USCA1 Opinion

December 23, 1992

United States Court of Appeals
United States Court of Appeals
For the First Circuit
For the First Circuit
____________________
No. 92-1530
TAINO LINES, INC.,
Plaintiffs, Appellees,
v.
M/V CONSTANCE PAN ATLANTIC,
ITS ENGINES, TACKLE, EQUIPMENT, ETC. ET. AL.,
Defendants, Appellees.
_____________________
CURTIS SHIPPING, INC.,
Defendant, Appellant.
____________________
No. 92-2133
TAINO LINES, INC.,
Plaintiffs, Appellees,
v.
M/V CONSTANCE PAN ATLANTIC,
ITS ENGINES, TACKLE, EQUIPMENT, ETC. ET. AL.,
Defendants, Appellees.
_____________________
CURTIS SHIPPING, INC., ET. AL.,
Defendant, Appellant.
_____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen C. Cerezo, U.S. District Judge]
___________________
____________________

Before
Torruella and Stahl, Circuit Judges,
______________
and Skinner,* Senior District Judge.
_____________________
____________________
Harry A. Ezratty for appellant.
________________
Juan A. Lopez-Conway, with whom Herbert W. Brown, III
______________________
________________________
Calvesbert & Brown, were on brief for appellees.
__________________
____________________
____________________
_____________________
*Of the District of Massachusetts, sitting by designation.

STAHL, Circuit Judge.

_____________

In this appeal,

appellant Curtis

Shipping,

Inc. ("Curtis")

district court's

award, without a hearing,

defendant-

challenges

the

of full custodia

________
legis
_____

expenses

("Taino")

for

to

certain

substitute custodian
Pan

Atlantic

plaintiff-appellee
expenditures

of defendant

("the vessel").

Taino
made

Lines,
by

in rem the
__ ___
Finding

no

Taino

Inc.
as

M/V Constance
error

in

the

district court's ruling, we affirm.

I.
I.
__
BACKGROUND
BACKGROUND
__________
Because the weakness of Curtis's
more apparent
history

of

background
1990,

with a fuller understanding

this

litigation,

in some

detail.

when Taino

filed

against the vessel

we

a verified

of the

Republic.

relevant

began August

complaint in

Puerto Rico,

The

15,

admiralty

complaint alleged that

vessel, breached a

Agreement ("the

had chartered the vessel

Mayaguez,

the

in rem and against Curtis, Robert Brewis,

__ ___

the owner

Charterparty

of the convoluted

forth

This action

and Connie Frazier in personas.1

__ ________
Curtis,

set

arguments becomes

Agreement") under

1989 Bareboat
which Taino

to carry cargo between the

and certain

The complaint

further

ports in
requested

Port of

the Dominican
the entry

of

alter ego

of

____________________
1.

According to

the complaint, Curtis

is an

_____ ___
Neither Brewis nor Frazier

Robert Brewis and Connie Frazier.

is a party to this appeal.
-33

judgment and/or the confirmation

an

amount

exceeding

Finally, the

issue a

$269,000

to

cover Taino's

complaint prayed that the

in rem, "be compelled

__ ___
in Miami."

of an arbitration award2 in

To

vessel, as defendant

to act as security to

that end, the

damages.3

the arbitration

complaint asked the

warrant for the vessel's

arrest.

See 9
___

court to
U.S.C.

(1970).4
After
Magistrate
the
Rules

reviewing

Judge Castellanos issued

vessel be arrested.
for

Taino's

Certain

("Supplemental Rules").5

verified

an order directing that

See Rule C(3)

___
Admiralty

complaint,

and

of the Supplemental
Maritime

Claims

He also appointed Taino substitute

____________________
2. The Agreement provided that any dispute between Curtis
and Taino would be settled by arbitration in Miami, Florida.

3. The complaint subsequently was amended to request damages

in excess of $910,000.
4. 9 U.S.C.
8 governs proceedings begun
admiralty and seizure of a vessel or property.

by libel in
It provides:

If the basis of jurisdiction be a cause of action

otherwise
justiciable
in
admiralty,
then,
notwithstanding anything herein to the contrary,
the party claiming to be aggrieved may begin his
proceeding hereunder by libel and seizure of the
vessel or other property of the
other party
according
to the
usual course
of admiralty
proceedings,
and the
court shall
then have
jurisdiction to direct the parties to proceed with
the arbitration and shall retain jurisdiction to
enter its decree upon the award.
5.

