Of the Seventh Circuit, sitting by designation. *

United States Court of Appeals

For the First Circuit

Nos. 08-2160

08-2161

GEORGE P. BUKURAS,

Plaintiff-Appellant, Cross-Appellee,

v.

MUELLER GROUP, LLC,

Defendant-Appellee, Cross-Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Douglas P. Woodlock, U.S. District Judge]

Before

Lynch, Chief Judge,

Torruella and Ripple, Circuit Judges. *

Jeremiah P. Sullivan, Jr., with whom Sullivan and McDermott,

was on brief for appellant.

Christopher Cole, with whom Karyl R. Martin and Sheehan

Phinney Bass + Green, P.A., were on brief for appellee.

January 20, 2010
-2-

TORRUELLA, Circuit Judge. This is a contract dispute

between the Mueller Group, LLC ("Mueller" or the "Company") and its

former general counsel, George P. Bukuras, over the interpretation

of the severance and general release provisions of Bukuras's

employment agreement. The district court granted summary judgment

against Bukuras on his claim that the Company breached the terms of

his employment when it failed to include in the calculation of his

severance compensation a $1 million transaction bonus he received

in connection with a sale of the Company, which the district found

unsupported by the plain terms of the agreement. See Bukuras v.

Mueller Group, LLC, No. 06-11790, 2008 U.S. Dist. LEXIS 64517, at

*17 (D. Mass. Aug. 14, 2008). The district court also granted

summary judgment against Mueller on its counterclaim alleging that

Bukuras's suit violated a general release of claims executed by

Bukuras at the time of his termination, finding that Bukuras's

claim was outside the scope of the release and that, in any event,

the release did not support an independent claim for breach which

would entitle Mueller to recover its litigation expenses incurred

in defending against Bukuras's claims. Id. at *23-25. On appeal,

both parties challenge these determinations. We affirm in all

respects.
-3-

I. Background

A. Facts

In August 2000, Mueller chief executive officer Dale

Smith offered Bukuras a position as the Company's general counsel.

Smith's offer letter provided for a base salary of $180,000, an

annual bonus equal to four percent of the Company's shared bonus

pool, and other benefits, including severance benefits as outlined

in Mueller's draft executive severance pay policy. A copy of that

policy was attached to the offer letter. Bukuras accepted, and

began work as Mueller's general counsel in October 2000.

Two years later, in the fall of 2002, Mueller's owners,

DLJ Merchant Banking Partners ("DLJ"), contemplated selling the

Company through a private auction. In connection with this effort,

Bukuras informed Smith in January 2003 that, in his opinion, the

Company was legally obligated to pay him upon termination the

benefits described in the severance policy attached to Smith's

August 2000 offer of employment, and that those payments were among

the obligations that needed to be disclosed to prospective bidders.

Smith, who had never submitted the draft policy to Mueller's board

of directors for approval, disagreed with Bukuras and the conflict

became heated. Smith invited Bukuras to resign.

Looking to resolve the matter, Bukuras sent a memorandum

to Mueller's board of directors in which he summarized his version

of the disagreement with Smith and informed the board of his
-4-

preference to remain with the Company through the proposed sale,

provided he could execute a new employment agreement so that

everyone would be on the same page regarding his severance

benefits. The board agreed and, after negotiations in which both

Bukuras and the Company were represented by counsel, the parties

executed a new employment agreement, which became effective in

early February 2003.

Under the terms of the 2003 employment agreement (the

"Agreement"), Mueller undertook, among other things, to pay Bukuras

an increased annual salary of at least $200,000 and, under the

heading "Bonus," "an annual bonus, payable at the conclusion of

each fiscal year, equivalent to not less than 5% of the bonus pool

applicable to compensate executive management of the company."

Agreement, § 4 [hereinafter, the "Bonus Provision"]. In addition,

the Agreement provided that if the Company terminated Bukuras for

any reason other than cause:

[T]he employee shall be entitled to severance

compensation in an amount equal to the sum of

(A) eighteen (18) months Salary (at the rate

then in effect), plus (B) one hundred fifty

(150%) percent of the bonus paid or payable to

the Employee for the fiscal year immediately

preceding the fiscal year in which termination

occurs.

