Ponce Federal Bank v. The Vessel "Lady Abb, 1st Cir. (1992)

USCA1 Opinion
November 25, 1992

UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
____________________
No. 92-1413
PONCE FEDERAL BANK, F.S.B.,
Plaintiff, Appellee,
v.
THE VESSEL "LADY ABBY", ET AL.,
Defendants, Appellees.
____________________
CRISTOBAL BURGOS RODRIGUEZ,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge]
___________________
____________________
Before
Breyer, Chief Judge,
___________
Aldrich, Senior Circuit Judge,
____________________
and Boudin, Circuit Judge.
_____________
____________________
Eli B. Arroyo with whom Miguel E. Miranda-Gutierrez and Figuer

_____________
___________________________
______
Morales & Chaves-Caraballo Law Offices were on brief for appellant.
______________________________________
Francisco A. Besosa with whom Miguel J. Rodriguez-Marxuach
____________________
_______________________________
Goldman Antonetti Ferraiuoli & Axtmayer were on brief for appell
________________________________________
Ponce Federal Bank, F.S.B.
____________________
____________________
BREYER, Chief Judge.

___________
Ponce Federal
Bank brought
an in rem action in admiralty to foreclose its mortgage on a

______
ship, the "Lady Abby."
the law of
It added an in personam claim, under

___________
Puerto Rico, for
a deficiency judgment
the Lady Abby's current possessor, Cristobal Burgos.

had
against
Burgos
bought the ship from the borrowers; he had promised the
borrowers he would
keep up the
mortgage payments; and,
he
had
failed
deficiency
to
do so.
judgment.
The
district
Burgos
court granted
appeals.
We
affirm
the
the
district court.
I
Jurisdiction
____________
Burgos argues that the district court did not have
jurisdiction to enter a judgment against him.
that the Bank originally
the ship,
not
brought an admiralty claim against
against him.
He adds
diversity jurisdiction, 28 U.S.C.

against
him did
1331.
He points out
not arise
that
no
1332, and that the claim
under federal
A special "ship mortgage"
there was
law.
28 U.S.C.
statute seems to provide
jurisdiction for a mortgagee to obtain a deficiency judgment

from a
borrower, but it
________
ship from
U.S.C.
a borrower.
31325(b)(2).
says nothing about one

See
___
46 U.S.C.
Where then,
951,
he asks,
who buys a
amended by 46
__________
did Congress
authorize
the
over him?
See, e.g., The Mayor v. Cooper, 73 U.S. (6 Wall.)

___ _____ _________
______
247,
(1868) ("[T]wo
252
admiralty court's
exercise
things
are
jurisdiction . . .
court the capacity
to take it, and an
of jurisdiction
necessary to
The Constitution must have
create
given the
act of Congress must
have supplied it.").

The
First,
answer
Congress
to
has
this
question
granted
federal
has
four
parts.
district
courts
"original jurisdiction" over 1) any "civil case of admiralty

or maritime jurisdiction," 28 U.S.C.
or
"civil
mortgage
action[s]"
. .
brought to
. lien"
mortgaged vessel.
(i.e., a
46 U.S.C.
1333; and 2) "suits"

enforce
ship mortgage
951,
"preferred
lien) on
amended by 46 U.S.C.
__________
31325.
Second,
courts
have
traditionally
read
jurisdictional statutes of this kind (at least in admiralty)

as granting admiralty courts "pendent party" jurisdiction, a
jurisdiction that
claim
to
permits the
hear another,
person not otherwise
court hearing
closely
related
a party in the case.
the admiralty
claim against
See, e.g., Roco

___ ____ ____
Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292, 1295

______________
_____________________
(2d Cir. 1990) (citing cases).
-33
Third, a non-federal
is sufficiently
claim against such
related to permit the
a person
assertion of pendent
party jurisdiction if
the
state
law
claim against
the
additional party arises out of a common
nucleus of operative facts with the
admiralty claim and the resolution of
the factually connected claims in a
single proceeding
would further the
interests
of
conserving
judicial
resources and fairness to the parties.
Id.
___
Fourth, the claim is so
mortgage-foreclosure
law
admiralty claims
and its
The Bank's
Puerto Rico
mortgage-deficiency claims involve a "common nucleus of
operative
seems
related here.
facts."
eminently
proceedings
judicial
in
"single proceeding"
fair.
the
And,
admiralty
resources, for
the
to decide
consolidation
court
otherwise the
helps
to
Bank would
of
both
the
conserve
have to
bring separate legal actions in
federal and local courts to
collect
the money due.
U.S.C.
U.S.C.
31325(c)
See 46
___
(giving
federal
951, amended by 46
__________
courts
exclusive
_________
jurisdiction over ship-mortgage foreclosure claims).

