Minturn v. Monrad

64 F.4th 9

• Court: Court of Appeals for the First Circuit
• Decided: March 30, 2023
• Docket: 22-1200
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

No. 22-1200

ROBERT B. MINTURN,

Plaintiff, Appellee,

v.

BRUCE H. MONRAD, individually and as special personal representative of the estate of Ernest E. Monrad, PETER J. BLAMPIED, GEORGE P. BEAL, and CHARLES R. DAUGHERTY,

Defendants, Appellants,

NORTHEAST INVESTORS TRUST,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Nathaniel M. Gorton, U.S. District Judge]

Before

Barron, Chief Judge, Selya and Lynch, Circuit Judges.

Shikha Garg, with whom Alison C. Barnes, Kramer Levin Robbins Russell, E. Page Wilkins, David Lurie, and Lurie Friedman LLP were on brief, for appellants. Douglas W. Salvesen, with whom Richard J. Yurko and Yurko Partners, P.C. were on brief, for appellee. March 30, 2023 SELYA, Circuit Judge. This is an old-fashioned contract

dispute. It requires us to construe contractual provisions under

which plaintiff-appellee Robert B. Minturn claims entitlement to

certain retirement compensation allegedly due to him from

Northeast Investors Trust (the Trust), where he served as a

trustee. Concluding, as we do, that the plain language of the

controlling agreement entitles the plaintiff to the claimed

compensation, we affirm the district court's grant of partial

summary judgment and its subsequent entry of judgment in the

plaintiff's favor for the sum of $794,500.

I

We briefly rehearse the relevant facts (which are

largely undisputed) and then chronicle the travel of the case.

The Trust is a Massachusetts business trust organized in 1950. It

operates as a mutual fund, the assets of which are managed by a

board of trustees (the Trustees) for the benefit of passive

investors, known as shareholders. From 1978 until his retirement

in 2013, the plaintiff served the Trust in various capacities,

including as clerk, chief legal officer, and vice president. He

also served as a member of the board of trustees from 1980 until

2005.

In 1989, the Trustees executed an agreement (the

Agreement) among themselves that outlined compensation and

retirement compensation due to each trustee then in office. Under

- 3 - the terms of the Agreement, the plaintiff (or his heirs, as the

case may be) was entitled to quarterly payments amounting to

$100,000 a year for ten years following his retirement, death,

disability, or other incapacitating event. This annual rate would

increase by $25,000 for each additional $100,000,000 in net assets

held by the Trust at his retirement (beyond the total assets held

by the Trust on March 31, 1989).

Under the Trust's Declaration of Trust, all trustee

compensation must be paid out of a management fee, which is derived

quarterly from the Trust's net assets at a fixed percentage. The

management fee also pays for "all research and statistical

services" and the Trust's office space.

The Agreement included two other relevant provisions.

The first such provision, section 8, outlined a process for the

independent (that is, non-management) trustees to reduce certain

annual trustee retirement compensation by extending the total

payment period in the event that specific circumstances — including

the decline in value of trust assets by more than forty percent —

transpired and the independent trustees deemed the reduction

"advisable and in the best interests of the shareholders . . . in

order to ensure the availability [of] adequate current

compensation for the Trustees." The second such provision, section

11 — the meaning of which the parties dispute — read as follows:

- 4 - Subject always to the best interests of the shareholders, it is contemplated and intended as between the Trustees of Northeast Investors Trust who are signatories hereto that this Agreement and the provisions hereof for the benefit of the individual Trustees, including provisions with regard to entitlement to payments of additional compensation, shall survive and continue and be made binding upon successor trustees, advisors, management companies, or any other individuals or entities becoming entitled to trustee, advisory and/or management fees from the Trust, however and in whatever form they are paid, despite any change of form or manner of management or operation of the Trust.

The Agreement was thrice amended (in 1994, 1998, and

2005), but none of these amendments directly affected the

plaintiff's retirement compensation. In 2008, however, the

Agreement was supplemented. This supplement (the Supplement)

addressed federal tax-law changes and resulted in the

characterization of the retirement compensation limned in the

Agreement as deferred compensation that was deemed "earned and

vested" as of December 31, 2004. The documents memorializing these

revisions (that is, the three amendments and the Supplement)

ratified the Agreement and were signed by all of the Trustees then

in office — a group which, since at least 2005, included all of

the defendants.

