author: GRUENDER, Circuit Judge. BEAM, Circuit Judge,

text:
    ACI WORLDWIDE CORPORATION, Plaintiff-Appellee v. CHURCHILL LANE ASSOCIATES, LLC, Defendant-Appellant
    No. 16-1736
    United States Court of Appeals, Eighth Circuit.
    Submitted: December 9, 2016
    Filed: January 27, 2017
    Rehearing Denied March 9, 2017

      Counsel who presented argument on behalf of the appellant was James M. Bausch, of Omaha, NE. The following attorney(s) appeared on the appellant brief; Richard Patrick Jeffries, of Omaha, NE., Trenten Patrick Bausch, of Omaha, NE., Adam W. Barney, of Omaha, NE.
    Counsel who presented argument on behalf of the appellee was Gregory Carl Sea-glione, of Omaha, NE. The following attorney(s) appeared on the appellee brief; Michele E Young, of Omaha, NE., Lee Armstrong, of New York, NY., Minja He-rían, of Omaha, NE.
    Before COLLOTON, BEAM, and GRUENDER, Circuit Judges.
   GRUENDER, Circuit Judge.

ACI Worldwide Corporation (“ACI”) brought this action seeking a declaratory judgment that it validly amended and terminated a Licensing Agreement, thus ending ACI’s obligation to make royalty payments to Churchill Lane Associates, LLC (“Churchill”). Churchill counterclaimed for breach of contract, the district court granted summary judgment in favor of ACI, and Churchill now appeals. We reverse in part, affirm in part, and remand for proceedings not inconsistent with this opinion.

I. BACKGROUND

Nestor, Inc. (“Nestor”) developed a suite of credit card fraud detection software products called Proactive Risk Management (“PRISM”). In February 2001, Nestor entered into a Licensing Agreement with ACI. The Licensing Agreement allowed ACI to use, modify, enhance, market, sub-license, maintain, and support portions of PRISM (“licensed software technology”). ACI used the licensed software technology to develop new software programs (“new technology”), which ACI licensed to its customers. Per the Licensing Agreement, Nestor owned any new technology developed by ACI. In addition, ACI agreed to pay Nestor periodic royalties, which consisted of fifteen percent of the fees paid by ACI’s customers to use the new technology.

The Licensing Agreement is governed by New York law. Section 9.2 of the Licensing Agreement (“termination provision”) states that the Licensing Agreement can be terminated unilaterally by one party if the other party becomes insolvent, transfers all of its assets, or otherwise ceases to conduct business. Section 9.3 (“post-termination royalties provision”) states that, even after termination, “ACI shall remain liable to Nestor for royalties” with respect to “any sublicenses granted by ACI prior to termination.” Section 11.9 (“amendment provision”) states that “this Agreement may be amended only by the consent of both parties.”

In 2002, Nestor faced financial difficulties and sought to sell its rights to the royalties. For that reason, Nestor and ACI executed Amendment 2 to the License Agreement, which states that “ACI hereby consents to the assignment by Nestor to a third party of the Royalties due Nestor under the Agreement.” In order to purchase the rights to the royalties, several Nestor investors formed the entity known as Churchill. Although ACI also was interested in acquiring the rights to the royalties, Churchill outbid ACI. As a result, Nestor and Churchill executed an agreement entitled Assignment of Royalty Stream in which Nestor irrevocably assigned to Churchill the future royalties due to Nestor under the Licensing Agreement in exchange for $3.1 million. Nestor and Churchill also entered into a Servicing Agreement in which Nestor promised not to modify or terminate the Licensing Agreement without Churchill’s consent. ACI received notice of the assignment and began remitting the royalties directly to Churchill.

In 2007, ACI, Nestor, and Churchill executed Amendment 4 to the Licensing Agreement. This amendment served three purposes: establishing foreign currency exchange rates for the royalties; applying Section 3.3 of the License Agreement to Churchill so that ACI would be required to provide Churchill with copies of the software agreements relating to the royalty payments; and requiring Churchill to sign ACI’s standard Nondisclosure Agreement. Amendment 4 stated that it was entered into by all three “parties” and that “all terms and conditions set forth in the License Agreement shall remain in full force and effect and shall continue to apply to this Amendment.”

In 2008, Nestor and ACI executed Amendment 5 in which Nestor assigned and transferred all of its rights in the new technology to ACI in exchange for $500,000. Notwithstanding this transfer, Amendment 5 clarified that Nestor had “irrevocably” assigned all of its rights in the royalties to Churchill and that “Nestor no longer has any right, title or interest of any nature whatsoever in and to such royalties.”

In 2009, Nestor became insolvent and went into receivership. A receiver appointed by the Rhode Island Superior Court sold all of Nestor’s rights in the Licensing Agreement and the licensed software technology to American Traffic Solutions (“ATS”). The Asset Purchase Agreement stated that the assets were being sold “free and clear of all Liens.” Churchill received notice of this sale and did not object. After the sale, ACI continued to pay royalties to Churchill. ACI also engaged in discussions with Churchill about acquiring the rights to the royalties, but Churchill declined ACI’s offers.

Unable to acquire the rights to the royalties from Churchill, ACI instead purchased from ATS all of Nestor’s remaining rights, title, and interest in the licensed software technology and the Licensing Agreement on July 20, 2014. The following day, ACI unilaterally executed a Termination of License Agreement declaring that “Licensor and Licensee hereby terminate the License Agreement as of the Effective Date and agree that all provisions of the License Agreement that were designated to survive termination are likewise terminated as of the Effective Date.” Several weeks later, ACI sent Churchill a letter stating that “the license agreement, including the royalty obligations assigned to Churchill Lanes, is no longer in effect.” ACI also enclosed a check representing the “full and final payment” for the balance of royalties due. Churchill did not consent to the termination, and it informed ACI that it believed it was still entitled to further royalties.

On October 20, 2014, ACI filed this diversity action in federal court, seeking a declaratory judgment that it validly terminated the Licensing Agreement and that it owed no further royalties to Churchill. Churchill’ responded that ACI could not amend or terminate the Licensing Agreement without Churchill’s consent because Churchill was a party to the Licensing Agreement, and even if Churchill was not a party, it was at least a third-party beneficiary. Churchill also counterclaimed for royalties due under the Licensing Agreement. Churchill filed a motion for partial summary judgment, and ACI filed a motion for summary judgment.

The district court denied Churchill’s motion and granted summary judgment in favor of ACI. The court held that, due to the terms of Amendment 4, which was signed by all three parties, Churchill was “a party to the agreement in some capacity.” ACI Worldwide, Corp. v. Churchill Lane Assoc., LLC, No. 8:14CV249, 2016 WL 5107137, at *7 (D. Neb. Mar. 9, 2016). Nevertheless, the court held that Churchill had only those rights intended by Amendment 4, which did not include retroactively making Churchill a full party to the Licensing Agreement or the amendment provision specifically. Id. On that basis, the court held that “Churchill’s permission was not needed .to amend the Licensing Agreement.” Id. Thus, the court concluded that ACI “validly amended the Licensing Agreement, eliminating the obligation to-pay post-termination Royalties on subli-censes.” Id. at *8. The court further held that ACI validly terminated the Licensing Agreement pursuant to the termination provision because Nestor had become insolvent. Id. at *9-10. Churchill now appeals.

II. DISCUSSION

Churchill argues that (1) ACI’s amendment of the Licensing Agreement to eliminate the post-termination .royalties provision is invalid, and (2) ACI’s termination of the Licensing Agreement is invalid. If ACI’s amendment is invalid, then ACI will continue to owe- Churchill royalties on any- sublicenses granted before the alleged termination date of July 21, 2014. If ACI’s termination also is invalid, ACI will continue to owe royalties on any subli-censes it has granted since the alleged termination date and that it will grant in the future. We review de novo the grant of summary judgment for ACI, viewing the facts in the light most favorable to Churchill. See McPherson v. O’Reilly Auto., Inc., 491 F.3d 726, 730 (8th Cir. 2007).

A. Amendment of the Licensing Agreement

ACI responds that its amendment of the Licensing Agreement to eliminate the post-termination royalties provision was valid for several reasons. First, ACI contends that Churchill possessed only the limited rights identified in Amendment 4, which did not include making Churchill a full party to the entire Licensing Agreement such that any future amendments would require its consent. Second, ACI contends that Churchill is not entitled to the protections of a third-party beneficiary or assignee because Churchill had only the rights specified in Amendment 4 and because any remaining rights were extinguished by the receivership sale of Nestor’s assets to ATS. Third, ACI contends that even if Churchill retains any rights, those rights are only to royalties “due to” the licensor, and because the licensor and licensee interests have merged in ACI, royalties are no longer “due to” either the licensor or Churchill.

Although we agree with ACI and the district court that Amendment 4 did not have the effect of retroactively making Churchill a full party to the License Agreement, we do not agree that either Amendment 4 or the receivership sale prevents Churchill from exercising the legal rights of a third-party beneficiary or as-signee. We also do not agree with ACI that the doctrine of merger prevents additional royalties from becoming due to Churchill. Therefore, we conclude that ACI did not validly amend the Licensing Agreement to eliminate the post-termination royalties provision, and royalties are still due to Churchill for any sublicens-es granted by ACI prior to July 21, 2014.

