UNITED STATES COURT OF APPEALS For the Fifth Circuit
No. 99-31128
N.J. COLLINS, INC.,
Plaintiff-Appellant,
VERSUS
PACIFIC LEASING, INC.,
Defendant-Appellee.
Appeal from the United States District Court For the Eastern District of Louisiana (97-CV-2379-N) October 16, 2000 Before REAVLEY, BENAVIDES, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:*
N.J. Collins, Inc., (“NJC”) sued Pacific Leasing, Inc.,
(“Pacific”) for an alleged breach of a sale contract whereby
Pacific was to sell the tugboat FRANCES J to NJC for $700,000.
Pacific filed a counter-claim, contending NJC breached the contract
by failing to make required advance deposits. The district court
* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
1 granted partial summary judgment to Pacific upon determining that
Pacific had not modified the contract or waived the provisions
requiring advance deposits of $70,000, that NJC had not relied to
its detriment on Pacific’s actions, and that NJC breached the
contract’s advance deposit requirements by failing to make the
payments. Trial was conducted solely on the issue of damages. NJC
requested that the court instruct the jury regarding Pacific’s duty
to mitigate its damages. The district court instructed the jury on
the duty imposed on Pacific by the Uniform Commercial Code (“UCC”)
to resell the tugboat in good faith and in a commercially
reasonable manner, but the court refused to instruct the jury
separately on the duty to mitigate, reasoning that the jury
instruction given subsumed the duty to mitigate in the UCC context.
The jury returned a verdict in favor of Pacific, and the court
entered judgment awarding $210,000 in damages to Pacific. On
appeal, NJC contends that the district court made two errors: (1)
in granting partial summary judgment to Pacific on the issues of
contract breach, contract modification, and waiver and reliance,
and (2) in not separately instructing the jury on the issue of
Pacific’s duty to mitigate. We affirm the district court’s
judgment.
I. Factual Background
Pacific and NJC executed the sale contract on July 26, 1996.
2 Because the tugboat was located in Guam and NJC was located in New
Orleans, the contract required Pacific to deliver the boat from
Guam to Balboa, Panama, where NJC would pay the balance of the
contract and take possession of the boat. The terms of the
contract obligated NJC to make an advance deposit of $35,000 by
August 2; NJC failed to do so. Pacific made demands on NJC to
fulfill its obligation to pay the deposit; a draft purchase/sale
agreement sent to NJC by Pacific on August 6 maintained the August
2 deposit requirement. In the meantime, seeking to salvage the
sale and to transfer the boat to the United States before the
typhoon season, Pacific notified NJC on August 8 that the boat
would depart Guam on August 13. According to the terms of the July
26 contract and the August 6 draft purchase/sale agreement, NJC was
obligated to deposit another $35,000 in Pacific’s bank account
within three days of being notified of the intent to sail from
Guam. NJC failed to make that payment.
Pacific persisted in demanding that NJC make the required
deposits, and continued to move the boat across the Pacific in
hopes of salvaging the sale. One day prior to the arrival of the
boat in Los Angeles, Pacific informed NJC by fax that it would
allow prospective buyers to inspect the boat there.2 Pacific sold
another boat in Los Angeles that NJC had contracted to purchase and
informed NJC by fax on October 8 that it was moving the FRANCES J
2 NJC claimed to have not received the fax transmission.
3 on to Balboa, Panama.3 Having received no response from NJC after
September 23, Pacific did not contact NJC when the boat arrived in
Balboa. Instead, Pacific moved the boat through the Panama Canal
to New Orleans and sold it to an alternate buyer for the reduced
price of $527,000. NJC never received financing approval for the
sale and never made any of the deposits required by the contract.
II. Analysis
A. Contract modification and waiver
We review the grant of summary judgment de novo, employing the
same standards used by the district court. Alton Ochsner Med.
Found. v. Allendale Mut. Ins. Co., 219 F.3d 501, 504 (5th Cir.
