Court Opinion

ID: 859155
Source: CourtListenerOpinion
Date Created: 2013-04-26 15:19:41.031524+00
Date Added: 2024-06-11T13:11:21.395445
License: Public Domain

United States Court of Appeals
                             For the Eighth Circuit
                         ___________________________

                                 No. 12-2482
                         ___________________________

                                   David Longaker

                        lllllllllllllllllllll Plaintiff - Appellant

                                            v.

                         Boston Scientific Corporation and
                            Guidant Sales Corporation

                       lllllllllllllllllllll Defendants - Appellees
                                        ____________

                     Appeal from United States District Court
                    for the District of Minnesota - Minneapolis
                                   ____________

                           Submitted: December 11, 2012
                               Filed: April 26, 2013
                                  ____________

Before WOLLMAN, BYE, and BENTON, Circuit Judges.
                          ____________

WOLLMAN, Circuit Judge.

      David Longaker appeals the district court’s1 dismissal of his breach of contract
and retaliation claims against Boston Scientific Corporation and Guidant Sales

      1
       The Honorable Ann D. Montgomery, United States District Judge for the
District of Minnesota.
Corporation (collectively, Boston Scientific).2 We affirm.

                                    I. Background

       In October 2009, Longaker entered into a three-year Employment Agreement
(Agreement) with Boston Scientific to work as a sales representative. Pursuant to the
Agreement, Boston Scientific paid Longaker an annual base salary and an annual base
commission, an amount below which Longaker’s commissions would not drop. The
Agreement guaranteed Longaker these payments unless he quit or was terminated for
certain reasons. The Agreement provided that Minnesota law governed any disputes
relating to the contract and identified Minnesota as the forum for the resolution of
such disputes. While employed by Boston Scientific, Longaker lived and worked
exclusively in California.

       On September 30, 2010, Longaker filed for Chapter 7 bankruptcy. On October
1, 2010, Boston Scientific terminated Longaker’s employment. In February 2011,
Longaker filed suit against Boston Scientific in California state court, asserting
claims for breach of contract, breach of the covenant of good faith and fair dealing,
and retaliatory discharge in violation of California law. Boston Scientific removed
the case to the United States District Court for the Northern District of California and
filed a motion to dismiss for improper venue, which was granted based on the
Agreement’s forum selection clause.

       In January 2012, Longaker filed suit in the United States District Court for the
District of Minnesota, reasserting his breach of contract claim and adding a claim for
retaliation in violation of the Minnesota Human Rights Act (MHRA). Boston
Scientific moved to dismiss Longaker’s complaint under Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6), arguing that Longaker lacked standing to bring

      2
          Guidant Sales Corporation is a wholly-owned subsidiary of Boston Scientific.

                                          -2-
either claim, that judicial estoppel barred the breach of contract claim, and that the
statute of limitations barred the MHRA retaliation claim.

      Near the beginning of the hearing on the motion to dismiss, the district court
asked whether Longaker’s MHRA retaliation claim remained viable and whether
Longaker continued to assert it. Longaker’s attorney replied:

      What I’m proposing is that I could amend the complaint, which seems
      consistent with what defendants want, I could amend the complaint to
      bring the retaliation cause of action under California law.

The district court explained that it was unlikely that Boston Scientific would consent
to Longaker amending his complaint at that juncture of the case.

       Longaker’s attorney and the district court resumed this discussion near the end
of the hearing:

      Attorney: Okay. So--so, again, if--if there is a ruling that [Longaker]
      cannot pursue his claim under the MHRA, I think it’s extreme to
      conclude that he can’t pursue his retaliation claim under any body of
      law, so I would argue that if Minnesota law doesn’t govern, then
      California law should.

      District court: But my task will be to just determine what’s in the
      complaint and whether there’s a viable MHRA claim?

      Attorney: And again, what I would seek leave to do if that happens is
      to amend the complaint to plead a claim under California state law.

The district court responded that if Longaker’s attorney was to seek leave to amend,
the local rules required that he submit an amended complaint and show how the

                                         -3-
amended complaint cured the initial complaint’s defects. Longaker did not file a
motion to amend.

