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17-P-45 Appeals Court

ALAN MACDONALD vs. JENZABAR, INC., & others.1

No. 17-P-45.

Suffolk. October 10, 2017. - January 11, 2018.

Present: Vuono, Meade, & Kinder, JJ.

Employment, Termination, Severance agreement. Contract, 

Employment, Severance agreement, Release from liability, 

Performance and breach, Construction of contract. Release. 

Corporation, Stock.

Civil action commenced in the Superior Court Department on 

August 17, 2012. 

The case was tried before Janet L. Sanders, J., and entry 

of judgment was ordered by her.

Colin R. Hagan for the plaintiff.

Michael D. Blanchard for the defendants.

MEADE, J. Alan MacDonald initiated this action in the 

Superior Court against his former employer, Jenzabar, Inc. 

(Jenzabar), and four of its directors (directors) after a 

dispute arose over his rights to certain Jenzabar preferred 

 

1 Robert A. Maginn, Jr.; Ling Chai; Daniel Quinn Mills; and 

Joseph San Miguel.
2

shares and stock options granted during the course of his 

employment. Central to that dispute is the interpretation of a 

severance agreement MacDonald executed as he departed from 

Jenzabar (severance agreement). According to Jenzabar and the 

directors, all of MacDonald's claims should be dismissed because 

the severance agreement, which contains a general release, is 

unambiguous and extinguished his rights to the preferred shares 

and stock options. MacDonald, in turn, maintains that the 

severance agreement is ambiguous and that extrinsic evidence, 

which Jenzabar chose not to dispute, establishes that the 

parties did not intend to so terminate his rights. After four 

years of litigation, both sides prevailed in part.

Most of MacDonald's claims, including all of those against 

the directors, were dismissed at various stages of the 

litigation for reasons unrelated to the interpretation of the 

severance agreement.2 As to that central issue, a judge 

concluded, in rulings issued both prior to and after trial, that 

 

2 Two judges, acting on separate dispositive motions, 

combined to dismiss MacDonald's claims for interference with 

contractual and prospective economic relations, conversion, 

civil conspiracy, violations of both G. L. c. 149, § 148 (Wage 

Act), and G. L. c. 110A (Massachusetts Uniform Securities Act 

[MUSA]), and the advancement of attorney's fees by Jenzabar. 

One of those judges also rejected, on grounds of futility, 

MacDonald's request to amend the complaint to add a claim for 

violation of G. L. c. 93A. Of these rulings, MacDonald raises 

on appeal only the dismissal of the Wage Act and MUSA claims and 

the denial of the motion to add the c. 93A claim. As none of 

those claims survives our interpretation of the severance 

agreement, however, we need not reach those issues.
3

the severance agreement is unambiguous insofar as it 

extinguished MacDonald's rights to the preferred shares, but is 

ambiguous regarding the stock options.3 After Jenzabar preserved 

its appeal with respect to the interpretation of the contract 

and waived the right to argue that any ambiguities should be 

resolved in its favor, the same judge presided over a jury trial 

on the limited issue of liability for the stock options. At the 

conclusion of that trial, the jury returned a verdict finding 

Jenzabar liable for refusing to honor MacDonald's initial 

exercise of 1,000 stock options, but not liable for failing to 

honor his second exercise of the remaining 1,515,000 options.4 

Following trial, therefore, the judge, at MacDonald's request, 

issued an order of specific performance as to the 1,000 stock 

options. The verdict and various dispositive rulings were 

summarized in an "Order and Judgment" entered on August 11, 2016 

(judgment). The present cross appeals followed, with the 

parties alleging error with respect to a number of the rulings 

issued throughout the litigation.

 

3 MacDonald and Jenzabar both asserted claims for 

declaratory judgment with respect to the status of MacDonald's 

rights to the preferred shares and stock options. The rulings 

on those competing claims and counterclaims are before us on 

appeal.

4 The trial involved MacDonald's claims against Jenzabar for 

breach of contract and breach of the implied covenant of good 

faith and fair dealing.
4

We need reach only one of those issues. Upon de novo 

review, we conclude, as a matter of law, that the severance 

agreement is unambiguous insofar as it extinguished MacDonald's 

rights to both the preferred shares and stock options. We

therefore affirm in part and reverse in part.

