OPINION

ERIC L. FRANK, Chief Judge.

I. INTRODUCTION

In this adversary proceeding, the chapter 7 trustee, Gary Seitz ("the Trustee"), seeks to avoid a pre-petition lien held by Defendant Republic First Bank ("the Bank") in three (3) investment accounts of the debtor, GEM Refrigerator Co. ("the Debtor"). The accounts are held at Charles Schwab & Co., Inc. t/a Charles Schwab Institutional ("Schwab"), and have a combined value of approximately $1 million.

The Trustee asserts that the Bank's security interest was unperfected as of the commencement of the case and requests that its lien be avoided under 11 U.S.C. § 544(a) (and related declaratory relief).1 The Bank counters that its lien remained perfected at all times and is not avoidable under the Bankruptcy Code.

The Bank has filed a motion for partial summary judgment ("the Motion"). For the reasons that follow, I will grant the Motion and enter judgment in the Bank's favor on the Trustee's lien avoidance and declaratory relief claims.2

II. PROCEDURAL HISTORY

On May 21, 2012, the Debtor filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. The case was converted to a case under chapter 7 on August 29, 2012. That same day, the United States Trustee appointed Gary F. Seitz, as the chapter 7 trustee of the Debtor's bankruptcy estate and he continues to serve in that capacity.

On April 10, 2013, the Trustee commenced this adversary proceeding by filing a Complaint.3 On May 16, 2013, the Trustee filed an Amended Complaint asserting five (5) counts, including inter alia, declaratory relief, lien avoidance, subordination, and marshaling. (Doc. # 10). The Bank filed an Answer on May 30, 2013. (Doc. # 12).4 The Bank's Answer included counter claims requesting a declaration that:

Id. The Trustee answered the counterclaims on June 20, 2013. (Doc. # 20).

On September 4, 2013, the Bank filed the instant Motion. (Doc. # 44). Briefing was completed on December 6, 2013.6 The matter is now ready for disposition.

III. STATEMENT OF UNDISPUTED FACTS

The Debtor is a Delaware Corporation. (See Financing Statements (Exs. Bank-9, 10); Credit Note (Ex. Bank-11); Loan Agreement (Ex. Bank-12)).

On April 21, 2011, the Debtor entered into several transactions. First, Jeffrey Steinberg, as President and C.E.O. of the Debtor, executed a Revolving Credit Note, pursuant to which the Bank agreed to lend the Debtor the maximum aggregate principal sum of $1,600,000.00. (Ex. Bank-11).

Second, as security for the Credit Note and on behalf of the Debtor, Steinberg executed a Loan and Security Agreement ("the Loan Agreement"), pursuant to which the Debtor granted the Bank a blanket lien on all of its assets. (Ex. Bank-12 at ¶ 3.1a.). More specifically, the Loan Agreement defined the loan "collateral" as "personal property," including "all assets" of the Debtor, "whether now owned or hereafter acquired," including inter alia, all "accounts," all "investment property" and "[a]ll items detailed in the UCC Financing Statement filed in connection" with the transaction. (Id. at ¶ 3. 1.a.i., xiii., vii.). Also included in the definition of collateral were "[t]he Marketable Securities," (id. at ¶ 3.1.a.xviii.), which were defined as "the marketable securities ... [at] an account manager acceptable to the Lender including Securities Account # [] — 8321 established and maintained at [Schwab]." (Id. at ¶ 1.1).

Third, the Debtor entered into a Securities Account Pledge Agreement with the Bank ("the Pledge") in connection with the Loan Agreement. (Ex. Bank-13). The Pledge, which identified "Securities Account # — 8321," (hereafter, "the Parent Account"), provided that as security for its obligations under the Loan Agreement, the Debtor

(Id.) (emphasis added).

The Pledge further provided that

(Id.).

Fourth and, finally, the Debtor, the Bank and Schwab entered into a Managed Pledged Asset Account Agreement ("the Control Agreement"), which also identified the Parent Account and provided in relevant part:

(Ex. Bank-14) (emphasis added).

On April 22, 2011, Steinberg and Bruce Gruhler, also an officer of the Debtor, signed an Organization Account Agreement to open a new account at Schwab through its investment advisor United Capital Financial Advisers ("United Capital"). (Ex. Trustee-1). A few days later, on April 26, 2011, the Bank filed a Financing Statement with the Delaware Department of State. (Exs.Bank-9, 10).7 The Financing Statement identified the Bank's collateral as including "deposit accounts, investment property ... whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property." (Id. at ¶ 1).8

As of June 10, 2011, the Parent Account, a Money Market Fund account, had a value of $1,004,833.75. (Ex. Bank-27). Prior to that date, the Parent Account consisted of shares of stock in various companies.