The plaintiff retired in 2013. At that time, the net

assets of the Trust had increased by over $300,000,000, raising

his retirement compensation to $175,000 per year. The Trustees

- 5 - paid him equal quarterly payments totaling $175,000 annually

through early 2018. In February of 2018, though, the Trustees did

an about-face: they voted to reduce the plaintiff's retirement

compensation to quarterly payments of $10,000, citing a sharp

decline in the value of trust assets. The plaintiff received

quarterly payments at this reduced rate until April of 2019. Then,

the Trustees stopped paying the plaintiff's retirement

compensation altogether.

The plaintiff did not go quietly into this bleak night.

Instead, he sued the Trust and the Trustees then in office (Ernest

E. Monrad, Bruce H. Monrad, Peter J. Blampied, George P. Beal, and

Charles R. Daugherty)1 in the United States District Court for the

District of Massachusetts, alleging that the defendants improperly

withheld his retirement compensation in violation of the

Agreement. He also alleged, in the alternative, that the

defendants were liable for wrongful denial of benefits and breach

of fiduciary duty under the Employee Retirement Income Security

Act (ERISA). See 29 U.S.C. § 1132(a)(1)(B), (a)(3), (g). The

defendants answered, denying the material allegations of the

During the pendency of the litigation, Ernest E. Monrad 1

died. Bruce H. Monrad was then substituted in Ernest E. Monrad's place and stead, so that he is named as a defendant both individually and as special personal representative of Ernest E. Monrad's estate.

- 6 - complaint and counterclaiming for a declaratory judgment. See 28

U.S.C. § 2201.

The defendants next moved to dismiss the plaintiff's

complaint for lack of subject matter jurisdiction and failure to

state a claim. See Fed. R. Civ. P. 12(b)(1), (6). The district

court granted the motion to dismiss as to the plaintiff's claims

against the Trust but denied it in all other respects. See Minturn

v. Monrad, 2020 WL 6363909, at *4 (D. Mass. Oct. 29, 2020).

Following the close of discovery, the plaintiff moved for partial

summary judgment on his breach-of-contract claim. See Fed. R.

Civ. P. 56(a). The district court granted the motion, holding

that section 11 of the Agreement was "precatory, i.e., advisory,"

and that the phrase "[s]ubject always to the best interests of the

shareholders" had "no bearing on the substantive obligations set

forth" elsewhere in the Agreement. Minturn v. Monrad, 585 F. Supp.

3d 123, 127-28 (D. Mass. 2022).

With the consent of all the parties, the plaintiff's

ERISA claims and the defendants' counterclaim were later

dismissed. On March 1, 2022, judgment was entered for the

plaintiff in the amount of $794,500 for quarterly payments due

under the Agreement up through January 2022 (which amount included

prejudgment interest). This timely appeal followed.

- 7 - II

We review a district court's grant of summary judgment

de novo. See Pleasantdale Condos., LLC v. Wakefield, 37 F.4th

728, 732 (1st Cir. 2022). Summary judgment is appropriate when

the moving party has shown that there is no genuine issue as to

any material fact and that he is entitled to judgment as a matter

of law. See Fed. R. Civ. P. 56(a). In conducting this tamisage,

we construe the facts in the light most favorable to the non-

moving parties (here, the defendants) and draw all reasonable

inferences therefrom to their behoof. See Pleasantdale Condos.,

37 F.4th at 733. We are not tied to the district court's rationale

but, rather, may affirm the judgment on any ground made manifest

by the record. See Houlton Citizens' Coal. v. Town of Houlton,

175 F.3d 178, 184 (1st Cir. 1999).

Here, the district court entered judgment for the

plaintiff on a state-law claim. See Minturn, 585 F. Supp. 3d at

128. That claim was in federal court by reason of supplemental

jurisdiction. See 28 U.S.C. § 1367(a). Thus, state law — in this

instance Massachusetts law — supplies the substantive rules of

decision. See Lawless v. Steward Health Care Sys., LLC, 894 F.3d

9, 21 (1st Cir. 2018); see also Borden v. Paul Revere Life Ins.

