Also known as: misappropriate · misappropriated · misappropriates
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
The fraudulent conversion of property by a person who initially acquires or holds the property in lawful possession.
The fraudulent conversion of property by a person who initially acquires or holds the property in lawful possession.
Select any source to read its text and confirm it supports the definition.
The unauthorized commercial exploitation of another's name, likeness, confidential information, or trade secrets.
Select any source to read its text and confirm it supports the definition.
The unauthorized commercial exploitation of another's name, likeness, confidential information, or trade secrets.
Each sense below has its own examples, sources, and questions.
Miranda Morales, a bank teller, receives customer cash deposits into her drawer during her shift. At closing she transfers most of the money to the vault but keeps several hundred dollars for herself. Because she held the funds lawfully as part of her job before converting them, the conduct constitutes misappropriation rather than a trespassory taking.
Matthew Martinez, an associate at a firm, discovers from a client file that a partner has been diverting client settlement funds into a personal account. The client asks Matthew not to report the conduct. Matthew must still disclose the misappropriation to disciplinary authorities because the information is not protected by confidentiality rules.
Maurice Marshall, a solo practitioner, receives a large settlement check for a client and deposits it into his client trust account. He then transfers most of the money to his personal operating account to cover office expenses, intending to repay the client later. The knowing misuse of entrusted funds results in disbarment regardless of repayment plans or lack of client loss.
In embezzlement the defendant begins with lawful possession and later converts the property. In larceny the defendant commits a trespassory taking at the moment of acquisition from someone with a superior right of possession.
Supporting sources
Yes. The duty to report serious misconduct such as misappropriation of client funds overrides a client's request for confidentiality when the information is not itself protected under confidentiality rules.
Supporting sources
Disbarment is the usual sanction. Courts impose it regardless of the lawyer's claimed intent to repay, absence of client loss, or prior good record because the conduct destroys public confidence in the profession.
Supporting sources
Monica Morgan survived a well-publicized rescue at sea. A production company makes a movie dramatizing her ordeal and uses her real name and likeness in promotional materials without permission. The company profits from the commercial exploitation of her identity, giving rise to a misappropriation claim.
Majestic Construction's public-relations team gathers fresh project details from on-site sources. A competitor copies those details verbatim from Majestic's bulletins and sells the information to newspapers before Majestic can distribute it. The competitor's use of the time-sensitive information without independent gathering constitutes misappropriation of quasi-property.
Mustafa Mahmoud, a financial columnist, learns the timing and contents of his upcoming column before publication. He trades securities based on that nonpublic information in breach of his duty of confidentiality to his employer. The trading constitutes securities fraud under the misappropriation theory because he converted confidential information for personal gain.
The plaintiff must show investment of time or money to gather the information, that the defendant took the information without similar investment, and that the plaintiff suffered competitive injury from the taking.
Supporting sources
…securities traded.” In affirming the mail and wire fraud convictions, the Court of Appeals ruled that Winans had fraudulently misappropriated “property” within the meaning of the mail and wire fraud statutes and that its revelation had harmed the Journal. It was held as well that the use of the mail and wire services had a…