2000).
This dispute is governed by the UCC, as adopted by Guam.
According to section 2201 of the Guam UCC, for a contract for the
sale of a good more than $500 in value to be enforceable, it must
be in writing and signed by the party against whom its enforcement
is being sought. 13 GUAM CODE ANN. § 2201(1) (2000). Section 2209
provides that a modification must also be in writing when the sale
price as modified exceeds the $500 threshold of Section 2201. Id.
§ 2209(3). The section also provides, however, that:
Although an attempt at modification or rescission does not satisfy the requirements of subdivision (2) or (3), it can operate as a waiver.... A party who has made a
3 NJC again claimed that it did not receive the fax transmission.
4 waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.
Id. § 2209(4) and (5).
NJC argues that Pacific’s performance of the contract by
moving the boat across the ocean to Balboa, despite the lack of
advance payments by NJC, in effect modified the contract to not
include the advance deposit requirements. According to the above-
quoted sections of the Guam UCC, however, such a modification was
required to be in writing.4 NJC is unable to identify any writings
that are modifications of the contract. Indeed, the only writings
of record from Pacific to NJC indicate the opposite; Pacific’s
communications demanding that the deposits be made as required by
the contract, and the purchase/sale agreement of August 6 referring
to the advance deposit requirements of the July 26 contract, all
indicate that the contract had not been modified.
NJC next argues that Pacific’s movement of the boat across the
ocean despite NJC’s nonpayment of the deposits were actions
constituting an attempted modification and were therefore a waiver
of the advance deposit requirements in the contract, according to
Guam UCC section 2209(4). Courts interpreting this section of the
UCC have reasoned that, because waiver is “the intentional
4 This is true whether the value is calculated as the value of the full contract–$700,000–or the value of the deposits affected by the alleged modification–$70,000.
5 relinquishment of a right,” waiver must be proven either by showing
that the actions were so unequivocal that they induced reliance on
the alleged waiver by the other party or the waiver must be
“clearly inferable from the circumstances.” Bank v. Truck Ins.
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UNITED STATES COURT OF APPEALS For the Fifth Circuit
No. 99-31128
N.J. COLLINS, INC.,
Plaintiff-Appellant,
VERSUS
PACIFIC LEASING, INC.,
Defendant-Appellee.
Appeal from the United States District Court For the Eastern District of Louisiana (97-CV-2379-N) October 16, 2000 Before REAVLEY, BENAVIDES, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:*
N.J. Collins, Inc., (“NJC”) sued Pacific Leasing, Inc.,
(“Pacific”) for an alleged breach of a sale contract whereby
Pacific was to sell the tugboat FRANCES J to NJC for $700,000.
Pacific filed a counter-claim, contending NJC breached the contract
by failing to make required advance deposits. The district court
* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
1 granted partial summary judgment to Pacific upon determining that
Pacific had not modified the contract or waived the provisions
requiring advance deposits of $70,000, that NJC had not relied to
its detriment on Pacific’s actions, and that NJC breached the
contract’s advance deposit requirements by failing to make the
payments. Trial was conducted solely on the issue of damages. NJC
requested that the court instruct the jury regarding Pacific’s duty
to mitigate its damages. The district court instructed the jury on
the duty imposed on Pacific by the Uniform Commercial Code (“UCC”)
to resell the tugboat in good faith and in a commercially
reasonable manner, but the court refused to instruct the jury
separately on the duty to mitigate, reasoning that the jury
instruction given subsumed the duty to mitigate in the UCC context.
The jury returned a verdict in favor of Pacific, and the court
entered judgment awarding $210,000 in damages to Pacific. On
appeal, NJC contends that the district court made two errors: (1)
in granting partial summary judgment to Pacific on the issues of
contract breach, contract modification, and waiver and reliance,
and (2) in not separately instructing the jury on the issue of
Pacific’s duty to mitigate. We affirm the district court’s
judgment.
