## Facts

- John’s Bean Farm of Homestead, Inc. operated a commercial bean farming business and borrowed funds from William Klein to purchase farm equipment.
- The debtor and Klein executed a promissory note and security agreement intended to grant Klein a security interest in the equipment.
- Klein filed a UCC-1 financing statement in Florida to perfect the security interest, but the financing statement listed the debtor as “John Bean Farms, Inc.” rather than “John’s Bean Farm of Homestead, Inc.”
- The debtor later filed a Chapter 7 bankruptcy case, and Klein filed a proof of claim asserting secured status based on the financing statement.
- The Chapter 7 trustee searched Florida’s secured transactions registry under the debtor’s correct legal name; Klein’s financing statement did not appear on the initial search results page and could be found only by repeatedly navigating backward through many result screens.

## Issues

1. Whether the financing statement’s incorrect debtor name rendered it “seriously misleading” and therefore ineffective to perfect the security interest under Florida’s Article 9.
2. Whether the statutory safe harbor applied when a search under the correct name using the filing office’s standard search logic did not disclose the financing statement on the initial results page.
3. If the security interest was unperfected, whether Klein nonetheless held an allowable unsecured claim in the bankruptcy case.

## Decision

- The court granted summary judgment for the Chapter 7 trustee on the perfection dispute and denied Klein’s request to be treated as a secured creditor.
- The court held the financing statement was seriously misleading because a search under the debtor’s correct legal name, using the filing office’s standard search logic, did not disclose the filing in the relevant search results.
- The court ruled the safe harbor did not apply and Klein’s security interest was unperfected as against the bankruptcy estate.
- The court allowed Klein’s claim as an unsecured claim for the underlying debt.

## Legal Principles

- Under Florida’s Article 9, a financing statement must sufficiently provide the debtor’s correct legal name; failure to do so is “seriously misleading.”
- A debtor-name error is not excused by the safe harbor unless a search of the filing office’s records under the correct name, using standard search logic, discloses the financing statement.
- The notice function of the filing system is measured by what the filing office’s standard search logic reveals, not by whether a determined searcher can locate the filing through extensive manual navigation.
- In bankruptcy, an unperfected security interest is ineffective against the trustee’s rights, but the underlying loan obligation may still be allowed as an unsecured claim.

## Conclusion

The bankruptcy court held that a UCC-1 financing statement with a materially incorrect debtor name was seriously misleading because it was not disclosed by a standard search under the correct name, defeating perfection and leaving the creditor with only an unsecured claim in the Chapter 7 case.


In re John’s Bean Farm of Homestead, Inc., 378 B.R. 385 (Bankr. S.D. Fla. 2007)