Body Shop That Endorsed Insurance Check Held Liable For Conversion Of Credit Union’s Interest In The Proceeds.

A credit union financed the purchase of a Bentley in the amount of $136,126. The car was collateral for the loan and the owner was required to maintain insurance for the car. The owner did fulfill his obligation to have insurance but did not name the credit union as an additional insured on the policy. The owner took the Bentley to a shop for repairs and an insurance adjuster appraised the damage and sent a check made out to the owner and the body shop, but not the credit union. The check was cashed after the body shop endorsed it at the owner’s request, but the owner had not authorized any work on the car, and the body shop did no repair work, and did not receive any of the proceeds from the check. Both the trial court and the appellate court found that by assisting the owner to negotiate the insurance check, the body shop was liable for conversion of the credit union’s interests, since the credit union had an equitable lien on the insurance proceeds. Los Angeles Federal Credit Union v. Madatyan  (Cal. App. Second Dist., Div. 5; October 11, 2012) 209 Cal.App.4th 1383.