United States Court of Appeals For the First Circuit

No. 05-2029 No. 05-2030

IN RE: BLINDS TO GO SHARE PURCHASE LITIGATION.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Reginald C. Lindsay, U.S. District Judge]

Before

Selya, Lynch and Howard, Circuit Judges.

David H. Erichsen, with whom Peter A. Spaeth, Eric D. Levin, Michael R. Dube, and Wilmer Cutler Pickering Hale and Dorr LLP were on brief, for appellants, cross-appellees Blinds to Go, Inc. and its shareholders. John T. Montgomery, with whom Mark D. Meredith, Sara M. Beauvalot, and Ropes & Gray LLP were on brief, for appellees, cross-appellants Charlesbank Equity Fund II, Limited Partnership and Harvard Private Capital Holdings, Inc.

March 22, 2006 SELYA, Circuit Judge. This case poses a puzzling

question about when an affiliate is not an affiliate. Cf. William

Shakespeare, Romeo and Juliet, act II, sc. ii (1595) ("What's in a

name? [T]hat which we call a rose [b]y any other name would smell

as sweet[.]"). The district court agreed with Blinds to Go, Inc.

(BTG) and its shareholders that Harvard Private Capital Holdings,

Inc. (Holdings) violated their right of first refusal when it

transferred all of BTG's preferred shares to the putative

affiliate, Charlesbank Equity Fund II, Limited Partnership (the

Fund). Accordingly, the court rescinded the transaction.

The district court's decision pleased no one. Holdings

and the Fund argue that they are in fact affiliates and assail the

district court's finding that the transfer inter sese violated the

right of first refusal. For their part, BTG and its shareholders

excoriate the district court's choice of remedy. Reexamining the

matter afresh, we conclude, as did the lower court, that a breach

of the right of first refusal occurred. We therefore reject the

appeal brought by Holdings and the Fund. We also conclude that the

district court's choice of remedy for that breach (voiding the

transfer rather than decreeing specific performance) was consistent

with the contract and with equitable remedial principles. We

therefore reject the appeal taken by BTG and its shareholders.

I. BACKGROUND

BTG is a closely held Canadian corporation that

-2- manufactures, sells, and installs custom-made window treatments.

Its seven shareholders include six Canadian corporations and Nkere

Udofia, BTG's vice-chairman.1

Holdings is a not-for-profit Massachusetts corporation.

Its sole member is the designee of the President and Fellows of

Harvard College (Harvard). The Fund is a limited partnership

organized under Massachusetts law. Its general partner is

Charlesbank Equity Fund II GP, Limited Partnership (the General

Partner); its limited partners are three charitable corporations

wholly owned by Harvard, namely, Holdings, Phemus Corp., and

Shipping Venture Corp. Structurally, the General Partner is itself

a Massachusetts limited partnership; its general partner is

Charlesbank Capital Partners, LLC (the LLC), a Massachusetts

limited liability company owned by its individual members. The

General Partner has one Class C limited partner, namely, Harvard

Private Capital Properties, Inc. (Harprop), a Delaware corporation

wholly owned by Harvard.

A venture capital transaction set in motion the events

leading to this litigation. In 1995, pursuant to the BTG Preferred

Share Purchase Agreement (the Purchase Agreement), Holdings

injected $15,000,000 in capital into BTG in exchange for

1 The corporate shareholders are S. & D. Shillgroup Inc., Davler Investments Inc., Stevler Investments Inc., Au Bon Marché, Davjosh Holdings Inc., and Zakbran Holdings Inc. All of them are owned, directly or indirectly, by BTG's chief executive officer (Stephen Shiller) or its board chairman (David Shiller).

