## Facts

- A bank financed a restaurant operator’s purchase of commercial restaurant equipment and received a security interest in the equipment.
- The operator used the equipment in a restaurant located within hotel premises leased from landlord entities (including Venice MD LLC).
- The operator defaulted on the secured loan.
- After default, the bank notified the landlords of its security interest in the equipment.
- The landlords took possession of the premises and continued operating the restaurant using the equipment despite the bank’s objection.
- The bank sued for trespass to chattels and sought damages tied to the restaurant’s gross revenue during the period of use.
- The district court found trespass to chattels and awarded damages based on the equipment’s reasonable rental value, using evidence that comparable rental rates ranged from $20,000 to $62,000 per month; it set damages at $25,000 per month.
- The landlords appealed, arguing damages should be limited to diminution in the equipment’s value, which would yield only nominal damages.

## Issues

1. For trespass to chattels based on unauthorized commercial use of equipment, is the proper measure of damages the chattel’s reasonable rental (use) value for the period of wrongful use, or only the diminution in value during that period?
2. Was the district court’s $25,000-per-month rental-value award supported by the evidence under the applicable standard of review?

## Decision

- The Fourth Circuit affirmed.
- The court upheld rental value (value of use) as an appropriate measure of damages for the landlords’ wrongful use of the equipment.
- The court rejected limiting damages to diminution in value where that approach would reduce a significant wrongful use to nominal damages.
- The court held the $25,000-per-month figure was supported by evidence of comparable market rental rates and was not clearly erroneous.

## Legal Principles

- Trespass to chattels may support damages measured by the reasonable rental value (value of use) of the chattel for the duration of wrongful possession or use.
- Diminution in value is not the exclusive measure of damages when the wrongful conduct consists primarily of unauthorized use rather than destruction or permanent deprivation.
- A trial court may select a reasonable rental-value figure within the evidentiary range, and an appellate court will generally defer absent clear error.

## Conclusion

The court affirmed damages for trespass to chattels based on the reasonable rental value of secured restaurant equipment wrongfully used in ongoing commercial operations, holding that a use-value remedy was proper and that the district court’s monthly valuation was supported by the record.


U.S. Bank Tr. Nat’l Ass’n v. Venice MD LLC, 92 F. App’x 948 (4th Cir. 2004)