SECURED TRANSACTIONS SYLLABUS AND COURSE OUTLINE Law #803B, FALL 2010, 3 credits Professor Karen M. Gebbia Classroom # 3203 415-369-5357, 707-538-2531 T/Th 10:15 11:30 Office Hours: Tues. 11:45-3 pm & by appt. Office # TBA kgebbia@ggu.edu PLEASE NOTE: This is an interactive class. COMPUTERS, RECORDING DEVICES, AND OTHER ELECTRONIC DEVICES WILL NOT BE PERMITTED IN CLASS. I. COURSE SUMMARY This course is about borrowing, lending, and getting paid. A lender may reduce the risk of non-payment by obtaining an interest in the borrower s property (real or personal) as collateral to secure repayment. Reducing the lender s risk may reduce the borrower s costs (e.g., interest rates, fees) or enable the borrower to obtain loans that would not otherwise be made. The course compares the rights of secured creditors to those of unsecured creditors; compares real property and personal property secured transactions; introduces you to the Uniform Commercial Code (UCC) (including the general governing principles of article 1); examines the creation, perfection, priority and enforcement of security interests in personal property under UCC article 9; and examines the policies that underlie article 9. Our focus is upon applying the UCC to (i) counsel clients, (ii) negotiate and document transactions, (iii) reduce risk, and (iv) resolve commercial disputes with and without litigation. We examine the rights of unsecured creditors and real property secured creditors primarily to enhance our understanding of UCC article 9 personal property secured transactions. II. COURSE OBJECTIVES This course is designed to enable you to: 1. Understand the different remedies available to unsecured and secured creditors. 2. Understand the fundamental differences between real property secured lending and personal property secured lending. 3. Understand the general principals that underlie the UCC and are the foundation for the continuing growth and development of the UCC. 4. Develop a working knowledge of the provisions of the UCC governing secured transactions (primarily articles 1 and 9) and other law applicable to secured transactions. 1
5. Develop the skills necessary to apply in practice the legal principles examined in the course. 6. Improve your skills of (a) critical thinking and analysis (including the ability to discern the letter and spirit of the law, recognize the important elements of cases, statutes and problems and distinguish well-reasoned and poorly reasoned judicial decisions), (b) independent discovery (including the ability to identify issues and locate the applicable governing law, and (c) problem solving (including the ability to recognize practical and legal problems faced by parties to commercial transactions, identify and choose among options and strategies, and use governing legal principles to formulate solutions.) III. PROFESSOR S COMMITMENTS: I will... 1. Provide you with a clear outline of the materials to be covered in the course and the objectives of the course, and give you as much advance notice as practicable of any necessary adjustments as the semester progresses. 2. Provide you with a clear recitation of the commitments expected from you and of the bases upon which your performance in the course will be evaluated. 3. Be as responsive as possible to questions posed in class, without digressing unreasonably from the subject matter. 4. Be available to consult with you during listed office hours and make reasonable efforts to be available at other times, particularly if your schedules conflict with listed office hours. 5. Attempt to provide a dynamic learning environment that links theory and practice, facilitates your achievement of the course objectives, shines a little light into the dusky corners of the UCC, and convinces you that the UCC truly can be your friend. IV. STUDENTS COMMITMENTS: You are expected to... 1. Attend each class, arriving on time and not leaving early except in unusual circumstances. 2. Complete all Required Readings prior to the class session in which such readings are to be discussed. 3. Actively participate in class discussions, drafting assignments, and any group projects in a manner that adds value and quality for the benefit of all students. 4. Complete the final examination at the date and time scheduled. 2