-3- approximately 20,000,000 shares of BTG's preferred stock. On

December 31, 1997, the parties executed an amended and restated

shareholders' agreement (the Shareholders' Agreement) which, along

with the Purchase Agreement, governs their relationship. Among

other things, the Shareholders' Agreement provides the BTG

shareholders with a right of first refusal vis-à-vis the stock

owned by Holdings. The right of first refusal attaches to any

transaction other than one involving an affiliate.2

In or around 1998, Harvard began to restructure its

investment portfolio for purposes of tax advantage and business

convenience. In 2001, as part of this restructuring, Holdings' in-

house counsel, without troubling to read the relevant document,

2 Section 3.1 of the Shareholders' Agreement memorializes the right of first refusal. It provides:

[Holdings] . . . shall not sell, assign, transfer, grant a participation in or otherwise dispose of any or all [BTG] Shares owned by [it], other than to an Affiliate . . . , unless (i) [Holdings] shall have received a bona-fide offer to purchase such Shares . . . from a third party . . . , (ii) such third party is acting at arm's length from [Holdings] and (iii) [Holdings] first submits a written offer . . . to [the BTG Shareholders] . . . , together with a copy of the . . . Third Party Offer identifying the third party to whom [Holdings'] Shares are proposed to be sold and the terms of the proposed sale and offering, [to the BTG Shareholders], the opportunity to purchase such Shares on terms and conditions, including price, not less favorable than those on which [Holdings] proposes to sell such Shares to such third party . . . .

-4- informed BTG that Holdings planned to make a permitted transfer of

its BTG shares to an affiliate. Holdings proceeded to convey those

shares to the Fund. The parties recorded the transfer at book

value (i.e., $15,000,000). In exchange, Holdings received a 12.4%

ownership interest in the Fund. Because it transferred other

assets as well, Holdings' total ownership interest in the Fund

reached 52.9%.

On January 14, 2002, Holdings and the Fund sought to

exercise a "put" right contained in the Purchase Agreement. That

right allowed Holdings or its lawful successor in interest to

demand, at either of two specified times, that BTG redeem all of the

preferred shares. Under the Purchase Agreement, the redemption

price was to be established through a formula emphasizing BTG's

earnings before interest, taxes, depreciation, and amortization

(EBITDA) for the preceding twelve months.

Storm clouds began to gather when the redemption price,

as tentatively calculated by BTG, proved to be far less munificent

than Holdings and the Fund expected. See Charlesbank Equity Fund

II v. Blinds to Go, Inc.,

(1st Cir. 2004)

(explicating more completely the factual background of the put and

the attempted redemption). The storm broke when the Fund, invoking

diversity jurisdiction, see

(a), filed suit against

BTG in the United States District Court for the District of

Massachusetts. The Fund asserted common law claims arising out of

-5- an alleged manipulation of BTG's finances with a view toward

reducing the value of the put. Holdings soon joined the fray as an

additional plaintiff. BTG denied the essential allegations of the

complaint and posited, as an affirmative defense, that it owed

nothing on the put because Holdings had breached the Shareholders'

Agreement when it transferred the shares to the Fund without

honoring the right of first refusal.3

On July 23, 2003, the BTG shareholders filed a separate

action in the district court seeking (i) a declaration as to whether

the transfer between Holdings and the Fund was a transfer to an

affiliate as that term is defined in the Shareholders' Agreement and

(ii) relief for Holdings' purported breach of the Shareholders'

Agreement. On October 15, 2003, the district court consolidated

that action with the original action.

After much procedural maneuvering, see, e.g., Charlesbank,

, BTG and its shareholders moved for summary judgment

on all claims and counterclaims. Not to be outdone, Holdings and

the Fund cross-filed for partial summary judgment on the right of

first refusal claim. Following a hearing, the district court, in

a bench decision, granted summary judgment in favor of the BTG

shareholders on the right of first refusal claim, denied the cross-

3 BTG and its shareholders also countersued in a Canadian court to enforce the right of first refusal. That action has been stayed pending resolution of the Massachusetts proceedings. See Blinds to Go Inc. v. Harvard Private Capital Holdings Inc., 261 N.B.R.2d 365 (2003).

-6- motion for partial summary judgment, and reserved decision on the

remaining issues in the case. The court concluded (i) that the Fund

was not an affiliate of Holdings within the contemplation of the

Shareholders' Agreement; (ii) that compliance with the right of

first refusal constituted a condition precedent to the proposed

transfer; (iii) that because Holdings did not abide by the right of

first refusal provision, the transfer was void ab initio; and (iv)

that the appropriate remedy was to unravel the transaction and

require the Fund to return the stock to Holdings. The district

court later entered a partial final judgment to this effect. See

Fed. R. Civ. P. 54(b). These timely appeals ensued.

