Statute of Limitations for Conversion in Minnesota

What Is the Statute of Limitations for Conversion in Minnesota?

A Minnesota conversion claim falls under Minn. Stat. § 541.05, subd. 1, whose list of actions opens by stating that “the following actions shall be commenced within six years.” Check the current statute text before relying on that period, because the legislature can amend it.

Clause (4) of that list describes a conversion claim closely. It covers actions “for taking, detaining, or injuring personal property, including actions for the specific recovery thereof.” The words “specific recovery” bring in a suit to get the property itself back, such as a replevin action. Conversion is the legal name for that taking or keeping. In Williamson v. Prasciunas, 661 N.W.2d 645 (Minn. App. 2003), discussed below, the Court of Appeals quoted the Minnesota Supreme Court’s definition of conversion as “an act of willful interference with [the personal property of another], done, without lawful justification, by which any person entitled thereto is deprived of use and possession.” My page on what conversion means under Minnesota law covers the elements.

The opening words of subdivision 1 matter as much as the period. The list applies “Except where the Uniform Commercial Code otherwise prescribes,” so a claim governed by the Uniform Commercial Code can carry its own deadline. One example that reaches businesses is a stolen or misdirected check, covered below.

When Does the Clock Start on a Conversion Claim?

The clock starts when the claim accrues, which Minnesota courts define as the moment the claim would survive a motion to dismiss for failure to state a claim. Finding out later does not restart it. In Williamson, a conversion case, the Court of Appeals quoted the Minnesota Supreme Court’s rule: “A cause of action accrues and the statute of limitations begins to run when the cause of action will survive a motion to dismiss for failure to state a claim upon which relief can be granted.”

The same court quoted the next sentence of that rule: “Thus, in the absence of fraudulent concealment, the running of the statute is not tolled by [the plaintiffs] ignorance of the cause of action.” The rule comes from Herrmann v. McMenomy & Severson, 590 N.W.2d 641 (Minn. 1999), a legal malpractice case in which the Minnesota Supreme Court declined to adopt a general discovery rule. For a business owner, the practical meaning is that an inventory shortfall noticed years after the fact does not start a fresh period unless someone concealed the claim.

A conversion claim does not always begin with a taking. Sometimes the other side first held the property with your permission, as a bailee, a former partner, or a departing employee with a company laptop. Williamson quoted an earlier Court of Appeals decision for the rule that “Wrongfully refusing to deliver property on demand by the owner constitutes conversion.” That makes the dates of your demand and the other side’s refusal facts worth proving. I suggest making any demand for the property in writing and keeping the reply, because both fix those dates in a document rather than in memory.

How Does Fraudulent Concealment Pause the Deadline?

Fraudulent concealment pauses the limitations period when the other side hid the claim and you could not have uncovered it with reasonable diligence. Williamson applied the rule of Haberle v. Buchwald, 480 N.W.2d 351 (Minn. App. 1992): “To establish fraudulent concealment, a plaintiff must prove there was an affirmative act or statement which concealed a potential cause of action, that the statement was known to be false or was made in reckless disregard of its truth or falsity, and that the concealment could not have been discovered by reasonable diligence.” In Williamson, the buyers of a house kept jewelry the seller had left in a wall safe and denied having it, both to her and to the police. The Court of Appeals held that their concealment tolled the period until March 2001, when the seller learned they had the jewelry, and it affirmed judgment for her.

Fitting that rule to its facts, the court required three showings: “(1) the Prasciunases made a statement or statements that concealed Williamson’s potential cause of action, (2) the statement or statements were intentionally false, and (3) the concealment could not have been discovered by reasonable diligence.” The court summarized the defendants’ position this way: “In effect, they argue that Williamson knew they had her jewelry, and therefore she could have brought suit in 1989.” The court rejected that argument: “Mere suspicion, in a case of fraudulent concealment, is not sufficient to stop the tolling of the statute of limitations.”

