## Facts

- Herbert Wesley Dabbs (Debtor) sought to purchase new siding for installation on his primary residence.
- To finance the purchase, Debtor applied for a Wells Fargo Bank, N.A. (Wells Fargo) “Home Projects” credit-card account.
- Debtor signed the “Wells Fargo Home Projects Credit Card Account Application” (the court referred to it as the “Purchase Agreement”), which stated: “You give us and we will retain a purchase-money security interest in goods purchased under our Credit Card Agreement.”
- After approval, Debtor purchased the siding using the account.
- Debtor later filed a Chapter 13 bankruptcy case.
- Wells Fargo filed a proof of claim asserting a secured claim of $14,797.51 (total claim $15,150.44) arising from the siding purchase.
- Wells Fargo attached to its proof of claim (1) the signed Purchase Agreement and (2) an invoice from the siding vendor describing the siding and identifying Debtor’s home as the installation location.
- Debtor objected to the proof of claim, arguing Wells Fargo held only an unsecured claim because (1) the Purchase Agreement was not a security agreement creating a security interest in the siding and (2) even if a security interest existed, it was not properly perfected because Wells Fargo did not file a financing statement.
- At the hearing, Debtor presented argument but offered no evidence to support the objections.

## Issues

1. Whether the signed Purchase Agreement, together with the attached vendor invoice, satisfied S.C. Code Ann. § 36-9-203(b) by constituting an authenticated security agreement that reasonably described the siding as collateral, thereby creating an enforceable purchase-money security interest.
2. If an enforceable PMSI existed, whether Wells Fargo’s security interest was perfected despite the absence of a filed financing statement.

## Decision

- The court overruled Debtor’s objection and allowed Wells Fargo’s claim as secured.
- The court found the requirements for attachment under S.C. Code Ann. § 36-9-203(b) were met: Wells Fargo gave value, Debtor had rights in the siding, and Debtor authenticated a security agreement.
- The court held that the Purchase Agreement’s express PMSI grant, read together with the attached invoice describing the siding and its installation location, provided a sufficient collateral description and showed an intent to create a security interest in the purchased goods.
- The court rejected Debtor’s perfection argument, concluding Wells Fargo’s PMSI in the siding was automatically perfected under South Carolina’s Article 9 rules applicable to purchase-money security interests in consumer goods; a separate financing statement was not required for perfection in this context.

## Legal Principles

- Under S.C. Code Ann. § 36-9-203(b) (U.C.C. § 9-203), a security interest is enforceable against the debtor and third parties when (i) value is given, (ii) the debtor has rights in the collateral, and (iii) the debtor authenticates a security agreement that reasonably describes the collateral.
- A security agreement may be shown by multiple writings read together when the documents collectively evidence a grant of a security interest and identify the collateral with reasonable specificity.
- A lender’s express grant clause providing a purchase-money security interest in “goods purchased” under an account agreement can create a PMSI when linked to transaction documents (such as an invoice) that identify the specific goods purchased.
- Under S.C. Code Ann. § 36-9-309 (U.C.C. § 9-309), a purchase-money security interest in consumer goods is perfected automatically upon attachment (subject to limited statutory exceptions not applicable here), so the absence of a financing statement does not, by itself, defeat perfection.
- In bankruptcy claim litigation, a properly filed proof of claim is prima facie valid, and an objecting party must produce evidence sufficient to rebut that presumption; argument alone is not enough.

## Conclusion

The bankruptcy court held that Dabbs’s signed Home Projects account application granting Wells Fargo a purchase-money security interest, combined with the attached invoice identifying the siding bought and installed on Dabbs’s home, created an enforceable security interest under Article 9 and that the PMSI was perfected automatically, so Wells Fargo’s proof of claim was allowed as secured and the debtor’s objection was denied.


In re Dabbs, 625 B.R. 15, 103 U.C.C. Rep. Serv. 2d 1477 (2021)