I. Factual Background
Pacific and NJC executed the sale contract on July 26, 1996.
2 Because the tugboat was located in Guam and NJC was located in New
Orleans, the contract required Pacific to deliver the boat from
Guam to Balboa, Panama, where NJC would pay the balance of the
contract and take possession of the boat. The terms of the
contract obligated NJC to make an advance deposit of $35,000 by
August 2; NJC failed to do so. Pacific made demands on NJC to
fulfill its obligation to pay the deposit; a draft purchase/sale
agreement sent to NJC by Pacific on August 6 maintained the August
2 deposit requirement. In the meantime, seeking to salvage the
sale and to transfer the boat to the United States before the
typhoon season, Pacific notified NJC on August 8 that the boat
would depart Guam on August 13. According to the terms of the July
26 contract and the August 6 draft purchase/sale agreement, NJC was
obligated to deposit another $35,000 in Pacific’s bank account
within three days of being notified of the intent to sail from
Guam. NJC failed to make that payment.
Pacific persisted in demanding that NJC make the required
deposits, and continued to move the boat across the Pacific in
hopes of salvaging the sale. One day prior to the arrival of the
boat in Los Angeles, Pacific informed NJC by fax that it would
allow prospective buyers to inspect the boat there.2 Pacific sold
another boat in Los Angeles that NJC had contracted to purchase and
informed NJC by fax on October 8 that it was moving the FRANCES J
2 NJC claimed to have not received the fax transmission.
3 on to Balboa, Panama.3 Having received no response from NJC after
September 23, Pacific did not contact NJC when the boat arrived in
Balboa. Instead, Pacific moved the boat through the Panama Canal
to New Orleans and sold it to an alternate buyer for the reduced
price of $527,000. NJC never received financing approval for the
sale and never made any of the deposits required by the contract.
II. Analysis
A. Contract modification and waiver
We review the grant of summary judgment de novo, employing the
same standards used by the district court. Alton Ochsner Med.
Found. v. Allendale Mut. Ins. Co., 219 F.3d 501, 504 (5th Cir.
2000).
This dispute is governed by the UCC, as adopted by Guam.
According to section 2201 of the Guam UCC, for a contract for the
sale of a good more than $500 in value to be enforceable, it must
be in writing and signed by the party against whom its enforcement
is being sought. 13 GUAM CODE ANN. § 2201(1) (2000). Section 2209
provides that a modification must also be in writing when the sale
price as modified exceeds the $500 threshold of Section 2201. Id.
§ 2209(3). The section also provides, however, that:
Although an attempt at modification or rescission does not satisfy the requirements of subdivision (2) or (3), it can operate as a waiver.... A party who has made a
3 NJC again claimed that it did not receive the fax transmission.
4 waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.
Id. § 2209(4) and (5).
NJC argues that Pacific’s performance of the contract by
moving the boat across the ocean to Balboa, despite the lack of
advance payments by NJC, in effect modified the contract to not
include the advance deposit requirements. According to the above-
quoted sections of the Guam UCC, however, such a modification was
required to be in writing.4 NJC is unable to identify any writings
that are modifications of the contract. Indeed, the only writings
of record from Pacific to NJC indicate the opposite; Pacific’s
communications demanding that the deposits be made as required by
the contract, and the purchase/sale agreement of August 6 referring
to the advance deposit requirements of the July 26 contract, all
indicate that the contract had not been modified.
NJC next argues that Pacific’s movement of the boat across the
ocean despite NJC’s nonpayment of the deposits were actions
constituting an attempted modification and were therefore a waiver
of the advance deposit requirements in the contract, according to
Guam UCC section 2209(4). Courts interpreting this section of the
UCC have reasoned that, because waiver is “the intentional
4 This is true whether the value is calculated as the value of the full contract–$700,000–or the value of the deposits affected by the alleged modification–$70,000.
