In re Cunningham

A group of purchasers (debtors) made 12 separate purchases of consumer goods from Best Buy on credit from Capital One (creditor). When the purchasers filed for bankruptcy, Capital One claimed a security interest in the consumer goods the purchasers had bought at Best Buy. Capital One relied on three documents in support of its argument. First, the credit card application signed on the date of the purchaser’s first purchase, which included language that the purchasers granted to Capital One a purchase-money security interest in the goods purchased on the purchaser’s account, and which also stated that the purchasers agreed to the terms and conditions of the cardholder agreement. Second, the cardholder agreement, which was not signed and was sent to the purchasers after the credit card application and initial purchase occurred and included language that the purchasers granted to Capital One a purchase-money security interest in the goods purchased with the purchaser’s card. Third, all but one of the purchasers had signed the 12 receipts from Best Buy. The receipts contained a brief description of the items purchased and stated the form of payment as “BBY CARD/HSBC,” Capital One’s predecessor-in-interest. Capital One argued that the combined language of the credit card application, cardholder agreement, and 12 receipts was sufficient to describe the collateral and, therefore, Capital One had a security interest in the consumer goods the purchasers had purchased at Best Buy.