## Facts

- A strawberry grower’s full legal name was “Armando Munoz Juarez,” as shown on identification and transaction documents.
- Corona subleased farmland to the grower, made production loans, and took a security interest in the crop and related collateral.
- Corona filed two UCC-1 financing statements identifying the debtor as “Armando Munoz.”
- Frozsun later advanced funds to the grower and filed a UCC-1 financing statement identifying the debtor as “Armando Juarez.”
- Before extending credit, Frozsun searched the filing office’s records under “Juarez” and found no prior financing statements.
- After default, Corona retook the land, harvested the strawberries, and retained the crop proceeds.
- Competing claims to the crop proceeds were consolidated for trial; the trial court found Corona’s filings did not perfect because they did not use the debtor’s true legal surname, and entered judgment for Frozsun.

## Issues

1. Whether financing statements identifying an individual debtor as “Armando Munoz,” rather than the debtor’s full legal name “Armando Munoz Juarez,” were “seriously misleading” under California’s UCC provisions governing debtor-name sufficiency and search logic.
2. Whether Corona’s security interest was unperfected and subordinate to Frozsun’s perfected security interest in the crop proceeds.

## Decision

- The Court of Appeal affirmed the judgment for Frozsun.
- The court held Corona’s UCC-1 filings were seriously misleading because they did not use the debtor’s true legal surname as reflected in official and transactional documents.
- Because a search under the debtor’s correct name using the filing office’s standard search logic would not disclose Corona’s filings, Corona’s security interest was not perfected.
- Frozsun’s filing using the debtor’s correct surname perfected its security interest and had priority in the crop proceeds.
- The court rejected Corona’s reliance on Mexican naming conventions to justify filing under “Munoz” rather than the debtor’s legal surname used for indexing and searching.

## Legal Principles

- A financing statement must provide the individual debtor’s correct name as required by Cal. U. Com. Code § 9503 (UCC § 9-503).
- Under Cal. U. Com. Code § 9506(b) (UCC § 9-506), a debtor-name error renders a financing statement “seriously misleading” if a search under the debtor’s correct name, using the filing office’s standard search logic, would not disclose the filing.
- In a notice-filing system indexed by surname, the secured party bears the risk of loss of perfection and priority from using an incomplete or incorrect debtor surname.
- The relevant “true legal name” is the name shown on official identification and legal documents for filing and search purposes, not a creditor’s chosen truncation based on naming customs.

## Conclusion

The court held that Corona’s UCC-1 filings under an incomplete debtor surname were seriously misleading and ineffective to perfect, so Frozsun’s correctly indexed filing was perfected and had priority to the strawberry crop proceeds.


Corona Fruits & Veggies, Inc. v. Frozsun Foods, Inc., 143 Cal. App. 4th 319 (Cal. Ct. App. 2006)