Interbusiness Bank v. First Nat. Bank of Mifflin.Interbusiness Bank v. First Nat. Bank of Mifflin.
MEMORANDUM
Presently before the court in this Uniform Commercial Code (“U.C.C.”) case are several dispositive motions in which the parties seek recognition of their respective security interests in certain collateral of a common debtor as superior to others. Plaintiff, InterBusiness Bank, N.A. (“In-terBusiness”), contends that defendant, First National Bank of Mifflintown (“First National”), lacked a valid interest in the “inventory” and “accounts receivable” of the debtor and yet collected and liquidated those assets in derogation of plaintiffs superior interest. Defendant disagrees, as
The questions presented in the motions are (1) whether parties may obtain priority security interests through assignment, (2) whether generic references in a financing statement to “goods” and “accounts” are effective to cover an interest in “inventory” and “accounts receivable” of the debtor, and (3) whether a security interest in collateral is deemed extinguished by operation of Pennsylvania law when the secured party purchases the real property of the debtor during execution proceedings on the underlying debt. For the reasons that follow, these questions must all be answered in the affirmative. Finding that the complaint states a valid claim for relief and that material questions of fact remain, the court will deny the cross-motions for summary judgment (Docs. 13, 20) and the motion to dismiss (Doc. 10).
I. Statement of Facts 1
At the heart of this controversy are two loans made by Allied Capital, a financing corporation, to Annlick Farm Supply, Inc. (“Annlick Farm Supply”), a business in central Pennsylvania. The first of these loans, in the amount of one million dollars ($1,000,000), was made in December 2000 pursuant to a loan agreement between the parties. (Doc. 1 ¶¶ 4-8; Doc. 1, Ex. A; Doc. 15 ¶¶ 1-10; Doc. 21 ¶¶ 1-2; Doc. 22 ¶¶ 1-10; Doc. 32 ¶¶ 1-2). As collateral, Allied Capital accepted a mortgage on real property owned by Annlick Farm Supply and an interest in its accounts, inventory, equipment, and other property. This interest was memorialized by a mortgage agreement and a security agreement, both of which were executed by the parties on December 22, 2000. (Doc. 1 ¶ 5; Doc. 1, Ex. B; Doc. 15 ¶¶ 1-10; Doc. 21 ¶ 3; Doc. 22 ¶¶ 1-10; Doc. 32 ¶ 3; Doc. 34, Ex. A ¶¶ 4-6). Allied Capital also filed a financing statement, identifying the collateral in which it claimed a security interest:
1. The collateral includes (but is not limited to) all property, tangible and intangible, now owned or hereafter acquired by Debtor including, without limitation, machinery, equipment, tools, furniture, fixtures and rents:
4. All goods, furniture, fixtures, building and other materials, tools, supplies, and other tangible personal property of every nature now owned or hereafter acquired by Debtor and used, intended for use, or usable in the construction, development, or operation of the Property, whether located on the Property or .elsewhere, together with all accessions thereto, replacements and substitutions therefor and proceeds thereof;
5. The right to use the trademark or trade name of Debtor and symbols or logos used in connection therewith, or any modifications or variations thereof, in connection with the operation of the improvements existing or to be constructed on the Property, together with all accounts, all contracts and contract rights and all plans, specifications, licenses, permits and other general intangibles (whether now owned or hereafter acquired, and including proceeds thereof) relating to or arising from Debtor’s ownership, construction, use, operation, leasing or sale of all or any part of the Property....
(Doc. 1, Ex. B). The statement was filed with state and local government offices in January and February 2001. (Doc. 1 ¶ 5; Doc. 15 ¶¶ 1-10; Doc. 21 ¶¶ 4-6; Doc. 22 ¶¶ 1-10; Doc. 32 ¶¶ 4-6).