Co., 935 F.2d 370, 375 (1st Cir. 1991) (confirming that federal

court may accept parties' plausible agreement as to which state's

law supplies the controlling rules of decision).

- 8 - A

The singular question presented on appeal is whether the

defendants breached the Agreement by reducing and then terminating

the plaintiff's retirement compensation. In order to answer this

question, we begin with first principles.

To demonstrate a breach of contract under Massachusetts

law, "the plaintiff must prove that a valid, binding contract

existed, the defendant breached the terms of the contract, and the

plaintiff sustained damages as a result of the breach." Young v.

Wells Fargo Bank, N.A., 828 F.3d 26, 32 (1st Cir. 2016) (quoting

Young v. Wells Fargo Bank, N.A., 717 F.3d 224, 232 (1st Cir.

2013)). Only the second of these three elements — whether the

defendants' actions constituted a breach — is at issue in this

appeal.

The interpretation of an unambiguous contractual

provision presents a question of law for the court. See Gen. Hosp.

Corp. v. Esoterix Genetic Lab'ys, LLC, 16 F.4th 304, 308 (1st Cir.

2021) (applying Massachusetts law). So, too, the determination of

whether the provision is ambiguous is for the court. See Bukuras

v. Mueller Grp., LLC, 592 F.3d 255, 261 (1st Cir. 2010) (applying

Massachusetts law). A contract is ambiguous either where its

"terms are inconsistent on their face or where the phraseology can

support reasonable differences of opinion as to the meaning of the

words employed and obligations undertaken." Farmers Ins. Exch. v.

- 9 - RNK, Inc., 632 F.3d 777, 783 (1st Cir. 2011) (quoting Bank v. Int'l

Bus. Machs. Corp., 145 F.3d 420, 424 (1st Cir. 1998)) (applying

Massachusetts law).

If a court determines that the terms of the contract are

unambiguous, it should resolve interpretive disputes based on the

language of the contract, without resort to extrinsic evidence.

See Esoterix, 16 F.4th at 308. In that process, the court must

interpret the contract to effectuate the parties' discerned

intent, which "must be gathered from a fair construction of the

contract as a whole." VFC Partners 26, LLC v. Cadlerocks

Centennial Drive, LLC, 735 F.3d 25, 29 (1st Cir. 2013) (quoting

Bukuras, 592 F.3d at 262) (applying Massachusetts law). The

contract should be interpreted "in a reasonable and practical way,"

reading words that are "plain and free from ambiguity" in their

"usual and ordinary sense." Esoterix, 16 F.4th at 308 (quoting

Bukuras, 592 F.3d at 262).

To determine whether the defendants breached the

Agreement, we start with section 11 (reproduced in full above).

The defendants claim that section 11 conferred upon them not only

the power but also the fiduciary obligation to depart from the

schedule of retirement compensation laid out in the Agreement and

to modify that schedule whenever doing so was in "the best

interests of the shareholders." The plaintiff demurs, responding

- 10 - that section 11 is merely a precatory (that is, a non-binding)

expression of the signatories' intention and, consequently,

conferred neither any such power nor any such obligation. The

parties offer dueling versions of syntactical rules that they

suggest may be of assistance. To us, however, the result is clear:

as we explain below, we read section 11, taken as a whole and

construing its words in their usual and ordinary sense, as

precatory. There is no ambiguity.

We turn first to the significance of "it is contemplated

and intended." The parties spar over whether that phrase indicates

that what follows — that is, that the Agreement and its provisions

"shall survive and continue and be made binding upon" successor

trustees — is precatory. The case law strongly favors the

plaintiff's interpretation that "contemplated" and "intended,"

whether considered singly or in combination, do not signal a

binding obligation. See, e.g., Advanced Water Techs., Inc. v.

Amiad U.S.A., Inc., 457 F. Supp. 3d 313, 320 (S.D.N.Y. 2020)

(collecting cases concluding that agreements "characterized by

precatory language, such as 'It is the intention of [the

parties],' . . . [are] unenforceable" (alterations in original)

(quoting Dragon Head LLC v. Elkman, 987 N.Y.S.2d 60, 61 (N.Y. App.

