## Facts

- Three siblings each owned one-third of the shares of two closely held Massachusetts corporations, Concord Auto Auction, Inc. and E.L. Cox Associates, Inc.
- The shareholders executed a stock purchase and restriction agreement requiring the corporations to repurchase a shareholder’s stock upon death, funded by life insurance.
- The agreement specified fixed per-share prices that would remain effective until changed, and also provided that the prices would be reviewed at least annually and could be changed by agreement.
- The first scheduled annual meeting and review did not occur, and no new price was agreed.
- One shareholder died unexpectedly; by then, the market value of the decedent’s shares was about double the contract price.
- The estate’s administrator refused to tender the shares at the contract price, asserting the missed annual review excused performance and alleging fiduciary and statutory misconduct by the surviving shareholders and corporations.

## Issues

1. Whether the agreement’s annual price “review” provision created a condition precedent to enforcement of the repurchase obligation.
2. Whether failure to hold the annual meeting and review constituted a breach, unclean hands, or breach of fiduciary duty barring specific performance.
3. Whether post-agreement appreciation made specific performance inequitable.
4. Whether the alleged conduct constituted an unfair or deceptive act under Mass. Gen. Laws ch. 93A, § 11.

## Decision

- The court granted summary judgment for the corporations.
- The court ordered specific performance requiring the estate to tender the shares at the agreement’s stated price.
- The court rejected defenses based on the missed annual review and the increase in value.
- The court dismissed the estate’s counterclaims for breach of contract, breach of fiduciary duty, unclean hands, and violation of Mass. Gen. Laws ch. 93A, § 11.

## Legal Principles

- A clear buy-sell agreement for a close corporation is enforced according to its written terms absent proof of ambiguity, fraud, duress, or comparable inequity.
- A contractual requirement to “review” price does not, without more, create a condition precedent to a repurchase obligation, especially where the contract states the existing price remains effective until changed by mutual agreement.
- Specific performance is not denied merely because later events make the contract price diverge materially from market value; subsequent appreciation is a foreseeable risk allocated by the agreement.
- Allegations of fiduciary breach or unclean hands must be supported by evidence of bad faith or wrongful conduct; mere nonoccurrence of a review meeting, without proof of misconduct, is insufficient.
- A private contract dispute, without unfair or deceptive commercial conduct, does not establish liability under Mass. Gen. Laws ch. 93A, § 11.

## Conclusion

The court enforced the close-corporation stock repurchase agreement at the stated price, holding that the annual “review” language did not condition enforceability on revaluation and that the estate failed to show inequitable conduct, fiduciary breach, or a Chapter 93A violation.


Concord Auto Auction, Inc. v. Rustin, 627 F. Supp. 1526 (D. Mass. 1986)