Under Nevada Law, Intangible Property is Subject to Conversion

The Nevada Supreme Court clarified if and when intangible property can be subject to conversion in its October 2 decision, M.C. Multi-Family Dev. v. Crestdale Assocs., 124 Nev. Adv. Op. No. 77 (2008).

Conversion under Nevada law is defined as “a distinct act of dominion wrongfully exerted over another’s personal property in denial of, or inconsistent with his title or rights therein or in derogation, exclusion, or defiance of such title or rights.”

The Court rejected the defendant’s contention that personal property must be tangible to be converted, and instead noted a “trend toward recognizing intangible property as personal property” that can be subject to conversion.

The Court adopted a three part test from the Ninth Circuit to determine whether property can be converted:

“A property right exists when

(1) there is an interest capable of precise definition,

(2) the interest is capable of exclusive possession or control, and

(3) the putative owner has established a legitimate claim to exclusivity.”

In adopting the test, the Court concluded the following:

“A contractor’s license constitutes intangible personal property that can be converted under Nevada law. Despite the fact that the use of a contractor’s license by one individual does not prevent others from using the same contractor’s license, unauthorized use of such a license in contravention of the license holder’s rights may give rise to a cognizable conversion claim.”