The burden sits with the party claiming the pause. In Collins v. Johnson, 374 N.W.2d 536 (Minn. App. 1985), a medical case, the court put it this way: “The party claiming fraudulent concealment has the burden of showing that the concealment could not have been discovered sooner by reasonable diligence on her part and was not the result of her own negligence.” The owner in Williamson met that burden: she consulted an attorney, who demanded the jewelry back, and she reported the loss to the police. My page on fraudulent concealment and the statute of limitations covers the doctrine across other claims.

What Changes When the Converted Property Is a Check?

A claim for conversion of a check or other negotiable instrument falls under the Uniform Commercial Code, not the general conversion period. Minn. Stat. § 336.3-118(g) provides: “Unless governed by other law regarding claims for indemnity or contribution, an action (i) for conversion of an instrument, for money had and received, or like action based on conversion, (ii) for breach of warranty, or (iii) to enforce an obligation, duty, or right arising under this article and not governed by this section must be commenced within three years after the cause of action accrues.” Check the current text before relying on that period.

Minn. Stat. § 336.3-420(a) starts from the general rule: “The law applicable to conversion of personal property applies to instruments.” It then adds a conversion that matters when an employee forges an endorsement or deposits checks payable to the company. Under that paragraph, an instrument is converted when “a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment.” That gives a business a possible conversion claim against the bank, and that claim runs on the shorter clock.

When the business entrusted the employee with “responsibility with respect to the instrument,” Minn. Stat. § 336.3-405(b) provides, for a person who in good faith pays the check or takes it for value or for collection, that “the endorsement is effective as the endorsement of the person to whom the instrument is payable if it is made in the name of that person”; if that person’s failure to exercise ordinary care substantially contributes to the loss, “the person bearing the loss may recover from the person failing to exercise ordinary care to the extent the failure to exercise ordinary care contributed to the loss.”

Paragraph (c) of § 336.3-420 limits one class of defendant: “A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.”

Paragraph (a) also limits who may sue: “An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.” Claims about a bank’s duties under Article 4, the bank deposits and collections article, carry their own period, and Minn. Stat. § 336.4-111 provides that “An action to enforce an obligation, duty, or right arising under this article must be commenced within three years after the cause of action accrues.”

When the company’s own signature on a check was forged, Minn. Stat. § 336.4-406(c) provides that “the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized,” and subsection (f) provides: “Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are made available to the customer (subsection (a)) discover and report the customer’s unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration.”

Subsection (d) attaches a consequence to the subsection (c) duty: “If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (c), the customer is precluded from asserting against the bank,” among other things, “the customer’s unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.” Subsection (e) limits that preclusion: “If subsection (d) applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with subsection (c) and the failure of the bank to exercise ordinary care contributed to the loss.” Check the current text of both sections before relying on these periods.

Embezzlement schemes can run for years through many checks. My pages on how employees embezzle and on conversion of checks and other instruments cover the mechanics. I suggest listing every check, with the date a bank paid it or obtained payment on it, as soon as the scheme surfaces, because the period in § 336.3-118(g) runs from when the cause of action accrues, and the bank conversion described above occurs when “a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment.”

What Other Rules Can Pause or Extend the Deadline?

Besides fraudulent concealment, Minnesota statutes pause the clock when the defendant leaves the state and cannot be served, and when the plaintiff has a recognized disability. A separate fraud claim also follows its own discovery rule. Check the current statute text before relying on any period or limit quoted below.

1. The defendant leaves Minnesota. Under Minn. Stat. § 541.13, “if, after a cause of action accrues, the person departs from and resides out of the state and while out of the state is not subject to process under the laws of this state or after diligent search the person cannot be found for the purpose of personal service when personal service is required, the time of the person’s absence is not part of the time limited for the commencement of the action.” A defendant who moves but can still be served under Minnesota law gets no pause.
2. A disability or a court order stops the plaintiff. Minn. Stat. § 541.15(a) provides that listed grounds of disability “shall suspend the running of the period of limitation until the same is removed.” The list includes an individual plaintiff “within the age of 18 years,” “the plaintiff’s insanity,” and the case “when the beginning of the action is stayed by injunction or by statutory prohibition.” The suspension has limits, stated in the statute: “such period, except in the case of infancy, shall not be extended for more than five years, nor in any case for more than one year after the disability ceases.”
3. The property was obtained by fraud. A fraud claim runs on discovery. When someone tricked your business out of property, a fraud claim may still be timely after a conversion claim is not; my page on the statute of limitations for fraud in Minnesota covers that claim. Minn. Stat. § 541.05, subd. 1, clause (6), covers actions “for relief on the ground of fraud, in which case the cause of action shall not be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud.” In Bustad v. Bustad, 263 Minn. 238, 116 N.W.2d 552 (Minn. 1962), the Minnesota Supreme Court quoted an earlier decision construing that clause: “the facts constituting the fraud are deemed to have been discovered when, with reasonable diligence, they could and ought to have been discovered.”

