Court Opinion

ID: 200386
Source: CourtListenerOpinion
Date Created: 2011-02-07 04:50:21+00
Date Added: 2024-06-11T17:27:08.067997
License: Public Domain

Not for Publication in West's Federal Reporter
       Citation Limited Pursuant to 1st Cir. Loc. R. 32.3

          United States Court of Appeals
                     For the First Circuit
No. 01-1813

    LUBRICANTES VENOCO, INTERNATIONAL, C.A.; FREDDY SANTANA;
    OSCAR J. FERNANDEZ ET AL.; JESUS PENALVER; JOSE BERRIOS;
TREVOR ELLIOT; YURIY KOSINKY; VALIERY TERESCHENKO; KLAUS LINDNER;
      BERNARD VILUAN; PRIMITIVO MINGUITO; GRISELDA SALDANA;
    RAMON CASTILLO; JUAN VARGAS; YIMI PALACIOS; TRANSCARIBBEAN
             MARITIME CORP; OCEAN INTERNATIONAL CORP.,

                           Plaintiffs,

                PEREZ Y CIA. DE PUERTO RICO, INC.
                      Plaintiff, Appellant,

                                v.

   M/V NEVERIS, HER ENGINES, FURNITURE, APPAREL, ETC., IN REM;
         LIMA-SOL SHIPOWNERS; SHIPCO MARINE, MANAGEMENT,
                      Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO
         [Hon. Jose Antonio Fuste, U.S. District Judge]

                             Before

                       Lynch, Circuit Judge,
           Coffin and Campbell, Senior Circuit Judges.

     Paul E. Calvesbert-Borgos with whom Francisco Javier Ortiz
García and Calvesbert Law Offices PSC were on brief for appellent.
     Antonio J. Ramírez-Aponte with whom Manuel Moreda Toledo and
McConnell Valdés were on brief for appellees.

                         March 21, 2003
             CAMPBELL, Senior Circuit Judge.              The Appellant, Perez Y

Cia. De Puerto Rico, Inc. ("Perez") appeals from the district

court's    order      granting    Robert    Fyffe's       unopposed   motion   for

$206,687.15 in custodia legis expenses that he incurred while

acting as substitute custodian to the M/V RIO NEVERI.1                  Concluding

that Perez's objections to the award of expenses were untimely, we

affirm.

I.           BACKGROUND

             The events leading up to this action begin with the

arrest by creditors of the M/V RIO NEVERI.                      On July 6, 1998,

Lubricantes Venoco Internacional, C.A. ("Venoco") filed a Verified

Complaint in the United States District Court for the District of

Puerto Rico initiating an in rem action against the M/V RIO NEVERI

and   an   in   personam       proceeding       against   its   owners,   Lima-Sol

Shipowners      and   Shipco     Marine   Management.        Venoco's     complaint

alleged that the defendants owed it $50,000 for goods provided and

services rendered and sought the seizure and arrest of the RIO

NEVERIS to enforce its maritime lien.

      1
      Perez's notice of appeal states that Perez is appealing from
the district court's March 30 order awarding Fyffe $14,369.42 and
from the district court's December 6 order awarding Fyffe
$206,687.15 in custodia legis expenses. However, in its appellate
brief, Perez makes no mention of, or argument regarding, the March
30 order. As a result, we consider the issue waived. Pratt v.
United States, 129 F.3d 54, 62 (1st Cir. 1997)("It is firmly
settled in this circuit that arguments not advanced and developed
in an appellant's brief are deemed waived.").

                                          -2-
            Shortly after filing the complaint, Venoco moved for

appointment of a substitute custodian.    Venoco requested the court

to name Robert Fyffe as substitute custodian in lieu of the U.S.

Marshals.    The court granted the motion.   As substitute custodian

Fyffe was responsible for the supervision and safekeeping of the

vessel. Venoco, as arresting party, assumed responsibility for the

expenses Fyffe incurred while acting as substitute custodian.     As

mandated by law, Venoco also deposited $10,000 with the U.S.