V. EVALUATION CRITERIA There will be one, three-hour, open book final examination. The format of the examination will be discussed in greater detail during the final class or review session. In accordance with GGU Law policy, any student who misses more than three class meetings or whose absence and unpreparedness together total more than three, may have his or her final grade reduced by one step/grade level (e.g., from A- to B+ ). Your grade in this class may also be INCREASED by one grade increment (e.g., from B+ to A- ) based upon exemplary class participation. VI. READINGS Required Readings: You should work through all problems assigned in the Required Readings and carefully read all assigned statutory provisions (including comments where applicable). The most important statutory provisions for each day are listed in bold. Also, an important skill in using comprehensive codes is learning to locate other statutory provisions that affect the provisions you are reading. Please read all relevant definitions and follow all significant cross-references in order to understand fully the primary sections you are reading. Although the problems are not graded, failure to analyze the problems in advance will impair your ability to understand class discussions, and to apply the concepts discussed in class to problems presented on the final examination and in practice. Visual Aids (in the form of PowerPoint slides or overhead transparencies) will be used extensively during class. You are not required to obtain copies but most students find them helpful. Visual Aids will be made available for copying in the Faculty Center and posted on my webpage. REQUIRED MATERIALS Text: LoPucki & Warren, Secured Transactions: A Systems Approach, Aspen (6th Edition 2008) Reader: A collection of supplemental materials. Please download the Reader from my website or obtain a copy from the Faculty Center prior to the first class. Statute Book: Baird, Commercial and Debtor-Creditor Law: Selected Statutes, Foundation Press (2010 Edition) OPTIONAL MATERIALS: If you wish to use a study aid for this class, the ones I recommend are: Clark, Dolan, et al., Secured Transactions and Payment Systems: Problems and Answers (Aspen, 2d Ed. 2003) 3
Lawrence, Henning, Freyermuth, Understanding Secured Transactions (LexisNexis, 4th Ed. 2007) 4
COURSE OUTLINE AND ASSIGNMENTS SCOPE & ENFORCEMENT Class 1-4 ATTACHMENT Class 5-9 PERFECTION Class 10-16 PRIORITY Class 17-26 CRITICAL ANALYSIS Class 27-28 TOPIC DATE ASSIGNMENT Course overview: Debt, equity and finance A map of secured credit and article 9 Applying the UCC 8/17/10 Text: xxi xxxiv Reader: Part 1: Debt, Equity, Finance UCC: 1-103 analyze Unsecured and Secured Creditors: General Principles and Remedies under State Law 8/19/10 Text: 3-35 Problem Set: 1 all 2.1, 2.2 UCC: 9-109 read 1-201(b)(35) read Unsecured and Secured Creditors: Foreclosure and Deficiency 8/24/10 Text: 38-53 Problem Set: 2.3 2.7 3 all UCC: 9-610 analyze 9-609 analyze 9-601 to 9-608 read 9-623 read Unsecured and Secured Creditors: Sale and Deficiency Note: this is an advance make-up class -- no class 10/14 8/24/10, room 3203, 11:45-1 pm 8/24/10 Text: 58-75, 78-90 Problem Set: 4.6 5 all UCC: 9-620 analyze 9-610 review 9-627 analyze 9-611 to 9-626, 9-628 read 5
Becoming a Secured Creditor: Attachment of a Security Interest 8/26/10 Text: 131-146 Problem Set: 8, omit 8.3(d) UCC: 9-203 analyze Attachment: the Collateral and the Debt *Determining which debt is secured by the collateral *Describing the collateral 8/31/10 Text: 150-161 Problem Set: 9 all UCC: 9-201 analyze 9-102(a) (2, 11, 12, 23, 29, 31, 33, 34, 41, 42, 44, 47, 48) read and compare 9-102 (b, c) 1-201(b) (3), 1-303 read 1-201(b)(35), 9-203 review 9-108 analyze 9-204 read Attachment: Changes in the Collateral: Proceeds, products, and tracing 9/2/10 Text: 164-179 Problem Set: 10 all UCC: 9-102(a)(64) analyze 9-315 analyze 9-401 read 9-203 review review sections from last class The Secured Party Versus the Debtor: Default and Enforcement 9/7/10 Text: 217-234, 238 1st 2 paragraphs Problem Set: 13 all UCC: 9-601 review and analyze 9-609, 9-610 review The Secured Party and the Debtor: Some Typical Secured Transactions Review: Attachment 9/9/10 Text: 251-268 Inventory Lending Reader: Part 2 Account Lending Problem Set: 15 all UCC: review 9-203 and Article 9, part 6 6