II. ANALYSIS

Given the district court's detailed findings, we do not

doubt our appellate jurisdiction over these interlocutory appeals.

See Spiegel v. Trs. of Tufts Coll.,

(1st Cir.

1988) (delineating the requirements for invocation of Rule 54(b)).

We therefore proceed to assess the district court's conclusions. We

divide our discussion into two segments.

A. Operation of the Right of First Refusal.

Holdings and the Fund contest the district court's

construction of the right of first refusal provision. They contend

that they are in fact affiliates as that term is defined in the

Shareholders' Agreement and that, therefore, the transaction between

them never triggered, much less violated, the right of first refusal.

-7- This contention is the logical starting point for our analysis; after

all, if Holdings and the Fund are correct, then the share transfer

was valid, the right of first refusal was not implicated, and there

would be no need for us to address the remedial aspect of the

district court's decision.

In approaching this question, we replay a familiar

standard of review. "A district court may enter summary judgment

upon a showing 'that there is no genuine issue as to any material

fact and that the moving party is entitled to a judgment as a matter

of law.'" Houlton Citizens' Coal. v. Town of Houlton,

(1st Cir. 1999) (quoting Fed. R. Civ. P. 56(c)). We review an

entry of summary judgment de novo and, therefore, apply the same

analytic framework here. See

. That framework is not

affected by the existence of a cross-motion for summary judgment.

See Blackie v. Maine,

(1st Cir. 1996).

On this issue, we are faced with a question of contract

interpretation: do Holdings and the Fund qualify as affiliates under

the Shareholders' Agreement? Section 2.4 of that agreement creates

the benchmark. It provides:

An "Affiliate" of a person or entity shall mean another person or entity that is directly or indirectly controlling, controlled by or under common control with such person or entity. "Control" shall mean the right to cast, directly or indirectly, more than 50% of the voting interests in a person or entity.

The Shareholders' Agreement recites that it is governed by

-8- Massachusetts law and, thus, we look there for the substantive rules

of decision.

Under Massachusetts law, an unambiguous contract must be

interpreted according to its terms. See Freelander v. G. & K. Realty

Corp.,

(Mass. 1970); see also Fairfield 274-278

Clarendon Trust v. Dwek,

(1st Cir. 1992) (applying

Massachusetts law). In such a situation, contract construction

presents an unadulterated question of law. See Daley v. J. F. White

Contracting Co.,

(Mass. 1964).

A contract is ambiguous only when its terms "are

inconsistent on their face" or when "the phraseology can support

reasonable difference of opinion as to the meaning of the words

employed." Suffolk Constr. Co. v. Lanco Scaffolding Co.,

(Mass. App. Ct. 1999) (quoting Fashion House, Inc. v. K mart

Corp.,

(1st Cir. 1989)). There is no ambiguity

simply because a dispute exists between the contracting parties, each

lobbying for its own preferred interpretation.

We discern no ambiguity in the relevant text of section

2.4. That section defines the term "[a]ffiliate" with considerable

precision and, in doing so, not only endows the word "control" with

decretory significance but also assigns that word a specific meaning.

We therefore rely on the plain language of the provision to resolve

the legitimacy of the transfer.

Holdings is fully controlled (under any definition of the

-9- word) by Harvard. In determining who "controls" the Fund, however,

we cannot rely on general usage but, rather, must apply the specific

definition agreed upon by BTG and Holdings. See Rogaris v. Albert,

(Mass. 2000) (stating that a contract's terms

will not "be taken in their plain and ordinary sense" if "otherwise

indicated by the contract"); see also Charles I. Hosmer, Inc. v.

Commonwealth,

(Mass. 1939) (explaining that "every

phrase and clause must be presumed to have been designedly

employed"). Because that definition turns on voting rights, we

conclude, without serious question, that the Fund is directly

controlled by the General Partner (after all, pursuant to the Fund's

organic document — its limited partnership agreement — only the

General Partner has the power to "vote, give assent and otherwise .

