Khokhar v. Gonzalez

Citation: 2021 NY Slip Op 05628Docket: Index No. 160994/19 Appeal No. 14386 Case No. 2020-04803

Court: Appellate Division of the Supreme Court of the State of New York; October 14, 2021; New York; State Appellate Court

Original Court Document: View Document

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In Khokhar v. Gonzalez, the Appellate Division, First Department, reversed a prior Supreme Court decision that granted a motion to dismiss a conversion claim against the law firm Gonzalez, Oberlander LLP. The initial ruling, made by Justice Paul A. Goetz on November 16, 2020, had dismissed the remaining cause of action for conversion concerning funds seized from a bank account belonging to the plaintiff, Abdul Jalil Khokhar. 

The appellate court found that the factors for applying collateral estoppel were not met, as the Bronx Supreme Court had not made any determinations regarding the conversion of funds or the parties' rights to possession. The denial of the order to show cause in the Bronx case did not constitute a final judgment on the merits, as it was merely a provisional remedy aimed at maintaining the status quo.

The law firm argued that Khokhar failed to state a viable cause of action for conversion based solely on the denial of the order to show cause. However, the appellate court noted that Khokhar had presented sufficient allegations, including proof that he was not the defendant in the Bronx action, that the funds did not belong to the judgment debtor, and that he had demanded the return of the funds, which the law firm refused. Consequently, the court reinstated Khokhar's conversion claim against the law firm. 

This decision underscores the necessity for clear determinations on a case's merits before collateral estoppel can be applied and affirms that a refusal to return funds, when the rightful ownership is established, can constitute conversion.