not subject to conversion. Id. In Berger v. Hanlon, 129 F.3d 505, 517
(9th Cir. 1997) (citing Restatement (Second) of Torts, § 242 and
comments), the Ninth Circuit noted that "[a]lthough the common law rule
has been relaxed somewhat, and the tort may now reach the
misappropriation of intangible rights customarily merged in or identified
with some document, it has not yet been extended further."
NSI contends that a domain name is a form of intangible property which
can not serve as a basis for a conversion claim. The Court concurs. There
is simply no evidence establishing that a domain name, including
sex.com, is "merged in or identified with" a document or other tangible
object. Thus, under the traditional precepts governing the tort of
conversion, a domain name is not protected intangible property.*fn2
The Court recognizes that the present action invites abandoning the
traditional strictures of conversion to encompass forms of intangible
property never contemplated in its formation. However, this Court heeds
the California Supreme Court's admonitions to exercise restraint in
imposing "`[new tort duties] when to do so would involve complex policy
decisions,' (citation omitted) especially when such decisions are more
appropriately the subject of legislative deliberation and resolution."
Moore v. Regents of University of California, 51 Cal.3d 120, 136,
271 Cal.Rptr. 146, 793 P.2d 479 (1990) (citing Foley v. Interactive Data
Corp., 47 Cal.3d 654, 694 & fn. 31, 254 Cal.Rptr. 211, 765 P.2d 373
(1988)). In considering the propriety of extending the law of conversion
the Court finds numerous issues "more appropriately the subject of
legislative deliberation and resolution." Id.
The Court shall limit its discussion to three issues of particular
concern. The first concern is the strict liability nature of conversion.
See Moore v. Regents of California, 51 Cal.3d 120, 144, 271 Cal.Rptr. 146,
793 P.2d 479 (1990). "The foundation of the action rests neither in the
knowledge nor intent of the defendant. . . . Therefore, questions of the
good faith, lack of knowledge, and motive are ordinarily immaterial."
Burlesci v. Petersen, 68 Cal.App.4th 1062, 1066, 80 Cal.Rptr.2d 704
(1998). The following example is illustrative of the tort's severity:
"where a warehouse man delivers stored household goods to a corporation
which appears to have a bona fide claim of ownership, the warehouse man
will be liable for conversion if the corporation is eventually unable to
establish its title." Gonzales v. Personal Storage, Inc.,
56 Cal.App.4th 464, 476, 65 Cal.Rptr.2d 473 (1997). As the warehouse man
in the latter scenario, domain registrars such as NSI would be exposed to
liability every time a third party fraudulently obtained the transfer of
a domain name. The Court finds it inherently unjust to place NSI in this
untenable position by virtue of innocently performing a purely
ministerial function.*fn3 Furthermore, the threat of litigation
threatens to stifle the registration system by requiring further
regulations by NSI and potential increases in fees.
Second, the Court is reluctant to construct the proverbial slippery
slope. Recognition of a domain name as convertible property would
essentially scrap any requirement of tangibility traditionally associated
with the tort. It is arguably arbitrary for California law to recognize
conversion of intangible property merged with a document, while excluding
wholly intangible property. Nevertheless, the Court is compelled to
uphold this distinction rather than contort the cause of action to
encompass property never contemplated. As stated by Prosser, "it would
seem preferable to fashion other remedies . . . to protect people from
having intangible values used and appropriated in unfair ways." W. Page
Keeton et al., Prosser & Keeton on the Law of Torts § 15, at 92
(5th ed. 1984).
Third, in line with Prosser's recommendation, the Court believes there
are methods better suited to regulate the vagaries of domain names. The
Court leaves it to the legislature to fashion an appropriate statutory
scheme to protect dormant domain names unprotected by trademark law. See
15 U.S.C. § 1125 (d). However, it simply notes the imprudence of
superimposing the archaic principles governing the tort of conversion
onto the nebulous realm of the Internet.
