                                                        [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS
                     FOR THE ELEVENTH CIRCUIT
                      ________________________      FILED
                                                    U.S. COURT OF APPEALS
                                No. 04-13364          ELEVENTH CIRCUIT
                                                          JUNE 24, 2005
                         ________________________
                    D. C. Docket No. 02-02053-CV-BBM-1 THOMAS K. KAHN
                                                            CLERK

CHEP USA,
a New York Partnership,
                                                     Plaintiff-Counter-
                                                     Defendant-Appellant,
                                   versus

MOCK PALLET COMPANY,
a Georgia Corporation,

                                                     Defendant-Counter-
                                                     Claimant-Appellee.
                          ________________________

                                No. 04-13518
                         ________________________
                    D. C. Docket No. 02-02053-CV-BBM-1

CHEP USA,
a New York Partnership,
                                                     Plaintiff-Counter-
                                                     Defendant-Appellee,
                                   versus

MOCK PALLET COMPANY,
a Georgia Corporation,

                                                     Defendant-Counter-
                                                     Claimant-Appellant.
                               ________________________

                      Appeals from the United States District Court
                          for the Northern District of Georgia
                            _________________________
                                   (June 24, 2005)

Before ANDERSON, HULL and RONEY, Circuit Judges.

PER CURIAM:

       CHEP, USA (“CHEP”) leases pallets to companies that use them to ship

goods. Although CHEP originally required its customers to ship the pallets to

entities that had agreed in advance to return them to CHEP, starting in 1998 CHEP

began allowing some of its customers, under certain conditions, to ship pallets to

entities with which CHEP did not have contracts. These entities are known as

Non-Participating Distributors (“NPD’s”). Some NPD’s have “sold” the pallets to

pallet recyclers, including the defendant in this case, Mock Pallet Company

(“MPC” or “Mock”).1 CHEP sued MPC to get back approximately 30,000 pallets,

arguing that MPC’s actions constituted conversion of CHEP property.2 MPC

counterclaimed, seeking a declaratory judgment that the pallets had been

       1
                The district court has ably described CHEP’s business models and we incorporate
that description by reference.
       2
              On appeal, both parties use the 30,000 figure. The district court, in its summary
judgment order, states that MPC “now has approximately 40,000 to 50,000" CHEP-marked
pallets. Summary Judgment Order at 6. We assume, without deciding, that the 30,000 figure is
correct.

                                                2
abandoned by CHEP and now belonged to MPC . Even if the court found that the

pallets belonged to CHEP, MPC argued that it was entitled to reimbursement for

handling and storage costs as a “naked depository” under Georgia law, or

alternatively under the theory of unjust enrichment. On summary judgment, the

district court ruled that the pallets belonged to CHEP, but that MPC was a naked

depository.3 The case went to trial on the question of how much MPC was entitled

to, as a naked depository, for handling and storing CHEP’s pallets. The district

court interpreted the naked depository damages provisions to allow for

reimbursement of the cost of reasonable hire rather than actual costs incurred.

MPC presented evidence of both its actual costs and the costs of reasonable hire

and won a verdict of $584,000.00. The district court also granted summary

judgment to MPC for unjust enrichment, but dismissed this claim shortly before the

damages trial because MPC could be “completely compensated pursuant to its

claims as a naked depository.”

       After filing its motion for summary judgment, CHEP learned that MPC had

sold 1,200 CHEP-marked pallets to third parties. CHEP amended its complaint to

add a claim for conversion regarding these sales separate from its general



       3
             The district court rejected MPC’s ownership claim in part because it held that
MPC was not a “bona fide” or “good faith” “purchaser for value” under Georgia law.

                                               3
conversion claim regarding the much larger number of pallets still in MPC’s

possession. Although the district court rejected CHEP’s claim for conversion with

respect to the bulk of the pallets, its general conversion claim, the district court did

hold that MPC had converted the 1,200 pallets which it sold, but the district court

also held that this specific conversion claim was barred by the four-year statute of

limitations. CHEP also moved for an injunction requiring MPC to contact CHEP

within 7 hours after MPC came into possession of CHEP-marked pallets and

requiring MPC to surrender such pallets to CHEP. The district court denied this

motion. Following the jury verdict, the district court denied CHEP’s motion for

judgment as a matter of law or, in the alternative, a new trial or remitittur.