Id. § 4(d) (emphasis added)[hereinafter, the "Severance

Provision"]. Receipt of this severance payment was expressly

conditioned on Bukuras's execution of a general release of claims

against the Company, and a model release was appended to the
 At all times relevant to this dispute, Mueller's fiscal year 1

ended on September 30.

-5-

Agreement. Further, in exchange for the severance benefits

described in the Agreement, Bukuras agreed to forgo certain

"Transaction Benefits" that the board was then considering awarding

to certain employees "in connection with a change of control

transaction expected to be consummated during [fiscal year ("FY")

2003]." Id. § 4(c).1

At the time he entered into the Agreement, Bukuras had

received annual bonuses for each of his two years at Mueller. In

both years, the bonuses were conditioned on the Company meeting

certain financial targets, measured in terms of earnings before

interest, taxes, depreciation, and amortization (or, "EBITA").

Based on those targets, the Company allocated a pool of money for

division among eligible senior executives according to the terms of

their employment. For example, for FY 2001 the Company set an

earnings target of $180 million EBITA and a bonus pool of

$4,797,000. When the Company hit its mark, Bukuras received a

$192,000 bonus, which was equal to four percent of the pool, per

the terms outlined in Smith's initial offer letter. For FY 2002,

Bukuras received a bonus of $240,000, calculated according to the

same methodology. Following the execution of the revised

Agreement, under which Bukuras was entitled to a larger (five

percent) share of the annual bonus pool, he received a $245,000
-6-

bonus for FY 2003 and a $210,000 bonus for FY 2004, with both

bonuses calculated according to the same EBITA-based formula used

in previous years. In every year of his employment, Bukuras

received his annual bonus following the conclusion of the fiscal

year, a delay which was necessary to allow the Company's auditors

to review its earnings.

The auction process contemplated by DLJ was unsuccessful

and did not result in the sale of the Company in 2003. As a

result, Smith and Bukuras's strained relationship continued.

However, in late 2004, DLJ began the process for another private

auction in a second attempt to sell the Company. In April 2005,

anticipating the sale, Mueller's board passed several resolutions

relating to the compensation of key executives, including a

resolution setting the EBITA target and bonus pool for FY 2005

according to the same methodology used in previous years.

Walter Industries ("Walter") emerged as the successful

bidder at auction and, on June 17, 2005, Mueller and Walter signed

a definitive merger agreement, which was conditioned on, among

other things, Hart-Scott-Rodino antitrust review by the Federal

Trade Commission ("FTC"), see 15 U.S.C. § 18a, a process expected

to take several months. Closing was set to occur within two days

of the satisfaction of all conditions set forth in the merger

agreement. However, the merger agreement provided that if the

conditions were not satisfied within six months of the June
 Participation in the transaction bonus pool was not coextensive 2

with participation in "the bonus pool applicable to compensate

executive management of the company" referenced in the Bonus

Provision of Bukuras's Agreement.

-7-

signing, the agreement would terminate and Walter's obligation to

purchase the Company would expire.

Also on June 17, 2005, the board passed a resolution

setting aside a pool of up to $10 million for the payment of a

one-time "transaction bonus." At closing, this pool would be

allocated to 17 employees -- including Bukuras, certain members of

the management team, and legal personnel involved in bringing the

transaction to a close. The transaction bonus was intended to 2

provide an incentive to the employees, some of whom understood they

would likely be terminated following the sale, to remain with the

Company until the merger was complete. The transaction bonus was

also meant to reward those employees for their efforts in bringing

the transaction to a successful close. Bukuras expected to receive

a $1 million transaction bonus, equal to ten percent of the pool,

if and when the deal went through.

Following the execution of the merger agreement, on

advice of outside counsel, Bukuras and other employees agreed to

submit certain anticipated change of control payments, including

the transaction bonus and any severance compensation, for

shareholder approval in order to avoid a tax penalty. As general

counsel (and also, since June 2004, chief compliance officer),
-8-

Bukuras was responsible for overseeing the preparation of

shareholder solicitation and disclosure documents related to these

payments. In July 2005, Bukuras's legal department prepared

spreadsheets which identified the anticipated severance

compensation and "Transaction Payment[s]" for certain employees.