       Thereafter, the district court found that Longaker lacked standing to assert his
breach of contract claim because his interest in the guaranteed payments, although
contingent at the time he filed for bankruptcy, was part of the bankruptcy estate. The
district court also dismissed Longaker’s MHRA retaliation claim, finding that he
lacked standing to assert a claim under the MHRA and that the statute of limitations
barred the claim. On appeal, Longaker argues that the district court erred in holding
that he lacked standing to assert his breach of contract claim and that it abused its
discretion in denying him leave to amend his complaint.

                                   II. Discussion

A. Breach of Contract Claim

       Longaker argues that the district court erred in holding that he lacked standing
to assert his breach of contract claim. We review de novo the district court’s grant of
a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1). Great
Rivers Habitat Alliance v. Fed. Emergency Mgmt. Agency, 615 F.3d 985, 988 (8th
Cir. 2010).

       Title 11 U.S.C. § 541 sets forth the property that comprises the bankruptcy
estate. Section 541(a) provides in relevant part that the bankruptcy estate includes,
with exceptions not applicable here: “(1) . . . all legal or equitable interests of the
debtor in property as of the commencement of the case . . . [and] (6) [p]roceeds,
product, offspring, rents, or profits of or from property of the estate, except such as
are earnings from services performed by an individual debtor after the
commencement of the case.” 11 U.S.C. § 541(a)(1) and (a)(6). Section 541's scope
is broad, and it encompasses a debtor’s contingent interests under a pre-petition

                                         -4-
contract. See Stoebner v. Wick (In re Wick), 276 F.3d 412, 415 (8th Cir. 2002)
(debtor’s interest in stock options under pre-petition contract were part of bankruptcy
estate even though the options were unvested and contingent on debtor’s continued
employment); Rau v. Ryerson (In re Ryerson), 739 F.2d 1423, 1425 (9th Cir. 1984)
(debtor’s interest in “contract value” payment was part of bankruptcy estate even
though the payment was “contingent at the time of filing and not payable” until the
debtor was terminated). Under the Agreement, Longaker held a contingent
contractual interest in the guaranteed payments. This interest would vest if Boston
Scientific terminated him for a reason other than those provided in the Agreement.
Relying on Ryerson and other cases, the district court held that this contingent
interest became part of the bankruptcy estate at the time Longaker filed his
bankruptcy petition.

       Longaker does not raise a serious objection to the district court’s analysis on
this issue. Instead, he argues that the guaranteed payments constitute post-petition
earnings for services, which are excluded from the bankruptcy estate under
§ 541(a)(6).3 Specifically, Longaker contends that, had Boston Scientific continued
his employment, the guaranteed payments would have been post-petition earnings
from services. Boston Scientific argues that § 541(a)(6)’s exception is inapplicable
because Longaker did not perform any post-petition services.

      A post-petition payment on a pre-petition contractual interest belongs to the
bankruptcy estate if the payment is neither attributable to nor conditioned upon the
debtor’s post-petition services. See Parsons v. Union Planters Bank (In re Parsons),
280 F.3d 1185, 1188 (8th Cir. 2002) (rejecting debtor’s argument that § 541(a)(6)
excluded debtor’s interest in real estate commissions received post-petition when
debtor’s right to commissions was attributable to debtor’s pre-petition services); In

      3
      Although Boston Scientific contends that Longaker waived his argument
concerning § 541(a)(6), we find that Longaker preserved the argument for appeal.

                                         -5-
re LaSpina, 304 B.R. 814, 820 (Bankr. S.D. Ohio 2004) (severance pay that debtor
negotiated one week prior to filing for bankruptcy was not compensation for services
performed post-petition and therefore was property of the bankruptcy estate).
Relatedly, if the post-petition payment is attributable to the debtor’s pre- and post-
petition services, the payment is divided, pro rata. That is, the portion of the payment
attributable to the debtor’s pre-petition services remains property of the bankruptcy
estate while the portion attributable to post-petition services is excluded from the
estate under § 541(a)(6). See Wick, 276 F.3d at 416-17 (limiting bankruptcy estate’s
interest in stock options to the pro rata portion of the options related to debtor’s pre-
petition services when terms of stock option agreement required debtor to work for
one year and, at the time debtor filed for bankruptcy, she had only worked four
months); Ryerson, 739 F.2d at 1425-26 (making pro rata distribution of “contract
value” payment where amount of payment had increased because of debtor’s post-
petition services).