1. Background. The following facts are undisputed. On 

June 30, 2004, several years into the first of his two terms of 

employment with Jenzabar, MacDonald, who was then the chief 

financial officer, executed a written employment agreement 

(employment agreement). The employment agreement provided, 

among other things, for the Jenzabar's issuance of shares of 

preferred stock (preferred shares) and options to acquire common 

stock (stock options) to MacDonald. As to the latter, MacDonald 

and Jenzabar entered into two additional written agreements, 

also dated June 30, 2004, wherein Jenzabar issued him options to 

purchase a total of 1,516,000 shares of its common stock (option 

agreements). The stock options vested in equal allotments over 

a three-year period and, to the extent not exercised, expired in 

ten years. Subsequently, in 2007, MacDonald left Jenzabar to 

pursue other interests. As of that time, he had neither 

received the preferred shares nor exercised any of the stock 

options.

In the latter part of 2008, MacDonald returned to Jenzabar 

and took a position as mergers and acquisitions researcher. Six 
5

months later, however, he again left Jenzabar. At that time, he 

was offered a package, documented in the severance agreement,

whereby Jenzabar agreed, in return for certain consideration, to 

continue to pay his salary, as well as a portion of his health 

insurance costs, for six months. MacDonald accepted and 

executed the severance agreement on May 26, 2009. As of that 

time, he had still not received the preferred shares or 

exercised any of his stock options.

Three provisions in the severance agreement are of 

particular significance in this action. The first is the 

general release in section 2, which provided, in pertinent part:

"General Release of Claims. As a material inducement to 

the Company to enter into this Agreement, you agree to 

fully, irrevocably and unconditionally release, acquit and 

forever discharge the Company, its predecessors, 

successors, affiliates, parents, subsidiaries, divisions 

and any other related entities, including, without 

limitation, . . . all of their current and former agents, 

officers, employees, directors, representatives, and 

attorneys, and all persons acting by, through, under, or in 

concert with any of them (the 'Released Parties') from any 

and all claims, liabilities, obligations, promises, 

agreements, damages, causes of action, suits, demands, 

losses, debts, and expenses (including, without limitation, 

attorneys' fees and costs) of any nature whatsoever, known 

or unknown, suspected or unsuspected, arising on or before 

the date of this Agreement and/or relating to or arising 

from your employment and your separation from employment 

with the Company and/or any of the Released Parties, 

including, without limitation, . . . any and all claims 

under the Employment Agreement dated as of June 30, 2004 by 

and between you and Jenzabar . . . . Without limiting the 

generality of the foregoing, you agree that the income and 

benefits provided in this Agreement include and are made in 

lieu of, and shall be considered as fulfilling, all 

financial obligations to you, including without limitation, 
6

salary, payroll benefits, bonuses, insurance coverages, 

fringe benefits, and any amounts payable under any 

employment separation or severance plan or policy and any 

other agreement or contract previously entered into by you 

with any of the Released Parties." (Emphasis added.)

The second is section 6, which concerns the survival of a 

confidentiality agreement MacDonald executed upon his return to 

Jenzabar in 2008 (confidentiality agreement):

"You hereby acknowledge and affirm the enforceability of 

the Agreement to Protect Company Assets dated as of October 

1, 2008 . . . (the 'Confidentiality Agreement'), which you 

agreed to as a condition of your employment with the 

Company. You agree that such agreement shall remain in 

full force and effect notwithstanding your termination of 

employment and also agree that, as an essential term of 

this agreement, such Confidentiality Agreement shall be 

amended so that the Noncompete Period of twenty-four (24) 

months after your termination date and the Nonsolicit 

Period of twenty-four (24) months after your termination 

date are amended so that such periods are increased to 

periods of five (5) years from your termination date. You 

affirm that this 5-year extension is reasonable in light of

(i) your senior role and position with the Company 

previously as its Chief Financial Officer and as a M&A 

Research Developer and (ii) the Company's grant to you of a 

considerable number of options to purchase common stock" 

(emphasis added).

Finally, the severance agreement contained, in section 7, a 

merger and integration clause: "This Agreement constitutes a 

single, integrated contract expressing the entire agreement 

between you and the Company and terminates and supersedes all 

other oral and written agreements or arrangements; provided, 

however, that you understand and agree that the terms and 

provisions of the Confidentiality Agreement are specifically 
7

incorporated into this Agreement, and you remain bound by them" 

(emphasis added).

