CARIBBEAN CARRIER HOLDING PANAMA INC

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF PUERTO RICO
IN RE:
CARIBBEAN 	CARRIER 	HOLDING
PANAMA, INC.,
Debtors
Case No. 10-04642 (MCF)
Chapter 11
FILED AND ENTERED ON 03/30/11
OPINION AND ORDER
Upon 	review 	of 	Holland 	Group 	Port 	Investment, 	Inc.’s
(hereafter 	"HGP") 	Motion 	for 	Reconsideration 	(Docket 	No. 	245),
Caribbean 	Carrier 	Holding 	Panama, 	Inc.'s 	(hereafter 	"Debtor")
Opposition 	thereto 	(Docket 	No. 	254), 	as 	well 	as 	Debtor’s 	own
Motion 	for 	Reconsideration 	(Docket 	No. 	246), 	the 	Court 	hereby
DENIES both parties’ Motions for Reconsideration.
I. PROCEDURAL HISTORY
At 	the 	evidentiary 	hearing 	held 	on 	January 	21, 	2011 	(Docket
No. 	240), 	the 	Court 	determined 	that 	HGP 	was 	entitled 	to 	an
administrative 	expense 	under 	11 	U.S.C. 	§ 	503(b)(1)(A) 	for 	the
post-petition 	security 	guard 	services 	provided 	by 	HGP 	up 	and
until 	July 	30, 	2010. 	Consequently, 	the 	Court 	approved 	the
amount 	of 	$20,880.00 	as 	an 	administrative 	expense. 	The 	Court
also 	determined 	that 	HGP 	was 	not 	entitled 	to 	distribution 	under
11 U.S.C. § 506(c) ("Section 506(c)").
HGP 	then 	filed 	a 	Motion 	for 	Reconsideration 	on 	February 	9,
2011, 	requesting 	a 	modification 	of 	the 	ruling 	that 	the 	security
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guard 	services 	incurred 	were, 	in 	fact, 	an 	administrative 	expense
under 	Section 	506(c) 	because 	these 	services 	are 	a 	form 	of 	"post-
petition maritime lien" as necessary services. Docket No. 245.
Debtor 	opposed 	HGP's 	reconsideration 	on 	the 	following
grounds: 	"(1) 	in 	view 	of 	[HGP's 	President's] 	testimony, 	[HGP's]
claim 	should 	only 	be 	allowed 	up 	to 	June 	26, 	201 	for 	an 	amount 	of
$7,377.00; 	(2) 	the 	reconsideration 	should 	be 	denied 	for 	raising
not 	one, 	but 	two 	new 	legal 	arguments 	and/or 	remedies; 	(3) 	even
if 	the 	arguments 	were 	not 	new, 	HGP 	is 	incorrect 	in 	as 	much 	as
its 	services 	do 	not 	create 	a 	post-petition 	lien 	on 	the 	vessel;
and 	(4) 	HGP 	did 	not 	properly 	notify 	other 	lien 	holders 	of 	its
request 	to 	be 	considered 	as 	a 	secured 	lien 	holder." 	(emphasis 	in
the original) 	Docket No. 254 at page 2.
Consequently, 	Debtor 	filed 	a 	separate 	Motion 	for
Reconsideration 	under 	Fed. 	R. 	Civ. 	P. 	59 	on 	February 	10, 	2011.
Docket 	No. 	246. 	Debtor 	claims 	that 	the 	security 	guard 	services
should 	be 	allowed 	until 	June 	26, 	2010, 	the 	date 	in 	which 	the
crew 	of 	the 	M/V 	CARIBBEAN 	CARRIER 	was 	transferred 	to 	the 	M/V
CARIBBEAN 	EXPRESS,1 thus 	making 	unnecessary 	the 	security 	guard
services for the Debtor after June 26, 2010.
1 The M/V CARIBBEAN CARRIER was property of Debtor's bankruptcy estate until
it 	was 	sold 	for 	scrap 	on 	July 	30, 	2010. 	The 	M/V 	CARIBBEAN 	EXPRESS 	was 	a
vessel 	owned 	by 	Western 	Holding 	Group, 	a 	related 	entity 	which 	also 	filed 	a
voluntary petition for bankruptcy protection.
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II. DISCUSSION
A. Standards for Rules 59 and 60
Matters 	that 	have 	been 	previously 	ruled 	upon 	by 	the 	courts
may 	be 	reconsidered 	by 	virtue 	of 	Rule 	59 	and/or 	Rule 	60 	of 	the
Federal 	Rules 	of 	Civil 	Procedure, 	as 	made 	applicable 	through
these proceedings by virtue of Fed. R. Bankr. P. 9023 and 9024.
