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Plaintiff may maintain a claim for conversion under the Michigan Builder’s Trust Fund Act

In an issue of first impression, the court held that a plaintiff may maintain an action for statutory conversion for violations of the MBTFA. However, the trial court did not err in ruling that the plaintiff failed to establish statutory or common-law conversion. Further, while a criminal conviction was not required to hold defendant-VanPopering personally liable for violation of the MBTFA, the trial court did not err in refusing to do so in light of the evidence that he did not misappropriate the funds. The court also upheld the trial court’s rulings on the breach of contract and construction lien issues. The case arose from the construction of a condo development. Defendant-Northland, solely owned by VanPopering, was the general contractor on the project. Northland contracted with plaintiff to perform carpentry work and painting on the project. The court concluded that the trial court’s factual findings in the parties’ bench trial were supported by the evidence, and that it accurately applied the law. As to whether a plaintiff may maintain statutory conversion and MBTFA claims cumulatively, the court applied the rationale employed by the Michigan Supreme Court in Appletree. “Like the ACMA, there is nothing in the MBTFA to suggest that it provides the sole remedy for an MBTFA violation.” Also as in the ACMA, “a general contractor subject to the MBTFA holds its funds in trust until its laborers, subcontractors, and materialmen are paid . . . .” However, as to whether Northland “converted” the funds, there was no evidence that plaintiff and its president/owner did not consent to Northland receiving the payments for the condos, “holding the funds in trust, and then remitting payment to plaintiff at the appropriate time.” While plaintiff did not consent to Northland failing to ever pay the owed funds, “Northland obtained the funds with plaintiff’s consent to the creation of a debtor-creditor relationship . . . .” As to plaintiff’s claim that the trial court erred by failing to hold VanPopering personally liable, there was “no evidence that VanPopering did anything with the funds received for the project other than try to keep the project afloat amid rising costs, unrelated litigation, and deficiencies to the project’s principal financier,” a bank. His “uncontroverted testimony established that he personally loaned Northland significant amounts of money in an ultimately unsuccessful attempt to keep the project on track.” As the trial court found, it appeared that “VanPopering put more funds into the project than Northland actually received in payment,” defeating any suggestion that he misappropriated those payments for personal use.