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ComplianceJanuary 20, 2022

2021: A year in review for UCC law

Keeping track of the changes to state UCC laws is important for businesses that borrow, for lenders, and for the lawyers that advise both debtors and creditors. But this can be hard to do for busy individuals with so much else on their plates. To help all interested parties keep up, CT Corporation has compiled some of the significant legislative and case law developments we have tracked and reported for you in our Resource Center during 2021.


House Bill 1926, effective July 28, 2021, clarified control of virtual currency under the Uniform Commercial Code. Read House Bill 1926.


Lightstorm Entertainment, Inc. v. Cummings, 2021 U.S. Dist. LEXIS 80720, decided April 27, 2021. The U.S. District Court, Central District of California granted the defendants’ motion for summary judgment declaring UCC-1 financing statements filed by the plaintiff false and void and ordering the California Secretary of State to remove them from their official records. The plaintiff had claimed the move Titanic was based on his life and that the defendants — which included several movie studios — owed him more than $400 million. He filed the UCC-1s identifying the defendants as debtors and placing liens on their assets. In granting the defendants injunctive and declaratory relief, the court noted that the plaintiff filed the financing statements without authority from the defendants in clear violation of the California Commercial Code which states that a party can file a UCC-1 only if the debtor authorizes the filing.

Rice v. Downs, 2021 Cal. App. LEXIS 1091, decided December 27, 2021. The California Court Appeal, in a case involving a lien priority issue, held that a security agreement perfected by the filing of a financing statement had priority over a charging order obtained after the financing statement was filed. The court noted that it had not found, nor had the parties identified, a statute specifically addressing the priority of charging orders in relation to other liens and security interests. In the absence of a statute specifically addressing the priority of charging orders, the court had to rely on the rule stated in Civil Code Sec. 2897 that “other things being equal, different liens upon the same property have priority according to the time of their creation”.


Juno Investments LLC v. Miller, 2021 U.S. Dist. LEXIS 118776, decided June 25, 2021. The U.S. District Court, District of Delaware denied the defendant lawyers’ motion to dismiss a malpractice suit filed against them by the plaintiff. The plaintiff loaned money to a Delaware LLC of which it was the majority shareholder. The LLC engaged the defendants to provide legal services. The defendants filed a UCC-1 financing statement naming the Delaware LLC as debtor and the plaintiff as creditor.

However, the UCC-1 was filed in North Carolina when it should have been filed in Delaware. The plaintiff claimed the defendants' failure to file the UCC-1 in the correct state rendered it an unsecured creditor in debtor’s bankruptcy, thereby causing it damage. In rejecting the motion to dismiss the court noted that (1) the defendants’ claim the plaintiff suffered no damages was mooted by the resolution of the bankruptcy proceedings, (2) the plaintiff did not lack standing to raise its negligence claim based on its not having an attorney client relationship because the plaintiff was asserting a duty as a nonclient, and (3) the plaintiff could maintain its breach of contract claim because its complaint plausibly showed privity of contract or that it was a direct third party beneficiary to the engagement contract between the debtor and defendants.


In re Bryant, 2021 Bankr. LEXIS 1528 (M.D. Ga 1628), decided June 7, 2021. The U.S. Bankruptcy Court for the Middle District of Georgia denied a bank’s motion for protection or relief from the automatic stay in connection with the debtor’s bankruptcy filing. The bank claimed relief based on its security interests evidenced by financing statements. The court found those financing statements invalid. The debtor’s name was listed on the financing statements using his full first and last names and his middle initial. His name as listed on his driver’s license included his full middle name. The court rejected the bank’s argument that Georgia’s UCC law, which requires “the name of the individual, which is indicated on the driver’s license”, does not require the full name. The court noted that the instructions on the UCC-1 form specifically indicate that the filer should use the full name and not abbreviate any part of the name. The court then pointed out that a UCC standard search using the debtor’s full name as stated on his driver’s license did not disclose the bank’s lien, thus rendering the financing statement seriously misleading.