Soon after making the first loan, Allied Capital made a second loan to Annlick Farm Supply in the amount of $1,250,000. 2 The parties executed another security agreement, giving Allied Capital an interest in the inventory and accounts of the business as collateral for the second loan. (Doc. 1 ¶¶ 9-10; Doc. 15 ¶¶ 11-12; Doc. 21 ¶¶ 9-12; Doc. 22 ¶¶ 11-12; Doc. 32 ¶¶ 9-12). Soon thereafter, Allied Capital filed a second financing statement identifying the collateral claimed under the second security agreement:
All tangible and intangible property of the Debtor, whether now owned or hereafter acquired, wherever located, including, but not limited to, the Debtor’s interest now owned and hereafter acquired in the following types or items of property:
(ii) all inventory of every nature, kind and description....
(iii) all accounts, accounts receivable, [and] contract rights ... arising out of the sale, lease or consignment of goods, or the rendition of services by the Debt- or....
(Doc. 1, Ex. E). This second financing statement was filed with state and local government offices in January and February 2001, after Allied Capital had filed the financing statement relating to the first loan agreement. (Doc. 1, Ex. E; Doc. 15 ¶¶ 5, 7, 9, 12-13; Doc. 22 ¶¶4, 11; Doc. 22 ¶¶ 5, 7, 9,12-13; Doc. 32 ¶¶ 4,11).
In a series of subsequent transfers, certain interests held by Allied Capital arising from the first and second loans were assigned to other corporations. All of the interests arising under the first loan, including the loan agreement, mortgage agreement, security agreement, and initial financing statement, were assigned to In-terBusiness on July 30, 2001. (Doc. 1 ¶¶ 6-8; Doc. 15 ¶¶ 1-10, 17; Doc. 21 ¶¶ 7-8; Doc. 22 ¶¶ 1-10, 17; Doc. 32 ¶¶ 7-8). With respect to the second loan, Allied Capital retained its interests in the loan and security agreements, and transferred only its interest in the second financing statement. Through amendments filed with the appropriate government offices, Allied Capital’s interest in this second financing statement was assigned to First National in April 2001. 3 (Doc. 1 ¶ 13; Doc. 15 ¶ 17; Doc. 21 ¶ 11; Doc. 22 ¶ 17; Doc. 32 ¶ 11).
In July 2002, Annlick Farm Supply defaulted on its obligations under the loan agreement between it and First National. Soon thereafter, First National collected the accounts receivable of Annlick Farm Supply and liquidated its inventory, garnering approximately $450,000. (Doc. 1 ¶¶ 22-23; Doc. 4 ¶¶ 22-23; Doc.21 ¶¶19-20; Doc. 32 ¶¶ 19-20).
In October 2002, other creditors of Ann-lick Farm Supply commenced involuntary bankruptcy proceedings against the company. InterBusiness moved for relief from the automatic stay to allow it “to exercise its state law rights and remedies against the Collateral and Real Property” of the debtor. (Doc. 34, Ex. A at 4). The bankruptcy court granted the request, and InterBusiness obtained judgment by confession against Annlick Farm Supply in a Pennsylvania trial court for sums owing under the loan agreement between the parties. (Doc. 34, Ex. B; Doc. 40 ¶¶ 2-4). A writ of execution was issued, and the real property subject to the mortgage agreement was sold to InterBusiness on May 1, 2003. (Doc. 34, Exs. B, C; Doc. 40 ¶¶ 2-4). Following its purchase, InterBu-siness did not file a petition to fix the fair market value of the property or take other action to determine the debt, if any, still owed by Annlick Farm Supply. (Doc. 34, Ex. D).
InterBusiness filed the complaint sub judice on December 12, 2003. (Doc. 1). The complaint asserts that InterBusiness’s security interest in the inventory and accounts receivable of Annlick Farm Supply is superior to that of First National, and demands remittance of the proceeds of the liquidation of those assets. (Doc. 1 at 8). First National then filed a third-party complaint against Allied Capital, including claims of fraud and misrepresentation based on Allied Capital’s alleged assurances that First National would obtain a first-priority position through assignment of the second loan financing statement. (Doc. 6).
