-
USCA1 Opinion
October 22, 1992
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 92-1389
FEDERAL DEPOSIT INSURANCE CORPORATION,
Plaintiff, Appellee,
v.
WORLD UNIVERSITY INC., ET AL.,
Defendants, Appellees.
__________
SANTA BARBARA CENTER CORPORATION,
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
Selya, Cyr and Stahl,
Circuit Judges.
______________
____________________
Norberto Medina-Zurinaga with whom Carlos J. Quilichini and
_________________________ ______________________
Quilichini, Oliver, Medina & Gorbea were on brief for appellant.
___________________________________
Jeannette E. Roach, Counsel, Federal Deposit Insurance
______________________
Corporation, with whom Ann S. Duross, Assistant General Counsel,
_______________
Colleen B. Bombardier, Senior Counsel, Robert D. McGillicuddy, Deputy
_____________________ ______________________
Senior Counsel, Larry H. Richmond, Counsel, Federal Deposit Insurance
__________________
Corporation, Frank Gotay-Barquet and Feldstein, Gelpi & Gotay were on
___________________ ________________________
brief for appellee.
____________________
____________________
STAHL, Circuit Judge. In this appeal, defendant-
STAHL, Circuit Judge.
_____________
appellant Santa Barbara Corporation ("Santa Barbara")
challenges the district court's entry of summary judgment in
favor of plaintiff-appellee Federal Deposit Insurance
Corporation ("the FDIC"). Finding no error in the district
court's ruling, we affirm.
BACKGROUND
BACKGROUND
__________
On September 10, 1975, Santa Barbara obtained a
$90,000 loan from Banco Central, a Puerto Rico bank. Santa
Barbara used the proceeds of the loan to purchase real
property in the municipality of Bayamon, Puerto Rico ("the
Bayamon property"). In exchange for the loan, Santa Barbara
issued a note in the principal amount of $90,000, payable
with interest on demand to bearer. The note was secured
with a mortgage on the Bayamon property.
Subsequently, on September 15, 1977, Santa Barbara
sold the Bayamon property to International Educational
Development Services, Inc. ("International"). The deed of
sale reflects that International agreed to pay the $90,000
note and accrued interest "when due." Because International
so agreed, it withheld the value of the note from the
purchase price paid to Santa Barbara.
2
The record of this case does not indicate the
whereabouts of the Santa Barbara note until June of 1983,
when it appears in International's possession in a lawsuit
pending in the Puerto Rico Superior Court. See Union Trust
___ ___________
Co. v. World Univ., Inc., No. 83-2933 (P.R. Super. Ct. July
___ _________________
6, 1983). In that case, Union Trust Company ("Union"), a
federally insured bank in Puerto Rico, sued World
University, Inc. ("World"), a Puerto Rico corporation, on a
debt. The Puerto Rico Superior Court entered judgment
against World. The judgment reveals that International,
although not a party to the Puerto Rico Superior Court law
suit, pledged Santa Barbara's bearer demand note as a
guarantee of payment of World's debt to Union. The judgment
also indicates that Union became a holder of the $90,000
note.
In December of 1983, Union was ordered closed and
the FDIC was appointed its receiver. Among Union's assets,
FDIC-receiver found the facially valid Santa Barbara note.
FDIC-receiver then sold the note to the FDIC in its
corporate capacity. FDIC-corporate commenced suit against
Santa Barbara for payment of the note and moved for summary
judgment. Santa Barbara responded with a cross-motion for
3
summary judgment, asserting that the note had been paid by
International.
The district court granted the FDIC's motion. In
so doing, the court ruled, inter alia, that the FDIC was a
_____ ____
holder in due course of a facially valid bearer note and, as
such, was entitled to judgment on it as a matter of law. We
agree.1
DISCUSSION
DISCUSSION
__________
I. Standard of Review
______________________
Summary judgment is appropriate where "the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a
matter of law." Fed. R. Civ. P. 56(c); see also Celotex
___ ____ _______
____________________
1To further support its ruling, the district court also
relied on the protections afforded the FDIC by 12 U.S.C.
