Court Opinion

ID: 2961510
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:44:13.595394+00
Date Added: 2024-06-11T13:14:07.475117
License: Public Domain

USCA1 Opinion

	

          October 22, 1992                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-1389                        FEDERAL DEPOSIT INSURANCE CORPORATION,                                 Plaintiff, Appellee,                                          v.                            WORLD UNIVERSITY INC., ET AL.,                                Defendants, Appellees.                                      __________                          SANTA BARBARA CENTER CORPORATION,                                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                                 Selya, Cyr and Stahl,                                    Circuit Judges.                                    ______________                                 ____________________            Norberto  Medina-Zurinaga  with  whom  Carlos  J.  Quilichini  and            _________________________              ______________________        Quilichini, Oliver, Medina & Gorbea were on brief for appellant.        ___________________________________            Jeannette   E.   Roach,   Counsel,   Federal   Deposit   Insurance            ______________________        Corporation,  with  whom Ann  S.  Duross,  Assistant General  Counsel,                                 _______________        Colleen B. Bombardier, Senior  Counsel, Robert D. McGillicuddy, Deputy        _____________________                   ______________________        Senior Counsel, Larry H.  Richmond, Counsel, Federal Deposit Insurance                        __________________        Corporation, Frank Gotay-Barquet and Feldstein, Gelpi & Gotay were  on                     ___________________     ________________________        brief for appellee.                                 ____________________                                 ____________________                       STAHL,  Circuit Judge.  In this appeal, defendant-                       STAHL,  Circuit Judge.                               _____________             appellant  Santa  Barbara   Corporation  ("Santa   Barbara")             challenges the district court's entry of summary judgment in             favor  of  plaintiff-appellee   Federal  Deposit   Insurance             Corporation ("the FDIC").  Finding  no error in the district             court's ruling, we affirm.                                                     BACKGROUND                                      BACKGROUND                                      __________                       On September  10, 1975,  Santa Barbara obtained  a             $90,000  loan from Banco Central, a Puerto Rico bank.  Santa             Barbara used  the  proceeds of  the  loan to  purchase  real             property in  the municipality of Bayamon,  Puerto Rico ("the             Bayamon property").  In exchange for the loan, Santa Barbara             issued a  note in the  principal amount of  $90,000, payable             with interest on  demand to  bearer.  The  note was  secured             with a mortgage on the Bayamon property.                         Subsequently, on September 15, 1977, Santa Barbara             sold  the  Bayamon  property  to  International  Educational             Development Services, Inc.  ("International").  The deed  of             sale reflects  that International agreed to  pay the $90,000             note and accrued interest "when due."  Because International             so  agreed, it  withheld  the value  of  the note  from  the             purchase price paid to Santa Barbara.                                           2                       The  record of  this  case does  not indicate  the             whereabouts  of the Santa  Barbara note until  June of 1983,             when it  appears in International's possession  in a lawsuit             pending  in the Puerto Rico Superior Court.  See Union Trust                                                          ___ ___________             Co.  v. World Univ., Inc., No. 83-2933 (P.R. Super. Ct. July             ___     _________________             6,  1983).  In that  case, Union Trust  Company ("Union"), a             federally   insured  bank   in   Puerto  Rico,   sued  World             University, Inc. ("World"), a  Puerto Rico corporation, on a             debt.    The Puerto  Rico  Superior  Court entered  judgment             against  World.   The judgment  reveals that  International,             although not a party  to the Puerto Rico Superior  Court law             suit,  pledged  Santa  Barbara's  bearer demand  note  as  a             guarantee of payment of World's debt to Union.  The judgment             also indicates  that Union  became a  holder of  the $90,000             note.                        In December of 1983,  Union was ordered closed and             the FDIC was appointed its receiver.   Among Union's assets,             FDIC-receiver found  the facially valid Santa  Barbara note.             FDIC-receiver  then  sold  the  note  to  the  FDIC  in  its             corporate  capacity.  FDIC-corporate  commenced suit against             Santa  Barbara for payment of the note and moved for summary             judgment.   Santa Barbara responded with  a cross-motion for                                          3             summary judgment, asserting that  the note had been  paid by             International.                        The district court granted  the FDIC's motion.  In             so doing, the court  ruled, inter alia, that the FDIC  was a                                         _____ ____             holder in due course of a facially valid bearer note and, as             such, was entitled to judgment on it as a matter of law.  We             agree.1                                        DISCUSSION                                      DISCUSSION                                      __________             I.  Standard of Review             ______________________                       Summary   judgment   is  appropriate   where  "the             pleadings,  depositions,  answers  to  interrogatories,  and             admissions on  file, together  with the affidavits,  if any,             show that there is  no genuine issue as to any material fact             and  that the moving  party is entitled  to a  judgment as a             matter of  law."  Fed.  R. Civ. P.  56(c); see also  Celotex                                                        ___ ____  _______                                              ____________________             1To  further support  its  ruling, the  district court  also             relied on the protections  afforded the FDIC by 12  U.S.C.               1823(e) (1989).   Because we find that the FDIC, as a holder             in due course, is entitled to recover on the note, we do not             address the  applicability of  12 U.S.C.    1823(e)  to this             dispute.                                          