1. Full-Party Status

Churchill argues that it became a full party to the Licensing Agreement by virtue of Amendment 4 because it was entered into by all three “parties” — Nestor, ACI, and Churchill — and it declared that “all terms and conditions set forth in the License Agreement shall remain in full force and effect and shall continue to apply to this Amendment.” Under New York law, “[t]he modification of a contract results in the creation of a new contract between the parties which pro tanto supplants the affected provisions of the original agreement while leaving the balance of it intact.” Cappelli v. State Farm Mut. Auto. Ins. Co., 259 A.D.2d 581, 582, 686 N.Y.S.2d 494 (N.Y. App. Div. 1999). Thus, according to Churchill, because it was a party to Amendment 4, it was also a party to the Licensing Agreement, and all of the terms of the original agreement, including the amendment provision, apply to Churchill.

However, the mere presence of Amendment 4 does not make Churchill a full party to the Licensing Agreement. As the district court recognized, New York law “does not suggest that a new party is retroactively conferred with all the rights and obligations of other parties in the original agreement when, as here, the terms of the contract and its amendments, read together, unambiguously reveal that the parties intended otherwise.” ACI, 2016 WL 5107137, at *7. Indeed, if the parties had intended for Churchill to become a full party to the License Agreement, they could have expressly stated as much in Amendment 4. Instead, Amendment 4 states only that Section 3.3 of the License Agreement will apply to Churchill and does not mention other provisions. This omission suggests that the parties did not intend to modify the Licensing Agreement to apply all provisions to Churchill. See Mary Matthews Interiors, Inc. v. Levis, 208 A.D.2d 504, 506, 617 N.Y.S.2d 39 (N.Y. App. Div. 1994) (“A ‘modification agreement [leaves] intact ... those provisions of the original agreement which were not expressly or impliedly supplanted.’ ”) (alteration in original) (quoting Tejani v. Allied Princess Bay Co., 204 A.D.2d 618, 620, 612 N.Y.S.2d 227 (N.Y. App. Div. 1994)). Furthermore, if Churchill became a full party to the Licensing Agreement, many of the provisions referring only to the rights of two parties would make little sense. For example, the amendment provision states that “this Agreement may be amended only by the consent of both parties.” Also, Section 11.8, which concerns where notices may be sent, lists only the names and addresses of Nestor and ACI. Hence, as far as express contractual rights are concerned, Churchill possesses only those rights identified by Amendment 4. Therefore, Churchill was not a full party to the entire Licensing Agreement.

2. Third-Party Beneficiary and Assignee Status

Churchill argues that, even if the district court was correct to hold that Churchill was a party to the License Agreement only for limited purposes, Churchill is at least a third-party beneficiary for all other purposes. Under New York law, “an intended beneficiary of a contract may maintain an action as a third party.” Alicea v. City of New York, 145 A.D.2d 315, 317, 534 N.Y.S.2d 983 (N.Y. App. Div. 1988). To maintain such an action, the third party must establish: “(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for his benefit and (3) that the benefit to him is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost.” Burns Jackson Miller Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 464 N.Y.S.2d 712, 451 N.E.2d 459, 469 (1983).

Churchill asserts that the amendments to the Licensing Agreement show that Churchill was a third-party beneficiary because, after these amendments, ACI’s obligation to pay royalties was owed to Churchill rather than Nestor. Moreover, ACI recognized this obligation by paying the royalties directly to Churchill from 2002 to 2014. Indeed, “where the performance is rendered directly to a third party, that party is generally considered an intended beneficiary of the contract.” Alicea, 145 A.D.2d at 318, 534 N.Y.S.2d 983. Thus, ACI’s actions suggest that Churchill may be characterized as a third-party beneficiary of the Licensing Agreement.

However, we note that Churchill may be better characterized simply as an assignee of Nestor’s rights to the royalties. “When a valid assignment is made, the assignee steps into the assignor’s shoes and acquires whatever rights the latter had.” In re Stralem, 303 A.D.2d 120, 123, 758 N.Y.S.2d 345 (N.Y. App. Div. 2003). “No particular words are necessary to effect an assignment; it is only required that there be a perfected transaction between the assignor and assignee, intended by those parties to vest in the assignee a present right in the things assigned.” Leon v. Martinez, 84 N.Y.2d 83, 614 N.Y.S.2d 972, 638 N.E.2d 511, 513 (1994). Accordingly, Churchill and Nestor effected a valid assignment when they executed the Assignment of Royalty Stream, which stated that “the Assignor irrevocably sells, transfers, conveys and assigns ... to the As-signee, and the Assignee irrevocably purchases from the Assignor, all Royalties.”

Regardless of whether Churchill is characterized as a third-party beneficiary or as an assignee, the same legal protection applies: once ACI had notice of the assignment and began to remit the royalties to Churchill, neither ACI nor Nestor could prejudice Churchill’s rights to the royalties without Churchill’s consent. See Barnum v. Millbrook Care Ltd. P’ship, 850 F.Supp. 1227, 1236 (S.D.N.Y. 1994) (“[T]he parties to an agreement may subsequently modify the agreement even without the consent of the creditor beneficiary as long as the creditor beneficiary has not accepted, adopted or relied upon the original agreement.”); Poughkeepsie Sav. Bank v. R & G Sloane Mfg. Co., 84 A.D.2d 212, 217, 445 N.Y.S.2d 560 (N.Y. 1981) (“[A]n assignee of a chose in action ... who has given notice of the assignment [to the debtor], is not liable to be prejudiced by any new dealings between the original parties to the contract.”) (quoting Myers v. Davis, 22 N.Y. 489, 491 (1860)). This rule is best illustrated by Poughkeepsie Savings Bank v. R & G Sloane Manufacturing Co. There, a landlord delivered an assignment of rents to a bank, the tenant began remitting its rental checks to the assignee bank, and the landlord and tenant agreed to cancel the lease in exchange for the payment of $30,000 to the landlord. Poughkeepsie, 84 A.D.2d at 213, 445 N.Y.S.2d 560. The court held that once “the tenant has been given notice of the assignment, the landlord and tenant cannot agree to cancel the lease without the consent of the assignee, and such an agreement is ineffective to impair the as-signee’s rights.” Id. at 216, 445 N.Y.S.2d 560. Here, as in Poughkeepsie, Churchill acquired the legal protections of a third-party beneficiary or assignee when ACI received notice of the assignment and began remitting royalties to Churchill. As a result, ACI could not thereafter impair Churchill’s rights by amending the post-termination royalties provision without Churchill’s consent.

ACI responds that Churchill is not entitled to such protections for two reasons. First, ACI argues that, because the parties expressly addressed Churchill’s rights in Amendment 4 and because Churchill did not negotiate the right to consent to amendments, there is no need to “enhance Churchill’s rights by operation of law.” Hence, ACI attempts to distinguish Poughkeepsie on the basis that the bank was a “complete stranger” to the lease and had not “passed” on rights to consent or receive notice of changes. Indeed, the district court seemed to subscribe to this theory when it determined that, because it found that Churchill was a limited party rather than a nonparty, “it need not consider Churchill’s alternative argument that, if not a party, it was a third-party beneficiary to the Licensing Agreement.” ACI, 2016 WL 5107137, at *7 n.9.

However, although ACI argues against enhancing Churchill’s rights, ACI fails to recognize that Churchill acquired such rights in 2002 and that it is effectively arguing that Amendment 4 reduced those rights. Yet, ACI and the district court cite no legal authority suggesting that an as-signee of rights loses its legal protections whenever the assignee and the original parties form a new agreement regarding ancillary matters and neglect to reduce to writing all of the legal protections that the assignee previously acquired. Rather, just as the silence of Amendment 4 could not modify the Licensing Agreement to grant Churchill full-party status, it likewise could not modify Churchill’s then-existing legal rights. Cf. Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of N.J., Inc., 448 F.3d 573, 585 (2d Cir. 2006) (“Because waiver of a contract right must be proved to be intentional, the defense of waiver requires a clear manifestation of an intent by plaintiff to relinquish her known right and mere silence, oversight or thoughtlessness in failing to object to a breach of the contract will not support a finding of waiver.”) (quotations omitted). Therefore, Churchill acquired the legal protections of either a third-party beneficiary or assignee in 2002, and we see no reason to conclude that Amendment 4 eliminated those protections in 2007.

Second, ACI contends that whatever protections Churchill received as a third-party beneficiary or assignee were extinguished by the receivership sale to ATS in 2009. ACI claims that “Churchill lost contractual rights during the receivership action” because “the receivership court entered a final order cancelling all agreements affecting the License Agreement and the PRISM technology (save only those listed on [the schedule of assumed executory contracts]) and approving the sale of all of Nestor’s assets free and clear of claims and unassumed contracts.” Thus, according to ACI, because neither the Assignment of Royalty Stream nor the Servicing Agreement were listed on the schedule of assumed executory contracts and because Churchill did not object to this omission, the receivership action “expressly cancelled the applicable agreements.” According to this view, Churchill had no valid assignment at all following the sale.

