Legal Memorandum: Company's Repurchase Rights in CA

Issue: In California, when is a company entitled to compel a former executive to resell his or her stock to the company in accordance with the company’s agreed repurchase rights?

Authority is plentiful for the proposition that specific performance is an appropriate remedy in cases involving closely held stock.  Stanchfield v. Hamer Toyota, Inc., 44 Cal. Rptr. 2d 565, 570 (Cal. Ct. App. 1995), citing Gilfallan v. Gilfallan, 168 Cal. 23, 26, 141 P. 623 (1914), Steinmeyer v. Warner Cons. Corp., 42 Cal. App. 3d 515, 519, 116 Cal. Rptr. 57 (1974), Kaneko v. Okuda, 195 Cal. App. 2d 217, 234, 15 Cal. Rptr. 792 (1961), Glascock v. Sukumlyn, 131 Cal. App. 2d 587, 593, 281 P.2d 90 (1955), Korabek v. Weaver Aircraft Corp., 65 Cal. App. 2d 32, 39, 149 P.2d 876 (1944).   An essential basis for specific performance is a showing by the plaintiff of performance, or tender of performance, or ability and willingness to perform.  Id., citing Cockrill v. Boas, 213 Cal. 490, 492, 2 P.2d 774 (1931).

In Piedmont Publishing Company v. Rogers, 14 Cal. Rptr. 133 (Cal. Dist. Ct. App. 1961), Piedmont Publishing Company sought to compel specific performance of silent film star Mary Pickford’s contractual agreement to sell her stock in a mutually owned company to Piedmont at Piedmont’s option.  Id. p. 135.  The agreement gave Piedmont an option to purchase Pickford’s stock at the end […]