## Facts

- In July 2006, Christopher J. Yatooma loaned $230,000 to Ronald Omilian and several Omilian-controlled businesses, including United Soils, Inc., Earth Products, Inc., Earth Supplies, Inc., and C.A.R.D. Properties, L.L.C. (collectively, the Omilian entities).
- The loan documents stated that repayment was secured by “all of the assets and personal property of” the Omilian entities and referred generally to a security interest in “all collateral.”
- Each Omilian entity filed UCC financing statements describing collateral broadly as all assets and personal property, including tangible and intangible property in which the entity then had, or later acquired, rights.
- Independent Bank had also extended credit to the Omilian entities and claimed its own secured position.
- In December 2006, United Soils filed for Chapter 11 bankruptcy.
- A few months later, certain Omilian entities entered into an agreement with Independent Bank to surrender assets to the bank.
- The surrender agreement contained a right-of-first-refusal clause giving Omilian or any Omilian-controlled entity the right to buy back surrendered assets if the bank notified Omilian of an intended sale to a third party.
- The bank later notified Omilian that it had agreed to sell some of the assets to a third party, and AKO Enterprises–Waterford, Inc. (AKO), an Omilian-controlled entity, exercised the right of first refusal and purchased the assets.
- After the sale to AKO, Yatooma sued Russell E. Barker (a bank officer involved in the transaction), asserting conversion and tortious interference with contract based on Yatooma’s claim that his collateral package covered the right of first refusal.
- The trial court granted summary disposition for Barker, and Yatooma appealed.

## Issues

1. Whether Yatooma’s security agreement describing collateral as “all of the assets and personal property” (and “all collateral”) created a security interest under Article 9 in a right of first refusal that was created later in a separate surrender agreement with the bank.
2. Whether UCC financing statements referencing present and after-acquired rights could supply the necessary collateral description (or otherwise expand attachment) if the security agreement itself did not clearly reach the later-created right of first refusal.
3. Whether Yatooma’s conversion and tortious-interference claims against Barker could survive without a valid property interest (security interest) in the right of first refusal or the assets transferred through its exercise.

## Decision

- The Michigan Court of Appeals affirmed summary disposition for Barker.
- The court concluded that Yatooma’s security agreement did not give him a security interest in the later-created right of first refusal arising from the surrender agreement.
- Because Yatooma lacked a valid secured interest in the right of first refusal (and thus lacked the claimed property interest tied to that right), his tort claims premised on that interest failed as a matter of law.

## Legal Principles

- A security interest attaches only to collateral that is described in the security agreement in a manner that reasonably identifies what is covered; the security agreement, not the financing statement, controls attachment.
- Broad collateral language such as “all assets” or “all personal property,” without more, may be read as covering property the debtor owns at the time of the grant (and any clearly identified after-acquired categories), but it does not automatically reach every later-created contractual right arising from a new transaction.
- After-acquired coverage must be supported by the security agreement’s terms; filing a financing statement with after-acquired wording does not, by itself, create or expand the debtor’s grant of a security interest.
- A right of first refusal created by a later contract is a distinct intangible right; whether it is collateral depends on whether the debtor granted a security interest in that type of right in the security agreement.
- Conversion requires an ownership or possessory interest in the property allegedly converted; tortious interference requires, among other elements, a legally protected contractual or property interest and wrongful interference with that interest. Without a valid security interest in the asserted collateral, these claims fail.

## Conclusion

Yatooma v. Barker holds that a secured party cannot rely on generic “all assets” language (or after-acquired language found only in financing statements) to claim a security interest in a right of first refusal that was created later in a separate surrender agreement; without that security interest, Yatooma lacked the property interest needed to support conversion and tortious-interference claims, so summary disposition for Barker was properly affirmed.


Yatooma v. Barker, 73 U.C.C. Rep. Serv. 2d 176 (2010)