1823(e) (1989). Because we find that the FDIC, as a holder
in due course, is entitled to recover on the note, we do not
address the applicability of 12 U.S.C. 1823(e) to this
dispute.
4
Corp. v. Catrett, 477 U.S. 317, 323 (1986); Aponte-Santiago
_____ _______ _______________
v. Lopez-Rivera, 957 F.2d 40, 40-41 (1st Cir. 1992). The
____________
burden is upon the moving party to "put the ball in play,
averring ``an absence of evidence to support the nonmoving
party's case.'" Garside v. Osco Drug, Inc., 895 F.2d 46, 48
_______ _______________
(1st Cir. 1990) (quoting Celotex, 477 U.S. at 325). "The
_______
burden then shifts to the nonmovant to establish the
existence of at least one fact issue which is both ``genuine'
and ``material.'" Id. (citations omitted). In determining
___
whether factual issues exist, we read the record "in the
light most amiable to the nonmovants and indulge all
reasonable inferences favorable to them." Id.
__
Our review of a summary judgment ruling is
plenary. Hoffman v. Reali, No. 91-1703, slip op. at 9 (1st
_______ _____
Cir. August 27, 1992). Moreover, we are not limited to the
district court's reasoning. Instead, we may "affirm the
entry of summary judgment on any independently sufficient
ground made manifest by the record." Quintero v. Aponte-
________ _______
Roque, No. 92-1227, slip op. at 3-4 (1st Cir. September 10,
_____
1992) (quoting United States v. One Parcel of Real Property,
_____________ ___________________________
960 F.2d 200, 204 (1st Cir. 1992)).
II. Law to be Applied
______________________
5
As an initial matter, we note that there has been
some confusion between the parties to this appeal as to the
applicable law. Before the district court, the parties
litigated primarily on the basis of Puerto Rico commercial
law, but made passing references to federal statutory and
common law. As a result, the district court's holding was
anchored predominantly in Puerto Rico law.
The FDIC now urges the application of federal law.
We have previously stated that federal law applies where, as
here, the FDIC sues in its corporate capacity to collect on
obligations acquired from the receiver of an insolvent bank.
See, e.g., Federal Deposit Ins. Corp. v. Municipality of
___ ____ ____________________________ _______________
Ponce, 904 F.2d 740, 745 (1st Cir. 1990); Federal Deposit
_____ ________________
Ins. Corp. v. P.L.M. Int'l, Inc., 834 F.2d 248, 252 (1st
__________ ___________________
Cir. 1987). Yet, we have also noted an exception to this
rule where the federal question is not raised by the
parties. Municipality of Ponce, 904 F.2d at 745.
_______________________
Moreover, we ordinarily will not entertain arguments made
for the first time on appeal. See Buenrostro v. Collazo,
___ __________ _______
No. 91-2337, slip op. at 9 (1st Cir. August 26, 1992)
(citing Clauson v. Smith, 823 F.2d 660, 666 (1st Cir.
_______ _____
1987)).
6
Here, however, the issue need not be addressed
because, in each regime, the analysis is essentially the
same. Under both Puerto Rico law and the hornbook
principles that necessarily would inform federal law, the
FDIC, as possessor of a bearer note, is a holder of that
note. See P.R. Laws Ann. tit. 19, 381(8) (1989)
___
("``Holder' means the payee or indorsee of a bill or note,
who is in possession of it, or the bearer thereof."); U.C.C.
1-201(20) (1989) ("``Holder' means a person who is in
possession of . . . an instrument . . . issued or indorsed
to . . . bearer or in blank."). A holder of a negotiable
instrument is entitled to enforce payment in his/her own
name. P.R. Laws Ann. tit. 19, 91 ("The holder of a
negotiable instrument may sue thereon in his[/her] own name.
. . ."); U.C.C. 3-301 ("The holder of an instrument
whether or not [s/]he is the owner may . . . enforce payment
in his[/her] own name."). A holder in due course has all
the rights of a holder. See generally P.R. Laws Ann. tit.
___ _________
19, 92; U.C.C. 3-302(1). S/he also takes the instrument
free from most claims on it and defenses to it. See P.R.