The final spreadsheets, dated July 18, 2005, calculated Bukuras's

anticipated severance payment as $1,027,500, using only his salary

and, explicitly, his estimated FY 2005 "annual bonus." The

spreadsheets did not include the transaction bonus in the severance

calculation; instead, it was identified in a separate column in the

spreadsheet. The figures in the spreadsheet were based on the

assumption that the merger would close in FY 2006 and that the

employees would be terminated in that year.

Charts based on these spreadsheets, and containing the

same or materially similar disclosures, were reviewed and approved

by Mueller's board and, on August 17, 2005, submitted to the

Company's shareholders for approval. The shareholder disclosures

indicated that the estimated severance payments were "calculated by

reference to an estimated annual bonus payable for the 2005 fiscal

year" (emphasis added). The shareholders approved the payments as

outlined in the disclosures.

In early September 2005, the FTC notified Mueller of

early termination of its approval process, which Mueller's outside

counsel had previously opined would likely not occur until mid- to
-9-

late November 2005 (i.e., FY 2006). The FTC approved the merger.

On September 26, 2005, Smith sent a letter to Bukuras stating, in

relevant part:

[W]e are anticipating that the sale of Mueller

Water Products to Walter Industries will occur

on Monday, October 3. . . . I've been

allowed the privilege of rewarding certain of

our employees that have been involved in the

sale process and whom have expended

significant extra time and energy in bringing

this transaction to a successful close.

Therefore, upon the completion of the

transaction on Monday, October 3, you will be

receiving $1,000,000 as a one-time special

bonus for your contribution to this

transaction.

[hereinafter, the "September 2005 Letter"]. The merger closed as

expected on October 3, 2005 -- the first business day of FY 2006 --

and Bukuras was wired the $1 million transaction bonus.

In early November 2005, Bukuras was terminated without

cause. In connection with his termination, and as an express

condition for receiving his severance payment, Bukuras signed a

broad, general release of all claims against the Company, including

claims arising from his severance of employment.

In December 2005, Bukuras received his annual,

EBITA-based bonus for FY 2005 in the amount of $468,600. However,

Bukuras had agreed, for tax purposes, to defer receipt of his

severance compensation until six months after his termination.

Thus, it was not until May 2006 that Bukuras received his severance

payment of $1,040,700, which was based on 1.5 times his annual
-10-

salary and 1.5 times his FY 2005 annual bonus. The $1 million

transaction bonus he had received on October 3, 2005 was not

factored into the calculation of his severance payment.

On May 18, 2006, Bukuras sent a letter to Smith calling

attention to the Company's failure to include the termination bonus

in the calculation of his severance payment and requesting a

response, which he never received.

B. Procedural History

Bukuras filed a lawsuit in Massachusetts state court on

September 20, 2006, which Mueller removed to federal court. In his

first amended federal complaint, filed in February 2007, Bukuras

asserted several causes of action, including breach of contract,

fraud, unjust enrichment, deceit, and negligent misrepresentation.

Six of the claims were based, at least in part, on the Company's

alleged failure to provide Bukuras with stock options commensurate

with those awarded to other senior executives. Another claim, for

breach of the Agreement, was based on Mueller's failure to include

the transaction bonus in the calculation of his severance payment.

Mueller responded by filing a counterclaim alleging that Bukuras

had breached the general release when he filed suit, and moved to

dismiss Bukuras's complaint in its entirety. The district court

granted the motion to dismiss all of Bukuras's claims but the claim

for breach of contract based on Mueller's calculation of his

severance compensation.
-11-

The parties subsequently filed cross-motions for summary

judgment on both the claim and counterclaim, and on August 14, 2008

the district court issued its decision. See generally Bukuras,

2008 U.S. Dist. LEXIS 64517. First, the court granted Mueller's

motion, and denied Bukuras's motion, on Bukuras's contract claim,

concluding that the contract was unambiguous and that "the bonus"

described in the Agreement's Severance Provision referred

exclusively to the Company's annual, EBITA-based bonus and did not

include the transaction bonus. Second, the court granted Bukuras's

motion, and denied the Company's motion, on Mueller's counterclaim,

holding that the release did not include within its scope Bukuras's

cause of action based on improper calculation of the severance

payment, which was unliquidated at the time he signed the release.

