Puerto Rico Ports Authority v. Barge Katy-B
| Decision Date | 25 October 2005 |
| Docket Number | No. 05-1016.,05-1016. |
| Parties | PUERTO RICO PORTS AUTHORITY, Petitioner, Appellant, v. BARGE KATY-B, O.N. 606665, Defendant in Rem. Salmon Bay Barge Line, Inc., Intervenor, Appellee. |
| Court | U.S. Court of Appeals — First Circuit |
Lawrence I. Kiern, with whom H. Allen Black III, Gerald A. Morrissey III, Winston & Strawn LLP, Jorge A. Fernández-Reboredo, Luis O. Soto-Colón, and Rivera & Fernández-Reboredo, P.S.C. were on brief, for appellant.
Christopher A. Abel, with whom Troutman Sanders LLP, Eugene F. Hestres-Velez, and Bird, Bird & Hestres were on brief, for appellee.
Before SELYA and LYNCH, Circuit Judges, and RESTANI,* Judge.
In this interlocutory appeal, which raises salient questions of both appellate jurisdiction and admiralty law, the Puerto Rico Ports Authority (PRPA) seeks to stem a tide of unfavorable rulings emanating from the district court. After careful consideration, we affirm the district court's order vacating PRPA's arrest of a vessel but dismiss the remainder of PRPA's appeal for want of appellate jurisdiction.
For nearly four years, the barge KATY-B was moored at a pier operated by PRPA. Pursuant to the terms of a lease with the barge's owner, San Antonio Maritime Corporation (SAM), PRPA assessed daily dockage charges against the barge. SAM refused to pay these charges, citing its repeated complaints about PRPA's ostensible failure to provide suitable terminal facilities.
In June of 2003, PRPA initiated a summary eviction proceeding against SAM in a local court. For whatever reason, PRPA did not include in its complaint a claim for the unpaid port charges. SAM counterclaimed for damages associated with PRPA's alleged breach of the lease. SAM also filed a complaint against PRPA with the Federal Maritime Commission. See 46 U.S.C. app. § 1710(a).
In early 2005, PRPA told SAM that it preferred to have the barge removed from the pier before the onset of the hurricane season. Although SAM wanted to accommodate PRPA's request by selling the barge, there was a rub: PRPA's provision of services to the barge had given rise to an inchoate maritime lien enforceable against the barge even after a change in its ownership. See id. § 31342(a)(1); Piedmont & Georges Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 12, 41 S.Ct. 1, 65 L.Ed. 97 (1920). This lien right discouraged potential buyers since the fair market value of the barge was around $500,000 while the unpaid port charges exceeded $1,700,000. The barge's large negative equity greatly diminished the likelihood of a sale.
It was against this background that Victor González, SAM's president, and José Sarraga, SAM's attorney, met with Miguel Castellanos, PRPA's general counsel, and Edwin Rodríguez, chief of PRPA's maritime bureau. The avowed purpose of the meeting was to ascertain PRPA's intentions concerning enforcement of its maritime lien against the KATY-B. During this session, which took place in March of 2004, Sarraga requested that PRPA waive its lien in writing and agree to pursue the outstanding charges in the pending eviction proceeding. Castellanos clearly understood that a letter from PRPA disclaiming any objection to the sale of the barge and stating that the unpaid port charges were the subject of ongoing litigation would "facilitate or expedite" the barge's sale to a third party.
On March 23, 2004, Rodríguez sent a letter to González. The letter stated in pertinent part:
In accordance with the recommendation of our General Legal Counsel, attorney Miguel Castellanos, the P.R. Ports Authority has no objection that your company sell the Barge ..., and that the same sail out of the Bay of San Juan. Both parties are aware that [the unpaid port] charges are being controverted in the [court] case pending before the Superior Court of San Juan.
We would appreciate that once the sale is finalized, that we be informed so we may discontinue the daily invoicing.
It is true that this epistle did not contain language expressly waiving the lien. It also is true that such express language is the customary method of waiving a lien. Nevertheless, Castellanos's testimony adequately evinces that PRPA understood the import of the letter:
Q: You knew that the representations in this letter would be relied upon by whoever purchased the vessel, didn't you?
A. Yes.
Q. And you wanted whoever was going to purchase the vessel to know that they didn't need to worry about their liability, or the vessel[']s liability for the port charges because those charges were part of the court case in the Superior Court of San Juan, right?
A. Right.
González and Sarraga construed the letter as a waiver of PRPA's maritime lien and an agreement that PRPA would prosecute its claim for the unpaid port charges exclusively in the local courts. Relying on it, they represented to prospective purchasers that PRPA had waived its maritime lien and would not seek to arrest the KATY-B after a sale. In due course, SAM contracted with one such prospective purchaser, Salmon Bay Barge Line (S-Bay), for a sale of the barge. The purchase agreement recited that SAM and PRPA had agreed to resolve any dispute as to accrued port charges in the pending court proceedings and contained SAM's warranty that the vessel was free of maritime liens. The evidence is uncontradicted that S-Bay would not have entered into the purchase agreement but for the March 23 letter.
