in re: v. Ville Marine Yacht

February 23, 1993 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 92-2041
IN RE: VILLA MARINA YACHT HARBOR, INC.,
Petitioner.
No. 92-2051
CHASE MANHATTAN BANK, N.A.,
Plaintiff, Appellee,
v.
VILLA MARINA YACHT HARBOR, INC.
a/k/a VILLA MARINA YACHT HARBOUR, INC.,
Defendant, Appellant.
ERRATA SHEET
The opinion of this court issued on February 2, 1993, is
amended as follows:
On page 4, line 4 from the bottom, change August 1 to
August 11.
February 2, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 92-2041
IN RE: VILLA MARINA YACHT HARBOR, INC.,
Petitioner.
No. 92-2051
CHASE MANHATTAN BANK, N.A.,
Plaintiff, Appellee,
v.
VILLA MARINA YACHT HARBOR, INC.,
a/k/a VILLA MARINA YACHT HARBOUR, INC.,
Defendant, Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Carmen C. Cerezo, U.S. District Judge]
Before
Selya, Circuit Judge,
Bownes, Senior Circuit Judge,
and Cyr, Circuit Judge.
Michael J. Rovell, with whom Lisa I. Fair, Robert E. Bull,
Law Offices of Michael J. Rovell, Carlos G. Latimer, and Latimer,
Biaggi, Rachid, Rodriguez, Suris & Godreau were on brief, for
appellant.
Jay A. Garcia-Gregory, with whom Rafael R. Vizcarrondo,
Heriberito J. Burgos-P rez and Fiddler, Gonzalez & Rodriguez were
on brief, for appellee.
February 2, 1993
BOWNES, Senior Circuit Judge. This is an appeal by
defendant-appellant Villa Marina Yacht Harbor, Inc. from the
following order of the district court:
Defendant shall deposit with the
Clerk of Court, within ten (10) days
after notice, the past due mortgage
payment and shall continue making such
deposits as the payments come due for the
duration of the litigation of this case.
The Clerk shall deposit them in an
interest-bearing account.
I. I.
Uncontested Facts Uncontested Facts
A statement of the uncontested facts leading to the
order compels the conclusion that there is no merit to this
appeal. On November 22, 1991, plaintiff-appellee, Chase
Manhattan Bank, N.A., filed a complaint against Villa Marina.
The complaint sought foreclosure of Chase's mortgage on Villa
Marina property and the collection of monies allegedly due it
from Villa Marina. Chase alleged, as one of the grounds for
foreclosure, that Villa Marina failed to timely make the
monthly mortgage payments due on October 1 and November 1,
1991. Chase also requested the appointment of a receiver;
this request was referred to a magistrate-judge.
Villa Marina filed an opposition to the appointment
of a receiver on December 27, 1991. On January 10, 1992, it
filed an answer and counterclaim. In its answer Villa Marina
stated:
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. . . it is admitted that VILLA MARINA
owes CHASE the principal sum and interest
therein pleaded, minus the amounts that
VILLA MARINA claims against CHASE in the
counterclaim and the amounts CHASE is
retaining in its escrow account.
In its answer and counterclaim, Villa Marina alleged bad
faith termination of the mortgage, breach of Chase's duty of
good faith and fair dealing by creating a fictitious default,
and filing the foreclosure action in breach of Chase's own
internal manual, rules, regulations, and practices. Villa
Marina estimated its damages as one million dollars.
On February 10, 1992, Chase moved for judgment on
the pleadings pursuant to Fed. R. Civ. P. 12(c) and for
dismissal of Villa Marina's counterclaim. Villa Marina
objected to these motions. A hearing was held before the
magistrate-judge on March 5, 1992, which encompassed all
pending matters. On March 12, the magistrate-judge issued a
report and recommended to the district court that it grant
Chase's motions for judgment on the pleadings and dismissal
of the counterclaim. On the same day the magistrate-judge
also issued an order appointing a receiver. Villa Marina
promptly filed an emergency petition for writ of mandamus,
petition for a stay of the orders, and a motion to vacate the
appointment of the receiver.
By order dated May 4, 1992, issued on May 5, the
district court vacated the magistrate-judge's appointment of
a receiver because this action "was beyond both the scope of
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our referral and the scope of his statutory powers." The
district court then considered the matter de novo. It held
that "Chase has failed to meet the threshold requirements for
granting the appointment of a receiver as an equitable
remedy." On May 18, 1992, the district judge issued a six-
page order in which she reviewed the report and
recommendations of the magistrate. The district court
declined to follow the magistrate-judge's report and
recommendations. It denied Chase's motions for judgment on
the pleadings and dismissal of the counterclaim.
On July 1, 1992, the district judge, sua sponte,
issued the order which is the basis of this appeal. Prior to
that part of the order directing Villa Marina to make its
monthly mortgage payments into court, the district judge
stated:
A review of our order entered on
May 18, 1992 reveals that the last
paragraph was inadvertently omitted.
Accordingly, the May 18, 1992 order is
amended to add the following: (Defendant
ordered to make monthly mortgage payments
into court).
On July 16, 1992, Villa Marina moved to amend or
alter the district court order of May 18. The motion was
denied on August 6, 1992, and entered on August 11. Villa
Marina appealed the July 1 order of the district court and
the court's denial of its motion to amend or alter the order
of May 18. Recognizing that there might be a question of
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appealability of these orders, Villa Marina also sought
appellate review by filing a petition for writ of mandamus.1
II. II.
Analysis Analysis
The crux of Villa Marina's argument is that the
district court lacked authority to issue the order requiring
the deposit of the mortgage payments with the court. In its
brief, Villa Marina asserts that it "is at a loss to find the
jurisdictional basis for the order" [Appellant's Brief, p.