       The exception set forth in § 541(a)(6) does not apply to Longaker’s claim for
the guaranteed payments because he did not perform any post-petition services. Even
assuming that Boston Scientific must pay the guaranteed payments, those amounts
are neither attributable to nor conditioned on Longaker’s post-petition services. We
find the guaranteed payments analogous to the severance payment in LaSpina, where
the court held that the payments, having no relation to the debtors’ post-petition
services, were sufficiently rooted in the debtors’ pre-petition past and were therefore
part of the debtor’s bankruptcy estate. LaSpina, 304 B.R. at 820. Because the
guaranteed payments, if due at all, are property of the bankruptcy estate, Longaker
lacked standing to assert his breach of contract claim.4 See Prochnow v. Apex Props.,

      4
       The dissent asserts that “Boston Scientific prevented Longaker from actually
providing post-petition services by firing him.” Post at 14. Under the “prevention
doctrine,” “if the occurrence of an event which triggers the discharge of a promissor’s
obligation is caused by the promissor’s culpable misconduct, the legal duty will not
be discharged.” Stevenson v. Stevenson Assocs. (In re Stevenson Assocs., Inc.), 777

                                          -6-
Inc. (In re Prochnow), 467 B.R. 656, 665 (C.D. Ill. 2012) (debtor lacked standing to
pursue real estate commission that was property of the bankruptcy estate).

       Longaker’s argument that had Boston Scientific not terminated him, the
payments he received under the Agreement would have been future earnings falling
within § 541(a)(6) does not require a different result. Courts construe § 541(a)(6)’s
earning exception narrowly and apply it only to payments a debtor receives post-
petition if the money is attributable to post-petition services actually rendered by the
debtor. See Stinnett v. Laplante (In re Stinnett), 465 F.3d 309, 313 (7th Cir. 2006)
(“[C]ase law provides that the [earnings exception] should be interpreted ‘extremely
narrowly’ and ‘excepts only earnings from services actually performed by an
individual debtor.’” (quoting In re Prince, 85 F.3d 314, 323 (7th Cir. 1996))); In re
A’Hearn, No. 11-00615, 2011 WL 4704235, at *6 (Bankr. N.D. Iowa Oct. 4, 2011)
(“Funds are not subject to the [earnings exception] unless they are paid as the result
of actual services performed postpetition, or are conditioned upon the performance

F.2d 415, 419 (8th Cir. 1985). In Stevenson, the alleged misconduct included “a rash
course of business ventures,” “improperly divert[ing] Associates’ resources,”
“misus[ing] Associates’ stable credit record to secure additional financing,”
“recklessly threatening Associates’ solvency,” and making the stock “worthless.” Id.
at 420. Here, Longaker alleges that Boston Scientific fired him for a reason other
than those provided in the Agreement. Merely terminating an employee’s contract
does not amount to misconduct under the prevention doctrine. Cf. id. at 419-20,
citing Christensen v. Felton, 322 F.2d 323, 325-26 (9th Cir. 1963) (invoking the
prevention doctrine where evidence showed “that the purchaser had ‘systematically
looted the assets’ of the purchased corporation, and that at the time of the transaction
the purchased corporation’s assets were more than twice its liabilities, but upon
bankruptcy one year later it was ‘hopelessly insolvent’”). Moreover, Boston
Scientific is not relying on the “non-occurrence” of Longaker’s post-petition services
“to defeat [its] liability.” See post at 14. Assuming it fired him for a reason not
provided in the contract, and must pay the guaranteed payments, Boston Scientific
would not retain those amounts — they would go to the bankruptcy estate.

                                          -7-
of continued services postpetition.”). Accordingly, Longaker’s hypothetical
argument does not render § 541(a)(6) applicable.

