Command v. B.J.'S Wholesale

• Court: Court of Appeals for the First Circuit
• Decided: August 9, 1995
• Docket: 94-1853
• Status: Published

Opinion

USCA1 Opinion

                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT

                                 ____________________



          No. 94-1853



                             COMMAND TRANSPORTATION INC.,

                                Plaintiff - Appellee,



                                          v.



                             B.J.'S WHOLESALE CLUB INC.,

                             AMES DEPARTMENT STORES INC.,

                        MORSE SHOE INC., LIONEL LEISURE INC.,

                             AND HOME INSURANCE COMPANY,

                               Defendants - Appellees.



                                 ____________________



                          LIBERTY MUTUAL INSURANCE COMPANY,

                                Defendant - Appellant.

                                 ____________________



                                     ERRATA SHEET



               The  opinion of  this  court  issued on  August  9, 1995  is

          amended as follows:



               The coversheet should read "Hon. W. Arthur Garrity, Jr.".
                                                                   ___



UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT

                                 ____________________



          No. 94-1853



                             COMMAND TRANSPORTATION INC.,

                                Plaintiff - Appellee,



                                          v.



                             B.J.'S WHOLESALE CLUB INC.,

                             AMES DEPARTMENT STORES INC.,

                        MORSE SHOE INC., LIONEL LEISURE INC.,

                             AND HOME INSURANCE COMPANY,

                               Defendants - Appellees.



                                 ____________________



                          LIBERTY MUTUAL INSURANCE COMPANY,

                                Defendant - Appellant.

                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                  [Hon. W. Arthur Garrity, Jr., U.S. District Judge]
                                                ___________________



                                 ____________________



                                        Before



                                Boudin, Circuit Judge,
                                        _____________

                 John R. Gibson* and Campbell, Senior Circuit Judges.
                                               _____________________

                                _____________________



               David J.  Daly, with whom  John E. Lecomte, Timothy  J. Daly
               ______________             _______________  ________________

          and  Lecomte,  Emanuelson,  Tick  &  Doyle,  were  on  brief  for
               _____________________________________

          appellant Liberty Mutual Insurance Company.

               Kurt Terwilliger, with whom Richard D. Bickelman and Deutsch
               ________________            ____________________     _______

          Williams  Brooks DeRensis Holland  & Drachman  were on  brief for
          _____________________________________________

          appellee Command Transportation, Inc.



                                 ____________________



                                    August 9, 1995

                                 ____________________

                              
          ____________________



          *  Of the Eighth Circuit, sitting by designation.



                                         -1-



JOHN R. GIBSON,  Senior Circuit Judge.   Liberty Mutual
                    JOHN R. GIBSON,  Senior Circuit Judge.
                                     ____________________



          Insurance  Company appeals  from  the  district court's  judgment



          denying its counterclaims against Command Transportation, Inc. to



          recover  freight damage claims Liberty paid to Command's shippers



          and to collect insurance  premiums from Command.  Liberty  argues



          that the district court erred:  (1) in failing to reduce  freight



          damage  claims Liberty paid  Command's shipping customers  by the



          amounts the  shippers owed Command  for freight services;  (2) in



          denying  its motions  to substitute or  add the  Resolution Trust



          Corporation  as  a  defendant or  third-party  defendant;  (3) in



          denying  relief on  Liberty's breach  of  contract claim  against



          Command  for  unpaid insurance  premiums;  and (4)  in  ruling on



          issues of disputed material fact.  We affirm the district court's



          judgment.



                    It  is unnecessary  that we  detail  the complex  facts



          underlying the  relatively simple  issues in this  appeal.   This



          litigation began  when Command,  an interstate  trucking company,



          became  insolvent and attempted  to collect freight  charges from



          its  shippers,  including  B.J.'s  Wholesale  Club, Inc.;  Lionel



          Leisure,  Inc.; Morse  Shoe, Inc.;  and  Ames Department  Stores.



          These  shippers filed  counterclaims against Command  for freight



          damage and losses.



