## Facts

- Mason Holding Company, Inc. (the Company) was a South Carolina statutory close corporation without a board of directors that owned and operated multiple tire and auto service stores.
- The Company’s shareholders were Joseph Mason, Sr. (Father), Catherine Mason (Mother), their daughter Kathy St. Blanchard (Daughter), and their son Joseph Mason, Jr. (Son). By 2007, Son and Daughter each held 30% of the stock.
- Son worked in the business and served as the Company’s president beginning in 2001.
- Irwin Levine (Accountant) provided accounting services to the Company and the family and was a public accountant, not a South Carolina CPA.
- A long-running practice existed of paying certain shareholder personal expenses through the Company.
- In September 2007, Son’s attorney sent a demand that the Company stop paying shareholders’ personal expenses. The other shareholders agreed to reimburse the Company for personal expenses, but Son refused to reimburse.
- In October 2007, the shareholders voted to elect Father as president and Son as vice president. Son’s salary and benefits were not reduced, and most of his duties remained the same.
- Son later stopped working for the Company. He admitted he was not fired, was not told not to return, and his pay was not cut; he said he left because he was unhappy, believed the others wanted him to quit, and felt embarrassed in front of employees.
- Son sued the Masons, the Company, and Accountant, asserting claims including breach of contract, breach of fiduciary duty, wrongful termination, and civil conspiracy. He also sought an order requiring the Company to purchase his shares under South Carolina’s statutory close-corporation dissolution/buyout provisions.
- The Masons and the Company asserted counterclaims related to a “casing scheme,” alleging Son obtained company cash by turning in fake or duplicate tire receipts. At trial, Son admitted engaging in the casing scheme.
- The parties consented to trial before a special referee, who ruled for the Masons, the Company, and Accountant on Son’s claims and ruled for the Masons and the Company on their counterclaims. Son appealed.

## Issues

1. Whether the special referee erred in rejecting Son’s claims for breach of contract, breach of fiduciary duty, wrongful termination (including constructive discharge), and civil conspiracy arising from the close-corporation dispute and Son’s change in corporate office.
2. Whether the special referee erred in declining to order the Company to purchase Son’s shares under South Carolina’s statutory provisions applicable to closely held corporations.
3. Whether the special referee erred in finding for the Masons and the Company on counterclaims based on Son’s admitted casing scheme.

## Decision

- The Court of Appeals affirmed the special referee’s judgment in favor of the Masons, the Company, and Accountant on all of Son’s causes of action.
- The court affirmed the denial of Son’s request for a court-ordered purchase of his shares under the close-corporation statutes.
- The court affirmed the judgment for the Masons and the Company on their counterclaims based on the casing scheme.
- The court deferred to the special referee’s factual findings and credibility determinations, including Son’s admissions that he was not terminated and that he participated in the casing scheme.

## Legal Principles

- When a case is tried by consent before a special referee, the referee’s factual findings and credibility determinations are given substantial deference on appeal and will be upheld if supported by evidence in the record.
- Claims premised on wrongful termination require proof of an actual discharge or legally sufficient constructive discharge; leaving voluntarily, without a pay cut and without being told not to return, supports a finding of no termination.
- In close corporations, shareholders may owe fiduciary duties to one another, but a claimant must prove actionable misconduct and causation; a referee may reject fiduciary-duty and conspiracy claims where the evidence supports nonwrongful business decisions and the claimant’s account is not credited.
- Statutory dissolution or buyout remedies for closely held corporations are not automatic; the court may deny compelled share purchase where the statutory grounds are not established under the facts found at trial.
- A shareholder’s misconduct involving misuse of corporate funds can support counterclaim liability and may weigh against equitable relief sought by that shareholder.

## Conclusion

In this family-owned close-corporation dispute, the South Carolina Court of Appeals affirmed the special referee’s ruling that Son was not wrongfully terminated or otherwise entitled to recover on contract, fiduciary-duty, or conspiracy theories, affirmed the refusal to compel the Company to buy his shares under the close-corporation statutes, and upheld counterclaim relief where Son admitted he took company cash through a casing scheme and also admitted he left work without being fired or having his pay reduced.


Mason v. Mason, 770 S.E.2d 405 (2015)