Kiriakides v. Atlas Food Systems & Services, Inc.

Elderly siblings John and Louise Kiriakides (plaintiffs) sued alleging their older brother Alex Kiriakides Jr. (defendant) squeezed them out of the family business, Atlas Food Systems and Services, Inc., and its subsidiaries (Atlas) (defendants). Alex owned a majority of Atlas’s shares and was chairman of the board with overall control of the business, while John was president and director and Louise secretary. For decades Alex and John ran Atlas smoothly. In 1990, Alex unilaterally made a distribution to Louise that reduced shares and subsequent distributions to her. In the mid-1990s, a rift developed between Alex and John. In 1996, Alex replaced John as president with Alex’s son. Alex and his family continued to benefit from his ownership of Atlas, while John and Louise received nothing. Atlas had no plans to pay dividends in the foreseeable future despite substantial cash and ability to do so. Meanwhile, Alex was estranged from John and Louise, and Atlas made extremely low offers to buy them out. Atlas offered to buy John’s shares for about $1 million plus canceling an $800,000 debt John owed Atlas, but a tax attorney advised John his shares were worth $10 million. John refused and sued, then amended to add Louise and claims requesting buyouts under the South Carolina judicial-dissolution statute. The court found Alex’s actions qualified as “illegal, fraudulent, oppressive, or unfairly prejudicial” under the statute and ordered dissolution. The appellate court affirmed, defining the statutory terms “oppressive” and “unfairly prejudicial” to include any majority action that frustrates minority shareholders’ reasonable expectations. Alex and Atlas appealed.