                    In  1980, Command  had purchased  a  Motor Truck  Cargo



          Policy from Liberty.  As required by the Interstate Commerce Act,



          the policy contained an endorsement for cargo liability, commonly



          referred  to  as  a  "BMC-32 endorsement."    49  U.S.C.    10927



          (a)(3)(1988).   Under the BMC-32 endorsement Liberty was required



to pay directly  any freight damage claims  of Command's shippers



          for  which Command  may have  been liable.   Further,  the BMC-32



          endorsement provided, in part:



                      The insured agrees to reimburse [Liberty]

                      for  any  payment  made  by [Liberty]  on

                      account of any loss or damage involving a

                      breach of the terms of the policy and for

                      any payment that [Liberty] would not have

                      been   obligated   to  make   under   the

                      provisions of the  policy, except for the

                      agreement contained in  this endorsement.


The policy terminated on  October 1, 1988, and was  replaced by a



          similar policy  issued by Home  Insurance Company.   Command sued



          Liberty and Home for breaching the insurance contract  by failing



          to  pay  shippers directly  for  their lost  or  damaged freight.



          Although  Liberty admittedly received the freight claims (and, in



          fact,  paid  some),  Liberty  argued  that  it  was  entitled  to



          Command's accounts receivable from the shippers.  Liberty alleged



          that a surety relationship existed between Command and Liberty by



          virtue of Liberty's payment of  freight damage claims directly to



          the  shippers under  the BMC-32  endorsement.   As  surety of  an



          insolvent  principal, Liberty  contended that  it  could set  off



          Command's freight  charge claims against  Liberty's obligation to



          pay the shippers' freight damage claims.



                    In  1986, Command  entered  into  a  revolving  finance



          agreement with Comfed Savings Bank.  The agreement granted Comfed



          a security  interest in  certain of  Command's assets,  including



          Command's accounts receivable.


-3-



By April 1989, Command was insolvent.  Command sold its



          assets to Munson Transportation and paid the proceeds  to Comfed.



          In December  1990, the RTC  was named as conservator  for Comfed,



          and, in September 1991, the  RTC was appointed receiver.  Liberty



          claimed that the RTC was the real party in interest which must be



          substituted for Command or added as a third-party defendant.



                    During  the  litigation,   the  district  court  denied



          Liberty's motions to substitute the RTC for Command or to add the



          RTC  as a  third-party defendant.   The court  rejected Liberty's



          arguments that  the RTC,  through Comfed, was  the real  party in



          interest.



                    Ultimately, the parties  resolved all their  respective



          claims, except  for Liberty's counterclaims  against Command  for



          setoff and for breach of contract.



                    The  district court  ordered that  Command  and Liberty



          file an agreed stipulation of facts.  The parties could not agree



          to a joint stipulation of facts, so each party submitted its  own



          proposed  stipulation of facts.   The proposed  stipulations were



          almost identical except  each party included some  facts that the



          other party either disagreed with or did not address.



                    After  a hearing on March  28, 1994, the district court



          denied Liberty's counterclaims.   Command Transportation Inc.  v.
                                            _______________________________



          B.J's Wholesale Club, Inc., Civ.  No. 90-10188-G, slip op. at 16-
          __________________________



          17 (D. Mass. June 23, 1994).   The court determined that the BMC-



          32 endorsement  obligated Liberty  to pay  shippers directly  for



          freight  damage and  loss.   The court  ruled that  although this


-4-



obligation  may  supersede  other  provisions  of  the  insurance



          policy, "the endorsement must be read in conjunction with, not in



          lieu of, the policy."  Id. at 9.  The court based this ruling  on
                                 ___



          the endorsement,  which stated:   "[A]ll  terms, conditions,  and



          limitations in the policy  to which this endorsement is  attached



          are to remain in  full force and  effect."  After discussing  two



          cases  considering earlier versions of the BMC-32 endorsement, In
                                                                         __



          re  Yale Express Sys.,  Inc., 362  F.2d 111  (2d Cir.  1966), and
          ____________________________



          Empire Fire  & Marine Ins.  Co. v. J.  Transport, Inc., 880  F.2d
          ______________________________________________________



          1291  (11th  Cir.  1989),  the  court  distinguished  obligations



          arising   from  the  policy  and  obligations  arising  from  the



          endorsement.  The court concluded that Liberty could be a surety,



          entitled  to a  setoff  only  for payments  it  made to  shippers



          "solely" under  the endorsement, and that Liberty failed to prove



          that it made  payments solely under the endorsement.  Slip op. at



          13.   The court  determined that Liberty  failed to  classify its



          payments to shippers as an  obligation from the endorsement or as



          an  obligation from  the  policy.   The  court  pointed out  that



          Liberty omitted the cargo policy as an exhibit to the Stipulation



          of Facts, and attached only a one-page form:  "Motor Truck Policy



          - Gross Receipts,"  which did not explain Liberty's obligation to



          pay claims  under the policy.  Id.   The court ruled that Liberty
                                         ___



          was not entitled to set  off freight damage claims with Command's



          accounts receivable.   The court acknowledged that  Liberty could



          have  a valid  setoff  claim  "to the  extent  that its  payments



          represent deductibles  it would  not have  been obligated  to pay


-5-



under the policy."   Id. at 14.   Once again, however,  the court
                               ___



          concluded  that Liberty failed to prove  entitlement to a setoff.



