
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                                                                      ____________________        No. 95-1682                                 DEN NORSKE BANK AS,                                Plaintiff, Appellant,                                          v.                      THE FIRST NATIONAL BANK OF BOSTON, ET AL.,                                Defendants, Appellees.                                                                                      ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Nathaniel M. Gorton, U.S. District Judge]                                              ___________________                                                                                      ____________________                                Selya, Circuit Judge,                                       _____________                            Bownes, Senior Circuit Judge,                                    ____________________                               and Cyr, Circuit Judge.                                        _____________                                                                                      ____________________             Glen Banks, with whom Steven C. Koppell and Fulbright & Jaworski,             __________            _________________     _____________________        LLP, were on brief for appellant.        ___             Joseph L. Kociubes, with whom Mark W. Batten and Bingham, Dana &             __________________            ______________     _______________        Gould were on brief for appellees.        _____                                                                                      ____________________                                   February 2, 1996                                                                                      ____________________                    CYR, Circuit Judge.  Plaintiff Den norske Bank AS ("Den                    CYR, Circuit Judge.                           _____________          norske")  appeals from  a district  court order  granting summary          judgment  to  defendant First  National  Bank  of Boston  ("First          National")1  on its claims for  breach of contract  and breach of          fiduciary duty.  We vacate the judgment.                                          I                                          I                                      BACKGROUND                                      BACKGROUND                                      __________                    In 1985, First National  loaned $43.2 million to Glades          Roads Associates ("Glades Roads") to construct an office building          in Florida, and  took a first mortgage on the  Project.  In 1986,          appellant Den norske entered  into a Loan Participation Agreement          ("Agreement")2 with First National.  Den norske purchased approx-          imately 17%  (or $7.5 million) of  the Glades Roads loan.   First          National  retained an  83% interest  in the  loan, and  served as          "Principal"     the party charged  with administering the  loan.           The Agreement also provided, in pertinent part:                    11.  Approval of  Principal's Actions.   Principal                         ________________________________               [First National] agrees that it shall not without prior                                                     ___ _______ _____               written agreement  by all Participants: (1)  reduce the               _______ _________                            ______ ___                                        ____________________               1References to  "First  National" include  its  predecessor,          BancBoston, and references to  "Den norske" include its predeces-          sor, DnC America Banking Corp.               2"In a typical [loan participation arrangement], one bank             the  'lead bank'      first makes  the  loan agreement  with  the          borrower and then makes a separate agreement    the participation          agreement      with other  banks, to  which  the lead  bank sells          shares  in the loan (usually retaining a share for itself, howev-          er), evidenced by participation certificates.  The result is that          only the lead bank has a direct contractual relationship with the          borrower."  First Nat'l  Bank of  Louisville v.  Continental Ill.                      ________________________________     ________________          Nat'l Bank  & Trust Co. of  Chicago, 933 F.2d 466,  467 (7th Cir.          ___________________________________          1991).                                          2               amount of the Loan  principal or interest payments; (2)               ______ __ ___ ____  _________               reduce  the  Loan interest  rate;  (3)  postpone for  a               period of more than 60 days any due date for payment of               the Loan  principal; (4) release or  subordinate any of               the collateral or waive any claim against any guarantor               or  person who may be secondarily liable who would have               a material,  adverse effect  on the collection  and en-               forcement of the  Loan or the Loan  documents; (5) sus-               pend the accrual of Loan interest.                    In other  matters concerning the  routine adminis-                    __ _____  _______ __________ ___  _______ ________               tration  of the  loan, [First  National] agrees  not to               _______  __ ___  ____               deviate  from the  Loan Documents  unless  the majority               (dollars outstanding) of the lending institutions agree               to  the  change provided  [First  National]  is in  the               majority.   In all  cases where  a consensus cannot  be               reached on matters of administration that is acceptable               to [First National],  [First National] agrees to adhere                                                                ______               to the Loan Documents.                    In all cases pertaining to default, [First Nation-                    __ ___ _____ __________ __ _______   _____ _______               al] agrees to adhere to [Section] 13.                __  ______ __ ______ __  _______  __                    . . . .                    13.  Loan  Default Procedures.   [First  National]                         ________________________               and Participants agree that in case of default, courses                                                               _______               of action  will be  agreed  to by  a majority  (dollars               __ ______               outstanding)  of  the  lending  institutions  providing               [First  National] is in the majority.  In cases where a               consensus cannot  be reached  on matters  pertaining to               default  that is  acceptable to [First  National], then               [First National] agrees to adhere to the Loan Documents                                          ______               for all appropriate remedies. . . .   (Emphasis added.)                    In July 1991, Glades  Roads defaulted on the note.   At          the  time of  the  default, First  National  still held  its  83%          interest in the note; Den norske 17%.  