United States Court of Appeals
For the First Circuit
No. 08-1625
TAG/ICIB SERVICES, INC., agent of Compañía Chilena
de Navegación Interoceánica (CCNI),
Plaintiff, Appellee,
v.
SEDECO SERVICIO DE DESCUENTO EN COMPRAS;
ALEX MENDA,
Defendants, Appellants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. José Antonio Fusté, U.S. District Judge]
Before
Torruella, Selya, and Leval,*
Circuit Judges.
Paul E. Calvesbert, with whom Calvesbert Law Offices PSC, was
on brief for appellants.
Luis R. Rivera-González, for appellee.
June 26, 2009
*
Of the Second Circuit, sitting by designation.
TORRUELLA, Circuit Judge. Sedeco Servicio de Descuento
en Compras ("Sedeco") appeals a $7,400 judgment entered against it
for overdue demurrage owed to TAG/ICIB Services, Inc. ("TAG"). The
case was resolved on stipulated facts, and the primary question
before us is which statute of limitations is most analogous to
TAG's claim for overdue demurrage charges on international
shipments to Puerto Rico. After careful consideration, we reverse.
I. Background
TAG sued Sedeco and its principal, Alex Menda,1 on
September 13, 2007. At an initial status conference, the parties
consented to resolution of the case on the merits under stipulated
facts after briefing on the issue of the applicable limitation
period. These stipulated facts are, in relevant part, as follows.
TAG brings this collection action as an agent of Compañía
Chilena de Navegación Interoceánica ("CCNI"), an ocean carrier
engaged in transporting goods by sea. Sedeco purchased goods
shipped to Puerto Rico by CCNI. All such shipments originated in
foreign ports and were discharged at the port of San Juan. Sedeco
incurred $7,475 in demurrage charges in connection with this
shipping, as represented by thirteen invoices dated between
1
Appellants complain that Menda was not a party to the contract
and that TAG sued him vexatiously. In fact, the parties stipulated
that there was no privity of contract between Menda and the
carrier. But Menda never moved to dismiss claims against him, and
appellants' brief on appeal does not challenge the district court's
entry of judgment on this basis. Accordingly, the issue of the
propriety of claims against Menda is not before us.
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January 28, 2003, and September 7, 2006. These demurrage charges
represent amounts due as a result of Sedeco's retention of CCNI's
containers beyond the time allowed. Sedeco does not dispute that
it incurred the charges represented in the invoices.
Twelve of the thirteen invoices, totaling $7,400, are
dated within three years of the date this action was filed. Four
of the invoices are dated within eighteen months of the filing of
this action. None were issued within 180 days of the filing of
this action. TAG sent Sedeco a collection letter on January 23,
2007, and furnished supporting documents on February 6, 2007.
Sedeco argued to the district court that the 180-day
limitations period found in Article 947 of Puerto Rico's commercial
code was directly controlling, or, in the alternative, supplied the
most analogous limitations period. See P.R. Laws Ann. tit. 10,
§ 1909. TAG relied on our decision in TAG/ICIB Servs. v. Pan Am.
Grain Co., 215 F.3d 172 (1st Cir. 2000) [hereinafter Pan Am.
Grain], to argue that the most analogous statute of limitations was
the eighteen month statute of limitation contained in the federal
Interstate Commerce Commission Termination Act of 1995 ("ICCTA").
See 49 U.S.C. § 14705. The district court accepted neither
argument and found most analogous a three-year limitations period
in the federal Shipping Act of 1984. See 46 U.S.C. § 41301(a).
Sedeco challenges this conclusion on appeal.
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After the appeal was filed but before oral argument,
Sedeco filed for bankruptcy. Sedeco sought permission from the
bankruptcy court to lift the automatic stay provisions of 11 U.S.C.
§ 362(a)(1) so as to allow this appeal to go forward. On March 5,
2009, the United States Bankruptcy Court for the District of Puerto
Rico entered an order permitting Sedeco's counsel to argue the case
and authorizing this court to decide the appeal. In re Servicios
de Descuento en Compra Inc, No. 09-00832, docket entry 33 (Bankr.
D.P.R. March 5, 2009).