However, the receivership court’s order did not, in fact, expressly cancel any agreements not listed on the schedule of Assumed Executory Contracts. Rather, the order noted only that any contracts not listed on that schedule were “expressly not assumed by Purchaser.” Although the Assignment of Royalty Stream and Servicing Agreement were not listed on the schedule of assumed executory contracts, the Licensing Agreement was listed, and the amendments to that agreement declare that Nestor irrevocably assigned the royalties to Churchill. ACI cites no legal authority to support the proposition that a receivership sale “free and clear” of all liens can eliminate the legal protections of an as-signee when the assignment is announced in a contract surviving the receivership action. Moreover, Churchill did not consent to any loss of assignee rights by failing to object to the receivership- sale. See Excelsior Capital, LLC v. Superior Broad. Co., 101 A.D.3d 670, 672, 955 N.Y.S.2d 196 (N.Y. App. Div. 2012) (“[M]ere silence or failure to consent is insufficient, standing alone, to establish consent.”).

Therefore, we find that the receivership sale to ATS did not eliminate Churchill’s assignment or its rights as a third-party beneficiary or assignee. The fact that ACI continued to remit royalties directly to Churchill even after the receivership sale underscores this finding. Because Churchill maintained these rights, ACI could not eliminate the post-termination royalties provision without Churchill’s consent.

3. Doctrine of Merger

ACI argues that even if it did not validly amend the Licensing Agreement, ACI’s obligation to pay further royalties ceased on July 21, 2014, when ACI acquired from ATS all of Nestor’s remaining rights as licensor. According to ACI, when this occurred, ownership of the licensor and licensee interests merged in ACI. Thus, Churchill was no longer entitled to royalties because Churchill had been assigned only the right to receive royalties “due to” the licensor, and the licensor had been extinguished through merger.

In the context of real property, New York courts consistently apply this doctrine of merger to extinguish easements when the title in fee to both the dominant and servient estates becomes vested in one person. See Will v. Gates, 89 N.Y.2d 778, 658 N.Y.S.2d 900, 680 N.E.2d 1197, 1200 (1997) (“The merger doctrine proceeds from a recognition that a person cannot have an easement in his or her own land because all the uses of an easement are fully comprehended in the general right of ownership.”) (citations omitted). However, this doctrine has not previously been applied to intellectual-property licenses. See In re Lockwood, 414 B.R. 593; 599 n.8 (Bankr. N.D. Cal. 2008) (finding “no case authority indicating that the doctrine of merger applies to licenses and patents and other intellectual property”).

Furthermore, even in the real property context, “[t]he doctrine of merger has never been favored in equity,” and estates will not merge when doing so would impair “some intervening right or equity in a third person.” Dunkum v. Maceck Bldg. Corp., 256 N.Y. 275, 176 N.E. 392, 394 (1931). Indeed, at least one court has denied a merger when it would have eliminated the rights of an assignee. In Trustees of Conquistador Council Boy Scouts Trust Fund v. International Minerals & Chemical Corp., a landlord assigned rental payments to an assignee, the tenant bought the property from the landlord, and the tenant ceased paying rent on the ground that the leasehold merged into the fee simple. 91 N.M. 55, 570 P.2d 593, 594 (1977). Nevertheless, the court held that “the doctrine of merger does not apply to extinguish the lesser (leasehold) estate when the lessee acquires the greater estate (fee), when to so apply the doctrine would prejudice the rights of an innocent third party.” Id. at 595.

ACI responds that Churchill would not be prejudiced by such a merger because “Churchill did not receive a promise to be paid a sum certain each.month.” Rather, Churchill was assigned only the right to be paid what becomes due to Nestor each month, and Churchill assumed the risk that nothing could become due to Nestor. However, although Churchill may have assumed the risk of no royalties becoming due based on the terms of the Licensing Agreement, nothing suggests that Churchill assumed the risk of ACI acquiring Nestor and eliminating the licensor-interest altogether. Indeed, the court in Conquistador did not rest its holding on the fact that the lease may have been for a sum certain each month. Rather, the court held that allowing a lessee to extinguish an assignment by purchasing the lessor’s interest “would result in rendering extinct and worthless many assignments and pledges of rentals made to third persons in a wide variety of business and financial transactions.” Id.

Therefore, we decline to hold that the doctrine of merger applies in this context. Because merger does not apply, the licensor and licensee interests do not merge, and thus royalties are still due to Churchill for all sublicenses granted prior to the alleged termination date.

B. Termination of the Licensing Agreement

Even though ACI’s amendment of the Licensing Agreement is invalid, that does not necessarily mean that ACI’s termination is likewise invalid. In fact, ACI’s termination of the Licensing Agreement is valid because, unlike ACI’s purported amendment, the termination does not impair Churchill’s rights. This conclusion follows from the rule that “an assign-ee takes no greater right than that of his assignor.” Poughkeepsie, 84 A.D.2d at 218, 445 N.Y.S.2d 560 (quotation omitted). Thus, ' in Poughkeepsie, the assignee bank’s consent was required to cancel the lease agreement only because the assign- or landlord’s consent was required for such an action. See id. at 217, 445 N.Y.S.2d 560 (“[A]n assignee ... is not liable to be prejudiced by any new dealings between the original parties to the contract.”) (quotation omitted). Likewise, Churchill’s consent was required to amend the post-termination royalties provision only because Nestor’s consent would have been required for such a modification. In contrast, under the terms of the termination provision, Nestor’s consent was not required for ACI unilaterally to terminate the Licensing Agreement once Nestor became insolvent. Consequently, if Churchill could prevent ACI from terminating the agreement based on Nestor’s insolvency, Churchill would hold even greater rights as an assignee than Nestor held as an original party to the Licensing Agreement. Therefore, allowing ACI to terminate the Licensing Agreement based on the termination provision does not impair Churchill’s rights.

Indeed, Churchill concedes that Nestor’s insolvency and receivership satisfied the conditions listed in the termination provision and would have allowed ACI to terminate the Licensing Agreement in 2009 without the consent of either Nestor or Churchill. However, Churchill provides three reasons why ACI’s termination in 2014 is invalid.

First, Churchill argues that ACI’s termination is invalid because it is barred by the election of remedies doctrine. This doctrine states that “[o]nce a party elects to continue [a] contract, he can never thereafter elect to terminate the contract based on that breach.” Bigda v. Fischbach Corp., 898 F.Supp. 1004,1011-12 (S.D.N.Y. 1995). Churchill argues that because ACI elected to continue paying royalties, ACI is precluded from terminating the License Agreement in 2014 based on Nestor’s acts in 2009. However, the election of remedies doctrine applies only to a party’s decision to continue performing a contract following a breach of that contract. See AM Cosmetics, Inc. v. Solomon, 67 F.Supp.2d 312, 317 (S.D.N.Y. 1999) (“[I]f one party to a contract materially breaches the contract during the course of a continuing performance, the injured party has two options: he may terminate the contractual relations at that time or he may choose to continue performance under the contract despite that breach.”). Nestor’s insolvency and receivership did not constitute a breach of the Licensing Agreement. See Hanna v. Florence Iron Co. of Wisc., 222 N.Y. 290, 118 N.E. 629, 630 (1918) (“Mere insolvency of one of the parties to a contract does not relieve the other party from performance thereof and would not excuse the refusal of [a party] to carry out its contract.”). Rather, insolvency was a condition allowing ACI to terminate the Licensing Agreement. Accordingly, the election of remedies doctrine does not render ACI’s termination invalid.

Second, Churchill argues that ACI’s termination is invalid because ACI notified Churchill that it was terminating the Licensing Agreement based on its status as licensor and licensee rather than Nestor’s insolvency. Churchill asserts that “ACI cannot terminate a contract for one reason and then later assert in litigation it was entitled to terminate for another reason.” However, this doctrine is “based on equitable estoppel.” G. Amsinck & Co. v. Springfield Grocer Co., 7 F.2d 855, 860 (8th Cir. 1925). Equitable estoppel requires “a representation by the party es-topped which misleads, and an innocent and deleterious change of position in reliance upon that representation.” Williams v. Neely, 134 F. 1,11 (8th Cir. 1904). Thus, the cases cited by Churchill correctly hold that the defendants could not justify termination on one basis and then later assert a breach of contract as a different basis, but that is because the plaintiffs could have remedied the breach if the defendants had originally cited the breach as the reason. See Date Sys. of New Jersey v. Philips Business Sys., No. 78 Civ. 6015-CSH, 1986 WL 733, at *1, *6-7 (S.D.N.Y. Jan. 6, 1986); Rode & Brand v. Kamm Games, Inc., 181 F.2d 584, 587 (2d Cir. 1950). Here, even if ACI originally cited Nestor’s insolvency as the reason for termination, Churchill could not have remedied a breach or prevented ACI from legally terminating the Licensing Agreement. Therefore, ACI’s failure to specify the correct legal justification does not render its termination invalid.

Third, Churchill and the dissent argue that ACI could not validly terminate the License Agreement because Nestor was no longer a “party” to the agreement as of 2014 because it previously transferred all of its remaining interests in the agreement in 2009. According to Churchill, the termination provision allows for termination only if a “party” becomes insolvent or meets one of the other conditions listed in the provision. Hence, when ATS “replaced Nestor as licensor in 2009,” Nestor was no longer a “party,” and so its insolvency had no bearing on ACI’s right to terminate the Licensing Agreement.

