Martin v Posener & Anor

Under Massachusetts contract law, clear contractual language is given its ordinary meaning. Where provisions create an ambiguity, the court may consider objective background facts to identify the parties’ intended meaning. Construing ambiguity against the drafter is a last resort.

A contractual trigger referring to awards by a German agency may operate despite a narrower recital referring to property held by the JCC, where the contract and its factual matrix show that the parties intended to cover claims pursued through either route. A repudiatory breach does not end the contract automatically. The innocent party may affirm it by words or conduct, including continued performance.

The claimant and the defendants entered into a contract under which the claimant financed research and legal work concerning compensation claims for assets confiscated by the Nazi regime. The defendants agreed to reimburse expenses and pay the claimant 30% of net compensation awards.

A German agency, the BADV, later awarded compensation relating to Posener property. The defendants refused to honour the agreement, arguing that the contract covered only JCC claims, that it was unenforceable under Rule 1.18 of the Massachusetts Code of Professional Conduct, and that the claimant’s refusal to fund a Berlin visit was a repudiatory breach accepted by them. The issues were the construction and enforceability of the contract, affirmation, and the sums recoverable.

1. Construction. The contract was governed by Massachusetts law. Clear language ordinarily governs, but objective extrinsic evidence may be considered to determine whether an ambiguity exists and to resolve an ambiguity. The contra proferentem rule is a last resort. The integration clause did not exclude objective evidence of the factual matrix.
2. Clause 8. There was a conflict between the recital defining Posener Property by reference to the JCC and clause 8, which expressly included awards by the BADV and other German agencies. The surrounding emails showed that the parties intended the agreement to cover property for which claims might be made through the JCC, the BADV, or another German agency or court. The BADV award therefore triggered clause 8.
3. Rule 1.18. The pleaded unclean-hands and professional-conduct defence failed. In any event, the evidence did not establish an attorney-client relationship: the defendants had not sought legal advice, the relevant German-law advice was outside the claimant’s professional competence, and no legal advice had been given.
4. Repudiation and affirmation. The claimant’s refusal to provide further funds for the Berlin visit was capable of amounting to a repudiatory breach because funding was a principal contractual obligation. The defendants nevertheless affirmed the contract by paying the expense, requesting and accepting further performance, continuing to treat the claimant as responsible for Mr Chudson’s remuneration, and delaying any acceptance of the alleged breach. The contract therefore remained on foot.
5. Relief. The defendants were jointly and severally liable to reimburse $61,666.45 paid for contractual research, and to pay 30% of the net BADV compensation after the specified deductions. The claimant was also entitled to an inquiry into third-party expenses incurred to enforce the contract, but not to payment for his own time under the indemnity clause. Interest was payable at 12% per annum, with the amount and commencement date to be determined.