II. Discussion
A. The Established Framework
The district court had subject matter jurisdiction over
this action to enforce a maritime shipping contract pursuant to 28
U.S.C. § 1333. "[I]n determining whether a contract falls within
admiralty, the true criterion is the nature and subject-matter of
the contract, as whether it was a maritime contract, having
reference to maritime service or maritime transactions." Exxon
Corp. v. Cent. Gulf Lines, 500 U.S. 603, 610 (1991) (internal
quotation marks omitted). In this case it is clear that the
maritime shipping contracts TAG asserts trigger the district
court's admiralty jurisdiction. See Pan Am. Grain, 215 F.3d at 175
& n.3.
Our previous decision in Pan American Grain, in which TAG
sued Pan American Grain over demurrage incurred in connection with
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interstate maritime shipments, sets up the applicable legal
framework:
In an admiralty case, maritime law and the
equitable doctrine of laches govern the time
to sue. When applying the doctrine of laches,
the court examines whether plaintiff's delay
in bringing suit was unreasonable and whether
defendant was prejudiced by the delay.
In the maritime context, a laches
analysis utilizes as a benchmark the
limitations period contained in the most
analogous statute. That limitations period is
not per se dispositive, but rather courts rely
upon it to establish burdens of proof and
presumptions of timeliness and untimeliness.
Hence, if a plaintiff files a complaint within
the analogous statutory period, the burden of
proving unreasonable delay and prejudice falls
on the defendant. If a plaintiff files after
the statutory period has expired, the burden
shifts and a presumption of laches is created.
The analogous limitation period can be located
either in state or federal law.
Id. at 175-76 (citations and internal quotation marks omitted).
This much is clear.2 The disputed question arises in choosing
this analogous limitations period.
B. The Analogous Limitations Period
"The initial determination of the most analogous statute
of limitations is an issue of law, which we review de novo." Doyle
v. Huntress, Inc., 513 F.3d 331, 335 (1st Cir. 2008).
2
Sedeco does suggest that Article 947 should directly govern this
action since it is the controlling law of Puerto Rico. We reject
this argument as inconsistent with the established law that
requires us to apply the above laches analysis to maritime claims.
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TAG relies heavily on our reasoning in Pan American
Grain, which held a federal limitations statute most analogous. We
summarize this decision. The Pan American Grain court faced an
action to collect demurrage on interstate, not international,
shipping. That decision noted that our precedent had recognized a
private right of action that maritime carriers could use to collect
demurrage charges "specified in tariffs set forth in certain
commerce-related statutes." Pan Am. Grain, 215 F.3d at 175 n.3
(citing Mar. Serv. Corp. v. Sweet Brokerage de P.R., Inc., 537 F.2d
560, 562-63 (1st Cir. 1976)). But TAG's action against Pan
American Grain was brought as an action for breach of a maritime
contract, not as a Shipping Act claim, so we did not further
analyze a direct statutory action, except to recognize that "the
same statutes of limitation found . . . to be most analogous for
laches purposes might control directly" in such an action. Id.
Although Pan American Grain used language indicating that
it is merely the subject matter of the federal statutes that
creates the analogy, see id. at 176 ("Here, we are satisfied that
the most analogous statutes are the federal statutes regulating the
very tariffs under which the alleged demurrages arose."), the
better read is that the private right of action contained in that
statute controlled our determination that it was most analogous.
See id. This conclusion is also buttressed by our recent analysis
of the issue in Doyle. In deciding whether to apply the FLSA or a
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state-law limitations period to an admiralty labor dispute, we
determined that largely because the FLSA declined to cover maritime
fishermen, it could not be deemed most analogous to such
fishermen's claims. See Doyle, 513 F.3d at 336. We also quoted a
Ninth Circuit case noting that "'weight is generally given to the
statute of limitations that would apply to a comparable non-
admiralty action filed in state court in the state in which the
cause of action arose.'" Id. (quoting Sandvik v. Ala. Packers
Ass'n, 609 F.2d 969, 971 (9th Cir. 1979)).
Pan American Grain argued that Puerto Rico state law,
namely Article 947 of the Puerto Rico Commerce Code, should apply.
Pan Am. Grain, 215 F.3d at 176. Specifically, Pan American Grain
relied on a Puerto Rico Supreme Court case that held that Article
947's 180-day limitations period applied to the collection of
demurrage charges incurred in connection with shipments to Puerto
Rico from a foreign port. Id. at 177 (citing Mortensen & Lange v.