In addition, it held that the release was an affirmative defense to

Bukuras's claims, but did not give rise to an agreement not to sue

capable of supporting Mueller's claim for damages. Both parties

now appeal.

II. Legal Framework

A. Standard of Review

We review a district court's grant of summary judgment de

novo, Insituform Techs., Inc. v. Am. Home Assurance Co., 566 F.3d

274, 276 (1st Cir. 2009), and "the presence of cross-motions for

summary judgment does not alter or dilute this standard." Kunelius

v. Town of Stow, 588 F.3d 1, 8 (1st Cir. 2009). "We will affirm
-12-

entry of summary judgment if the record -- viewed in the light most

favorable to the nonmoving party, including all reasonable

inferences drawn in favor of the nonmoving party -- discloses no

genuine issue of material fact, and the moving party is entitled to

judgment as a matter of law." Id. at 8-9. "We may affirm summary

judgment on any ground manifest in the record." Emhart Indus. Inc.

v. Century Indem. Co., 559 F.3d 57, 65 (1st Cir. 2009).

B. Contract Interpretation

Under the terms of the Agreement, we look to

Massachusetts contract law. The interpretation of an unambiguous

contract is a question of law for the court, as is the initial

determination of whether an ambiguity exists. Basis Tech. Corp. v.

Amazon.com, Inc., 878 N.E.2d 952, 958-59 (Mass. App. Ct. 2008).

"Provisions are not ambiguous simply because the parties have

developed different interpretations of them. Genuine ambiguity

requires language susceptible of more than one meaning so that

reasonably intelligent persons would differ as to which meaning is

the proper one." Id. at 959 (quotation marks and alterations

omitted); see Teragram Corp. v. Marketwatch.com, Inc., 444 F.3d 1,

9 (1st Cir. 2006) (applying Massachusetts law, and explaining that

"[e]ven if a contract might arguably appear ambiguous from its

words alone, the decision remains with the judge if the alternative

reading is inherently unreasonable when placed in context").
-13-

"[A]n agreement is to be 'construed so as to give it

effect as a rational business instrument and in a manner which will

effectuate the intent of the parties[;]' the parties' intent 'must

be gathered from a fair construction of the contract as a whole and

not by special emphasis upon any one part.'" Kingstown Corp. v.

Black Cat Cranberry Corp., 839 N.E.2d 333, 336 (Mass. App. Ct.

2005) (internal citations omitted). "[W]ords that are plain and

free from ambiguity must be construed in their usual and ordinary

sense," and the agreement should be read "in a reasonable and

practical way, consistent with its language, background, and

purpose." Cady v. Marcella, 729 N.E.2d 1125, 1129-30 (Mass. App.

Ct. 2000) (internal quotation marks omitted).

"Common sense is as much a part of contract

interpretation as is the dictionary or the arsenal of cannons."

Fishman v. LaSalle Nat'l Bank, 247 F.3d 300, 302 (1st Cir. 2001).

"In short, words matter; but the words are to be read as elements

in a practical working document and not as a crossword puzzle."

Fleet Nat'l Bank v. H&D Entm't, 96 F.3d 532, 538 (1st Cir.

1996)(applying Massachusetts law).

III. Discussion

A. Alleged Breach of the Severance Provision

The Agreement's Severance Provision obligated Mueller to

pay Bukuras upon termination "one hundred fifty (150%) percent of

the bonus paid or payable to the Employee for the fiscal year
-14-

immediately preceding the fiscal year in which termination occurs."

This dispute centers on the meaning of "the bonus" as used in this

provision.