Soon thereafter, Allied Capital filed a motion to dismiss, claiming that, under the allegations of the original complaint, Inter-Business did not have a perfected security interest in the inventory and accounts receivable of Annlick Farm Supply. (Docs. 10, 11). First National then filed a motion for summary judgment, incorporating and “amplifying]” the argument that InterBu-siness lacked an interest in the collateral. (Doc. 14 at 3 n. 1). InterBusiness responded with a cross-motion for summary judgment, claiming that it had a priority interest and was entitled to judgment as a matter of law. (Docs. 20, 25). The last of the multiple briefs and exhibits supporting and opposing the motions was filed on April 8, 2004. (Doc. 39).
11. Standard of Review
Concurrent resolution of cross-motions for summary judgment can present a formidable task.
See
10A ChaRles Alan WRIGHT ET AL, FEDERAL PRACTICE AND PROCEdure § 2720 (3d ed.1998).
Similarly problematic is simultaneous review of motions for summary judgment and for dismissal.
Fortunately, these distinctions are without difference in the present case. The basic facts of the case, as alleged in the pleadings, are substantially undisputed and have been borne out by the declarations and exhibits of the parties. Whether the complaint or the evidence is viewed in the light most favorable to plaintiff, defendant, or third-party defendants, the same conclusions generally inhere. The few evi-dentiary discrepancies that do exist may be noted as necessary, satisfying the dictates of
III. Discussion 4
Article 9 of the U.C.C., first enacted in Pennsylvania in 1953,
see
Act of Apr. 6, 1953, Pub.L. No. 3, 1953 Pa. Laws 1, overhauled the formalistic common law secured transactions regime, installing a simplified and functional set of terms and procedures for creating and enforcing secured interests in property. 13 Pa Cons.Stat. § 9101 cmt. (1999); 4 James J. White
&
Robert S. Summers, Uniform Commeroial Code § 30-1 (4th ed.1995). In return for the extension of credit or other financing arrangements, the “secured party” is entitled to take a “security interest” in the “collateral” of the “debtor.” 13 Pa Cons.Stat. §§ 9102, 9203 (2002);
id.
§§ 9105, 9203 (1999);
see also id.
§ 9101 cmt.; 4 White & Summers,
supra,
§§ 31-1 to -3. The precise form of the transaction is relatively immaterial.
Id.
So long as the exchange includes the provision of credit and the release of an interest in property as security for the debt, Article 9 generally ap
Among the most important concepts in the U.C.C. secured transactions system are “attachment” and “perfection.” 4 White
&
SummeRS,
supra,
§ 31-1. By attaching certain assets of the debtor, the creditor gains a security interest in those assets that may be enforced against the debtor in the event of default.
Closely related to attachment is “perfection.”
See
4 White & Summers,
supra,
§ 31-1. By perfecting an interest, the creditor is entitled to take “priority” in the collection and liquidation of the assets of the defaulting debtor as against other creditors with unperfected security interests in the same collateral.
When two or more parties hold perfected security interests in the same collateral, priority is determined according to the dates of filing of the parties’ respective financing statements.
From this relatively simple outline emerges a host of intricate issues with respect to the existence and priority of the conflicting claims of InterBusiness and First National in the inventory and accounts receivable of Annlick Farms. Each party claims that the other failed to satisfy the requirements for perfection. In addition, First National alleges that, subsequent to attachment, InterBusiness attained full satisfaction of its debt through purchase of the debtor’s real estate in execution proceedings, extinguishing any security interest that it held and giving First National first priority in collection.
Further complicating these difficult questions are choice-of-law issues arising from major revisions to Article 9 enacted in Pennsylvania in 2001. See Uniform Commercial Code Modernization Act of 2001, Pub.L. No. 123, 2001 Pa. Laws 18. These amendments significantly altered several provisions of Article 9, including those governing priority and perfection. See 13 Pa Cons.Stat. § 9101 cmt. 4 (2002) (providing summary of revisions). The effective date of the revised Article was July 1, 2001. Id. § 9701. Because the transactions and events involved in the present case occurred both before and after this date, the question becomes whether the revised or former Article 9 should apply.