The upshot is that this case falls well within the
bounds of
court to
relevant legal authority permitting

assert "pendent
party" jurisdiction.
an admiralty
See, e.g.,
___ ____
Brown v. Trustees of Boston University, 891 F.2d 337, 355-56

_____
_____________________________
-44
(1st
Cir.
1989),
cert.
denied,
______________
496
U.S.
937
(1990);
Rodriguez v. Comas, 888 F.2d 899, 903-05 (1st Cir. 1989).

_________
_____
The
that we must
Court's fairly
appellant's
single
ignore this authority
significant argument
because of the
recent decision in Finley
is
Supreme
v. United States,
______
490
U.S.
545 (1989).
The
Supreme
_____________
Court, in
that case,
cautioned against reading jurisdictional statutes broadly to

confer "pendent party" jurisdiction.
considered
a federal
tort claim
See id. at 547-48.

___ ___
statute that
federal courts
"exclusive jurisdiction of civil
claims against
the United
States."
28
U.S.C.
It
granted the
actions on
1346(b).
And, it held that
this statute did not authorize

___
court,
hearing a
federal
United
States, also to hear a state law tort claim, arising
law accident
a federal
claim against
the
out of the same accident, but against a person not otherwise

a
56.
party in the federal case.

Congress yet more
overturns Finley.
______
See Finley, 490 U.S. at 555___ ______
recently has passed
28 U.S.C.
1367.
a statute that
But, that statute does
not directly apply to this, post-Finley, pre-statute, case.

______
We do
different
not agree, however, that
result
distinguished
in
this
case.
Finley requires a
______
Other
circuits
have
between Finley's statutory context (a statute

______
that waived sovereign immunity) and

-55
jurisdictional statutes
related
to admiralty.
See Roco Carriers, 899 F.2d at 1295___ _____________
97; Loeber v. Bay Tankers, Inc., 924 F.2d 1340, 1345-47 (5th
______
_________________
Cir. 1991) (following
Roco); see also Antilles Ins. Co. v.

____
___ ____ __________________
M/V Abitibi Concord, 755

_____________________
(same);
cf.
___
Rodriguez
_________
F.
v.
Supp. 42,
Comas,
_____
45
888
(D.P.R. 1991)
F.2d
at
(distinguishing Finley from a Section 1983 case).

______
pointed
out
that, traditionally,
courts
waivers of sovereign immunity narrowly;

they
have
also
jurisdiction more
expedition,
and
They have
have interpreted
yet, traditionally,
interpreted
assertions
broadly (given
needs for
broad
905-06
statutory language,
of
admiralty
uniformity and
such
as
granting jurisdiction over any admiralty "civil case").

Roco Carriers,
_____________
899 F.2d
at
1295-97; Loeber,
______
1345-47; see also Antilles, 755 F.

___ ____ ________
have concluded
that, despite
Supp. at 45.
Finley, and even

______
924 F.2d
And,
that
See
___
at
they
without the
new statute, in admiralty
pendent party jurisdiction
still
lives in very much the same form as we have applied it here.

See
___
Roco Carriers, 899 F.2d at 1295-97; Loeber, 924 F.2d at

_____________
______
1346-47; see also Antilles, 755 F. Supp. at 45.

___ ____ ________
In
our
particularly in
view,
light of
it
would
make
these recent
"no
cases, "to
expansive reading to Finley to reach a result that

______
has deliberately repudiated for
future cases."
sense,"
give an
Congress
13B Charles
-66
A.
Wright,
Arthur R.
Miller &
Practice and
Procedure
_________________________
(referring
to 28 U.S.C.
Edward H.
3567.2
1367).
at
We
Cooper, Federal
_______
31
(1992
Supp.)
therefore follow the
precedent of other circuits and hold that the district court

lawfully asserted "pendent party" jurisdiction in this case.
II
The Deficiency Claim
____________________
In
his contract
prior owners,
Burgos promised
the payment of
owed
buying
the (3)
the Lady
Abby from
its
"immediately [to] carry
out
due monthly
installments that
are
to the Ponce Federal Bank," and to "assume the pending
balance of
the referred account."
Burgos argues, however,
that he made this promise to the ship's sellers, not
to the
Bank, and that he was never "substituted" for the sellers as

the debtor to the initial promissory note.
Whether
or
not
the
sale
contract
achieved
technical "substitution," relieving the sellers of liability

to
the
the Bank, is irrelevant

Bank.
Puerto
Rico's
to whether Burgos
contract
is liable to
law, recognizing
claims of third-party beneficiaries, provides:

should
the
contract
contain
any
stipulation in favor of a third person,
he may demand its fulfillment, provided
he has given notice of his acceptance to
the person bound before it may have been
revoked.
-77
the
31
L.P.R.A.
3374.
"stipulation in favor
By
bringing
The
contract
proceedings,
the
Bank
"acceptance."
seem adequate
See
___
Constructors,
Inc.,
____________________
"notice
P.R.R.
its
complaint, and later

of"
A.L. Arsuaga,
Inc.
_____________________
90
the Bank.
has "demand[ed]
And, the filing of the

would
contains a
of a third person," namely
this lawsuit,
fulfillment."
before us
101,
the Bank's
v.
107-08
La Hood
________
(1964).
Consequently, the court's judgment of liability is lawful.