___
Laws Ann. tit. 19, 97 ("A holder in due course holds the
instrument free from any defect of title of prior parties,
and free from defenses available to prior parties among
7
themselves. . . ."); U.C.C. 3-305 ("To the extent that a
holder is a holder in due course [s/]he takes the instrument
free from (1) all claims to it on the part of any person;
and (2) all defenses of any party to the instrument with
whom the holder has not dealt except [certain delineated
"real" defenses not applicable to the instant case].").
Finally, the maker of a negotiable instrument engages that
s/he will pay the instrument according to its tenor at the
time of his/her engagement. See P.R. Laws Ann. tit. 19,
___
111; U.C.C. 3-413(1).
III. Santa Barbara's Arguments
_______________________________
In its effort to counter such authority, Santa
Barbara makes five arguments: (1) the FDIC had notice of
infirmities in the note; (2) the FDIC tacitly consented to
recognize International, and not Santa Barbara, as liable on
the note; (3) the note was negotiated to the FDIC an
unreasonable length of time after it was made; (4) because
the note was not delivered to the FDIC by Santa Barbara, the
FDIC cannot enforce it against Santa Barbara; and (5) the
note was paid by International. Though Santa Barbara's
8
brief is not entirely clear on this point, the first four
arguments appear directed towards challenging the district
court's ruling that the FDIC is a holder in due course,
while the fifth seems to be asserted as a defense to Santa
Barbara's obligation as the note's maker. We address each
argument in turn.
A. Notice of Infirmities
________________________
Santa Barbara is correct in asserting that notice
of defenses or infirmities in a note defeats holder in due
course status. See P.R. Laws Ann. tit. 19, 92 ("A holder
___
in due course is a holder who has taken the instrument under
the following conditions: . . . that at the time it was
negotiated to him[/her] [s/]he had no notice of any
infirmity in the instrument or defect in the title of the
person negotiating it."); U.C.C. 3-302(1)(c) ("A holder in
due course is a holder who takes the instrument . . .
without notice that it is overdue or has been dishonored or
of any defense against or claim to it on the part of any
person."). Santa Barbara contends that the FDIC must have
been aware of two facts that would have put it on notice
that the note was defective: (1) that International
simultaneously possessed the note and owned the Bayamon
9
property which secured payment of the note; and (2) that
Union only intended to acquire a mortgage over the Bayamon
property, not the note itself, in accepting International's
pledge on behalf of World in 1983. Santa Barbara's
contention fails to withstand factual and legal scrutiny.
First, Santa Barbara does not point to any
evidence in support of its allegation that the FDIC knew
that International owned the Bayamon property and possessed
the note simultaneously. The Puerto Rico Superior Court
judgment and the note do not themselves reflect this fact.2
__________
Moreover, Santa Barbara cannot seriously assert that the
FDIC was under an obligation to investigate beyond the face
of these documents when it acquired the note from Union.3
As such, Santa Barbara's allegation of notice is without
factual evidentiary support.
Second, a plain reading of the 1983 Puerto Rico
Superior Court judgment undercuts Santa Barbara's assertion
____________________
2Nowhere is it argued that the FDIC had before it a title
search or a deed to the Bayamon property, the only documents
in the record that could have indicated the property's owner
in 1983, when the FDIC purchased Santa Barbara's note.
3Any such obligation would undermine Congress's desire to
promote and facilitate purchase and assumption transactions,
wherein FDIC-corporate purchases assets from FDIC-receiver,
because these transactions must be completed in great haste.
See Federal Deposit Ins. Corp. v. 604 Columbus Ave. Realty
___ ___________________________ _________________________
Trust, 968 F.2d 1332, 1349-50 (1st Cir. 1992).
_____
10
regarding Union's intentions at that time. The judgment
makes clear that the mortgage would serve only as a
guarantee to the note and that Union would be the owner and
holder of the note.4 In light of these facts and in the
absence of other evidence, there is no merit to Santa
Barbara's argument that the FDIC had notice that Union was
intending to acquire only a mortgage over the Bayamon
property, and not the note itself.
