1944 Beach Boulevard, LLC v. Live Oak Banking Co.

1944 Beach Boulevard, LLC (Beach Boulevard) (plaintiff) owed approximately $3 million on two loans from Live Oak Banking Company (Live Oak) (defendant). The debt was purportedly secured by a blanket lien on all Beach Boulevard assets and perfected by two financing statements filed with the Florida Secured Transaction Registry (registry). The registry’s search function operated by returning a list of names—20 per page—based on how closely they matched the name entered. However, the financing statements incorrectly spelled the debtor’s name by using “Blvd.” instead of “Boulevard.” Beach Boulevard later filed for Chapter 11 bankruptcy, at which time Beach Boulevard’s manager conducted a search of the registry and found that Live Oak’s financing statements did not appear on the first page of results. Beach Boulevard filed a complaint against Live Oak, arguing that the abbreviation of “Boulevard” rendered the financing statements seriously misleading and therefore not legally effective to secure Live Oak’s interest. Live Oak insisted that the difference in spelling was too minor to rise to the level of seriously misleading, also noting that the financing statements could still be found on an adjacent page of the search results. The bankruptcy court granted summary judgment in favor of Live Oak, holding that a statutory safe harbor applied because the registry’s standard search logic was still sufficient to disclose the financing statements. Beach Boulevard appealed to federal district court, which affirmed the bankruptcy court, and then to the United States Court of Appeals for the Eleventh Circuit, which presented three certified questions involving the search process to the Florida Supreme Court.