February 16, 2024 – District of Connecticut
Cote Law is proud to announce a significant legal victory in the United States District Court for the District of Connecticut, where the firm successfully enforced a mandatory buy-sell provision on behalf of its client, Neville, Rodie and Shaw, Inc. (“NRS”), in a dispute involving the estate of a former shareholder.
In Neville, Rodie and Shaw, Inc. v. E.A. Prescott LeGard, as Executor of the Estate of Edwin F. LeGard, Jr., Judge Victor A. Bolden granted NRS’s motion for judgment on the pleadings, denied the Executor’s cross-motion, and ordered specific performance requiring the estate to sell its shares back to the corporation, marking a complete win for our client.
Case Overview
The matter centered around a 2003 Shareholders’ Agreement governing ownership and restrictions on the transfer of stock in NRS. When longtime shareholder Edwin F. LeGard, Jr. passed away on September 23, 2022, NRS moved to exercise its contractual right to repurchase his 20 shares at Book Value as required by the agreement.
Despite the clarity of the agreement, the Executor of the Estate, E.A. Prescott LeGard, refused to sell the shares, claiming the corporation was obligated only to offer to buy them, not compel the sale.
Cote Law represented NRS in enforcing the agreement and defending the integrity of the corporation’s governance structure.
Court’s Findings
Judge Bolden ruled decisively in favor of NRS, holding that:
1. The Agreement Is Unambiguous
The court concluded that the 2003 Shareholders’ Agreement clearly required:
- the corporation to purchase the decedent’s shares, and
- the estate to sell those shares.
The restrictions were designed to prevent stock from being freely transferred and to maintain control among the corporation’s existing shareholders.
2. Mandatory Buy-Out Provisions Are Fully Enforceable
The court recognized Section 2 of the Agreement as a standard and enforceable mandatory buy-out clause that applies equally to estates and successor owners.
3. Specific Performance Is the Correct Remedy
Because NRS is a closely held corporation without a public market for its shares, Judge Bolden held that monetary damages were inadequate and that specific performance was required.
The Executor must sell the 20 shares to NRS at the established Book Value of $304,081.20.
Outcome: A Complete Win for Our Client
Cote Law successfully secured:
- Enforcement of the mandatory buy-sell agreement
- Recognition that the estate had no right to retain or transfer the shares
- A court order compelling the sale at Book Value
- A clear legal victory protecting the corporation’s structure and shareholder control
This case underscores the importance of well-drafted shareholder agreements, and the power of enforcing them when disputes arise.
About Cote Law
Cote Law represents businesses, fiduciaries, and individuals in complex corporate, probate, and civil litigation matters. Our firm is dedicated to delivering strategic, results-driven representation that protects our clients’ interests at every stage.