San Juan Mercantile Corp., 119 D.P.R. 345, 19 P.R. Offic. Trans.
372 (1987)). The Pan American Grain court conceded that the Puerto
Rico statute was "broad enough to apply" to demurrage, but refused
to apply it, stating that "an admiralty court must apply the
federal maritime rules that directly address the issues at hand,
and only resort to state law when no federal rule applies." Id.3
3
Specifically, we found two federal rules applied. Though the
Shipping Act of 1916 did not have a built-in statute of
limitations, the related Interstate Commerce Act supplied a three-
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This preference for federal law, however, need not derail
application of state law if no federal law "directly addresses
these issues." In Doyle, the highly related federal law explicitly
declined to speak precisely to the relevant question and we
determined that Congress's choice justified a refusal to borrow
that limitations period. Moreover, while there is some preference
for choosing federal law in admiralty cases, there is also a long
tradition of borrowing state limitations periods. See Wilburn Boat
Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 313-14 (1955)
(rejecting the idea "that every term in every maritime contract can
only be controlled by some federally defined admiralty rule" and
stating that "[i]n the field of maritime contracts as in that of
maritime torts, the National Government has left much regulatory
power in the States" (footnotes omitted)); see also Uisdean R. Vass
& Xia Chen, The Admiralty Doctrine of Laches, 53 La. L. Rev. 495,
518 (1992) (suggesting that resort to the limitations period
governing an identical non-admiralty state claim is "a good rule of
thumb").
year statute of limitations. Id. at 176-77. Further, we held that
after the ICCTA replaced the Shipping Act of 1916, the most
analogous statute of limitations was the ICCTA provision which
directly specified that "[a] carrier providing transportation or
service subject to jurisdiction under chapter 135 must begin a
civil action to recover charges for transportation or service
provided by the carrier within 18 months after the claim accrues."
Id. at 177 (citing 49 U.S.C. 14705(a)).
-8-
Considering this exposition of our previous decisions, it
should be easier to evaluate the candidates for the most analogous
statute of limitations in this case involving demurrage on
international shipments. After examining why the reasoning of Pan
American Grain is not controlling, and after rejecting the possible
federal analogues, we conclude that Article 947 is most analogous.
We explain.
The first possibility is simply to apply the same
limitations period as in the Pan American Grain decision. Though
no party asserts this position on appeal, this was the position TAG
advanced before the district court. While there is some appeal of
simplicity in applying the ICCTA's eighteen month statute of
limitations period to all demurrage claims,4 we conclude that doing
so in the case of foreign shipments is not proper. This is because
the ICCTA does not apply to shipments originating in a foreign port
and terminating in a United States port, unless the shipment
transships through one United States port on the way to the final
4
One law review article analyzing Pan American Grain advocates
uniformly applying its federal rule in all demurrage cases. See
Paul W. Stewart and Christine H. Scheinberg, Time and Demurrage and
the Case for Uniformity, 29 Transp. L.J. 235 (2002). This article
states that "[u]niformity in the realm of interstate and
international commerce is a prime goal of all federal legislation
on commerce" and emphasized the need to defer to Congress's will in
setting the applicable limitations period. Id. at 245-46.
According to this article, "the [Pan American Grain] case settles
for all time the appropriate analogous statute to be used as a
benchmark for laches analysis in demurrage claims not brought
directly under the ICCTA." Id. As explained below, we do not
agree with this conclusion in this case.
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United States Port. 49 U.S.C. § 13521(a)(3)(C). Thus, in the
ICCTA, Congress has not spoken to the applicable limitations period
for foreign shipments that arrive directly in the United States.
Further, since the ICCTA does not apply in this case,
whatever analogous private rights of action we acknowledged under
it and its predecessor statutes would not be available. As
explained above, Pan American Grain's decision to reject the state
limitations period in favor of the federal period was based, in
part, on the idea that the similar private right of action under
federal law naturally provided an analogous statute of limitations.
See 215 F.3d at 176. Thus, in the present case, the ICCTA does not
govern the action, and the reasons for concluding its limitations
period are most analogous have diminished force.5
So, we turn to the second federal candidate, the Shipping
Act of 1984. The district court concluded that TAG's current suit
was brought under this act, which regulates international shipping,
and so used it to find the analogous limitations period. In
reaching this conclusion, the district court relied on its decision
5
This conclusion is supported by another scholarly commentator.