On or about June 16, 2011, Erik Evans, a "Wealth Advisor" with United Capital, sent an e-mail to James D'Antonio, a Vice President of the Bank, with a carbon copy sent to Steinberg ("the June 16th E-mail"). (Ex. Bank-15). In the June 16th E-mail, Evans requested Mr. D'Antonio's written permission to effect transfers from the Parent Account into three (3) separate "sub-accounts," to implement the Debtor's investment strategy. D'Antonio acquiesced to the request and sent written instructions on the Bank's letterhead to Schwab ("the June 16th Letter") to transfer and invest funds from the Parent Account as follows:

(Ex. Bank-16).

I will follow the parties' convention of referring to Accounts Nos. 7341, 4162 and 4438 as "the Sub-Accounts."

IV. SUMMARY JUDGMENT STANDARD

The legal standard for the entry of summary judgment under Fed.R.Civ.P. 56, incorporated into bankruptcy adversary proceedings by Fed. R. Bankr.P. 7056, is well established. Summary judgment is appropriate only when, drawing all reasonable inferences in favor of the nonmoving party, there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. E.g., Tri-M Group, LLC v. Sharp, 638 F.3d 406, 415 (3d Cir.2011); In re Bath, 442 B.R. 377, 387 (Bankr.E.D.Pa.2010). In other words, summary judgment may be entered if there are no disputed issues of material fact and the undisputed facts would require a directed verdict in favor of the movant. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993).

In evaluating a motion for summary judgment, the court's role is not to weigh the evidence, but to determine whether there is a disputed, material fact for resolution at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue of material fact is one in which sufficient evidence exists that would permit a reasonable fact finder to return a verdict for the non-moving party. Id. at 248, 106 S.Ct. 2505. The court must view the underlying facts and make all reasonable inferences therefrom in the light most favorable to the party opposing the motion. Montone v. City of Jersey City, 709 F.3d 181, 189 (3d Cir.2013). On the other hand, if it appears that the evidence "is so one-sided that one party must prevail as a matter of law," the court should enter judgment in that party's favor. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

As a threshold matter, the moving party's initial burden is to demonstrate that there are no disputed issues of material fact. E.g., U.S. v. Donovan, 661 F.3d 174, 185 (3d Cir.2011); Aman v. Cort Furniture Rental Corp., 85 F.3d 1074, 1080 (3d Cir.1996). How the movant meets this burden and how the respondent may rebut the movant's showing is affected by the allocation of the evidentiary burden of persuasion if the dispute were to proceed to trial.

Here, the Bank (the moving party) does not have the burden of proof at trial. Therefore, it may establish the absence of a disputed issue of material fact and grounds for summary judgment one (1) of two (2) ways: First, and most simply, if the Bank presents evidence establishing that the undisputed facts negate at least one (1) element of the Trustee's claim, it is entitled to summary judgment. See Quaker State Minit-Lube, Inc. v. Fireman's Fund Ins. Co., 868 F.Supp. 1278, 1287 n. 5 (D.Utah 1994). Alternatively, the Bank may obtain summary judgment by demonstrating that the Trustee lacks evidence to support an essential element of its claim. See, e.g., Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir.1996); In re Polichuk, 506 B.R. 405, 421-22 (Bankr. E.D.Pa.2014).

V. DISCUSSION

A. Overview

In this case, there are no genuine issues of fact. The evidence is undisputed as to what occurred — the Bank took certain actions to acquire and perfect a lien on the Debtor's assets, including the Schwab Parent Account and, subsequently, permitted the Debtor to transfer most of the assets from the Parent Account to the three (3) Schwab Sub-Accounts.

In seeking summary judgment, the Bank invokes the first "path" to judgment described above. It claims that the undisputed facts demonstrate that its lien on both the initial account and the three (3) subsequent accounts all were perfected, thereby negating an essential element of the Trustee's avoidance claim. See n. 1, supra. The Trustee does not dispute that the Bank's lien on the Parent Account (and the property contained therein) was perfected. Ultimately, the Trustee contends that the transfers of the property from the Parent Account to the three (3) Sub-Accounts "undid" the prior perfection.

Resolution of the "perfection" issue turns, in large part, on the characterization of the secured property under the Uniform Commercial Code ("UCC"). For the reasons outlined below, I conclude that the Sub-Accounts constituted "investment property" under the UCC and, as such, the Bank's lien remained perfected following the transfer of property from the Parent Account to the Sub-Accounts. Therefore, the Bank is entitled to summary judgment.