B.    Retaliation Claim

       Longaker admits that he never filed a written request to amend his complaint.
Instead, he argues that he requested leave to amend his complaint during the motion
to dismiss hearing and that the district court abused its discretion by not allowing him
to do so. A review of the hearing transcript belies this argument. Although
Longaker’s attorney discussed the possibility of amending his complaint, he indicated
at the end of the hearing that he would seek leave to do so only if the district court
dismissed the MHRA claim. The district court then explained that if “it’s part of your
request to seek leave to amend,” the local rules required Longaker to submit an
amended complaint and show how the amended complaint would cure the initial
complaint’s defects. Longaker’s attorney’s response was that this was “probably a
bridge that is not to be crossed today.” Because Longaker never requested leave to
amend his complaint, the district court cannot be faulted for failing to allow him to
do so. See Steele v. City of Bemidji, 257 F.3d 902, 905 (8th Cir. 2001) (explaining
that a party “cannot fault the District Court for failing to grant him leave to amend
when he did not seek permission to do so”).

                                   III. Conclusion

      The judgment is affirmed.

BYE, Circuit Judge, concurring in part and dissenting in part.

      I readily agree with the majority the district court properly denied David
Longaker leave to amend his complaint. But I cannot join the majority’s conclusion
the remaining two years of salary and commissions in Longaker’s employment

                                          -8-
contract belong to the bankruptcy estate, not Longaker. The majority, like the district
court, has confused the issue of Longaker’s standing to bring his breach of contract
claim with the validity of the claim itself. I believe Longaker has standing to bring
his claim. Furthermore, because I believe the salary and commissions are earnings
from post-petition services and the majority’s opinion fails to properly balance the
dual purposes of 11 U.S.C. § 541, I must respectfully dissent.

        The district court dismissed David Longaker’s complaint for lack of standing.
Fed. R. Civ. P. 12(b)(1); see Faibisch v. Univ. of Minn., 304 F.3d 797, 801 (8th Cir.
2002) (“[I]f a plaintiff lacks standing, the district court has no subject matter
jurisdiction.”). “[T]he doctrine of standing serves to identify those disputes which
are appropriately resolved through the judicial process.” Whitmore v. Arkansas, 495
U.S. 149, 155 (1990). A plaintiff must present a “case or controversy” within the
meaning of Article III of the United States Constitution to have standing. Id. This
“irreducible constitutional minimum” requires a plaintiff to show an “injury in fact”
that is “fairly . . . trace[able] to the challenged action of the defendant” and likely to
be “redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61 (1992) (quotations and citations omitted).

       Whether a plaintiff has suffered an injury “often turns on the nature and source
of the claim asserted.” Warth v. Seldin, 422 U.S. 490, 500 (1975); see Int’l Primate
Prot. League v. Adm’rs of Tulane Educ. Fund, 500 U.S. 72, 77 (1991). Accordingly,
the standing inquiry, to some degree, “tracks [the plaintiff’s] cause of action.” Braden
v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009); see William A. Fletcher,
The Structure of Standing, 98 Yale L.J. 221, 234 (1988) (characterizing the standing
inquiry as “a jurisdictional question[] involving a preliminary look at the merits—a
sort of nibble at the apple before plaintiff takes a real bite”). The Supreme Court has
warned that courts should not conflate standing with the merits of a plaintiff’s claim.
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89-90 (1998); see also Braden,
588 F.3d at 591 (“It is crucial, however, not to conflate Article III’s requirement of

                                           -9-
injury in fact with a plaintiff’s potential causes of action, for the concepts are not
coextensive.”); 2 Milton I. Shadur & Mary P. Squires, Moore’s Federal Practice
§ 12.30[1] (3d ed. 2012). “[T]he absence of a valid (as opposed to arguable) cause
of action does not implicate subject-matter jurisdiction.” Steel Co., 523 U.S. at 89.
Instead, whether the cause of action is valid is a merits issue. Jurisdiction is defeated
only if “the claim is ‘so insubstantial, implausible, foreclosed by prior decisions of
this Court, or otherwise completely devoid of merit as not to involve a federal
controversy.’” Id. (quoting Oneida Indian Nation v. Cnty. of Oneida, 414 U.S. 661,
666 (1974)).