However, although it may be true that Nestor was no longer a party to the agreement following its insolvency, that does not mean that its insolvency had no bearing on ACI’s rights under the termination provision. The termination provision allows one party unilaterally to terminate the Licensing Agreement if “the other party ... becomes insolvent or assigns all, or substantially all, of its assets.” It does not state that “the other party” must remain a party to the agreement after insolvency or assigning all of its assets. Indeed, according to Churchill, Nestor ceased to be a “party” precisely because it assigned all of its assets to ATS. But if Nestor also ceased to be “the other party” for purposes of this provision upon assigning all of its assets, then ACI would have no window of opportunity to terminate the Licensing Agreement on that basis. Thus, the termination provision would be rendered meaningless. Because we should “avoid an interpretation that effectively renders meaningless a part of the contract,” Helmsley-Spear, Inc. v. N.Y. Blood Ctr., Inc., 257 A.D.2d 64, 69, 687 N.Y.S.2d 353 (N.Y. App. Div. 1999), we reject Churchill’s argument that ACI could terminate the agreement only while Nestor remained a “party.” Rather, we believe that the termination provision authorized ACI to terminate the agreement if Nestor became insolvent or assigned its assets while it was a party to the agreement. Because Nestor still was a party to the agreement in 2009 when it became insolvent, ACI was entitled to terminate the agreement.

Therefore, ACI validly terminated the License Agreement in accordance with the termination provision. As a result, ACI does not owe Churchill royalties on any sublicenses that ACI has granted since July 21, 2014 or that it will grant in the future. However, because the post-termb nation royalties provision was not validly amended prior to termination, ACI continues to owe Churchill royalties on any subli-censes granted before July. 21, 2014.

III. CONCLUSION

For the foregoing reasons, we reverse the entry of summary judgment in favor of ACI on the issue of amendment of the Licensing Agreement, affirm the entry of summary judgment in favor of ACI on the issue of termination, and remand to the district court for further proceedings not inconsistent with this opinion.

BEAM, Circuit Judge,

concurring in part and dissenting in part.

I concur in the court’s reversal of the district court’s entry of summary judgment in favor of ACI and in the court’s collateral ruling that ACI continues to owe Churchill royalties accruing from all subli-censes granted prior to July 21, 2014. I dissent from the court’s holding that ACI validly terminated Churchill’s continuing interest in the Licensing Agreement on July 21, 2014.

I agree with the district court and Churchill that Churchill became a party to the Agreement in 2007 when, due to financial difficulties, Nestor entered into Amendment 4 of the Agreement with ACI and Churchill. At that time, Churchill acquired all of Nestor’s past, present and future technology-based royalty stream, and, at least by enforceable implication, Nestor’s prerogatives in the technology that generated such royalties. In addition, without question, Churchill gained the right to enforce the receipt of royalty assets due from past, present and future ACI-founded sublicenses.

Under the terms of Amendment 4, ACI acquiesced in this newly formed tripartite relationship and submitted sublicense royalty collections previously due Nestor directly to Churchill. As a result, Churchill contends, correctly, that ACI, in its pleadings, concedes that Churchill became a party to the Licensing Agreement. Accordingly, subsequent to Amendment 4, the parties to the Licensing Agreement were Nestor, ACI and Churchill.

The court notes that in 2008, Nestor and ACI executed Amendment 5 through which Nestor transferred all of its rights in any “new” technology to ACI. Ante at 574-75. The court also correctly states, pursuant to Amendment 5, that “[n]otwith-standing this transfer ... Nestor had [in 2002] ‘irrevocably’ assigned all of its rights in the royalties to Churchill and that ‘Nestor no longer has any right, title or interest of any nature whatsoever in and to such royalties.’ ” Ante at 575. This amendment assignment had to have included royalties emanating from the use of the new technology as agreed upon at the outset of the Nestor-ACI relationship in 2001. So, subsequent to that point in time, and especially on July 21, 2014, the Licensing Agreement, as relevant to this action, was totally dedicated to the matter of royalties owed by one party to another party.

The, court mentions, but fails to adequately discuss, the implications surrounding Nestor becoming insolvent in 2009. At that time, the Rhode Island Superior Court appointed an insolvency receiver. The receiver, as authorized by the court, sold “all of Nestor’s [still continuing] rights in the Licensing Agreement and the licensed software technology to [ATS].” Ante at 575. Indeed, the Asset Purchase Agreement states that the assets were being sold “free and clear of all Liens.” Ante at 575. At that time, ATS was wholly substituted for Nestor as a party to the Licensing Agreement by action of the Rhode Island court which by law exercised exclusive jurisdiction over Nestor’s property. See Rhode Island General Laws § 7-1.2-1316(f). Thus, the parties to the Licensing Agreement at that time consisted of Churchill, ACI and ATS.

The court then observes that, “[u]nable to acquire the rights to the royalties [that were earlier irrevocably assigned as noted in Amendment 5] from Churchill, ACI instead purchased from ATS all of Nestor’s remaining rights, title, and interest in the licensed software technology and the Licensing Agreement on July 20, 2014.” Ante at 575. This purchase did not include any Nestor royalty rights because the receiver had none to sell. In any event, the parties to the Licensing Agreement then became ACI and Churchill. The next day ACI, armed with whatever rights it had earlier owned or had then been acquired from the receiver, unilaterally purported to execute a termination notice to Churchill, although with a later letter stating, “the license agreement, including the royalty obligations assigned to Churchill Lanes, is no longer in effect.” It appears that no specific contractually required reasons for a termination were ever advanced by ACI.

This purported termination notice was actually an attempted unilateral amendment of the Licensing Agreement and is so recognized by the court and both ACI and Churchill. See ante at 575 n.l. And, in this regard, the Agreement recognizes as the only grounds potentially applicable here for a termination of a “party” (1) becoming insolvent, (2) transferring of all its assets or (3) ceasing to conduct business. ACI’s cancellation of the License Agreement’s royalty obligations fully assigned to Churchill is not one of these applicable grounds for unilateral termination. Thus, ACI’s above-stated unilateral amendment attempt designed to obtain Nestor’s long since assigned royalty rights was ultra vires in the extreme.

To repeat, and as the court concedes, a unilateral termination could be bottomed only on an allegation that the other party has become insolvent, transferred all of its assets, or has otherwise ceased to conduct business. Ante at 574. And, the record clearly establishes that Nestor, as Churchill correctly contends, was no longer a party to the Agreement at the time ACI rendered its termination notice. If, however, ACI somehow seeks to support a termination claim based upon Nestor’s rights and assets purchased from ATS, the License Agreement language and prior transactions between these existing parties to the Agreement clearly prohibit such a result.

Section 9.3, the post-termination royalties- provision, provides that even after termination, ACI shall remain liable to Nestor for royalties with respect to sub-licenses granted by ACI prior to termination. Without question Churchill acquired all Nestor’s royalty rights well before ATS purchased any rights, title or interest from the receiver or before ACI purported to acquire them and render its specious termination notice.

Section 11.9 states this Agreement may be amended only by the consent of both parties. At this time, that would be ACI and Churchill. ACI’s purported termination notice is clearly a unilateral contract amendment and it seeks to function as such. And, as earlier noted, Churchill paid Nestor $3.1 million for all future royalties due Nestor under the Licensing Agreement and Churchill and Nestor entered into an agreement at that time whereby Nestor promised not to modify or terminate the Licensing Agreement without Churchill’s consent. Ante at 574-75. ACI’s purported termination based upon acquisition of ATS’s receivership purchases breach the underlying Agreement from which ACI now seeks to benefit.

Churchill is entitled to a calculable stream of licensing royalties emanating from Nestor, ACI and Churchill sources on and after July' 21, 2014. From the court’s contrary holding, I dissent.

      . Consistent with the positions of both parties throughout this litigation, we treat this clause as both a purported amendment and a purported termination of the Licensing Agreement.

      . Churchill also argues that ACI made a binding judicial admission that Churchill was a party to the Licensing Agreement when ACI’s complaint alleged that Churchill consented to personal jurisdiction "pursuant to the ACI License Agreement.” However, as the district court recognized, this claim regarded only personal jurisdiction and did not constitute "a binding admission that Churchill incurred other rights and obligations under the Licensing Agreement.” ACI, 2016 WL 5107137, at *7 n.10.

      . For instance, Section 9.2 of the termination provision states "[e]ither party may immediately terminate this Agreement ... if the other party ... becomes insolvent.” It is difficult to believe that ACI’s purported termination coming more than seven years subsequent to Nestor’s insolvency can be deemed either “immediate,” or equitable.


source: Caselaw Access Project

author:
STRAND, District Judge.
      SHEPHERD, Circuit Judge,

license: Public Domain

text:
    Rodney RAYMOND, Plaintiff-Appellant v. BOARD OF REGENTS OF THE UNIVERSITY OF MINNESOTA, individually in their official capacities; The University of Minnesota, Defendants-Appellees
    No. 15-3575
    United States Court of Appeals, Eighth Circuit.
    Submitted: November 15, 2016
    Filed: January 31, 2017

      Paul Egtvedt, EGTVEDT LAW FIRM, P.L.C., Minneapolis, MN, for Plaintiff-Appellant.
    Brian Slovut, UNIVERSITY OF MINNESOTA, Office of the General Counsel, Minneapolis, MN, for Defendants-Appellees.
    Before BENTON and SHEPHERD, Circuit Judges, and STRAND, District Judge.

      . The Honorable Leonard T. Strand, United States District Judge for the Northern District of Iowa, sitting by designation.

