Opinion ID: 593291
Heading Depth: 2
Heading Rank: 3

Heading: Santa Barbara's Arguments

Text: 12 In its effort to counter such authority, Santa Barbara makes five arguments: (1) the FDIC had notice of infirmities in the note; (2) the FDIC tacitly consented to recognize International, and not Santa Barbara, as liable on the note; (3) the note was negotiated to the FDIC an unreasonable length of time after it was made; (4) because the note was not delivered to the FDIC by Santa Barbara, the FDIC cannot enforce it against Santa Barbara; and (5) the note was paid by International. Though Santa Barbara's brief is not entirely clear on this point, the first four arguments appear directed towards challenging the district court's ruling that the FDIC is a holder in due course, while the fifth seems to be asserted as a defense to Santa Barbara's obligation as the note's maker. We address each argument in turn.
13 Santa Barbara is correct in asserting that notice of defenses or infirmities in a note defeats holder in due course status. See P.R. Laws Ann. tit. 19, § 92 (A holder in due course is a holder who has taken the instrument under the following conditions: ... that at the time it was negotiated to him[/her] [s/]he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.); U.C.C. § 3-302(1)(c) (A holder in due course is a holder who takes the instrument ... without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person.). Santa Barbara contends that the FDIC must have been aware of two facts that would have put it on notice that the note was defective: (1) that International simultaneously possessed the note and owned the Bayamon property which secured payment of the note; and (2) that Union only intended to acquire a mortgage over the Bayamon property, not the note itself, in accepting International's pledge on behalf of World in 1983. Santa Barbara's contention fails to withstand factual and legal scrutiny. 14 First, Santa Barbara does not point to any evidence in support of its allegation that the FDIC knew that International owned the Bayamon property and possessed the note simultaneously. The Puerto Rico Superior Court judgment and the note do not themselves reflect this fact. 2 Moreover, Santa Barbara cannot seriously assert that the FDIC was under an obligation to investigate beyond the face of these documents when it acquired the note from Union. 3 As such, Santa Barbara's allegation of notice is without factual evidentiary support. 15 Second, a plain reading of the 1983 Puerto Rico Superior Court judgment undercuts Santa Barbara's assertion regarding Union's intentions at that time. The judgment makes clear that the mortgage would serve only as a guarantee to the note and that Union would be the owner and holder of the note. 4 In light of these facts and in the absence of other evidence, there is no merit to Santa Barbara's argument that the FDIC had notice that Union was intending to acquire only a mortgage over the Bayamon property, and not the note itself. 16 Finally, even were the FDIC to have had knowledge of such facts when it acquired the note, Santa Barbara has not made any argument that this knowledge would have constituted notice of an infirmity in the instrument or defect in the title of the person negotiating it, P.R. Laws Ann. tit. 19, § 92(4), or notice that the instrument had been dishonored or was subject to a defense against or claim to it.... U.C.C. § 3-302(1)(c). Put another way, Santa Barbara has failed to assert, let alone demonstrate, that knowledge of these facts would deprive the FDIC of holder in due course status. We have repeatedly warned litigants that issues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived. See, e.g., Elgabri v. Lekas, 964 F.2d 1255, 1261 (1st Cir.1992) (quoting United States v. Zannino, 895 F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082, 110 S.Ct. 1814, 108 L.Ed.2d 944 (1990)). Accordingly, Santa Barbara's notice of infirmities argument must fail.
