The Rhode Island Supreme Court recently decided a property case, demonstrating the importance of preserving arguments for appeal. In this case, the plaintiff entered into a lease with the defendants to rent commercial property owned by the defendants. The plaintiff paid the defendants $18,600, which was comprised of $9,300 for a security deposit and $9,300 for the first month’s rent. A “receipt agreement” signed by the parties stated that if the property was not ready on or before November 14, 2013, “all deposits are fully refundable.”
According to the plaintiff, after the city found out that the plaintiff planned to grow medical marijuana in the building, the defendant told the plaintiff to “forget about” the property and that he was keeping the security deposit “for his aggravation.” The defendant testified that he did not return the security deposit because the plaintiff left the lease “without even trying to do anything.” The plaintiff could not occupy the property, and the defendants refused to return the security deposit. The plaintiff claimed that the defendants breached the contract, and also that the refusal to return the security deposit constituted a conversion of his property. A jury agreed, finding the defendants converted the plaintiff’s security deposit to their own use.
On appeal, the defendants argued in part that the economic loss doctrine barred the plaintiff from recovering under the conversion claim. The defendants argued that the plaintiff should not have been able to receive a damages award for the conversion claim because the plaintiff did not suffer any injury, and thus should be barred under the economic loss doctrine.