First National invoked the          acceleration clause, made demand  for the entire outstanding loan          principal  and  accrued   interest,  then  commenced  foreclosure          proceedings.   In September  1991, however, First  National asked          Ernst  &  Young to  evaluate  the  comparative benefit  to  First          National of  (i) an immediate  foreclosure and (ii)  a negotiated          loan restructuring  agreement whereby Glades Roads  would make an                                          3          immediate payment  of $8 million and a  five-year balloon payment          of $17 million, and  First National in turn would  "forgive" $9.6          million.   Valuing  the  Glades Roads  project at  $24.7 million,          Ernst & Young recommended restructuring rather  than foreclosure.          Den  norske,  believing  that  the Project  was  worth  far more,          preferred  to foreclose,  hold the  property for five  years, and          collect rental income.   First National  rejected the Den  norske          proposal and opted for its own five-year restructuring plan.                    In  1992,  Den  norske brought  this  diversity  action          against First  National in federal district  court, alleging that          First National's  failure to  obtain "prior written  agreement by          all Participants" with the Glades Roads loan forgiveness arrange-          ment,  pursuant to   11 of the  Agreement, supra pp. 2-3, consti-                                                     _____          tuted breach of contract, breach of fiduciary duty, and an unfair          trade  practice.   The  district  court  initially denied  cross-          motions for summary judgment, finding     11 and 13 of the Agree-          ment  ambiguous.   Den  norske Bank  AS  v. First  Nat'l Bank  of                             ____________________     _____________________          Boston, 838 F. Supp. 19 (D. Mass. 1993).3           ______                    Following discovery, however,  the court  reconsidered,          eventually  awarding summary judgment to defendant First National          on the remaining Den norske claims.   Den norske Bank AS v. First                                                __________________    _____          Nat'l  Bank of Boston, No. 92-11294-NMG, 1993 WL 773796 (D. Mass.          _____________________          May  24,  1995).   The court  concluded  that    11 unambiguously          entitled  Den norske to veto a loan  forgiveness only in the pre-                                                           ____ __ ___ ____                                        ____________________               3The  district court  dismissed  the unfair  trade  practice          claim, a decision not challenged on appeal.                                           4          default  stage of  "routine" loan administration,  but that    13          _______          gave  First National the right  to choose any  "course of action"          thereafter.   Id. at *3.  The  court ruled also that  even if the                        ___          Agreement  were  determined  ambiguous,  Den  norske's  extrinsic          evidence was  insufficient to  support a rational  inference that          the  parties intended to give Den norske a post-default veto. Id.                                                     ____________       ___          at  *4  ("The extrinsic  evidence submitted  by the  plaintiff is          unpersuasive  and does not create an ambiguity or a genuine issue          of material fact.").                                          II                                          II                                      DISCUSSION                                      DISCUSSION                                      __________                    Den norske presents a two-part challenge to the summary          judgment ruling.  First, it  contends that proper contract inter-          pretation   requires  summary  judgment  against  First  National          because    11  unambiguously ordains  that First  National cannot          unilaterally "reduce the amount of the [Glades Road] Loan princi-          pal" under any circumstances,  including the borrower's  default,               _____ ___ _____________          and no provision in   13 countermands the specific prohibition in             11.   Second, even  assuming     11 and  13 were  ambiguous or          inconsistent,  Den norske's  extrinsic  evidence  raises  genuine          factual disputes    as to whether the contracting parties intend-          ed to afford Den  norske a unilateral veto over  any post-default          loan  forgiveness [hereinafter:  "veto"]     which cannot  be re-          solved at summary judgment.           A.   Applicable State Law           A.   Applicable State Law               ____________________                    Interpretation of  the Agreement is governed  by Massa-                                          5          chusetts  law.  See Agreement   22.  Normally, contract interpre-                          ___          tation is a  question of  law for the  court.  Fairfield  274-278                                                         __________________          Clarendon  Trust  v. Dwek,  970 F.2d  990,  993 (1st  Cir. 1992);          ________________     ____          Freelander  v. G. & K.  Realty Corp., 258  N.E.2d 786, 788 (Mass.          __________     _____________________          1970).  Should the court find the  contract language unambiguous,          we interpret it according to its plain terms.  See Dwek, 970 F.2d                                                         ___ ____          at 993; Hiller  v. Submarine  Signal Co., 91  N.E.2d 667,  669-70                  ______     _____________________          (Mass. 1950).                      If, however, the contract language is ambiguous, on its          face or as  applied, contract meaning  normally becomes a  matter          for the factfinder.   See Dwek, 970 F.2d at 993;  Freelander, 258                                ___ ____                    __________          N.E.2d at 788.   Although not admissible either to  contradict or          alter express  terms, extrinsic evidence is  admissible to assist          the factfinder  in  ascertaining the  intent  of the  parties  as          imperfectly expressed in ambiguous contract language.  See Robert                                                                 ___ ______          Indus., Inc.  v. Spence,  291  N.E.2d 407, 410 (Mass.  1973).  In          ____________     ______          descending order of  importance, extrinsic evidence may  include:          (1) the parties' negotiations on  the particular loan, see Merri-                                                                 ___ ______          mack  Valley  Nat'l Bank  v. Baird,  363  N.E.2d 688,  690 (Mass.          ________________________     _____          1977); Charles River Mortgage  Co. v. Baptist Home of  Mass., 630                 ___________________________    ______________________          N.E.2d 304, 306 (Mass.  