In 2014, a diamond bracelet, an emerald ring and a brooch were stolen from the Dayton-area residence of Irene Danopulos. American Trading II, a pawnshop in Cheviot Ohio, bought these items for $2125, reported the purchase to the Sheriff’s office, held the jewelry for the statutorily required 15-day period, then sold the pieces as scrap for $7964.   

Round One

Danopulos filed a conversion action against American Trading, which she lost at summary judgment. The trial court determined that American Trading complied with the relevant portions of Ohio’s pawnbroker laws, R.C. 4727, and therefore had superior ownership rights in the stolen property. On appeal, the First District reversed the trial court’s grant of summary judgment, holding that R.C. 4727 served a regulatory function and did not alter the common law rule that thieves do not acquire good title to stolen property against the true owner. The First District remanded the case for further proceedings.

Round Two

On remand, the case proceeded to a bench trial on the conversion claim. The trial court found that although American Trading had sold the stolen jewelry, Danopulos could not win without evidence that she made a demand for the property while American Trading still possessed the jewelry. Because no demand was made until after American Trading sold the jewelry, the court again entered judgment for American Trading. Danopulos appealed a second time.

The Second Appeal

In a unanimous opinion, the First District Court of Appeals again found for Danopulos. The court held that the lack of a demand was irrelevant to this conversion action. Because American Trading intentionally disassembled and sold stolen property after acquiring it from a person who lacked power to transfer an ownership interest in it, Danopulos established a conversion claim against American Trading.

The appeals court reasoned that because wrongful intent is not an element of conversion, American Trading could still be liable even if acting under a mistake. While demand and refusal may be necessary in conversion cases involving a defendant who lawfully came into possession of the property, it is not in cases like this where “an act of dominion or control” was inconsistent with the true owner’s ownership.

The appeals court further found that the trial court incorrectly applied a negligence rule to American Trading’s actions. Although lawful possessors may be liable in negligence for accidental loss or destruction of legally acquired property, that rule has no application here where American Trading intentionally disassembled the jewelry and sold the parts. The trial court was instructed to enter judgment for Danopulos on the issue of liability and to determine her damages.

American Trading appealed to the Supreme Court of Ohio, which accepted the following proposition of law on October 10, 2018:

A pawn broker’s compliance with R.C. 4227.09 and R.C. 4727.12 in the purchase and resale of property provides it with lawful possession of the property in defense to a plaintiff’s conversion claim.

Case Dismissed as Improvidently Accepted

On July 9, 2019, the Supreme Court of Ohio heard oral argument in the case. On August 13, 2019, the court dismissed the case as improvidently accepted and further ordered that the case was not to be cited as precedent except between the parties to the case.

Where did that leave things? The case was remanded to the trial court “to enter judgment for Danopulos on the issue of liability and to determine the amount of her damages.”

On Remand, Again

The trial court (with a different judge) held that while the pawnshop did offer evidence of what it paid for the jewelry and what it sold it for, only Michael Karaman, the expert witness for Danopulos, testified as to the market value of the pieces at the time of the conversion. Karaman valued the emerald ring at $31,500 and the brooch at $8000, but offered no opinion on the value of the bracelet. The trial court award damages to Danopulos in the amount of $31,500 for the ring, $8000 for the brooch and found that she had failed to prove damages for the bracelet. American Trading appealed the damages awarded as being too speculative and Danopulos cross-appealed the failure of the trial court to award her damages for the conversion of the bracelet.

Most Recent Appeal

 On June 30, 2021, in a unanimous opinion written by Judge Pierre Bergeron, the First District affirmed in part and reversed in part.

The proper measure of damages in a conversion action is the value of the converted property at the time of the conversion. For an injured plaintiff/consumer that is the retail price of the goods.

Turning first to the qualifications of Michael Karaman, the plaintiff’s expert, the defense conceded at oral argument that Karaman was sufficiently qualified to give an expert appraisal, but challenged his methods. Karaman could not examine the pieces of jewelry themselves since they had been taken apart. So, in giving his opinion Karaman relied on a photocopy taken by American Trading, some older photographs supplied by Danopulos, and information from counsel.

Karaman’s valuation of the brooch at $8000 was based on what Danopulos’ husband had paid for it. As for the emerald ring, Karaman based his appraisal of $31,500 on its age, a midpoint average price of an emerald per carat (4 carats, at $6000 per carat) plus $4500 for the diamonds, and $3000 for other factors such as the age and craftsmanship of the piece. Karaman offered no opinion as to the value of the stolen bracelet.

The appeals court rejected American Trading’s challenges to Karaman’s valuations, noting, “we have an impeccably-credentialed expert confronting imperfect information because-by virtue of the defendant’s actions—the jewelry no longer exists to be more precisely appraised.” The reason Karaman couldn’t examine the pieces themselves was because American Trading had scrapped them, making Danopulos’ testimony the most competent evidence on which to base the value of the jewelry.

“Without some contrary appraisal from American Trading or reason to question Mrs. Danopulos’s credibility, the trial court’s decision to accept Mr. Karaman’s appraisals as the best measure of damages falls far from a ‘manifest miscarriage of justice,’” wrote Judge Bergeron.

The appeals court also rejected American Trading’s argument that the trial court should have based damages on the $2125 it paid and the $7964.30 it received for the jewelry. The $2125 paid to the thief was clearly not an arms-length transaction. The thief just needed to get rid of the property quickly and probably had no idea what the pieces were worth. And the scrap value American Trading received is not representative of the fair market value of the pieces.

“American Trading’s decision to sell the pieces for scrap indicates that it did not know (or did not care) that the pieces were worth more whole. Mrs. Danopulos’s damages should not be curtailed by American Trading’s decision to sell the pieces for less than retail price and destroy their antique and artistic value,” wrote Bergeron.

The appeals court found that the damages award for the ring and the brooch was supported by competent credible evidence and overruled American Trading’s assignment of error.

As for the cross-appeal, Danopulos argued that the trial court should have awarded her $15,000 for her diamond bracelet, based on Karaman’s testimony that the mid-range value of the diamonds in the ring was $1500 per carat, and she testified that the bracelet was a 10-carat diamond bracelet. The appeals court agreed that the trial court erred in denying her damages for the bracelet and remanded the case yet again for a determination of the value of the bracelet. Because a different judge will hear the case, the appeals court offered the trial court the choice of requesting new evidence on the valuation of the bracelet or deciding that issue on the state of the existing record. If the trial court finds Danopulos’ testimony credible, the trial court “should combine that testimony with Mr. Karaman’s valuation of mid-range diamonds at $1500 per carat to calculate the market value for the bracelet.” That would be $15,000 for the bracelet.