Div. 2014))); Sec. Bank & Tr. Co. v. Bogard, 494 N.E.2d 965, 969

(Ind. Ct. App. 1986) ("[T]he mere expression of an intention is

not a promise."); Dauray v. Gaylord, 402 S.W.2d 948, 950-51 (Tex.

- 11 - Civ. App. 1966) (concluding that "contemplate" is precatory);

Hansen v. Catsman, 123 N.W.2d 265, 267 (Mich. 1963) (stating that

"[o]rdinarily, the word 'contemplates' indicates an expectation or

intention rather than a promise or undertaking"). Although there

is a minority view, see, e.g., Denker v. Twentieth Century-Fox

Film Corp., 210 N.Y.S.2d 241, 244 (N.Y. Sup. Ct. 1960) (explaining

that "contemplate" may "connote a binding obligation"), we find

that view unconvincing.

That said, we renounce any per se rule to the effect

that the phrase "it is contemplated and intended" always renders

what follows precatory. Just as no specific words are necessary

to form a binding promise, see E.I. Du Pont De Nemours & Co. v.

Claiborne-Reno Co., 64 F.2d 224, 227 (8th Cir. 1933), no specific

words are necessary to form a precatory provision. The defendants

concede that phraseology such as "it is contemplated and intended"

might indicate, in some contexts, that a provision is precatory.

They nonetheless assert that, when used here, those words are at

least ambiguous.

Taken in a vacuum, the defendants' point may have some

superficial appeal — but contract interpretation does not take

place in a vacuum, and the absence of a per se rule does not get

the defendants very far. They still must face up to the reality

that phrasing such as "it is contemplated and intended" ordinarily

implies that what follows expresses a non-binding intention (and,

- 12 - thus, is precatory). And the mere fact that those words, standing

alone, do not resolve the interpretive question as to whether

section 11 is precatory does not render section 11 ambiguous. That

fact only means that we must look to the surrounding text for

further clarification. See Nat'l Tax Inst. v. Topnotch at Stowe

Resort & Spa, 388 F.3d 15, 18 (1st Cir. 2004) (applying

Massachusetts law) (finding that "related provisions may cast

light on meaning" even when phrase considered alone is

inconclusive).

Considering its text as a whole and reading its words in

their usual and ordinary sense, it is clear to us that section 11

is precatory. That section goes on to express what is

"contemplated and intended": that the Agreement, including the

provisions for trustee retirement compensation, "shall survive and

continue and be made binding upon" anyone who becomes "entitled to

trustee, advisory and/or management fees from the Trust,"

notwithstanding "any change of form or manner of management or

operation of the Trust." A prefatory clause qualifies that

statement as "[s]ubject always to the best interest of the

shareholders."

The plain and unambiguous meaning of section 11 is to

express an intention for a future time during which the signatories

(who were also the beneficiaries of the Agreement) are no longer

- 13 - in charge of the management of the Trust. The signatories

"contemplated and intended" that the Agreement would "survive" and

"continue" should such changes occur while the provisions of the

Agreement were still relevant. At such time, those provisions

would "be made binding" — the passive voice implying that someone

other than the signatories would be undertaking that effort — upon

the persons who, in the future, would be charged with making

management decisions for the Trust (but whom the Agreement did not

yet bind). Effectuating that intention was, of course, conditioned

upon the Agreement continuing to be in "the best interests of the

shareholders." The signatories' aim, as reflected in the text,

was to indicate to future management-fee recipients the

signatories' intent that the Agreement remain in place even though

they were no longer in a position to enforce it. There is simply

no textual basis for concluding that the language was meant to

provide a general override to every other section of the Agreement.

