Zimmerling v. Affinity Financial Corp.

In 2008 Affinity Financial (defendant) borrowed thirteen and a half million dollars from BHC, which perfected its security interest. In 2010 William Zimmerling (plaintiff) obtained a default judgment against Affinity for just under $371,000 and sought to enforce it, naming AARP Financial, which owed Affinity money. The superior court ordered AARP to fund an escrow account as security for Zimmerling. BHC intervened, asserting its interest in the money AARP owed Affinity. The superior court held BHC's security interest superior, and Zimmerling appealed, relying on UCC section 9-332, which says a transferee of funds from a deposit account takes free of a security interest.

Whether a perfected security interest in funds is extinguished when the funds are transferred into an escrow account pursuant to a court order.