B. Characterization of the Property that Serves as the Bank's Collateral: the Parties' Contentions

The assets in the Sub-Accounts derived from the Parent Account, so it is logical to start by examining the status of the original, Parent Account, particularly because the parties dispute the characterization of the Parent Account under the UCC.

In a nutshell, the Trustee argues the Parent Account was a "deposit account," while the Bank contends it was "investment property." The proper characterization is significant because it affects the means by which a secured party's lien can be perfected.

The Trustee's position is that, as a deposit account, the Bank's lien on the Parent Account was perfected by execution of the Control Agreement. The Trustee then reasons that when the property in the Parent Account was transferred from the Parent Account to the Sub-Accounts, the perfection of the Bank's lien lapsed because the Bank neither amended the Control Agreement to encompass the three (3) Sub-Accounts nor obtained new control agreements for the Sub-Accounts. (See Trustee's Supp. Memo at 8-9 (unpaginated)). The Trustee also suggests that the composition of the assets contained in the Sub-Accounts, which includes "Cash and Other Assets (i.e., other than the other categories specifically listed such as equities, equity funds, mutual funds, bonds and bond funds), are not characteristic of "investment property," and, therefore, the Sub-Accounts must be "deposit accounts."

The Bank contends that, not only was the Parent Account "investment property," but so too are the Sub-Accounts and that the Financing Statement which perfected its lien on the Parent Account also served to perfect the Bank's lien on the Sub-Accounts.

To resolve the dispute, it is necessary to review the relevant definitions under the UCC. However, there is a threshold choice of law issue.

C. Choice of Law Governing the Characterization of the Collateral

The Trustee first raised a choice of law issue in his supplemental brief. While the parties agree that the Uniform Commercial Code ("UCC") applies, they do not agree on which state's UCC is applicable.

The Bank argues that Pennsylvania law applies because the Debtor is headquartered in Philadelphia and all of the loan documents — the Credit Note (Ex. Bank-11 at 1), the Loan Agreement (Ex. Bank-12 at 39) and the Pledge Agreement (Ex. Bank-13 at 4) — dictate that Pennsylvania law applies. The Trustee argues that the Delaware UCC applies because the Debtor is a Delaware corporation.10

For choice of law questions, I am required to apply the choice of law rules of the forum state. In re Southwest Equipment Rental, Inc., 1992 WL 684872, at n. 48 & accompanying text (E.D.Tenn. July 9, 1992) (collecting cases and discussing division of authority on the subject of choice of law rules in bankruptcy cases); In re Buffalo Molded Plastics, Inc., 354 B.R. 731, 750 (Bankr.W.D.Pa.2006) (citing Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)); see Perma-Liner Industries, Inc. v. U.S. Sewer & Drain, Inc., 630 F.Supp.2d 516, 522 (E.D.Pa.2008) (federal court, sitting in diversity or with supplemental jurisdiction over a common law claim, must apply the choice of law rules of the forum state and Pennsylvania courts generally enforce contractual choice of law provisions); see also In re Old Summit Mfg., LLC, 523 F.3d 134, 137 (3d Cir.2008) (applying Pennsylvania law in applying the UCC to a contract that provided that it shall be construed in accordance with Pennsylvania law). But see John T. Cross, State Choice of Law Rules in Bankruptcy, 42 Okla. L.Rev. 531, 542-45 (Winter 1989). Consequently, I will apply Pennsylvania law.

Pennsylvania courts generally will honor choice of law provisions in contracts, to the extent they are reasonably related to the chosen forum. Gay v. CreditInform, 511 F.3d 369, 390 (3d Cir.2007) (citing Churchill Corp. v. Third Century, Inc., 396 Pa.Super. 314, 578 A.2d 532, 537 (1990)). Under the Pennsylvania UCC, in particular, "when a transaction bears a reasonable relation to this Commonwealth and also to another state ... the parties may agree that the law either of this Commonwealth or of such other state ... shall govern their rights and duties." 13 Pa. C.S.A. § 1301.

Here, the Loan Agreement provides that Pennsylvania law applies.11 Because I conclude that the parties' agreement bears a reasonable relationship to Pennsylvania, I will respect the parties' contractual choice of law provision. But see In re Eagle Enterprises, Inc., 237 B.R. 269, 273-74 (E.D.Pa.1999).12

Therefore, I begin by reviewing the Pennsylvania UCC to determine the nature of the secured property (collateral).

D. The Parent Account Is "Investment Property" under the Pennsylvania UCC

1.