Marshals to cover the required insurance premiums.     See 28 U.S.C.

§ 1921(a)(1)(E) (1994 & Supp. VI).2

            On July 30, 1998, Perez intervened in the action claiming

a maritime lien for ship repair and services totaling $250,000.3

After conferring with Venoco, Perez agreed to divide the substitute

custodian expenses proportionally according to each party's claim.

Because Perez's claim was larger, Perez agreed to pay 80 percent of

Fyffe's expenses.

            On August 28, 1998, the U.S. Marshals seized the RIO

NEVERI and placed the vessel in Fyffe's custody.   Less than a month

later, on September 21, 1998, during Hurricane George, the RIO

     2
      28 U.S.C. § 1921(a)(1)(E) provides that the United States
marshal shall routinely collect, and a court may tax as costs, fees
for the keeping of seized property including the costs of
insurance.
     3
      A host of other parties intervened as well, including the RIO
NEVERI's crew, the ship's agent and the Puerto Rico Port Authority.
Their claims are not relevant to the current dispute.

                                 -3-
NEVERI broke loose from her moorings and grounded in the mud in San

Juan Harbor. The parties scuffled over who was responsible for the

expenses related to refloating the vessel.                   Neither Perez nor

Venoco was willing to front the money for the refloating and Fyffe

was unable to obtain funds from any other source.               Perez and Venoco

also stopped paying Fyffe's expenses, believing his negligence had

allowed the RIO NEVERI to run aground.

                 On December 10, 1998, the United States, upon its own

motion, was authorized to refloat and secure the vessel.                         For

reasons not clear on the record, however, the United States took no

action to refloat the vessel and the RIO NEVERI remained grounded

until Fyffe obtained a court order to begin salvage operations in

July 1999.          It is undisputed that the parties agreed that the

$130,000 fee payable to the salvor, Dimitrious Kalogerakis, would

be   paid    from    the   proceeds   of   the   sale   of   the   vessel   as    an

"administrative cost."         Kalogerakis successfully salvaged the RIO

NEVERI and returned the vessel to its mooring.

                 The RIO NEVERI's grounding resulted in the bringing of

two separate court actions in the District Court for the District

of Puerto Rico, Frontier Insurance Company v. Lubricantes Venoco

Internacional, C.A., et. al., Civ. No. 99-1292 and Perez Y Cia. de

Puerto Rico, Inc. v. Fyffe, Civ. No. 99-2055.                In both actions the

plaintiffs alleged that the grounding of the RIO NEVERI was a

result      of    negligence   and    claimed    damages     arising   from      the

                                        -4-
negligence.     In October 1999, Perez moved to consolidate the two

actions with the in rem action against the RIO NEVERI.                   Judge

Fuste, the judge presiding over the in rem action, denied the

motion to consolidate.      Perez did not appeal from the denial.

             Because the owners of the RIO NEVERI had not stepped

forward to     claim the vessel and pay the lienors, the court ordered

the vessel's sale.      While at the time of its arrest the RIO NEVERI

had been appraised for $1,600,000, her value had significantly

depreciated because of the considerable damage she had sustained

from the grounding.        The sale of the RIO NEVERI netted only

$163,000.4     On March 15, 2000, the court approved the sale and

ordered that each of the parties interested in the sale proceeds

"shall file a separate motion containing an invoice in the form of

a verified claim for payment as custodia legis expenses" within

thirty days from the date of the order.        Almost immediately, Perez

and   Venoco    filed   separate   motions   requesting    custodia      legis

expenses of $84,836.66 and $20,481.28 respectively.           Prior to the

confirmation of the sale, Fyffe had submitted to the court a motion

requesting $60,478.12 from the proceeds of the sale to cover the

additional     expenses   he   allegedly     incurred     related   to     the

reflotation of the vessel.