Rule 59(e) provides that:
(e) 	Motion 	to 	Alter 	or 	Amend 	a 	Judgment. 	A 	motion
to 	alter 	or 	amend 	a 	judgment 	must 	be 	filed 	no
later 	than 	28 	days 	after 	the 	entry 	of 	the
judgment.
Fed.R. Civ. P. 59(e).
Moreover, Rule 60(b) states as follows:
(b) 	Grounds 	for 	Relief 	from 	a 	Final 	Judgment,
Order, 	or 	Proceeding. 	On 	motion 	and 	just 	terms,
the 	court 	may 	relieve 	a 	party 	or 	its 	legal
representative 	from 	a 	final 	judgment, 	order, 	or
proceeding for the following reasons:
(1) 	mistake, 	inadvertence, 	surprise, 	or 	excusable
neglect;
(2) 	newly 	discovered 	evidence 	that, 	with
reasonable 	diligence, 	could 	not 	have 	been
discovered 	in 	time 	to 	move 	for 	a 	new 	trial 	under
Rule 59(b);
(3) 	fraud 	(whether 	previously 	called 	intrinsic 	or
extrinsic), 	misrepresentation, 	or 	misconduct 	by
an opposing party;
(4) the judgment is void;
(5) 	the 	judgment 	has 	been 	satisfied, 	released, 	or
discharged; 	it 	is 	based 	on 	an 	earlier 	judgment
that 	has 	been 	reversed 	or 	vacated; 	or 	applying 	it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Fed.R. Civ. P. 60(b).
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Both 	Rules 	59 	and 	60 	establish 	appropriate 	vehicles 	to
allow 	a 	non-victorious 	party 	to 	request 	the 	modification,
reversal, 	and/or 	alteration 	of 	a 	decision. 	The 	main 	differences
between 	the 	rules 	are 	the 	time 	periods 	in 	which 	reconsideration
may 	be 	sought 	and 	the 	cause 	for 	reconsideration. 	Vernet 	v.
Torres, 	2010 	U.S. 	Dist. 	LEXIS 	106422 	(D.P.R. 	2010); 	Perez-Perez
v. 	Popular 	Leasing 	Rental, 	Inc., 	993 	F.2d 	281, 	284 	(1 st Cir.
1993).
A 	reconsideration 	under 	Rule 	59 	must 	be 	sought 	within 	28
days 	after 	entry 	of 	the 	judgment, 	and 	in 	order 	to 	"correct
manifest 	errors 	of 	law 	or 	fact, 	present 	newly 	discovered
evidence, 	or 	when 	there 	is 	an 	intervening 	change 	in 	the 	law."
Standard 	Quimica 	De 	Venez. 	v. 	Central 	Hispano 	Int'l, 	Inc., 	189
F.R.D. 	202, 	205 	(D.P.R. 	1999); 	Jorge 	Rivera 	Surillo 	& 	Co. 	v.
Falconer 	Glass 	Indus., 	Inc., 	37 	F.3d 	25, 	29 	(1 st Cir. 	1994);
Federal 	Deposit 	Ins. 	Co. 	v. 	World 	University, 	Inc., 	978 	F.2d 	10,
16 	(1 st Cir. 	1992); 	Cherena 	v. 	Coors 	Brewing 	Co., 	20 	F. 	Supp.2d
282, 	286 	(D.P.R. 	1998); 	National 	Metal 	Finishing 	Co. 	v.
BarclaysAmerican/Commercial, 	Inc., 	899 	F.2d 	119, 	124 	(1 st Cir.
1990). 	On 	the 	other 	hand, 	a 	reconsideration 	under 	Rule 	60 	may 	be
brought 	"within 	a 	reasonable 	time" 	or 	within 	a 	year 	after 	entry
of 	judgment 	(depending 	on 	the 	cause 	for 	reconsideration), 	and
the 	reasons 	are 	limited 	exclusively 	to 	one 	of 	the 	six
circumstances listed at Rule 60(b).
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Rule 	59 	is 	the 	appropriate 	mechanism 	for 	reconsideration 	in
the 	case 	at 	bar 	because 	both 	Debtor 	and 	HGP's 	motions 	for
reconsideration 	were 	filed 	within 	the 	28 	day 	period 	prescribed
by 	Rule 	59(e). 	Therefore, 	we 	must 	now 	consider 	whether 	HGP 	or
Debtor 	complied 	with 	any 	of 	the 	causes 	for 	reconsideration 	under
Rule 	59, 	that 	is, 	whether 	we 	are 	dealing 	with: 	(1) 	a 	manifest
error 	of 	law 	or 	fact; 	(2) 	some 	newly 	discovered 	evidence; 	or 	(3)
if there was an intervening change in the law.
B. HGP's Motion for Reconsideration
HGP 	does 	not 	specifically 	raise 	in 	its 	motion 	any 	of 	the
three 	causes 	for 	reconsideration 	under 	Rule 	59 	and, 	as 	such, 	the
motion 	could 	be 	denied 	for 	failure 	to 	comply 	with 	Rule 	59.
