Corona Fruits & Veggies, Inc. v. Frozsun Foods, Inc.

Opinion

VEGAN, Acting P. J.

Shakespeare asked, “What’s in a name?” We supply an answer only for the Uniform Commercial Code lien priority statutes; Everything when the last name is true and nothing when the last name is false. When a creditor files a UCC-1 financing statement, the debtor’s true last name is crucial because the financing statements are indexed by last names. A subsequent creditor who loans money to a debtor with the same name is put on notice that its lien is secondary.

The trial court here found that Corona Fruits & Veggies, Inc. and Corona Marketing Company (appellants), failed to perfect a security interest in a strawberry crop because its UCC-1 financing statement erroneously listed the debtor’s last name. We affirm. (Cal. U. Com. Code, §§ 9503, subd. (a)(4)(A), 9506, subd. (b).)

1

Facts and Procedural History

In 2001, appellants subleased farm land to a strawberry farmer (debtor) who went by the last name of “Munoz.” The sublease, as well as other documents given to appellants, stated that debtor’s name was “Armando

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Munoz Juarez.” That was and is his full true name. But he signed the sublease “Armando Munoz.”

Appellants advanced money for payroll and farm production expenses. On July 2, 2001, appellants filed a UCC-1 financing statement listing debtor’s name as “Armando Munoz” and a second UCC-1 financing statement on January 17, 2002, listing the same name.

In December 2001, debtor contracted with respondent Frozsun Foods, Inc. (Frozsun Foods) to sell processed strawberries. Frozsun Foods advanced money which was secured by a January 17, 2002 UCC-1 financing statement listing debtor’s last name as “Armando Juarez.”

As of July 26, 2002, debtor owed appellants $230,482.52 and owed Frozsun Foods $19,648.52. When debtor was unable to meet his loan obligations, appellants took back the farm land, harvested the strawberry crop, and kept the crop proceeds.

Appellants and Frozsun Foods filed collection actions which were consolidated for trial. (Code Civ. Proc., § 1048, subd. (a).) The trial court found that debtor’s true legal name was “Armando Munoz Juarez, ... as shown on his identification documents as well as the documents of [appellants] and Frozsun, Inc . . . .” The trial court concluded that appellants and Frozsun Foods knew debtor’s true legal name, “but only Frozsun Foods, Inc. recorded its UCC-1 statement under that full name[.] [I]ts recording supercedes the two recordings by [appellants] using only part of Munoz’s name.”