      4
      The actual sale price of the vessel was $148,000. However,
this was augmented by a $15,000 deposit forfeited by an earlier,
defaulting bidder.

                                    -5-
          On March 30, 2000, the court issued a "final order"

distributing the sale proceeds.       As previously agreed to by the

parties, Kalogerakis, the salvage operator who refloated the RIO

NEVERI, received $130,000.   The U.S. Marshal received $10,630.58

for insurance coverage that it was required by statute to maintain

but that Venoco and Perez had failed to pay.    A.L. Burbank received

$8,000 for the incidental advertising expenses related to the sale

of the vessel. Fyffe received the remaining $14,369.42. The court

further ordered:

          The balance of the custodial expenses incurred
          by Robert Fyffe will be paid by the plaintiff
          and the intervening plaintiffs in any amount
          to be agreed by the parties or further
          disposed of by the court after April 14, 2000.

          It is further ORDERED that this case is
          closed, subject to any further adjustment on
          claims needing court intervention after April
          14, 2000, and without prejudice of a hearing
          to resolve any arising dispute.

          In response to the order of distribution, Perez, joined

by Venoco, filed a motion for reconsideration "of such part of the

final order or distribution of sale proceeds awarding Robert Fyffe

$14,369.42 of the sales proceeds." The motion was denied. Neither

Perez nor Venoco opposed the portion of the order that required

Fyffe's remaining expenses to be paid by Venoco, Perez, and the

other intervening plaintiffs.

          On April 14, 2000, within the 30 day period specified in

the March 15, 2000 order, Fyffe submitted a verified claim for

                                -6-
additional custodia legis expenses in the amount of $206,687.15.

Fyffe    requested   that   the   court   declare     the     plaintiff   and

intervening plaintiffs "jointly liable to Fyffe for his fees and

expenses" and "severally liable to each other for contribution in

proportion for [sic] their respective claims."              In response, the

United States filed a motion supporting Fyffe's claim for custodia

legis expenses.      The government submitted that the plaintiff and

intervening plaintiffs "are jointly and severally liable to Fyffe

. . . for Fyffe's custodia legis expenses . . . ."               Fyffe also

filed a motion requesting an extension of time to oppose Perez's

and Venoco's requests for custodia legis expenses.             Neither Perez

nor Venoco filed an opposition to Fyffe's request nor did either

party request an evidentiary hearing.

           On December 6, 2000, after nearly eight months had

elapsed since Fyffe's additional claim was filed, the court granted

Fyffe's unopposed request for expenses.5      Within days, Perez moved

for reconsideration of the court's December 6 order. Fyffe replied

to the motion claiming, inter alia, that Perez had waived its right

to contest the appropriateness of the expenses or the calculation

by failing to oppose his April 14 motion.           On April 3, 2001, the

     5
      The disposition of this claim appears to have resolved the
remaining outstanding claims in the case, leaving the December 6
order as final and appealable pursuant to 28 U.S.C. § 1291.
According to the docket, as of December 6, 2000, all the parties
claims had been addressed and orders entered disposing of remaining
matters. See Fed. R. Civ. P. 54(b).

                                   -7-
court denied Perez's motion.         This appeal timely followed.           See

Fed. R. App. P. 4(B)(i).

II.             DISCUSSION

                The central issue is whether, after allowing Fyffe's

claim     for    additional   expenses   to   which   Perez   had   filed   no

opposition, the district court abused its discretion in denying

Perez's motion for reconsideration.6            Fyffe insists that Perez

waived its arguments objecting to the district court's award of

expenses when it failed to timely oppose Fyffe's request and that

the district court properly exercised its discretion in refusing to

reconsider the matter.

                Generally, claims not timely made during the pendency of

a case, and raised for the first time thereafter in a motion for

reconsideration, are deemed waived on appeal.            DiMarcoi-Zappa v.

