In re Zaochney

Nada Zaochney (plaintiff) took out a credit-line loan agreement with Alaska USA Federal Credit Union (Alaska Credit Union) (defendant) that expressly cross-collateralized her other existing and future loans with the credit union. She later financed a car purchase through Alaska Credit Union, and that retail installment contract likewise stated the car secured any other obligations she owed the credit union, present or future. After Zaochney filed for bankruptcy, she moved to value Alaska Credit Union's security interest in the car; the parties agreed the car was worth $12,950. Alaska Credit Union argued the car secured both the car loan balance and the outstanding credit-line balance, while Zaochney argued the dragnet clauses were unenforceable and the car secured only the car loan.