Court Opinion

ID: 2961569
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:44:51.766067+00
Date Added: 2024-06-11T15:01:41.006155
License: Public Domain

USCA1 Opinion

	

          November 25, 1992                            UNITED STATES COURT OF APPEALS                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1413                             PONCE FEDERAL BANK, F.S.B.,                                 Plaintiff, Appellee,                                          v.                           THE VESSEL "LADY ABBY", ET AL.,                                Defendants, Appellees.                                 ____________________                             CRISTOBAL BURGOS RODRIGUEZ,                                Defendant, Appellant.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                  [Hon. Juan M. Perez-Gimenez, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,                                         ___________                            Aldrich, Senior Circuit Judge,                                     ____________________                              and Boudin, Circuit Judge.                                          _____________                                 ____________________            Eli B. Arroyo with whom Miguel E. Miranda-Gutierrez and  Figueroa-            _____________           ___________________________      _________        Morales & Chaves-Caraballo Law Offices were on brief for appellant.        ______________________________________            Francisco A.  Besosa with  whom Miguel  J. Rodriguez-Marxuach  and            ____________________            __________________________________        Goldman Antonetti  Ferraiuoli & Axtmayer  were on brief  for appellee,        ________________________________________        Ponce Federal Bank, F.S.B.                                 ____________________                                 ____________________                       BREYER, Chief Judge.   Ponce Federal  Bank brought                               ___________             an in rem action in admiralty to foreclose its mortgage on a                ______             ship, the "Lady Abby."  It added an in personam claim, under                                                 ___________             the law of  Puerto Rico, for  a deficiency judgment  against             the Lady Abby's current possessor, Cristobal Burgos.  Burgos             had  bought the ship from the borrowers; he had promised the             borrowers he would  keep up the  mortgage payments; and,  he             had  failed  to  do so.    The  district  court granted  the             deficiency  judgment.    Burgos  appeals.    We  affirm  the             district court.                                          I                                     Jurisdiction                                     ____________                       Burgos argues that the district court did not have             jurisdiction to enter a judgment against him.  He points out             that the Bank originally  brought an admiralty claim against             the ship,  not  against him.    He adds  that  there was  no             diversity jurisdiction, 28 U.S.C.   1332, and that the claim             against  him did  not arise  under federal  law.   28 U.S.C.               1331.  A special "ship mortgage"  statute seems to provide             jurisdiction for a mortgagee to obtain a deficiency judgment             from a  borrower, but it  says nothing about one  who buys a                     ________             ship from  a borrower.  See  46 U.S.C.   951,  amended by 46                                     ___                    __________             U.S.C.    31325(b)(2).   Where then,  he asks,  did Congress             authorize  the  admiralty court's  exercise  of jurisdiction             over him?  See, e.g., The Mayor v. Cooper, 73 U.S. (6 Wall.)                        ___ _____  _________    ______             247,  252  (1868) ("[T]wo  things  are  necessary to  create             jurisdiction . . .  .  The Constitution must have  given the             court the capacity  to take it, and an  act of Congress must             have supplied it.").                       The  answer  to  this  question  has  four  parts.             First,   Congress  has   granted  federal   district  courts             "original jurisdiction" over 1) any "civil case of admiralty             or maritime jurisdiction," 28 U.S.C.    1333; and 2) "suits"             or  "civil  action[s]"    brought to  enforce  a  "preferred             mortgage  . .  . lien"  (i.e., a  ship mortgage  lien) on  a             mortgaged vessel.   46 U.S.C.   951,  amended by 46 U.S.C.                                                     __________             31325.                        Second,    courts    have    traditionally    read             jurisdictional statutes of this kind (at least in admiralty)             as granting admiralty courts "pendent party" jurisdiction, a             jurisdiction that  permits the  court hearing  the admiralty             claim  to  hear another,  closely  related  claim against  a             person not otherwise  a party in the case.   See, e.g., Roco                                                          ___  ____  ____             Carriers, Ltd. v. M/V Nurnberg  Express, 899 F.2d 1292, 1295             ______________    _____________________             (2d Cir. 1990) (citing cases).                                           -3-                                          3                       Third, a non-federal  claim against such  a person             is sufficiently  related to permit the  assertion of pendent             party jurisdiction if                       the   state   law   claim  against   the                       additional party arises  out of a common                       nucleus  of  operative  facts  with  the                       admiralty  claim  and the  resolution of                       the  factually  connected  claims  in  a                       single  proceeding   would  further  the                       interests    of    conserving   judicial                       resources and fairness to the parties.             Id.             ___                       Fourth, the claim is so  related here.  The Bank's             mortgage-foreclosure  admiralty claims  and its  Puerto Rico             law  mortgage-deficiency claims involve a "common nucleus of             operative  facts."   A  "single proceeding"  to decide  both             seems  eminently  fair.    And,  the  consolidation  of  the             proceedings  in  the  admiralty   court  helps  to  conserve             judicial  resources, for  otherwise the  Bank would  have to             bring separate legal actions in  federal and local courts to             collect  the money due.  See 46  U.S.C.   951, amended by 46                                      ___                   __________             U.S.C.      31325(c)   (giving  federal   courts   exclusive                                                                _________             jurisdiction over ship-mortgage foreclosure claims).                         The upshot is that this case falls well within the             bounds of  relevant legal authority permitting  an admiralty             court to  assert "pendent  party" jurisdiction.   See, e.g.,                                                               ___  ____             Brown v. Trustees of Boston University, 891 F.2d 337, 355-56             _____    _____________________________                                         -4-                                          4             (1st  Cir.  1989),  cert.   denied,  496  U.S.  937  (1990);                                 ______________             Rodriguez v. Comas, 888 F.2d 899, 903-05 (1st Cir. 1989).              _________    _____                       The  appellant's  single  significant argument  is             that we must  ignore this authority  because of the  Supreme             Court's fairly  recent decision in Finley  v. United States,                                                ______     _____________             490  U.S.  545 (1989).   The  Supreme  Court, in  that case,             cautioned against reading jurisdictional statutes broadly to             confer "pendent party" jurisdiction.  See id. at 547-48.  It                                                   ___ ___             considered  a federal  tort claim  statute that  granted the             federal courts  "exclusive jurisdiction of civil  actions on             claims against  the United  States."  28  U.S.C.    1346(b).             And, it held that  this statute did not authorize  a federal                                                 ___             court,  hearing a  federal  law accident  claim against  the             United  States, also to hear a state law tort claim, arising             out of the same accident, but against a person not otherwise             a  party in the federal case.   See Finley, 490 U.S. at 555-                                             ___ ______             56.   Congress yet more  recently has passed  a statute that             overturns Finley.  28 U.S.C.   1367.  But, that statute does                       ______             not directly apply to this, post-Finley, pre-statute, case.                                              ______                       We do  not agree, however, that  Finley requires a                                                        ______             different  result  in  this   case.    Other  circuits  have             distinguished  between Finley's statutory context (a statute                                    ______             that waived sovereign immunity) and  jurisdictional statutes                                         -5-                                          5             related  to admiralty.  See Roco Carriers, 899 F.2d at 1295-                                     ___ _____________             97; Loeber v. Bay Tankers, Inc., 924 F.2d 1340, 1345-47 (5th                 ______    _________________             Cir. 1991) (following  Roco); see also Antilles  Ins. Co. v.                                    ____   ___ ____ __________________             M/V  Abitibi  Concord, 755  F.  Supp. 42,  45  (D.P.R. 1991)             _____________________             (same);  cf.   Rodriguez  v.  Comas,  888   F.2d  at  905-06                      ___   _________      _____             (distinguishing Finley from a Section 1983 case).  They have                             ______             pointed  out  that, traditionally,  courts  have interpreted             waivers of sovereign immunity narrowly;  yet, traditionally,             they   have  also   interpreted   assertions  of   admiralty             jurisdiction more  broadly (given  needs for  uniformity and             expedition,  and  broad  statutory language,  such  as  that             granting jurisdiction over any admiralty "civil case").  See                                                                      ___             Roco Carriers,  899 F.2d  at  1295-97; Loeber,  924 F.2d  at             _____________                          ______             1345-47; see also Antilles, 755 F.  Supp. at 45.  And,  they                      ___ ____ ________             have concluded  that, despite  Finley, and even  without the                                            ______             new statute, in admiralty  pendent party jurisdiction  still             lives in very much the same form as we have applied it here.             