Court Opinion

ID: 7170
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:25:36+00
Date Added: 2024-06-11T15:04:39.474933
License: Public Domain

UNITED STATES COURT OF APPEALS
                       For the Fifth Circuit

                           No. 93-3631

                THE FIRST NATIONAL BANK OF BOSTON,

                                                 Plaintiff-Appellee,

                              VERSUS

                   BECKWITH MACHINERY COMPANY,

                                              Intervenor-Appellant,

                              VERSUS

                      VIKING MARITEC, INC.,

                                                          Defendant.

           Appeal from the United States District Court
               for the Eastern District of Louisiana
                         (June 13, 1995)

Before JOHNSON, BARKSDALE and DeMOSS, Circuit Judges.

PER CURIAM:

     This case revolves around the construction and financing of a

towboat.   In 1992, Viking Maritec, Inc. ("Viking") and Avondale

Industries, Inc. ("Avondale") entered into a contract for Avondale

to build a towboat for Viking in exchange for a purchase price of

$2.8 million.   Viking entered into a credit agreement with First

National Bank of Boston ("FNBB") to finance the purchase price due

Avondale and to pay for other equipment for the vessel.        FNBB
agreed to lend Viking up to $4.8 million, and Viking executed a

construction note in favor of FNBB.              Viking also executed a

"Louisiana Ship Mortgage and Security Agreement," granting the bank

a security interest in the towboat and its materials and components

under the provisions of the L A. REV. STAT. ANN. 10:9-101 - 10:9-604

(West 1993). FNBB perfected the security interest by filing a UCC-

1 financing statement in the proper office on August 6, 1992.              The

documents stated that the Ship Mortgage Law and the Louisiana UCC

would govern   the   security   agreement.        In   early    1993,   Viking

purchased from Beckwith Machinery Company ("Beckwith") engines and

related machinery, which were incorporated into the tugboat.

     Viking did not pay either Beckwith or FNBB.          After its demand

for payment was not answered, FNBB filed an action in federal

district court to have the unfinished and undocumented towboat

seized and sold. Beckwith intervened, seeking priority through the

Louisiana Civil Code, which gives privileges to certain classes of

creditors,   including   suppliers       of   shipbuilding     materials   and

equipment.   LA. CIV. CODE ANN. art. 3237 (West 1952).          FNBB filed a

motion asking the court to give priority instead to its perfected

UCC security interest.

     On July 26, 1993, the district court rendered a decision

formally ranking FNBB's security interest in the vessel ahead of

Beckwith's materialman's privilege. First Nat. Bank of Boston v.

Viking Maritec, Inc., No. CIV.A 93-1336, 1993 WL 292996 (E.D. La.

1993). A final judgment was entered on September 3, 1993, giving

priority to the bank's security interest. The towboat was sold at

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a judicial sale on August 20, 1993, and FNBB was paid its debt on

September 23, 1993. Beckwith brought the instant appeal.

     Noting that the determinative issue in this case is clearly a

matter of Louisiana law, and finding no ruling by a Louisiana court

on such issue, we certified the following question to the Louisiana

Supreme Court:

     Which interest should have priority under Louisiana law:
     (1) a civil law "privilege" for suppliers of shipbuilding
     materials, thus giving Beckwith creditor priority rights,
     or (2) an earlier perfected UCC security interest, thus
     giving FNBB creditor priority rights?

See First Nat. Bank of Boston v. Beckwith Machinery Co., 26 F.3d
580 (5th Cir. 1994) (certifying question). The Louisiana Supreme

Court granted certification, 648 So. 2d 379, and responded with a

well-reasoned opinion explaining the proper priority of Louisiana

Civil   Code   privileges      in    relation   to   the   Louisiana   Uniform

Commercial Code. See First Nat. Bank v. Beckwith Machinery, 650
So. 2d 1148   (La.   1995).    In    its   opinion,   which   we   adopt   and

incorporate herein, the Louisiana court reached the following

conclusion:

     A prior perfected Chapter 9 security interest created
     pursuant to [LA. REV. STAT. ANN.] 10:9-101 et seq. has
     priority over a nonpossessory materialman's privilege
     granted to a supplier of shipbuilding materials under
     LA. CIV. CODE ANN. art. 3237(8).

Id. at 1157. We now apply that ruling in our disposition of this

appeal. Under Louisiana law, the prior perfected security interest

held by plaintiff-appellee First National Bank of Boston has

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priority over the civil code materialman's privilege held by

intervenor-appellant Beckwith Machinery. We therefore AFFIRM the

decision of the district court to rank the bank's interest first.

        AFFIRMED.

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