Contrary to the defendants' importunings, reading

section 11 as precatory does not lead to the conclusion that it is

meaningless. The signatories had no power to ensure that future

management-fee recipients would be bound to the Agreement. See

Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 129-30 (1st

Cir. 2006) (applying Massachusetts law) (concluding that non-

parties are not bound by agreement and, thus, cannot be held liable

for breach). Nor did they have any power to ensure that the

- 14 - Agreement would "survive and continue" after they were no longer

trustees. Read against that background, section 11 expresses the

signatories' intention that the terms of the Agreement should

remain intact for future management-fee recipients. The bare fact

that section 11 does not create a binding legal obligation does

not render it meaningless. See Restatement (Second) of Contracts

§ 203 cmt. b (1981) ("The preference for an interpretation which

gives meaning to every part of an agreement does not mean that

every part is assumed to have legal consequences."); see also Byrne

v. Perry, 421 N.E.2d 1248, 1249 (Mass. App. Ct. 1981).

The defendants' attempts to circumvent the plain meaning

of the text are unpersuasive. They first suggest an interpretation

of section 11 that would bypass "it is contemplated and intended"

altogether, such that whether the Agreement "shall survive and

continue and be made binding upon" future trustees is directly

"[s]ubject always to the best interests of the shareholders." But

this suggestion has an obvious flaw: it fails to account for the

intervening words ("it is contemplated and intended"), which both

basic grammatical rules and common sense instruct must qualify the

three verbs that follow and convincingly imply that what follows

is precatory. See Lieber v. President & Fellows of Harvard Coll.,

179 N.E.3d 19, 26 n.15 (Mass. 2022) (explaining that "it is a

fundamental principle of interpretation 'that every word and

phrase of an instrument is if possible to be given meaning, and

- 15 - none is to be rejected as surplusage if any other course is

rationally possible'" (quoting Balles v. Babcock Power Inc., 70

N.E.3d 905, 914 n.17 (Mass. 2017))).

The defendants rejoin that "survive and continue and be

made binding upon" is the "nearest reasonable referent" following

the opening clause. But that rejoinder is struthious and ignores

the language used by the signatories. Cf. Fishman v. LaSalle Nat'l

Bank, 247 F.3d 300, 302-03 (1st Cir. 2001) (applying Massachusetts

law) (warning that party's argument, though "strong on canons and

doctrine," failed to provide rational interpretation of challenged

text). The defendants would have us treat "it is contemplated and

intended" as entirely redundant — but they offer no principled

basis for us to do so. See DeWolfe v. Hingham Ctr., Ltd., 985

N.E.2d 1187, 1196 (Mass. 2013) ("[Plaintiff's] construction of the

clause is to be favored, because the construction offered by the

defendants fails to give effect to [specific] words.").

Next, the defendants assert that the district court

incorrectly determined that "[s]ubject always to the best

interests of the shareholders" applies only to "be made binding,"

thus failing to account for "survive" and "continue." They further

assert that — when properly considered — "[t]he ordinary meaning

of the words 'survive' and 'continue' confirms that Section 11 was

intended to affect the conditions under which the Agreement would

persist." One of those conditions, their thesis runs, is that the

- 16 - Agreement would be "[s]ubject always to the best interests of the

We accept the defendants' premise that the district

court's opinion was imprecise in its discussion of the three verbs.

See Minturn, 585 F. Supp. 3d at 127. We agree, moreover, that it

would be folly not to account for "survive" and "continue" in

construing section 11. See Jasty v. Wright Med. Tech., Inc., 528

F.3d 28, 36 (1st Cir. 2008) (applying Massachusetts law)

("[C]onstructions that render contract terms meaningless should be

avoided." (alteration in original) (quoting Summit Packaging Sys.,

Inc. v. Kenyon & Kenyon, 273 F.3d 9, 12 (1st Cir. 2001))). The

clause "[s]ubject always to the best interests of the shareholders"

should apply to all three verbs — mediated (as discussed above) by

"it is contemplated and intended."

Here, however, our review is de novo, see Pleasantdale

Condos., 37 F.4th at 732, and accounting for all three verbs does

not weaken the conclusion that section 11 is precatory. The

defendants' contrary assertion only holds water if we adopt the

unnatural and stilted reading that subjects the Agreement's

survival and continuation directly to the best interests of the

shareholders. The three verbs still have meaning if section 11 is

precatory: section 11 relates the intention that the Agreement

remain in effect should the "management or operation" of the Trust

change. That includes the intention that the Agreement remain in

- 17 - existence after the change (that is, that the Agreement "survive"

the change); that it go uninterrupted (that is, that the Agreement

"continue"); and that the Agreement "be made binding" on future

management-fee recipients.