Rule C of the Supplemental Rules

governs actions in rem.

__ ___
In relevant part, the version of Rule C(3) in effect at the
time Taino filed its complaint provided:
-44

custodian
conducting

of

the
a

vessel.

post-arrest

On

August

hearing,

27,

1990,

Magistrate

after
Judge

Castellanos ordered defendants to post security in the amount

of $350,000 in

order to

obtain the release

See generally Supplemental Rule

___ _________
of

of the

vessel.

E(5) (governing the

posting

bonds to release property that has been arrested in rem).

__ ___

The order specifically

should be
next ten

stated:

undertaken upon
(10) days

release of the

posting of [$350,000]

or[,] upon

party[,] the sale of

"The

request

within the

of [the]

the arrested vessel shall

vessel

aggrieved

be ordered."

Defendants never posted the security.

On

September 5,

1990, both

the in
__

rem defendant
___

vessel and defendants Brewis and Frazier requested a stay

the proceedings
arbitration.

until the parties' dispute

On September 10,

had proceeded to

1990, Taino objected

to the

request for a stay on the

grounds that no security had

posted, and moved for the

interlocutory sale of the

On

September 24,

1990, the

of

district court issued

been

vessel.
an order

notifying defendants that Taino's motion for an interlocutory

____________________
[T]he verified complaint and any supporting papers
shall be reviewed by
the court and, if the
conditions for an action in rem appear to exist, an
order so stating and authorizing a warrant for the
arrest of the vessel or other property that is the
subject of the action shall issue and be delivered
to the clerk who shall prepare the warrant and
deliver it to the marshal for service. . . .

-55

sale

of

posted

the vessel
within three

would be
days.

granted unless
On

security were

September 25,

1990, Curtis

filed a notice of stay advising the court that it had filed a

Chapter

11

petition for

Bankruptcy Court

for the

the automatic stay

Attached to the

bankruptcy

vessel be

the United

District of Maryland

of 11 U.S.C.

notice of

dissolved.6

States

and invoking

362 (1979 & Supp.

stay was a

apparently contained language

the

in

1992).

proposed order

directing that
Evidently,

which

the arrest

the proposed

of

order

never was noticed to or served upon Taino.7

For
the

several months, the parties skirmished in both

district court

issues, i.e.,

and

in bankruptcy

court over

whether the interlocutory sale

despite the automatic stay of 11 U.S.C.

rem
___

action should be stayed, and

the

Chapter 11 petition was

the

release of

security.

should proceed

362, whether the in

__

whether Curtis's filing of

sufficient for Curtis to obtain

vessel even

where

it had

not

posted

Finally, on February 5, 1991, the bankruptcy court

issued an order
vessel;

the

numerous

which (1)

enjoined Taino

from selling

the

(2) directed Taino to turn the vessel over to Curtis

"upon the posting by [Curtis] of a bond in favor of Taino . .

____________________

6.

The notice of stay contained no such language.

7. Indeed, it appears that Taino only became aware that

Curtis was seeking dissolution of the vessel's arrest when
the court so notified it in a margin order entered on
Curtis's notice of stay.
-66

. in the amount of $350,000.00, or such lower

amount or none

as may be established in equity by the United States District

Court for

the District of Puerto

Rico . . .";

(3) enjoined

Taino "from continuing the civil action pending in the United

States District Court
(4) modified
petition

for the District of

the automatic stay

the district court to

changed in nature

and request

so that

Puerto Rico"; and

Curtis could

both

have its bond lowered and/or

that Taino "post

a bond

for

damages which [Curtis] alleges it has suffered[.]"8

Although the
sometime
court
the

in February

record is not clear

1991, Curtis

on exactly when,

filed with

a motion to compel Taino to arbitrate.9

motion,

arguing (1)

arbitration without
that, in

that it

should

the district
Taino opposed

not be

obtaining security from Curtis,

light of the

bankruptcy court's February

forced to
and (2)
5, 1991,

order, Curtis should

bankruptcy

be directed to

court and not

seek relief before

the district court.