Bukuras contends that "the bonus" captures both his FY

2005 annual bonus and the transaction bonus he received in

connection with the successful merger with Walter in FY 2006. He

takes two steps to reach this conclusion. First, he contends that

the transaction bonus was "paid or payable" for FY 2005 because,

according to Smith's September 2005 Letter, the transaction bonus

was paid "for his contribution" to the successful merger with

Walter, and all his work towards that end occurred in FY 2005.

Second, Bukuras argues that, in contrast to the "annual bonus"

described in the Bonus Provision, the parties left the term "bonus"

in the Severance Provision undefined and therefore to its plain and

ordinary meaning, which he asserts comprehends both his FY 2005

annual bonus and any additional funds over and above his salary

which were "paid or payable" to him for that year. Therefore, he

insists, Mueller breached its obligations under the Severance

Provision when it failed to include 150% of the transaction bonus

in his severance payment.

Mueller counters, and the district court found, that the

transaction bonus was properly excluded from the calculation of

Bukuras's severance payment because (1) the transaction bonus was

not "paid or payable" for FY 2005 due to the undisputed fact that
The Oxford English Dictionary notes, however, that "[o]f time" 3

is also among the numerous definitions of the preposition "for."

Oxford English Dictionary Online, available at

http://dictionary.oed.com.

-15-

payment of the bonus was contingent on the closing of the merger,

which did not occur until FY 2006; and, in any event, (2) the

Agreement, read as a whole, makes clear that the drafters intended

"the bonus" referenced in the Severance Provision to refer,

exclusively, to the "annual bonus" described in the Bonus

Provision.

We agree with the district court that Mueller was not

required under the terms of the Agreement to include Bukuras's $1

million transaction bonus in the calculation of his severance

payment. As Bukuras has acknowledged, the transaction bonus was

paid, and became payable, in FY 2006 when the merger occurred.

Nonetheless, Bukuras contends that when the bonus was paid or

became payable is immaterial for purposes of determining what the

bonus was paid "for." Rather, he asserts that the plain language

of the Severance Provision requires us to ask what the transaction

bonus was "in consideration or payment of." See Random House

Dictionary of the English Language (2d. ed. 1987) (defining

"for")(quoted in Appellant's Br. 17 n.12). Relying on Smith's 3

September 2005 Letter, he maintains that the transaction bonus was

for "his significant extra time and energy in bringing [the]

transaction to a successful close" and for "his contribution" to
-16-

the merger. There is no dispute that his efforts with respect to

the merger wrapped up in the final hours of the last business day

of FY 2005.

Nonetheless, we reject the contention that the

transaction bonus can reasonably be understood as "for" anything

but the closing of the merger transaction in FY 2006. Indeed, the

September 2005 Letter on which Bukuras relies specifically

describes the transaction bonus as a "one-time special bonus" which

would be paid, and would become payable, "[u]pon completion of the

transaction" in FY 2006. Had the deal collapsed prior to closing,

regardless of Bukuras's FY 2005 efforts or contribution, the bonus

would never have been "paid" or become "payable." We thus conclude

that because the closing occurred in the same year in which Bukuras

was terminated, the transaction bonus was not "paid or payable

. . . for the fiscal year immediately preceding" his termination

and was, therefore, outside the scope of the Severance Provision.

In any event, we also agree with the district court that

a comprehensive reading of the Agreement confirms that the parties

intended "the bonus" in the Severance Provision to mean Bukuras's

"annual bonus." In plain English, Bukuras's bonus "for" the fiscal

year immediately preceding his termination is most comfortably

understood as his FY 2005 "annual bonus." Mueller persuasively

explains that the phrase "the bonus paid or payable . . . for . . .

the fiscal year" was included to reflect the reality that annual
 Though Bukuras asserts that Smith held out the prospect of 4

additional, discretionary compensation in addition to his annual

bonus, there is no indication in the record that Bukuras received

any other "bonuses" prior to -- or, for that matter, after -- the

Agreement's execution, other than the transaction bonus. The

record does reflect that the Company was not contractually

obligated to pay out one hundred percent of funds available in the

"annual bonus" pool described in the Bonus Provision, and that

Smith had discretion as to how to dispense the remainder, and to

whom. But even if Bukuras could have received an "annual bonus"

greater than the share Mueller was contractually obligated to pay

him, a fact which accounts for the "at least equivalent to"

language used in the Bonus Provision, Bukuras had no reasonable

expectation of receiving this additional, discretionary

compensation at the time he negotiated the Agreement.

