Capistrant v. Lifetouch National Schools Studio, Inc.

John Capistrant (plaintiff) worked as a photographer for Lifetouch National Schools Studio, Inc. (Lifetouch) (defendant), where he eventually rose to a managerial role. At this point, Capistrant and Lifetouch entered a contract containing a paragraph that imposed various post-employment noncompete obligations on Capistrant, including a requirement that he return all Lifetouch property immediately at the end of his employment. The contract stipulated that the breach of any of these provisions by Capistrant would terminate Lifetouch’s obligation to pay residual (i.e., post-employment) commissions. Disagreements arose between Capistrant and Lifetouch. Capistrant brought suit for a judgment declaring his and Lifetouch’s respective rights under the contract, including the correct calculation of residual commissions. In March 2015, while the litigation was underway, Capistrant retired. About three months later, Lifetouch became aware that Capistrant still had several Lifetouch documents in his possession—for example, customer lists—and demanded that Capistrant return them, which he did. Lifetouch then asserted that Capistrant had breached the return-of-property provision. Capistrant argued that the return-of-property provision was not material to the contract. Both parties moved for summary judgment. The district court found in favor of Lifetouch. The court of appeals reversed, holding as a matter of law that the return-of-property clause was more properly read as part of a broader noncompete agreement, of which Capistrant was not in breach, and that enforcement would result in disproportionate forfeiture of large commission amounts owed to Capistrant. Lifetouch appealed to the Minnesota Supreme Court.