Marine construction project gone wrong
The US Court of Appeals for the Fifth Circuit ruled that a creditor with a perfected Uniform Commercial Code (UCC) security interest prevails over a creditor with a subrogated claim. In the instant case, the US Army Corps of Engineers hired a marine construction company to construct pile dikes on the Lower Mississippi River. Various entities then sought payment of the contract funds based on monies allegedly owed by the contractor. The Corps of Engineers commenced this action asking the court to resolve the conflicting claims. The court concluded that the subrogated claim gave the claimant only an equitable claim that was unsecured. US v. Jesco Construction Corp., No. 06-31007 (5th Cir., - HK LAW).