William P. Byrne, Competing Periods in Determining Laches in
Demurrage Disputes, 33 Transp. L.J. 135, 138-39 (2006). This
article criticizes Stewart and Scheinberg's analysis and concludes
that "[Pan American Grain] should not be read to embrace ocean
transportation not included within the definition of the non-
contiguous domestic trade." Id. at 138. Thus, Byrne concludes
that "[t]here is no reason . . . to extend [Pan American Grain]'s
applicability by analogy to foreign ocean transportation, a subject
that Congress has elected to distinguish and treat independently
from domestic water transportation." Id. at 139.
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in an earlier case, which found that act applicable to foreign
shipments involving only one United States port. See SL Serv.,
Inc. v. Int'l Food Packers, Inc., 217 F. Supp. 2d 180, 185 (D.P.R.
2002). That case concluded that the Shipping Act of 1984 "appears"
to regulate the tariffs at issue since its purpose was "'to
establish a nondiscriminatory regulatory process for the common
carriage of goods by water in the foreign commerce of the United
States with a minimum of government intervention and regulatory
costs.'" Id. (quoting 46 U.S.C. § 40101). The district court then
applied a three-year limitations period on actions filed with the
FMC that assert a violation of the Shipping Act of 1984. See 46
U.S.C. § 41301(a).
We agree that the Shipping Act of 1984 applies to the
shipping at issue in this case,6 but we disagree that the statute
of limitations used by the district court is analogous. This
statute of limitations is related to a provision of the Shipping
Act of 1984 that bars shippers from obtaining transportation below
6
As noted above, The ICCTA applies to shipments that transship
through a second United States port. Our conclusion that the ICCTA
does not apply here is based on the assumption that there was no
transshipment in this case. It is true that the stipulated facts
simply state that the shipments at issue "originated in foreign
ports, and were discharged at the port of San Juan," and thus do
not foreclose the possibility of transshipment. But all parties
proceeded both below and on appeal as though there was no
transshipment. No party argues on appeal that the ICCTA is
directly controlling because of a transshipment. Thus, any
argument that a relevant transshipment occurred is waived, both by
failure to develop in the district court and by failure to present
it to us on appeal.
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applicable rates through an "unjust or unfair device." Id.
§ 41102(a). A violation of this, or other provision of the
Shipping Act of 1984, is enforced through an administrative
complaint with the FMC. Id. § 41301(a). Such administrative
complaints must be brought within three years, id., and it is this
period that the district court found most analogous to the present
case.
But that section is not on point here. First, the right
of action created in 46 U.S.C. § 41301 does not extend to simple
cases of failure to pay. Rather, the statute requires an "unjust
or unfair device or means," and regulations make clear that the FMC
will not infer such a device "from the failure of a shipper to pay
ocean freight." 46 C.F.R. § 545.2. Second, the provision is
incongruous with this case since, unlike the private right of
action available for interstate shipments, it requires that a
plaintiff seek relief before an administrative body. Thus, there
is not the same need, as encountered in Pan American Grain, to
ensure that the federal court hearing a maritime contract applies
the same law as would be applied if the carrier had sought to
collect through a direct action under the statutes. In sum, the
Shipping Act of 1984 does not provide a right of action resembling
the one found in the ICCTA. Thus, we conclude that the Shipping
Act of 1984's three-year limitations period on administrative
actions does not regulate actions for the collection of demurrage,
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and so is not perfectly analogous to TAG's claim. Nor is another
provision of the Shipping Act of 1984 on point.7
Thus, we are left with two flawed analogies. Though the
ICCTA contains a limitations period contemplating a collection
claim, it explicitly does not apply to foreign shipments that do
not include a domestic transshipment. Though the Shipping Act of
1984 regulates the kind of shipments at issue, it does not provide
a right of action comparable to that provided by the ICCTA and does
not regulate simple collection claims like the one presently before
us.