Following the execution of the severance agreement, 

MacDonald continued to communicate with individuals at Jenzabar 

regarding possible ways to convert his preferred shares and 

stock options into cash to fund a new business venture.5 On two 

occasions, he also attempted to exercise his stock options, 

first seeking to exercise 1,000 options, and then the remaining 

1,515,000.6 Ultimately, however, Jenzabar refused, claiming that 

MacDonald released all rights to the preferred shares and stock 

options in the severance agreement.

2. Discussion. The interpretation of the severance 

agreement, including the determination of ambiguity, is a 

question of law for the court, subject on appeal to de novo 

review. See, e.g., Balles v. Babcock Power, Inc., 476 Mass. 

565, 571 (2017). The rules of interpretation are wellestablished. "[A] court generally will accord no deference to a 

party's interpretation of a contract but, rather, will focus on 

the language of the instrument to effectuate its terms." Id. at 

571 n.12.

 

5 It is these communications that, in large part, make up 

the extrinsic evidence MacDonald would rely on if the severance 

agreement were held to be ambiguous.

6 MacDonald's attempt to exercise the 1,515,000 options 

occurred several months after he commenced this action.
8

"The words of contract must be considered in the context of 

the entire contract rather than in isolation. When the 

words of a contract are clear, they must be construed in 

their usual and ordinary sense, and we do not admit parol 

evidence to create an ambiguity when the plain language is 

unambiguous. . . . [E]xtrinsic evidence may be admitted 

when a contract is ambiguous on its face or as applied to 

the subject matter. The initial ambiguity must exist, 

however. Furthermore, extrinsic evidence cannot be used to 

contradict or change the written terms, but only to remove 

or to explain the existing uncertainty or ambiguity."

General Convention of the New Jerusalem in the United States of 

America, Inc. v. MacKenzie, 449 Mass. 832, 835-836 (2007) 

(citations omitted). See Bank v. Thermo Elemental Inc., 451 

Mass. 638, 648 (2008) ("To answer the ambiguity question, the 

court must first examine the language of the contract by itself, 

independent of extrinsic evidence concerning the drafting 

history or intention of the parties"). "[A]n ambiguity is not 

created simply because a controversy exists between the parties, 

each favoring an interpretation contrary to the other." Boazova

v. Safety Ins. Co., 462 Mass. 346, 351 (2012), quoting from 

Citation Ins. Co. v. Gomez, 426 Mass. 379, 381 (1998). 

"Language is ambiguous where the phraseology can support a 

reasonable difference of opinion as to the meaning of the words 

employed and the obligations undertaken." Ferri v. PowellFerri, 476 Mass. 651, 654 (2017) (quotation omitted).

We start by considering the language of the general release 

in section 2 of the severance agreement, which as previously 

noted provides, in pertinent part, that MacDonald released 
9

Jenzabar "from any and all claims, liabilities, obligations, 

promises, agreements, damages, causes of action, suits, demands, 

losses, debts, and expenses . . . of any nature whatsoever, 

known or unknown, suspected or unsuspected, arising on or before 

the date of this Agreement." MacDonald's rights to the 

preferred shares and stock options arise from the prior 

employment and option agreements. In that regard, the language 

of the general release is clear and broad. It not only 

generally extinguishes any and all agreements, of any nature 

whatsoever, predating the severance agreement, but also 

expressly extinguishes the employment agreement. Simply put, 

the plain language of the release is only susceptible of one 

reasonable interpretation: barring something to the contrary 

elsewhere in the severance agreement, MacDonald released all 

rights to the preferred shares and stock options.

According to MacDonald, there is something to the contrary 

elsewhere in the severance agreement. Specifically, he points 

to the language in the last sentence of section 6, where he 

affirmed that the extension of the noncompete and 

nonsolicitation periods under the confidentiality agreement was 

"reasonable in light of . . . the Company's grant to you of a 

considerable number of options to purchase common stock." As 

MacDonald would have it, this raises an ambiguity regarding 
10

whether his rights to the preferred shares and stock options 

survived the general release. For several reasons, we disagree.

First, section 6 of the severance agreement makes reference 

only to the stock options, not to the preferred shares. By no 

means, therefore, is there any ambiguity regarding MacDonald's 

rights to the preferred shares; those rights were extinguished 

by the general release.

Second, the language at the end of section 6 does not 

provide anything to the effect that MacDonald either would 

continue to retain rights to the stock options or was somehow 

retaining those rights as consideration for the extension of the 

noncompete and nonsolicitation periods. To understand the 

meaning of the last sentence of section 6, it must be read in 

its entirety. The sentence refers not only to MacDonald's stock 

options, but also to the "senior" roles and positions he held at 

Jenzabar, as chief financial officer and mergers and 

acquisitions researcher. When read as a whole, therefore, the 

sentence affirms the historical justification for the five-year 

noncompete and nonsolicitation periods: namely, that MacDonald 

had held both high-level positions at, and vested stock option 

rights in, Jenzabar.