      CHEP appeals the adverse rulings mentioned above, as well as the jury

award. On appeal, MPC does not contest the district court’s determination that the

pallets belong to CHEP. Rather, MPC seeks to uphold the district court’s

determination that MPC is a naked depository, its decision regarding the statute of

limitations on the claim for the 1,200 pallets, and the jury’s damages award. In the

event that this Court overturns the district court’s ruling in MPC’s favor on the

naked depository claim, MPC cross appeals the district court’s dismissal of the

unjust enrichment claim.

      In Part I.A, we address CHEP’s general conversion claim. In Part I.B, we

                                           4
address MPC’s claim that it is a naked depository. In Part I.C, we address MPC’s

alternative claim pursuant to the theory of unjust enrichment. In Part I.D, we set

out the appropriate measure of recovery under the unjust enrichment theory. In

Part I.E, we set out the appropriate measure of recovery under the naked depository

theory. In Part I.F, we address CHEP’s specific conversion claim with respect to

the 1,200 pallets MPC sold and the statute of limitations in that regard.

                                       I. DISCUSSION

       A. Conversion

       We affirm the district court’s grant of summary judgment in favor of MPC

on CHEP’s general conversion claim.4 Conversion is defined in Georgia as “an

unauthorized assumption and exercise of the right of ownership over personal

property of another, in hostility to his rights; an act of dominion over the personal

property of another inconsistent with his rights; or an unauthorized appropriation.”

Tidwell v. Tidwell, 251 Ga.App. 863, 864-65 (2001) (citations omitted). A

plaintiff establishes a cause of action for conversion by showing “(1) title to the

property or the right of possession, (2) actual possession in the other party, (3)

       4
                As already discussed, there are two “conversion” claims involved in this appeal.
The first is CHEP’s claim that MPC’s refusal to return all 30,000 pallets on demand constitutes
conversion, the general conversion claim. The second is CHEP’s claim that MPC converted the
1,200 blue pallets it sold to third parties. Unless otherwise noted, our discussion of CHEP’s
“conversion claim” refers to the first, more general claim; in particular, our discussion in this
Part I.A relates only to the 30,000 pallets, and not to the 1,200 which were sold.

                                                 5
demand for the return of the property, and (4) refusal by the other party to return

the property.” Johnson v. First Union Nat’l Bank, 255 Ga. App. 819, 823 (2002).

         The district court rejected CHEP’s conversion claim on grounds that “MPC

was a naked depository of CHEP marked pallets, having lawfully acquired such

pallets by virtue of CHEP’s permissive release thereof to entities with whom it has

no contractual relationship, and was therefore entitled to retain possession of the

deposit until . . . [all] charges and expenses [incurred] by reason of the deposit are

paid.”

         We agree with the district court that a valid claim to be a naked depository

(which would give MPC a lien on the pallets pending reimbursement) would defeat

CHEP’s conversion claim. We think a meritorious unjust enrichment claim would

have the same effect. As in the case of a naked depository, we think that refusal to

turn the pallets over without reasonable payment would not be wrongful where the

result would be unjust enrichment of the pallets’ owner.

         As we discuss below, there is a genuine issue of fact as to whether MPC was

a naked depository, but if the fact finder finds MPC is not a naked depository, then

MPC is nevertheless entitled to recover from CHEP pursuant to its unjust

enrichment. For these reasons, CHEP’s general conversion claim fails as a matter

of law, and the district court’s summary judgment against CHEP is affirmed in this

                                            6
regard.

      B. Naked Depository

      There is a material factual dispute regarding whether MPC stored CHEP’s

pallets “gratuitously” or for its own benefit. As a result, summary judgment on the

naked depository issue was improper.

      First, we review the relevant statutes. O.C.G.A. §44-12-90 provides the

following definitions:

            (1) “Deposit” means the delivery of chattels by one person to
      another to keep for use of the bailor.

            (2) “Depository for hire” means a depository who receives or
      expects a reward or hire for undertaking to keep chattels for another.

            (3) “Naked deposit” means an undertaking whereby a
      depository keeps chattels for another gratuitously.

O.C.G.A. §44-12-96 states:

      One who holds a naked deposit is entitled to be reimbursed for all
      charges and expenses which he incurs by reason of the deposit, and he
      may retain possession of the deposit until such charges and expenses
      are paid.