AgGeorgia Farm Credit, ACA v. Wynn (In re Wynn), 2021 Bankr. LEXIS 883, decided April 2, 2021. The U.S. Bankruptcy Court, Middle District of Georgia, held that the defendant’s UCC financing statement was seriously misleading and ineffective to perfect its security interest because the debtor’s name did not match the name on his driver’s license and because a search done with the filing office’s standard search logic would not have disclosed the defendant’s financing statement.


Senate Bill 342, effective July 1, 2021, adds a new section to the state’s UCC law regarding the termination of wrongfully filed financing statements. It provides that a person identified as debtor in a filed financing statement may deliver to the filing office a notarized, sworn affidavit that identifies the financing statement by file number, indicates the affiant's mailing address, and states that the affiant believes that the filed record identifying the affiant as debtor was not authorized to be filed and was caused to be communicated to the filing office with the intent to harass or defraud the affiant. The filing office shall then file a termination statement with respect to that financing statement and provide notice of the termination to the secured party of record. The secured party may seek an administrative review or file an action against the filing office seeking reinstatement. A separate procedure is included where an affidavit relates to a filed record communicated to the filing office by a “trusted filer”, as that term is defined.

SB 342 also provides that a person shall not cause to be communicated to the filing office for filing a record if the person is not authorized to file the record, the record is not related to an existing or anticipated transaction that is or will be governed by Article 9, and the record is filed with the intent to harass or defraud the person identified as debtor in the record. A violation is a simple misdemeanor for a first offense and a serious misdemeanor for a second or subsequent offense. Read Senate Bill 342.


House Bill 4694, effective November 22, 2021, amends Article 9 of the Uniform Commercial Code to change references to a "correction statement" to an "information statement", and to require a filing office to accept certain financing statement and financing statement amendment forms approved by the International Association of Commercial Administrators and adopted by the Secretary of State and any other form adopted by the Secretary of State. Read House Bill 4694.


Legislative Bill 910 (Laws of 2020), effective July 1, 2021, revises certain fees charged by the Secretary of State related to UCC filings. Read Legislative Bill 910.

Legislative Bill 649, which was signed by the Governor May 25, amends sections of Article 9 of Nebraska’s UCC law regarding perfection, priority rights, and other issues regarding controllable electronic records. The bill also adds a new Article 12 called “Uniform Commercial Code – Controllable Electronic Records.” These amendments are effective July 1, 2022. Read Legislative Bill 649.

New Mexico

House Bill 66, effective June 18, 2021, amends Article 9 of New Mexico’s UCC law to add definitions of “good faith” and “public finance transactions”. Read House Bill 66.

Rhode Island

House Bill 5511 and Senate Bill 451, each effective July 13, 2021, clarify that the Uniform Commercial Code applies to electronic transactions. Read House Bill 5511 and Senate Bill 451.

South Dakota

Zoss v. Greg Protsch & Mumford & Protsch, 2021 U.S. Dist. LEXIS 68091, decided April 8, 2021. The U.S. District Court, District of South Dakota held that the statute of repose had not run on the plaintiff’s suit alleging the defendants’ preparation and filing of financing statements were defective and the result of attorney malpractice. The financing statements were filed within the three-year statute of repose.

However, the defendants argued that any occurrence of negligence had to have occurred when the documents were drafted and not when they were filed. The court disagreed, holding that the filing of the financing statements was a part of the transaction and that the occurrence of negligence did not occur until they were filed.