App. Ct.), review denied, 636  N.E.2d 278                                             ______ ______          (Mass. 1994);  (2) their course of performance, see Affiliated FM                                                          ___ _____________          Ins. Co. v. Constitution  Reins. Corp., 626 N.E.2d 878,  882 n.10          ________    __________________________          (Mass. 1994)  (citing Restatement (Second) of  Contracts   203(b)          (1981));   (3)  their prior  course of dealing, see  id.; and (4)                                                          ___  ___          trade  usage in the relevant (viz., banking) industry, see id. at                                                                 ___ ___                                          6          881-82 (citing  Restatement   222 cmt. b  (1981); A.J. Cunningham                                                            _______________          Packing  Corp. v. Florence Beef Co., 785  F.2d 348, 351 (1st Cir.          ______________    _________________          1986)); Baccari v. B. Perini  & Sons, Inc., 199 N.E. 912,  915-16                  _______    _______________________          (Mass. 1936); see  also Jamesbury Corp.  v. Worcester Valve  Co.,                        ___  ____ _______________     ____________________          443 F.2d  205, 210 (1st  Cir. 1971)  (citing 3 Arthur  L. Corbin,          Corbin on Contracts   542, at 108 (1970)).            ___________________          B.   Standard of Review           B.   Standard of Review               __________________                    We  examine a grant of summary judgment de novo, with a                                                            __ ____          view to whether there is a "genuine issue as to any material fact          and  . . . the moving party is entitled to a judgment as a matter          of law."   Fed. R.  Civ. P. 56(c);  see Byrd v.  Ronayne, 61 F.3d                                              ___ ____     _______          1026, 1030 (1st Cir. 1995).  Once the moving party (First Nation-          al)  makes this showing, the party bearing the ultimate burden of          proof (Den  norske)  cannot rest  on mere  allegations, but  must          proffer sufficient competent evidence upon which a rational trier          of  fact could find in its favor.   See, e.g., Milton v. Van Dorn                                              ___  ____  ______    ________          Co.,  961 F.2d  965,  969 (1st  Cir.  1992) (citing  Anderson  v.          ___                                                  ________          Liberty  Lobby, Inc., 477 U.S. 242, 249 (1986)); see also Celotex          ____________________                             ___ ____ _______          Corp.  v. Catrett,  477 U.S.  317, 322  (1986).   "'[A]n argument          _____     _______          between parties about the meaning of a[n] [ambiguous] contract is          typically  an argument  about  a "material  fact,"'" and  summary          judgment is  normally unwarranted  unless "'the  [extrinsic] evi-          dence  presented  about the  parties'  intended  meaning [is]  so          one-sided that  no reasonable person  could decide [to]  the con-          trary.'"  Allen v. Adage, Inc., 967 F.2d 695, 698 (1st Cir. 1992)                    _____    ___________          (quoting Boston Five  Cents Sav.  Bank v. Secretary  of Dep't  of                   _____________________________    _______________________                                          7          HUD, 768 F.2d  5, 8 (1st Cir. 1985));  Blanchard v. Peerless Ins.          ___                                    _________    _____________          Co.,  958 F.2d 483, 491 (1st Cir.  1991) (same).  Nonetheless, we          ___          must  resolve all  genuine  factual disputes,  and any  competing          rational  inferences, in the light  most favorable to Den norske,          the party against  whom summary judgment entered.    See Byrd, 61                                                               ___ ____          F.3d at 1030.           C.   Interpretation of Participation Agreement          C.   Interpretation of Participation Agreement               _________________________________________               1.   Contract Ambiguity               1.   Contract Ambiguity                    __________________                    The district  court found that the  Agreement unambigu-          ously  afforded  First National,  qua  majority  participant, the                                            ___          unilateral right to forgive principal on post-default loans.  Den                                                   ____                 ___          norske Bank AS,  1993 WL 773796, at *3.   The court reasoned that          ______________          the  prohibition against debt forgiveness  in   11,    1, applies          only to pre-default loans.   See supra Section I.  Section  11,            ____    ___                  ___ _____          2,  of the  Agreement  refers to  "other  matters concerning  the                                             _____  _______          routine administration of the loan." (Emphasis added.) The phrase          _______          "other  matters" suggests  that    2  is residual;  that is,    1          describes all other "matters" relating to "routine" loan adminis-          tration  not described  in     2.   By  definition,  post-default                                                               ____          administration of a  loan is not "routine,"  and therefore cannot                                       ___          be governed by   11.  We do not agree.                     First,  though  the  district court  drew  a  perfectly          plausible inference from the contract  language, we do not  think          it  can be  considered the  only reasonable  inference.   For one                                      ____          thing, the   11 caption states "Approval of Principal's Actions,"                                                                  _______          not "Approval of Principal's  Pre-default Actions."  The district                                        ___________                                          8          court implicitly assumed that  the phrase "concerning the routine          administration  of the loan," in   2,  stood in apposition to the          term  "matters," whereas it is as  faithfully understood to refer          to the phrase "other matters."  In other words,   11,   2, can be          construed to suggest  that   11,   1, adverts  to "other matters"          (i.e.,  actions taken by the lead bank) of such overriding impor-          tance to minority participants as to preclude their characteriza-          tion as "routine" matters.                     Next, if the contracting  parties intended to supplant,                                                               __ ________          in its entirety, the   11  definition of the parties' rights  and          __ ___ ________          obligations upon the occurrence of a borrower default,   11,   3,          is oddly couched.   For instance,   11,    3, does not say:   "In          the event of  default, the parties agree that loan administration                                     _______          will be governed  (or controlled)  by Section 13."   Rather,  the                  ________      __________          choice of  language is more inscrutable: "In all cases pertaining          to default, [First National]  agrees to adhere to  Paragraph 13."                       _____ ________             ______          (Emphasis added.)   This language lends  conspicuous ambiguity in          at least two significant respects.   First, ostensibly it imposes          a contractual obligation (i.e., "adherence") upon First  National          alone,  and not  on Den  norske.   