Cabanillas, 238 F.3d 25, 33 (1st Cir. 2001) ("To the extent that

appellants' reconsideration motion sought to raise an argument

      6
      We assume Perez's motion for reconsideration was brought
pursuant to Fed. R. Civ. P. 59(e) as a motion to alter or amend the
judgment. See Aybar v. Crispin-Reyes, 118 F.3d 10, 13 n.3 (1st Cir.
1997)(stating "regardless of how it is characterized, a post-
judgment motion made within ten days of the entry of judgment that
questions the correctness of a judgment is properly construed as a
motion to alter or amend judgment under Fed. R. Civ. P. 59(e).").
Rule 59(e) does not provide a vehicle for a party to present
arguments that "could and should have been presented to the
district court prior to the judgment." Id. at 16. Perez does not
appeal from the district court's denial of its motion for
reconsideration but from the district court's December 6, 2000,
order granting Fyffe's motion for custodia legis expenses. See also
n.1, supra.

                                     -8-
waived at the trial stage, it must necessarily fail."); CMM Cable

Rep, Inc. v. Ocean Front Props., Inc., 97 F.3d 1504, 1526 (1st Cir.

1996) (finding no merit in appellant's argument that its arguments

were   preserved   because    they    were     advanced   in    a   motion    for

reconsideration).       As we have explained before, appealing parties

cannot claim error based on matters which the district court and

the other parties did not have timely chance to consider.               See CMM

Cable, 97 F.3d at 1526 (citing McCoy v. Mass. Inst. of Tech., 950

F.2d 13, 22 & n.7 (1st Cir. 1991)).

           Perez's arguments were not timely raised during the

proceedings    below.      Since    1966,    the   Federal     Rules   of   Civil

Procedure have applied to actions in Admiralty.              See Fed. R. Civ.

P. 1; Rule A, Supplemental Rules for Certain Admiralty and Maritime

Claims.   While the Federal Rules of Civil Procedure set forth the

rules for calculating specified time limits, it is the local rules

of the district courts that establish the time frames within which

parties must respond to motions.            See Viqueira v. First Bank, 140

F.3d 12, 16 (1st Cir. 1998).        Under the local rules of the District

of Puerto Rico, Perez had ten days after service of the motion

within which to file an opposition to Fyffe's motion requesting

additional custodia legis expenses. D.P.R. Loc. R. 311.5; see also

Viqueira, 140 F.3d at 16.          It did not do so.      The local rule is

unambiguous.    See United States v. Fray, 145 F.3d 1, 4 (1st Cir.

1998).    Throughout the in rem proceeding, the parties adhered to

                                      -9-
this ten-day rule or, in appropriate circumstances, requested an

extension of time for filing responses.             Perez did neither here.

In any event, Perez concedes that the objections first made in its

motion for reconsideration, filed after the court had allowed

Fyffe's additional claim and filed many months after Fyffe had

filed that claim, were well out of time.

            Perez further concedes that matters presented for the

first time in a motion for reconsideration are not timely raised

nor are they ordinarily deemed to be preserved for appellate

review.     However, Perez contends that we should entertain his

objections because the district court exercised its discretion to

review them, thus impliedly excusing their untimeliness.7                  See

Quest    Med.,   Inc.   v.   Apprill,   90   F.3d   1080,   1087   (5th   Cir.

1996)(stating that if a district court exercises its discretion to

consider issues raised for the first time in a post-trial brief

then the issues may be considered to have been properly raised

below).

            Whatever can be said for Perez's theory, it is of no help

to Perez here.     The record in no way supports Perez's suggestion

that, after Perez moved for reconsideration, the district court

     7
      We note that Perez presents this argument only in its Reply
Brief. Normally, arguments raised for the first time in a reply
brief come too late to meet the requirement that appellate
arguments must be briefed. Frazier v. Bailey, 957 F.2d 920, 932 n.
14 (1st Cir. 1992). While we reject Perez's argument as lacking in
merit, Perez's failure to have included it in its main brief may
constitute a separate ground for rejection.