       The majority, like the district court, erroneously conflates standing with the
validity of Longaker’s cause of action. Longaker’s standing turns on the injury he
alleges. See Braden, 588 F.3d at 592. The validity of his claim—in other words,
whether he will ultimately succeed in obtaining relief—turns on the cause of action
he brings. See id. Longaker has stated a personal injury because Boston Scientific
allegedly breached his employment contract and denied Longaker salary and
commissions that are rightly his. That injury is traceable to Boston Scientific’s
conduct because Boston Scientific breached the contract. And the court can redress
Longaker’s injury by issuing a favorable judgment. See Lujan, 504 U.S. at 560.
Longaker has thus presented a “case or controversy.” The majority opinion
concluding otherwise is incorrect.

       Having established Longaker has standing, I now endeavor to demonstrate
Longaker presents a valid cause of action and is entitled to relief. As usual, the task
of determining the meaning of a statute begins with the text of the statute itself.
United States v. Ron Pair Enters., 489 U.S. 235, 241 (1989); Landreth Timber Co. v.
Landreth, 471 U.S. 681, 685 (1985). The commencement of a bankruptcy case
creates an estate. 11 U.S.C. § 541(a). The estate includes “all legal or equitable
interests of the debtor in property as of the commencement of the case.” Id.
§ 541(a)(1). The scope of the estate is broad. See Owen v. Owen, 500 U.S. 305, 308

                                          -10-
(1991). It includes “even future, non-possessory, contingent, speculative, and
derivative interests.” In re Carlton, 309 B.R. 67, 71 (Bankr. S.D. Fla. 2004). Broad
as it may be, the estate does not include “earnings from services performed by an
individual debtor after the commencement of the case.” 11 U.S.C. § 541(a)(6).

       Section 541(a)(1) and § 541(a)(6) illustrate the dual purposes of § 541. First,
it gives creditors full availment of the debtor’s non-exempt assets to pay off the
creditors’ claims against the debtor to the maximum extent possible. Segal v.
Rochelle, 382 U.S. 375, 379 (1966). It accomplishes this purpose by defining the
estate broadly and designating that proceeds from or profits of estate property are
likewise part of the estate. 11 U.S.C. § 541(a)(6). Second, it allows the debtor to
make a “fresh start” by accumulating new wealth free and clear of the reach of his or
her creditors. Id. It accomplishes this purpose by using the petition date to clearly
demarcate the line between the assets of the estate and the assets of the debtor, or, in
other words, the right of creditors to be repaid and the right of the debtor to begin
anew. See Andrews v. Riggs Nat’l Bank (In re Andrews), 80 F.3d 906, 909-10 (4th
Cir. 1996). Pre-petition assets are rooted in the debtor’s pre-petition activities and
belong to the estate. Segal, 382 U.S. at 380. Post-petition assets flow from the
debtor’s post-petition activities; they belong to the debtor. Id. Applying these
principles to the present case, if Longaker’s future salary and commissions are rooted
in his pre-petition activities, those assets belong to the estate. If the future salary and
commissions are rooted in his post-petition activities, those assets are Longaker’s to
keep.

      The characterization of activities as “pre-petition” or “post-petition” is often
complicated. Many pre-petition interests are contingent on the debtor’s performance
of post-petition services. In such a case, the extent of the estate’s interest in an asset
cannot be greater than the interest the debtor holds in the asset at the petition date.
Drews v. Vote (In re Vote), 276 F.3d 1024, 1026 (8th Cir. 2002) (opinion of
Wollman, J.) (“[D]espite the broad scope of § 541, it ‘is not intended to expend [sic]

                                           -11-
the debtor’s rights against others more than they exist at the commencement of the
case.’” (quoting S. Rep. 95-989, at 82 (1978), reprinted in 1978 U.S.C.C.A.N. 5787,
5868)). Therefore, the estate’s share of an asset contingent on post-petition services
cannot exceed the extent of the asset attributable to the pre-petition services of the
debtor. See Prochnow v. Apex Props., Inc. (In re Prochnow), 467 B.R. 656, 663-64
(C.D. Ill. 2012) (holding commissions from pre-petition services are part of the
bankruptcy estate, but commissions from post-petition services are not); Larson v.
Cameron (In re Larson), 147 B.R. 39, 44 (Bankr. D. N.D. 1992) (holding portion of
stock options which depends on performance of post-petition services are not estate
property).