          The court referred to an affidavit submitted by Liberty, to which



          Command  did not stipulate,  listing Liberty's total  payments to



          each  shipper.   Id.   Because  the affidavit  showed only  total
                           ___



          payments,  the court  could  neither  determine  if  Liberty  had



          already reduced the  amount by the deductible, nor  calculate the



          date,  amount,  or number  of  losses.   Accordingly,  the  court



          concluded that  there was  no basis for  ruling that  Liberty was



          entitled to a setoff for the deductible amount.  Id. at 14-15.
                                                           ___



                    Liberty also  claimed subrogation  rights arising  from



          indemnity agreements  between  it and  Command,  whereby  Command



          agreed to  indemnify Liberty  for any monies  paid by  Liberty in



          connection  with  "bonds,  undertakings  and/or  obligations   of



          suretyship or guarantee"  issued on behalf  of Command.   Because



          Liberty's recovery  under this  provision depended  on proving  a



          surety relationship, the court did not address Liberty's claim of



          subrogation.   Id. at  15.   The court  explained that a  further
                         ___



          obstacle to  Liberty's claims  existed because  a non-party,  the



          RTC,  held a secured  interest in Command's  accounts receivable.



          Id. at 16.
          ___



                    Finally,  the court held  that Liberty failed  to prove



          its breach of contract claim.   Id.  The court reasoned that  the
                                          ___



          sole  item  of  evidence,  a  September 20,  1989,  Statement  of



          Account, did not  prove that Command owed Liberty  premiums under



          the policy that lapsed in 1988.  Without the terms of the policy,


-6-



including proof of coverage dates, the court refused to speculate



          whether Command had failed to pay premiums due.  Id. at 17.
                                                           ___



                    Liberty filed a motion to amend judgment.  At a hearing



          on a different  motion, Liberty's counsel stated that  he did not



          expect the  court to  enter judgment on  the basis  of stipulated



          facts  but thought there  would be a  trial.  The  district court



          judge  found this statement inconsistent with his recollection of



          the  March 28, 1994  proceedings when Liberty's  counsel remained



          silent after Command's  counsel stated he  expected the court  to



          enter judgment on the basis of  the stipulated record.  The court



          construed Liberty's silence as assent.  The district court denied



          Liberty's motion, and Liberty appeals.



                                          I.
                                          I.



                    In its reply  brief, Liberty contends that  the parties



          did not authorize the district court  to decide disputed material



          facts.   Liberty  asserts that  although  the parties  wanted the



          district court to decide the  case based on stipulated facts, the



          parties  did not  agree to  stipulated facts.   Arguing  that the



          standard  governing the  granting of  a  summary judgment  motion



          applies, Liberty contends that the district court erred by ruling



          on material issues of genuine fact without a trial.



                    Liberty  agreed,  however,  for the  district  court to



          decide the case  on the record before it.  The first paragraph in



          Liberty's memorandum submitted  to the district court  in support



          of judgment in its favor states:



                      The  following  memorandum  is  submitted

                      pursuant   to   the   agreement   between



                                         -7-



[Command]   and   [Liberty]    that   all

                      remaining issues in this  case be decided

                      by the Court based  upon a Stipulation of

                      Facts.     No  final  agreement   on  the

                      Stipulation of Facts  was reached by  the

                      deadline  imposed by  the  Court, so  the

                      references in this  memorandum are to the

                      "Stipulation of  Facts" filed  by Liberty

                      on  March 23, 1994.   Liberty also relies

                      on its previous briefs filed with respect

                      to this matter.