11], because there is no specific provision in the federal
rules expressly authorizing its issuance and because the
court acted without a motion pending. This contention
ignores the inherent power possessed by a district court,
"not governed by rule or statute, to manage the litigation
before it." Zebrowski v. Hanna, 973 F.2d 1001, 1003-04 (1st
Cir. 1992). "[T]he rules of civil procedure do not
completely describe and limit the power of district courts .
. . ." HMG Property Investors v. Parque Indus. Rio Canas,
847 F.2d 908, 915 (1st Cir. 1988) (quoting Brockton Savings
Bank v. Peat, Marwick, Mitchell & Co., 771 F.2d 5, 11 (1st
Cir. 1985), cert. denied, First United Fund, Ltd. v. Brockton
Savings Bank, 475 U.S. 1018 (1986)). The district courts
1 Chase has suggested in its brief that Villa Marina's
appeal was not timely filed. For purposes of this opinion we
find that it was.
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"retain the inherent power to do what is necessary and proper
to conduct judicial business in a satisfactory manner."
Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1119 (1st Cir.
1989). This inherent power is "rooted in the chancellor's
equity powers[] to process litigation to a just and equitable
conclusion." Id. (citation omitted).
We have repeatedly recognized this inherent power
of the district court as encompassing the power to order
various types of "administrative" actions: to require the
posting of security for costs when warranted by the
circumstances of a case, Aggarwal v. Ponce School of
Medicine, 745 F.2d 723, 726 (1st Cir. 1984), Hawes v. Club
Escuetre El Commandante, 535 F.2d 140, 143 (1st Cir. 1976);
to modify discovery-related protective orders for so long as
such order is in effect, Public Citizen v. Liggett Group,
Inc., 858 F.2d 775, 782 (1st Cir. 1988), cert. denied, 488
U.S. 1030 (citing various other jurisdictions as support for
same proposition); to reconsider its orders, Burns v. Watler,
931 F.2d 140, 145 (1st Cir. 1991); to stay pending litigation
when efficacious management of docket reasonably requires,
Marquis v. F.D.I.C., 965 F.2d 1148, 1154-55 (1st Cir. 1992);
to permit jury view of places or objects outside the
courtroom, United States v. Passos-Paternina, 918 F.2d 979,
986 (1st Cir. 1990), cert. denied, 111 S. Ct. 1637, 111 S.
Ct. 2808, 111 S. Ct. 2809 (1991); to fashion appropriate
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sanctions for abuses of the judicial process, including
dismissal, Zebrowski v. Hanna, 973 F.2d at 1003-04, R.W.
International Corp. v. Welch Foods Inc., 937 F.2d 11, 19-20
(1st Cir. 1991).
In deciding the propriety of the order at issue
here, we accept the district court's statement that the pay-
into-court order of July 1 was inadvertently omitted from its
order of May 18. The May 18 order makes it unmistakably
clear that the issues in controversy between the parties,
including those raised in Villa Marina's counterclaim, will
be tried on the merits. In light of Villa Marina's explicit
admission in its answer that "it owes Chase the principal sum
and interest therein pleaded," an order directing it to
deposit the monthly mortgage payments into an interest-
bearing court account as they become due would not be
unusual; in fact, it would be routine. We hold that the July
1 amendment was wholly within the inherent administrative
powers of the district court and did not constitute an abuse
of discretion.
Even if, for purposes of this case, we view the
order as a preliminary injunction,2 as Villa Marina urges,
2 We need not consider whether the district court's order is,
indeed, an appealable injunction, and we express no opinion
on that matter. Because the case is straightforward, and the
party in whose favor the jurisdictional issue would operate
is entitled to prevail on the merits, we elect to forgo
unnecessary work and to bypass the question of appellate
jurisdiction. See, e.g., Secretary of the Navy v. Avrech,
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there is no basis for overturning it. Indeed, we are at a
loss to understand why Villa Marina opposes the order.
Contrary to Villa Marina's assertion, it is not a "windfall"
to Chase. The payments do not go to Chase; they go into an
interest-bearing court account. Until the case is decided on
the merits, neither Chase nor Villa Marina can use the money.
And, if there had been no attempted foreclosure by Chase,
wrongful or justified, Villa Marina would be making the
monthly mortgage payments to Chase. Indeed, Villa Marina, in
its motion to amend or alter the appealed order, stated
explicitly:
Villa Marina nevertheless is willing to
post the funds directly to Chase if Chase
reinstates the mortgage and Villa Marina
is allowed to pursue its counterclaims.
(footnotes not now pertinent)
As the case now stands, the mortgage continues in effect
pending a hearing on the merits including the counterclaim.
Villa Marina has received all it requested. The order is a
paradigm case of preserving the status quo with no harm to
either party pending a hearing on the merits.
Because Villa Marina has advanced no plausible
reason for this appeal, we find it frivolous and award costs
and attorney fees for this appeal to appellee Chase. Chase
418 U.S. 676, 677-78 (1974) (per curiam); In re D.C. Sullivan
Co., 843 F.2d 596, 598 (1st Cir. 1988).
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shall file its fee petition within the time fixed under, and
in the form contemplated by, 1st Cir. Loc. R. 39.2.
So ordered. So ordered.
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