       In the instant matter, the majority concludes Longaker’s right to future salary
and commissions is a contingent interest that became part of the bankruptcy estate
when Longaker filed his petition. Ante at 5; see Stoebner v. Wick (In re Wick), 276
F.3d 412, 415 (8th Cir. 2002); Rau v. Ryerson (In re Ryerson), 739 F.2d 1423, 1425
(9th Cir. 1984). Upon close reading, Wick and Ryerson do not support the majority’s
classification of Longaker’s interest. In Wick, a Chapter 7 debtor had stock options
which entitled her to a 24.5% ownership stake in a company. The interest was
contingent on her continued employment for one year following the signing of the
stock option. At the time she filed for Chapter 7, Wick had been employed by the
company for four months. We recognized the value of the stock options was due in
part to the post-petition work Wick performed to complete the vesting period, and
Wick should “receive[] the benefit of her post-petition labor, as mandated by 11
U.S.C. § 541(a)(6).” Wick, 276 F.3d at 417. The same is true in Longaker’s case.
The second and third years of his employment agreement compensate him for labor
performed post-petition. He should get the benefit of that labor.

       In Ryerson, a manager at an insurance company signed a contract which
entitled him to termination payments of a certain figure, multiplied by his number of
years of service as a manager. One year of service was a condition precedent to

                                        -12-
eligibility. When he filed his Chapter 7 petition, Ryerson had already served four
years, and was thus qualified to receive payments. Ryerson argued the payments
belonged to him because at the time he filed his petition, he had not yet been
terminated, and therefore had no interest in the termination payments. The Ninth
Circuit rejected his argument and held the termination payments were estate property.
Ryerson is of little help. There, the only post-petition “service” Ryerson was required
to perform was getting fired. He had already performed the work that entitled him to
the benefit. Booth v. Vaughan (In re Booth), 260 B.R. 281, 289 (B.A.P. 6th Cir.
2001) (“[T]he payment in Ryerson was grounded in a prepetition contract and was
based on the debtor’s prepetition services.”). Here, by contrast, Longaker had not yet
performed any of the work that entitled him to the salary and commissions the second
and third years of the employment agreement provided him. The termination
payments in Ryerson are, in short, more “sufficiently rooted in the pre-bankruptcy
past” than Longaker’s post-petition, yet-to-be-performed job activities. Segal, 382
U.S. at 380. Merely designating Longaker’s interest as contingent and lumping pre-
and post-petition services together not only strays from our prior recognition that
contingent interests are estate property only to the extent they are attributable to the
debtor’s pre-petition services, but also inappropriately advances the creditor’s interest
in repayment over the debtor’s interest in starting over unsaddled by debt. If
Longaker’s employment contract had been for twenty years rather than three years,
the majority’s definition would direct the remaining nineteen years of salary and
commissions to the estate. This is hardly the “fresh start” § 541 intends.

       The majority nevertheless concludes that even if § 541(a)(6)’s reservation of
earnings from post-petition services theoretically applied to the instant matter,
Longaker still would not be entitled to his salary and commissions because he did not
actually perform any post-petition services. Ante at 6; see In re A’Hearn, No.
11-00615, 2011 WL 4704235, at *6 (Bankr. N.D. Iowa Oct. 4, 2011). This cannot
be correct. The doctrine of prevention provides “where a party to a contract is the
cause of the failure of performance of the obligation due him or her, that party cannot