The defendants contest this common-sense construction.

They claim that it blurs together the definitions of "survive" and

"continue." This claim does not withstand scrutiny: although the

definitions may overlap, they are distinct. And even though it is

important to avoid interpretations of contractual language that

render a word superfluous or redundant, see Starr v. Fordham, 648

N.E.2d 1261, 1270 (Mass. 1995), we are not so formalistic as to

demand that each word in a contract must have a perfectly defined

dominion that in no way impinges upon the dominion of another word.

To be sure, the words of a contractual provision matter.

See Bukuras, 592 F.3d at 262. Even so, "the words are to be read

as elements in a practical working document and not as a crossword

puzzle." Id. (quoting Fleet Nat'l Bank v. H & D Ent., 96 F.3d

532, 538 (1st Cir.1996)). On such a reading, section 11 is plainly

precatory.

The other sections of the Agreement reinforce the

conclusion that section 11 is precatory and does not provide an

avenue for overriding the specific obligations delineated in the

Agreement. See Starr, 648 N.E.2d at 1269 (explaining that contract

- 18 - obligations should be determined by looking both to immediate

context and to all other contractual provisions).

a

The first interpretive clue is found in section 8, which

provides a framework for modifying retirement compensation in the

event of a decline in the Trust's net assets. Even though the

defendants paid no heed to section 8 when reducing the plaintiff's

retirement compensation, that section sheds a bright light on the

meaning of section 11.

In contrast to section 11, section 8 is detailed: it

explains under what conditions reductions in retirement

compensation can be made and which persons are subject to such

reductions; it pegs any such reductions to the total decline in

assets and the pool of retirees receiving compensation; and it

requires any reductions to be offset by a corresponding increase

in years of payment (such that the total compensation remains the

same). Section 8 also confers upon the independent trustees the

power to determine whether trustee compensation should be reduced.

That determination must be based on the independent trustees'

assessment of whether a reduction "is advisable and in the best

interests of the shareholders . . . in order to ensure the

availability [of] adequate current compensation for the Trustees."

The defendants claim that section 11 allows them to

abrogate or modify retirement compensation without any limitation

- 19 - except that such an action is in "the best interests of the

shareholders." That interpretation irreconcilably conflicts with

section 8. Contracts must be read as a whole, and specific

provisions customarily trump more general provisions. See

Easthampton Congregational Church v. Church Mut. Ins. Co., 916

F.3d 86, 92 (1st Cir. 2019) (applying Massachusetts law). Section

8 is specific, whereas section 11 is general. It defies logic to

think that contracting parties would include a detailed provision

for when and how retirement compensation may be reduced and then

include another provision allowing reductions essentially without

limit. See Topnotch at Stowe Resort & Spa, 388 F.3d at 18-19.

This is especially true inasmuch as the independent trustees'

decision to trim compensation under section 8 is already made

subject to "the best interests of the shareholders," with the

result that the application of essentially the same clause in

section 11 would be redundant.

As we have said, contracts should be interpreted "as

rational business instrument[s]." Starr, 648 N.E.2d at 1270. The

detailed process spelled out in section 8 convincingly

demonstrates the signatories' understanding that modifications to

trustee retirement compensation could become necessary if the

circumstances of the Trust changed materially, but that any such

changes should be cabined by stipulated guidelines and procedures.

- 20 - This makes good sense: retirement compensation is something that

recipients count on and would not want modified arbitrarily.

The defendants' attempts to resist this conclusion are

futile. First, they argue that section 8 is "irrelevant" in this

context because the stipulated conditions have not been met. They

suggest that, until those conditions eventuate, section 11's

"general" power governs modifications of the Agreement.

