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Builder borrowed $200,000 from Credit Union. Builder signed a security agreement granting Credit Union a security interest in "all accounts, general intangibles, contract rights, commercial tort claims, and proceeds, whether now owned or later acquired." At the time of signing, Builder had no known tort claims. Six months later, a supplier delivered defective steel that caused a warehouse roof to collapse. Builder sued the supplier for lost profits and property damage. Credit Union then sent Builder a letter stating that the lawsuit was covered by the earlier security agreement.
Before the lawsuit settled, Builder filed bankruptcy. Credit Union claims that its security interest attached to the commercial tort claim when the claim arose. Alternatively, Credit Union claims an interest in any settlement proceeds. Builder argues that the security agreement did not specifically describe the tort claim and that Article 9 does not allow a generic after-acquired clause to cover later commercial tort claims.
Discuss whether Credit Union's security interest attached to the commercial tort claim itself and whether Credit Union has a better argument to any settlement proceeds or payment rights after the claim is resolved.