Court Opinion

ID: 8996739
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:44:30.067494+00
Date Added: 2024-06-11T17:11:04.780911
License: Public Domain

SEITZ, Circuit Judge,
dissenting.
As the majority notes, it is a truism reflected in Pennsylvania law that a contract must be in existence before it can be breached. Thus, Snyder’s pre-contract activity was not relevant to Allegheny’s breach of contract defense. Nor did Snyder’s alleged continuing violation of company policy constitute a breach of contract. The majority opinion reaches the same conclusions and, of course, I agree. Thus, the judgment of the district court based on those defenses was properly reversed.
However, rather than directing an outright reversal, the majority remands for trial Allegheny’s belated claim that Snyder’s pre-contract conduct, if not fully revealed before formal approval of the contract, would constitute a fraud or mistake with respect to execution of the contract. It does so because it believes that the fraud and mistake defenses were raised at least in the district court. I cannot agree.
One searches the record in vain at every level to find any reference to a defense based on mistake in the execution of the contract. In my view, it is not consonant with the justice requirements of our adversary system to remand for a determination of an issue which will require a trial of a defense first raised by this court. Nor, in my view, do the ends of justice dictate that the case be remanded for a trial on the issue of fraudulent inducement.
The only mention of fraudulent inducement in the bankruptcy court was made by counsel for Snyder in his closing remarks. He stated that there was “no claim by Allegheny that Dan Snyder fraudulently induced ... [Allegheny] to enter into that contract, nor could there be because after the accounting issues had been investigated.... the Human Resources Committee of the Board approved the written contract.” (Tr. of Trial on Objection to Claim of Snyder, at 162-63.) Allegheny’s counsel did not challenge this statement.
The district court, in reviewing the bankruptcy court’s order on appeal, also made no mention of a theory of fraudulent inducement. It merely affirmed the bankruptcy court’s conclusion that Snyder’s conduct breached the contract due to the fact that the accounting improprieties continued past the date of the new contract. The majority relies upon the district court’s statement regarding the Committee’s awareness of the Roche investigation as proof that the theory of fraudulent inducement was presented to that court. In my *182view, this analysis does not comport with the record. First off, there is absolutely no showing that Allegheny’s counsel presented the theory to the district court. Moreover, I do not believe a reasonable reader would divine from the district court’s language that it was referring to a fraudulent inducement theory. Even if the language can be stretched to show consideration of the theory of fraudulent inducement, that consideration by the district court would necessarily be of an issue presented for the first time on appeal from the bankruptcy court.
A court of appeals generally will refuse to hear arguments not heard by the trial court absent exceptional circumstances or in order to avoid a clear injustice. Am. Disabled for Accessible Public Tr. v. Skinner, 881 F.2d 1184, 1197 (3d Cir.1989) (en banc); B.B. Rider Corp. v. C.I.R., 725 F.2d 945, 951 (3d Cir.1984). The decision whether to reach such arguments is, of course, committed to the discretion of the reviewing court. Singleton v. Wulff, 428 U.S. 106, 121, 96 S.Ct. 2868, 2877, 49 L.Ed.2d 826 (1976). This holds true for a district court in exercising its appellate jurisdiction over bankruptcy matters. In re Reliable MFG. Corp., 17 B.R. 899 (N.D.Ill.1981), aff'd, 703 F.2d 996 (7th Cir.1983); see In re Monroe Park, 17 B.R. 934 (D.Del.1982).
As I read the record the issue of fraudulent inducement was first noted in a delphic way in Allegheny’s answering brief on appeal to this court. Moreover, at oral argument the following colloquy took place between this court and counsel for Allegheny:
THE COURT: Now, wait a minute. You really, I mean aside from the election problems that come up with rescission, you didn’t really try to present that theory, did you? You didn’t try to defend on the ground, you didn’t try to defend on the ground, that you had reason to rescind his contract.
COUNSEL FOR ALLEGHENY: Never
THE COURT: Okay.
I do not find any special circumstance or clear injustice that would warrant sending this case back for a trial of this new issue.
I would therefore reverse the judgment of the district court with a direction that it in turn reverse the order of the bankruptcy court and direct the entry of an appropriate judgment for Snyder.