-17-

bonuses were paid following the conclusion of the fiscal year in

order to allow its auditors time to crunch the Company's annual

earnings figures.

This understanding of the term "bonus" as "annual bonus"

is confirmed by the context in which the word was used; namely, an

employment agreement containing an express Bonus Provision

obligating the Company to pay an "annual bonus, payable at the

conclusion of each fiscal year." It also lines up with common

sense. Mueller's historical practice of paying Bukuras an "annual

bonus" based on annual earnings reinforces the conclusion that,

when the parties referenced "the bonus" for "the fiscal year," they

had in mind the only bonus which Bukuras had received, and under

the terms of his employment had an expectation to receive, at the

time the Agreement was drafted. As the district court noted, the 4

Severance Provision references "the bonus" in the singular, and the

reasonable inference is that by doing so the parties intended to
 While Bukuras asserts that his different treatment with respect 5

to Transaction Benefits supports the notion that he bargained away

those benefits in exchange for an expansive definition of "bonus"

in the Severance Provision, there is no support for this

proposition in the text of the Agreement or elsewhere in the

record. Rather, the explicit language of Section 4(c) and the

circumstances of the parties at the time of drafting indicate that

Bukuras agreed to forgo Transaction Benefits in exchange for

comfort regarding his entitlement to severance benefits in the

event of his possible termination following the contemplated FY

2003 sale. It makes little sense that Bukuras would have bargained

away the Transaction Benefits in exchange for an expansive

definition of bonus capable of comprehending a separate payment

that he had no expectation of receiving.

-18-

refer back to, and incorporate, the only other bonus -- Bukuras's

"annual bonus" -- described within the four corners of the

Agreement. Against this backdrop, Bukuras's contention that "the

bonus" is a collective noun capable of comprehending the payment of

multiple bonuses is a stretch too far.

Finally, as Section 4(c) of the Agreement makes clear,

when the agreement was signed Bukuras had expressly agreed to waive

any right to "Transaction Benefits" associated with the thencontemplated sale of the Company in exchange for the severance

benefits described in Section 4(d). This provision demonstrates

that, at the time of drafting, the parties did not understand the

term "bonus" to include "Transaction Benefits." Even if the

specific transaction referenced in Section 4(c) never materialized,

Bukuras fails to explain why the parties would have understood

special compensation associated with the FY 2006 transaction any

differently.5
-19-

Bukuras disputes this construction, emphasizing that

unlike the term "Salary," which is defined in Section 4(a) and

expressly incorporated in the Severance Provision, the Agreement

does not create "bonus" as a defined term. He thus asserts that

the term "bonus" as used in the Severance Provision was

intentionally left to its plain, ordinary, and expansive meaning of

"something given or paid over and above what is due." Random House

Dictionary of the English Language (2d ed. 1987) (quoted in

Appellant's Br. 14), and not the more limited description of

"Bonus" as "annual bonus" set forth in the Bonus Provision.

However, "the scope of a party's obligations cannot 'be delineated

by isolating words and interpreting them as though they stood

alone.'" Starr v. Fordham, 648 N.E.2d 1261, 1269 (Mass. 1995)

(quoting Comm'r of Corp. & Taxation v. Chilton Club, 61 N.E.2d 335

(Mass. 1945)). As discussed, Bukuras's proposed construction

strains the language of the contract, fails to account for the

circumstances in which the Agreement was drafted, and is belied by

a common sense reading of the document as a whole. The Agreement's

failure to explicitly define "bonus" to the same extent as "Salary"

fails to override these considerations. Cf. Wyner v. North Am.

Specialty Ins. Co., 78 F.3d 752, 756-57 (1st Cir. 1996) (applying

Massachusetts contract law, and concluding that the inconsistent

capitalization and usage of terms in an insurance contract failed
-20-

to create an ambiguity where the contract's meaning could be

reasonably discerned from other provisions).

