## Facts

- A Mississippi debtor borrowed $200,000 from a bank and granted a security interest in specified equipment, including a dredge and a sand-and-gravel shaker plant.
- The bank perfected its security interest by filing a UCC-1 financing statement in Mississippi.
- The security agreement barred transfer of collateral to third parties without the bank’s written consent.
- The debtor sold the equipment without the bank’s consent; the buyer later sold it to a Louisiana entity (Phoenix).
- The equipment was moved from Mississippi to Louisiana and delivered to Phoenix’s Louisiana premises.
- More than one year after the move, the bank filed a Louisiana financing statement covering the equipment.
- After the debtor defaulted, the bank filed an executory proceeding in Louisiana and obtained a writ of sequestration to seize the equipment.
- Phoenix sought to dissolve the sequestration and requested damages for wrongful sequestration, asserting the bank’s security interest became unperfected under Louisiana law due to untimely re-perfection.

## Issues

1. Whether Phoenix could procedurally challenge the sequestration and assert ownership/damages in the executory proceeding (and whether the dispute was moot).
2. Whether La. Rev. Stat. § 10:9-316’s one-year continuation/retroactive-lapse rule applies when collateral perfected in another state is sold to a new owner and then moved to Louisiana.
3. Whether the bank’s failure to re-perfect in Louisiana within one year caused its security interest to become unperfected (and deemed never perfected) as against Phoenix, allowing Phoenix to take free as a purchaser for value.

## Decision

- The court held Phoenix’s filing was properly treated as an intervention in the executory proceeding.
- The case was not moot because Phoenix’s claim for damages for wrongful sequestration presented collateral consequences.
- The court held La. Rev. Stat. § 10:9-316 applies to collateral moved into Louisiana after it has been sold to a new owner.
- Because the bank did not re-perfect in Louisiana within one year of the collateral’s relocation, its security interest became unperfected and was deemed never to have been perfected as against Phoenix.
- Phoenix, as a purchaser for value that received delivery before Louisiana perfection, took the equipment free of the bank’s security interest.
- The court affirmed the appellate judgment and remanded for further proceedings, including Phoenix’s damages claim.

## Legal Principles

- A security interest perfected under another jurisdiction’s law remains perfected in Louisiana for a limited period after a qualifying transfer/relocation; if re-perfection does not occur within the statutory period, the interest becomes unperfected and is deemed never perfected as to certain competing claimants. (La. Rev. Stat. § 10:9-316)
- The one-year re-perfection period can be triggered when collateral is moved into Louisiana after sale to a new owner located in Louisiana.
- A purchaser for value who takes delivery before a security interest is perfected in Louisiana can take free of that security interest; knowledge of the prior out-of-state filing is not an additional statutory bar when the interest has lapsed under § 10:9-316.

## Conclusion

The court ruled that the bank’s out-of-state perfected security interest lost protection against a Louisiana purchaser because the bank failed to re-perfect in Louisiana within one year after the equipment was moved into the state; Phoenix therefore took the collateral free of the bank’s claim, and the matter was remanded for further proceedings on wrongful sequestration damages.


First Nat’l Bank of Picayune v. Pearl River Fabricators, Inc., 971 So. 2d 302 (La. 2007)