The sale of the barge closed on June 3, 2004. The following day, PRPA for the first time recorded its maritime lien against the KATY-B. PRPA maintains that it did not know about the sale of the barge when it prepared its notice of claim of lien. The fact that it recorded its lien within twenty-four hours after the closing was, in its words, a "mere coincidence." Nevertheless, PRPA acknowledges both that it knew of SAM's ongoing efforts to sell the barge and that it should have moved more celeritously to record its lien.
Later that month, PRPA initiated an in rem action against the KATY-B in the federal district court. The verified complaint prayed for the arrest of the barge and a money judgment against the barge in the amount of the accrued pre-sale port charges. Following the barge's arrest on July 1, 2004, S-Bay intervened in the action and requested an expedited hearing on the propriety of the arrest. See Fed.R.Civ.P. Supp. R. E(4)(f).1
On July 12, 2004, PRPA served an amended complaint. The first count reiterated PRPA's prayer for in rem relief against the KATY-B with respect to the unpaid pre-sale port charges. The second count sought judgment against S-Bay for unpaid post-sale port charges.
Rodríguez, Castellanos, González, and Sarraga all testified at an evidentiary hearing held two days later. The parties also introduced a number of exhibits, including a copy of the March 23 letter from Rodríguez to González. The district court, ruling ore sponte, made the following findings: (i) that PRPA had an interest in the barge leaving San Juan prior to the hurricane season; (ii) that the March 23 letter was specifically intended to influence third parties who might be considering an acquisition of the barge; (iii) that as to such third parties, the letter constituted a waiver of PRPA's maritime lien against the KATY-B; (iv) that S-Bay came within the scope of the waiver since it purchased the barge in good faith and in reliance on the representations made by SAM regarding the state of the barge's title; (v) that SAM, in turn, had relied on PRPA's representations as set forth in the letter; and (vi) that the letter did not waive or otherwise diminish any of PRPA's underlying claims against SAM, including those that might be brought in the pending eviction proceeding, but only waived the right to enforce those claims through the medium of a maritime lien. Premised on these findings, the court vacated the writ of arrest. Relatedly, the court ruled that S-Bay did not owe PRPA any pre-sale port charges or any port charges for the period of the wrongful arrest. The court directed S-Bay to post a bond to cover port charges for the period between the date of the sale and the date of the arrest. Moreover, the court noted that S-Bay would be responsible to PRPA for any port charges incurred after the date of the hearing. The court also awarded attorneys' fees to S-Bay based on what it regarded as PRPA's bad faith conduct. Finally, the court retained jurisdiction over any continuing aspects of the controversy.
Subsequent to the entry of the district court's order, a series of events occurred. First, S-Bay and PRPA resolved the dispute relating to post-sale port charges, and the barge sailed out of San Juan. Second, S-Bay answered PRPA's amended complaint and asserted a counterclaim for damages arising out of the wrongful arrest. Third, PRPA moved for reconsideration of key parts of the district court's order, arguing that the court had erred in quashing the arrest and that, in all events, PRPA had proceeded in the utmost good faith. Unmoved, the district court upheld its original order. PRPA v. Barge Katy-B, No. 04-1637 (D.P.R. Nov. 18, 2004) (unpublished).
This interlocutory appeal ensued. In it, PRPA asserts that the district court erred in two principal respects, namely, (i) in concluding that PRPA lacked a valid basis for arresting the KATY-B and (ii) in finding that PRPA prosecuted the arrest in bad faith. In the pages that follow, we address each of these assertions.
Before plunging into the validity of the vessel's arrest, we first address two threshold issues: whether this portion of PRPA's appeal is properly within our appellate jurisdiction and, if so, whether the fact that the barge has departed the territorial jurisdiction of the district court renders any portion of the appeal moot. Only after clearing these hurdles do ...
To continue reading
Request your trial
-
United States v. $4,480,466.16 in Funds Seized from Bank of Am. Account Ending in 2653
...or a United States officer or agency."). We address sovereign immunity infra .11 See also, e.g. , Puerto Rico Ports Auth. v. Barge KATY-B, O.N. 606665 , 427 F.3d 93, 99, 100 (1st Cir. 2005) (noting intervenor’s counterclaim for damages in in rem proceeding); Hawkspere Shipping Co., Ltd. v. ......
-
Barnes v. Sea Haw. Rafting, LLC
..., 818 F.3d 864, 874 (9th Cir. 2016) (citing Mueller v. Auker , 576 F.3d 979, 987 (9th Cir. 2009) ); see also P.R. Ports Auth. v. Barge Katy–B , 427 F.3d 93, 106–07 (1st Cir. 2005) (holding that § 1292(a)(3) permits interlocutory review of only the portion of an order determining the parties......
-
Minott v. Brunello
...Cohen v. Beneficial Indus. Loan Corp , 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) ); see also Puerto Rico Ports Auth. v. Barge Katy-B , 427 F.3d 93, 101 (1st Cir. 2005) (explaining that concerns of "effective finality" establish that "an order vacating an arrest finally determin......
-
Berry v. Encore Bank
...that have addressed the issue concur that maritime liens do not need to be recorded to be enforced. See, e.g., P.R. Ports Auth. v. BARGE KATY-B, 427 F.3d 93, 104 (1st Cir. 2005); Luis A. Ayala-Colon Sucres., Inc. v. Break Bulk Servs., LLC, 925 F. Supp. 2d 199, 204 (D. P.R. 2013) (citing Van......