Court Opinion

ID: 22404
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:55:29+00
Date Added: 2024-06-11T09:02:47.897590
License: Public Domain

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 R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.

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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.

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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.

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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.

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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

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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

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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.

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