Lysenko v. Sawaya

1999 UT App 31, 1999 UT App 031, 973 P.2d 445, 362 Utah Adv. Rep. 12, 1999 Utah App. LEXIS 5, 1999 WL 50477
CourtCourt of Appeals of Utah
DecidedFebruary 4, 1999
Docket981011-CA
StatusPublished
Cited by7 cases

This text of 1999 UT App 31 (Lysenko v. Sawaya) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lysenko v. Sawaya, 1999 UT App 31, 1999 UT App 031, 973 P.2d 445, 362 Utah Adv. Rep. 12, 1999 Utah App. LEXIS 5, 1999 WL 50477 (Utah Ct. App. 1999).

Opinions

WILKINS, Presiding Judge:

¶ 1 Appellant Peter Lysenko (Lysenko) challenges the trial court’s order limiting his damages for conversion to the salvage rather than the in-place value of his restaurant equipment. We affirm.

BACKGROUND

¶ 2 On May 22, 1978, Mitchell and Lillie Sawaya (Sawayas), leased property (premises) located in Orem, Utah, to the Burger King Corporation. The lease allowed Burger King to build a restaurant on the premises." In addition, the lease provided that any additions or improvements made to the premises would become the property of the Sawayas if not removed within fifteen days after the lease ended. Subsequently, Burger King built a restaurant on the premises and on February 6, 1979, entered into a sublease agreement with Lysenko. The sublease stated that Burger King’s ownership of improvements made to the premises was subject to its lease with the Sawayas. The sublease further provided that all personal property installed by Lysenko would remain his property after the lease ended. Shortly thereafter, Lysenko purchased the necessary restaurant equipment (equipment) and opened for business. Lysenko financed his purchase of the equipment through a loan from Central Bank and Trust (bank).

[447]*447¶3 In January 1993, the bank filed a UCC-1 Financing Statement which was secured by the Burger King Restaurant and included all equipment, fixtures, furniture, signs, improvements, accessories, extensions and additions related to the restaurant. When Lysenko defaulted in February 1993, Burger King terminated Lysenko’s franchise and sublease agreements. Thereafter, Lysenko arranged for Curtis Loosli, a former employee of Lysenko, to purchase the bank’s security interest in the equipment. The bank then sold its rights in the equipment subject to the security interest to Loosli, who in turn conveyed ownership of the equipment to Lysenko.

¶4 In November 1993, the Sawayas’ attorney informed Lysenko, the bank, and Burger King that all improvements, personal property, and equipment were to be removed within fifteen days of February 6, 1994, pursuant to the lease agreement between the Sawayas and Burger King, or it would be forfeited to the Sawayas. However, on January 26, 1994, the Sawayas’ attorney acknowledged that Lysenko’s claim to the restaurant equipment was subject to the claims of Burger King and the bank and that, based on Burger King’s claim of ownership of the building and equipment, the Sawayas were not in a position to allow Lysenko to enter the premises and remove any equipment. Nevertheless, Lysenko informed the Sawa-yas he would begin removing the equipment on February 11, 1994, and requested that someone be present to unlock the building. The Sawayas refused Lysenko’s request.

¶ 5 Lysenko brought suit arguing the Sa-wayas had unlawfully converted his equipment and therefore, he was entitled to possession of the equipment or its equivalent value. At trial, the court admitted expert testimony regarding the equipment’s value. In its memorandum decision, the court stated that Lysenko had a perfected security interest in the equipment entitling him to possession, and that by interfering with Lysenko’s attempts to recover his equipment, and receiving some benefit from the possession and continued use of that equipment, the Sawa-yas had committed conversion. The court awarded Lysenko the salvage value of the equipment in the amount of $12,980, plus interest and costs. The trial court entered Formal Findings of Fact and Conclusions of Law on March 21, 1997, and also entered a Judgment the same day. Thereafter, Lysenko filed a Motion for Amendment to the Findings and Judgment, or alternatively, for a new trial, which the court denied. The trial court entered a final order denying the motion on August 20, 1997. Lysenko now seeks review of the court’s order limiting his damages for conversion to the equipment’s salvage value.

ISSUES AND STANDARDS OF REVIEW

¶ 6 Lysenko raises two issues on appeal. First, Lysenko contends the trial court erred by failing to grant him possession of the equipment. Second, Lysenko asserts the trial court erred in basing his damage award on the salvage rather than the in-place value of the equipment. We review the trial court’s decision to award damages under a standard which gives the court considerable discretion, and will not disturb its ruling absent an abuse of discretion. See Thurston v. Box Elder County, 892 P.2d 1034, 1041 (Utah 1995). Furthermore, because the adequacy of a damage award is a factual question, we will not reverse the trial court’s findings unless they are clearly erroneous. See Utah R. Civ. P. 52(a); In Re Knickerbocker, 912 P.2d 969, 981 (Utah 1996).

ANALYSIS

I. Possession of the Equipment

¶ 7 First, Lysenko challenges the trial court’s award of damages rather than possession of the equipment. Lysenko argues because he had a valid security interest in the equipment entitling him to take possession thereof, the trial court erred in awarding damages instead of possession. We disagree. In Clayton v. Crossroads Equip. Co., 655 P.2d 1125 (Utah 1982), the Utah Supreme Court addressed a similar issue. There, the defendant wrongfully repossessed a piece of farm equipment in which it held a valid security interest. See id. at 1127-28. The plaintiff sought damages and possession of the wrongfully possessed equip[448]*448ment. See id. at 1126. The lower court granted the defendant possession of the equipment and awarded damages to the plaintiff. See id. On appeal, the supreme court affirmed the lower court’s decision and stated that “[allowing [defendant] to retain possession of the [equipment] and compensating plaintiff for his investment therein was not an unreasonable method of fixing damages.” Id. at 1130. The court stated that “the desired objective in ... fashioning a remedy is to evaluate a loss suffered by the most direct and practical method which could be employed.” Id. Here, after terminating Lysenko’s lease, the Sawayas relet the premises, and the new tenants continuously used the equipment for more than two years before trial. Also, the new tenants replaced the worn out equipment with newer versions. Equally important, the size and volume of the equipment apparently would have made removal problematic. Therefore, it appears that compensating Lysenko for his investment while allowing the Sawayas to retain possession of the equipment was the most practical method of providing relief.

¶ 8 Furthermore, it would be inequitable if we required the trial court to award Lysenko possession of the equipment. “In conversion cases, the trial court must be given the discretion ... to fashion an equitable remedy. If allowing the plaintiff to elect to recover the converted property itself will over-compensate him for his injury, then the election must be taken away from the plaintiff.” Storms v. Reid, 691 S.W.2d 73, 74 (Tex.Ct.App.1985). Here, the Sawayas’ new tenants made significant repairs and modifications to restore the equipment to working condition. Thus, awarding Lysenko possession would allow him to profit at the expense of the Sawayas’ new tenants.

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Bluebook (online)
1999 UT App 31, 1999 UT App 031, 973 P.2d 445, 362 Utah Adv. Rep. 12, 1999 Utah App. LEXIS 5, 1999 WL 50477, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lysenko-v-sawaya-utahctapp-1999.