. . exercise all rights, powers, privileges and other incidents of

ownership or possession with respect to" the Fund's assets). While

Holdings is a limited partner, the limited partnership agreement

specifically declares that it "shall take no part in the conduct or

control of the Partnership business."

The General Partner itself is, of course, a limited

partnership. This is scant solace to Holdings and the Fund, however,

as its limited partnership agreement states unequivocally that "[t]he

Partnership shall be managed exclusively" by its general partner (the

LLC). Thus, the LLC controls the General Partner. In turn, the LLC

is controlled by a manager and various individual members (a group

-10- that excludes both Harvard and Holdings).

Given this hierarchy, it is readily evident that neither

Harvard nor Holdings occupies a place in the Fund's chain of voting

control. Neither Harvard nor Holdings controls the Fund "directly"

(a status reserved to the General Partner). By the same token,

neither Harvard nor Holdings controls the Fund "indirectly" (a status

reserved to the LLC and its members). Holdings and the Fund are,

therefore, not affiliates within the narrow compass of the definition

contained in the Shareholders' Agreement.

In an effort to blunt the force of this reasoning,

Holdings and the Fund make three points. First, they argue that

because Harvard (through Holdings, Phemus, and Shipping Venture)

continues to own virtually all of the beneficial interest in the Fund

— 99.92% — it, in effect, "controls" the Fund. Second, they posit

that because Holdings itself owns a majority interest in the Fund —

52.9% — it has the power under the partnership agreement to require

the Fund to reconvey its assets to the limited partners; this power

of reconveyance, they say, amounts to "control." Third, Harvard,

through Harprop (the only Class C limited partner of the General

Partner), can direct the LLC (the general partner of the General

Partner) to distribute the Fund's assets to its limited partners, so

it "controls" the Fund in that sense as well.

To be sure, these scenarios suggest "control" in a lay

sense. This case, however, is not concerned with the ordinary

-11- meaning of "control." Where the parties to a contract take pains to

define a key term specially, their dealings under the contract are

governed by that definition. See J. A. Sullivan Corp. v.

Commonwealth,

(Mass. 1986) (recognizing that "[a]

contract is to be construed to give reasonable effect to each of its

provisions"). So it is here. The parties to the Shareholders'

Agreement crafted a specific definition of the word "control."

Holdings and the Fund cannot now gloss over that definition — nor can

we. See Charles I. Hosmer, Inc.,

(explaining that

all phraseology in a contract "must be given meaning and effect,

whenever practicable"). The mere fact that the transaction, viewed

without regard to the Shareholders' Agreement, represented a transfer

from one Harvard pocket to another is not enough to override the

explicit language that the parties chose to insert into the

instrument.

Holdings and the Fund insist that the word "indirect,"

used twice in section 2.4, expands voting control to include

practical control of any kind. That word, however, cannot carry

the weight that Holdings and the Fund place upon it. In context,

the word refers only to corporate structure (e.g., the LLC

"indirectly controls" the Fund because it "directly controls" the

General Partner, which, in turn, "directly controls" the Fund). It

would be unreasonable to read the word as a fundamental alteration

of the precise definition of "control" that accompanies it.

-12- At bottom, then, the arguments mounted by Holdings and

the Fund represent thinly veiled attempts to redefine "control" to

comport with economic realities rather than with voting rights.

Whatever the merits of this perspective in the abstract, we cannot

countenance so blatant an attempt to rewrite a clearly defined

contract term. See Freelander,

(observing that

when "[t]here is nothing ambiguous in [a contract's] language . .

. [a] court cannot subvert its plain meaning"). Consequently, we

conclude, as did the court below, that Holdings and the Fund are

not affiliates as that term is defined in the Shareholders'

Agreement.