17 Santa Barbara next argues that Union tacitly consented to International's 1977 assumption of the obligation on the note, and that such consent, when taken together with the cancellation of the note through International's alleged payment, discharged its obligation. We disagree. 18 We have previously recognized that, under Puerto Rico law, a lender's tacit consent to a third party's assumption of liability on a note and acceptance of payment combine to cancel the note and preclude the FDIC from later recovering thereon. See Federal Deposit Ins. Corp. v. Bracero & Rivera, Inc., 895 F.2d 824, 826-28 (1st Cir.1990). However, the situation in Bracero & Rivera bears little resemblance to the facts in the case before us. 19 Bracero & Rivera also involved a facially valid note, payable to bearer on demand, found in the files of a failed bank. However, prior to failure, the bank had accepted payment from a third party on the debt. 5 Additionally, the bank issued a credit voucher in favor of the defendant which contained the following notation: cancellation of [defendant's] loan 25-85-70-9. Notice of this cancellation was in the FDIC's possession at all relevant times. See generally id. at 825-29. 20 The district court in Bracero & Rivera entered judgment in favor of defendant. In so doing, the court ruled that, under Puerto Rico law, the lender's tacit consent to the third party's assumption of liability on the note and acceptance of payment discharged the note. Id. at 826. We affirmed, noting that the FDIC's notice of cancellation would preclude it from recovering as a holder in due course. Id. at 829. 21 In the case at bar, however, there is no record evidence, such as the cancellation voucher in Bracero & Rivera, indicating that Union, at the time that it acquired the note as security for its judgment against World, tacitly consented to relieve Santa Barbara of its obligation on the note and look solely to International for payment. Despite Santa Barbara's argument to the contrary, we simply do not see how Union's acceptance of the note with knowledge of the 1977 deed agreement between International and Santa Barbara, if Union had such knowledge, 6 implies the existence of an intent on Union's part to tacitly consent to hold International liable on the note. Furthermore, even if Union did so intend, the record is devoid of evidence indicating that the FDIC had notice of this intent. Thus, the doctrine of tacit consent, if applicable to this case, would not deprive the FDIC of holder in due course status.
22 Relying on P.R. Laws Ann. tit. 19, § 93, Santa Barbara next argues that neither Union nor the FDIC is a holder in due course because the instrument was negotiated to Union and the FDIC an unreasonable length of time after its issuance. 7 Santa Barbara raised this argument for the first time in its motion requesting that the district court alter or amend its judgment. See Fed.R.Civ.P. 59(e). 23 Rule 59(e) motions are aimed at reconsideration, not initial consideration. Harley-Davidson Motor Co., Inc. v. Bank of New England, 897 F.2d 611, 616 (1st Cir.1990) (citing White v. New Hampshire Dept. of Employment Sec., 455 U.S. 445, 451, 102 S.Ct. 1162, 1166, 71 L.Ed.2d 325 (1982)) (emphasis in original). Thus, parties should not use them to raise arguments which could, and should, have been made before judgment issued. Id. (quoting Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260, 1268 (7th Cir.1986)). Motions under Rule 59(e) must either clearly establish a manifest error of law or must present newly discovered evidence. Meyer, 781 F.2d at 1268. They may not be used to argue a new legal theory. Id. 24 Here, there was no reason why Santa Barbara could not have made its unreasonable time argument before the district court entered judgment. Moreover, the argument neither reveals a manifest error of law nor presents newly discovered evidence. As a result, we find no error in the district court's refusal to amend or alter its judgment based on this argument.
25 Santa Barbara's improper delivery argument suffers a similar fate. To the extent that Santa Barbara made this argument at all before the district court, it did so only in a most perfunctory manner. It is well settled that arguments made in a perfunctory manner below are deemed waived on appeal. See, e.g., Buenrostro, 973 F.2d at 44 (citing McCoy v. Massachusetts Inst. of Technology, 950 F.2d 13, 22 (1st Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1939, 118 L.Ed.2d 545 (1992)). We see no reason to depart from ordinary practice under the present circumstances, and accordingly we treat the argument as waived.
26 Having rejected Santa Barbara's challenges to the district court's finding that the FDIC is a holder in due course, we need not address Santa Barbara's allegation of payment in an extended manner. The defense that a third party has paid a previous holder in order to discharge a note is a personal defense. See P.R.Laws Ann. tit. 19, § 97 (A holder in due course holds the instrument ... free from any defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties thereon.); see also James J. White and Robert S. Summers, Handbook of the Law Under the Uniform Commercial Code, § 14-9, at 573 (2d ed. 1980) (defenses not listed in U.C.C. 3-305(2) are personal defenses). Personal defenses may not be asserted against holders in due course. See P.R.Laws Ann. tit. 19, § 97; U.C.C. § 3-305. As a result, Santa Barbara's assertion of payment cannot defeat the FDIC's right to recover on the note. 8