House Bill 3794, effective September 1, 2021, amends the law relating to oil and gas liens by repealing Sec. 9.343 of the Texas Business and Commerce Code and enacting a new Chapter 67 of the Texas Property Code (titled “Oil and Gas Liens”). In addition to repealing Sec. 9.343 (a non-uniform UCC provision which provided for the perfection of a security interest in certain oil and gas proceeds without the filing of a financing statement), H.B. 3794 amends Texas’ UCC law to provide that Chapter 9 (Secured Transactions) does not apply to certain liens, assignments, sales, and transfers, including an oil and gas lien arising under new Chapter 67 of the Property Code. New Chapter 67 of the Property Code provides, in part, that to secure the obligations of a first purchaser to pay the sales price, each interest owner has an oil and gas lien to the extent of the interest owner's interest in oil and gas rights and that the oil and gas lien exists as part of and incident to the ownership of oil and gas rights. It also provides that an oil and gas lien of an interest owner is perfected automatically without the need to file a financing statement or any other type of documentation, and that, except for a permitted lien, an oil and gas lien takes priority over any other lien, whether arising by contract, law, equity, or otherwise, or any security interest.

The bill was enacted in response to In re First River Energy, LLC, 986 F.3d 914 (5th Cir. 2021) in which the U.S. Court of Appeals for the Fifth Circuit found that the UCC law of Delaware, the jurisdiction where the debtor was located, governed the priority of liens on the proceeds of oil. Delaware’s UCC law does not recognize the priority of a security interest perfected pursuant to a non-uniform UCC provision. Because Sec. 9.343 (a non-uniform UCC provision) established the Texas producers’ security interests, the court found that a bank, which had perfected its interest in the oil proceeds by filing a financing statement with the Delaware Secretary of State, had priority over the Texas producers, who did not file a financing statement and claimed priority under Sec. 9.343. In contrast, the court held that Oklahoma producers were entitled to a first-priority statutory lien in the proceeds because they perfected under the Oklahoma Lien Act and the Delaware UCC does not preempt statutory liens created by other states. Read House Bill 3794.

House Bill 4474, effective September 1, 2021, amends the law relating to the control of virtual currency and the rights of purchasers who obtain control of virtual currency for purposes of the Uniform Commercial Code. Among other things, H.B. 4474 amends various sections of the Business & Commerce Code, including the following: Sec. 9.102 (regarding the definition of "virtual currency"), Sec. 9.1071 (a new section regarding a secured party’s control over virtual currency), Secs. 9.310, 9.312, and 9.314 (regarding the perfection of a security interest in virtual currencies), and Sec. 9.331 (regarding the rights of certain holders or purchasers of a virtual currency). H.B. 4474 also adds a new chapter 12 (titled “Virtual Currency”) addressing, among other things, the definition of virtual currency and the control of and rights in virtual currency. Read House Bill 4474.


Deutsche Bank National Trust Co. v. Fegely, CA 3:16cv147, decided March 30, 2021. The U.S. District Court, Eastern District of Virginia declared a UCC financing statement null and void due to a lack of evidence the debtor authorized the filing. The defendant filed the financing statement in which she identified herself as filer and secured party with a superior security interest in certain property based on an alleged debt owed to her.

However neither the alleged debtor nor anyone else signed the financing statement and the defendant admitted that no one authorized her to file the financing statement, nor did she submit any documentation of the debt owed to her.


Senate Bill 5019, effective July 25, 2021, authorizes the Secretary of State to make reasonable rules in accordance with federal and state laws and to provide for the uniform recording of documents in cooperation with the Recording Standards Commission. The Secretary of State may make rules governing, among other things, recording duties of county recorders and county auditors; recording standards for the creation of certified copies for use as evidence; recording standards for documents related to liens; and recording standards for documents related to the uniform commercial code. Read Senate Bill 5019.


House Bill 43, effective July 1, 2021, amends the law relating to how perfection of a digital asset or digital security can be achieved, including through possession or filing a financing statement. Read House Bill 43.


Sandra Feldman
Publications Attorney
Sandra (Sandy) Feldman has been with CT Corporation since 1985 and has been the Publications Attorney since 1988. Sandy stays on top of the most pressing and pertinent business entity law issues that impact CT customers of all sizes and segments.
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