In re Adkins

Roy Dale Adkins and Beth Ann Adkins (debtors) filed for Chapter 13 bankruptcy in May 2010. Prior to filing for bankruptcy, Beth secured funding from Wells Fargo Financial National Bank (Wells Fargo) (creditor) to purchase windows from a vendor. Beth signed a charge slip that described the product simply as windows and granted a purchase-money security interest (PMSI) to Wells Fargo. The windows were incorporated into the Adkinses’ home. After the bankruptcy filing, Wells Fargo submitted a proof of claim for a PMSI in the windows in the amount of $6,618.31 to the bankruptcy court. The Adkinses’ objected to Wells Fargo’s claim and sought to have it reclassified as an unsecured claim. The Adkinses argued that Wells Fargo no longer held a PMSI because the windows were ordinary building materials as found in an average home. Under Ohio’s version of Article 9 of the Uniform Commercial Code (UCC), a security interest in goods may survive after goods have become fixtures. However, this survival of the security interest does not include ordinary building materials once the goods have been incorporated into real property. Although Wells Fargo had not made a fixture filing, it maintained its claim based on its PMSI. Wells Fargo did not argue that the windows were not ordinary building materials. The court asked the parties to brief the issue of whether Wells Fargo’s PMSI in the windows survived after the windows were installed in the Adkinses’ home.