the

The district

____________________
8. Although not a part of the district court record, we take
judicial notice of the proceedings before the bankruptcy
court per the request of Curtis. See Fed. R. Evid. 201(d).
___
___
9. The copy of the motion in Curtis's appendix is dated
February 13, 1991. The motion itself is not, however, datestamped. Nor does the district court docket sheet indicate
that any such motion was filed on February 13, 1991. Rather,
the docket sheet reflects that the motion was filed on
February 25, 1991.
-77

court

did

not respond

specifically

to

Curtis's motion,10

and on March 15,

1991, Curtis filed a second

to

to

compel Taino

opposed, arguing

proceed to

motion seeking

arbitration.

Again

that the bankruptcy court was

which Curtis should be

pressing its argument.

Taino

the forum in
On

April 16,

1991, the district court denied Curtis's motion.

Meanwhile,

on

April

11, 1991,

Taino

had

moved

before
fees

the district court

and expenses it

custodia legis of
________ _____

for the

had thus far

the vessel.

interim approval
incurred in

Curtis

such approval.

On May

10, 1991, the

its role as

opposed the

arguing that the automatic stay of 11 U.S.C.

of the

motion,

362 prohibited

court denied

Taino's

motion.11
On

May 7,

1991,

after

considering the

parties'

arguments on the question of whether Taino could be compelled

to arbitration where
bankruptcy
arbitration.
19,

court

Curtis had not yet posted security, the

ordered

the

to

proceed

Arbitration commenced on May 30, 1991.

1991, the arbitrators found

$144,206 plus

parties

for Taino in

prejudgment interest,

to

On June

the amount of

taxable costs,

and the

____________________
10. On February 27, 1991, the district court did, however,
issue an order staying the action before it, stating that the
arrest of the vessel would remain in effect until either
Curtis posted security or the bankruptcy court "vacates the
automatic stay of this action, avoid[s] the liens, or
otherwise act[s] according to its jurisdiction."
11. The basis of the
clear by the record.

district court's denial

-88

is not

made

arbitrators' fees.
district

On July 5, 1991, Taino requested that the

court confirm

the

arbitration award.

The

court

confirmed the arbitrator's award on July 29, 1992.

Though nothing in

the record documents

Taino

represents that,

court

lifted the automatic stay and

for
1991,

on August

the interlocutory sale of

Taino

so

simultaneously
expenses.

moved

moved

On September 19, 1991,

the interlocutory
confirmed
Pursuant

the

taxation

the
to

amount of

sale of

sale of

court order,

On September 3,

district
of

court,

its custodia
________

and
legis
_____

the district court ordered

the vessel.

the

the bankruptcy

permitted Taino to move

the vessel.

before

for

31, 1991,

such fact,

vessel
proceeds

The district

on November
from the

$331,887, were subsequently placed

court

15,

sale,

1991.
in the

in an interest

bearing savings account.

Needless

to

say,

the

parties

were

unable

to

successfully determine the amount to which Taino was entitled

as custodia
________

legis.
_____

Thus,

the parties file legal

the district court

memoranda on the issue.

directed that
The parties

complied with the district court's request, and presented the

court with yet
March 30, 1992,

another volley

after considering

it, the court, without a

taxation

of motions and

of costs

in

replies.

the documentation

On

before

hearing, granted Taino's motion for

the amount

of $220,438.52,

the full

amount requested.

This appeal followed.

-99

II.
II.
___
DISCUSSION
DISCUSSION
__________
On
confirmation

appeal,
of

entitled

to some

argues:

(1) that

exercise its
legis
_____

and

does

the arbitrators'
custodia legis
________ _____
the

not

which accrued

dispute

award

or

expenses.

district court

equitable powers

expenses

unreasonably

Curtis

during

and unjustly refused

that Taino

that

is

Rather, Curtis

erred in

to deny Taino

either the

refusing to

those custodia
________
period when

it

to submit to arbitration,

(2) that the district court erred in foregoing a hearing

on Curtis's challenge to certain of the custodia legis costs.