To resolve such issues, the amendments include a number of “transition” provisions governing choice of law when transactions straddle the effective date of the revised Article. See id. §§ 9700-9710. Section 9709 prescribes the version of Article 9 applicable to determine perfection and priority in the instant case:
Revised [Article] 9 determines the priority of conflicting claims to collateral. However, if the relative priorities of the claims were established before Revised [Article] 9 takes effect, Former [Article] 9 determines priority.
Id. § 9709. This section functions as a grandfather clause, protecting interests that enjoyed priority under former Article 9 but would lose that status under the revised provisions. See id. § 9709 cmt. 1. It ensures that “the mere taking effect of [revised Article 9] does not of itself adversely affect the priority of conflicting claims to collateral.” Id.; Harry C. Sig-man & Edwin E. Smith, Revised U.C.C. Article 9’s Transition Rules: Insuring a Soft Landing, 55 Bus. Law. 1065, 1103-06 (2000).
Whether the relative priorities of conflicting claims were “established” before revised Article 9 took effect hinges on whether the respective security interests were perfected prior to the Article’s effective date.
See
The choice-of-law inquiry is thus subsumed within an examination of perfection and priority. If the security interests of both InterBusiness and First National were perfected prior to July 1, 2001, the former Article applies and determines their respective priorities.
See
A. Perfection and Priority Under Former Article 9
Whether and when the parties attained perfected security interests depend on the validity and effect of the various assignments from Allied Capital, on which each party relies to support its claim. Article 9 adopts a liberal attitude towards assignment of security interests, not only recognizing the inherent validity of such transactions but endowing the assignee with priority rights held by the assignor.
See
Through assignment, InterBusiness obtained a perfected security interest. As part of the first loan to Annlick Farm Supply, Allied Capital executed a security agreement and filed a financing statement in February 2001, thus perfecting its interest in collateral identified in the statement.
See
Whereas InterBusiness was assigned Allied Capital’s entire perfected interest, including the underlying loan agreement and financing statement, First National was assigned only the financing statement filed with respect to the second loan. Assignment of a financing statement alone, achieved through a publicly filed amendment naming the assignee as secured party of record, is ineffective to transfer a perfected interest in the collateral at issue. Perfection requires both attachment and a properly filed financing
Assignment of a “bare” financing statement, divorced from any underlying security interest, is nonetheless a valuable asset. As discussed previously, among perfected interests, priority is determined from the date of the first-filed financing statement.
See id.
§ 9312(e)(1); 4 White & SummeRS,
supra,
§ 33-4. It matters not whether the financing statement was filed before or after the security interest attached or whether the current secured party filed the statement initially.
By assignment of the financing statement from Allied Capital and execution of its own security agreement with Annlick Farm Supply, First National gained a perfected interest in the collateral of Annlick Farm Supply. The financing statement eventually transferred to First National was initially filed by Allied Capital as part of the second loan to Annlick Farm Supply. At the time of its assignment, an amendment was filed substituting First National as the secured party of record. That First National did not have a security interest in the collateral when it received the financing statement is immaterial, since the prerequisites for perfection may be satisfied in any order.
In arguing that First National could not acquire a perfected security interest through the second loan financing statement without concurrent assignment of the second loan and security agreements, InterBusiness misapprehends the nature and purpose of a financing statement. A financing statement does not relate to particular security interest, to which it is inextricably bound following perfection. Rather, it serves only to mark certain collateral of the debtor as potentially subject to a claim.
See
Both parties in this case perfected their respective security interests prior to July 1, 2001, the effective date of revised Article 9. Thus, former Article 9 governs priority of the claims at issue.
See
B. Description of Collateral
Concluding that InterBusiness held a priority security interest in certain collateral of Annlick Farm Supply does not, of course, answer the question of what particular assets this interest covered. A financing statement is effective to perfect a security interest only to the extent that the statement adequately describes the collateral at issue. Id. §§ 9401-9402 (1999); 1 Claek, supra, ¶ 2.09(c); 4 White & Summers, supra, § 31-18(d). Whether In-terBusiness can claim an interest in the “inventory” and “accounts receivable” of Annlick Farm Supply hinges on whether the financing statement assigned to it, identifying an interest in “goods” and “accounts,” satisfies the description requirements of former Article 9. 8
A financing statement is sufficient if it ... contains a statement indicating the types ... of collateral.
