IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-41063

REGIONS EQUIPMENT FINANCE CORPORATION,

Plaintiff-Appellee

v.

AT 2400, Official Number 530775, her engines, tackle, furniture, apparel,

appurtenances, etc., in rem; AT 1400, Official Number 279236, her engines,

tackle, furniture, apparel, appurtenances, etc., in rem; ACCU III, Official

Number 514466, her engines, tackle, furniture, apparel, appurtenances, etc., in

rem; AT 3010, Official Number 1080340, her engines, tackle, furniture, apparel,

appurtenances, etc., in rem; AT 3014, Official Number 1086811, her engines,

tackle,furniture, apparel, appurtenances, etc., in rem; AT 3008, Official Number

1080268, her engines, tackle, furniture, apparel, appurtenances, etc., in rem;

ACCU VII, Official Number 520332, her engines, tackle, furniture, apparel,

appurtenances, etc., in rem; AT 1401, Official Number 295706, her engines,

tackle, furniture, apparel, appurtenances, etc., in rem; ACCU XI, Official

Number 536661, her engines, tackle, furniture, apparel, appurtenances, etc., in

rem; ACCUMARINE TRANSPORTATION, LP, in personam,

Defendants-Appellants

Appeal from the United States District Court 

for the Eastern District of Texas

Before WIENER, BENAVIDES, and STEWART, Circuit Judges.

WIENER, Circuit Judge:

Plaintiff-Appellee Regions Equipment Finance Corporation (REFCO) sued

Defendant-Appellant Accumarine Transportation, L.P. (“Accumarine”), in

United States Court of Appeals

Fifth Circuit

F I L E D

April 27, 2011

Lyle W. Cayce

Clerk
No. 10-41063

2

personam, and also sued a number of Accumarine’s vessels, DefendantsAppellants AT 2400, AT 1400, ACCU III, AT 3010, ACCU VII, ACCU XI, in rem,

for breach of contract. The suit is based on Accumarine’s failure to make

payments due on four promissory notes held by REFCO and on Accumarine’s

default on loan agreements to cover those notes. Accumarine does not dispute

REFCO’s allegations of breach of contract but asserts defenses of promissory and

equitable estoppel. The district court granted REFCO’s motion for summary

judgment, determining that Accumarine’s defenses are not assertable under

Alabama law and that there remains no genuine issue of material fact that

Accumarine has breached its contract with REFCO. We affirm on the basis that

Accumarine may not assertits defenses pursuantto the specific provisions ofthe

contract, under either maritime law or Alabama law.

I. FACTS & PROCEEDINGS

A. Facts

REFCO is an Alabama corporation that entered into a loan agreement

with Accumarine in 2007 on some of Accumarine’s vessels. The agreement was

amended three times, with each of the subsequent agreements supported by a

separate promissory note requiring monthly payments of equal amounts and a

final balloon installment of principal and interest due in 2012. The Third

Amended Loan Agreement (the “Agreement”) was secured by a First Preferred

Fleet Mortgage (the “Preferred Mortgage”), which encumbered four of

Accumarine’s vessels for which the loan had been granted.

Accumarine has not made a principal payment under the Agreement since

December 2008 and has not made an interest payment since June 2009. At the

time that Accumarine defaulted under the Agreement, some of the Agreement’s

guarantors were in default under a separate loan with REFCO (the “Dunhill

Note”).
No. 10-41063

3

Accumarine alleges—and REFCO disputes—that the guarantors sought

to negotiate the Dunhill Note and Accumarine’s debts simultaneously with

REFCO, but that REFCO refused to do so and instead required the guarantors

to negotiate the Dunhill Note first. Accumarine claims that REFCO promised:

(1) REFCO would not take action on Accumarine’s debt to REFCO if the Dunhill

Note was resolved first, and (2) REFCO would notify Accumarine before taking

any action on Accumarine’s loan. Accumarine also asserts that it relied on these

oral promises when it postponed efforts to find an investor to whom Accumarine

could sell the Preferred Mortgage.

Accumarine does not dispute that it has (1) failed to pay the monthly

installments as scheduled, (2) not provided the required financial statements,

and (3) incurred competing liens—each of which constitutes an act of default

under the Agreement.