                    The  record of the March 28 proceedings also shows that



          Liberty expected the court to decide the case based on the record



          before  it.   At the  hearing,  the district  court judge  asked:



          "What are  we doing here  this afternoon?"  The  judge questioned



          whether  the proceedings were pretrial, cross motions for summary



          judgment, or trial of the case.  Command's counsel responded that



          the court directed  the parties to submit a  stipulation of facts



          and brief the issue of liability on Liberty's counterclaims.  The



          court  then  explained that  it  was  unsure  where to  turn  for



          evidence of  the payments, receipts  and dates, and asked  if the



          submitted  filings identified the amounts that Liberty, or anyone



          else,  paid  the  shippers.    Command's  counsel  answered  that



          Liberty's  affidavit showed  the amounts  Liberty  paid and  that



          Command  did   not  intend  to   submit  further   documentation.



          Liberty's  counsel agreed that  he addressed every  issue Command



          raised in  its briefs.   After discussing  the merits  of various



          issues,  the  court  asked  Liberty's  counsel  what  he  sought.



          Liberty answered:  "any monies which went to Command or may go to



          Command in the  future which were subject to  the shipper's right



          to setoff."


-8-



Furthermore,  the  district   court's  June  23,  1994,



          decision made twenty-three findings of fact, incorporating all of



          the stipulations of  facts submitted by Liberty in  its March 24,



          1994  filing,  except  for  Liberty's proposed  stipulation  that



          Command had not paid certain premiums due.  Liberty's argument in



          this appeal does  not identify a disputed issue  of material fact



          it  claims to  be wrongly  decided by  the district  court.1   We



          therefore reject Liberty's argument that the district court erred



          by deciding this  case and, indeed, are left  with the impression



          that Liberty has been less than candid in urging this position.



                                         II.
                                         II.



                    Liberty  argues that the  BMC-32 endorsement  created a



          surety relationship  between Liberty  and Command,  and that  the



          district court's finding  of no suretyship is  clearly erroneous.



          Liberty contends that,  as Command's  surety, it  is entitled  to



          assert the shippers' right to set off unpaid freight charges.



                    The  case  law  unequivocally  supports  the   district



          court's view that  the mere existence  of the BMC-32  endorsement



          does not give rise to  a surety relationship entitling Liberty to



          set  off  its  obligation  to  pay  freight  damage  claims.    A



          suretyship  is created  only after  the insurer  makes  a payment



                              
          ____________________



          1    Having  failed to  identify  any  material  factual dispute,

          Liberty's  arguments that the  district court should  have viewed

          the proceedings as cross-motions for summary  judgment and held a

          trial on  the merits  are contradictory.   See Boston  Five Cents
                                                     ___ __________________

          Sav.  Bank v. Dep't  of Housing &  Urban Dev., 768  F.2d 5, 11-12
          _____________________________________________

          (1st Cir. 1985) (discussing difference between decisions based on

          cross-motions  for  summary   judgment  and  those  based   on  a

          stipulated record).



                                         -9-



required solely under the endorsement,  in other words, a payment



          the  insurer "would  not have  been obligated  to make  under the



          provisions of the policy."



                    The Second Circuit considered an earlier version of the



          BMC-32 endorsement in  In re Yale  Express, 362  F.2d 111.   That
                                 ___________________



          endorsement  required the carrier  to reimburse the  insurer "for



          any payment that  the [insurer] would not have  been obligated to



          make under the provisions of the policy, except for the agreement



          contained  in the endorsement."   Id. at 113.   After the carrier
                                            ___



          went bankrupt, the shippers asserted  claims for lost and damaged



          freight.   Id.    The carrier  and  insurer asserted  conflicting
                     ___



          positions.   The  carrier  demanded that  the  shippers  pay  all



          freight charges  to it.  Id.  The  insurer asserted that it could
                                   ___



          set off freight damage  claims with the carrier's claims  against



          the shippers for  unpaid freight.  Id.   The Second  Circuit held
                                             ___



          that the insurer was a surety only for the claims it  paid solely



          under the endorsement, not to  those claims it paid also required



          by the policy.  Id. at 114.   The court explained that suretyship
                          ___



          exists when "'one person has undertaken an obligation and another



          person  is also under an obligation or other duty to the obligee,



          who is  entitled to but one  performance, and as between  the two



          who  are bound, one rather than  the other should perform.'"  Id.
                                                                        ___