5 relinquishment of a right,” waiver must be proven either by showing
that the actions were so unequivocal that they induced reliance on
the alleged waiver by the other party or the waiver must be
“clearly inferable from the circumstances.” Bank v. Truck Ins.
Exchange, 51 F.3d 736, 739 (7th Cir. 1995); see also American Suzuki
Motor Corp. v. Bill Kummer, Inc., 65 F.3d 1381, 1387 (7th Cir. 1995)
(finding that actions evidencing a waiver must be “unequivocal,”
and that a waiver can only occur if the other party “reasonably
relied” on it). The attorney for Pacific testified that he
directed the movement of the boat across the ocean to make it
available to a market before the Pacific typhoon season, but also
in hopes of salvaging Pacific’s contract with NJC. His
communications with NJC consistently noted NJC’s failure to make
the advance deposits, demanded that the payments be made, and asked
NJC to inform Pacific why the payments had not been made. These
actions did not constitute an unequivocal relinquishment of
Pacific’s right to collect the advance deposit of $70,000;
therefore, they cannot be construed as an “attempted modification”
and waiver of Pacific’s right to the advance deposits. Moreover,
NJC fails to point to any disadvantage it suffered from reliance on
Pacific’s movement of the boat across the ocean despite NJC’s
default upon the advance deposits. NJC was unable to secure
financing, so it did not incur debt in an attempt to complete the
purchase. Because NJC failed to provide proof from which a
6 reasonable trier of facts could have found an attempted
modification or detrimental reliance, we conclude that the district
court was correct in granting summary judgment to Pacific.
B. Mitigation of damages
In reviewing a trial court’s instructions to the jury, we
reverse only “[i]f the charge as a whole leaves us with substantial
and ineradicable doubt whether the jury has been properly guided in
its deliberations.” McCullough v. Beech Aircraft Corp., 587 F.2d
754, 759 (5th Cir. 1979).
The district court instructed the jury that Pacific was
obliged to give NJC reasonable notice of its intent to resell the
FRANCES J and to act in good faith and in a commercially reasonable
manner. These instructions are in accord with the seller’s duty
when reselling a good under the Guam UCC. 13 GUAM CODE ANN. §
2706(1) (2000) (“Where the resale is made in good faith and in a
commercially reasonable manner the seller may recover the
difference between the resale price and the contract price together
with any incidental damages allowed under the provisions of this
division (Section 2710), but less expenses saved in consequence of
the buyer’s breach.”). The seller’s damages in case of breach are
reduced, or mitigated, by the amount of a resale conducted in good
faith and in a commercially reasonable manner. See id. Section
2706(1) encompasses the seller’s requirement to mitigate his
7 damages under the UCC. See 5 ROBERT L. HAIG, BUSINESS & COMMERCIAL
LITIGATION IN FEDERAL COURTS § 74.8, at 704 (1998) (observing that
“[t]he[] terms [of UCC § 2-706(1)] require seller to mitigate
damages wherever possible”). NJC failed to show that Pacific could
have taken any additional mitigating action consistent with the
UCC. Therefore, we find that the jury instruction here adequately
informed the jury of Pacific’s duty to mitigate. To have
instructed the jury as to an additional mitigation duty would have
been redundant and possibly misleading. In any event, under the
circumstances of the present case, the lack of an additional
instruction on mitigation does not create a substantial and
ineradicable doubt that the jury was misled. See, e.g., Beckman
Cotton Co. v. First Nat’l Bank of Atlanta, 666 F.2d 181, 183-84 (5th
Cir. 1982) (measuring the duty to mitigate by the UCC’s commercial
reasonableness standard).
III. Conclusion
For the foregoing reasons, we AFFIRM the district court’s
grant of summary judgment in favor of Pacific and against NJC on
the issue of liability for breach of contract and fraud and AFFIRM
the district court’s final judgment awarding damages to Pacific.