B. Proceedings

On April 14, 2010, REFCO filed suit against Accumarine, in personam,

and against the vessels encumbered by the Preferred Mortgage, in rem. REFCO

filed a motion for summary judgment, contending that it had established that

Accumarine was in default under the Agreement and that the Preferred

Mortgage gave rise to a preferred mortgage lien against Accumarine’s vessels in

the amount of the indebtedness. In response, Accumarine contended that

REFCO was estopped from enforcing the Preferred Mortgage and collecting the

notes under principles of promissory and equitable estoppel, based on the alleged

oral promises made by REFCO to Accumarine’s guarantors.

The district court entered an order granting REFCO’s motion for summary

judgment, ruling that Alabama law applied to the contractual dispute and that

Alabama’s Statute of Frauds barred evidence of REFCO’s alleged oral promises

to Accumarine, which were the only bases of Accumarine’s affirmative defenses.
No. 10-41063

1 United States v. Caremark, Inc., 634 F.3d 808, 814 (5th Cir. 2011) (citation omitted).

2 FED. R. CIV. P. 56(a).

3

(capitalization and emphasis in original).

4

Accumarine timely filed a notice of appeal, challenging the district court’s

summary judgment disposition.

II. ANALYSIS

A. Standard of Review

We review a district court’s summary judgment disposition de novo,

applying the same legal standards as the district court.1 The district court

appropriately grants a motion for summary judgment “if the movant shows that

there is no genuine dispute as to any material fact and the movant is entitled to

judgment as a matter of law.”2

B. The Agreement Preempts the Conflicts-of-Law Issue

At the outset, we consider the Agreement’s “ENTIRE AGREEMENT”

clause relating to amendments, which states in full:

Section 9.10 ENTIRE AGREEMENT: AMENDMENT. THIS

AGREEMENT AND THE OTHER LOAN DOCUMENTS

REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE

AGREEMENT AMONG THE PARTIES HERETO AND

SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,

AGREEMENTS, REPRESENTATIONS, AND

UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,

RELATING TO THE SUBJECT MATTER HEREOF AND MAY

NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF

PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL

AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO.

THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES

HERETO. The provisions of this Agreement and the other Loan

Documents to which Borrower or any Guarantor is a party may be

amended or waived only by an instrument in writing signed by the

parties hereto.3

The district court acknowledged this clause only when it applied Alabama law,
No. 10-41063

4 Martinsville Nylon Employees Council Corp. v. N.L.R.B., 969 F.2d 1263, 1267 (D.C.

Cir. 1992) (quoting U.C.C. § 2-209(2)) (internal citations omitted).

5

Id. See also id.:

The drawback ofthe common law rule is that it denies to all contracting parties,

no matter how sophisticated, the ability to decide for themselves whether to

restrict the manner in which their agreement may be modified. The UCC rule,

on the other hand, enables those parties who mutually value certainty in their

relations to have it; under the UCC rule, moreover, no one has to agree to rule

out oral modifications nor, having so agreed, are the parties precluded from

5

explaining that even if Accumarine could assert the defenses of promissory and

equitable estoppel here, those defenses would fail under Alabama’s reasonable

reliance test because “Accumarine’s reliance on [REFCO’s] promises could not

be reasonable, in light of [this clause of the Agreement].” Before we even reach

the conflict-of-laws issue, however, we read this clause as specifically controlling

the discrete issue on appeal, i.e., whether Accumarine may assert estoppel

defenses to breach of contract based on alleged oral amendment of the

Agreement.

Accumarine contends that the “no oral modification” clause is not

enforceable because “contracting parties may undo their agreements.” Although

this proposition was true under “traditional common law,” as Accumarine duly

cites, today this common law rule is not always followed. The D.C. Circuit has

noted that “[i]n modern times the common law rule has been discarded in broad

areas,” including by the Uniform Commercial Code (UCC).4 The D.C. Circuit

further explained, in the context of a collective bargaining agreement, that the

UCC rule should apply instead of the traditional common law rule when: (1) the

parties are “sophisticated,” (2) the agreement is the “product of substantive

negotiations between intensely interested parties, usually advised by specialized

counsel,” and (3) there is no “fear that either party may have missed the fine

print or somehow been taken advantage of in agreeing thatthere shall be no oral

modifications.”5 Notably, the D.C. Circuit ultimately concluded:
No. 10-41063

executing a mutually agreeable modification.

