Merchants & Farmers Bank v. Coxwell (In the Matter of Fish & Fisher, Inc.)

Case No. 13-60368 (5th Cir. February 7, 2014)
Affirmed dismissal under Fed. R. Civ. P. 12(b)(6) and affirmed denial of motion to amend complaint.
Procedural context:
Bankruptcy Court dismissed complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. District Court affirmed. Court of Appeals affirmed.
Merchant & Farms Bank ("M&F") alleged it held a perfected security interest in accounts receivable of Fish & Fisher ("F&F") securing loan. F&F received $1.2 million in funds through unrelated arbitration against a client. The funds were held in trust by Coxwell & Associates ("Coxwell") to distribute to creditors of F&F. No funds, however, were distributed to M&F. After most of the funds were distributed, M&F and other creditors filed a petition for involuntary bankruptcy relief against F&F. The remaining $91,972.87 in funds were then distributed to F&F by Coxwell. M&F filed a complaint against Coxwell alleging claims for violation of constructive trust, negligence, and conversion. The Court of Appeals held that dismissal was proper because M&F failed to plead sufficient facts to support its claims. The Court of Appeals held that denial of M&F's motion to amend its Second Amended Complaint was proper because M&F had no new facts to cure the deficiencies of the complaint.
Smith, DeMoss, and Higginson, Per Curiam

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