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Trade Fixtures - Secured Sale Agreement - § 7-1-203, Ala. Code 1975

Pipkin v. Sun State Oil, Inc., et al., [Ms. 1160850, Sept. 21, 2018] __ So. 3d __ (Ala. 2018). This unanimous decision by Justice Mendheim reverses the Mobile Circuit Court’s summary judgment in favor of Sun State Oil dismissing claims for conversion and trespass asserted by Pipkin, the owner of a convenience store. Sun State had installed the gasoline pumps at the convenience store in connection with a petroleum supply agreement (PSA) which obligated the then-owner, IMAS, to purchase a minimum of 6 million gallons of petroleum over the 10-year term. Ms. *4. The PSA further provided that Sun State would lease to IMAS two new gasoline pumps with card readers. Ibid. After the store was closed and sold to Pipkin, Sun State entered the property and removed the gasoline pumps.

The circuit court granted Sun State’s motion for summary judgment, concluding that the gasoline pumps were trade fixtures and that Sun State retained an interest in and right to remove the pumps notwithstanding the pumps being affixed to the real property. Ms. *12-13. Pipkin argued the gasoline pumps were not trade fixtures and that Sun State had sold the pumps to the prior owner but failed to perfect a security by filing a UCC-1 financing statement. Ms. *14.

The Supreme Court agreed with Pipkin and concluded that although “unlike fixtures generally, a trade fixture retains its status as personal property and does not become part of the real property to which it is affixed,” Ms. *15, the gasoline pumps were not trade fixtures because they were affixed to the property by the owner, not a tenant. Ibid. The Court noted that “‘[a] trade fixture is an article annexed to realty by a tenant for purposes of carrying on a tenant’s trade or business.” Ms. *16, quoting Sycamore Mgmt. Grp., LLC v. Coosa Cable Co., 42 So. 3d 90. 94 (Ala. 2010).

Applying §7-1-203, Ala. Code 1975, the Court concluded that the PSA was not a true lease of the pumps but was a sale of the pumps disguised as a lease. Ms. *34. Because Sun State did not file a UCC-1 financing statement, it had no security interest and no right to remove the gasoline pumps. Ibid.

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