It suggests  that though    13          _____   ___ ___  __ ___  ______          imposed  additional  obligations  on First  National,  see, e.g.,                               ___________                       ___  ____          Agreement    13  (noting that,  if the  majority  of participants          cannot  reach a  consensus, First  National, qua  Principal, must                                                       ___          "adhere" to loan documents in  selecting "appropriate remedies"),          it  was not intended to supplant any Den norske contractual right                                                                      _____          already enumerated in    11.  And, at least  arguably, the broad-                                          9          based caption to    11     "Approval of  Principal's Actions"                                                                   _______          intimates that  Den norske's unconditional right  of veto extends          to  matters embraced by  the phrase "courses of  action" in   13.                                                           ______          Second, unlike  "govern" and "control," the  verb "adhere" cannot          be read to rule out the  possibility that   13 merely supplements                                                                ___________            11 and does not displace  it as the only provision defining the                            ________          parties' contractual rights and  obligations in the  post-default          period.                      First  National counters  that  Den norske's  alternate          interpretation would render   13 a virtual nullity, see Merchants                                                              ___ _________          Nat'l Bank v. Stone, 5 N.E.2d 430, 433 (Mass. 1936) (noting that,          __________    _____          where possible,  no part of  contract should be  deemed superflu-          ous),4 since it  would preclude First National from pursuing some          otherwise appropriate "courses of  action" following a default by          the borrower.  On  the contrary, though Den norske's  interpreta-          tion may limit First National's post-default prerogatives under                     _____          13, clearly  it does not render   13 wholly superfluous.  So con-                                                      ___________          strued,  section 13 still  would reserve  considerable decisional          latitude to the  lead bank, permitting  First National to  choose          any post-default "course  of action," even an  innovative one not                                        ____________________               4Meeting  parry for  thrust,  Den norske  argues that  First          National's  interpretation would  render    11,    1,  a nullity,          since a lead bank rarely (if ever) would have  occasion (or need)          to forgive a loan unless the borrower were in default.   Although          this proposition has some appeal, it suffers from the same defect          as  First  National's "nullity"  argument; viz.,  neither conclu-                                                                    _______          sively resolves  the facial  contract ambiguity  so as  to enable          ______               ______          summary judgment.  Of course, customary  banking practices may be          introduced  as  circumstantial  extrinsic evidence  of  usage  of          trade, from which a jury might infer contract meaning.  See infra                                                                  ___ _____          Section II.C.2(b).                                          10          specifically described in the  loan documents, as long as  it did          not choose  a course of  action (e.g., unilateral  loan principal          forgiveness) expressly prohibited under   11,   1.                         _________ __________                    First  National next  argues  that  its  interpretation          represents the only "common sense" reading of  the Agreement that          comports with  the economic  realities  underlying loan  partici-          pation agreements, which are  by their very nature risk-spreading                                                             ______________          financial  arrangements.  Thus, a  lead bank (at  least one which          remains the  majority participant) retains a  much greater finan-          cial  stake in  maximizing loan recoveries  than do  the minority          participants.   Consequently, upon a default  a minority partici-          pant should not be able to take unfair advantage of the  majority          participant  by invoking  a  veto, thereby  forcing the  majority          either to take a "course of action" it deems inappropriate, or to          buy  out the  minority participant's  share at  a premium.   See,                                                                       ___          e.g., First Nat'l  Bank of Louisville  v. Continental Ill.  Nat'l          ____  _______________________________     _______________________          Bank &  Trust Co. of Chicago,  933 F.2d 466, 470  (7th Cir. 1991)          ____________________________          ("The  banks that had financed five-sixths of the loan thought it          in their best  interest not to call the loan,  despite the borro-          wer's  default.   Given that  decision, it  was in  [the minority          participant's] interest to play dog in  the manger . . . ."); see                                                                        ___          also Carondelet Sav. & Loan Ass'n v.  Citizens Sav. & Loan Ass'n,          ____ ____________________________     __________________________          604  F.2d 464  (7th Cir.  1979); Mark  Twain Bank  v. Continental                                           ________________     ___________          Bank, N.A., 817 F. Supp. 792 (E.D. Mo. 1993).            __________                    The "economic realities"  driving participation  agree-          ments  vary too widely in  individual cases to  control the "four                                          11          corners"  analysis of the Agreement in this  case.5   As with all          contracting  parties,  "each  bank  [negotiating  a participation          agreement]  wants to preserve, so far as possible, its freedom of                                         __ ___ __ ________          action,"  First Nat'l Bank of Louisville, 933 F.2d at 470 (empha-                    ______________________________          sis added), yet this  intuition is tempered by its  assessment as          to  the  financial benefits  which would  accrue  in the  event a          mutually acceptable "compromise" agreement  can be achieved.  For          example,  lead  banks  utilize participation  agreements  (1)  to          spread credit  risks by  diversifying their loan  portfolios, see                                                                        ___          Banco  Espanol de Credito v.  Security Pac. Nat'l  Bank, 973 F.2d          _________________________     _________________________          51, 53 (2d Cir. 1992), cert. denied, 113 S. Ct. 2992 (1993); W.C.                                 _____ ______          Lott,  et  al.,  Structuring  Multiple  Lender  Transactions, 112                           ___________________________________________          Banking  L.J.  734 (1995);  Note,  Bankruptcy and  the  U.C.C. as                                             ______________________________          Applied to Securitization,  73 B.U.  