Bank One, Louisiana v. Mr. Dean MV

BargeCarib, Inc. entered into a time-charter agreement with Offshore Supply Ships, Inc. (Offshore) to use Offshore’s towboat, which came to be named the Mr. Dean (defendant), to aid in BargeCarib’s shipments of its products. BargeCarib took possession of and began using the Mr. Dean on August 15, 1996. In May of 1997, Offshore sold the Mr. Dean to Global Towing, LLC (Global). Global succeeded Offshore as BargeCarib’s counterparty on the charter agreement. Global financed the purchase of the Mr. Dean with a loan from an entity that later became Bank One, Louisiana NA (Bank One) (plaintiff). To secure the loan, Global gave Bank One a mortgage on the Mr. Dean, which Bank One duly recorded on May 21, 1997. In 1998, Global’s owner, Michael Blake, personally guaranteed Global’s indebtedness. In July 1997, Global breached its charter agreement by failing to make the Mr. Dean or another towboat available to BargeCarib. Later, Global defaulted on its loan with Bank One, and Blake refused to honor his guarantee. Bank One brought an in rem suit against the Mr. Dean, seeking a forced sale. Because any forced sale was unlikely to generate enough proceeds to cover both Bank One’s outstanding loan balance and BargeCarib’s damages for breach of the charter agreement, BargeCarib intervened in Bank One’s suit, seeking a judgment prioritizing BargeCarib’s claim. The district court determined that Bank One’s mortgage had priority because Bank One had perfected its mortgage before Global breached its charter agreement with BargeCarib. BargeCarib appealed.