Confronted with these imperfect analogies, we return to
Puerto Rico's Article 947. It is precisely on point: "The actions
relating to the collection of transportation, freights, expenses
inherent thereto, and the contributions of ordinary averages shall
prescribe six months after the goods which gave rise thereto were
7
As discussed below, Sedeco's primary claim is that Puerto Rico
law should supply the applicable limitations period. In the
alternative, Sedeco argues that we should apply the Shipping Act of
1984's 180-day limitations period on applications with the FMC for
refunds of freight overcharges. See 46 U.S.C. § 40503. But the
present action is one to collect an unpaid charge, not for a refund
of an overcharge. Thus, just as with the three-year limitations
period used by the district court, there are serious problems with
this analogy.
We have reviewed the entire Shipping Act of 1984 and found no
other provision which might regulate TAG's instant claim. Nor has
TAG suggested that another provision of that act applies, even
after we gave TAG an explicit opportunity to do so after oral
argument. In fact, TAG did not even suggest that its claim was
brought under the Shipping Act of 1984 in its complaint or briefing
to the district court.
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delivered." P.R. Laws Ann. tit. 10, § 1909. The Puerto Rico
Supreme Court, the authoritative source for interpretation of
Puerto Rico law, has recognized that this statute applies to
demurrage on international shipments. Mortensen, 119 D.P.R. at
359, 19 P.R. Offic. Trans. at 387. And we have already
acknowledged the statute's breadth. Pan Am. Grain, 215 F.3d at 177
(stating "that statute is certainly broad enough to apply to a
demurrage action").
Thus, the relevant federal laws here do not apply to a
simple collection action for demurrage on a foreign shipment to a
single United States port. Just as in Doyle, in the absence of
federal law on point, it makes most sense to apply a controlling
state law. So, in the case of international shipments arriving
directly to Puerto Rico, the limitations period in Article 947 is
most analogous.
We note that this conclusion is narrow, in that it only
applies to shipments sent directly to a single United States port.
If a second United States port becomes involved through
transshipment, thus increasing the risk of interstate conflict of
laws, then the ICCTA supplies a federal rule.
C. Application of Laches
With the applicable statute of limitations period
resolved, the final question is whether TAG can meet its burden of
rebutting the presumption of unreasonable delay and prejudice.
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The district court did not analyze the question of
prejudice and delay, but simply entered judgment for TAG on the
$7,400 worth of claims within the three-year period and excluded
the $75 it found to be outside the presumptive laches period. No
party challenges these particular rulings on appeal. Aside from
the mailing of a collection letter, no facts in the stipulation are
relevant to this question. The collection letter was filed more
than six months after all but one of the invoices, and TAG makes no
argument on appeal as to why sending such a letter rebuts the
presumption against them.8
The record shows that the parties stipulated to facts and
consented to the district court entering judgment on those facts.
When this happens in a non-jury case, we treat the matter as a case
stated. García-Ayala v. Lederle Parenterals, Inc., 212 F.3d 638,
644 (1st Cir. 2000). In such a case, "[i]nstead of expending time
and money on a trial, the parties may decide that the pre-trial
record establishes all the necessary grounds upon which a judge may
8
Somewhat confusingly, TAG has argued on appeal, in the
alternative, that even if the district court applied the wrong
limitations period, the limitations period is not dispositive, and,
since Sedeco did not pursue the issue, it submitted to the district
court's resolution of that issue as a matter of law. Thus, if
anything, TAG is arguing that the presumption question should be
resolved as a matter of law. Certainly TAG has not sought a remand
on that issue should the 180-day period apply.
Finally, we also note that TAG has not argued on appeal that
any sort of tolling should be possible in this maritime laches
analysis by virtue of the extra-judicial claim letter sent to
Sedeco in January 2007.
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enter a final ruling on one or all of the issues in dispute." Id.
Thus, we conclude that no error arose from the district court's
failure to apply the laches presumption, since the parties offered
scant facts relevant to such an inquiry, and since the parties
consented to judgment on the stipulation.
Considering this procedural posture, the proper course is
clear. The 180-day presumption based on Article 947 applies to all
of TAG's claims. TAG offers no grounds for rebutting that
presumption. And the parties consented to entry of judgment based
on the stipulation. Thus, we conclude that the district court
should have entered judgment for the defendants.
III. Conclusion
For the foregoing reasons, the judgment below is reversed
and the case remanded for the district court to enter judgment for
the defendants.
Reversed and Remanded.
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