## Facts

- The Sawayas leased land to Burger King for 15 years to construct and operate a restaurant; the lease provided that additions or improvements not removed within 15 days after lease termination would become the Sawayas’ property.
- Burger King subleased the premises to Peter Lysenko to operate a franchised restaurant; the sublease stated Lysenko’s installed personal property would remain his after the sublease ended, subject to the master lease.
- Lysenko bought and installed restaurant equipment financed by Central Bank, which perfected a security interest in the equipment and related items.
- Burger King later agreed to sell the restaurant building to Lysenko, subject to the master lease; the agreement allowed termination for uncured default.
- Burger King terminated Lysenko’s franchise, sublease, and building-purchase agreement after Lysenko failed to cure monetary defaults; Lysenko closed the restaurant.
- Before expiration of the master lease, the Sawayas notified Central Bank, Burger King, and Lysenko that improvements, personal property, and equipment were to be removed.
- Central Bank’s security interest was assigned to Lysenko, leaving him as both owner and secured party with a right to remove the equipment, but he did not remove it within 15 days after the master lease ended.
- After the master lease expired, the Sawayas leased the premises to another operator who discarded some equipment and used the rest.
- Lysenko sued the Sawayas for conversion and sought damages based on the equipment’s higher “in-place” value; the trial court found conversion but awarded damages based on salvage value, which the court of appeals affirmed.

## Issues

1. In a conversion action involving restaurant equipment subject to a lease-based removal deadline, should damages be measured by the equipment’s “in-place” value or by its salvage value, given the plaintiff’s limited interest at the time of conversion?

## Decision

- The Utah Supreme Court affirmed.
- The trial court used the correct damages measure by valuing the converted equipment at salvage value rather than in-place value.
- Because Lysenko’s rights were time-limited by the master lease and he lacked any continuing right to operate the restaurant, his compensable interest was essentially the right to remove and sell the equipment.
- The valuation determination was treated as fact-based; applying the correct legal standard, the trial court’s salvage-value assessment was upheld.

## Legal Principles

- Conversion damages are generally the value of the property at the time and place of conversion, but recovery is limited to the value of the plaintiff’s actual interest in the property.
- Contractual limitations on the plaintiff’s rights—such as lease provisions transferring ownership of improvements if not removed within a specified period—constrain the compensable interest in conversion.
- When a claimant’s remaining interest is limited to timely removal and resale (rather than continued use on the premises), salvage value may be the proper measure of conversion damages.

## Conclusion

The court held that although the defendants were liable for conversion, damages had to match the scope of Lysenko’s time-limited and conditional property interest under the governing lease structure, making salvage value the appropriate measure rather than the higher in-place value.


Lysenko v. Sawaya, 7 P.3d 783 (Utah 2000)