## Facts

- A landlord owned commercial premises leased to a laundromat tenant.
- A lender financed the tenant’s purchase of laundry equipment and held a security interest in that equipment.
- The tenant defaulted on rent and the loan; the landlord evicted the tenant.
- The lender obtained a judgment against the tenant and an ex parte court order directing a New York City marshal to seize the collateral.
- Without notice to the landlord, the marshal entered the premises, broke the landlord’s seal, and removed washers, dryers, and related equipment.
- The landlord alleged that the marshal damaged the building during removal by severing vents and disconnecting utilities.
- The landlord sued the lender and the lender’s law firm, asserting claims including statutory reimbursement under UCC § 9-604(d) for physical injury to the real property caused by removal of collateral.

## Issues

1. Whether UCC § 9-604(d) makes a secured creditor liable to reimburse a nondebtor property owner for damage caused when a court-ordered New York City marshal removes the collateral.
2. Whether a marshal executing a judicial order is treated as the secured party (or its agent) for purposes of “a secured party that removes collateral” under UCC § 9-604(d).

## Decision

- The Court of Appeals affirmed summary judgment for the lender.
- UCC § 9-604(d) did not apply because the secured party did not “remove” the collateral; the marshal did.
- A New York City marshal executing a court order acts as a neutral public officer, not as an agent of the judgment creditor.
- The secured party’s choice to proceed by judicial process rather than self-help insulated it from UCC § 9-604(d) reimbursement liability for damage allegedly caused by the marshal’s negligent execution.

## Legal Principles

- UCC § 9-604(d) imposes reimbursement liability only on “a secured party that removes collateral,” tying the duty to the secured party’s own removal conduct (including removal by its agents).
- When collateral is removed by a neutral public officer pursuant to a court order, the secured party is not the statutory “remover” and is not liable under UCC § 9-604(d) for resulting physical injury to the real property.
- Judicial enforcement through court-directed officers is treated differently from creditor-controlled self-help repossession for purposes of Article 9 removal-based reimbursement duties.

## Conclusion

A secured creditor is not liable under UCC § 9-604(d) for damage to a third party’s real property when the collateral is removed by a New York City marshal acting under a court order, because the marshal’s court-directed actions are not treated as removal by the secured party.


Cla-Mil E. Holding Corp. v. Medallion Funding Corp., 6 N.Y.3d 375 (N.Y. 2006)