Los Angeles Federal Credit Union v. Madatyan

In Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, sufficient evidence supported the trial court's ruling that an auto body shop and its owners were liable to a credit union for converting insurance proceeds in which the credit union had an equitable lien, unbeknownst to the shop or its owners. The credit union financed the purchase of a Bentley by a customer of the shop and had a lien on the Bentley. The customer purchased insurance on the Bentley, but did not name the credit union as the loss payee, contrary to the terms of the loan. (Los Angeles Federal Credit Union v. Madatyan, supra, 209 Cal.App.4th at pp. 1385-1387.) After the Bentley was damaged, the customer received an insurance check payable to himself and the shop, and asked one of the shop owners to endorse the check to him. The shop owner endorsed the check, and the customer abandoned the Bentley in the shop without having it repaired. The credit union prevailed on its conversion claim against the shop and its owners, even though none of the defendants knew the credit union had an interest in the car or an equitable lien in the insurance proceeds. (Los Angeles Federal Credit Union v. Madatyan, supra, 209 Cal.App.4th at pp. 1387-1388.)