USCA1 Opinion

November 25, 1992

UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT
____________________
No. 92-1413
PONCE FEDERAL BANK, F.S.B.,
Plaintiff, Appellee,
v.
THE VESSEL "LADY ABBY", ET AL.,
Defendants, Appellees.
____________________
CRISTOBAL BURGOS RODRIGUEZ,
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
Breyer, Chief Judge,
___________
Aldrich, Senior Circuit Judge,

____________________
and Boudin, Circuit Judge.
_____________
____________________

Eli B. Arroyo with whom Miguel E. Miranda-Gutierrez and Figuer

_____________
___________________________
______
Morales & Chaves-Caraballo Law Offices were on brief for appellant.
______________________________________
Francisco A. Besosa with whom Miguel J. Rodriguez-Marxuach
____________________
_______________________________
Goldman Antonetti Ferraiuoli & Axtmayer were on brief for appell
________________________________________
Ponce Federal Bank, F.S.B.
____________________
____________________

BREYER, Chief Judge.

___________

Ponce Federal

Bank brought

an in rem action in admiralty to foreclose its mortgage on a

______
ship, the "Lady Abby."
the law of

It added an in personam claim, under

___________

Puerto Rico, for

a deficiency judgment

the Lady Abby's current possessor, Cristobal Burgos.

had

against
Burgos

bought the ship from the borrowers; he had promised the

borrowers he would

keep up the

mortgage payments; and,

he

had

failed

deficiency

to

do so.

judgment.

The

district

Burgos

court granted

appeals.

We

affirm

the
the

district court.
I
Jurisdiction
____________
Burgos argues that the district court did not have
jurisdiction to enter a judgment against him.
that the Bank originally
the ship,

not

brought an admiralty claim against

against him.

He adds

diversity jurisdiction, 28 U.S.C.

against

him did

1331.

He points out

not arise

that

no

1332, and that the claim

under federal

A special "ship mortgage"

there was

law.

28 U.S.C.

statute seems to provide

jurisdiction for a mortgagee to obtain a deficiency judgment

from a

borrower, but it
________

ship from
U.S.C.

a borrower.
31325(b)(2).

says nothing about one

See
___

46 U.S.C.

Where then,

951,
he asks,

who buys a

amended by 46
__________
did Congress

authorize

the

over him?

See, e.g., The Mayor v. Cooper, 73 U.S. (6 Wall.)

___ _____ _________
______

247,

(1868) ("[T]wo

252

admiralty court's

exercise

things

are

jurisdiction . . .

court the capacity

to take it, and an

of jurisdiction

necessary to

The Constitution must have

create

given the

act of Congress must

have supplied it.").

The
First,

answer

Congress

to

has

this

question

granted

federal

has

four

parts.

district

courts

"original jurisdiction" over 1) any "civil case of admiralty

or maritime jurisdiction," 28 U.S.C.
or

"civil

mortgage

action[s]"
. .

brought to

. lien"

mortgaged vessel.

(i.e., a

46 U.S.C.

1333; and 2) "suits"

enforce

ship mortgage
951,

"preferred
lien) on

amended by 46 U.S.C.
__________

31325.
Second,

courts

have

traditionally

read

jurisdictional statutes of this kind (at least in admiralty)

as granting admiralty courts "pendent party" jurisdiction, a
jurisdiction that
claim

to

permits the

hear another,

person not otherwise

court hearing

closely

related

a party in the case.

the admiralty

claim against

See, e.g., Roco

___ ____ ____

Carriers, Ltd. v. M/V Nurnberg Express, 899 F.2d 1292, 1295

______________
_____________________
(2d Cir. 1990) (citing cases).

-33

Third, a non-federal
is sufficiently

claim against such

related to permit the

a person

assertion of pendent

party jurisdiction if
the
state
law
claim against
the
additional party arises out of a common
nucleus of operative facts with the
admiralty claim and the resolution of
the factually connected claims in a
single proceeding
would further the
interests
of
conserving
judicial
resources and fairness to the parties.
Id.
___
Fourth, the claim is so
mortgage-foreclosure
law

admiralty claims

and its

The Bank's
Puerto Rico

mortgage-deficiency claims involve a "common nucleus of

operative
seems

related here.

facts."

eminently

proceedings
judicial

in

"single proceeding"

fair.
the

And,

admiralty

resources, for

the

to decide

consolidation

court

otherwise the

helps

to

Bank would

of

both
the

conserve
have to

bring separate legal actions in

federal and local courts to

collect

the money due.

