Litton Industrial Automation Systems, Inc. v. Nationwide Power Corp.

106 F.3d 366 (1997)

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Litton Industrial Automation Systems, Inc. v. Nationwide Power Corp.

United States Court of Appeals for the Eleventh Circuit
106 F.3d 366 (1997)

Facts

In April of 1986, Nationwide Power Corporation (Nationwide) gave Highlander International Corporation (Highlander) a security interest in certain cash collateral to secure a debt. The cash collateral covered a cause of action that Nationwide had against Litton Industrial Automation Systems, Inc. (Litton) (plaintiff). However, Highlander did not file a financing statement to perfect its interest until August of 1989. On June 9, 1986, the Internal Revenue Service (IRS) assessed tax penalties exceeding $700,000 against Nationwide. On July 3, 1986, the IRS properly filed a notice of federal tax lien. In August of 1989, Nationwide obtained a judgment against Litton. Litton initiated an interpleader action for the court to determine whether Highlander or the United States (the Government) (defendants) is entitled to the $572,627.46 that Litton deposited with the court, which represented the funds Litton owed to Highlander pursuant to the judgment. The district court held that the Government’s federal tax lien had priority over Highlander’s unperfected security interest because Highlander’s interest was not protected under Florida law against a judgment lien.

Rule of Law

Issue

Holding and Reasoning (Birch, J.)

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