That ends this aspect of the matter. Since it is

undisputed that Holdings did not afford the BTG shareholders the

specified opportunity to exercise their right of first refusal, the

transfer violated the Shareholders' Agreement.4

B. Choice of Remedy.

The focus of the appeal taken by BTG and its shareholders

is the district court's choice of remedy. Citing Town of Sudbury

v. Scott,

(Mass. 2003), they insist that specific

4 Holdings and the Fund have a fallback position to the effect that the BTG shareholders forfeited their right of first refusal by not acting on that right within the thirty days allotted under section 3.2 of the Shareholders' Agreement. That argument need not detain us. Under the terms of the Shareholders' Agreement, the thirty-day window is not opened by notice of a non-affiliate transfer but, rather, by receipt of an offer to exercise the first refusal right. Neither Holdings nor the Fund tendered such an offer to the BTG shareholders.

-13- enforcement of a disregarded right of first refusal is the

exclusive remedy permitted under Massachusetts law. Accordingly,

their thesis runs, the district court should have ordered Holdings

to offer the preferred shares to the BTG shareholders on the same

terms as were made available to the Fund. We think that this

thesis takes too crabbed a view of a trial court's equitable powers

under Massachusetts law.

To facilitate this phase of our inquiry, we assume for

argument's sake that the Fund's acquisition of the shares met the

initial requirements set forth in section 3.1 of the Shareholders'

Agreement (i.e., that there was an offer, which was bona fide and

led to an arm's length transaction). See supra note 2. This set

of assumptions primes the pump and brings us directly to the

question of remediation.

The anodyne that the BTG shareholders seek (specific

performance) and the anodyne that the district court decreed

(rescission) are both equitable remedies. See, e.g., Kenda Corp.

v. Pot O'Gold Money Leagues, Inc.,

(1st Cir.

2003); Pritzker v. Yari,

(1st Cir. 1994). Two

abiding truths about equitable remedies are pertinent here. First,

in choosing among equitable remedies, a nisi prius court has the

ability — indeed, the duty — to weigh all the relevant facts and

circumstances and to craft appropriate relief on a case-by-case

basis. See Rosario-Torres v. Hernandez-Colon,

, 321

-14- (1st Cir. 1989) (en banc). Second, in shaping an equitable remedy,

a nisi prius court typically has a range of appropriate options.

As long as the court's ultimate choice falls within this range, it

will withstand review even if it is not, in the appellate court's

opinion, the best option within the range. See

(describing a district court's choice of equitable remedies as

"quintessentially a judgment call" and noting that, absent clear

error, it does not matter whether the court of appeals might have

made some other choice).

Viewed against this backdrop, it should come as no

surprise that the standard of review applicable to a district

court's choice among available equitable remedies is deferential.

A deferential standard is particularly appropriate where, as here,

the trial court must balance conflicting factors and deal with

issues of judgment. See Charlesbank,

. Therefore,

we review the trial court's choice among available equitable

remedies for abuse of discretion. See Texaco P.R., Inc. v. Dep't

of Consumer Affairs,

(1st Cir. 1995); Rosario-

Torres,

. Because the district court "is in a

considerably better position to bring the scales into balance than

an appellate tribunal," we will not normally find an abuse of

discretion unless, upon whole-record review, we are convinced that

the district court committed a significant error in judgment.

Rosario-Torres,

.

-15- Of course, a material error of law constitutes an abuse

of discretion. Rosario-Urdaz v. Rivera-Hernandez,

(1st Cir. 2003). Invoking this principle, BTG and its

shareholders cite Town of Sudbury for the proposition that

Massachusetts law limits the range of remedies available in this

instance to one: specific performance. But the Massachusetts

Supreme Judicial Court (the SJC) has emphasized that "[e]quitable

remedies are flexible tools," Demoulas v. Demoulas,

, 1169 (Mass. 1998), and we do not believe that it has

constrained the inherently flexible nature of equity as severely as

BTG suggests.

In Town of Sudbury, the SJC addressed a municipality's

claim against a purchaser of agrarian land. The purchaser had paid

a reduced price to the original owner on the understanding that he

would maintain the land for agricultural use. See Town of Sudbury,

. Had he bought it for any other use, the town

would have been entitled to a statutory right of first refusal.5

5 The relevant statute provides:

Land which is valued, assessed and taxed on the basis of its agricultural or horticultural use . . . shall not be sold for or converted to residential, industrial or commercial use while so valued, assessed and taxed unless the city or town in which such land is located has been notified of intent to sell for or convert to such other use . . . . [S]aid city or town shall have, in the case of an intended sale, a first refusal option to meet a bona fide offer to purchase said land, or in the case of an

-16- See

.