U.S.C.

U.S.C.

31325(c)

See 46
___
(giving

federal

951, amended by 46
__________
courts

exclusive
_________

jurisdiction over ship-mortgage foreclosure claims).

The upshot is that this case falls well within the
bounds of
court to

relevant legal authority permitting

assert "pendent

party" jurisdiction.

an admiralty
See, e.g.,
___ ____

Brown v. Trustees of Boston University, 891 F.2d 337, 355-56

_____
_____________________________
-44

(1st

Cir.

1989),

cert.
denied,
______________

496

U.S.

937

(1990);

Rodriguez v. Comas, 888 F.2d 899, 903-05 (1st Cir. 1989).

_________
_____
The
that we must
Court's fairly

appellant's

single

ignore this authority

significant argument
because of the

recent decision in Finley

is

Supreme

v. United States,

______
490

U.S.

545 (1989).

The

Supreme

_____________

Court, in

that case,

cautioned against reading jurisdictional statutes broadly to

confer "pendent party" jurisdiction.
considered

a federal

tort claim

See id. at 547-48.

___ ___

statute that

federal courts

"exclusive jurisdiction of civil

claims against

the United

States."

28

U.S.C.

It

granted the
actions on
1346(b).

And, it held that

this statute did not authorize

___

court,

hearing a

federal

United

States, also to hear a state law tort claim, arising

law accident

a federal

claim against

the

out of the same accident, but against a person not otherwise

a
56.

party in the federal case.

Congress yet more

overturns Finley.
______

See Finley, 490 U.S. at 555___ ______

recently has passed

28 U.S.C.

1367.

a statute that

But, that statute does

not directly apply to this, post-Finley, pre-statute, case.

______
We do
different

not agree, however, that

result

distinguished

in

this

case.

Finley requires a
______

Other

circuits

have

between Finley's statutory context (a statute

______

that waived sovereign immunity) and

-55

jurisdictional statutes

related

to admiralty.

See Roco Carriers, 899 F.2d at 1295___ _____________

97; Loeber v. Bay Tankers, Inc., 924 F.2d 1340, 1345-47 (5th
______
_________________
Cir. 1991) (following

Roco); see also Antilles Ins. Co. v.

____
___ ____ __________________

M/V Abitibi Concord, 755

_____________________
(same);

cf.
___

Rodriguez
_________

F.
v.

Supp. 42,
Comas,
_____

45

888

(D.P.R. 1991)

F.2d

at

(distinguishing Finley from a Section 1983 case).

______
pointed

out

that, traditionally,

courts

waivers of sovereign immunity narrowly;

they

have

also

jurisdiction more
expedition,

and

They have

have interpreted

yet, traditionally,

interpreted

assertions

broadly (given

needs for

broad

905-06

statutory language,

of

admiralty

uniformity and
such

as

granting jurisdiction over any admiralty "civil case").

Roco Carriers,
_____________

899 F.2d

at

1295-97; Loeber,
______

1345-47; see also Antilles, 755 F.

___ ____ ________
have concluded

that, despite

Supp. at 45.

Finley, and even

______

924 F.2d
And,

that
See
___
at
they

without the

new statute, in admiralty

pendent party jurisdiction

still

lives in very much the same form as we have applied it here.

See
___

Roco Carriers, 899 F.2d at 1295-97; Loeber, 924 F.2d at

_____________
______

1346-47; see also Antilles, 755 F. Supp. at 45.

