A new tool for obtaining electronic records As a chapter 7 bankruptcy trustee, I'm always looking for new ways to ensure debtors turn over their financial records. I now have a doozy, thanks to the New York Court of Appeals.

In Thyroff v. Nationwide Mutual Insurance Co., 8 N.Y.3d 283, 2007 WL 844860 (N.Y. 2007), the Court of Appeals of New York held that the tort of conversion applies when a defendant denies access to electronic computer information. Thyroff was an insurance agent. When Nationwide Mutual terminated its relationship with Thyroff, it allegedly denied Thyroff access to information he had maintained on Nationwide's computers. Thyroff sued Nationwide for conversion in Federal Court, which filed a motion to dismiss. When the case reached the Court of Appeals for the Second Circuit, it certified the following question to the Court of Appeals of New York: "is a claim for the conversion of electronic data cognizable under New York law?"

The state court said yes. Which means, for all practical purposes, that if a principal of a business debtor fails to turn over electronic records to a trustee, the trustee can sue him for damages - at least in New York.

Labels: conversion, electronic records

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