OR - Terrain Boundary

Is there a proper workflow to clip a terrain model with a defined shape? I cannot find anywhere that describes ways to troubleshoot the commands not working. When you add a boundary to a terrain should it not clip to that boundary? 

I have a primary surface that I want to have LIDAR contours append where the two surfaces overlap. The create complex terrain model function doesn't seem to allow one surface to supercede another terrain where they overlap, is this correct? 

Thanks!