BancorpSouth Bank v. 51 Concrete, LLC & Thompson Machinery Commerce Corporation

This is a conversion case. The appellant bank perfected its security interest in collateral for a loan by filing a UCC-1 statement. The debtor subsequently sold the collateral to appellee third parties, representing that there were no liens on the collateral. The appellee third parties later sold the collateral. The debtor defaulted on the loan to the appellant bank, and the bank obtained a default judgment against the debtor. The debtor then filed bankruptcy. The appellant bank filed this lawsuit against the appellee third parties for conversion, seeking the proceeds from the sale of the collateral. The trial court dismissed the case for lack of subject matter jurisdiction, holding that the bankruptcy court had exclusive jurisdiction. The trial court also adjudicated the bank’s claims for punitive damages and attorney fees. The bank now appeals. We reverse the trial court’s holding on its subject matter jurisdiction, vacate its rulings on the claims for attorney fees and punitive damages, and remand.