See  Roco Carriers, 899 F.2d at 1295-97; Loeber, 924 F.2d at             ___  _____________                       ______             1346-47; see also Antilles, 755 F. Supp. at 45.                        ___ ____ ________                       In  our   view,   it  would   make   "no   sense,"             particularly in  light of  these recent  cases, "to  give an             expansive reading to Finley to reach a result that  Congress                                  ______             has deliberately repudiated for  future cases."  13B Charles                                         -6-                                          6             A.  Wright,  Arthur R.  Miller &  Edward H.  Cooper, Federal                                                                  _______             Practice  and   Procedure     3567.2  at   31  (1992  Supp.)             _________________________             (referring  to 28 U.S.C.    1367).  We  therefore follow the             precedent of other circuits and hold that the district court             lawfully asserted "pendent party" jurisdiction in this case.                                          II                                 The Deficiency Claim                                 ____________________                       In  his contract  buying  the Lady  Abby from  its             prior owners,  Burgos promised  "immediately [to] carry  out             the payment of  the (3)  due monthly  installments that  are             owed  to the Ponce Federal Bank," and to "assume the pending             balance of  the referred account."   Burgos argues, however,             that he made this promise to the ship's sellers, not  to the             Bank, and that he was never "substituted" for the sellers as             the debtor to the initial promissory note.                         Whether  or  not  the  sale  contract  achieved  a             technical "substitution," relieving the sellers of liability             to  the Bank, is irrelevant  to whether Burgos  is liable to             the  Bank.   Puerto  Rico's  contract  law, recognizing  the             claims of third-party beneficiaries, provides:                       should   the    contract   contain   any                       stipulation in favor of a  third person,                       he may demand its  fulfillment, provided                       he has given notice of his acceptance to                       the person bound before it may have been                       revoked.                                         -7-                                          7             31  L.P.R.A.    3374.   The  contract  before us  contains a             "stipulation in favor  of a third person," namely  the Bank.             By  bringing  this lawsuit,  the  Bank  has "demand[ed]  its             fulfillment."   And, the filing of the  complaint, and later             proceedings,  would  seem adequate  "notice  of"  the Bank's             "acceptance."     See   A.L.  Arsuaga,   Inc.  v.   La  Hood                               ___   _____________________       ________             Constructors,   Inc.,  90   P.R.R.   101,   107-08   (1964).             ____________________             Consequently, the court's judgment of liability is lawful.                                         III                              The Borrowers' Cross-Claim                              __________________________                       We  turn to a final appellate claim resting upon a             matter that,  in order to  simplify the discussion,  we have             not yet  mentioned.  The Bank brought  its deficiency claims             not  only against  Burgos,  but also  against the  borrowers             themselves.    See 46  U.S.C.    951,  amended by  46 U.S.C.                            ___                     __________               31325(b)(2).  The borrowers asserted a cross-claim against             Burgos.    And,  the   district  court,  agreeing  with  the             borrowers, ordered Burgos to reimburse the borrowers for any             deficiency  payment  they might  make to  the Bank.   Burgos             appeals  this judgment, too.   He argues that  the court did             not have the legal  power to permit the borrowers  to assert             that claim against Burgos.                                         -8-                                          8                       Both  the  borrowers  and  Burgos,  however,  were             properly made  parties  in this  case.   A  federal  statute             specifically  permitted  the  Bank  to  make  the  borrowers             parties in the case,  46 U.S.C.   951, amended by  46 U.S.C.                                                    __________               31325(b)(2); and,  for the  reasons set  out in  Section I             above, Burgos, too,  was a  proper party.   Fed. R. Civ.  P.             13(g) permits one party to an action to assert a cross-claim             against another party as long as the cross-claim arises "out             of the  transaction or occurrence that is the subject matter             . .  . of the  original action."  The  Bank's original claim             against  the "Lady Abby" rests on a mortgage; and the Bank's             and  the borrowers'  claims against  Burgos arise  out of  a             contract  in which  Burgos agreed to  make payments  on that             mortgage.  These claims are closely related, satisfying Rule             13(g), as well  as the "pendent"  jurisdiction requirements.             See 6 Wright, Miller & Kane, supra,   1433 at 253-57.             ___                          _____                       The judgment of the district court is                       Affirmed.                       ________                                         -9-                                          9