Finally, Bukuras makes much of the fact that the Bonus

Provision only required payment of an annual bonus "equivalent to

not less" than the specified share of the annual bonus pool, and

did not tie the Company to any particular method for determining

bonus levels. He argues, among other things, that because payment

of the $1 million transaction bonus alone would have satisfied the

Company's obligations pursuant to the Bonus Provision, the

transaction bonus must fall within the ambit of "bonus" for

purposes of the Severance Provision; otherwise, he maintains, the

Company could satisfy its annual bonus obligations while leaving

Bukuras with no "bonus" factor for purposes of his severance

payment. Plainly, this is a false syllogism. While, in Bukuras's

hypothetical, payment of the $1 million he received as the

transaction bonus would have been "at least equivalent to" his

annual bonus share and therefore satisfied Mueller's obligations

under the Bonus Provision, it does not follow that the transaction

payment should therefore be understood as his "annual bonus."

There is no dispute that Mueller paid Bukuras a substantial "annual

bonus" for FY 2005 and included that annual bonus in the

calculation of his severance payment.

Accordingly, we agree with the district court, for

essentially the same reasons, that the Company did not breach the
Because we conclude that the Agreement is clear on its face, we 6

do not consider the August 2005 shareholder disclosures, or

Bukuras's understanding of his severance rights as reflected in

those documents.

-21-

terms of the Agreement when it failed to include Bukuras's

transaction bonus in the calculation of his severance payment. We

thus affirm the grant of summary judgment in favor of Mueller, and

against Bukuras, on his claim for breach of the Agreement.6

B. Alleged Breach of the General Release

On cross-appeal, Mueller contends that the district court

erred when it held that the Company could not recover its fees and

costs associated with defending against Bukuras's claims as damages

for Bukuras's alleged violation of the release he signed. Bukuras

answers that his claim for breach of the Agreement was outside the

scope of the release and that, in any event, under the so-called

American Rule, Mueller is not entitled to recoup its litigation

expenses as damages for breach. Bukuras also maintains that all of

his claims were permitted under a carve-out provision in the

release, which states that "nothing herein is intended or shall be

construed or understood to diminish or limit in any way any of the

protections and/or benefits to which I may be entitled." The

district court's determination that the release is enforceable as

a knowing and voluntary waiver of rights is not at issue in this

appeal.
-22-

The release executed by Bukuras was a broad one. In it,

Bukuras "voluntarily, irrevocably, and unconditionally release[d]

and forever discharge[d]" the Company "from any and all complaints,

claims, demands, or liabilities, or rights, whether known or

unknown and whether in law or equity" which have or may "arise in

whole or in part from [his] employment and/or termination from the

Company." The release goes on to "specifically include[]" a number

of contract claims relating to his "employment or severance of

employment." The release provided Bukuras with a right to seek

clarification of its terms, and stated that upon execution the

Company would "assume, and ask any court or trier of fact to

assume, that you have understood everything on which clarification

has not been sought." Bukuras sought no clarification regarding

the amount of his severance prior to his execution of the release

on November 1, 2005.

Nonetheless, the district court held that Bukuras's claim

regarding the calculation of his severance payment was outside the

scope of the release because "the precise amount of the severance

payment had not been liquidated at the time the release was

executed." Under the circumstances, we agree with this conclusion.

Bukuras's claim for breach of the Severance Provision alleged that

the Company failed to pay him the full benefits he was promised in

consideration for signing the release. As the district court

noted, Mueller's proposed interpretation would permit the Company
-23-

to violate the terms of his employment contract by paying him less

severance than he was due. An interpretation of the release that

would deprive Bukuras of any recourse in the event of a violation

of an unliquidated obligation on the part of the Company is simply

untenable. We therefore conclude that the release did not prevent

Bukuras from mounting a good faith challenge to the Company's

interpretation of its obligations under the Severance Provision.

We also agree that the Company's attempt to bring an

independent claim for breach of the release in order to recoup the

costs of defending itself in this litigation must fail. A release

is an affirmative defense; it does not supply a defendant with an

independent claim for breach of contract. See Melanson v.