Nevertheless, 	we 	interpret 	HGP's 	request 	under 	"a 	manifest 	error
of law."
HGP's 	argument 	is 	premised 	on 	the 	allegation 	that 	the
security 	guard 	services 	are 	considered 	"necessary 	post-petition
liens" 	under 	Maritime 	Law. 	Debtor 	contends 	in 	its 	objection 	that
HGP 	is 	barred 	from 	presenting 	this 	argument 	at 	this 	stage 	of 	the
proceedings 	for 	HGP 	failed 	to 	originally 	assert 	this 	point 	at
the initial stages of the controversy.
We 	agree 	with 	Debtor’s 	position 	that 	HGP 	did 	not 	raise 	this
contention 	in 	its 	original 	request 	for 	administrative 	expense.
Docket 	No. 	124. 	This 	argument 	was 	not 	presented 	in 	HGP's 	reply
to 	Debtor 	and 	Liberty 	Marine 	Services, 	Inc.'s 	opposition 	to
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administrative 	expenses, 	and 	in 	its 	objection 	to 	Debtor's
supplemental 	opposition 	to 	the 	motion 	requesting 	administrative
expenses. 	Docket 	No. 	135 	and 	172. 	Finally, 	Debtor 	correctly
establishes 	that 	the 	first 	time 	that 	HGP 	even 	made 	a 	"passing
reference" 	to 	this 	argument 	was 	in 	paragraph 	56 	of 	the 	Pre-Trial
Report. 	Docket No. 203.
The 	First 	Circuit 	in 	the 	case 	of 	Dimarco-Zappa 	v.
Cabanillas, 	238 	F.3d 	25, 	34 	(1 st Cir. 	2001), 	has 	distinguished
that 	"[s]imply 	noting 	an 	argument 	in 	passing 	without 	explanation
is 	insufficient 	to 	avoid 	waiver." 	Id. 	at 	34 	(citing 	McCoy 	v.
Mass. 	Inst. 	of 	Tech., 	950 	F.2d 	13, 	22 	(1st Cir. 	1991)) 	(where 	a
mention 	comprised 	of 	two 	sentences 	and 	one 	citation 	to 	a
tangentially 	relevant 	case 	was 	not 	sufficient 	to 	avoid 	waiver).
See 	also 	Vernet, 	2010 	U.S. 	Dist. 	LEXIS 	106422, 	at 	p. 	7 	("It 	is
settled 	that 	'[a] 	motion 	for 	reconsideration 	does 	not 	provide 	a
vehicle 	for 	a 	party 	to 	undo 	its 	own 	procedural 	failures 	and 	it
certainly 	does 	not 	allow 	a 	party 	to 	introduce 	new 	evidence 	or
advance 	new 	arguments 	that 	could 	or 	should 	have 	been 	presented
to 	the 	district 	court 	prior 	to 	judgment.'"); 	Marks 	3-Zet-Ernst
Marks 	GMBH 	& 	Co. 	KG 	v. 	Presstek, 	Inc., 	455 	F.3d 	7, 	15-16 	(1 st
Cir. 	2006); 	Lubricantes 	Venoco 	Int'l 	v. 	M/V 	Neveris, 	60 	Fed.
Appx. 835, 839 (1 st Cir. 2003) (claims not timely made during the
pendency 	of 	the 	case, 	but 	instead 	are 	raised 	for 	the 	first 	time
in a motion for reconsideration, are deemed waived).
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Given 	that 	HGP 	did 	not 	raise 	these 	arguments 	in 	its
original 	motion 	(Docket 	No. 	124), 	its 	reply 	(Docket 	No. 	135),
its 	opposition 	to 	supplement 	to 	objections 	(Docket 	No. 	172), 	and
was 	only 	tangently 	raised 	in 	the 	Pre-Trial 	Report 	(Docket 	No.
203), 	the 	Court 	concurs 	with 	Debtor's 	assessment 	that 	HGP 	waived
the 	legal 	argument 	of 	security 	guard 	services 	being 	necessary
post-petition liens under Maritime Law.
Finally, 	HGP 	had 	never 	raised 	its 	request 	for 	distribution
under 	Section 	506(c) 	at 	the 	evidentiary 	hearing 	nor 	prior 	to 	its
motion 	for 	reconsideration. 	In 	any 	event, 	even 	assuming 	that 	the
Section 	506(c) 	argument 	were 	timely, 	it 	is 	important 	to 	note
that, 	aside 	from 	simply 	quoting 	"Section 	506(c)" 	in 	its 	Motion
for 	Reconsideration, 	HGP 	has 	not 	put 	this 	Court 	in 	a 	position 	to
consider 	the 	applicability, 	or 	not, 	of 	said 	section 	to 	this
case, 	due 	to 	HGP's 	lack 	of 	supporting 	legal 	authority 	on 	this
matter 	in 	both 	its 	Motion 	for 	Reconsideration 	and 	Pre-Trial
Report.2 Consequently, 	the 	Court 	hereby 	DENIES 	HGP's 	motion 	for
reconsideration filed on February 9, 2011. 	Docket No. 245.