Issues of statutory interpretation are customarily resolved by resort to the plain meaning of the terms, as found in
Although the statute does not provide an explicit definition of “type,” other provisions offer interpretive clues. Words draw meaning from those around them, and context sheds light on language otherwise obscured.
See United States v. Cleveland Indians Baseball Co.,
Courts and commentators have struggled with this issue.
10
See Bennett Co.,
The latter interpretation, accepting the defined terms as “types” of collateral for purposes of section 9402, offers the only viable method for limiting the scope of “type” and remaining within the bounds of the statute. While Article 9 ascribes a broad meaning to several of the enumerated categories of collateral, these definitions are sufficiently limited to give potential creditors notice of whether a security interest may exist.
See
The alternative would be an
ad hoc
analysis of each specific term used in every financing statement to decide whether, based on evanescent guidelines, it constitutes a “type” of collateral. Such inquiries would engender doubt in the commercial community and defeat the central purpose of the U.C.C.: uniformity in transactions.
See
Interpreting “types” of collateral to include the terms defined in Article 9 finds additional support in the official commentary. Comments to the general definitions section of former Article 9 state:
For some purposes the Code makes distinctions between different types of collateral [such as] ... “goods” ... “accounts” and “general intangibles”....
The court therefore holds that reference to the terms defined in former Article 9 of the U.C.C. satisfies the requirement of description by “type.”
Accord Dillard Ford,
First National argues that, even if the references to “goods” and “accounts” suffice to cover inventory and accounts receivable, the financing statement assigned to InterBusiness includes additional limiting language that restricts the scope of the terms.
See, e.g., In re Toppo,
The language cited by First National does not support such a restrictive interpretation. The first financing statement covers all goods and accounts arising from the “use” and “operation” of the property. The property, in this case, was the site of Annlick Farm Supply. By operating from and using this property to facilitate commercial transactions, Annlick Farm Supply was able to obtain assets in the forms of inventory and accounts receivable. The emphasized language, rather than aiding First National, actually supports the opposing position that the financing statement provided clear notice of a potential security interest in the collateral at issue.
11
See
That a party attains a priority perfected interest in collateral does not, of course, ensure that its right will remain undisturbed thereafter. Assignment or satisfaction of the underlying debt obligation extinguishes the party’s security interest.
13
See, e.g., Auerbach v. Corn Exch. Nat’l Bank & Trust Co.,
First National suggests that the debt underlying InterBusiness's security interest in the collateral of Annlick Farm Supply was satisfied by operation of the Pennsylvania Deficiency Judgment Act, 42 PA. CONS.STAT. § 8103 (2002). The Act provides, iii pertinent part, as follows:
(a) General rule.-Whenever any real property is sold to the judgment creditor in execution proceedings and the price for which such property has been sold is not sufficient to satisfy the amount of the judgment, interest and costs and the judgment creditor seeks to collect the balance due on said judgment, interest and costs, the judgment creditor shall petition the court to fix the fair market value of the real property sold. The petition shall be filed as a supplementary proceeding in the matter in which the judgment was entered [within six months following execution and delivery of sheriffs deed for the property sold in connection with the execution proceedings].
(b) Effect of failure to give notice.Any debtor ... who is neither named in the petition nor served with a copy thereof or notice of the filing thereof as prescribed by general rule, shall be deemed to be discharged from all personal liability to the judgment creditor on the debt, interest and costs. . .
(d) Action in absence of petition.-If the judgment creditor shall fail to present a petition to fix the fair market value of the real property sold within [six months] after the sale of such real property the debtor may file a petition, as a supplementary proceeding in the matter in which the judgment was entered, in the court having jurisdiction, setting forth the fact of the sale, and that no petition has been filed within [six months after the sale of such real property] to fix the fair market value of the property sold, whereupon the court, after notice as prescribed by general rule, and being satisfied of such facts, shalldirect the clerk to mark the judgment satisfied, released and discharged.
