## Facts

- Live Oak Banking Company made two loans totaling about $3 million to 1944 Beach Boulevard, LLC, purportedly secured by a blanket lien on the debtor’s assets.
- Live Oak filed two UCC-1 financing statements in the Florida Secured Transaction Registry naming the debtor as “1944 Beach Blvd., LLC,” not the debtor’s exact legal name.
- The debtor filed for Chapter 11 bankruptcy.
- A registry search under the debtor’s correct legal name did not display Live Oak’s financing statements on the initial results page, though they could be located on an adjacent page by paging through results.
- In bankruptcy, the debtor argued the misnaming made the financing statements “seriously misleading” and ineffective to perfect under Fla. Stat. § 679.5061.
- The bankruptcy court granted summary judgment to Live Oak, and the federal district court affirmed, reasoning the statutory safe harbor applied because the registry search could disclose the filings.
- The Eleventh Circuit certified questions of Florida law to the Florida Supreme Court about the scope of the § 679.5061(3) safe harbor and what constitutes a qualifying “search.”
- The Florida Supreme Court accepted jurisdiction to answer the certified questions of state law.

## Issues

1. Whether Fla. Stat. § 679.5061(3)’s safe harbor applies only if the filing office uses a “standard search logic” within the statute’s meaning.
2. Whether the Florida Secured Transaction Registry employs a “standard search logic” for purposes of § 679.5061(3).
3. If the registry lacks a qualifying “standard search logic,” whether an incorrect debtor name renders a financing statement “seriously misleading” and ineffective under § 679.5061(2).

## Decision

- The court reformulated the certified questions to resolve a threshold issue: whether the existence of a “standard search logic” is required to invoke § 679.5061(3).
- The court held that use of a “standard search logic” by the filing office is a necessary condition for the safe harbor in § 679.5061(3).
- The court held the Florida Secured Transaction Registry does not employ a “standard search logic” within the meaning of § 679.5061(3).
- Because the safe harbor could not apply, a financing statement that fails to provide the debtor’s correct name is “seriously misleading” and ineffective under § 679.5061(2).
- The court declined to answer the Eleventh Circuit’s more detailed questions about the proper scope of a “search,” because those questions assumed a qualifying standard search logic exists.

## Legal Principles

- Under Fla. Stat. § 679.5061(2), a financing statement that fails sufficiently to provide the debtor’s name as required by Fla. Stat. § 679.5031 is “seriously misleading” and ineffective.
- The § 679.5061(3) safe harbor applies only when a search under the debtor’s correct name, using the filing office’s “standard search logic, if any,” would disclose the financing statement; if the filing office has no qualifying standard search logic, the safe harbor does not operate.
- A “standard search logic” contemplates a fixed, predictable, and publicly ascertainable search methodology that enables parties to determine whether a proper-name search will disclose a filing.
- A list-based search tool that returns pages of nearby names without a discrete, predictable hit-or-miss logic does not satisfy § 679.5061(3)’s “standard search logic” requirement.
- In Florida, absent an operative safe harbor, the filer bears the risk of debtor-name errors, and searchers may rely on searches under the debtor’s exact legal name without a duty to experiment with variations or page through results to locate misnamed filings.

## Conclusion

The Florida Supreme Court held that § 679.5061(3)’s misnaming safe harbor is unavailable because the Florida Secured Transaction Registry does not use a qualifying “standard search logic,” leaving incorrect debtor-name financing statements seriously misleading and ineffective to perfect a security interest.


1944 Beach Boulevard, LLC v. Live Oak Banking Co., 346 So. 3d 587 (Fla. 2022)