   STRAND, District Judge.

Rodney Raymond (Raymond) brought this action against the Board of Regents of the University of Minnesota, individually in their official capacities (Regents), and the University of Minnesota (University) pursuant to 42 U.S.C. § 1983, seeking damages and injunctive relief. The district court dismissed Raymond’s amended complaint. This appeal followed. We affirm.

I. BACKGROUND

A. Raymond’s Amended Complaint

Raymond was employed as a wellness director and fitness instructor at the University’s Duluth campus. Beginning in 2009, the University received reports that Raymond was violating various school policies, including policies related to sexual harassment. Raymond denied the allegations and the University conducted investigations. Each investigation concluded Raymond had indeed violated school policies. He appealed these decisions to varying degrees, with each appeal being determined against him.

Raymond alleged that one of the investigations was tainted by bias and involved collusion between the investigator and complainant. A University panel agreed and decided to hire a new investigator. Raymond objected to a new investigation on double jeopardy and due process grounds. The University denied Raymond’s objection. Raymond then requested to be involved in selecting the new investigator. This request was denied. The new investigator was hired based, in part, on the recommendation of the University’s legal counsel. Raymond requested the investigator recuse himself given that the attorney who had recommended him would be the “prosecutor” against Raymond. This request was denied.

Raymond alleged the new investigation was flawed because it went beyond the scope of the allegations and was not justified by University policy. According to Raymond, the new investigator engaged in unprofessional communications with Raymond’s counsel, failed to investigate the collusion in the original investigation, exceeded the scope of his investigatory mandate, distorted witness statements and came to erroneous conclusions. He also alleged that an appellate panel had found the investigator “over-reached in his attempt to. show that [Raymond] should be disciplined by [the University.]” See Amended Complaint at ¶ 9. During the investigative process, Raymond contends he never had the opportunity to examine or cross-examine witnesses.

On November 19, 2012, Raymond submitted a written request to the Regents that they intervene as a court of appeal and provide him with a hearing to address his grievances with respect to the investigation. The Regents denied this request through written correspondence dated De-eember 12, 2012. On April 10, 2013, the University informed Raymond that the investigation concluded there was “just cause” to discipline him for violations of University policy. Raymond requested the opportunity to respond to this letter, but was informed on April 25, 2013, that the University had decided to terminate his employment.

On May 1, 2013, Raymond filed a petition with the Office of Conflict Resolution (OCR) challenging the termination and requesting a hearing. Around this time, news reports were purportedly circulating regarding his discharge and the sexual harassment allegations. On August 8, 2013, the OCR issued a jurisdictional decision to determine the scope of panel review in addressing the grounds for Raymond’s discharge. On October 13, 2013, the Provost intervened and overturned the OCR’s jurisdictional decision by limiting the scope of the hearing to exclude the sexual harassment allegations from further review. Raymond contends these allegations were a basis for the University’s termination decision.

On November 7, 2013, Raymond requested that the presiding hearing officer recuse herself because she had been privy to the investigative report that led to Raymond’s discharge, which included the sexual harassment allegations. In addition, he requested a new hearing panel and the submission of a redacted report excluding the sexual harassment allegations. The University denied these requests.

On February 5, 2014, Raymond withdrew from the hearing process “based on the futility of the process and its inherent unfairness and bias towards him, and because of the University’s bad faith in its dealings with him.” See Amended Complaint at ¶ 21. Raymond contends that the University used the process to harass him and discourage his legitimate defenses to discharge. He alleges that if he had continued to engage in the process, which he claims was unfair and biased, he would have been irreparably injured.

On September 19, 2014, Raymond requested a post-termination hearing before the Regents to address all the grounds for his discharge. He also requested the Regents consult outside counsel because the University’s counsel had been involved in the investigative, “prosecutorial,” and decision-making processes. These requests were denied.

Raymond’s amended complaint asserted two claims of procedural due process violations — one against his liberty interest and the other against his property interest. He sought damages and injunctive relief.

B. Proceedings Below

Pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1), the University and Regents moved to dismiss the amended complaint for failure to state a claim upon which relief could be granted and lack of subject matter jurisdiction. The district court granted the motion. It dismissed Raymond’s claims against the University on Eleventh Amendment grounds and similarly ruled that the Eleventh Amendment prohibits Raymond from seeking damages from the Regents. Raymond’s appeal does not address these issues.

With regard to injunctive relief, the district court found Raymond had failed to state a due process claim upon which relief could be granted. In doing so, the court analyzed whether the University’s pre-ter-mination and post-termination procedures were adequate and concluded they were. The court also found that Raymond failed to exhaust state remedies. The court rejected Raymond’s allegation that exhaustion would have been futile, noting that futility must be based on certainty rather than.the subjective belief-of the person asserting futility. The court also concluded that the futility exception is not available in the context of a § 1983 procedural due process claim. Raymond appeals, the dismissal of his claims for injunctive relief.

II. DISCUSSION

A. Standard of Review

‘“Whether a complaint states a cause of action is a question of law which we review on appeal de novo.’ ” Packard v. Darveau, 759 F.3d 897, 900 (8th Cir. 2014) (quoting Miller v. Redwood Toxicology Lab., Inc., 688 F.3d 928, 936 (8th Cir. 2012)). Under Rule 12(b)(6), a defendant may move for dismissal based on a plaintiff’s “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). ‘We will affirm the dismissal if the complaint fails to allege facts sufficient to ‘state a claim to relief that is plausible on its face.’ ” Hopkins v. City of Bloomington, 774 F.3d 490, 491-92 (8th Cir. 2014) (quoting Walker v. Barrett, 650 F.3d 1198, 1203 (8th Cir. 2011)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

B. Raymond’s Due Process Claims

Raymond alleges that he was deprived of liberty and property interests without due process when his employment with the University was terminated. The Regents and University do not challenge the adequacy of Raymond’s alleged interests. Rather, they argue Raymond did not satisfy a condition of his procedural due process claims — exhaustion of state remedies. For this reason, they argue the district court’s decision should be affirmed.

“[T]he exhaustion requirement is an affirmative defense that a defendant must plead and prove.” Nash v. Lappin, 172 Fed.Appx. 702, 703 (8th Cir. 2006) (per curiam). However, “[i]f an affirmative defense ... is apparent on the face of the complaint ... that [defense] can provide the basis for dismissal under Rule 12(b)(6).” C.H. Robinson Worldwide, Inc. v. Lobrano, 695 F.3d 758, 764 (8th Cir. 2012) (quoting Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 983 (8th Cir. 2008)) (alterations in original). “Generally, a plaintiff is not required to exhaust state administrative remedies as a prerequisite to bringing an action pursuant to § 1983.” Hopkins, 774 F.3d at 492 (citing Patsy v. Bd. of Regents of Fla., 457 U.S. 496, 516, 102 S.Ct. 2557, 73 L.Ed.2d 172 (1982)). However, this court has “recognized an exception to Patsy’s general rule that exhaustion of state remedies prior to bringing a section 1983.claim is not-required.” Id. (quoting Keating v. Neb. Pub. Power Dist., 562 F.3d 923, 929 (8th Cir. 2009)). “Under federal, law, a litigant asserting a deprivation of procedural due process must exhaust state remedies before such an allegation states a claim under § 1983.” Id. (quoting Wax ’n Works v. City of St. Paul, 213 F.3d 1016, 1019 (8th Cir. 2000)).

“[A]n employee who fails to request post-termination process cannot later sue for having been deprived of it.” Winskowski v. City of Stephen, 442 F.3d 1107, 1111 (8th Cir. 2006); see also Krentz v. Robertson, 228 F.3d 897, 904 (8th Cir. 2000) (“[A]n employee waives a procedural due process claim by refusing to participate in post-termination administrative or grievance procedures made available by the state.”). “[T]his requirement is distinct from exhaustion requirements in other contexts.” Crooks v. Lynch, 557 F.3d 846, 848 (8th Cir. 2009). “Rather, this requirement is necessary for a procedural due process claim to be ripe for adjudication.” Id. A plaintiff “cannot complain of a violation of procedural due process when he has not availed himself of existing procedures.” Anderson v. Douglas Cnty., 4 F.3d 574, 578 (8th Cir. 1993).

Although Raymond’s amended complaint focuses primarily on the adequacy of the post-termination procedures, we must first consider whether he has sufficiently alleged a pre-termination procedural due process violation, which would not require exhaustion. See Keating, 562 F.3d at 929 (“[I]t is not necessary for a litigant to have exhausted available postdeprivation remedies when the litigant contends that he was entitled to predeprivation process.”) (emphasis in original). In the context of a public employee’s discharge, a pre-termination hearing is required, although it “need not be elaborate.” Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532, 545, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985); see also Christiansen v. West Branch Comm. Sch. Dist., 674 F.3d 927, 934 (8th Cir. 2012) (“Due process does not require elaborate pre-termination procedures, especially where meaningful post-termination process is available.”).

“The essential requirements of due process ... are notice and an opportunity to respond.” Loudermill, 470 U.S. at 546, 105 S.Ct. 1487. “To satisfy minimal due-process requirements at the pre-termi-nation stage, a public employer must give the public employee oral or written notice of the charges against him, an explanation of the employer’s evidence, and an opportunity to present his side of the story.” Smutka v. City of Hutchinson, 451 F.3d 522, 526-27 (8th Cir. 2006) (internal quotations omitted). “To require more than this prior to termination would intrude to an unwarranted extent on the government’s interest in quickly removing an unsatisfactory employee.” Id.

