Yatooma v. Barker

In July 2006, Christopher Yatooma (plaintiff) loaned Ronald Omilian, United Soils, Inc., Earth Products, Inc., Earth Supplies, Inc., and C.A.R.D. Properties, L.L.C. (collectively, the Omilian entities) $230,000. The loan agreement provided that the loan was secured by “all of the assets and personal property of” the Omilian entities. The agreement further provided that Yatooma had a security interest in “all collateral.” Each Omilian entity filed a Uniform Commercial Code (UCC) financing statement covering all assets and personal property, including tangible and intangible property in which the entity presently had or later acquired any rights. Independent Bank (the bank) (defendant) had also loaned money to the Omilian entities. In December 2006, United Soils filed for Chapter 11 bankruptcy. A few months later, some of the Omilian entities, including United Soils, entered into an agreement to surrender their assets to the bank. The agreement included a right-of-first-refusal clause that gave Omilian or any Omilian-controlled entity the right to purchase back the assets if the bank gave Omilian notice that the bank intended to sell the assets to a third party. The bank subsequently gave notice that the bank had agreed to sell part of the assets to a third party, and Omilian-controlled entity AKO Enterprises-Waterford, Inc. (AKO) exercised its right to purchase the assets under the right-of-first-refusal clause. After the bank sold the assets to AKO, Yatooma sued the bank for conversion and tortious interference with contract. Yatooma claimed that the loan agreement had given him a secured interest in the right of first refusal and that the bank had not honored that secured interest. The bank moved for summary disposition, arguing that Yatooma did not have a security interest in the right of first refusal because the right had been created after Yatooma had entered into the loan agreement. The trial court denied summary disposition, finding a question of material fact regarding whether Omilian and Yatooma had intended after-acquired property to be included in Yatooma’s security interest. The bank appealed.