Donald D. Forsht Associates, Inc. v. Transamerica ICS, Inc., s. 85-5974

• Decision Date: 21 July 1987
• Docket Number: Nos. 85-5974,86-5341 and 86-5376,s. 85-5974
• Citation: 821 F.2d 1556
• Parties: DONALD D. FORSHT ASSOCIATES, INC., Plaintiff, v. TRANSAMERICA ICS, INC., and Transamerica Transportation Services, Inc., Defendants/Third-Party Plaintiffs-Appellants, v. FIRST GREYHOUND LEASING COMPANY and Greyhound Leasing and Financial Corporation, Third-Party Defendants-Appellees. DONALD D. FORSHT ASSOCIATES, INC., Plaintiff-Appellant, v. TRANSAMERICA ICS, INC., and Transamerica Transportation Services, Inc., Defendants/Third-Party Plaintiffs-Appellees, First Greyhound Leasing Co., et al., Third-Party Defendants-Appellees. DONALD D. FORSHT ASSOCIATES, INC., Plaintiff-Appellee, v. TRANSAMERICA ICS, INC., and Transamerica Transportation Services, Inc., Defendants-Third Party Plaintiffs-Appellants, v. FIRST GREYHOUND LEASING CO., and Greyhound Leasing & Financial Corp., Third- Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1556

821 F.2d 1556

1987 A.M.C. 2561

DONALD D. FORSHT ASSOCIATES, INC., Plaintiff, v. TRANSAMERICA ICS, INC., and Transamerica Transportation

Services, Inc., Defendants/Third-Party Plaintiffs-Appellants, v. FIRST GREYHOUND LEASING COMPANY and Greyhound Leasing and Financial Corporation, Third-Party Defendants-Appellees.

DONALD D. FORSHT ASSOCIATES, INC., Plaintiff-Appellant, v. TRANSAMERICA ICS, INC., and Transamerica Transportation

Services, Inc., Defendants/Third-Party Plaintiffs-Appellees,

First Greyhound Leasing Co., et al., Third-Party

Defendants-Appellees.

DONALD D. FORSHT ASSOCIATES, INC., Plaintiff-Appellee, v. TRANSAMERICA ICS, INC., and Transamerica Transportation

Services, Inc., Defendants-Third Party Plaintiffs-Appellants, v. FIRST GREYHOUND LEASING CO., and Greyhound Leasing &

Financial Corp., Third- Party Defendants-Appellees.

Nos. 85-5974, 86-5341 and 86-5376.

United States Court of Appeals Eleventh Circuit.

July 21, 1987.

Rehearing and Rehearing En Banc Denied Sept. 10, 1987.

Kieron F. Quinn, Quinn, Ward, & Kershaw, P.A., Baltimore, Md., for Transamerica ICS, Inc., and Transamerica Transp., Services, Inc.

Richard F. Ralph, Miami, Fla., for 1st Greyhound Leasing & Greyhound L & F Corp.

Appeals from the United States District Court for the Southern District of Florida.

Before HILL and HATCHETT, Circuit Judges, and HENDERSON, Senior Circuit Judge.

HENDERSON, Senior Circuit Judge:

These consolidated appeals challenge the judgment of the United States District Court for the Southern District of Florida in which the court held that the appellees, First Greyhound Leasing Company and Greyhound Leasing & Financial Corporation ("Greyhound"), were not liable to either of the appellants for their proportionate share of certain administrative expenses incurred in an earlier proceeding. For the reasons hereinafter stated, we reverse the district court's judgment as to the potential liability of Greyhound to the appellants, Transamerica ICS, Inc. and Transamerica Transportation Services, Inc. ("Transamerica"), and we find the remaining issues on appeal moot.

This case is related to four prior admiralty in rem proceedings filed in the Southern District of Florida. The present controversy arose when the funds realized at a court-ordered interlocutory sale of two of the vessels arrested in the prior in rem proceedings were insufficient to cover court-ordered administrative expenses.

On June 21, 1983, a constellation of corporations affiliated with Chester, Blackburn & Roder, Inc. ("CB & R") filed for reorganization under Chapter Eleven ¹ in the United States Bankruptcy Court for the Southern District of New York. The CB & R group was engaged in a number of enterprises in the Miami area, principally related to the ocean carriage of cargo, including terminal operations, stevedoring and agency and freight forwarding.

The chief business of the CB & R group was the carriage of goods by sea from Florida and the United States Gulf coast to Central America. To that end, it owned or operated a number of vessels. As a consequence of CB & R's collapse, four of these vessels, the M/V PANCARIBE, the M/V PANATLANTIC, the M/V COSTA RICA and the M/V CENTRO AMERICA were arrested in Miami.

In each of those admiralty cases, the first complaint to be filed with the clerk's office of the United States District Court for the Southern District of Florida was that of the appellant, Transamerica. In each case Transamerica deposited the required $7,500.00 with the Marshal as an advance for administrative expenses.

In addition to Transamerica, a number of CB & R's other maritime service creditors joined the in rem actions. Some filed separate in rem actions and deposited advances against administrative fees with the Marshal, but most simply intervened in the first in rem case brought by Transamerica and did not deposit any monies with the Marshal.

