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Ford v. Baerg

Supreme Court of Kentucky

November 2, 2017

ANGELA FORD; ANGELA FORD, P.S.C.; ATI VENTURES, LLC; AND VILLA PARIDISIO, LLC APPELLANTS
v.
HAROLD BAERG, JR.; KATHLEEN M. BAERG; AND FAISAL SHAH APPELLEES

         ON REVIEW FROM COURT OF APPEALS CASE NOS. 2014-CA-000762.& 2014-CA-00791 FAYETTE CIRCUIT COURT NO. 12-CI-03758

          COUNSEL FOR APPELLANTS: Angela Margaret Ford I Mindy Barfield Brett Nolan · · Dinsmore & Shohl, LLP

          COUNSEL FOR APPELLEE FAISAL SHAH: Stephen M. O'Brien III David Coomer Stephen M. O'Brien, III, PLLC

          COUNSEL FOR APPELLEES KATHLEEN M. BAERG AND HAROLD BAERG JR.: John F. Billings John Nathanael Billings Christopher L. Thacker Stephen Wilson Billings Law Firm, PLLC.

          OPINION

          MINTON, CHIEF JUSTICE

         Among the elements required under our law to prove the tort of conversion, the plaintiff must first prove that she has legal title to the converted property and then prove the right to possess the property at the time of the alleged conversion. Attorney Angela Ford filed this civil action asserting the tort of conversion, claiming that Harold and Kathleen Baerg and Fasal Shah should be required to disgorge large sums of money that Ford claimed had been stolen from her by her attorney, Seth Johnston, and transferred by him to the Baergs and Shah. The trial court granted summary judgment in favor of Ford, but the Court of Appeals reversed the trial court's judgment, holding that Ford failed to prove the essential elements of conversion mentioned above. On discretionary review, we affirm the opinion of the Court of Appeals and remand this case to the trial court with direction to grant summary judgment to the Baergs and to Shah.

         I. FACTUAL AND PROCEDURAL BACKGROUND.

         Attorney Angela Ford received a large sum of legal fees for her work in the notorious fen-phen lawsuit.[1] Ford hired attorney Seth Johnston to help her form several LLCs to manage and secrete these funds. Johnston then formed two limited liability companies (LLCs), Villa Paridisio and ATI Ventures, to own and manage the funds. Ford placed some funds into Villa Paridisio's PNC Bank account and some into ATI Ventures's Republic Bank account. Johnston, according to the record available to us, was the signatory on both LLCs' accounts, later transferring Villa Paridisio's funds to BB&T, also an account where Johnston was named the, sole signatory as revealed by the available record.

         Johnston also represented Harold and Kathleen Baefg at this time. The Baergs wished to engage in an I.R.C. § 1031 like-kind property exchange. And they wanted Johnston to hold the proceeds from their sold property in an intermediary company, Emerald Rivefport, solely controlled by Johnston, until they purchased new property to complete the § 1031 transaction.

         Unknown to Ford and the Baergs, Johnston was involved in an extensive scheme of fraud, theft, and illegal drug distribution. Johnston spent the Baergs' proceeds from the sale of their property, placed in Emerald Riverpdrt, for his own scheme. When the Baergs wanted the money to purchase new property under their § 1031 transaction, Johnston wire-transferred funds from Ford's Villa Paridisib account to pay the seller of the new property. Johnston also used funds from Ford's ATI Ventures account to purchase a cashier's check, which he then negotiated to Zafar Nasir. Nasir later negotiated that cashier's check to Faisal Shah, who deposited the check's funds into his personal bank account.

         After discovering these fraudulent dealings, Ford filed the underlying action against Johnston, the Baergs, and Shah for conversion. Ford moved for summary judgment against all parties, and the trial court granted Ford's motion and found all parties liable. Shah and the Baergs appealed, and the appellate court reversed the trial court's findings with respect to them, finding that Ford could not prove the first two elements of conversion[2]-specifically, that Ford lacked the requisite legal title or possessory rights to the allegedly converted property. This court took this case on discretionary review.

         II. ANALYSIS.

         A. Standard of Review.

         We review a trial court's granting of a parry's summary judgment motion de novo.[3] "On appeal, '[t]he standard of review.. .of a summary judgment is whether the circuit judge correctly found that there were no issues as to any material fact and that the moving party was entitled to a judgment as a matter of law.'"[4]

         B. Ford Cannot Satisfy the First Two Elements of Conversion.

         The Baergs correctly argue that Johnston, as the sole signatory on the Villa Paridisio bank accounts at PNC Bank and BB&T, possessed, at the least, apparent authority over those bank accounts. Shah argues the same- Johnston remained the sole signatory on the ATI Ventures bank account at Republic Bank, and thus Johnston possessed apparent authority over that bank account. The Baergs and Shah argue that, through his apparent authority, Johnston divested Ford of legal title and possessory rights when ...


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