L. Rev. 873  (1993); (2)  to          _________________________          avoid regulatory  lending limits, see,  e.g., 12 C.F.R.    32.107                                            ___   ____          (1985),  thereby  permitting  lead  banks to  make  more  capital          available to important  commercial clients,  see Andrew  Strehle,                                                       ___          Teaching Old Laws New Tricks: The Prospect for Loan Participation          _________________________________________________________________          Regulation, 13 Ann. Rev.  Banking L. 421, 423-24 (1994);  and (3)          __________          to generate  fees from  servicing and  administering loans.   See                                                                        ___                                        ____________________               5See  generally  Eric M.  Schiller,  Scott  A. Lindquist,  &                ___  _________          Christopher Q. King, Current Issues in Loan Participation and Co-                               ____________________________________________          Lending Agreements,  C974 ALI-ABA 457,  464 (1995) ("Generalizing          __________________          about enforcement of loan participation and co-lending agreements          is nearly impossible. Although there is some uniformity in  terms          among  these  agreements, the  resolution  of  any conflict  will          necessarily turn  almost entirely upon  the precise terms  of the          contracts, which may differ substantially from one transaction to          the next. Moreover, in applying legal standards prescribed by the          contracts, consideration  of the facts and  circumstances of each          individual case is necessary.").                                           12          generally First  Nat'l Bank of Belleville  v. Clay-Hensley Comm'n          _________ _______________________________     ___________________          Co.,  525 N.E.2d  217, 219-20  (Ill. App.  Ct. 1988)  (describing          ___          various  "lead  bank"  incentives for  negotiating  participation          agreements).6   It cannot  be ascertained conclusively     solely                                                                     ______          by  scrutinizing the  terms of  the Agreement     how  much First          National was prepared to concede, in 1986, to obtain Den norske's                                            __ ____          agreement to advance $7.5  million and to assume a  percentage of          the risk  associated with  the Glades Roads  Note.   Accordingly,          there  is no  reliable way  to identify  the particular  economic          realities at work in the First National-Den norske loan  partici-          pation relationship without recourse  to extrinsic evidence.  See                                                                        ___          infra Section II.C.2.          _____                    Finally,  the  cases  First  National  relies  upon  as          support for its "economic reality" interpretation are inapposite.          In  Carondelet,  for  example, the  participation  agreement  was              __________          utterly silent as to the existence  of an analogous minority-held                  ______          veto (over  decisions whether to declare  loan defaults), whereas          the Agreement in  our case clearly incorporates  a veto provision          (   11,    1), though  its intended  scope (i.e.,  pre- or  post-                                               _____          default)  is  demonstrably ambiguous.    Carondelet  Sav. &  Loan                                     _________     ________________________          Ass'n, 604 F.2d  at 470; see also First Nat'l Bank of Louisville,          _____                    ___ ____ ______________________________          933  F.2d at  470  (noting that  minority participant's  contract          interpretation "lacks  textual support").  Moreover,  the Seventh                                        ____________________               6By  contrast, minority  participants look  to  limit credit          search and  administration  costs associated  with making  direct          loans or  investments, see Note, 73  B.U. L. Rev. at  873, and to                                 ___ ____          obtain  higher interest  rates  on their  investments, see  Banco                                                                 ___  _____          Espanol de Credito, 973 F.2d at 53.            __________________                                          13          Circuit ultimately  discussed "economic  realities" only  in con-          junction  with its review of the extrinsic evidence of custom and                                           _________ ________          usage  credited by the factfinder, and not in connection with the          question  whether the  agreement  was facially  unambiguous as  a                                                                      __  _          matter of  law.  Carondelet Sav.  & Loan Ass'n, 604  F.2d at 470.          ______ __  ___   _____________________________          Finally, Carondelet was an  appeal from a final judgment  for the                   __________                       _____ ________          lead bank  following a  bench  trial, and  not  from a  grant  of                                  _____  _____          summary  judgment. Id. at 468.  There the factfinder's assessment                             ___          of extrinsic  evidence would  have been  reviewed only  for clear          error.                    2.   Extrinsic Evidence                    2.   Extrinsic Evidence                         __________________                    As  the Agreement is amenable to  more than one reason-          able interpretation, we must determine whether Den norske adduced          enough competent extrinsic evidence  of the contracting  parties'          intent  to support  a rational  jury verdict in  its favor.   See                                                                        ___          Blanchard,  958 F.2d at 491.   The district  court concluded that          _________          the  extrinsic evidence proffered by Den norske could not support          a rational  inference that     11  and 13 afforded  Den norske  a          post-default veto.   Den norske Bank  AS, 1993 WL 773796,  at *4.                               ___________________          The  Den  norske  extrinsic  evidence pertains  to  the  contract          negotiations and to "usage of trade" in the banking industry.                    (a)  Contract Negotiations                    (a)  Contract Negotiations                         _____________________                    Den norske adduced evidence that First National normal-          ly used its own standardized form contract for all its participa-          tion agreements in the  mid-1980s, that First National's Florida-          based loan officers were  permitted to customize these agreements                                          14          in negotiations with prospective  minority participants, and that          Liska Langston, one  of these  loan officers, wrote  a letter  in          April  1986 noting  that specific  changes had  been made  to the                                   ________  _______          First  National-Den norske agreement.   