4             Corp. v. Catrett, 477  U.S. 317, 323 (1986); Aponte-Santiago             _____    _______                             _______________             v.  Lopez-Rivera, 957 F.2d 40,  40-41 (1st Cir.  1992).  The                 ____________             burden is upon  the moving party to  "put the ball  in play,             averring `an  absence of  evidence to support  the nonmoving             party's case.'"  Garside v. Osco Drug, Inc., 895 F.2d 46, 48                              _______    _______________             (1st  Cir. 1990) (quoting Celotex,  477 U.S. at  325).  "The                                       _______             burden  then  shifts  to  the  nonmovant  to  establish  the             existence of at least one fact issue which is both `genuine'             and `material.'"   Id. (citations omitted).   In determining                                ___             whether factual issues  exist, we  read the  record "in  the             light  most  amiable  to  the  nonmovants  and  indulge  all             reasonable inferences favorable to them."  Id.                                                          __                       Our  review  of  a  summary  judgment   ruling  is             plenary.  Hoffman  v. Reali, No. 91-1703, slip op. at 9 (1st                       _______     _____             Cir. August 27, 1992).  Moreover, we  are not limited to the             district  court's reasoning.   Instead,  we may  "affirm the             entry of  summary judgment  on any  independently sufficient             ground made  manifest by the  record."  Quintero  v. Aponte-                                                     ________     _______             Roque,  No. 92-1227, slip op. at 3-4 (1st Cir. September 10,             _____             1992) (quoting United States v. One Parcel of Real Property,                            _____________    ___________________________             960 F.2d 200, 204 (1st Cir. 1992)).             II.  Law to be Applied             ______________________                                          5                       As an initial matter, we note  that there has been             some  confusion between the parties to this appeal as to the             applicable  law.   Before  the district  court, the  parties             litigated primarily  on the basis of  Puerto Rico commercial             law, but  made passing  references to federal  statutory and             common law.  As  a result, the district court's  holding was             anchored predominantly in Puerto Rico law.                        The FDIC now urges the application of federal law.             We have previously stated that federal law applies where, as             here,  the FDIC sues in its corporate capacity to collect on             obligations acquired from the receiver of an insolvent bank.             See,  e.g., Federal  Deposit Ins.  Corp. v.  Municipality of             ___   ____  ____________________________     _______________             Ponce, 904 F.2d  740, 745 (1st  Cir. 1990); Federal  Deposit             _____                                       ________________             Ins. Corp. v.  P.L.M. Int'l,  Inc., 834 F.2d  248, 252  (1st             __________     ___________________             Cir. 1987).   Yet, we have also  noted an exception to  this             rule  where  the federal  question  is  not  raised  by  the             parties.    Municipality  of  Ponce,  904  F.2d   at  745.                           _______________________             Moreover, we  ordinarily will  not entertain  arguments made             for  the first time on  appeal.  See  Buenrostro v. Collazo,                                              ___  __________    _______             No.  91-2337, slip  op.  at 9  (1st  Cir. August  26,  1992)             (citing  Clauson  v. Smith,  823  F.2d  660, 666  (1st  Cir.                      _______     _____             1987)).                                            6                       Here, however,  the issue  need  not be  addressed             because,  in each  regime, the  analysis is  essentially the             same.    Under  both  Puerto   Rico  law  and  the  hornbook             principles that  necessarily would  inform federal  law, the             FDIC,  as possessor of  a bearer note,  is a holder  of that             note.    See  P.R.  Laws  Ann.  tit.  19,     381(8)  (1989)                      ___             ("`Holder'  means the payee or  indorsee of a  bill or note,             who is in possession of it, or the bearer thereof."); U.C.C.                1-201(20) (1989)  ("`Holder'  means a  person  who is  in             possession  of . . . an instrument  . . . issued or indorsed             to .  . . bearer or  in blank.").  A holder  of a negotiable             instrument  is entitled  to enforce  payment in  his/her own             name.   P.R. Laws  Ann.  tit. 19,    91  ("The  holder of  a             negotiable instrument may sue thereon in his[/her] own name.             .  . .");  U.C.C.    3-301  ("The  holder of  an  instrument             whether or not [s/]he is the owner may . . . enforce payment             in his[/her] own name.").   A holder in  due course has  all             the rights of a holder.   See generally P.R. Laws Ann.  tit.                                       ___ _________             19,   92; U.C.C.   3-302(1).  S/he also takes the instrument             free from  most claims on it  and defenses to it.   See P.R.                                                                 ___             Laws Ann. tit.  19,   97 ("A holder in  due course holds the             instrument free  from any defect of title  of prior parties,             and  free from  defenses  available to  prior parties  among                                          7             themselves. . .  ."); U.C.C.   3-305 ("To the  extent that a             holder is a holder in due course [s/]he takes the instrument             free from  (1) all claims to  it on the part  of any person;             and (2) all  defenses of  any party to  the instrument  with             whom  the holder  has not  dealt except  [certain delineated             "real" defenses  not  applicable to  the  instant  case].").             Finally, the  maker of a negotiable  instrument engages that             s/he will pay the  instrument according to its tenor  at the             time of his/her  engagement.  See P.R. Laws Ann.  tit. 19,                                             ___             111; U.C.C.   3-413(1).             III.  Santa Barbara's Arguments             _______________________________                       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                                          8             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.                       