Lysenko v. Sawaya

Mitchell and Lillie Sawaya (defendants) leased property to Burger King so that Burger King could build a restaurant on the property. The lease included a provision allowing the Sawayas to keep any additions or improvements to the property not removed within 15 days after the lease terminated. Burger King built a restaurant and sublet the property to Peter Lysenko (plaintiff). The sublease provided that any personal property Lysenko installed would remain his property after the termination of the sublease. Lysenko bought and installed restaurant equipment, financing the equipment with a bank loan. The bank took a security interest in the equipment. Lysenko operated the restaurant until April 1993, when the sublease was terminated due to his default. At this point, Lysenko lost the right to possess the property. The lease between the Sawayas and Burger King terminated in February 1994. As the termination date approached, the Sawayas notified Lysenko, Burger King, and the bank that any equipment left in the building 15 days after termination of the lease would belong to the Sawayas. Lysenko asked to remove his equipment from the property, but the Sawayas did not allow him to do so because the bank had a security interest in the property. Prior to the termination of the lease, Lysenko acquired the bank’s security interest, therefore gaining the right to remove the equipment, but failed to retrieve it within 15 days of termination. The Sawayas subsequently leased the property to another restaurant owner, who threw away some of Lysenko’s equipment and used the rest of it. Lysenko sued the Sawayas for conversion of the equipment and sought damages equal to the equipment’s value. The trial court found for Lysenko and awarded him the equipment’s salvage value: the value the equipment would have had if it had been removed from the restaurant and sold. The court of appeals affirmed, and Lysenko appealed, arguing that the trial court should have based its damages award on the equipment’s in-place value, the value of the equipment in a currently operating business.