Langston  highlighted the          changes  on  a copy  of  the  "revised Participation  Agreement,"                                         _______          including  an entirely  redrafted version  of    11.   Den norske          _________  __ ________  _________ _______  __ _  __          contends  that this  circumstantial evidence  invites  a rational          inference that  it deliberately  negotiated changes to  the stan-          dardized version of   11 to assure  itself a veto.  See In re 604                                                              ___ _________          Columbus Ave. Realty Trust,  968 F.2d 1332, 1358 (1st  Cir. 1992)          __________________________          (noting  that,  under  Massachusetts  contract  law, specifically          negotiated  contract  terms  normally control  over  standardized          __________                                           ____________          contract provisions) (citing Carrigg v. Cordeiro, 530 N.E.2d 809,                                       _______    ________          813 (Mass. App. Ct.  1988), review denied, 536 N.E.2d  612 (Mass.                                      ______ ______          1989)).                     First  National  responds that  the  extrinsic evidence          proffered by Den  norske is  insufficient, for two  reasons.   It          cites affidavits  and depositions which  attest that (i)  the so-          called "revised" version of   11 actually was part of a standard-          ized  First  National  form;  or (ii)  the  negotiating  officers          (including Liska Langston) could  not recall having discussed any                                                              _________          proposed   11  changes with Den  norske in  1986.  These  conten-          tions,  which bear on the  weight to be  given the circumstantial                                     ______          evidence proffered by Den  norske, do not undermine Den  norske's          argument that genuine issues  of material fact remain unresolved.          See Byrd, 61 F.3d at 1030.            ___ ____                                          15                    First,  it is not at all surprising that a loan officer          might not recall the unrecorded  details of a decade-old negotia-                               __________          tion, such as particular  oral conversations.  Moreover, Langston                                    ____ _____________          confirmed that  her signature  appears on  the April 1986  letter          highlighting  certain substantial "changes"  and "revis[ions]" to          standardized form   11 arrived at through negotiation.  Thus, the          authenticated, uncontradicted April 1986  letter signed by  Lang-          ston could  support  a rational  inference  that Den  norske  had          proposed  specific changes in    11, and that  First National was          announcing  its  agreement with  the Den  norske counterproposal.          See Deposition  Exhibit No.  6 (Langston  Letter dated  April 14,          ___          1986) ("[A]dvise us as soon as possible if you concur [with these          "changes" and "revis[ions]].").                    In the  same vein,  Den norske proffered  participation          agreements it negotiated with lead banks other than First Nation-          al, wherein it consistently reserved a  minority veto, as circum-                         ____________          stantial  evidence that Den  norske would not  have intended that          its  First National  loan participation  be any  exception.   See                                                                        ___          Vadala v. Teledyne  Indus., Inc., 44 F.3d 36, 39  (1st Cir. 1995)          ______    ______________________          ("Certainly  the fact  that there  is a  pattern of  occurrences,          reflecting an apparent cause  and effect sequence, can strengthen          the likelihood that the present case is  one more in the pattern.          This is how human beings reason about circumstantial evidence.").          Coupled with  other extrinsic  evidence proffered by  Den norske,          see infra Section  II.C.2(b), these  exhibits     if admitted  at          ___ _____          trial  and credited by the jury    could contribute to a rational                                          16          inference that  the contracting  parties intended to  depart from          the standardized First National form versions of   11 and   13 so          as  to provide Den  norske with a veto  over any loan forgiveness          arrangement.   See In re 604 Columbus Ave. Realty Trust, 968 F.2d                         ___ ____________________________________          at 1358.                    (b)  Usage of Trade                    (b)  Usage of Trade                         ______________                    Den norske proffered  extrinsic evidence     pertaining          to the relevant 1985-86  period    that it was  common, industry-                                                                  _________          wide, to  incorporate such minority participant  veto powers over          ____          loan  forgiveness  arrangements. The  evidence took  three forms:          (1) affidavits  from current and former  commercial loan officers          (viz., Den  norske Vice President  David Schwarz and  former Vice          President Daniel deMenocal) based  on their personal knowledge of          banking industry practices; (2)  learned treatises on the banking          industry, see, e.g., Sandra Stern, Structuring Loan Participation                    ___  ____                ______________________________            1.05(1)(d),  at 1-20  (1992) ("Typically,  participation agree-          ments provide that the lead bank may agree to modification of the          loan documents [if the loan becomes  delinquent] . . . as long as                                                                 __ ____ __          it does  not reduce the amount of principal due . . . .") (empha-          __ ____  ___ ______ ___ ______ __ _________ ___          sis added);7  and (3) participation agreements  negotiated by Den                                        ____________________               7See generally Eric M.  Schiller, Scott A. Lindquist, Chris-                ___ _________          topher  Q. King,  Current Issues  in Loan  Participation  and Co-                            _______________________________________________          Lending  Agreements,  C974  ALI-ABA  457,  479-80  (1995)  ("Most          ___________________          participation  agreements allow  fairly broad  discretion to  the          lead  lender on the issue of when  to declare the loan in default          or initiate  enforcement action. This is quite logical given that          the lead lender generally has the best understanding of the loan,          the  borrower,  and  the  current situation.  However,  the  lead          lender's flexibility  in dealing with loan  defaults and remedies          may not be  as broad as it  might at first appear.   For example,          the lead  lender may  be prohibited  from waiving, releasing,  or                                   __________                                          17          norske  with other  lead banks,  wherein Den  norske consistently          reserved such a veto.   