Corporations — repurchase agreements — specific performance

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Wisconsin Supreme Court

Civil

Corporations — repurchase agreements — specific performance

Summary judgment was improperly granted to a corporation where a shareholder sought specific performance of a repurchase agreement, without considering the equities.

“We reiterate that the case law on specific performance is abundantly clear that the equities must be weighed. It is clear from a review of the record that such a balancing has never happened in this case. The motion for summary judgment failed to make a prima facie case that Sideline was entitled to specific performance because it did not show a defense that would defeat the equitable claim it opposed.”

“We therefore agree with the court of appeals that summary judgment was improperly granted in this case without the required balancing of the equities that are due to a specific performance claim and without a consideration of the possibility of a breach of the covenant of good faith and fair dealing. In order to make a prima facie case that Sideline was entitled to summary judgment, its motion would need to show a defense that would defeat Beidel’s claim. That is, it must successfully attack the requirements for obtaining specific performance: – that specific performance is available as a remedy; – that there has been a substantial enough breach to warrant specific performance; and – that the equities lie on his side, and that nothing would make an order of specific performance unfair, unreasonable or impossible. In determining whether the requirements for specific performance have been met in this case, it will be necessary for the court to interpret and apply the provisions of the Stock Repurchase Agreement, with special reference to Section 6, Termination of Employment without Cause, as well as Sections 8(b) and (c), which relate to valuation. In this case the analysis necessarily involves interpreting the contract and determining whether the undefined term “termination” is ambiguous, and if so, what the parties intended the term to mean. Extrinsic evidence may be needed in order to make the determination of the parties’ intent.”

Affirmed.

2011AP788 Beidel v. Sideline Software, Inc.

Crooks, J.

Attorneys: For Appellant: Aprahamian, Michael J., Milwaukee; Keenan, Brian, Milwaukee; For Respondent: Grimmer, Kim, Madison; West, Travis James, Madison