Id.; see also id.
§ 5522. A judgment creditor that purchases real property of the debtor at an execution proceeding but fails to file a petition to fix value within six months thereafter is deemed to have accepted the purchase as full satisfaction of the judgment.
See id.
§§ 5522, 8103;
Marine Midland Bank v. Surfbelt, Inc.,
It cannot reasonably be disputed that InterBusiness failed to comply with the Pennsylvania Deficiency Judgment Act. InterBusiness obtained judgment by confession against Annlick Farm Supply in a Pennsylvania trial court for sums owing under the first loan agreement and subsequently purchased the real property securing the debt at a sheriffs sale on May 1, 2003. Delivery of the deed triggered In-terBusiness’s obligation to file a petition to fix value within six months, 14 establishing the amount of debt satisfied by the purchase and the debt still remaining. Inter-Business did not file such a petition.
More difficult than finding non-compliance is determining its effect. Pennsylvania courts have consistently held that expiration of the six-month window gives rise to an “irrebuttable presumption that the creditor was paid in full in kind,” but the superior court has recently suggested in dicta that this presumption is not “activate[d]” until the debtor files a petition to mark the judgment satisfied pursuant to subsection (d) of the Act.
First Fed. Sav. & Loan Ass’n of Carnegie v. Keisling,
In
First National Consumer Discount Co. v. Fetherman,
The supreme court held that the judgment creditor had a statutory duty to hon- or the debtor’s request to mark the judgment satisfied after expiration of the six-month limitations period.
Fetherman,
Under the Pennsylvania Deficiency Judgment Act, as interpreted by the Supreme Court of Pennsylvania in
Fether-man,
InterBusiness’s failure to file a petition to fix value within six months of the real estate sale conclusively establishes satisfaction of the debt owed by Annlick Farm Supply.
15
See
Nevertheless, InterBusiness claims that its security interest remains effective because the interests in the real property and collateral, although based on the same debt, arose through separate agreements. Such an argument elevates form over substance.
But see
This principle also compels rejection of InterBusiness’s proposed analogy to Hor
bal v. Moxham National Bank,
Neither the supreme court nor the lower court opinions in
Horbal
stand for the holding espoused by InterBusiness. To the contrary, the outcome in
Horbal
hinged on the conclusion (accepted by three justices of the supreme court) that the certificate of deposit was a negotiable instrument controlled by Article 3, rather than Article 9, of the U.C.C.
See id.
at 582-83;
see also, id.
at 585 (opinion in support of reversal). From this conclusion, the justices reasoned that the instrument was effective to transfer
full oumership rights
to the creditor
on the date of default. Id.
at 583-84. The certificate of deposit, and the funds that it represented, ceased to be the personal property of the debtor and became the property of the creditor immediately upon default, regardless of when the creditor actually liquidated the certificate.
Id.
The subsequent satisfaction of the underlying debt by operation of the Deficiency Judgment Act eliminated the creditor’s right to enforce
Unlike
Horbal,
InterBusiness seeks to enforce a security interest concededly governed by Article 9. Neither party asserts, nor could they, that the security agreement at issue is a “negotiable instrument” or that this case somehow implicates Article 3 of the U.C.C.
See id.
at 583-86 (explaining requisites for negotiable instruments). Ownership
of
the collateral did not pass immediately upon default from Annlick Farm Supply to InterBusiness; rather, InterBusiness gained a right to enforce a security interest in that property.
Cf
InterBusiness has received the relief that it requests, and its claim for these amounts is now moot. While a finding of mootness would ordinarily compel dismissal of the claims, or the entire case, such action would be premature in this circumstance. See 5A Wright & Miller, supra, § 3533.2. First National did not move for summary judgment on grounds of satisfaction. Rather, it raised the issue only as a defense to InterBusiness’s motion. Finding the debt satisfied by operation of Pennsylvania law rests on a view of the facts in the light most favorable to First National, as the non-moving party, and the issue has received inadequate briefing to permit final resolution. 17 See 10A WRIGHT et al., supra, § 2720; see also supra Part II (explaining cross-motion practice). Considering the record at this stage of the proceedings, the court can conclude only that InterBusiness is not entitled to judgment as a matter of law.