The Secured Party versus Third Parties: Perfection, Priority and the Filing System *Perfection, priority and filing 9/14/10 Text: 275-291 Problem Set: 16 all 17.5, 17.6 UCC: 9-501 analyze 9-109 review 9-301 analyze *Financing statements 9/16/10 Text: 294-209, 313-323 Problem Set: 17.1 17.4, 17.7, 17.8 18 all UCC: 9-501 to 9-504, 9-506 analyze 9-509, 9-510 read 9-516, 9-517 analyze 9-108, 9-518 to 9-527 read The Secured Party versus Third Parties: Perfection other than by Filing 9/21/10 Text: 327-341 Problem Set: 19 UCC: 9-312 analyze 9-109 review 9-308 to 9-316 read The Secured Party versus Third Parties: Perfection and the Nature of the Collateral *Real estate related collateral and vehicles 9/23/10 Text: 344-356 Problem Set: 20 Text: skim 417-430 (omit problems) UCC: 9-102(a) (40, 41, 44, 80) analyze 9-334 read 1-201(b)(35), 1-203, 9-109 review 9-510, 9-502, 9-308 to 9-315 review *Characterizing the collateral 9/28/10 Text: 360-373 GROUP PROJECT: Perfection by Collateral Type Problem Set: 21 all UCC: 1-201(b) (35), 1-203 review 9-102(a)(2, 11, 29, 33, 34, 42, 47, 48) and cmts review 9-109, 9-308 to 9-315, 9-501 review 7
The Secured Party versus Third Parties: Maintaining Perfection Review: perfection *Lapse, bankruptcy and name change 9/30/10 Text: 375-388, 391-394 Problem Set: 22.1, 22.2, 22.5 23.2, 23.3 UCC: 9-512, 9-513, 9-625 analyze 9-507 review 9-506 to 9-517 review 9-519 to 9-527 read Bankruptcy Code: skim 544, 545 *Change in collateral, relocation of debtor or collateral 10/5/10 Text: 404-414 Problem Set: 23.1, 23.4, 23.5 24.1 to 24.3 UCC: 9-301 to 9-307 review 9-501 to 9-507 review 9-315, 9-316, 9-507, 9-508, 9-515 read The Secured Party versus Third Parties: Priority Battles involving Judicial Lien Creditors 10/710 Text: 433-443, 463-471 Problem Set: 26.2, 26.3, 26.5 28.1 to 28.7 UCC: 9-611, 9-617 analyze 9-609, 9-625 review 9-317 analyze 9-203, 9-308, 9-309 review 10/12/10 Text: 474-85 Problem Set: 29 all UCC: 9-323 analyze 9-317 review Note: there will be no class on 10/14/10 8
The Secured Party versus Third Parties: Priority Battles against the Trustee in Bankruptcy 10/19/10 Text: 446-460, 488-500 Problem Set: 30.1, 30.2, 30.4 Bankruptcy Code: 544 analyze 362(a-c) read UCC: 9-317 review 10/21/10 Text: 503-510 Problem Set: 31 all Bankruptcy Code: 547 (a, b, c, e) analyze The Secured Party versus Third Parties: Priority Battles against other Secured Creditors 10/26/10 Text: 513-524 Problem Set: 32 all UCC: 9-322 analyze 9-323 to 9-325 analyze 9-326 to 9-339 read 9-308, 3-317 review 9-203, 9-204 review 9-506, 9-507, 9-515 to 9-517 review 10/28/10 Text: 529-546 Problem Set: 33.3 to 33.6 UCC: 9-322, 9-334 review 9-604 analyze The Secured Party versus Third Parties: Priority Battles against Sellers and Buyers *Sellers 11/2/10 Text: 567-582 Problem Set: 35 all UCC: 9-203, 9-109 review 9-319, 9-324 read 2-403, 2-702 read (article 2, not 9) *Buyers 11/4/10 Text: 585-601 Problem Set: 36 all UCC: 9-401 analyze 9-201 review 9-315, 9-317, 9-320, 9-232 review 9
The Secured Party versus Third Parties: Priority Battles against Statutory Liens Review: priority Secured Credit: A Review and Critique *Statutory Liens under State Law 11/9/10 Text: 605-621 Reader: Part 3, California Statutes Problem Set: 37 all UCC: 9-333 analyze 9-109, 9-310, 9-322 read *IRS Federal Tax Liens 11/11/10 Text: 625-641 Reader: Part 4, IRC 6321 to 6323 Problem Set: 38 all *Why Secured Credit? 11/16/10 Text: 657-674 Problem Set: 40 all Group Project *Compare Traditional Secured Credit to Securitization 11/18/10 Text: none Reader: Part 5, Creative Finance 10