___ ____ ________
In

our

particularly in

view,
light of

it

would

make

these recent

"no

cases, "to

expansive reading to Finley to reach a result that

______
has deliberately repudiated for

future cases."

sense,"
give an
Congress

13B Charles

-66

A.

Wright,

Arthur R.

Miller &

Practice and
Procedure
_________________________
(referring

to 28 U.S.C.

Edward H.

3567.2
1367).

at
We

Cooper, Federal
_______
31

(1992

Supp.)

therefore follow the

precedent of other circuits and hold that the district court

lawfully asserted "pendent party" jurisdiction in this case.

II
The Deficiency Claim
____________________
In

his contract

prior owners,

Burgos promised

the payment of
owed

buying

the (3)

the Lady

Abby from

its

"immediately [to] carry

out

due monthly

installments that

are

to the Ponce Federal Bank," and to "assume the pending

balance of

the referred account."

Burgos argues, however,

that he made this promise to the ship's sellers, not

to the

Bank, and that he was never "substituted" for the sellers as

the debtor to the initial promissory note.
Whether

or

not

the

sale

contract

achieved

technical "substitution," relieving the sellers of liability

to
the

the Bank, is irrelevant

Bank.

Puerto

Rico's

to whether Burgos
contract

is liable to

law, recognizing

claims of third-party beneficiaries, provides:

should
the
contract
contain
any
stipulation in favor of a third person,
he may demand its fulfillment, provided
he has given notice of his acceptance to
the person bound before it may have been
revoked.
-77

the

31

L.P.R.A.

3374.

"stipulation in favor
By

bringing

The

contract

proceedings,

the

Bank

"acceptance."

seem adequate

See
___

Constructors,
Inc.,
____________________

"notice

P.R.R.

its

complaint, and later

of"

A.L. Arsuaga,
Inc.
_____________________
90

the Bank.

has "demand[ed]

And, the filing of the

would

contains a

of a third person," namely

this lawsuit,

fulfillment."

before us

101,

the Bank's

v.

107-08

La Hood
________
(1964).

Consequently, the court's judgment of liability is lawful.

III
The Borrowers' Cross-Claim
__________________________
We

turn to a final appellate claim resting upon a

matter that,
not yet
not

in order to

mentioned.

only against

themselves.

Burgos.

The Bank brought

Burgos,

See 46
___

31325(b)(2).
And,

simplify the discussion,

but also

U.S.C.

we have

its deficiency claims

against the

borrowers

amended by
__________

46 U.S.C.

951,

The borrowers asserted a cross-claim against

the

district

court,

agreeing

with

the

borrowers, ordered Burgos to reimburse the borrowers for any

deficiency
appeals

payment

they might

this judgment, too.

not have the legal

make to

the Bank.

He argues that

the court did

power to permit the borrowers

that claim against Burgos.

Burgos

to assert

-88

Both

the

borrowers

properly made

parties

specifically

permitted

parties in the case,

31325(b)(2); and,
above, Burgos, too,

and

in this
the

for the
was a

case.

however,

were

federal

make

the

borrowers

951, amended by
__________

46 U.S.C.

Bank

46 U.S.C.

Burgos,

to

reasons set
proper party.

out in

statute

Section I

Fed. R. Civ.

P.

13(g) permits one party to an action to assert a cross-claim

against another party as long as the cross-claim arises "out
of the
. .

transaction or occurrence that is the subject matter

. of the

against
and

original action."

mortgage.

Bank's original claim

the "Lady Abby" rests on a mortgage; and the Bank's

the borrowers'

contract

The

in which

claims against
Burgos agreed to

Burgos arise
make payments

out of

on that

These claims are closely related, satisfying Rule

13(g), as well

as the "pendent"

jurisdiction requirements.

See 6 Wright, Miller & Kane, supra,

___
_____

1433 at 253-57.

The judgment of the district court is

Affirmed.
________

-99