IV. Conclusion
Both InterBusiness and First National acquired valid and enforceable perfected interests in the inventory and accounts receivable of Annlick Farm Supply through the assignment of interests from Allied Capital. First National violated In-terBusiness’s priority status under Article 9 of the U.C.C. by collecting and liquidating those assets, but evidence suggests that InterBusiness subsequently obtained full satisfaction of its debt by operation of the Pennsylvania Deficiency Judgment Act. Because material questions of fact with respect to the validity of plaintiffs claims remain outstanding, the cross-motions for summary judgment and the motion to dismiss must be denied.
An appropriate order will issue.
ORDER
AND NOW, this 23rd day of April, 2004, upon consideration of the cross-motions for summary judgment of plaintiff and defendant (Docs. 13, 20) and the motion to dismiss of third-party defendants (Doc. 10), and for the reasons stated in the accompanying memorandum, it is hereby ORDERED that the motions (Docs. 10, 13, 20) are DENIED.
Notes
. In accordance with the standards of review for motions for summary judgment and for dismissal, the court will present the facts as gleaned from the complaint, supporting exhibits, and statements of material facts in the light most favorable to the non-moving parties. See infra Part II. Discrepancies between the pleadings and evidence, when relevant, will be noted.
. The parties dispute whether the second loan was made by Allied Capital Corporation or its subsidiary, Allied Capital SBLC Corporation. (Doc. 21 ¶ 9; Doc. 32 ¶ 10). The precise identity of the lender is immaterial for purposes of the instant motions.
. The parties dispute whether First National received an assignment of the second loan security agreement. (Doc. 22 ¶ 17). This fact is immaterial for purposes of the instant motions.
. The following discussion relies, as it must in this diversity action, on Pennsylvania law.
See Erie R.R. Co. v. Tompkins,
. Perfection may also be achieved in certain instances through possession or through mere attachment.
See
. Other transition provisions prescribe the effect of the revised Article’s enactment on the perfected status of security interests created before the effective date. See 13 Pa. Cons Stat. §§ 9703-9704 (2002). These provisions apply only to disputes among creditors whose relative interests were not perfected before July 1, 2001 (or have since changed in terms of priority classification). See id. § 9709(a).
. It is worth reiterating that "perfection” does not apply to a particular
party,
but to the
interest
itself.
See
. Because former Article 9 governs perfection and priority, it controls this issue.
. Former Article 9 also permits description by ''item.”
.
Compare In re Dillard Ford, Inc.,
. Further, accepting First National’s argument would render the terms "accounts” and "goods” superfluous. Other provisions of the first financing statement expressly cover fixtures and other building materials used in the property, insurance on the property, compensation for the taking of the property, and "[a]ll rents, issues, income and profits of and from the Property and all leases, subleases and tenancies ... affecting said real estate.” (Doc. 1, Ex. B). It would be unnecessary to include more generic references to "goods” and "accounts” to cover the same assets. The more reasonable interpretation is that these terms cover a broader array of collateral than those relating solely to the real estate.
. This result would likely not change under revised Article 9.
See
.
See
. Commencement of a bankruptcy action generally gives rise to an automatic stay of all proceedings against the debtor, including those relating to a petition to fix the value of the debtor's real estate pursuant to the Pennsylvania Deficiency Judgment Act.
See In re Wilkins,
. Although federalism principles require application of the
Fetherman
holding,
see Erie,
. Because the security interest was extinguished after the effective date of revised Article 9, the amended provisions govern these issues of perfection and priority.
See
. In addition, outstanding claims for punitive damages by InterBusiness still remain and present a live "case or controversy” regardless of the extinguishment of the security interest.
See