## Facts

- In March 2005, debtor James W. Lull borrowed $3,800,000 from Gregg Gardiner (as trustee of the Gregg C. Gardiner Revocable Living Trust) and did not repay the note when it matured in February 2006.
- In September and December 2005, Kapaa 382, LLC made several loans to Lull totaling about $2,000,000.
- In April 2006, Lull entered a consignment agreement with Bowers and Merena Auctions, LLC, under which Bowers would auction Lull’s rare-coin collection; Bowers also advanced Lull $700,000 to be repaid from the auction proceeds.
- On July 19, 2006, Lull executed a security agreement granting Gardiner a security interest in all of Lull’s personal property and other assets, listing standard categories of personal property (including money) and the proceeds of the collateral.
- On July 20, 2006, Gardiner filed a UCC financing statement describing the collateral broadly as all of Lull’s assets and personal property (wherever located, now owned or later acquired) and all proceeds and products.
- On July 26, 2006, Lull agreed to transfer title to the rare-coin collection to Kapaa 382 as a partial settlement of Lull’s debt to Kapaa 382.
- On August 18, 2006, Bowers sold the collection for $1,119,750; after repaying its $700,000 advance and related charges, Bowers retained net proceeds of $455,046.11.
- On August 22, 2006, Kapaa 382 filed its own financing statement regarding its interest in the coin collection.
- After Lull filed Chapter 7, Bowers (as stakeholder) brought an adversary proceeding for interpleader to determine who was entitled to the net auction proceeds among Gardiner, Kapaa 382, and other claimants (with the Chapter 7 trustee later substituted for Lull).
- Gardiner moved for summary judgment, asserting first priority in the interpleaded proceeds based on his earlier perfected blanket security interest; Kapaa 382 argued, among other points, that any interest in “money” required perfection by possession and that discovery might show Bowers held the coins for Kapaa 382’s benefit (constructive possession).

## Issues

1. Whether Gardiner’s security interest, perfected by a filed “all assets/all personal property” financing statement covering proceeds, attached to and remained perfected in the identifiable auction proceeds.
2. Whether Kapaa 382 could obtain priority to the proceeds based on the later transfer of title to the coin collection and its later-filed financing statement.
3. Whether Kapaa 382’s theory that a security interest in “money” must be perfected by possession, including a claimed constructive-possession arrangement through the auctioneer, created a triable issue (or justified additional discovery) that barred summary judgment.

## Decision

- The court granted Gardiner’s motion for summary judgment.
- Gardiner held a valid, perfected security interest that covered the coin collection and continued in the identifiable proceeds generated by the auction.
- Gardiner’s earlier filing date gave him priority over Kapaa 382’s later-asserted rights, including Kapaa 382’s later filing and the later transfer of title.
- Kapaa 382’s possession/constructive-possession and additional-discovery arguments did not establish a genuine dispute of material fact that would change the priority outcome on the summary-judgment record.

## Legal Principles

- Under UCC Article 9 (as adopted in the forum), a financing statement may describe collateral by indicating it covers “all assets” or “all personal property,” and such a description can perfect a blanket security interest when supported by a security agreement.
- A perfected security interest generally continues in identifiable proceeds of collateral after disposition of the collateral, and priority in proceeds follows Article 9 priority rules.
- Between competing security interests, priority is generally determined by the first-to-file-or-perfect rule, absent a specific statutory exception.
- A later transfer of title to collateral does not, by itself, defeat an earlier perfected security interest that has attached to the collateral and continues in proceeds.
- A request for additional discovery to oppose summary judgment must show more than speculation; where the relevant dates and filings are undisputed and the proposed discovery would not change the controlling legal result, summary judgment may be granted.

## Conclusion

In *In re Lull*, the bankruptcy court awarded the interpleaded rare-coin auction proceeds to Gardiner because his earlier perfected, broadly described Article 9 security interest covered the collateral and continued in the identifiable proceeds, and Kapaa 382’s later title-transfer, later filing, and possession-based theories did not defeat Gardiner’s priority on summary judgment.


In re Lull, 386 B.R. 261 (2008)