We have a policy in our Commonwealth of giving effect to 

general releases, even if the parties did not have in mind at 

the time all of the matters that might be covered. See Leblanc
11

v. Friedman, 438 Mass. 592, 598 (2003), quoting from Schuster v. 

Baskin, 354 Mass. 137, 140 (1968) ("General releases dispose 'of 

all claims and demands arising out of any transactions between 

the parties'"); Eck v. Godbout, 444 Mass. 724, 732 (2005)

("[T]he mere fact that a release as worded extends to matters 

that the parties did not specifically have in mind at the time 

of execution does not operate to exclude those matters from the 

scope of the release"). With that in mind, our courts have 

counselled that any exceptions to, or reservation of rights in, 

a general release should be stated in clear terms. See Tupper

v. Hancock, 319 Mass. 105, 108 (1946) (any intended exception 

should have been "expressly" stated); Naukeag Inn, Inc. v. 

Rideout, 351 Mass. 353, 357 (1966) (same); Schuster v. Baskin, 

supra at 140-141 (any exceptions should have been "specified"). 

See also Atlas Tack Corp. v. DiMasi, 37 Mass. App. Ct. 66, 71 

(1994) (reservation of rights in release was effective because 

it was expressed in "very specific language"). If the language 

in section 6 was intended to create an exception for MacDonald's 

rights to the preferred shares and stock options, it fell well 

short of achieving the required level of clarity.

Finally, in section 7, the merger and integration clause, 

MacDonald and Jenzabar clearly provided that the severance 

agreement terminated and superseded all other oral and written 

agreements or arrangements, but for the confidentiality 
12

agreement. In so doing, they showed that, when they intended 

to, they knew how to properly craft an exception. In so doing, 

they also revealed, by way of omission, that they did not intend 

to create an exception for the preferred shares and stock 

options.7 The omission is notable given that, as evidenced by 

section 6, they were cognizant at the time of the stock options.

The severance agreement is unambiguous and extinguished 

MacDonald's rights to the preferred shares and stock options. 

Accordingly, none of MacDonald's claims against Jenzabar and the 

directors can be sustained.

3. Conclusion. The judgment is affirmed in part and 

reversed in part. The numbered paragraphs of the judgment are

amended as follows:

a. The portion of the judgment set forth in paragraph 1 is 

reversed;

b. The substance of paragraph 2 is stricken and replaced 

with the following: "On Count Nine of the Third Amended 

Complaint (declaratory judgment that MacDonald owns 

1,516,000 stock options and 250 shares of Series B 

preferred stock), judgment is entered in favor of Jenzabar 

in that MacDonald does not own 250 shares of Series B 

preferred stock and 1,516,000 stock options";

 

7 MacDonald claims, in the alternative, that the termination 

of his rights to the preferred shares and stock options was the 

product of mutual mistake, thereby warranting reformation of the 

release provision of the severance agreement. However, the 

claim is without merit as he has not presented "full, clear, and 

decisive proof" that the mistake was either mutual or made by 

him and known to Jenzabar. Polaroid Corp. v. Travelers Indem. 

Co., 414 Mass. 747, 756 (1993). See Caron v. Horace Mann Ins. 

Co., 46 Mass. 218, 224-225 (2013).
13

c. The substance of paragraph 3 is stricken and replaced 

with the following: "Judgment is entered in favor of 

Jenzabar on all Counts of the Second and Third Amended 

Complaints asserted against it";

d. The substance of paragraph 9 is stricken and replaced 

with the following: "On Count One of Jenzabar's 

Counterclaims (declaratory judgment that MacDonald released 

1,516,000 stock options and 250 shares of Series B 

preferred stock), judgment is entered in favor of Jenzabar 

in that MacDonald released all rights that he had to 250 

shares of Series B preferred stock and 1,516,000 stock 

options when he executed the severance agreement."

The judgment is otherwise affirmed. Given that the award in 

favor of MacDonald for specific performance as to the 1,000 

options for Jenzabar common stock contained in paragraph 1 of 

the judgment has been reversed, the matter is remanded to the 

extent that any further orders are necessary to effectuate the 

unwinding of that award.

So ordered.