Browning-Ferris Indus., 281 F.3d 272, 276 (1st Cir. 2002) ("Waiver

and releases are affirmative defenses on which the employer bears

the burden.") (applying Massachusetts law); cf. Isbell v. Allstate

Ins. Co., 418 F.3d 788, 797 (7th Cir. 2005) (explaining that a

release "does not result in breach upon the filing of a suit.

Instead, it provides [a defendant] with an effective affirmative

defense should a claim be raised").

Moreover, under the American Rule, which is followed in

Massachusetts, attorneys fees and costs are generally not

recoverable by a prevailing litigant in the absence of an explicit

contractual provision or other applicable rule or statute. See

generally Police Comm'r of Boston v. Gows, 705 N.E.2d 1126, 1128
-24-

(Mass. 1999); Waldman v. American Honda Motor Co., 597 N.E.2d 404,

406 (Mass. 1992). Though there is no Massachusetts case squarely

on point, the vast majority of jurisdictions adhering to this Rule

do not permit a litigant pursuing claims for breach of a release to

recover attorneys' fees and costs as damages in the absence of a

contractual clause, rule or statute specifically providing for that

remedy. See, e.g., Allison v. Bank One - Denver, 289 F.3d 1223,

1244-45 (10th Cir. 2002) (applying Colorado law to conclude that

"attorney fees and costs should not be awarded for breach of a

release unless the agreement expressly provides that remedy")

(internal quotation marks and alterations omitted); Gruver v. Midas

Int'l Corp., 925 F.2d 280, 284 (9th Cir. 1991) (explaining "the

majority view that under the American rule, attorney's fees are not

awardable where there has been a breach of a release and covenant

not to sue unless attorney's fees were provided for in that

release"); see also W.R. Grace & Co. - Conn. v. Goodyear Tire &

Rubber Co., No. 1:99-cv-305, 1999 U.S. Dist. LEXIS 22553, at *8-10

(W.D. Mich. Nov. 30, 1999) (noting that "the great majority of

courts that have applied state law in resolving" whether attorneys

fees and costs are recoverable for violation of a release and

covenant not to sue "have held that litigation expenses are not

recoverable," and surveying cases from various jurisdictions). We

conclude that Massachusetts courts would also take this view. Cf.
 Mueller contends that we should read the release as a covenant 7

not to sue, asserting that Massachusetts no longer recognizes any

distinction between the two. The authority Mueller cites for this

proposition, Mass. Gen. Law ch. 231B, § 4(a), is inapposite because

it applies only to contributions among joint tortfeasors. In any

event, we find that this distinction will not help Mueller under

the circumstances because, as the cases cited above demonstrate,

the prevailing view is that, as with a release, attorneys' fees are

not recoverable for breach of a covenant not to sue in the absence

of express contractual language providing otherwise. Accord In re

Weinschneider, 395 F.3d 401, 404 (7th Cir. 2005) (explaining that

under Illinois law, which follows the American Rule, "[a]ttorney

fees and the ordinary expenses and burden of litigation are not

allowable to the successful party" to recover for breach of a

covenant not to sue "in the absence of an agreement or stipulation

specifically authorizing the allowance of attorney fees, or in the

absence of a statute providing for the taxing of attorney fees

against the losing party").

-25-

Gows, 705 N.E.2d at 1129 (stating policy that "[a]n award of

attorney's fees should be reserved for rare and egregious cases").7

In this case, the release Bukuras signed contained no

fee-shifting provision that would have entitled Mueller to recover

its costs or fees in the event of a breach. There is also no claim

that Bukuras brought his lawsuit in bad faith, see Fed. R. Civ. P.

11, or otherwise engaged in litigation conduct which might support

a claim for fees and expenses, see, e.g., Fed. R. Civ. P. 37(c).

Thus, in the absence of an express contractual provision or other

source of authority which would permit the recovery of the relief

Mueller seeks, we conclude that the Company is not entitled to

recover its fees and costs as damages for Bukuras's alleged breach

of the release. Accordingly, we affirm the district court's grant
-26-

of summary judgment against Mueller, and in favor of Bukuras, on

its counterclaim.

Affirmed.