III
The Borrowers' Cross-Claim
__________________________
We
turn to a final appellate claim resting upon a
matter that,
not yet
not
in order to
mentioned.
only against
themselves.
Burgos.
The Bank brought

Burgos,
See 46
___
31325(b)(2).
And,
simplify the discussion,
but also
U.S.C.
we have
its deficiency claims

against the
borrowers
amended by
__________
46 U.S.C.
951,
The borrowers asserted a cross-claim against

the
district
court,
agreeing
with
the
borrowers, ordered Burgos to reimburse the borrowers for any

deficiency
appeals
payment
they might
this judgment, too.
not have the legal
make to
the Bank.
He argues that
the court did
power to permit the borrowers
that claim against Burgos.
Burgos
to assert
-88
Both
the
borrowers
properly made
parties
specifically
permitted
parties in the case,

31325(b)(2); and,
above, Burgos, too,
and
in this
the
for the
was a
case.
however,
were
federal
make
the
borrowers
951, amended by
__________
46 U.S.C.
Bank
46 U.S.C.
Burgos,
to
reasons set
proper party.
out in
statute
Section I
Fed. R. Civ.
P.
13(g) permits one party to an action to assert a cross-claim

against another party as long as the cross-claim arises "out
of the
. .
transaction or occurrence that is the subject matter
. of the
against
and
original action."
mortgage.
Bank's original claim
the "Lady Abby" rests on a mortgage; and the Bank's
the borrowers'
contract
The
in which
claims against
Burgos agreed to
Burgos arise
make payments
out of
on that
These claims are closely related, satisfying Rule
13(g), as well
as the "pendent"
jurisdiction requirements.
See 6 Wright, Miller & Kane, supra,

___
_____
1433 at 253-57.
The judgment of the district court is

Affirmed.
________
-99

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USCA1 Opinion

November 25, 1992

Eli B. Arroyo with whom Miguel E. Miranda-Gutierrez and Figuer

BREYER, Chief Judge.

an in rem action in admiralty to foreclose its mortgage on a

It added an in personam claim, under

Puerto Rico, for

the Lady Abby's current possessor, Cristobal Burgos.

bought the ship from the borrowers; he had promised the

mortgage payments; and,

brought an admiralty claim against

diversity jurisdiction, 28 U.S.C.

1332, and that the claim

A special "ship mortgage"

statute seems to provide

jurisdiction for a mortgagee to obtain a deficiency judgment

says nothing about one

See, e.g., The Mayor v. Cooper, 73 U.S. (6 Wall.)

court the capacity

to take it, and an

The Constitution must have

act of Congress must

have supplied it.").

"original jurisdiction" over 1) any "civil case of admiralty

1333; and 2) "suits"

jurisdictional statutes of this kind (at least in admiralty)

person not otherwise

a party in the case.

See, e.g., Roco

Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292, 1295

claim against such

related to permit the

mortgage-deficiency claims involve a "common nucleus of

bring separate legal actions in

federal and local courts to

the money due.

jurisdiction over ship-mortgage foreclosure claims).

relevant legal authority permitting

Brown v. Trustees of Boston University, 891 F.2d 337, 355-56

Rodriguez v. Comas, 888 F.2d 899, 903-05 (1st Cir. 1989).

ignore this authority

recent decision in Finley

cautioned against reading jurisdictional statutes broadly to

See id. at 547-48.

"exclusive jurisdiction of civil

And, it held that

this statute did not authorize

States, also to hear a state law tort claim, arising

out of the same accident, but against a person not otherwise

party in the federal case.

See Finley, 490 U.S. at 555___ ______

recently has passed

But, that statute does

not directly apply to this, post-Finley, pre-statute, case.

not agree, however, that

between Finley's statutory context (a statute

that waived sovereign immunity) and

See Roco Carriers, 899 F.2d at 1295___ _____________

Roco); see also Antilles Ins. Co. v.

See Finley, 490 U.S. at 555_ ____

See Roco Carriers, 899 F.2d at 1295_ ___________