When Does a Related Claim Carry a Different Deadline?

A dispute over property can support more than one claim, and each claim keeps its own deadline. Four claims that can travel with conversion in a business dispute are contract, sale of goods, civil theft, and trade secrets.

1. Contract. When the property changed hands under an agreement, a breach claim falls under clause (1) of Minn. Stat. § 541.05, subd. 1, for actions “upon a contract or other obligation, express or implied, as to which no other limitation is expressly prescribed.”

   When the agreement was a lease of goods, such as leased equipment, Minn. Stat. § 336.2A-506 provides instead: “An action for default under a lease contract, including breach of warranty or indemnity, must be commenced within four years after the cause of action accrued. If the lease contract is not a consumer lease, the parties may reduce the period of limitation to not less than one year in the original lease contract.” Under subsection (2), “A cause of action for default accrues when the act or omission on which the default or breach of warranty is based is or should have been discovered by the aggrieved party, or when the default occurs, whichever is later.” Check the current statute text before relying on these periods.

2. Sale of goods. A dispute over goods a buyer never paid for or a seller never delivered is a claim on a contract for sale. Minn. Stat. § 336.2-725 provides that “An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.” It adds: “A cause of action accrues when the breach occurs, regardless of the aggrieved party’s lack of knowledge of the breach.” By their original agreement, the parties “may reduce the period of limitation to not less than one year but may not extend it.” Check the current statute text before relying on these periods.

3. Civil theft. Minn. Stat. § 604.14, subd. 1 makes “A person who steals personal property from another” liable “to the owner of the property for its value when stolen plus punitive damages of either $50 or up to 100 percent of its value when stolen, whichever is greater.” Getting the property back does not end that claim; under subdivision 5, “The recovery of stolen property by a person does not affect liability under this section, other than liability for the value of the property.” The section states no limitations period of its own, so check which period applies before relying on the conversion deadline for it. My page on Minnesota’s civil theft statute covers the claim.

4. Trade secrets. When the “property” is confidential information, such as a customer list or pricing data, the Minnesota Uniform Trade Secrets Act can replace a conversion claim. Minn. Stat. § 325C.07(a) provides that the act’s sections “displace conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.” Under Minn. Stat. § 325C.06, “An action for misappropriation must be brought within three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.” The federal Defend Trade Secrets Act, 18 U.S.C. § 1836(d), uses the same measure: a claim “may not be commenced later than 3 years after the date on which the misappropriation with respect to which the action would relate is discovered or by the exercise of reasonable diligence should have been discovered.”

The trade-secret periods run from discovery, unlike conversion. If a conversion count for stolen data is displaced, the trade-secret claim has to be timely under its own period. Check the current text of § 325C.06 and 18 U.S.C. § 1836(d) before relying on those periods.

How Is a Conversion Lawsuit Started in Minnesota?

In Minnesota, a lawsuit is started against each defendant by service of the summons, a signed waiver of service, or delivery of the summons to the sheriff in the county where the defendant resides followed by timely service or first publication, not by filing papers with the court. Minn. R. Civ. P. 3.01 provides that a civil action is commenced against each defendant “(a) when the summons is served upon that defendant; or (b) at the date of signing a waiver of service pursuant to Rule 4.05; or (c) when the summons is delivered for service to the sheriff in the county where the defendant resides personally, by U.S. Mail (postage prepaid), by commercial courier with proof of delivery, or by electronic means consented to by the sheriff’s office either in writing or electronically; but such delivery shall be ineffectual unless within 60 days thereafter the summons is actually served on that defendant or the first publication thereof is made.”