O.C.G.A. §44-14-410 states:

      [I]nvoluntary, gratuitous, or naked depositories shall have a lien on the
      property in their possession for any expense incurred in caring for the
      property and any expenses incurred in the effort to locate the owner
      thereof. . . . Where the owner and his address are known, the
      depository is authorized, but is not required, to address a notice by

                                          7
       registered or certified mail to the owner notifying him that the
       depository holds the property and that the property will be delivered to
       the owner upon reasonable identification and payment of any charges
       that have accrued in caring for the property and in giving such notice.

Under O.C.G.A. §44-12-91, “[f]or a naked deposit, the depository is responsible

only for gross negligence.” Under O.C.G.A. §44-12-92, “[d]epositories for hire are

bound to exercise ordinary care and diligence and are liable as in other cases of

bailment for hire.”

       CHEP argues that MPC cannot meet the requirements of a naked depository

because MPC did not transport, sort and store CHEP pallets for CHEP’s benefit but

rather claimed ownership of the pallets throughout the time it transported, sorted

and stored CHEP pallets and throughout the course of the instant litigation. As a

fallback position, CHEP contends that there is a material factual dispute in this

regard. We conclude that there is a material issue of fact.

       It is clear from the definition of a naked deposit that it is an undertaking to

keep property “for another.”5 Thus, CHEP is correct that, to be a naked depository,

MPC must have held the pallets for the benefit of CHEP. MPC does not dispute

this, but argues that there is no genuine issue of fact in this regard. We disagree.


       5
                It is also part of the definition of a naked deposit that the property be held for
another gratuitously. The gratuitous aspect of the definition is particularly important with respect
to our discussion of the recovery which is appropriate under the statute for a naked depository.
See Part I.E. below.

                                                 8
The statements of the owners of MPC, the Mocks, undermine the contention that

no reasonable juror could believe that MPC acted for its own benefit rather than

CHEP’s. When asked why he did not contact CHEP, Ricky Mock stated in

deposition that, “I bought the pallets in good faith and I’m taking them in as a

normal course of business and it’s my philosophy that if they was [sic] yours you

would have control of them or your customer would have control of them.”

Likewise, Ricky Mock stated that the pallets “don’t belong to Chep because they

belong to the customer that gave them away.” Nancy Mock explained why MPC

had not contacted CHEP about pallet retrieval as follows:

      Q.     Have you or anyone at Mock Pallet Company ever called Chep
             about their pallets to ask them to come pick up pallets?

      A.     No. We don’t feel – we feel we’ve come by them honestly they
             don’t belong to Chep anymore.

      Similarly, when asked why MPC had not released CHEP-marked pallets

upon CHEP’s request, Nancy Mock stated:

      [W]e don’t feel they belong to Chep. Those pallets have been
      brought — Chep has put up a cost – charged the people that they got
      them from and the other people have come about them rightfully in
      the course of business and we come about them rightfully in the
      course of business. So we see it’s a free and clear pallet.

      MPC’s decision to sell 1,200 of the blue pallets also undercuts MPC’s




                                          9
contention that it held the pallets without expectation of reward.6 MPC’s formal

position during the course of litigation also supports CHEP’s position. For

example, in its amended answer, MPC stated that it “continued to lawfully

purchase approximately 500-1000 CHEP-marked pallets per month” and “is

acquiring good title in said pallets, and as such owns them.”

       Finally, we note that although MPC did not have any legal duty under the

naked depository statutes to contact CHEP regarding the presence of blue pallets at

MPC’s yard, MPC’s failure to do so, in some cases for roughly a decade after it

came into possession of the pallet, and despite contact information being listed on

the pallets and provided through general mailings, is in tension with MPC’s claim

that it was storing the pallets gratuitously on CHEP’s behalf.

       The record, however, does contain significant evidence pointing the other

direction, i.e., pointing to the conclusion that MPC recognized CHEP’s ownership

and intended to store the pallets for CHEP’s benefit. For example, in September

2001, Ricky Mock met with CHEP representatives and told them that he would




       6
                 The district court held that these sales would have been “inconsistent with MPC’s
status as a naked depository . . . and would constitute conversion of such pallets” but for the fact
that CHEP’s claim for conversion with regard to the 1,200 pallets was barred by the statute of
limitations. We address the statute of limitations issue below. However, MPC’s sale of the
pallets is also some evidence that MPC was not holding them for the benefit of CHEP.