First National argues that this "usage of          trade" evidence is insufficiently probative, for three reasons.                     First, it contends that  Den norske's affiants were not          qualified to give expert testimony on banking industry practices.          We  do not  agree.   Whatever may  have been  Schwarz' qualifica-          tions,8 deMenocal  was a  forty-year banking veteran  (with Citi-                                    __________          bank  and Den norske)  who attested that  he had (i)  served as a          vice-president in charge of "large commercial loan transactions,"          (ii) had "become very familiar with participation agreements from          the  perspective of  both  the lead  bank  and the  participating          banks,"  and  (iii)  observed  firsthand  the  "well  established          industry custom[] and practice[]" to allow such minority-partici-          pant  vetoes.   Under  Massachusetts law,  this  is the  type  of          testimony through  which "usage of  trade" is established.   See,                                                                       ___          e.g., Baccari, 199 N.E. at 916 (noting that "[t]he testimony of a          ____  _______          witness  who had been employed as a road builder for twenty-eight                                                               ____________          years was  sufficient to warrant a  finding of a  usage, and that          _____          these  parties contracted  with reference  to it,"  and observing          that the  "credibility" of  witnesses describing usages  of trade                                        ____________________          modifying material provisions of the loan documents, particularly          _________ ________ __________                        ____________          payment provisions.") (emphasis added).           _______ __________               8First  National argues  that  Schwarz is  not competent  to          provide expert testimony on  "usage of trade" because he  did not          deal  frequently  with loan  participation  agreements;  thus, he          could not form a  reliable opinion as to prevalent  banking prac-          tices.   Since  deMenocal's qualifications,  at least  those dis-          closed in the summary judgment record, clearly were sufficient to          establish  competence, we need  not resolve the  challenge to the          Schwarz affidavit.                                           18          ultimately  is a  factual  question "for  the master")  (emphasis                            _______          added);  Barry v.  Quimby, 92  N.E. 451,  453 (Mass.  1910) ("The                   _____     ______          witness  [on 'usage'] testifies to  the existence of  a fact from          actual knowledge, acquired through observation and  experience in          the business .  . .  ."); Industrial Eng'g  & Metal  Fabricators,                                    _______________________________________          Inc.  v. Fontaine Bros., 319  N.E.2d 726, 727-28  (Mass. App. Ct.          ____     ______________          1974) (discerning no error  in factfinder's reliance on affidavit          of person whose "recitation  of his background and qualifications          affirmatively demonstrated  his competence to testify  of his own          personal  knowledge on the factual  issue of whether  there was a          custom in the  trade") (citation omitted); see  also Leibovich v.                                                     ___  ____ _________          Antonellis, 574 N.E.2d 978, 982 (Mass. 1991) (noting that jury is          __________          arbiter  of  "soundness" of  expert  testimony,  and that  "[o]ne          factor in  assessing  the strength  of  expert testimony  is  the          expert's  knowledge and  experience").   First  National has  not          demonstrated  to our  satisfaction  that deMenocal  would not  be          permitted  to provide  expert testimony  at trial.   See  Fed. R.                                                               ___          Evid. 702, 703; Daubert v. Merrell Dow Pharmaceuticals, Inc., 113                          _______    _________________________________          S. Ct.  2786 (1992) (noting that trial  court serves "gatekeeper"          function in determining competency, qualifications, and "helpful-          ness" of expert testimony); see also United States  v. Saccoccia,                                      ___ ____ _____________     _________          58 F.3d 754,  781 (1st Cir. 1995)  (same).  Moreover, Den  norske          cites  to  published  treatises on  standard  banking  practices,          excerpts  from which  may be  admissible at  trial in  support of          deMenocal's  testimony.   See Fed.  R. Evid.  803(18); Carondelet                                    ___                          __________          Sav.  & Loan Ass'n, 604 F.2d at 470 (noting that defendant relied          __________________                                          19          on  expert  testimony and  learned  treatises to  prove  usage of          trade,  in order to discern meaning of ambiguous language in loan          participation agreement).9                      Second, First National argues that the expert testimony          proffered by  Den norske merely  represented self-serving  state-          ments which would help  their employer, since both affiants  were          Den  norske employees.  Once again, however, we are not persuaded          that First  National has demonstrated that  the expert qualifica-                                                          ______ __________          tions  of these  affiants  are undermined  by  their present  and          _____          former association with Den norske so as to render their testimo-          ny inadmissible.   Of course,  such matters may  bear heavily  on             ____________          witness credibility, bias, and  the weight of the evidence.   But          these  are matters for the  factfinder.  See  Newell Puerto Rico,                                                   ___  ___________________          Ltd. v. Rubbermaid, Inc., 20 F.3d 15, 23  (1st Cir. 1994); Leibo-          ____    ________________                                   ______          vich,  574 N.E.2d at 982  (noting that it  is "[t]he jury's func-          ____          tion, vis-a-vis an expert witness, .  . . to assess the soundness          and  credibility of his  opinions").  At  summary judgment, more-          over,  courts normally assume that the trier of fact would credit          the  expert  testimony  proffered  by the  nonmovant  (i.e.,  Den          norske).   See Woodman v.  Haemonetics Corp., 51  F.3d 1087, 1091                     ___ _______     _________________          (1st Cir. 1995);  Affiliated FM Ins. Co., 626 N.E.2d at 882 ("The                            ______________________                                        ____________________               9Of course, the claim that First National was unaware of the          "usage of trade" described by deMenocal is not controlling.  