Filing comes later. The rule’s own note states: “Filing requirements are set forth in Rule 5.04, which requires filing with the court within one year after commencement for non-family cases.” Under that rule, a served summons and complaint can start a Minnesota case before any court has a file for it. Check the current rule text before relying on either period in Rule 3.01.

A demand letter starts nothing. Minn. Stat. § 604.14, subd. 6 states: “A person may make a written demand for payment for the liability imposed by this section before beginning an action, including a copy of this section and a description of the liability contained in this section.” The words “before beginning an action” show that the demand comes first and the action is a separate step. I suggest sending a demand early enough that service can still happen before the deadline if the demand fails, because the letter does not commence the action.

Can Multiple Parties Be Liable for One Conversion?

Yes. More than one person can be liable for the same conversion, and each one is a separate defendant with a separate deadline to meet. Williamson itself had two defendants: the opinion opens, “Appellants Robert and Rebecca Prasciunas challenge (1) the district court’s decision to award respondent Patricia Rogers Williamson damages for civil conversion,” and the Court of Appeals affirmed. In a check scheme, the employee who took the checks and the bank that paid them can both face claims, because Minn. Stat. § 336.3-420(a), discussed above, treats a bank’s payment of a check for a person not entitled to enforce it or receive payment as a conversion.

How a damages award is split among several liable defendants is set by Minn. Stat. § 604.02, subd. 1: “When two or more persons are severally liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that the following persons are jointly and severally liable for the whole award.” The exceptions include “(1) a person whose fault is greater than 50 percent,” “(2) two or more persons who act in a common scheme or plan that results in injury,” and “(3) a person who commits an intentional tort.” The subdivision adds: “This section applies to claims arising from events that occur on or after August 1, 2003.” Which of those categories fits a given defendant depends on the facts proved about that defendant.

Because Minn. R. Civ. P. 3.01 measures commencement “against each defendant,” I suggest identifying every person and business that took, received, or paid out the property early, so each one can be served before the deadline runs.

How Does a Bankruptcy Affect My Conversion Claim?

When the person who converted your property files bankruptcy, federal law decides three things: whether you can sue now, how long your deadline lasts after the wait, and whether the debt survives the discharge. Check the current text of each provision below before relying on it.

1. The automatic stay. Under 11 U.S.C. § 362(a), a bankruptcy petition “operates as a stay, applicable to all entities, of” acts that include “the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title.” A conversion suit against the debtor, new or already pending, is stayed while the stay lasts.
2. The deadline after the stay. 11 U.S.C. § 108(c) protects a state-law period that “has not expired before the date of the filing of the petition.” For a period fixed for “commencing or continuing a civil action in a court other than a bankruptcy court on a claim against the debtor,” the statute provides that “such period does not expire until the later of— (1) the end of such period, including any suspension of such period occurring on or after the commencement of the case; or (2) 30 days after notice of the termination or expiration of the stay under section 362, 922, 1201, or 1301 of this title, as the case may be, with respect to such claim.” The second option can leave as little as 30 days, so I suggest calendaring the date you receive notice that the stay ended.
3. Whether the debt survives discharge. 11 U.S.C. § 523(a) lists debts a discharge “does not discharge an individual debtor from,” including a debt “for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny” (paragraph (4)) and a debt “for willful and malicious injury by the debtor to another entity or to the property of another entity” (paragraph (6)). Those two exceptions are not automatic. Under § 523(c)(1), “the debtor shall be discharged from a debt of a kind specified in paragraph (2), (4), or (6) of subsection (a) of this section, unless, on request of the creditor to whom such debt is owed, and after notice and a hearing, the court determines such debt to be excepted from discharge.” Fed. R. Bankr. P. 4007(c), as amended effective December 1, 2024, sets the deadline for that request: “a complaint to determine whether a debt is dischargeable under §523(c) must be filed within 60 days after the first date set for the §341(a) meeting of creditors.” A motion to extend that time must be “filed before the time expires.”