________ _____
Both of Curtis's arguments are singularly without merit.
A.

The Court's Refusal To Award Equitable Relief

_________________________________________________
As
court

noted above,

Curtis argues

erred in declining to

custodia
________

legis expenses.
_____

that the

award Taino less

district

than its full

More specifically, Curtis asserts

that the district court was obliged to exercise its equitable

powers and to

reduce its

some unspecified sum

custodia legis award

________ _____

in order

unjustly enriched by its

to prevent

stranger

in

has

long been

admiralty;

settled
admiralty

authorized to grant equitable

369

U.S.

527, 530

Taino from

by

being

obstructionist behavior in refusing

to proceed to arbitration until May 1991.

It

to Taino

(1962);

relief."
see
___

also
____

We disagree.

that

"[e]quity is

courts

are,

no

indeed,

Vaughan v. Atkinson,
_______
________
Pino
____

v.

Protection
__________

-1010

Maritime Ins. Co., Ltd., 599

________________________

F.2d 10, 15

(1st Cir.), cert.

_____

denied, 444 U.S. 900

______

Of course, a

court's decision

(1979).

on

whether

committed

or

not

to exercise

its

to its sound discretion.

equitable

powers

is

See Roland M. v. Concord

___ _________
_______

Sch. Comm., 910 F.2d 983, 999 (1st Cir. 1990), cert. denied,
___________
_____ ______
111 S. Ct. 1122 (1991); see also
___ ____
Enforcement Admin.,
__________________
Therefore,

we

discretion.

Reyes v. Supervisor of Drug

_____
__________________

834 F.2d 1093, 1098-99

review
See,
___

such

a decision

e.g., Ferrofluidics
____ _____________

Components, Inc.,
_________________

968

F.2d

Hiraldo-Cancel v. Aponte,
______________
______

1463, 1471

(1st Cir. 1987).

only
v.

for

abuse of

Advanced Vacuum
________________
(1st

Cir.

925 F.2d 10, 13 (1st

1992);

Cir.), cert.
_____

denied, 112 S. Ct. 637 (1991); see also Kingstate Oil v. M/V
______
___ ____ ______________
___
Green Star, 815 F.2d 918,
___________
whether

to allow

922 (3rd Cir.

application

for

1987) (decision on

custodia legis
________ _____

expenses

reviewed for abuse of discretion).

Here,

Curtis's

abused its discretion in

legis
_____
that

award strains

argument that

the

district court

refusing to reduce Taino's custodia

________

credulity.

The record

amply reflects

Taino was prepared to proceed to arbitration as soon as

Curtis
eventual

posted

security.

ruling to

Despite

the contrary,12

the

bankruptcy

it appears

court's

to us

that

____________________
12. We do not, of course, express an opinion on whether the
bankruptcy court was correct in compelling Taino to proceed
to arbitration despite the fact that Curtis had not yet
posted security.
-1111

Taino's

position

faith.13
rejected

was neither

Furthermore, when
Taino's

arbitration

nor

the bankruptcy

argument

in May

frivolous

by

bad

court seemingly

ordering it

1991, Taino

taken in

to

proceed

promptly complied

to

with the

bankruptcy court's order.

More
overwhelmingly

importantly,
indicates

responsible as Taino for

was under arrest.
release

however,

that

Curtis

the
is

record

at

least

the length of time that

as

the vessel

It was Curtis who never posted security to

the

vessel

Supplemental

Rules.

in

the

manner

Moreover, it

provided
was

for

Curtis who

in

the

filed a

Chapter 11 petition in order to prevent the vessel from being

sold in September 1990, and then alternated between defensive
invocations

of the

affirmative attempts

automatic stay

of 11

both to release the

U.S.C.

362 and

vessel from arrest

and to compel Taino to proceed

these facts,

to arbitration.

Curtis's lamentations about the

between the seizure of

In light

of

length of time

the vessel and its eventual

sale can

most charitably be described as unpersuasive.

In
within its

sum, we find that the district court acted well

discretion in refusing to

exercise its equitable

____________________
13. Taino argues that Congress's use of the word "then" in 9
U.S.C.
8, see supra note 4, evinces an intent that courts
___ _____
should not direct parties to proceed with arbitration until
such time as bond is posted since the posting of bond occurs
during "the usual course" of an admiralty arrest. Regardless
of whether Taino's position is correct, it strikes us that it
is based upon at least a plausible reading of the statute.
-1212

powers to reduce Taino's

custodia legis award.