Finally, even were the FDIC to have had knowledge
of such facts when it acquired the note, Santa Barbara has
not made any argument that this knowledge would have
constituted notice of an "infirmity in the instrument or
defect in the title of the person negotiating it," P.R. Laws
Ann. tit. 19, 92(4), or notice that the instrument had
____________________
4Specifically, the judgment provides:
In guarantee of the obligations listed
herein, [World] is bound to [Union] for
the following:
a) Second mortgage for $90,000
in principal as guarantee to a
__ ____________
Bearer note with 12% yearly
interest due on demand. . . .
To establish by means of
corresponding clarification
document, that [Union] is the
______________
owner and holder of said
______________________________
mortgage note.
_____________
(emphasis supplied).
11
been "dishonored" or was subject to a "defense against or
claim to it. . . ." U.C.C. 3-302(1)(c). Put another way,
Santa Barbara has failed to assert, let alone demonstrate,
that knowledge of these facts would deprive the FDIC of
holder in due course status. We have repeatedly warned
litigants that "issues adverted to in a perfunctory manner,
unaccompanied by some effort at developed argumentation, are
deemed waived." See, e.g., Elgabri v. Lekas, 964 F.2d 1255,
___ ____ _______ _____
1261 (1st Cir. 1992) (quoting United States v. Zannino, 895
_____________ _______
F.2d 1, 17 (1st Cir.), cert. denied, 494 U.S. 1082 (1990)).
_____ ______
Accordingly, Santa Barbara's "notice of infirmities"
argument must fail.
B. Tacit Consent
________________
Santa Barbara next argues that Union tacitly
consented to International's 1977 assumption of the
obligation on the note, and that such consent, when taken
together with the cancellation of the note through
International's alleged payment, discharged its obligation.
We disagree.
We have previously recognized that, under Puerto
Rico law, a lender's tacit consent to a third party's
assumption of liability on a note and acceptance of payment
12
combine to cancel the note and preclude the FDIC from later
recovering thereon. See Federal Deposit Ins. Corp. v.
___ ____________________________
Bracero & Rivera, Inc., 895 F.2d 824, 826-28 (1st Cir.
________________________
1990). However, the situation in Bracero & Rivera bears
_________________
little resemblance to the facts in the case before us.
Bracero & Rivera also involved a facially valid
_________________
note, payable to bearer on demand, found in the files of a
failed bank. However, prior to failure, the bank had
accepted payment from a third party on the debt.5
Additionally, the bank issued a credit voucher in favor of
the defendant which contained the following notation:
"cancellation of [defendant's] loan 25-85-70-9." Notice of
this cancellation was in the FDIC's possession at all
relevant times. See generally id. at 825-29.
___ _________ ___
The district court in Bracero & Rivera entered
_________________
judgment in favor of defendant. In so doing, the court
ruled that, under Puerto Rico law, the lender's tacit
consent to the third party's assumption of liability on the
____________________
5The note in Bracero & Rivera was originally secured by a
_________________
mortgage on a housing development. The maker of the note
sold the housing development to the third party, who
retained enough money from the purchase price to pay off the
maker's note. Upon making an additional loan to the third
party, the bank retained from the loan enough money to pay
the note. Thus, the bank accepted payment on the note, and
the third party owed the bank a new debt. See id. at 825-
___ ___
26.
13
note and acceptance of payment discharged the note. Id. at
___
826. We affirmed, noting that the FDIC's notice of
cancellation would preclude it from recovering as a holder
in due course. Id. at 829.
___
In the case at bar, however, there is no record
evidence, such as the cancellation voucher in Bracero &
__________
Rivera, indicating that Union, at the time that it acquired
______
the note as security for its judgment against World, tacitly
consented to relieve Santa Barbara of its obligation on the
note and look solely to International for payment. Despite
Santa Barbara's argument to the contrary, we simply do not
see how Union's acceptance of the note with knowledge of the
1977 deed agreement between International and Santa Barbara,
if Union had such knowledge,6 implies the existence of an
intent on Union's part to tacitly consent to hold
International liable on the note. Furthermore, even if
Union did so intend, the record is devoid of evidence
indicating that the FDIC had notice of this intent. Thus,
the doctrine of tacit consent, if applicable to this case,
would not deprive the FDIC of holder in due course status.