          (quoting  Restatement  of  Security    82  (1941)).    The  court



          reasoned  that,  although  the  insurer  and  carrier  were  both



          obligated  to the shipper, the carrier's promise to reimburse the



          insurer for any payments made solely by virtue of the endorsement


-10-



made  the carrier,  not the  insurer, the  principal who  "should



          perform."  Id.   The court distinguished claims  that the insurer
                     ___



          paid  under  the  endorsement exceeding  the  deductible:   "[the



          insurer's] position under the endorsement differs wholly from its



          status with respect to  claims exceeding [the deductible]; as  to



          the latter it is an  indemnitor," not a surety.  Id. at  114 n.1.
                                                           ___



          Because the deductible is an  amount which the insurer would "not



          otherwise be  obligated to pay"  except for the  endorsement, the



          insurer had surety status only for the deductible amount.  Id.
                                                                     ___



                    The Eleventh Circuit rejected the very argument Liberty



          makes here  in Empire Fire  & Marine, 880  F.2d 1291.   The court
                         _____________________



          remanded that case,  in part, for a determination  of whether the



          insurance  policy  covered the  loss  at  issue.   Id.  at  1298.
                                                             ___



          Likewise,  in  American  Inter-Fidelity  Exch.  v.  American  Re-
                         __________________________________________________



          Insurance Co., 17 F.3d 1018  (7th Cir. 1994), the Seventh Circuit
          _____________



          interpreted   language   virtually   identical  to   the   BMC-32



          endorsement, concluding that an insurer  is a surety only for the



          deductible under the  endorsement, the amount  it would not  have



          been  obligated to pay  under the policy.   Id. at  1022.  Accord
                                                      ___            ______



          Ford  Motor Co. v. Transport  Indem. Co., 41  B.R. 433, 439 (E.D.
          ________________________________________



          Mich.  1984), rev'd  on other  grounds,  795 F.2d  538 (6th  Cir.
                        ________________________



          1986).   Cf. Eastern Freight  Ways, Inc. v. Seaboard  Surety Co.,
                   ___ ___________________________________________________



          577  F.2d 175,  180  n.9  (2d  Cir.  1978)  (surety  relationship



          established because of issuance of bonds for cargo claims).



                    Because Liberty may be a  surety only to the extent its



          payments  to shippers represent  payments required "solely" under


-11-



the  endorsement,  we  have  no  difficulty  rejecting  Liberty's



          argument  that  the  district  court  erred  in  requiring it  to



          distinguish between policy and  endorsement obligations.  Liberty



          contends that  Command did  not allege  that Liberty's  liability



          arose from anything other  than the endorsement.  Liberty  points



          out  that, when it  was called on  to directly pay  the shippers,



          Command  had already  cancelled and  replaced  the cargo  policy.



          Thus, Liberty contends that the district court erred in requiring



          proof that  Liberty had no  obligation to pay the  shippers under



          the policy.  



                    Liberty's argument is circular.   The endorsement, just



          as in Yale Express and  Empire Fire & Marine, specifically limits
                ____________      ____________________



          Liberty's right to reimbursement from Command to payments Liberty



          would  not have  been  obligated  to pay  under  the policy,  and



          Liberty  bore  the  burden  of  proving  entitlement  to  setoff.



          Reliance Steel Prod. Co. v. National Fire Ins. Co., 880 F.2d 575,
          __________________________________________________



          577-78 (1st Cir. 1989).  Liberty neglected to specify whether its



          payments to shippers were  also obliged under the policy.  See In
                                                                     ___ __



          re Yale Express,  362 F.2d at 114  n.1 (insurer not a  surety for
          _______________



          amounts  in excess  of  deductible under  endorsement);  American
                                                                   ________



          Inter-Fidelity Exch., 17  F.3d at 1022 (insurer is  a surety only
          ____________________



          for deductible under endorsement).



                    We similarly reject Liberty's argument that  suretyship



          and insurance cannot co-exist  and that, therefore, its  right to



          setoff is  not subject to  the insurance provisions of  the cargo



          policy.     This  argument   is  inconsistent   with  the   cases


-12-



interpreting the BMC-32 endorsement  and irreconcilable with  the



          language   of  the   endorsement  providing   that  "all   terms,



          conditions, and limitations  in the policy  . . . remain in  full



          force and effect."   See Empire Fire  & Marine, 880 F.2d  at 1298
                               ___ _____________________



          (regulations  which  require  the endorsement  "do  not  alter or



          affect the  obligations between  the insured  and the  insurer");



          American Inter-Fidelity Exch., 17 F.3d at 1022 (same).
          _____________________________


-13-



III.
                                         III.



                    Liberty  next argues  that the  district court  clearly



          erred  in finding  that the  evidence was  insufficient  to prove



          Liberty's counterclaim  for premiums  owed by  Command under  the



          policy.  