2 	Debtor 	argues 	that, 	according 	to 	the 	legal 	authority 	cited 	by 	HGP 	in 	its
reconsideration, the same would not qualify as a post-petition maritime lien
because "[w]hen examining maritime liens the Bankruptcy Court should keep in
mind 	that 	First 	Circuit 	has 	held 	that 	“maritime 	liens 	are 	to 	be 	strictly
construed.” See Tramp Oil Marine, Ltd. v. M/V Mermaid I, 805 F.2d 42 (1 st Cir.
1986)(quoting Atlantic & Gulf Stevedores, Inc. v. M/V Grand Loyalty, 608 F.2d
197, 200, 201 (5 th Cir. 1979)).
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C. Debtor's Motion for Reconsideration
Debtor 	requests 	reconsideration 	under 	Rule 	59 	on 	the
grounds 	that 	the 	Court 	"erroneously 	interpreted 	a 	set 	of 	facts
presented 	to 	it 	before 	reaching 	said 	judgment." 	Docket 	No. 	246
at 	p. 	2. 	Specifically, 	Debtor 	alleges 	that 	the 	amount 	of
administrative 	expenses 	for 	security 	guards 	should 	be 	reduced
from 	$20,880 	to 	$7,377, 	which 	corresponds 	to 	the 	period 	of
security 	guards 	up 	until 	June 	26, 	2010. 	Debtor 	states 	that 	the
Court 	misinterpreted 	a 	crucial 	piece 	of 	information, 	that 	is,
HGP's 	President's 	testimony 	at 	the 	evidentiary 	hearing, 	in 	which
he 	indicated 	that 	the 	crew 	from 	the 	M/V 	Caribbean 	Carrier 	was
transferred 	to 	the 	M/V 	Caribbean 	Express 	on 	June 	26, 	2010.
Thus, 	the 	services 	for 	security 	guards 	after 	said 	date 	were
unnecessary. Docket No. 246.
Debtor 	is 	now 	trying, 	through 	its 	motion, 	to 	undo 	a
procedural 	failure 	as 	well 	as 	advancing 	an 	argument 	that 	could
and 	should 	have 	been 	presented 	prior 	to 	the 	reconsideration. 	In
other 	words, 	Debtor 	is 	using 	its 	motion 	as 	a 	means 	of 	rebutting
the 	testimony 	produced 	by 	HGP's 	President, 	when 	the 	correct
procedure 	would 	have 	been 	to 	have 	raised 	this 	matter 	immediately
at 	the 	evidentiary 	hearing 	held 	on 	January 	21, 	2011.
Furthermore, 	the 	issue 	of 	the 	transfer 	of 	the 	crewmembers 	from
one 	vessel 	to 	another 	was 	known 	by 	Debtor 	as 	early 	as 	June 	29,
2010, 	date 	in 	which 	Debtor 	voluntarily 	recognized 	this 	fact 	at
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the 	hearing 	held 	on 	said 	date. 	Docket 	No. 	39. 	Dimarco-Zappa, 	238
F.3d at 34; Vernet, 2010 U.S. Dist. LEXIS 106422, at p. 7.
Considering 	Debtor's 	prior 	knowledge 	of 	the 	crewmembers
transfer, 	it 	is 	interesting 	to 	note 	that 	Debtor 	did 	not 	raise
this 	argument 	in 	its 	opposition 	to 	HGP's 	motion 	requesting
administrative 	expense 	(Docket 	No. 	133), 	its 	supplement 	to
opposition 	to 	motion 	requesting 	administrative 	expense 	(Docket
No. 171), or the Pre-Trial Report (Docket No. 203).
Given 	that 	Debtor 	waived 	this 	argument 	by 	having 	failed 	to
timely 	plead 	it 	prior 	to 	the 	reconsideration, 	the 	Court 	hereby
DENIES Debtor's request for reconsideration. 	Docket No. 246.
ORDER
WHEREFORE, 	HGP's 	Motion 	for 	Reconsideration 	(Docket 	No.
245), 	as 	well 	as 	Debtor's 	Motion 	for 	Reconsideration 	(Docket 	No.
246), shall be, and hereby are, DENIED.
SO ORDERED.
San Juan, Puerto Rico, this 30th day of March, 2011.
BY THE COURT:
/s/MILDRED CABAN FLORES
U.S. Bankruptcy Judge
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