____________________
6The record does not indicate that Union actually had this
knowledge.
14
C. Unreasonable Time
____________________
Relying on P.R. Laws Ann. tit. 19, 93, Santa
Barbara next argues that neither Union nor the FDIC is a
holder in due course because the instrument was negotiated
to Union and the FDIC an unreasonable length of time after
its issuance.7 Santa Barbara raised this argument for the
first time in its motion requesting that the district court
alter or amend its judgment. See Fed. R. Civ. P. 59(e).
___
Rule 59(e) motions are "aimed at reconsideration,
__
not initial consideration." Harley-Davidson Motor Co., Inc.
_______________________________
v. Bank of New England, 897 F.2d 611, 616 (1st Cir. 1990)
____________________
(citing White v. New Hampshire Dept. of Employment Sec., 455
_____ ______________________________________
U.S. 445, 451 (1982)) (emphasis in original). Thus, parties
should not use them to "raise arguments which could, and
should, have been made before judgment issued." Id.
___
(quoting Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260,
__________________________ _____
1268 (7th Cir. 1986)). Motions under Rule 59(e) must either
clearly establish a manifest error of law or must present
____________________
7P.R. Laws Ann. tit. 19, 93 states:
Where an instrument payable on demand is
negotiated an unreasonable length of
time after its issue, the holder is not
deemed a holder in due course.
15
newly discovered evidence. Meyer, 781 F.2d at 1268. They
_____
may not be used to argue a new legal theory. Id.
___
Here, there was no reason why Santa Barbara could
not have made its "unreasonable time" argument before the
district court entered judgment. Moreover, the argument
neither reveals a manifest error of law nor presents newly
discovered evidence. As a result, we find no error in the
district court's refusal to amend or alter its judgment
based on this argument.
D. Improper Delivery
____________________
Santa Barbara's improper delivery argument suffers
a similar fate. To the extent that Santa Barbara made this
argument at all before the district court, it did so only in
a most perfunctory manner. It is well settled that
arguments made in a perfunctory manner below are deemed
waived on appeal. See, e.g., Buenrostro, slip op. at 9
___ ____ __________
(citing McCoy v. Massachusetts Inst. of Technology, 950 F.2d
_____ _________________________________
13, 22 (1st Cir. 1991), cert. denied, ___ U.S. ___, 112 S.
_____ ______
Ct. 1939 (1992)). We see no reason to depart from ordinary
practice under the present circumstances, and accordingly we
treat the argument as waived.
16
E. Payment
___________
Having rejected Santa Barbara's challenges to the
district court's finding that the FDIC is a holder in due
course, we need not address Santa Barbara's allegation of
payment in an extended manner. The defense that a third
party has paid a previous holder in order to discharge a
note is a personal defense. See P.R. Laws Ann. tit. 19,
___
97 ("A holder in due course holds the instrument . . . free
from any defenses available to prior parties among
themselves, and may enforce payment of the instrument for
the full amount thereof against all parties thereon."); see
___
also James J. White and Robert S. Summers, Handbook of the
____ _______________
Law Under the Uniform Commercial Code, 14-9, at 573 (2d
_______________________________________
ed. 1980) (defenses not listed in U.C.C. 3-305(2) are
personal defenses). Personal defenses may not be asserted
against holders in due course. See P.R. Laws Ann. tit. 19,
___
97; U.C.C. 3-305. As a result, Santa Barbara's
assertion of payment cannot defeat the FDIC's right to
recover on the note.8
CONCLUSION
CONCLUSION
__________
____________________
8While evidence of payment would not change our analysis, we
note that there was no direct evidence of payment in the
record before us.
17
Because we find each of Santa Barbara's arguments
meritless, we affirm the judgment of the district court.
Affirmed.
________
18
Document Info
Docket Number： 92-1389
Filed Date： 10/22/1992
Precedential Status： Precedential
Modified Date： 9/21/2015