                                                 10
return CHEP’s pallets if CHEP paid a $5 per pallet storage and handling fee.7 On

October 12, 2001, MPC’s lawyer notified CHEP that it would begin charging a

storage fee of $.05 per pallet per day. This is sufficient to create a genuine dispute

of material fact regarding whether MPC stored the pallets gratuitously on CHEP’s

behalf or rather was asserting ownership thereof.

      Thus, we conclude there are genuine issues of material fact with respect to

whether MPC was a naked depository. The district court erred in concluding at the

summary judgment stage that MPC was a naked depository. However, because the

fact finder on remand may find that MPC is a naked depository, we set out in Part

I.E the appropriate measure of damages or recovery.



      C. Unjust Enrichment

      The district court granted summary judgment in favor of MPC on its claim

      7
              Ricky Mock recounted the conversation as follows:

      I told [the CHEP representative] that if they were there [sic] pallets I would be
      glad to return them to them for a $5 storage and handling fee but I didn’t feel that
      they was [sic] their pallets and I bought them in the normal course of business.

       . . . Finally, I told him to shut up and listen to me. I said you got five days to
      bring a cashier’s check and get your pallets off my property or I’m going to
      consider the pallets and [sic] abandoned. . . .

      This is your deal. You either you [sic] come up and get them at $5 a pallet or they
      are going to be mine and I’ll do what I want with them . . . I’m tired of hearing
      you.

                                                 11
against CHEP for unjust enrichment, but dismissed the claim because MPC would

be completely compensated as a naked depository. We agree with the district court

that if the fact finder on remand finds that MPC is a naked depository, then MPC

will be completely compensated in whatever amount the fact finder finds pursuant

to the law set out in Part I.E of this opinion. However, if the fact finder finds that

MPC is not a naked depository, then we hold that the district court correctly ruled

that MPC would be entitled to recover from CHEP for unjust enrichment, and thus

correctly granted summary judgment in favor of MPC in this regard.

      As stated in Hollifield v. Monte Vista Biblical Gardens, Inc., 251 Ga.App.

124, 131 (2001):

      The concept of unjust enrichment in law is premised upon the
      principle that a party cannot induce, accept or encourage another to
      furnish or render something of value to such party and avoid payment
      for the value received. Inherent in the theory of unjust enrichment is
      the requirement that the receiving party knew of the value being
      bestowed upon him by another and failed to stop the act or to reject
      the benefit prior to its conferment.

Id. (citations omitted).

      CHEP’s behavior in the instant case meets the criteria set forth in Hollifield.

Specifically, summary judgment for MPC on the unjust enrichment claim is

appropriate because (a) MPC’s handling and storage of CHEP’s pallets is a benefit

conferred upon CHEP; (b) there is no legal contract between CHEP and MPC; and

                                           12
(c) CHEP’s business model contemplates that MPC, a stranger to the contractual

relationship between CHEP and its customers, will bear CHEP’s costs of

collecting, sorting and storing CHEP’s pallets. Equitable considerations dictate

that CHEP reimburse MPC for the benefit to CHEP of MPC’s services.

      Thus, if the fact finder on remand finds that MPC is not a naked depository,

then MPC will be entitled to recover from CHEP under the theory of unjust

enrichment. We set out the appropriate measure of recovery in Part I.D

immediately below.

      D. Calculation of Damages Under the Unjust Enrichment Theory

      “The measure of damages under ... unjust enrichment is based upon the

benefit conferred upon the [recipient] and not the cost to render the service or cost

of the goods.” Id. at 130-31 (brackets in original). We leave determination of the

benefit conferred upon CHEP to the district court in the first instance.

      E. Damages Under the Naked Deposit Statutes

      The appropriate measure of damages or recovery for a naked depository is

set out as follows. There are two statutory provisions relevant to determining the

costs incurred by a naked depository. O.C.G.A. §44-12-96 states:

      One who holds a naked deposit is entitled to be reimbursed for all
      charges and expenses which he incurs by reason of the deposit, and
      he may retain possession of the deposit until such charges and

                                          13
      expenses are paid.

