Not for Publication in West's Federal Reporter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.").
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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.
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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
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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.
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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
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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).
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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.
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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
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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.
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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.
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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
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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.
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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
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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
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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.
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