This threadbare suggestion will not wash. It would be

unreasonable to interpret the Agreement as allowing modification

(let alone complete abrogation) of specific obligations up to the

time the stipulated conditions are met, without regard to any of

the safeguards specified in section 8, and then abruptly subject

such modifications to the specified safeguards once the conditions

have been met. The only reasonable interpretation is that the

Trustees had no power to modify the retirement compensation

described in the Agreement unless the conditions in section 8

occurred, at which point the independent trustees could agree to

reduce the compensation in accordance with the terms of that

section.

The defendants try to erect one last buffer to shield

them from the impact of section 8. They suggest that section 8 is

irrelevant because it does not apply to the plaintiff's retirement

compensation. This suggestion has a patina of plausibility:

section 8 is not a model of clarity, and at one point, it seems to

- 21 - indicate that only the annual compensation of two other trustees

(Ernest Monrad and William Oates, Jr.) may be modified if the

Trust's assets decline. At another point, though, section 8

explains that any compensation "so reduced" should still — over

time — equal the total dollar amounts guaranteed to Monrad, Oates,

and the plaintiff.

We need not resolve this ambiguity because it makes no

difference here. See Brigade Leveraged Cap. Structures Fund Ltd.

v. PIMCO Income Strategy Fund, 995 N.E.2d 64, 70 & n.11 (Mass.

2013). The relevance of section 8 to our analysis is that it

furnishes compelling evidence that there is a specific provision

in the Agreement that would be in conflict with section 11 if we

were to interpret section 11 to allow the Trustees free reign to

modify the Agreement. The two sections would be in conflict

regardless (if not in application to the plaintiff, then in

application to Monrad and Oates).

We add, moreover, that if section 8 does not apply to

the plaintiff, the reasonable inference is that such an exclusion

was deliberate. And it would follow that the Trustees cannot

reduce the plaintiff's retirement compensation under any

circumstances. See F.D.I.C. v. Singh, 977 F.2d 18, 22-23 (1st

Cir. 1992) (explaining that "Massachusetts law embraces the maxim

'expressio unius est exclusio alterius,'" meaning that when

"objects embraced by a contract" are enumerated, similar items not

- 22 - included may be assumed to have been excluded intentionally

(quoting Chatham Pharms., Inc. v. Angier Chem. Co., 196 N.E.2d

852, 854-55 (Mass. 1964))). That would be a rational choice: the

plaintiff was expecting a significantly lower retirement-

compensation package than Monrad and Oates. Accordingly, the

drafters may not have been as concerned about the effects of a

downturn in asset value with respect to paying the plaintiff's

retirement compensation.

To sum up, section 8 falls short of crystalline clarity.

Nevertheless, we can see no scenario in which its presence in the

Agreement fails to support the conclusion that section 11 would

conflict with it if section 11 were to be construed to give the

Trustees the power to modify the retirement-compensation

provisions in the Agreement. Cf. Blackie v. Maine, 75 F.3d 716,

722 (1st Cir. 1996) (holding that contractual provision, though

"not a model of syntax," was nonetheless unambiguous when "[r]ead

as a whole, the [provision] can sustain only one reasonable

interpretation").

b

Yet another provision of the Agreement undercuts the

proposition that section 11 gives the defendants unbridled

discretion to reduce the plaintiff's retirement compensation. The

Supplement, which was incorporated into the Agreement in 2008,

characterizes the retirement compensation specified in the

- 23 - Agreement (including the plaintiff's retirement compensation) as

"earned and vested" as of December 31, 2004, such that it was "not

subject to Internal Revenue Code Section 409A." In turn, section

409A (which was enacted in 2004) excluded certain deferred

compensation from current taxation if the compensation had been

deferred before January 1, 2005. See I.R.C. § 409A; 26 C.F.R.

§ 1.409A-6(a)(2) (2008). For compensation to qualify, the

recipient must already have "had a legally binding right to be

paid the amount, and the right to the amount [must have been]

earned and vested." 26 C.F.R. § 1.409A-6(a)(2) (2008). If the

payor "retained discretion to reduce the amount," the recipient

was deemed not to have a legally binding right to that

compensation. Id.

