468 B.R. 802
Bankr. E.D. Va.2012Background
- Debtor objected to Wells Fargo's Proof of Claim 4, arguing the claim is unsecured; Wells Fargo contends it is a secured claim.
- Debt arose from Window World siding and windows financed by Wells Fargo; two documents in one transaction: purchase order and credit card application.
- Purchase order explicitly excludes any security interest in the debtor's principal dwelling, stating the property will remain personal property and not be a fixture.
- Credit card application contains a broad term creating a purchase-money security interest in goods purchased for the account.
- Siding and windows were installed on the debtor's principal dwelling and incorporated into real property; the question is whether a UCC lien can attach to such materials under Virginia law.
- Under Virginia law, ordinary building materials incorporated into real property generally are not subject to a security interest under Article 8.9; fixtures lose their chattel character.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a UCC lien arose on the debtor's principal dwelling for the siding and windows | Wells Fargo argues a lien attached to the materials as secured property. | Debtor contends the materials became fixtures/part of real property, precluding a UCC lien. | No lien under Article 8.9; materials became fixtures and are excluded. |
| Which document governs the lien—purchase order or credit card application | Wells Fargo relies on broad security interest language in the application. | Purchase order controls due to its specific exclusion for principal residence. | Purchase order controls; terms exclude lien on principal residence. |
| Are the siding and windows ordinary building materials incorporated into real property? | If ordinary materials, they become part of real property without a UCC security interest. | N/A or aligns with the same understanding. | Yes; they are ordinary building materials incorporated into real property. |
| If not secured under Article 8.9, what security or lien options remain | N/A | N/A | Mechanic's lien or deed of trust on real property may be pursued; not secured under 8.9. |
| Impact of Official Comment to § 8.9A-334(a) on the outcome | N/A | N/A | Official Comment supports categorization of ordinary building materials as non-secured under 8.9. |
Key Cases Cited
- Taco Bell of Am., Inc. v. Commonwealth Transp. Comm’r of Va., 282 Va. 127, 710 S.E.2d 478 (Va. 2011) (touches on building materials and fixtures in Virginia law)
- Danville Holding Corp. v. Clement, 178 Va. 223, 16 S.E.2d 345 (Va. 1941) (precedent on property interests and fixtures)
- In re Dalebout, 454 B.R. 158 (Bankr.D.Kan. 2011) (bankruptcy treatment of security interests in building materials)
- In re Adkins, 444 B.R. 374 (Bankr.N.D.Ohio 2011) (analysis of security interests in fixtures and building materials)
- In re Williams, 381 B.R. 742 (Bankr.W.D.Ark.2008) (fixtures and chattel financing considerations)
- In re Alterman, 127 B.R. 356 (Bankr.E.D.Va.1991) (Virginia bankruptcy fixture considerations)
- In re Shelton, 35 B.R. 505 (Bankr.E.D.Va.1983) (Virginia bankruptcy fixture considerations)