Lubricantes Venoco v. Perez Y Cia. ( 2003 )

  •          Not for Publication in West's Federal Reporter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
                    PEREZ Y CIA. DE PUERTO RICO, INC.
                          Plaintiff, Appellant,
                          Defendants, Appellees.
                     FOR THE DISTRICT OF PUERTO RICO
             [Hon. Jose Antonio Fuste, U.S. District Judge]
                           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
    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.
          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.").
                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
          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
          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.
    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
    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.
          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.
              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
    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
          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).
    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.
    238 F.3d 25
    , 33 (1st Cir. 2001) ("To the extent that
    appellants' reconsideration motion sought to raise an argument
          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.
    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
    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
                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
          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.
    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.
               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.
    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
    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
          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.
    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
    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
    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.
              The district court's order granting Fyffe's unopposed
    motion for custodia legis expenses is affirmed.