In Re Safeguard Self-Storage Trust, Debtor. Wattson Pacific Ventures v. Valley Federal Savings & Loan, Safeguard Self-Storage Trust

Wattson Pacific Ventures (“WPV”) appeals the district court’s order affirming a decision of the bankruptcy court that the revenues which Safeguard Self-Storage Trust receives from leasing storage space do not constitute cash collateral under 11 U.S.C. § 363 (a). WPV argues that the contrary result is compelled under California law because the storage agreements are leases rather than licenses. We have jurisdiction pursuant to 28 U.S.C. § 168 (d) and § 1291, and we reverse.

I

In February 1988, Ned Evans purchased a self-storage warehouse in Arcadia, California (the “Safeguard property”) from WPV. Evans executed promissory notes secured by first and second deeds of trust in favor of Valley Federal Savings and a note secured by a third deed of trust in favor of WPV. The WPV deed of trust provided “as additional security [to WPV] ... the right, power and authority ... to collect the rents, issues and profits of said property_” WPV recorded the deed of trust on February 12, 1988. At no time has WPV recorded a UCC financing statement covering the revenues from the self-storage property.

In a series of transactions in December 1989, the Safeguard property was quit-claimed to a series…