In sum, the Court grants summary adjudication of both the conversion
and conspiracy to convert property causes of action against NSI.
D. Conversion to Bailee
"A bailment . . . is the deposit of personal property with another,
usually for a particular purpose, under an express or implied contract."
4 Witkin, Summary of
California Law, Personal Property § 129 (9th ed. 1987). A deposit may
be voluntary or involuntary. See Cal.Civ.Code § 1813. "A voluntary
deposit is made by one giving to another, with his consent, the
possession of personal property to keep for the benefit of the former, or
of a third party." Cal.Civ.Code § 1814. Plaintiff contends his
delivery of sex.com to NSI, who in turn accepted care and custody of the
domain name, created a bailor/bailee relationship. Plaintiffs
characterization of NSI as a bailee misconstrues NSI's function. In
Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 985 (9th
Cir. 1999) (citation omitted), the Ninth Circuit found that NSI's role is
solely to provide a service because its "involvement with the use of
domain names does not extend beyond registration." NSI's mere
registration of names does not convert its role to that of a bailee.
Thus, the Court grants Defendant's motion for summary judgment with
respect to the bailment claim.
E. Breach of Fiduciary Duty
"A fiduciary or a confidential relationship exists whenever under the
circumstances trust and confidence reasonably may be and is reposed by
one person in the integrity and fidelity of another." California Jury
Instructions, Civil (8th ed. 1994) No. 12.36. NSI's only function in
relation to Mr. Kremen was to register his domain name. As discussed
above, the registration process in 1994 only involved completing a short
form and forwarding it to NSI. There were no fees associated with the
registration process. Thus, the completion of the form did not even
create a contractual relationship because it was not supported by any
consideration. Based upon the remote nature of the parties'
relationship, Mr. Kremen could not reasonably place his trust and
confidence in NSI. Accordingly, the Court grants NSI's motion for summary
judgment with respect to the breach of fiduciary duty claim.
F. Negligent Misrepresentation
The elements of a negligent misrepresentation are as follows: "(1) a
misrepresentation of a past or existing material fact, (2) without
reasonable grounds for believing it to be true, (3) with intent to induce
another's reliance on the fact misrepresented, (4) ignorance of the truth
and justifiable reliance thereon by the party to whom the
misrepresentation was directed, and (5) damages." Fox v. Pollack,
181 Cal.App.3d 954, 962, 226 Cal.Rptr. 532 (1986). To recover on a theory
of negligent misrepresentation, "more than an omission is required."
Byrum v. Brand, 219 Cal.App.3d 926, 941, 268 Cal.Rptr. 609 (1990).
In his complaint, Plaintiff contends "NSI represented . . . that it
would register and hold secure the register of domain names in a manner
that would protect the property interests of the registrant. . . ." Third
Amended Complaint ¶ 105. Defendant points out that Plaintiff has
failed to present any evidence of such misrepresentations. Thus, under
the principles of summary judgment, the burden shifts to Plaintiff to
adduce evidence in support of his claim. However, Plaintiff fails to even
address the cause of action in its opposition. "If no factual showing is
made in opposition to a motion for summary judgment, the district court
is not required to search the record sua sponte for some genuine issue of
material fact. It may rely entirely on the evidence designated by the
moving party showing no such triable issue." Schwarzer et al., Federal
Civil Procedure Before Trial, ¶ 14:330 (1997) (citing Guarino v.
Brookfield Township Trustees, 980 F.2d 399, 403 (6th Cir. 1992)). Based
upon the absence of evidence is support of Plaintiffs negligent
misrepresentation claim, the Court grants summary judgment of the claim
in favor of NSI.
Based upon the foregoing, the Court grants Defendant NSI's motion for
summary judgment. However, the Court shall
retain jurisdiction over NSI in the interests of resolving the domain
name dispute between Plaintiff and the remaining parties.