                                    -10-
actually considered the motion on its merits.          The district court,

without     comment,     summarily      denied    Perez's      motion      for

reconsideration.       Perez   argues   that   "[i]t   is   clear   that   the

District Court accepted Perez's excuses[] because it took almost

three (3) months       for the District Court to finally deny Perez's

motion for reconsideration."       We see no reason why the passage of

three months between the submission of the reconsideration motion

and the district court's ruling thereon should be taken to indicate

the court's consideration of the merits of the motion.                     Most

likely, the court was simply busy with other matters.

           As a further reason for us to find the district court had

decided the reconsideration motion on the merits, Perez points out

that the court allowed it to reply to Fyffe's opposition to the

motion. But again there is no reason why this isolated fact should

be taken to indicate that the court decided to excuse Perez's

untimeliness and delve into the merits of Perez's objections to

Fyffe's claim.   Fyffe asserted in his opposition to Perez's motion

for reconsideration that Perez's arguments were untimely and had,

therefore, been waived.        By permitting a reply the district court

suggested no more than that it sought to be fair and allow Perez to

counter Fyffe's waiver argument or tender whatever other excuse it

could.    There is nothing to show that the district court actually

reached the merits of Perez's objections to Fyffe's expense claims.

                                     -11-
           In extraordinary circumstances, courts have recognized an

exception to the raise-or-waive rule.       DiMarcoi-Zappa, 238 F.3d at

34.   Exceptions have been allowed where a waived argument is "'so

compelling as virtually to insure appellant's success,'" and a

"'gross miscarriage of justice'" would result from our failure to

address it.     Am. Auto. Mfr. Ass'n v. Comm'r, Mass. Dep't Envtl.

Prot., 31 F.3d 18, 26 (1st Cir. 1994) (quoting Johnston v. Holiday

Inns, Inc., 595 F.2d 890, 894 (1st Cir. 1979)); see also Grenier v.

Cyanamid Plastics, Inc., 70 F.3d 667, 678 (1st Cir. 1996). Perez's

situation does not fit within this unusual and narrow category of

exceptions.     See Correa v. Hosp. San Francisco, 69 F.3d 1184, 1196

(1st Cir. 1995) ("[T]he exceptions are few and far between, and

appellate discretion should not be affirmatively exercised unless

error is plain and the equities heavily preponderate in favor of

correcting it."); Ondine Shipping Corp. v. Cataldo, 24 F.3d 353,

356 (1st Cir. 1994) ("this is a long-odds exception that must be

applied sparingly").

           The arguments Perez now presents against the court's

allowance of Fyffe's expenses are far from being so compelling as

to virtually insure their success.          Perez contends that it was

wrong for the district court to award custodia legis expenses

without first holding an evidentiary hearing.          In Perez's view, a

hearing   was   required   since   Perez   "attacked   the   veracity   and

reasonableness of Fyffe's claims."         But before issuing its order

                                   -12-
the district court had no way to know that Perez attacked the

veracity and reasonableness of the claims since Perez had not filed

an opposition to them.   There is no pro forma requirement that, in

each and every case, a district court hold an evidentiary hearing

prior to awarding custodia legis expenses.8   Taino Lines, Inc. v.

M/V Constance Pan Atl., 982 F.2d 20, 25 (1st Cir. 1992).   The local

rules of the district court make clear that an unopposed motion

will be considered and decided without a hearing, unless otherwise

directed by the court.    D.P.R. Loc. R. 311.9.   It was not plain

error for the court to rule without a hearing in the circumstances

as they appeared at the time.   Id.