      O.C.G.A. §44-14-410 states:

      [I]nvoluntary, gratuitous, or naked depositories shall have a lien on the
      property in their possession for any expense incurred in caring for the
      property and any expenses incurred in the effort to locate the owner
      thereof. Where the owner and his address are known, the depository is
      authorized, but is not required, to address a notice by registered or
      certified mail to the owner notifying him that the depository holds the
      property and that the property will be delivered to the owner upon
      reasonable identification and payment of any charges that have
      accrued in caring for the property and in giving such notice.

      The district court interpreted these statutes to provide for reimbursement in

the amount equivalent to the cost of “reasonable hire,” citing Savannah Steam

Rice-Mill Co. v. Hull, 103 Ga. 831, 833-34, 30 S.E. 952, 953 (1898), Postell v.

Val-Lite Corp., 78 Ga.App. 199, 203-04 (1948), and Morrow Transfer & Storage

Co. v. Whitson, 20 Ga.App. 149 (1917). At trial, MPC offered evidence not only

regarding out of pocket costs of handling the pallets such as transport and sorting,

but also included pro rata shares of all of MPC’s fixed expenses. Finally, MPC

argued that it was entitled to a pallet storage fee of $.05 per pallet per day, an

amount which clearly included a considerable element of profit. Indeed, it is

probable that the verdict awarded by the jury consisted largely of storage fees. In

other words, it is clear to us that the district court permitted MPC to recover not

only its actual expenses attributable to the blue pallets but also profit and a pro rata

                                           14
portion of general overhead expenses. We are persuaded that the district court

erred in this regard.

       We are persuaded that the district court’s interpretation is inconsistent with

the plain meaning of §44-12-96. In particular, we reject Mock’s argument that the

word “charges” encompasses not only amounts charged to Mock by other parties,

but also amounts that Mock wishes to charge the depositor. The statute states that

the depositee is “entitled to be reimbursed for all charges and expenses which he

incurs by reason of the deposit.” §44-12-96 (emphasis added). We are persuaded

that the word “reimburse” means that Mock would have to have paid out money or

expended labor with respect to which it would be entitled to be reimbursed. The

word “incurs” reinforces our belief that the word “charge” refers to any fees a third

party might charge to MPC for services related to storage or handling of CHEP’s

pallets. Finally, we are persuaded that the term “by reason of” indicates that such

charges and expenses must not only be actually incurred, but that these expenses

must also be directly attributable to and proximately caused by the storage or

handling activity gratuitously undertaken by the depositee on behalf of the

depositor.8


       8
              The district court’s reliance on Postell v. Val-Lite Corp., 78 Ga.App. 199 (1948),
Morrow Transfer & Storage Co. v. Whitson, 20 Ga.App. 149 (1917), and Savannah Steam Rice-
Mill Co. v. Hull, 103 Ga. 831, 833-34, 30 S.E. 952, 953 (1898), is misplaced. The latter two

                                               15
       The definition of naked deposit as an undertaking to keep property for

another gratuitously also provides strong support for our interpretation. The plain

meaning of the word “gratuitous”9 makes clear that a depository who stores

property gratuitously stores it without expectation of profit. The statutory

definition of a naked deposit as holding property for another gratuitously stands in

stark contrast to the definition of a depository for hire – i.e., one who keeps

property for another with an expectation of reward or hire. Profit is an appropriate

recovery for a depository for hire, but not for a naked depository.

       As applied to the facts of this case, we hold that MPC can be reimbursed

only for amounts which it can prove were actually expended by it because of the

presence of the pallets and which would not have been expended except for the

presence of those pallets. Thus, MPC cannot recover profit; nor can it recover

general administrative and overhead expenses unless it can prove particular items




cases involve warehousemen, rather than naked depositories. Postell is a naked depository case,
but gives no indication that costs beyond those actually incurred are recoverable. To the
contrary, it appears that the depositee in Postell merely sought reimbursement for charges he had
been forced to pay to others as a direct result of the depositor’s refusal to retrieve the goods
stored as a personal favor.
       9
              Merriam-Webster’s New Collegiate Dictionary defines “gratuitous” as “1. a :
given unearned or without recompense b : not involving a return benefit, compensation or
consideration c : costing nothing : FREE.” (10th ed.1999) (emphasis in original).