Under the Pennsylvania UCC, a "deposit account" is a

13 Pa.C.S.A. § 9102.

The Pennsylvania UCC defines "investment property" as a

13 Pa.C.S.A. § 9102 (emphasis added).

As explained in Comment 6 to § 9102, the term investment property

Id. (emphasis added).

The terms deposit account and "investment property" are mutually exclusive. This is so for all types of investment property, including securities and security entitlements, or shares in a money-market mutual fund, even if the shares are redeemable by check. As specified in Cmt. 12, 13 Pa.C.S. §§ 9102.

The terms, "security,"13 "security entitlement,"14 "securities account" and related terms are defined in Article 8 of the Pennsylvania UCC. Most pertinent in this case is the definition of a "securities account:"

13 Pa.C.S.A. § 8501 (emphasis added).

A "financial asset" is defined in relevant part as

13 Pa.C.S.A. § 8102 (emphasis added).15

And, finally, a "securities intermediary" is either a (1) clearing corporation; or (2) a person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. 13 Pa.C.S.A. § 8102(a).

2.

The Bank contends that the Parent Account was investment property because it was a "securities account." The Trustee takes the position that the Parent Account was a deposit account. I agree with the Bank.

Prior to June 10, 2011, the Parent Account consisted of shares of stock in various companies. Under 13 Pa.C.S. § 8102(a), the stock interests were "securities" and "financial assets" and Schwab clearly was a "securities intermediary." Because these were being maintained by Schwab, a securities intermediary, it follows that the Parent Account was a "securities account" under 13 Pa.C.S.A. § 8501. As a "securities account," the Parent Account constituted "investment property" under 13 Pa.C.S.A. § 9102.16 Investment property and deposit accounts being mutually exclusive, the Parent Account could not have been a deposit account. See 13 Pa.C.S.A. § 9102 ("The term [deposit account] does not include investment property or accounts evidenced by an instrument.").17

3.

For much the same reasons, I conclude easily that the three (3) Sub-Accounts also constitute investment property.

According to the June 16th Letter, D'Antonio (the Bank's representative) authorized Schwab to allocate funds from the Parent Account to the Sub-Accounts and to invest in certain funds: Account 7344 to Endowment Mutual Fund 20/80; Account 4162 into "Tactical Fixed Income" fund; and 4488 in "Sage Advisory Multi Asset Income fund.". (Ex. Bank-16). Certain transfers took place on June 22, 2011, and as of July 1, 2011, the Parent Account was reduced to a value of $1,519.87. (Ex. Bank-20).18 All but $32.72 of that remaining value was transferred to each of the Sub-Accounts ten (10) days later, on July 1, 2011.19 (Id.). And, in reviewing the July 1-31, 2011 statements provided for each of the three (3) Sub-Accounts, one can see that each account consisted of some securities.20

The Trustee suggests that the existence of some cash in the Sub-Accounts somehow transforms the account from "investment property" into "deposit accounts," and that, because there was no control agreement for the specific Sub-Accounts, the Bank's lien became unperfected. The Trustee offers no legal authority in support for the premise of the argument, i.e., the novel proposition that the existence of some cash in a securities account maintained by a securities intermediary turns the account into a deposit account. To the contrary, while each of the Sub-Accounts held some cash, they remained with Schwab, a securities intermediary, and also held securities, in large part. Accordingly, the Sub-Accounts continued to hold "financial assets," continued to be maintained by a "securities intermediary" and continued to be "securities accounts," and therefore, "investment property."

The status of the Sub-Accounts as investment property having been determined, I can now address the ultimate issue: whether the Bank's lien was perfected.

E. Perfection of the Parent Account: Pennsylvania UCC Provisions

According to § 9301(a) of the Pennsylvania UCC, the general rule is that the local law of the jurisdiction in which the debtor is located "governs perfection, the effect of perfection or non-perfection and the priority of a security interest in collateral." There are exceptions, however. See 13 Pa.C.S. § 9301(e). One exception is for investment property. Id. § 9301(e)(3). The rules governing perfection of security interests in investment property are set forth in 13 Pa.C.S.A. § 9305.

Section 9305(a)(1)-(4) states the general rules governing perfection of a security interest in a certificated security, an uncertificated security, a security entitlement, a securities account or a commodity contract or commodity account. However, Section 9305(a) expressly states that its rules apply "except as otherwise provided in subsection (c)." Subsection (c) addresses the perfection of a security interest in investment property by filing. Thus, for present purposes, § 9305(c) is the controlling provision.

