Opinion ID: 204143
Heading Depth: 2
Heading Rank: 2

Heading: Alleged Breach of the General Release

Text: 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. 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 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, 429 Mass. 14, 705 N.E.2d 1126, 1128 (1999); Waldman v. American Honda Motor Co., 413 Mass. 320, 597 N.E.2d 404, 406 (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 -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. 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 of summary judgment against Mueller, and in favor of Bukuras, on its counterclaim. Affirmed.