Only months after the acquisition, the purchaser began to

prepare the site for non-agricultural use and soon entered into a

purchase-and-sale agreement with a third party who intended to

carry out the non-agricultural use. See

. When the

town learned of the impending sale, it sought to exercise its right

of first refusal as to the transaction between the original owner

and the purchaser. Receiving a cold shoulder, the town filed suit

in state court. See

.

On those facts, the SJC remanded the case for a

determination of the purchaser's intent at the time he took title.

. In language celebrated by BTG and its shareholders,

the court concluded that "[a]t common law, a right of first refusal

ripens into an option to purchase when the condition set forth in

the instrument creating the right is met. . . . The holder is

entitled to specific performance of the option as to a subsequent

owner who purchased with notice of the holder's right of first

refusal."

(footnote omitted). Although the SJC's

commentary in Town of Sudbury is relatively broad, the case is

readily distinguishable from the case at hand on at least two

intended conversion not involving sale, an option to purchase said land at full and fair market value . . . .

Town of Sudbury,

n.10 (quoting Mass. Gen. Laws ch. 61A, § 14).

-17- levels: the purpose underlying the right of first refusal and the

centrality of the remedy to the litigation.

As to the first, the Massachusetts statute granting the

right of first refusal in Town of Sudbury was passed under the

aegis of the legislature's power to regulate "for the purpose of

developing and conserving agricultural or horticultural lands."

Mass. Const. amend. art. 99; see Town of Sudbury,

. Thus, specific performance embodied the only remedy that

would comport with the right's purpose: only by acquiring the land

could the town maintain it for agricultural use. In contrast,

BTG's right of first refusal was negotiated by the parties to the

Shareholders' Agreement in order to ensure that Harvard (and not

some stranger who did not have BTG's blessing) would retain control

of BTG's preferred shares. Rescission of the unauthorized transfer

returns the shares to a Harvard entity (Holdings) and, thus,

adequately serves the original purpose of the right. Specific

performance, however, would return the shares to BTG, negating any

opportunity for a further relationship between Harvard and the

company — a relationship clearly valued at the time of contracting.

The second distinction is equally compelling. In Town of

Sudbury, the trial court's remedial choice was hardly central to

the litigation; in fact, the language to which BTG and its

shareholders cling so tightly is dictum, pure and simple. That is

understandable; the issue actually litigated in Town of Sudbury was

-18- whether notice of an intended change of use as opposed to actual

change of use triggered the town's statutory first refusal right.6

See Town of Sudbury,

. The court's choice of

remedy was seemingly uncontroversial. No matter whether the court

rescinded the transaction (and, thus, returned the land to the

original owner) or specifically enforced the right of first refusal

(and, thus, required the land to be offered to the town), the

purchaser would lose the opportunity to develop it for a non-

agricultural purpose.

Here, however, the consequences of the remedial choice

are quite different. Although Holdings and the Fund are not

affiliates as that term is defined in the Shareholders' Agreement,

they nonetheless are related entities. As such, their interests

are much more closely aligned than those of the original owner and

purchaser in Town of Sudbury. Holdings and the Fund are not

indifferent to the choice of remedy — nor should they be. If

rescission stands, the BTG shares will remain in a Harvard pocket,

but if specific performance is ordered, the shares (and their

apparently enhanced value) will escape completely from the fold.

On the basis of these distinctions, we conclude that the

district court committed no error of law when it declined to order

specific performance in this instance. Even so, BTG and its

6 We already have dispatched the analogous question here — whether Holdings and the Fund were affiliates and, thus, whether the first refusal right came into play.

-19- shareholders have a fallback position. They asseverate that the

district court misapplied Massachusetts law in two other respects.

Accordingly, we examine those asseverations.