                                                16
thereof would not have been incurred except for CHEP’s pallets.10 To the extent

these costs are for storage, we are also persuaded that recovery is limited to actual

out-of-pocket expenditures directly attributable to the presence of CHEP’s pallets

which would not have been incurred except for the presence of those pallets.”11

Accordingly, the jury verdict determining MPC’s damages as a naked depository is

set aside. If MPC is found on remand to have been a naked depository, then the

finder of fact must determine MPC’s appropriate recovery pursuant to instructions

consistent with this opinion.

       F. CHEP’s Specific Conversion Claim with Respect to the 1,200 Pallets
          Sold

            The district court ruled on summary judgment that MPC’s sale of the

1,200 blue pallets was “inconsistent with MPC’s status as a naked depository . . .

and would constitute conversion of such pallets.” We agree. We also conclude

that, even if MPC is not a naked depository, and is merely entitled to unjust



       10
                  In other words, MPC is not entitled to reimbursement for a pro-rata share of costs,
fixed or otherwise, which would have been incurred even if MPC had not taken possession of
any blue pallets. Thus, unless MPC can demonstrate that some portion of its rent, utilities,
overhead, etc., or some portion of any given improvement, was directly attributable to the storage
and handling of the blue pallets and would not have been incurred by MPC except for those
pallets, it is not entitled to reimbursement on a pro-rata basis for these expenses.
       11
               It is clear to us that the $.05 per day per pallet which MPC sought for storage is
not a reasonable reflection of MPC’s actual out-of-pocket expenses incurred, and we so hold as a
matter of law.

                                                 17
enrichment recovery, there nevertheless was a conversion with respect to the

pallets which were sold. However, the district court ruled that CHEP’s claim for

conversion of these pallets was barred by the statute of limitations because CHEP

did not provide evidence that “the pallets sold were acquired within the four-year

period preceding the inception of this action.” Having rejected CHEP’s conversion

claim, the district court, of course, also ruled that CHEP was not entitled to

punitive damages due to MPC’s sale of the 1,200 pallets.

         O.C.G.A. §9-3-32 (2002) states that “[a]ctions for the recovery of

personal property, or for damages for the conversion or destruction of the same,

shall be brought within four years after the right of action accrues.” “The true test

to determine when a cause of action accrues is to ascertain the time when the

plaintiff could first have maintained her action to a successful result.” Travis Pruitt

& Assocs. P.C. v. Bowling, 238 Ga.App. 225, 226 (1999).

             As we have already discussed, MPC did not convert CHEP’s pallets

when it came into possession of them. Rather, we think conversion did not occur

until MPC sold the pallets. The four years had not passed between the accrual of

CHEP’s right and CHEP’s addition of the claim in its amended complaint. For

these reasons, we reverse the district court’s grant of summary judgment on the

statute of limitations issue with respect to the 1,200 pallets which were sold and


                                          18
converted.12

               This is not, however, the end of the matter. Although CHEP is entitled

to summary judgment on its conversion claim regarding these 1,200 pallets, the

amount of CHEP’s damages must be offset by whatever MPC is owed attributable

to its possession of those pallets prior to sale, either as a naked depository or under

the unjust enrichment theory, as the case may be.

                                            II. CONCLUSION

               For the foregoing reasons we affirm in part, reverse in part and remand

for further proceedings consistent with this opinion.

            AFFIRMED IN PART, REVERSED IN PART, and REMANDED.13




       12
              However, we are confident that no reasonable jury could impose punitive damages
and we therefore affirm the district court’s ruling that CHEP is not entitled to punitive damages.
We also affirm the district court’s denial of CHEP’s claim for injunctive relief.
       13
               In light of the decisions reached today, we believe that this case can be and should
be settled. The court refers this appeal to the Kinnard Mediation Center for settlement
discussions under FED . R. APP . P. 33 and 11TH CIR. R. 33-1. Counsel are directed to telephone the
Kinnard Mediation Center within 14 days of this opinion to schedule a time and place to explore
settlement. Before settlement discussions, counsel are directed to consult their clients and obtain
as much authority as feasible to settle this case.

       We also direct that the mandate in this case not issue for 90 days, subject to either
extension or shortening, depending upon developments with respect to the mediation.

                                                 19
