A debtor under another name? Court Certifies Issue to Florida Supreme Court


Florida law provides that a UCC-1 funding statement is “seriously misleading” if it does not include the correct name of the debtor, unless “A search of depository office records under the exact name of the debtor, using standard depository office search logic, if available, would reveal” the funding status despite the incorrect name. But how much research is needed? The Eleventh Circuit certified this issue in the Florida Supreme Court in 1944 Beach Boulevard, LLC v. Live Oak Banking Co. (In re NRP Lease Holdings, LLC), 2021 US App. LEXIS 36637 (11th Cir. 10 Dec. 2021).

The case began in bankruptcy court, where 1944 Beach Boulevard, LLC, as debtor-in-chief, filed a lawsuit to avoid an alleged general lien on its assets by Live Oak Banking Company. Live Oak had filed UCC-1 funding statements with the Florida Secured Transaction Registry, but the statements incorrectly identified the debtor as “1944 Beach Blvd., LLC” instead of “1944 Beach Boulevard, LLC. Therefore, a search in the registry using the name appearing on the financing statement would bring up a page of 20 entries, but the exact name of the debtor was not among them. To find the correct debtor name, the searcher should click on the “PREVIOUS” link to access the 20 immediately preceding names on the court registry list. The bankruptcy court ruled that the improper naming of Live Oak’s funding statements was not “seriously misleading” and therefore the statements were effective, based on its finding that the research results of the register “seemed[] to include more than the initial page displayed. The district court confirmed.

On appeal, the Eleventh Circuit, in an opinion drafted by Judge Lagoa, noted that different bankruptcy courts had reached different conclusions on the scope of the term “research” as used in the relevant Florida law. In light of this and the importance of the issue to debtors and creditors, the court certified to the Florida Supreme Court the following issues:

(1) Is the “search for depository office records under the correct debtor name, using standard depository office search logic,” as provided by Florida law § 679.5061 (3), limited or satisfied by the initial page? of twenty names displayed to the user of the registry search function?

(2) If not, does this search include all names in the depository office database, which the user can navigate to using the command tabs displayed on the initial page?

(3) If the search covers all the names in the depository’s database, are there any limitations on a user’s obligation to examine the names and, if so, what factors should courts take into account in determining whether a user has fulfilled these obligations?


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