A. Notice of Infirmities                       ________________________                       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                                          9             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.                       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.                         Second, a  plain reading  of the 1983  Puerto Rico             Superior Court judgment undercuts Santa  Barbara's assertion                                              ____________________             2Nowhere is it  argued that the  FDIC had before it  a title             search or a deed to the Bayamon property, the only documents             in the record that could have indicated the property's owner             in 1983, when the FDIC purchased Santa Barbara's note.             3Any such  obligation would undermine  Congress's desire  to             promote and facilitate purchase and assumption transactions,             wherein FDIC-corporate purchases assets  from FDIC-receiver,             because these transactions must be completed in great haste.             See Federal Deposit  Ins. Corp. v. 604  Columbus Ave. Realty             ___ ___________________________    _________________________             Trust, 968 F.2d 1332, 1349-50 (1st Cir. 1992).              _____                                          10             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.                        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                                              ____________________             4Specifically, the judgment provides:                       In guarantee of  the obligations  listed                       herein, [World] is bound to  [Union] for                       the following:                            a) Second mortgage for $90,000                            in principal as guarantee to a                                         __ ____________                            Bearer  note  with 12%  yearly                            interest due on demand. .  . .                            To   establish  by   means  of                            corresponding    clarification                            document, that  [Union] is the                                            ______________                            owner   and  holder   of  said                            ______________________________                            mortgage note.                            _____________             (emphasis supplied).                                          11             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 (1990)).                                     _____ ______             Accordingly,   Santa   Barbara's  "notice   of  infirmities"             argument must fail.                       B. Tacit Consent                       ________________                       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.                       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                                          12             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.                         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.                                ___ _________ ___                       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                                              ____________________             5The  note in Bracero &  Rivera was originally  secured by a                           _________________             mortgage  on a housing development.   The maker  of the note             sold  the  housing  development  to  the  third  party,  who             retained enough money from the purchase price to pay off the             maker's note.  Upon  making an additional loan to  the third             party, the bank retained  from the loan enough money  to pay             the note.  Thus,  the bank accepted payment on the note, and             the third  party owed the bank a new  debt.  See id. at 825-                                                          ___ ___             26.                                          13             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.                             ___                       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.                                              ____________________             6The record does  not indicate that Union  actually had this             knowledge.                                          14                       C. Unreasonable Time                       ____________________                       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).                                             ___                       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 (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                                              ____________________             7P.R. Laws Ann. tit. 19,   93 states:                       Where an instrument payable on demand is                       negotiated  an  unreasonable  length  of                       time after  its issue, the holder is not                       deemed a holder in due course.                                          15             newly discovered evidence.   Meyer, 781 F.2d at 1268.   They                                          _____             may not be used to argue a new legal theory.  Id.                                                             ___                       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.                       D. Improper Delivery                       ____________________                       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,  slip op.  at 9                                  ___   ____  __________             (citing McCoy v. Massachusetts Inst. of Technology, 950 F.2d                     _____    _________________________________             13, 22 (1st Cir.  1991), cert. denied, ___ U.S.  ___, 112 S.                                      _____ ______             Ct. 1939 (1992)).  We see  no reason to depart from ordinary             practice under the present circumstances, and accordingly we             treat the argument as waived.                                          16                       E.  Payment                       ___________                       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                                      CONCLUSION                                      CONCLUSION                                      __________                                              ____________________             8While evidence of payment would not change our analysis, we             note that there  was no  direct evidence of  payment in  the             record before us.                                          17                       Because  we find each of Santa Barbara's arguments                                    meritless, we affirm the judgment of the district court.                       Affirmed.                       ________                                          18