The 60-day bankruptcy deadline can arrive long before the state-law conversion period would have run. If a defendant files bankruptcy, I suggest reading the bankruptcy notice for the meeting-of-creditors date the day it arrives.

How Does a Business Accused of Conversion Raise the Deadline?

A business sued for conversion should plead the statute of limitations as an affirmative defense in its responsive pleading. Minn. R. Civ. P. 8.03 provides: “In pleading to a preceding pleading, a party shall set forth affirmatively” a list of defenses that includes “statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense.”

Two facts are central to the defense. The first is the accrual date, measured by when the claim would have survived a motion to dismiss. The second is the absence of any concealment that would pause the clock. In Williamson, the defendants raised the statute of limitations by a motion to dismiss, which the district court denied, and again on summary judgment. The district court rejected the defense because their false denials fraudulently concealed the claim, and the Court of Appeals affirmed. Under the Haberle rule, the plaintiff claiming concealment must prove “an affirmative act or statement which concealed a potential cause of action,” and carries the burden Collins describes. For a defendant in a fiduciary or confidential relationship with the owner, the Minnesota Supreme Court in Wild v. Rarig, 302 Minn. 419, 234 N.W.2d 775 (Minn. 1975) quoted a legal text stating that “in the absence of a fiduciary or confidential relationship, there must be something of an affirmative nature designed to prevent, and which does prevent, discovery of the cause of action.”

A limitations defense is one of several a business accused of conversion can raise. My page on defenses to a conversion claim covers consent, lawful possession, and the other defenses that apply even when the claim is timely.

What Records Prove When a Conversion Claim Accrued?

The deadline turns on dates, and dates are proved with documents. Whether you are bringing the claim or defending it, these records decide when the clock started, whether it paused, and whether the action was commenced in time:

1. The taking or the first refusal. The date the property left your control, or the date the holder first refused a demand to return it.
2. Every demand and reply. Letters, emails, and texts asking for the property, and the answers, because a wrongful refusal on demand is itself conversion.
3. Every statement or act that hid the property. Statements denying possession made to you, to police, or to an insurer, and any act that concealed the taking, because an affirmative act or statement that concealed the claim is the first showing the Haberle rule requires for a fraudulent-concealment pause.
4. How and when you learned the truth. The person, document, or event that revealed who had the property, and the steps you took before that, which show diligence.
5. The defendant’s residence. Moves out of Minnesota and any period when the person could not be found for service.
6. For checks, each instrument. The date, amount, payee, endorsement, and depositing bank of each check, and the date a bank paid it or obtained payment on it, because the instrument period runs from when the cause of action accrues.
7. The commencement date. The date the summons was served on each defendant, the date a defendant signed a waiver of service, or the date the summons was delivered for service to the sheriff in the county where the defendant resides, because Minn. R. Civ. P. 3.01 dates commencement by those events.

Those same records support the damages side of the case; my page on what a conversion plaintiff can recover covers valuation and interest.

Next Steps on a Minnesota Conversion Deadline

A Minnesota conversion claim generally falls under Minn. Stat. § 541.05, runs from the date the claim arose, and can pause for reasons that include fraudulent concealment, a defendant’s absence while beyond Minnesota process, a listed disability, and an injunction or statutory prohibition that stays the action. A claim for conversion of a check runs on the shorter Uniform Commercial Code clock, and a trade-secret claim follows its own discovery rule. Under Minn. R. Civ. P. 3.01, the action is commenced “when the summons is served upon that defendant,” “at the date of signing a waiver of service pursuant to Rule 4.05,” or on delivery of the summons to the sheriff in the county where the defendant resides when service or first publication follows in time; a letter or a filing commences nothing.

If property or funds were taken from your business, or your business has been accused of conversion, my business torts practice page describes how I handle these disputes. To have me look at the dates in your situation, email [email protected] with a brief description of what was taken, when, and by whom. I start with an intake and conflict check before you send confidential documents.