Section 9305(c) provides, in relevant part, that the law of the jurisdiction in which the debtor is located governs perfection of a security interest by filing. Here, the Bank filed a financing statement, so I must determine the location of the Debtor to determine which jurisdiction's law of perfection is applicable.21

The "location of the debtor" depends upon whether the debtor is an individual, has only one place of business, or has more than one place of business. See 13 Pa. C.S.A. § 9307(b). However, yet again, there is an exception to the general rule. A different rule applies if the organization is a "registered organization" under the law of a state. A "registered organization" is defined in Section 9-102, in relevant part as an "organization formed or organized solely under the law of a single state or the United States by the filing of a public organic record, with the issuance of a public organic record by or the enactment of legislation by the state or the United States." A registered organization is "located" in the state of its organization. 13 Pa.C.S.A. § 9307(e).

In this case, Delaware law governs the issue of perfection because the Debtor is a registered corporation in Delaware (though physically located in Pennsylvania).

F. Perfection of the Parent Account: Application of the Delaware UCC

The next issue is whether the Parent Account (investment property) was properly perfected under Delaware law by the filing of a financing statement.22

Through 6 Del. C. § 9-502, Delaware has adopted the system of "notice filing," which means that "only a simple record providing a limited amount of information (financing statement)" is required. 6 Del. C. § 9-502, Cmt. 2. "The financing statement may be filed before the security interest attaches or thereafter." Id. The contents of the financing statement are sufficient if it:

6 Del. C. § 9-502(a)(1)-(3).

There are no disputed issues regarding the first two (2) requirements.

As for the indication of collateral, a financing statement is sufficient if it provides either: (1) a description of the collateral pursuant to § 9-108; or (2) an indication that the financing statement covers all assets or all personal property. 6 Del. C. § 9-504. A description of investment property collateral is sufficient if the financing statements describes the collateral "as investment property." Id. § 9-108(d); see also id., cmt. 4 ("describing collateral as a securities account is a simple way of describing all of the security entitlements carried in the account").

Here, there were two (2) financing statements (Exs. Bank-9 & 10), filed for two (2) different loans from the Bank, both of which define the collateral to include: "[a]ll ... investment property ... all whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property." This description suffices under § 9-108.23 Therefore, I conclude that the Parent Account was perfected by the filing of the Financing Statement.

G. Perfection of the Sub-Accounts

I also conclude that the Sub-Accounts were perfected by the Financing Statement.

The Sub-Accounts are all securities accounts held by Schwab, a securities intermediary and, as explained above, are "investment property" under the UCC.24 Therefore, given that the Financing Statement identified the collateral securing the loan as "all investment property," one may draw the conclusion that the Sub-Accounts are covered by the Financing Statement.

The Sub-Accounts also may be characterized as "after-acquired" collateral.25 See generally 6 Del. C. § 9-204 ("Except as otherwise provided in subsection (b), a security agreement may create or provide for a security interest in after-acquired collateral.").26

The Loan Agreement defined "collateral" as "personal property, ... whether now owned or hereafter acquired, created and arising and wherever located....." (Ex. Bank-12, at ¶ 3.1.a.). Furthermore, the Financing Statements defined the collateral as including "investment property... whether now existing or hereafter arising, whether now owned or hereafter acquired or whether now or hereafter subject to any rights in the foregoing property." The Sub-Accounts, created after the Financing Statement, were perfected by the Financing Statement by virtue of being after-acquired securities accounts. See also 6 Del. C. § 9-502, cmt. 2.27

VI. CONCLUSION

Based on the undisputed facts and, as a matter of law, the Bank's interest in the Schwab accounts remained perfected following the transfers made from the Parent Account to the Sub-Accounts. Accordingly, the Bank is entitled to summary judgment because the Trustee cannot prevail on his claims that the Bank's lien is avoidable as an unperfected lien.

An appropriate Order follows.

ORDER

AND NOW, upon consideration of the Motion for Summary Judgment ("the Motion") filed by Defendant Republic First Bank ("the Bank") and the response filed by Plaintiff Gary F. Seitz, Trustee ("the Trustee"), and for the reasons stated in the accompanying Opinion, it is hereby ORDERED that:

1. The Motion is GRANTED.

2. JUDGMENT is entered in favor of the Bank and against the Trustee on Counts I, II, and III asserted in the Trustee's Amended Complaint.

3. A status hearing is SCHEDULED on June 25, 2014, at 10:00 a.m., in Bankruptcy Courtroom No. 1, 900 Market Street, Philadelphia, PA, to consider the status of the Trustee's remaining claims, the Bank's counterclaim, and the pending Amended Third Party Complaint.