First, BTG and its shareholders assert that the court's

remedial decision offends basic canons of contract interpretation

by transforming a right of first refusal into a mere veto right.

This assertion lacks force. Although we agree that courts must

enforce contracts as written, see, e.g., Hakim v. Mass. Insurers'

Insolvency Fund,

, 1164 (Mass. 1997), the

shareholders' characterization of the district court's actions is

unfair. By ordering rescission, the district court did not alter

the underlying contract — if Holdings were to attempt to retransfer

the shares to the Fund (or any other non-affiliate, for that

matter), it would still need to abide by the right of first

refusal.

Second, BTG and its shareholders hypothesize that the

district court selected an incorrect remedy. They find fault

because the remedy imposed does not place them in the same position

that they would have occupied had Holdings performed as required by

the right of first refusal. That argument assumes too much.

While it is the goal of specific performance to place

parties in the same position as they would occupy had the contract

been carried out, that is not the goal of all contract remedies.

Cf. VMark Software, Inc. v. EMC Corp.,

, 590 n.2

-20- (Mass. App. Ct. 1994) (contrasting "[t]he long-established general

rule for breach of contract recovery in Massachusetts . . . that

the wronged party should . . . be placed in the same position as if

the contract had been performed" with an "alternative" remedy

designed to place a plaintiff in as good a position as he would

have occupied had no transaction occurred). Rescission is a remedy

of a different kind — a remedy that, in this case, aims to place

BTG and its shareholders in as good a position as they would have

enjoyed had the offending transaction not occurred at all. Given

the district court's superior coign of vantage, we are not

persuaded that the court committed legal error in weighing the

equities, favoring some remedial interests over others, and

concluding that rescission was the remedy of choice.

An additional circumstance buttresses our view that the

district court exercised its judgment reasonably. Even without

specific performance, BTG likely will end up with the entirety of

its preferred shares through the put, which Holdings has already

tried to exercise. Given the incestuous nature of the relationship

between Holdings and the Fund — while they are not affiliates

within the isthmian confines of the definition embedded in the

Shareholders' Agreement, they are, as we have said, plainly related

parties — the put price may well represent a fairer approximation

of the worth of the stock at or near the time of the attempted

transfer than would the terms agreed upon by Holdings and the

-21- Fund.7

The BTG shareholders most bruited response to this

reasoning is that a weighing of the equities rewrites the district

court's remedial rationale. This position relies heavily on the

district judge's casual statement that he was "not doing equity."

Yet, the judge retreated from that remark almost immediately

thereafter, saying "I guess maybe I am specifically enforcing it in

the sense that I'm saying that the shares have to be

retransferred." Given that these comments were made from the bench

and were not repeated in the Rule 54(b) findings, we deem it wise

to embrace substance over form. See, e.g., United States v.

Hilton,

(1st Cir. 1991) ("We think it is

unrealistic to expect that busy trial judges, ruling from the

bench, will be infinitely precise in their choice of language.").

To cinch matters, the judge characterized the transaction as "void

ab inito" — a characterization more consistent with rescission than

with specific performance.

We need go no further. Finding, as we do, that the

district court was not limited to a single remedy under

Massachusetts law, that rescission of the transfer was within the

armamentarium of permissible choices available to the court, and

7 The put option calls for calculation of the value of the shares as of January 14, 2002, only a matter of weeks after the date of the transaction between Holdings and the Fund (November 1, 2001).

-22- that rescission was reasonable under the circumstances, we conclude

that the court acted within the encincture of its discretion in

simply voiding the transfer.

III. CONCLUSION

We summarize succinctly. Holdings and the Fund are not

affiliates within the purview of the Shareholders' Agreement.

Thus, Holdings breached that agreement when it did not offer the

BTG shareholders an opportunity to exercise their right of first

refusal prior to effecting the challenged transfer. Considering

all the circumstances of this case, however, the lower court was

not obliged to order specific performance of the first refusal

right. Rather, the court acted within its equitable discretion

when, after mulling both specific performance and rescission, it

chose the latter.

The decision of the district court is affirmed in all

respects and the case is remanded for further proceedings. All

parties shall bear their own costs.

-23-