Raymond alleges that when the University began investigating the alleged violations of school policies, he denied the allegations and appealed the conclusions, with each appeal being determined against him. Raymond presented evidence of bias and collusion to the University, which led an appellate panel to determine that investigation could not be used against Raymond. Raymond objected to a new investigation on double jeopardy and due process grounds. His request was denied. He then requested to be involved in the selection of a new investigator. That request was denied. Finally, he requested that the new investigator recuse himself. That request was also denied. Following the second investigation, Raymond submitted a written request to the Regents to sit as a court of appeal and provide him a hearing to address his grievances. That request was denied through written correspondence. Raymond then received a letter dated April 10, 2013, advising him that the investigative report found “just cause” to discipline Raymond for violating school policies. Raymond requested an opportunity to respond, but received a letter on April 25, 2013, notifying him his employment had been terminated.

These allegations, taken as true from Raymond’s amended complaint, fail to state a claim of a pre-termination due process violation. Indeed, they establish the opposite. Raymond was advised of the allegations and evidence against him. He had the opportunity to respond, and did respond, to the allegations. Indeed, the University agreed with his complaints of bias and collusion as to one investigation and ordered a new investigation. During the subsequent investigation, the University and Regents responded to Raymond’s requests. His only complaint about this process is that he was never afforded the opportunity to examine or cross-examine witnesses. This type of formal process is not required prior to termination. See Mathews v. Eldridge, 424 U.S. 319, 343, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976) (noting that “something less than an evidentiary hearing is sufficient prior to adverse administrative action.”). Because Raymond did not sufficiently plead a pre-termination procedural due process violation, exhaustion of state remedies is required to proceed on his post-termination claim.

Raymond’s amended complaint acknowledges that he withdrew from the post-termination OCR process by withdrawing his petition on February 5, 2014. Therefore, he did not exhaust state remedies. However, Raymond contends this failure is not detrimental to his claim. He alleges that he withdrew from the process “based on the futility of the process and its inherent unfairness and bias towards him, and because of the University’s bad faith in its dealings with him.” See Amended Complaint at ¶ 21. Raymond argues we should recognize futility as an exception to the exhaustion requirement in the context of a procedural due process claim and allow him to proceed with his lawsuit.

C. Futility

Raymond argues the OCR process was futile for two reasons: (1) he did not have the opportunity to confront and cross-examine witnesses and (2) the Provost’s jurisdictional ruling denied him a name-clearing hearing on the sexual harassment allegations that were part of the basis for his termination. For these reasons, he argues this court should recognize a futility exception to the exhaustion requirement.

This court has recognized exceptions to exhaustion requirements in other contexts. See, e.g., Ace Property and Cas. Ins. Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 1000 (8th Cir. 2006) (“A party may be excused from exhausting administrative remedies if the complaint involves a legitimate constitutional claim, if exhaustion would cause irreparable harm, if further administrative procedures would be futile ... or if the issues to be decided are primarily legal rather than factual.”). An administrative remedy is futile “if there is doubt about whether the agency could grant effective relief.” Id. Notably, Ace did not involve a § 1983 procedural due process claim, but an alleged breach of contract by an administrative agency. Id. at 995. Exhaustion of administrative remedies was mandated by statute. Id.

This court has never held that the exceptions recognized in Ace apply in the context of § 1983 procedural due process claims. Raymond suggests, however, that none of our cases preclude it. He distinguishes Winskowski, 442 F.3d at 1110, a case the district court cited for the proposition that an individual who did not take advantage of a post-termination process cannot claim that it was inadequate. Raymond argues Winskowski is inapplicable because unlike the Winskowski plaintiff, who failed to request any post-termination process, Raymond requested that process and withdrew from it only when he concluded that it was futile. He cites Schleck v. Ramsey Cnty., 939 F.2d 638 (8th Cir. 1991), to argue that futility should be recognized as an exception in this context. In Schleck, this court held that there was no due process violation when county employees declined a post-termination hearing. Schleck, 939 F.2d at 643. Raymond notes that the post-termination process in that case explicitly included the right to cross-examine witnesses and respond to the charges against them, id. and asserts that those rights were omitted from the post-termination procedures here. Essentially, Raymond suggests that if a post-termination process does not guarantee certain rights (i.e., the right to cross-examine witnesses and respond to charges), the claimant should not have to exhaust remedies and should be permitted to allege futility.

With regard to the post-termination process here, paragraph 9 of the University’s conflict resolution procedures for civil service employee complaints provides, “[t]he hearing panel will provide a fair opportunity for the petitioner and the respondent to present their views and information from witnesses.” See Appellant’s App’x at 36. Even if the opportunity to cross-examine witnesses at the OCR hearing was ambiguous, that does not justify foregoing the process altogether on grounds of futility. See Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d .1079, 1085 (8th Cir. 2009) (“The futility exception is narrow — the plan participant must show that it is certain that [his] claim will be denied on appeal, not merely that [he] doubts that an appeal will result in a different decision.”) (internal quotations omitted). Proper grounds of futility include the situation in which an agency may be “unable to consider whether to grant relief because it lacks institutional competence to resolve the particular type of issue presented” or “an agency may be competent to adjudicate the issue presented, but still lack authority to grant the type of relief requested.” See Bartlett v. U.S. Dept. of Agriculture, 716 F.3d 464, 473 (8th Cir. 2013) (quoting McCarthy v. Madigan, 503 U.S. 140, 147-48, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992), superseded by statute, Prison Litigation Reform Act of 1995, 42 U.S.C. § 1997e et seq., as recognized in Woodford v. Ngo, 548 U.S. 81, 126 S.Ct. 2378, 165 L.Ed.2d 368 (2006)).

Raymond has not sufficiently alleged that proceeding with the OCR hearing would have been futile. He has only speculated that he would not be allowed to cross-examine witnesses and that the OCR panel would not consider the sexual harassment allegations. See Midgett v. Washington Group Intern Long Term Disability Plan, 561 F.3d 887, 898 (8th Cir. 2009) (“[u]nsupported and speculative claims of futility do not excuse a claimant’s failure to exhaust his or her administrative remedies.”) (internal quotations omitted). Raymond could have challenged these issues at the OCR hearing and, if the outcome was unfavorable, appealed them to the Provost. He then could have sought certiorari review by the Minnesota Court of Appeals or demanded binding arbitration in accordance with the University’s conflict review procedures. At any of these stages, the presiding body or individual could have ruled in Raymond’s favor. None of the allegations establish, with certainty, that the final outcome of the process would have been adverse to Raymond. For this reason, Raymond’s futility argument fails.

III. CONCLUSION

Raymond’s § 1983 procedural due process claims were properly dismissed. The judgment of the district court is affirmed.

SHEPHERD, Circuit Judge,

concurring.

I concur in the judgment of the majority affirming the dismissal of Raymond’s § 1983 procedural due process claims but I write separately to express two points. First, aside from a few sweeping generalities, Raymond’s briefing invokes only post-termination due process requirements and he does not appeal the district court’s ruling as to the pre-termination procedures. I therefore would refrain from any discussion of Raymond’s pre-termination due process rights. Jasperson v. Purolator Courier Corp., 765 F.2d 736, 740 (8th Cir. 1985) (issues not raised in a party’s brief are deemed abandoned).

Second, regarding post-termination due process, Raymond’s futility argument is unsupported. As the majority notes, the cases recognizing futility as an exception to the exhaustion requirement do not involve § 1983 procedural due process claims. See McCarthy v. Madigan, 503 U.S. 140, 149, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992) (Bivens claim for money damages); Brown v. J.B. Hunt Transp. Servs., Inc., 586 F.3d 1079, 1085 (8th Cir. 2009) (ERISA action); Ace Prop. & Cas. Ins. Co. v. Fed. Crop Ins. Corp., 440 F.3d 992, 1000 (8th Cir. 2006) (breach of contract claim under the Federal Crop Insurance Act). Rather, the law in this context is settled: Futility is not an exception to the requirement that a litigant exhaust his state remedies in order to pursue a § 1983 procedural due process claim. See Christiansen v. W. Branch Cmty. Sch. Dist., 674 F.3d 927, 935-36 (8th Cir. 2012) (“[A] government employee who chooses not to pursue available post-termination remedies cannot later claim, via a § 1983 suit in federal district court, that he was denied post-termination due process.”); Winskowski v. City of Stephen, 442 F.3d 1107, 1110 (8th Cir. 2006) (“[A]n employee who fails to request post-termination process cannot later sue for having been deprived of it.”). Our court rejected an argument similar to Raymond’s futility claim in Riggins v. Board of Regents of University of Nebraska, 790 F.2d 707, 711-12 (8th Cir. 1986). In that case, a terminated employee alleged that the University’s process for post-termination grievances was constitutionally insufficient because it would not have allowed her to confront or cross-examine witnesses. Id. at 711. After concluding that the process would have been adequate, the court stated that, nonetheless, the plaintiff “chose not to file a grievance. In so choosing, she waived any claim that the grievance procedure did not afford her the process she was due.” Id. at 712. Since Riggins, we have consistently held that a plaintiff cannot bring a § 1983 procedural due process challenge to the adequacy of post-deprivation remedies without first exhausting those remedies. Hopkins v. City of Bloomington, 774 F.3d 490, 492 (8th Cir. 2014); Christiansen, 674 F.3d at 935-36; Winskowski, 442 F.3d at 1110.

