- Grogan v. Harvest Capital Company, et al. (In re Grogan), B.A.P. No. OR-12-1483 (9th Cir. B.A.P., October 15, 2013) (Not for Publication)
- In an unpublished decision, the Bankruptcy Appellate Panel of the Ninth Circuit affirmed the entry of partial judgment by the Bankruptcy Court, construing the Appellees' security agreements as covering Appellants' Christmas tree crop. Despite a purported ambiguity in their collateral descriptions, the descriptions satisfied the "reasonable identification test" under Oregon U.C.C. law, because they provided enough information to enable a third party to identify the Christmas trees as collateral upon reasonable inquiry as to the other provisions of the agreements and the circumstances of the loans. Moreover, the descriptions would be construed under Oregon contract law as covering the Christmas trees in light of their context among the numerous other provisions of the security agreements.
- Procedural context:
- Appeal from the Bankruptcy Court for the District of Oregon (J. Renn) denying motion for summary judgment, granting cross-motions for summary judgment, and entering partial judgment pursuant to Federal Rule of Civil Procedure 56(a), reviewed de novo.
- Appellants Sarah and Charles Grogan, Chapter 11 debtors ("Debtors") and owner/operators of an Oregon Christmas tree farm, initiated an adversary proceeding against Appellees, Harvest Capital Company and Demeter AG, LLC ("Creditors"), seeking a determination that the Creditors' liens securing approximately $7.4 million in loans did not cover Appellants' Christmas trees and thus were unperfected and avoidable pursuant to Bankruptcy Code Section 544. Upon the filing of a motion for summary judgment by the Debtors and cross-motions by the Creditors, the Bankruptcy Court issued a Memorandum Decision concluding that the collateral descriptions contained in Creditors' security agreements and financing statements did cover the Debtors' Christmas trees and entered entered partial judgment in favor of the Creditors. On appeal, the B.A.P affirmed the Bankruptcy Court in total, finding that, under applicable Oregon U.C.C law, the collateral descriptions at issue satisfied the "reasonable identification test" as to the Debtors' Christmas trees, in accordance with ORS 79.0504 and 79.0108. To the extent that there was any ambiguity as to whether the word "permanent" modified the words "trees" and "bushes" (because Christmas trees are not "permanent" plantings), the "reasonable identification test" was satisfied, because the descriptions provided enough information to enable third parties to identify the collateral upon reasonable inquiry as to the other provisions in the agreements and the circumstances of the loans. Moreover, the collateral descriptions would similarly be construed under Oregon contract law to include Christmas trees in light of their context amidst the other provisions of the security agreements relating to the same.
- Jury, Taylor, and Pappas, Bankruptcy Judges.
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