Bankr. W.D.N.C.: In re Hudgins- Secured Status of Fixture versus Consumer Good


Lendmark financed the purchase and installation of an HVAC unit for Ms. Hudgins’ home. All parties agreed that the HVAC unit was a “consumer good” as defined by N.C.G.S. § 25-9-102, that Lendmark held an automatically perfected purchase money security interest in the HVAC as chattel pursuant to N.C.G.S. § 25-9-309(1) and that Lendmark did not record a fixture filing.

The Trustee argued that without the fixture filing Lendmark’s security interest fell to the hypothetical judgment lien creditor status of bankruptcy estate under 11 U.S.C. § 544. Lendmark countered that its perfected lien against the HVAC as a consumer good was not lost when it became a fixture.

The bankruptcy court agreed with Lendmark that “a PMSI in consumer goods that are also fixtures has priority as against any other secured parties or lien creditors with a conflicting security interest in the same goods arising not as a result of a real estate interest. “ 9B Fredrick H. Miller and Carl S. Bjerre, HAWKLAND UCC SERIES § 9-309:2 [Rev] (June 2016). Further, 11 U.S.C. § 544(a)(3) grants a Trustee bona fide purchaser status for real property “other than fixtures.” As such, Lendmark perfected PMSI primed the trustee’s interest and remained secured by the HVAC.


As the opinion notes that the claim was co-signed by Ms. Hudgins’ non-filing husband, that would have been a sufficient grounds to hold that the claim was secured.

Further, despite the parties agreement that the claim was secured as a PMSI and while the Consumer Credit Installment Sales Contract (“CCISC”) attached to the Proof of Claim does provide that “Buyer grants to the Seller a Security interest under the Uniform Commercial Code in the goods described in the [CCISC] on page 1 hereof.” That section, however, is blank in the sections for Description of Goods or Services, Model Number and Serial Number. This would not seem to adequately describe the goods as required by the UCC. While there is a subsequent Performance Contact also attached to the Proof of Claim that does describe the HVAC unit, this is signed only by Mr. Hudgins and is not referenced in the CCISC.

And, for what its is worth, the CCISC, which originated with the Seller, 72 Degrees, also includes an indorsement of the note to Bank of America. There is nothing in the Proof of Claim linking Lendmark with this claim, raising questions about whether Lendmark is actually a proper party.

For a copy of the opinion and the Proof of Claim, please see:

Hudgins- Secured Status of Fixture versus Consumer Good

Hudgins- Lendmark Proof of Claim


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

Tagged with: , , ,

Leave a Reply