Because Raymond’s invocation of futility lacks legal authority, there is no need to analyze whether the University’s post-termination procedures were in fact futile. I instead conclude that Raymond waived his § 1983 procedural due process claim by failing to pursue the post-termination processes available to him and his claim therefore fails as a matter of law. Christiansen, 674 F.3d at 936.

      . The Honorable Donovan W. Frank,. United States District Judge for the District of Minnesota.

      .We must accept the factual allegations set forth in the amended complaint as true for purposes of deciding whether the district court properly dismissed that complaint. See e.g., Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009).

      . The record is silent as to whether Raymond ever complained of these perceived deficiencies to the University or Regents prior to withdrawing his OCR petition.

      . "Though matters outside the pleading may not be considered in deciding a Rule 12 motion to dismiss, documents necessarily embraced by the complaint are not matters outside the pleading.” Gorog v. Best Buy Co. Inc., 760 F.3d 787, 791 (8th Cir. 2014) (quoting Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir. 2012)).

      . Because Raymond's allegations are insufficient to support a claim that exhaustion would have been futile, we need not decide whether futility is available as an exception to the exhaustion requirement in a- procedural due process claim.

      . For example: "Raymond claims that the entire process was infected from start to finish.” And: "Raymond was never, pre-termination or post-termination, ... given the right to confront and cross-examine [witnesses].”


author: MURPHY, Circuit Judge.

text:
    HILAND PARTNERS GP HOLDINGS, LLC, a foreign company; Hiland Partners, LP, a foreign partnership; Hiland Operating, LLC, a foreign company, Plaintiffs-Appellants v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendant-Appellee
    No. 15-3936
    United States Court of Appeals, Eighth Circuit.
    Submitted: December 15, 2016
    Filed: January 31, 2017

      Counsel who presented argument on behalf of the appellant was Margaret M. Clarke, of Tulsa, OK. The following attorney(s) appeared on the appellant brief; Patrick W. Durick, of Bismarck, ND.
    Counsel who presented argument on behalf ■ of the appellee was Katherine A. McBride, of Minneapolis, MN. The following attorney(s) appeared on the appellee brief; Robert Edward Salmon, of Minneapolis, MN.
    Before KELLY and MURPHY, Circuit Judges, and MONTGOMERY, District Judge.

      . The Honorable Ann D. Montgomery, United States District Judge for the District of Minnesota, sitting by designation.

   MURPHY, Circuit Judge.

Hiland Partners GP Holdings, LLC, Hi-land Partners, LP, and Hiland Operating, LLC (collectively, Hiland) brought this insurance coverage action against National Union Fire Insurance Company of Pittsburgh, PA (National Union). Hiland alleged that National Union had a duty to defend and indemnify it in connection with a lawsuit arising from an explosion at its natural gas processing facility. The district court granted National Union summary judgment after concluding that an exclusion to the insurance policy barred coverage. Hiland appeals, and we affirm.

I.

Hiland owns and operates a natural gas processing facility in Watford City, North Dakota. The processing facility receives gas and hydrocarbon products and processes them into byproducts for sale. Hi-land entered into a master service contract with Missouri Basin Well Service (Missouri Basin). That contract provided that Missouri Basin would “from time to time, be requested by Hiland ... to perform certain work or furnish certain services to Hiland.” The contract also required Missouri Basin to obtain insurance policies which named it as the primary insured and Hiland as an additional insured.

Missouri Basin also procured a commercial general liability insurance policy through National Union in April 2011, which was effective through April 2012. An endorsement to the policy provided that any organization to which Missouri Basin is obligated as a result of any contract or agreement would be included as an additional insured under the policy. The policy required National Union to pay all “sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘propérty damage’ ” which the policy covered. The policy also required National Union “to defend the insured against any ‘suit’ seeking those damages.”

The policy included an endorsement which excluded coverage for:

(1) “Bodily Injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of pollutants:
(a) At or from any premises, site or location which is or was at any time owned or occupied by ... any insured ....
(b) At or from any premises, site or location which is or was at any time used by or for any insured ... for the handling, storage, disposal, processing or treatment of waste;
(c) Which are or were at any time transported, handled, stored, treated, disposed of, or processed as waste by or for:
(i) Any insured....
(d) At or from any premises, site or location on which any insured or any contractors or subcontractors working directly or indirectly on any insured’s behalf are performing operations....

The endorsement defined “pollutants” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The endorsement provided that subparagraphs (l)(a) and (l)(d) do not apply if the pollution “commences during the term of the policy,” the insured discovers the pollution within seven days “after it commences,” and the insured reports the pollution to the insurer within twenty one business days following its discovery.

In October 2011, Hiland requested that Missouri Basin remove water from its hydrocarbon condensate tanks at its Watford City processing facility. Condensate is one of the marketable byproducts derived from the facility’s processing of gas and hydrocarbon products. It is a flammable, volatile, and explosive product. Missouri Basin asked B&B Heavy Haul, LLC (B&B), a subcontractor, to haul the water. After B&B employee Lenny Chapman arrived at the facility he positioned his truck in front of one of the condensate tanks. Before Chapman began removing the water, one of the tanks overflowed. The condensate then caused an explosion which seriously injured Chapman.

Chapman and his wife filed a lawsuit against Hiland, alleging negligence and loss of consortium. The Chapmans later settled their claims against Hiland. National Union refused to defend and indemnify Hiland as an additional insured under its insurance policy with Missouri Basin. Hi-land then filed this declaratory judgment action against National Union, arguing it was an additional insured under the insurance policy and that National Union had breached the policy by refusing to defend or indemnify it. After the parties filed cross motions for summary judgment, the district court granted National Union summary judgment. The court concluded that although Hiland was an additional insured under the policy, the Chapmans’ action fell within the pollution exclusion. Hiland appeals.

II.

We review a district court’s “grant of summary judgment de novo and consider the facts in the light most favorable to the nonmoving party.” Nichols v. Tri-Nat’l Logistics, Inc., 809 F.3d 981, 985 (8th Cir. 2016). A district court’s grant of “[sjummary judgment is only appropriate when ‘there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.’ ” Id. (quoting Pinson v. 45 Dev., LLC, 758 F.3d 948, 951-52 (8th Cir. 2014)). We review de novo questions of contract interpretation. Anderson v. Hess Corp., 649 F.3d 891, 896 (8th Cir. 2011).

It is undisputed that North Dakota law governs this action. In North Dakota, an “insurer’s obligation to defend its insured is ordinarily measured by the terms of the insurance policy and the pleading of the claimant who sues the insured.” Tibert v. Nodak Mut. Ins. Co., 816 N.W.2d 31, 42 (N.D. 2012) (quoting Schultze v. Cont’l Ins. Co., 619 N.W.2d 510, 513 (N.D. 2000)). If the allegations in the Chapmans’ complaint could have supported recovery upon a risk covered under National Union’s policy, National Union would have a duty to defend Hiland. Id. The duty to defend is broader than the duty to indemnify. Id at 43.

III.

Hiland first argues that the pollution exclusion in the National Union insurance policy is ambiguous. If language in an insurance contract is ambiguous, “any ambiguity or any reasonable doubt as to its meaning should be construed strictly against the insurer, and the doubt or ambiguity favorably to the insured.” Universal Underwriters Ins. Co. v. Johnson, 110 N.W.2d 224, 226 (N.D. 1961). A term is ambiguous if “there is doubt or uncertainty as to its meaning and it is fairly susceptible of two interpretations.” Id. at 227 (quoting 44 C.J.S. Insurance § 297c, at 1166-69).

National Union argues that Hi-land waived any argument that the pollution exclusion was ambiguous because Hiland did not raise any such argument before the district court. We will not ordinarily “consider arguments raised for the first time on appeal.” Cole v. Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am., 533 F.3d 932, 936 (8th Cir. 2008) (quoting Wiser v. Wayne Farms, 411 F.3d 923, 926 (8th Cir. 2005)). A party therefore “cannot assert arguments that were not presented to the district court in opposing summary judgment in an appeal contesting an adverse grant of summary judgment.” Id. “We may notice plain error despite a failure to raise the issue below, but we generally do so only to prevent a miscarriage of justice.” Id (internal quotation marks omitted).

In its memorandum in support of summary judgment, National Union argued that the pollution exclusion in its policy “is clear and unambiguous.” Hiland chose not to contest this point in its response in opposition to summary judgment. Hiland instead argued that hydrocarbon condensate is not a pollutant under the unambiguous terms of the policy.

Hiland argues that the following sentence in its memorandum in opposition to summary judgment preserved its ambiguity argument: “To find otherwise would require the Court to look beyond the policy’s definition of ‘pollutant’ and to interpret the ambiguous term to mean what National Union wants it to mean, and not what the policy describes it as being.” Read in context, however, this sentence merely reiterates Hiland’s argument that the definition of pollutant is unambiguous. Indeed, the district court noted in its summary judgment order that “Hiland does not contend the language of the pollution exclusion is ambiguous.” Because Hiland did not directly dispute the ambiguity issue, it is waived. See Cole, 533 F.3d at 936.

