Madatyan

*1385 Opinion

INTRODUCTION

Plaintiff and respondent Los Angeles Federal Credit Union (the Credit Union) prevailed in an action for conversion against defendants and appellants Edgar Madatyan and Elvis Madatyan 1 concerning an insurance check Edgar endorsed that was payable jointly to the owner of a damaged car and to GAD Auto Body Shop (GAD), a defendant owned by Elvis. The Credit Union, which had loaned the car owner money to purchase the car and had a lien on the car, claimed to have an interest in the insurance check because of the lien and because the loan agreement required the car owner to maintain insurance on the car. We hold that defendants converted the insurance proceeds because the Credit Union had an equitable hen against those insurance proceeds. We therefore affirm.

BACKGROUND

On August 1, 2008, the Credit Union financed the purchase of a 2000 Bentley by Areg Khachikian in the amount of $136,126. The loan agreement provided that the car was collateral for the loan and required Khachikian to maintain insurance for the car. The insurance provision of the loan agreement stated, in part, “You promise to maintain property insurance in an amount necessary to protect…