                                          -13-
in any way take advantage of that failure.” 13 Richard A. Lord, Williston on
Contracts § 39:3 (4th ed. 2000); see La Societe Generale Immobiliere v. Minneapolis
Cmty. Dev. Agency, 44 F.3d 629, 638 (8th Cir. 1994) (quoting Zobel & Dahl Constr.
v. Crotty, 356 N.W.2d 42, 45 (Minn. 1984)). We have recognized without ambiguity
the prevention doctrine applies in bankruptcy cases. Stevenson v. Stevenson Assocs.
(In re Stevenson Assocs.), 777 F.2d 415, 419-20 (8th Cir. 1985). The rationale
behind the doctrine is two-fold. The first rationale is equitable. It is unfair for one
who prevents the fulfillment of a condition precedent to rely on the non-occurrence
of that condition to defeat his or her liability. Omaha Pub. Power Dist. v. Emp’rs Fire
Ins. Co., 327 F.2d 912, 916 (8th Cir. 1964); Nodland v. Chirpich, 240 N.W.2d 513,
516-17 (Minn. 1976) (quotation and citation omitted); Lord, supra, § 39:4. Second,
it emanates from the promise of good-faith performance, which Minnesota law
implies in every contract. Crotty, 356 N.W.2d at 45 (“[E]very contract contains an
implied condition that each party will not unjustifiably hinder the other party from
performing.”).

       Consider an example. A company tells its remotely-located salesperson he
must call by Friday at noon and report his sales figures to receive a bonus. The
company then disconnects its phone lines, effectively preventing the salesperson from
calling. In such a case, the prevention doctrine would forbid the company from
raising the failure of the condition precedent—reporting the sales figures—as grounds
to avoid paying a bonus. Because the company prevented the salesperson from
reporting his sales figures and thus fulfilling the condition, the company cannot rely
on the non-occurrence of that condition to defeat its liability.

      Just so here. Boston Scientific prevented Longaker from actually providing
post-petition services by firing him. Boston Scientific has, in other words, prevented
Longaker from fulfilling the condition precedent. It should not be allowed to rely on
the non-occurrence of that condition to avoid paying the salary and commissions to
Longaker. Yet the majority allows Boston Scientific to do exactly that, and in doing

                                         -14-
so, sanctions a result that is inequitable and inconsistent with Minnesota contract
principles.5

       I would hold Longaker has standing, and if the district court concluded on
remand that Boston Scientific breached the employment contract, Longaker would
be entitled to the portion of his salary and commissions attributable to his post-
petition services. Holding as such hews more closely to our prior construction of the
statute and the balance § 541 strikes between creditors’ right to repayment and the
debtor’s right to a “fresh start.” It also possesses the benefit of fidelity to long-settled
principles of equity and contract interpretation. Because I cannot join the majority’s
opinion to the contrary, I respectfully dissent.
                     ____________________________________

       5
        The majority states “[m]erely terminating an employee’s contract does not
amount to misconduct under the prevention doctrine.” Ante at 7 n.4; Stevenson, 777
F.2d 420. Rather, the majority suggests more extreme misconduct—a “parade of
horribles”—is necessary to invoke the doctrine. This is wrong. Nowhere does
Stevenson insist on a “parade of horribles,” and the majority’s “cf.” citation thereto
appears to acknowledge it conjures a doctrinal requirement that does not exist.
Minnesota law, which governs this breach of contract claim, shows it is the existence
of culpable misconduct, rather than its extent, which invokes the prevention doctrine.
See Crotty, 356 N.W.2d at 45 (holding the prevention doctrine applied where a
homeowner unreasonably failed to allow a contractor to make repairs); Nodland, 240
N.W.2d at 517 (applying the doctrine where landowners wrongfully misrepresented
a co-owner’s assent to a land sale contract).
       The majority, without so much as a breath of analysis from the district court on
the matter, takes it upon itself to conclude firing Longaker for a reason not
enumerated in the employment contract does not amount to culpable misconduct.
“[W]e do not normally consider issues which the district court did not rule upon . . . .”
First Union Nat’l Bank ex rel. Se. Timber Leasing Statutory Trust v. Pictet Overseas
Trust Corp., 351 F.3d 810, 816 (8th Cir. 2003) (opinion of Wollman, J.). Unlike the
majority, I am not keen to dispense with this rather fundamental principle. I believe
Stevenson, the very case the majority cites, shows the way, and would remand for the
district court to consider whether Longaker’s termination was culpable misconduct.
Stevenson, 777 F.2d at 420-21 (acknowledging the factual record is unresolved and
remanding to the bankruptcy court to consider the issue of culpable misconduct).

                                           -15-