We need not review this issue for plain error because a failure to review it will not result in a miscarriage of justice. North Dakota has not addressed whether pollution exclusions like the one in this case are ambiguous. Moreover, the “majority of state and federal jurisdictions have held that absolute pollution exclusions are unambiguous as a matter of law.” Church Mut. Ins. Co. v. Clay Ctr. Christian Church, 746 F.3d 375, 380 (8th Cir. 2014) (quoting Cincinnati Ins. Co. v. Becker Warehouse, Inc., 262 Neb. 746, 635 N.W.2d 112,118 (2001)).

IV.

Hiland next argues that the district court erred by concluding that condensate is a pollutant. National Union’s insurance policy excluded from coverage bodily injuries or property damage “arising out of the ... discharge, dispersal, seepage, migration, release or escape of pollutants.” The policy defined pollutants as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.” The policy did not define irritant or contaminant, however. North Dakota applies “the plain, ordinary meaning” to an undefined term in an insurance policy so long as the term is not subject to strict technical usage. Hanneman v. Cont’l W. Ins. Co., 575 N.W.2d 445, 450-51 (N.D. 1998). Neither party argues that the definition of pollutant is subject to strict technical usage.

North Dakota courts consider dictionaries to be “good source[s] to determine the plain, ordinary definition of an undefined term.” Hanneman, 575 N.W.2d at 451. An irritant is defined as “something that irritates,” that is, that “produce[s] irritation.” Webster’s Third New International Dictionary 1197 (2002); see also The American Heritage Dictionary of the English Language 928 (5th ed. 2011) (“Causing irritation, especially physical irritation.”). A contaminant is “something that contaminates,” that is, that “soil[s], stains[s], corrupts], or infect[s] by contact or association.” Webster’s Third New International Dictionary, supra, at 490; see also The American Heritage Dictionary of the English Language, supra, at 396 (defining a contaminant as “[o]ne that contaminates,” that is, that makes “impure or unclean by contact or mixture”).

According to Chapman’s complaint, condensate is a saleable byproduct that results from the processing of gas and hydrocarbon products. The complaint described condensate as “flammable, volatile, and explosive.” Condensate is therefore a contaminant because flammable, volatile, and explosive liquid and gas has the ability to soil, stain, corrupt, or infect the environment. This conclusion is in accord with the “bulk of the case authority ... [which] holds that oil, gasoline, and other petroleum products are toxic by nature and therefore they constitute a contaminant when released into the environment.” Aetna Cas. & Sur. Co. v. Dow Chem. Co., 933 F.Supp. 675, 683 (E.D. Mich. 1996) (collecting cases); see also Owners Ins. Co. v. Farmer, 173 F.Supp.2d 1330, 1332-34 (N.D. Ga. 2001) (concluding that diesel fuel is a “pollutant”); Breese v. Hadson Petroleum (USA), Inc., 955 F.Supp. 648, 650-51 & n.7 (M.D. La. 1996) (concluding that diesel fuel is a “liquid contaminant”); Guilford Indus., Inc. v. Liberty Mut. Ins. Co., 688 F.Supp. 792, 793-96 (D. Me. 1988) (concluding that fuel oil is a “pollutant”).

The conclusion that condensate is a pollutant is further supported by Noble Energy, Inc. v. Bituminous Cas. Co., 529 F.3d 642 (5th Cir. 2008). In that case Noble Energy contracted with a water hauler “to collect and dispose of Basic Sediment and Water (‘BS&W’) from Noble’s storage tanks” at an oilfield recycling facility. I& at 644. The water hauler was covered by an insurance policy that contained a pollution exclusion that is identical in all relevant parts to the exclusion here. See id. at 646. While an employee of the water hauler was unloading the BS&W from a truck, condensate vapors dispersed and caused the truck’s engine to explode. Id. at 644. The court concluded that condensate “indisputably [met] the policy’s definition of ‘pollutant’ ” and the explosion “indisputably arose out of the discharge, dispersal, release, or escape of the BS&W and its vapors.” Id. at 647. We find Noble Energy, Inc. persuasive and indistinguishable from the current action.

Hiland nevertheless argues that even if condensate has the inherent properties of a contaminant, it does not fall within the policy’s definition of a contaminant because the condensate caused harm in a manner other than by contamination. In United Fire & Casualty Co. v. Titan Contractors Service, Inc., 751 F.3d 880, 886 (8th Cir. 2014), we concluded that a “pollution exclusion will not necessarily apply where the substance causing injury has the potential to irritate but has ... caused harm in a manner other than by irritating.” As an example, we noted that if a bottle of Drano qualified as a “pollutant” a pollution exclusion would not necessarily “bar coverage for bodily injuries suffered by one who slips and falls on the spilled contents of [the] bottle of Drano.” Id. (quoting Pipefitters Welfare Educ. Fund v. Westchester Fire Ins. Co., 976 F.2d 1037, 1043 (7th Cir. 1992)).

According to the Chapmans’ complaint, the condensate caused Chapman’s injuries due to its contamination of the environment. Condensate is a contaminant because it is flammable, volatile, and explosive. After Hiland permitted the condensate tanks to overflow, condensate escaped into the environment. The complaint alleged that overflow of the condensate tanks “caused ignition, fire, and an explosion” which seriously injured Chapman. Because condensate is a contaminant due to its flammable, volatile, and explosive properties and because Chapman’s injuries were the result of an explosion, the nature of the harm here is directly related to the nature of the contaminant.

Hiland also attempts to rely on Hocker Oil Co. v. Barker-Phillips-Jackson, Inc., 997 S.W.2d 510 (Mo. Ct. App. 1999). In Hocker Oil, a company that owned gasoline service stations sought coverage from its insurer after a drain plug on one of its gasoline storage tanks failed, thereby releasing gasoline into the ground. Id. at 512. The insurer denied coverage under a pollution exclusion identical to the exclusion in the present action. Id. at 512-13. After concluding that the exclusion was ambiguous, the court determined there that gasoline was not a pollutant because the insured’s primary business was to sell gasoline. Id; at 518. Hiland argues similarly that condensate is not a pollutant because it is in the business of selling condensate. As we have recently noted, however, Hocker Oil is not persuasive because it “has been almost uniformly rejected by appellate courts in other jurisdictions, and has not since been cited or referred to favorably by the Supreme Court of Missouri.” Doe Run Res. Corp. v. Lexington Ins. Co., 719 F.3d 868, 875 (8th Cir. 2013).

The district court therefore did not err by concluding that National Union did not have a duty to defend or indemnify Hiland because the allegations in the Chapmans’ complaint fell within the policy’s pollution exclusion.

V.

The district court concluded that National Union was not required to defend or indemnify Hiland because subdivisions (l)(a) and (l)(d) of the pollution exclusion applied. Subdivisions (l)(a) and (l)(d) do not however apply if the pollution commenced during the term of the policy, the insured discovers the pollution within seven days after it commences, and the insured reports the discharge of pollution to the insurer in writing within twenty one days of discovering it. The district court concluded that this exception to the exclusion did not apply because Hiland failed to offer evidence that it reported the pollution to National Union within twenty one days of discovering it.

Hiland argues that the district court improperly placed on Hiland the burden at the summary judgment stage to offer affirmative evidence that it reported the pollution within twenty one days. Hiland contends that even if it was required to prove at trial that it reported the pollution to National Union within twenty one days, National Union had the burden at summary judgment to assert the inapplicability of this exception, thus shifting the burden to Hiland to show affirmatively that it reported the pollution in a timely manner.

Under Rule 56, the party moving for summary judgment must show “that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The nonmoving party may resist a properly supported motion for summary judgment by “asserting affirmative defenses which it has the burden to prove” and supporting those defenses with specific facts. Midwest Oilseeds, Inc. v. Limagrain Genetics Corp., 387 F.3d 705, 714 (8th Cir. 2004).

In North Dakota the “insurer has the burden to prove the applicability of a' policy exclusion.” Lovas v. St. Paul Ins. Cos., 240 N.W.2d 53, 62 (N.D. 1976) (quoting Long v. Glidden Mut. Ins. Ass’n, 215 N.W.2d 271, 274 (Iowa 1974)). The insured, however, carries the burden to prove the applicability of “an exception to the exclusion in order to benefit from coverage.” Nationwide Mut. Ins. Cos. v. Lagodinski, 683 N.W.2d 903, 907 (N.D. 2004). As noted above, National Union met its summary judgment burden by proving the applicability of the pollution exclusion. The district court then properly placed the burden of proving the applicability of an exception to this exclusion on Hiland. Because Hi-land did not offer specific facts showing that it reported the pollution to National Union within twenty one days, the district court did not err by concluding that the exception to the exclusion did not apply.

VI.

For these reasons, we affirm the judgment of the district court.

      . The Honorable Daniel L. Hovland, United States District Judge for the District of North Dakota.

      . Notably, the Chapmans’ complaint does not allege that "the substance causing injury”— the condensate — "caused harm in a manner other than by” contaminating — that is, by exploding due to its flammable, volatile, and explosive nature. See United Fire, 751 F.3d at 886. Nor does the Chapmans' complaint allege Chapman’s injuries were caused by an intervening or superseding cause.

      . Because we conclude that condensate is a contaminant, we need not determine whether the district court properly concluded that it qualifies as waste under the policy.