          Perez also contends that the district court was without

authority in the in rem proceeding to award custodia legis expenses

in excess of the sale proceeds. Perez proffers Forscht Associates,

Inc. v. Transamerican ICS, Inc., 821 F.2d 1556 (11th Cir. 1987),

for the proposition that once the proceeds of the sale of the RIO

NEVERI were exhausted, "the unpaid custodia legis fees must become

the object of a separate action for breach of contract lodged by

the substitute custodian."   But Forscht does not stand for such a

proposition.   To the contrary, the Forscht court concluded that a

substitute custodian could seek payment through the in rem action

     8
      Contrary to Perez's argument, the local admiralty rules for
the District of Puerto Rico do not mandate that a district court
hold a hearing prior to awarding expenses. LAR(e)(12)(d) provides
only that a district court "may" schedule a hearing.

                                -13-
or through an action for breach of contract.   Id. at 1562; see also

Certain Underwriters at Lloyds v. Kenco Marine Terminal, 81 F.3d

871, 872 (9th Cir. 1995) (ordering parties to split custodia legis

expenses in excess of sale proceeds as part of in rem proceeding).

            Perez's remaining arguments attack the correctness of the

underlying award of expenses and the district court's refusal to

transfer Fyffe's claim for expenses to the collateral litigation.

As already discussed, the district court was entitled to resolve

the matter of custodia legis expenses in the in rem proceeding.   As

to Perez's claims that the district court erred when it awarded

Fyffe $206,687.15 in custodia legis expenses and Perez's companion

request for this court to vacate the December 6, 2000 order, we

find no plain error in the district court's award.       See Town of

Norwood v. New England Power Co., 202 F.3d 408, 417 (1st Cir.

2000)("It is normally not error at all, let alone plain error, for

a court to ignore a possible claim or defense that a party fails to

proffer or pursue.").

            For like reasons, we can detect no "gross miscarriage of

justice."   See Am. Auto Mfr. Ass'n, 31 F.3d at 26.   It should have

come as no surprise to Perez that it was at risk of being held

partially responsible for the remaining custodia legis expenses.

It is a well-established tenet of admiralty law that the arresting

plaintiff and the intervening plaintiffs share in the costs of

maintaining the res until resolution of the case.     See Beauregard

                                 -14-
Inc. v. Sword Servs. L.L.C., 107 F.3d 351, 353 (5th Cir. 1997);

Kenco, 81 F.3d at 873; Forscht, 821 F.2d at 1561; see also D.P.R.

LAR (e)(11)(b).    Perez agreed to divide the custodian and security

fees with Venoco in its August 4, 1998 motion requesting an

interlocutory sale of the vessel.            Nor should it have been a

surprise to Perez that the custodia legis expenses in excess of the

sale   proceeds    were   awarded   by     Judge   Fuste    in    the   in   rem

proceedings.   Judge Fuste indicated that he intended to review and

award expenses in the in rem proceeding when he specifically

requested   that   the    parties   submit   claims   for    custodia     legis

expenses in his March 15 order approving the sale of the RIO

NEVERI. Perez and Venoco submitted their own expense requests even

though it was evident that the proceeds from the sale of the vessel

would be nearly exhausted by the salvage operator's claim and the

U.S. Marshal's fees.      Nor should it have been a surprise to Perez

when the expenses were actually awarded against it.               In his March

30 order, Judge Fuste explicitly stated that the balance of the

custodial expenses incurred by Fyffe would be paid by Venoco, Perez

and the other intervening plaintiffs either as agreed to by the

parties "or further disposed of by the court."                   Unaccountably,

Perez remained mute, even after Fyffe submitted, on April 14, 2000,

his verified claim for additional custodia legis expenses.                   Even

after the United States filed a motion supporting Fyffe's claim for

expenses, and Fyffe filed motions requesting an extension of time

                                    -15-
to oppose Perez's and Venoco's claims for custodia legis expenses,

Perez   did   nothing   to   indicate    its   opposition.   In   these

circumstances, we find no miscarriage of justice such as would

warrant reopening the judgment of the district court.

III.      CONCLUSION

          The district court's order granting Fyffe's unopposed

motion for custodia legis expenses is affirmed.

                                  -16-