Lid Acquisition, LLC v. Lake at Las Vegas Joint Venture, LLC (In Re Lake at Las Vegas Joint Venture, LLC)

MEMORANDUM

The Security Agreement between Lake at Las Vegas Joint Venture (LLVJV) and Wells Fargo granted the bank a security interest, not an absolute assignment, in payments “due or to become due under or in connection with” the T-12 Acquisition Agreement, because the agreement: (1) expressly contemplated that, once signed, it created a security interest, see, e.g., “T-12 Security Agreement” at ¶ 2; (2) gave Wells Fargo the right to demand the amount of any deficiency between the proceeds from the sale of the collateral and the amount of the loans, see id. at ¶ 15(e); and (3) required Wells Fargo to pay any surplus received from the sale of the collateral to the debtors or at the debtors’ direction, see id. See Dewhirst v. Citibank (In re Contractors Equip. Supply Co.), 861 F.2d 241 , 245 (9th Cir.1988) (citing In re Evergreen Valley Resort, Inc., 23 B.R. 659, 661-62 (Bankr.D.Me.1982)) (identifying factors relevant to determining whether an agreement creates a security interest or an absolute assignment). For these same reasons, the Security Agreement between LLV-l, LLC and Wells Fargo granted the bank a security interest, not an absolute assignment, in the T-16 Acquisition…