________ _____

Accordingly,

we affirm the district court's ruling awarding Taino its full

custodia legis expenses.
________ _____
B. The Court's Refusal To Hold A Hearing
_________________________________________
Curtis also

contends that the district court erred

in failing to
custodia
________

hold a

hearing on its

legis costs.14
_____

This

challenges to

contention does

certain

not warrant

extended discussion.
In support

of

general argument and one

that Alejandro Ortiz
vessel on behalf of

its position,

piece of evidence.

repair

cash.15
Gifter

shop,

Taino, could not have made

could

Curtis also submits

as evidence

that

have

access

the affidavit

the custodial

of the

cash outlays

months since he, as owner

not

one

Curtis asserts

Cardona, who acted as custodian

of $172,610.97 over fifteen

auto

Curtis advances

to

of an

that

much

of Benjamin

B.

care delineated

by

____________________
14. Curtis neither argues nor points us to any authority
suggesting that a hearing is always necessary before a court
can award custodia legis expenses. Accordingly, we construe
________ _____
Curtis's argument as being that the court's failure to hold a
hearing in this instance was an abuse of its discretion.
__ ____ ________
15. We note that in support of his claimed custodial
expenses, Ortiz Cardona submitted to the court both copies of
cash receipts and a sworn statement that the expenses at
issue were "necessarily incurred in the custody of the vessel
and the services for which the fees have been charged were
actually and necessarily performed."
-1313

Taino in its

expense submissions to

the district court

was

Simply put, Curtis's argument and evidence are

far

not really provided.16

from sufficient for us to find that the district court abused

its

discretion in

Curtis

has

assertion
cash.
veracity

submitted
about Ortiz

Nor

has it
of

documentation.17
nothing

failing

to hold

no evidence

The

supporting

Cardona's alleged

specifically

any

the requested

of
Gifter

Ortiz

its

lack of

called into

hearing.
blanket
access to

question

the

Cardona's

supporting

affidavit tends

to establish

other than the fact that on three occasions during a

____________________
16. Gifter is a rabbi who, while in Mayaguez "supervising
special Kosher productions at the Star Kist Tuna plant," had
occasion to visit the area where the vessel was docked during
the period of its arrest. Gifter asserts that during three
visits to the dock area, he did not observe any guards on
board the vessel.
Gifter further states that on two
subsequent visits, he observed a male person sleeping on a
hammock on board the vessel.
17. In fact, the only specific item challenged by Curtis is
a claim for 12% interest on cash outlays made by Ortiz
Cardona in his sworn statement. Curtis argues that the 12%
interest figure is outrageously high.
Curtis's challenge to the interest claimed by Ortiz
Cardona does not alter our conclusion that the district court
was not required to hold a hearing.
First of all, this
argument was not made before the district court. Therefore,
Curtis is precluded from making it here. See, e.g., Federal

___ ____ _______

Deposit Ins. Corp. v. World Univ., No. 92-1389, slip op. at 5
__________________
___________
(1st Cir. Oct. 22, 1992) (arguments ordinarily cannot be made
for the first time on appeal) (citations omitted). Moreover,
even if the argument were not procedurally defaulted, it is
apparent that it lacks substantive merit.
The record
reflects that, in the end, Taino never submitted to the
district court Ortiz Cardona's request for 12% interest in
its final claim for custodia legis expenses.
________ _____
-1414

fifteen

month period, no person was on the vessel's deck and

thus visible

from the

dock area.

court acted well within its

even

if

accepted, as

Obviously, the

district

discretion in viewing such fact,

insufficient

to

call into

question

whether Taino actually provided the custodial care claimed in

its expense submissions.
In
district
hold

light of

court did not

a hearing

on

the foregoing,
abuse its

discretion in

Curtis's challenge

legis expenses claimed by Taino.

_____

III.

we conclude

to certain

that the
failing to
custodia
________

III.
____
CONCLUSION
CONCLUSION
__________
Because we find that Curtis's arguments are without
merit, we affirm the judgment of the district court.
Affirmed. Costs to appellee.
_____________________________

-1515