6

Id. at 1268 (emphasis added).

7 See Kossick v. United Fruit Co., 365 U.S. 731, 734 n.4 (1961).

8 See 46 U.S.C. § 31321 (“A bill of sale, conveyance, mortgage, assignment, or related

instrument, whenever made . . . must be filed with the Secretary to be valid . . . .”).

6

We need notfinally choose today between the common law and UCC

rules concerning no-oral-modification clauses, however, because the

[agreement] before us also contains an “entire agreement” clause.

Whatever the ultimate merits ofthe common law rule denying effect

to the no-oral-modification clause, by including the entire agreement

clause the parties here made clear beyond doubt their intention not

to be bound to any informal arrangement to which they might

voluntarily adhere during the term of their [agreement]. In effect,

each told the other: “If you want anything else, you’ll have to get it

in writing,” and to this both agreed.6

Here, the “entire agreement” clause itself includes the “no oral

modification” clause, which provides that the Agreement “may be amended or

waived only by an instrument in writing signed by the parties hereto.” In

addition, there are two reiterations: (1) “THIS AGREEMENT . . . MAY NOT BE

CONTRADICTED OR VARIED BY EVIDENCE OF . . . SUBSEQUENT ORAL

AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO” and

(2) “THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES

HERETO.” There is no doubt about the parties’ intention not to be bound by

future oral promises purporting to amend the Agreement.

First, under existing maritime law, there is not a clear answer to whether

this combination “entire agreement” and “no oral modification” clause is

necessarily unenforceable. Itis true that maritime law allows oral modifications

for maritime employment contracts, which may be valid even if made orally in

their entirety.7 But, without exception, a preferred ship mortgage contract, like

the one in the instant case, must be in writing to be valid.8 Accordingly, the D.C.
No. 10-41063

9 See Pavco Indus. Inc. v. First Nat’l Bank of Mobile, 534 So. 2d 572, 576 (Ala. 1988):

[Plaintiff borrowers] argue that [the defendant bank’s] assurances became part

of the contract and that it was therefore a breach of contract to fail to comply

with those assurances. The fatal flaw in this argument, however, is that the

note included the following provision: “This agreement shall be changed only by

an agreement in writing signed by the party against whom enforcement of any

waiver, change, modification, or discharge is sought.” Thus, there can be no oral

modification of the written note and security agreement.

(citing Williams v. Ford Motor Credit Co., 435 So. 2d 66 (Ala. 1983)).

10 See Ex parte Conference America, Inc., 713 So. 2d 953, 956 (Ala. 1998). See also Homes

of Legend, Inc. v. McCollough, 776 So. 2d 741, 746 (Ala. 2000) (“Under general Alabama rules

of contract interpretation, the intent of the contracting parties is discerned from the whole of

the contract.”).

7

Circuit’s criteria apply more fittingly in the ship mortgage context than in the

maritime employment context: Both parties here are sophisticated companies;

the Agreement and Preferred Mortgage were the product of substantial

negotiations, with the negotiated loans aggregating more than $20 million; and

there is no fear that Accumarine may have missed the fine print or somehow

been taken advantage of in agreeing that the Agreement and Preferred

Mortgage could not be modified orally.

Second, under Alabama law,the Agreement’s “no oral modification” clause

would be enforceable. The Alabama Supreme Court has enforced such clauses

in the past.9 The Alabama Supreme Court has also enforced “entire agreement”

clauses by applying “[g]eneral canons of contract construction” and concluding

that “because [the parties] expressly stated that the [contract] constitutes the

‘entire agreement’ between them, we will enforce the plain meaning of those

words by treating the [contract] as the entire agreement between the parties.”10

As this clause is enforceable under both maritime and Alabama law, we

need not decide the choice-of-law issue. Rather, we hold that the Agreement’s

“entire agreement” clause defeats Accumarine’s defenses of promissory and

equitable estoppel.
No. 10-41063

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III. CONCLUSION

For the foregoing reasons, we affirm the district court’s order granting

summary judgment in favor of REFCO. 

AFFIRMED.