See,                                                                       ___          e.g.,  Berwick & Smith Co. v. Salem  Press, Inc., 117 N.E.2d 825,          ____   ___________________    __________________          827  (Mass.  1954)  (noting  that proof  of  defendant's  "actual          knowledge"  of  usage  is  unnecessary; "`[w]here  the  usage  is          established the  presumption is that the  parties contracted with                           ___________          reference to it'")  (quoting Baccari, 199 N.E. at  916) (emphasis                                       _______          added).                                          20          existence and scope of a usage of trade are questions of  fact.")          (citing  Restatement  (Second)  of  Contracts     222(2)  (1981);          DiMarzo v. American Mut.  Ins. Co., 449 N.E.2d 1189,  1201 (Mass.          _______    _______________________          1983)); see also U.C.C.   1-205(2).                  ___ ____                    Finally,  First  National  argues  that  the  proffered          expert  testimony is insufficiently probative of banking industry          practices because it merely evidences "that participants general-          ly  attempt to negotiate such protections,"  not that they gener-              _______    _________          ally  succeed  in  obtaining   such  concessions  from  the  lead                _______          bank.10    Quite   the  contrary,  the  "typical"   participation          agreement usage  with which  Den norske's experts  were familiar,          and  to which presumably they  would testify, is  that a minority          participant veto  is  the  industry norm.    Moreover,  if  First          National means to suggest that  such "general" practices are  not          probative as to whether it is more or less likely that particular                                                                 __________          contracting  parties  harbored such  an intent,  it is  simply in          error.    Cf. U.C.C.    1-205(2)  (noting  that "usage  of trade"                    ___          includes "any practice or method of dealing having such regulari-                                                             ____ _________                                        ____________________               10First  National  further  argues that  "demenocal  is  not                                                                        ___          entirely supportive of Den norske's position," in that he assert-          ________ __________          ed that it was "possible" that an "indirect" minority participant          might  not  have enough  bargaining power  to  insist on  a veto.          DeMenocal described  an inapposite  scenario    called  an "indi-          rect" participation     in  which an original  lender participant          enters into a second  and collateral participation agreement with                        ______          a  "third  bank" in  order to  allocate,  inter se,  the original                                                    _____ __          participant's  credit risk  on  the underlying  loan.   DeMenocal          correctly  noted that the "third  bank" in such  a scenario would          have  no  direct  contractual  relationship  with  the  borrower.          Although  Den  norske  (like  most  "direct"  loan  participants)          likewise  has no  contractual relationship  with the  borrower             Glades Roads    see supra note 2,  it is in no sense the type  of                          ___ _____          "indirect" participant described by demenocal.                                           21          ty of observance .  . . as to justify an expectation that it will          __          be observed with respect to the transaction in question") (empha-          sis added); Carondelet Sav. & Loan Ass'n, 604 F.2d at 470 (noting                      ____________________________          that lead bank's extrinsic evidence of industry custom and usage,          in  the form of  witness testimony and  treatises, was admissible          because  it made  it more  "likely" that the  contracting parties          would not have  intended to  use an ambiguously  broad term  like          "servicing" to exclude the lead bank's unilateral right to modify          the  loan  documents  if  the industry  custom  were  otherwise);          Affiliated FM Ins.  Co., 626  N.E.2d at 882  ("The existence  and          _______________________          scope  of a  usage of  trade are  questions of  fact.") (emphasis          _____          added).  The precise function of "usage of trade" evidence is  to          provide  circumstantial proof of the contracting parties' intent.                   ______________          A party need not show  that all participation agreements  invari-                                      ___          ably entitle  minority participants  to post-default  vetoes. See                                                                        ___          id. ("Where, as  here, the contract  language is ambiguous,  evi-          ___          dence  of custom and trade practice  may be admitted to arrive at          an interpretation  `"which appears to  be in accord  with justice          and common  sense and the probable intention  of the parties."'")                                    ________ _________  __ ___ _______          (citations omitted; emphasis added).11                                          ____________________               11First National likewise cites Den norske's internal credit          manuals, which suggest that Den norske loan officers not agree to          minority  participant  vetoes   in  any  participation  agreement          negotiated for Den norske as lead bank.  Viewed in the light most                                    __ ____ ____          favorable to  Den norske,  however, these manuals  merely suggest          the  obvious truth that it is likely  that lead banks will almost          always negotiate to avoid  a minority participant veto provision.                 _________          See  supra Section II.C.1  (discussing First National's "economic          ___  _____          reality" theory).  By  contrast, "usage of trade" deals  not with          contract negotiation, but with the "typical" end product included                                                       ___ _______          in negotiated loan participation agreements.                                          22                                         III                                         III                                      CONCLUSION                                      CONCLUSION                                      __________                    We therefore conclude  that Den  norske adduced  suffi-          cient competent  extrinsic evidence  which, if admitted  at trial          and credited by the jury, could support a rational verdict in its          favor.   The parties agree that  the disposition of the breach of          contract  claim  controls the  breach  of  fiduciary duty  claim.          Consequently, the summary judgment entered on counts 1 and 2 must                        ___ _______ ________ _______ __ ______ _ ___ _ ____          be vacated.  The case is remanded for further proceedings consis-          __ _______   ___ ____ __ ________ ___ _______ ___________ _______          tent with this opinion.  Costs to appellant.          ____ ____ ____ _______   _____ __ _________                    So ordered.                     So ordered.                    __ _______                                          23
