It Takes Two to Tango: Louisiana Uniform Electronic Transactions Act Not Applicable in Maritime Contract Dispute

It Takes Two to Tango: Louisiana Uniform Electronic Transactions Act Not Applicable in Maritime Contract Dispute

By: Rachel Jeandron

Celtic Marine Corp. v. James C. Justice Cos., 760 F.3d 477 (5th Cir. 2014).

Kentucky Fuel Corp. (“KFC”) entered into spot charter parties with Celtic Marine Corp. (“Celtic Marine”) for the purpose of transporting coal by barges. James C. Justice Companies, Inc. (“Justice”) guaranteed KFC’s obligations owed to Celtic Marine under a 2011 contract in a Guarantor’s Agreement. When KFC failed to fulfill its obligations, Celtic Marine filed suit against Justice pursuant to the Guarantor’s Agreement.The three parties entered into two settlement agreements. The first settlement agreement also required a second contract (the 2012 contract) between KFC and Celtic Marine for the purpose of transporting coal. Justice guaranteed KFC’s obligations under this contract, as well.The parties entered into a second settlement agreement after KFC did not fulfill its obligations under the first settlement agreement. The terms of the second settlement agreement set forth a payment schedule of four installments totaling $2,200,000.00 from Justice and KFC to Celtic Marine. The agreement also included an acceleration clause, which allowed Celtic Marine to demand payment of the total amounts owed under the first settlement agreement and the 2012 contract, if any of the four payments were late.All four payments were late. In a largely one-sided email exchange with Justice, Celtic Marine repeatedly demanded payment of the past due fourth installment. In one such email, to which Justice did not respond, Celtic Marine asked for the final payment “to settle this for once and all.”Upon receipt of the fourth payment six weeks after its due date, Celtic Marine moved for summary judgment to enforce the acceleration clause. The district court granted Celtic Marine’s motion for summary judgment and motion to reopen the case, both of which Justice appealed.The Fifth Circuit dismissed Justice’s appeal of the Rule 60(b)(6) order for lack of jurisdiction because the order was simply procedural and thus not appealable pursuant to § 1292(a)(3). Regarding the substantive issues, the Fifth Circuit considered (1) whether the parties agreed to amend the payment deadlines by electronic means, which Justice maintained; and (2) whether Celtic Marine waived its right to enforce the acceleration clause by accepting the late payments from Justice.Applying Louisiana law pursuant to the settlement agreement’s choice of law provision, the Fifth Circuit held that the email exchange between Celtic Marine and Justice did not modify the payment schedule. Where applicable, the Louisiana Uniform Electronic Transactions Act (LUETA) allows an email to satisfy the writing requirement necessary for a compromise, pursuant to Louisiana Civil Code Article 3072. However, LUETA “applies only where each party ‘has agreed to conduct transactions by electronic means.’”Here, contrary to Justice’s contentions, there was no evidence that the parties agreed to conduct transactions by electronic means. In the past, the parties had only used typed contracts, physically signed by party representatives—not email communication—to enter into contracts, settlement agreements, and guaranties. Moreover, the plain language of the email exchange did not demonstrate intent to amend the agreement.In addition, the Court held that Celtic Marine did not waive its right to enforce the acceleration clause. Pursuant to the Standard Brewing doctrine, an obligee may waive his right to enforce an acceleration clause by customarily accepting late payments from his obligor. But as the Court noted, the doctrine “applies only if the obligor is ready to pay but delayed only because of the impression created by the obligee that a late payment is acceptable.” Justice failed to offer summary judgment evidence that it was “ready to pay” when the payments were due or that the late payments were acceptable. Accordingly, the Fifth Circuit rejected Justice’s contention that Celtic Marine waived its right to enforce the acceleration clause.