Kiriakides v. Atlas Food Systems & Services, Inc., 541 S.E.2d 257 (S.C. 2001)

Facts

Atlas was started and run as a family business with Alex owning 57.68%, John, the brother, owning 37.7% and Louise, the sister, owning 3%.  Tensions began between Alex and John and John allegedly said he was leaving job as president.  When John returned to work, he was told he was no longer president and was offered a buy out of $1 million and forgiveness of $800,000 owed.  John refused.

Procedural History

John sued alleging claims of fraud under the judicial dissolution statute.  The referee found Alex had engaged in fraud and found Atlas had engaged in conduct which was fraudulent, oppressive, and unfairly prejudicial toward John and Louise.  The court of appeals affirmed, defining the terms oppressive and unfairly prejudicial.

Issue(s)

Did the Court of Appeals err in finding (1) against Atlas for its conduct and (2) defining the terms of oppressive and unfairly prejudicial?

Holding(s)

No;  Yes.

Reasoning/Analysis

The Court found that the legislative intent of the terminology was that the terms were elastic and their application varied with the circumstances.  The Court of Appeals attempt to create a rigid test was contrary to the legislative intent.  As to the treatment of John and Louise, the Court found that the case presented a classic example of a freeze out.  The Court found the factors relied on by the referee in determining a freeze out occurred was correct.

Judgment/Outcome

The Court affirmed in part and reversed in part the Court of Appeals.