The four in rem cases were subsequently consolidated into two actions, the division being principally the result of the vessels having two different mortgagees. The M/V CENTRO AMERICA and the M/V COSTA RICA were mortgaged to the Financing and Credit Export Institute of the Norwegian Commercial Banks, Ltd., and the actions involving those two vessels were consolidated into Civil Action Number 83-1605-Civ-EBD. The M/V PANATLANTIC and the M/V PANCARIBE, which were mortgaged to the appellee, Greyhound, were consolidated into Civil Action Number 83-1464-Civ-EBD.

Shortly after consolidation, counsel for Transamerica sought to have the vessels held at a lower cost than that charged by the Marshal for the use of his personnel and the resources of his office. The arrangements made by the Marshal were costing $250.00 per day, per vessel. When contacted, the appellant, Donald D. Forsht Associates, Inc. ("Forsht"), quoted a price of $220.00 per ship, per day. There was no opposition to a substitution of the custodian and, therefore, Transamerica filed motions in each of the four in rem cases to have Forsht appointed the Marshal's substitute custodian for each vessel. The motions were granted and the orders signed and entered by the district court on June 30, 1983.

The case involving the two larger vessels, the M/V CENTRO AMERICA and the M/V COSTA RICA, proceeded expeditiously. Pursuant to a motion for interlocutory sale, the M/V CENTRO AMERICA and the M/V COSTA RICA were sold by the court on November 18, 1983, for a total sum of $8,000,000.00, which was the minimum price previously set by the district court.

The consolidated case involving the smaller vessels, the M/V PANATLANTIC and the M/V PANCARIBE, did not move as quickly. Although Greyhound moved to sell the M/V PANATLANTIC and M/V PANCARIBE on October 12, 1983, the final sale did not occur until August 7, 1984. At that sale the high bidder for each of the vessels was Greyhound itself, which bid $95,000.00 for each vessel. On August 17, 1984, Transamerica filed an objection to the confirmation of sale of the vessels, noting that the sale price secured by Greyhound was insufficient to cover the administrative fees and expenses. Greyhound filed a reply asserting that the fees of the substitute custodian were the private responsibility of the other claimants and were not entitled to be paid as an administrative expense.

On October 5, 1984, the court entered an order confirming the sale of the vessels to Greyhound for the bid price of $95,000.00 each, reciting that "[t]he Court finds that, although the high bid of $95,000.00 does not even cover all the administrative expenses, it is in the interest of justice to confirm the sale at this time so as not to incur increased administrative expenses pending another attempt at sale." This order also directed that the fund be distributed in the following order of priority: 1) all expenses actually incurred by the Marshal (including the Marshal's commission), 2) all advertising expenses, 3) dockage expenses, and 4) expenses of the substitute custodian appointed by the court.

Transamerica, supported by other claimants, filed a motion for reconsideration which was denied by the court. After the other expenses were paid, the remaining funds were inadequate to cover the fees of the substitute custodian, leaving a $120,930.33 deficiency on its invoices. Forsht then filed a motion to intervene seeking compensation for the shortfall from the parties to the action. The district court denied that motion. Meanwhile, the clerk disbursed the sale funds in the registry.

On January 3, 1985, Forsht filed this action against Transamerica to recover the $120,930.33 deficit. Forsht sought to hold Transamerica liable for the entire amount due because Transamerica was the party which had arranged for Forsht's custodianship and had moved for Forsht's appointment as the substitute custodian. Transamerica answered and filed a third-party complaint impleading each of the arresting and intervening claimants in the underlying in rem actions against the M/V PANATLANTIC and the M/V PANCARIBE. Several of the third-party defendants filed either a motion for judgment on the pleadings or a motion to dismiss, which motions were granted by the court. Transamerica appealed these judgments. Subsequently the remaining third-party defendants also filed motions for judgment on the pleadings or motions for dismissal, which were also granted, leaving only Forsht and Transamerica as parties to this action. At that point Forsht moved for leave to amend its complaint to state a cause of action directly against each of the third-party defendants and Transamerica moved for an order granting an interlocutory appeal of the dismissals. The court denied both motions. Forsht and Transamerica then reached a settlement of the case, pursuant to which Forsht took a final judgment against Transamerica in the amount of $146,674.93. Transamerica paid Forsht $107,000.00 and took an assignment of the full judgment. Both parties filed appeals, Forsht from the denial of its motion to amend, and Transamerica from the dismissals and judgments on the pleadings granted to each of the third-party defendants. These two appeals, together with Transamerica's earlier appeal, were consolidated. After the appeals were filed Transamerica reached an accommodation with each of the appellee/third-party defendants, except Greyhound.

Before reaching the issues on appeal we must first address Greyhound's contention that this court has no jurisdiction over Forsht's appeal. Through this appeal Forsht challenges the district court's denial of its motion for leave to amend its complaint to state direct causes of action against each of the third-party defendants. According to Greyhound, Forsht's subsequent settlement with Transamerica renders a review of the district court's action moot. We agree. As noted in the factual summary, Forsht and Transamerica stipulated to the entry of a final judgment in the amount of $146,674.93, an amount which included full...