Article courtesy of Ariel Emmanuel (King & Spalding)
Westlake Flooring Co., LLC v. Miami Motorsports, LLC, 423 So.3d 894 (Fla. Dist. Ct. App. 2025).
In 2014, Miami Motorsports, LLC (“Motorsports”), an auto dealership, executed a promissory note (the “Poleka Loan”) in favor of Poleka, Limited (“Poleka”), secured by a stock pledge agreement (“Poleka Pledge”) under which Motorsports pledged its capital stock. Prior to executing the Poleka Pledge, Poleka had recorded a UCC-1 financing statement against Motorsports (“Poleka UCC-1”) listing its present and future goods and inventory, including motor vehicles, as collateral. The following year, Motorsports executed a promissory note (“Westlake Loan”) in favor of Westlake Flooring Company, LLC (“Westlake”), secured by a loan and security agreement (“Westlake Pledge”) under which Motorsports pledged its vehicle inventory, among other assets. The Westlake Pledge granted Westlake the right to take immediate possession of the vehicles without legal process upon default. Shortly thereafter, Westlake recorded a UCC-1 financing statement against Motorsports (“Westlake UCC-1”) listing all of its assets as collateral. After Motorsports defaulted on the Westlake Loan, Westlake repossessed Motorsports’ vehicles from its premises, including vehicles Poleka’s subsidiary held liens on and possessed the title certificates for (“Disputed Vehicles”), despite an apparent agreement to keep such vehicles in a locked location pending discussions with Poleka.
Following repossession, Westlake invoked its contractual right to repossess Motorsports’ vehicles and brought a successful replevin action against Motorsports to repossess the vehicles. Westlake subsequently brought a claim against Poleka to establish the superiority of its interest in the Disputed Vehicles and foreclose on its security interest. Poleka counterclaimed for unlawful conversion and a declaration that it possessed a superior interest in the Disputed Vehicles. The district court ruled for Poleka, finding that Westlake’s repossession of the Disputed Vehicles from the locked location entitled it to judgment on each of these counterclaims.
The Court was thus presented with two primary issues: i) whether Poleka or Westlake possessed the superior interest in the Disputed Vehicles; ii) whether Poleka had a viable conversion claim against Westlake for its repossession of the vehicles.
With respect to the superiority of interests in the Disputed Vehicles, the Court began its analysis with an extensive discussion of UCC Article 9’s priority rules governing who prevails as between competing claimants to collateral. In particular, the Court elaborated heavily on the roles of attachment and perfection in resolving competing claims. The Court described attachment as the moment at which a security interest is created. It listed three requirements for attachment, including, unless a substitute applies, the existence of a signed security agreement describing the collateral in a manner reasonably identifying what is covered. The Court then detailed the role of perfection in affording secured parties protection against third parties. After identifying attachment as a prerequisite to perfection, the Court discussed additional acts, usually the filing of a financing statement, necessary to perfect a security interest.
Applying these concepts, the Court found Westlake’s interest in the Disputed Vehicles was superior to Poleka’s. It reasoned that by virtue of its dealings with Motorsports, Westlake created an enforceable and perfected security interest in the Disputed Vehicles. Westlake’s security interest attached upon the signing of the Westlake Pledge specifically describing Motorsports’ vehicle inventory as collateral, and that attached interest was perfected upon the filing of the Westlake UCC-1 listing all of Motorsports’ assets as collateral. In contrast, Poleka’s dealings with Motorsports did not grant it an enforceable and perfected security interest in the Disputed Vehicles. While the Poleka UCC-1 covered Motorsports’ vehicle inventory as collateral, the Poleka Pledge, which described only Motorsports’ capital stock as collateral, did not. The Court thus held that Poleka never attached its security interest in the Disputed Vehicles because it failed to reasonably identify them as collateral in the Poleka Pledge, and a UCC-1 cannot expand the scope of a security agreement’s collateral description. Accordingly, the Court ruled that Westlake’s right to the Disputed Vehicles was superior to Poleka’s given that Westlake possessed a perfected security interest in them while Poleka possessed no security interest at all.
Citing the foregoing analysis in support of its conclusion, the Court also held for Westlake on Poleka’s conversion claim. It identified a plaintiff’s possessory right to the property as an indispensable element of such claims. And because Poleka did not possess an enforceable security interest or any other possessory property interest in the vehicles, the Court rejected its arguments for relief on these grounds.
The Court thus reversed the trial court’s judgment, ruling that Westlake had a superior interest in the Disputed Vehicles and, being entitled to repossess them on this basis, had not engaged in conversion.