"[T]he law of Massachusetts demands that we harmonize

[provisions within a contract] rather than strain to create an

imaginary conflict." Singh, 977 F.2d at 24. Harmonizing section

11 with the Supplement requires us to reject the defendants'

interpretation of section 11. After all, an interpretation of

section 11 that grants the Trustees discretion to reduce the

plaintiff's retirement compensation would conflict head-on with

the Supplement's characterization of his compensation as "earned

and vested."

- 24 - 4

In an effort to blunt the force of this reasoning, the

defendants contend that section 11 generally — and the phrase

"[s]ubject always to the best interests of the shareholders"

specifically — should be read as formalizing the Trustees'

fiduciary duties to the shareholders. Building on this foundation,

they further contend that when the asset value of the Trust

plummeted, the Trustees had a fiduciary duty under section 11 to

revise the plaintiff's retirement compensation.

These contentions, in turn, rest on the defendants'

notion that the Trustees must have understood that — in order to

comply with their fiduciary duties — the specific obligations in

the Agreement could only be binding within the limits of those

duties. The text of section 11 must therefore be interpreted, the

defendants submit, through the prism of that understanding.

The defendants' attempt to convert their fiduciary

duties into an off-ramp that would allow them to detour around

their contractual obligations does not put any points on the board.

As we already have indicated, see supra Part II(A)(2), the text of

section 11 unambiguously indicates that it is precatory. The

defendants' "fiduciary duty" argument conveniently overlooks that

text. And while the inclusion of the clause "[s]ubject always to

the best interests of the shareholders" may indicate the Trustees'

awareness of their fiduciary duties, that clause does nothing to

- 25 - define specifically what the boundaries of those duties may be.

Moreover, its applicability still extends only to the assessment

of whether the Agreement, once it is no longer in force, should

"survive and continue" on a going-forward basis (and, thus, "be

made binding").

If more were needed — and we doubt that it is — the

defendants have failed to articulate a comprehensible system as to

how their fiduciary duties would pertain here (whether through

section 11 or as an extra-contractual backstop). The defendants'

"fiduciary duty" argument is not accompanied by any workable

limiting principle: it would require the Trustees to subject every

action that they take to the best interests of the shareholders,

treating that clause as a continual condition precedent. The

Trustees' ability to abrogate or modify any contract based on their

fiduciary duties would be wholly unfettered: they could throw

overboard any contract, including a contract with an unrelated

third party, through the simple expedient of declaring that such

a contract was no longer "in the best interests of the

The defendants have not identified any pertinent

authority sufficient to support so expansive a view of fiduciary

duties. And that is no wonder: it is hard to imagine why anyone

would enter into a contract with the Trust if such a free-wheeling

regime was in place. Cf. Cofman v. Acton Corp., 958 F.2d 494, 497

- 26 - (1st Cir. 1992) (applying Massachusetts law) (expressing

"fundamental principle that a contract is to be construed as

meaningful and not illusory"). Saddling third parties with losses

simply to avoid imposing them on shareholders is not a rational

result.2 See Homeowner's Rehab, Inc. v. Related Corp. V SLP, L.P.,

99 N.E.3d 744, 754 (Mass. 2018).

III

We need go no further. Because we conclude that the

Agreement is unambiguous as to the plaintiff's right to his agreed

retirement compensation, we need not look to the extrinsic evidence

proffered by the parties. Nor does section 11 of the Agreement

undermine this conclusion. Taken together, the other provisions

in the Agreement confirm what the text of section 11 already tells

us: that section 11 is precatory. It cannot (and did not) relieve

the defendants of the specific obligations provided in the

Agreement, even in the event that they consider those obligations

no longer to be in the best interests of the shareholders.

Consequently, we affirm both the district court's grant of partial

Laboring to avoid the weight of this analysis, the Trustees 2

suggest that such an abrogation or modification would be acceptable only if the perceived conflict affected the Trust's viability. This suggestion, too, is unaccompanied by any persuasive authority. And we discern no justification for us to blaze a new trail through this uncharted terrain. Cf. Jones v. Secord, 684 F.3d 1, 10-11 (1st Cir. 2012) (warning that federal court applying state substantive law should be reluctant about getting out ahead of state courts and expanding state law).

- 27 - summary judgment and its subsequent entry of judgment for the

plaintiff.

Affirmed.

- 28 -