                    Liberty sought $656,330.04  in premiums allegedly  owed



          by Command under the cargo policy.  The district court noted that



          the "only policy before the Court is the Motor Truck Policy . . .



          issued on November 1, 1980 and numbered K01-712-001357-04."  Slip



          op. at  16-17.  The district  court found that the  only evidence



          offered by Liberty to support its breach of contract  claim was a



          September 20,  1989, Statement  of  Account.   Id.  at 16.    The
                                                         ___



          Statement of Account listed several policy numbers,  and the only



          policy number in the two-page statement which corresponded to the



          policy number on the face of the policy differed by one digit and



          listed  a "Retro  Adjustment" in  the  amount of  $186,159.   The



          district  court concluded  that the  evidence did  not show  that



          Command   continues  to  owe  premiums  under  the  policy  which



          terminated in 1988,  only that Liberty made  a "retro adjustment"



          to that policy.



                    During  the hearing,  the district court  asked counsel



          which  page  of  the  policy  defined  "premiums owed  under  the



          policy."   Liberty's  counsel remained  silent  when counsel  for



          Command stated that "it's  not [Command's] burden" but  "if there



          is an  answer to that question I would  guess it would be located



          in the policy."


-14-



On  appeal,  Liberty  explains   only  that  a   "retro



          adjustment is  an increased premium  owed by an insured  based on



          the cost to the insurer as shown by actual experience,"  and that



          the "retro adjustment amounts listed on the  Statement of Account



          are  'Payable on  Receipt.'"   Liberty  explains  that the  total



          retroadjustments  reflected in the  Statement of Account  are all



          premiums  for policies  that are  part of  the cargo  policy and,



          therefore, Liberty  should be awarded  $444,262 on its  breach of



          contract claim.   The shortfall of Liberty's  contentions is that



          it has  presented no  evidence to explain  how it  calculated the



          "retro  adjustment" or why Command still  owes premiums under the



          1988 insurance policy.2   Therefore, the  district court did  not



          err in concluding that there was insufficient evidence to support



          Liberty's breach of insurance contract claim.



                                         IV.
                                         IV.



                    Finally,  Liberty   alleges  numerous  errors   in  the



          district court's refusal to substitute  the RTC as the real party



          in interest or to  add the RTC as  a party under Fed. R.  Civ. P.



          17(a), 19, and 20.  Liberty alleges that Comfed, and subsequently



          the  RTC, is the real  party in interest.   Liberty also contends



          that  the RTC,  acting through  the corporate  shell  of Command,



          attempts,  through this litigation,  to force Liberty  to pay the



          shippers' claims  so that the  RTC may collect the  full accounts

                              
          ____________________



          2  Liberty's citation to Truck Ins. Exch.  v. Webb Transfer Line,
                                   ________________________________________

          Inc., 432 S.W.2d 25, 26 (Ky. Ct. App. 1968), is unpersuasive.  In
          ____

          that case,  the parties  did not dispute  the computation  of the

          total  amount  of  premiums payable,  and  the  insurer presented

          testimony as to the premium computation.  Id.  
                                                    ___



                                         -15-



receivable due from the shippers free from Liberty's right to set



          off.     Liberty  contends  that  the  RTC's  collection  without



          affording notice or  the opportunity to be heard deprived Liberty



          of  its  property  in  violation  of  the  Fifth  and  Fourteenth



          Amendments to the United States Constitution.



                    Because Liberty failed to prove entitlement to a setoff



          against  Command's bankruptcy  estate, Liberty's efforts  to make



          the RTC a party necessarily fail.  In any event, we are persuaded



          that  a  number of  other  reasons support  the  district court's



          refusal to substitute or add the RTC as a party or  a third-party



          defendant, including Liberty's failure to exhaust  administrative



          remedies, see,  e.g., Marquis v.  FDIC, 965 F.2d 1148,  1151 (1st
                    ___   ____  ________________



          Cir.  1992),  or  to  explain  the  superiority  of  its  alleged



          interest.  See In re Yale Express, 362 F.2d at 117.
                     ___ __________________



                    We affirm the district court's judgment.
                       ______


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