IN THE SUPREME COURT OF MISSISSIPPI NO. 2019-CA-00229-SCT WILLIAM LEO BOATRIGHT AND KELLEY BOATRIGHT

v. A & H TECHNOLOGIES, INC., CHESTER H. ABBOTT AND CAROL ABBOTT

DATE OF JUDGMENT: 12/20/2018 TRIAL JUDGE: HON. MICHAEL L. FONDREN TRIAL COURT ATTORNEYS: W I LLIAM V. W E STBROOK, III DAVID ANDREW W HEELER RUSSELL SCOTT MANNING NICHOLAS VAN W ISER COURT FROM W HICH APPEALED: JACKSON COUNTY CHANCERY COURT ATTORNEY FOR APPELLANTS: W I LLIAM V. W E STBROOK, III ATTORNEYS FOR APPELLEES: DAVID A. W HEELER RUSSELL SCOTT MANNING NATURE OF THE CASE: OTHER DISPOSITION: ON DIRECT APPEAL: AFFIRMED IN PART; REVERSED AND REMANDED IN PART. ON CROSS-APPEAL: AFFIRMED IN PART; REVERSED AND REMANDED IN PART; REVERSED AND RENDERED IN PART - 06/04/2020 MOTION FOR REHEARING FILED: MANDATE ISSUED:

BEFORE KING, P.J., MAX WELL AND GRIFFIS, JJ.
MAX WELL, JUSTICE, FOR THE COURT: ¶1. In June 20 1 4 , C h e s t e r A b b o t t , a s ma j o r i t y s h a reholder and director of A&H Technologies, Inc., f

orm ally noticed a special shareholder m eeting. T he m eeting was to beheld on July 23, 2014, i n Mississippi. W illiam Boatright, the only other s hareholder, could

not attend because he was working on an A &H pro j e c t o u t of s tate. Despite W illiam ’s conf lict, Chester proceeded with the m eeting as the sole shareholder in attendance. ¶2. Chester re-elected him self the lone director of A&H. He f u rther determ ined he had been the only e l e c ted d irector of the com pany since 2001. Finally , he a ddressed the sixf igure bonus h e g a ve him self i n Decem ber 2013, recording on the m inutes that it was based

on “his extraordinary w ork and e f f ort to continue t o b uild business a n d u pon his f orgoing any bonus f or 2009 t o 2012.” Chester held a board-of -directors m eeting that sam e day

. Chester elected him self president of A&H. C hester replaced W i lliam as vice president with h i s daughter-in-law Cy

nthia A bbott. And he replaced W illiam ’s w if e, Kelley Boatright, as secretary /treasurer with his own wif e, Carol Abbott. ¶3. W i lliam sued Chester and A&H the next d a y , a l l e g i n g t h a t Chester’s oppressive conduct toward W illiam was detrim ental to A&H. In his com plaint, W illiam s ought both to replace Chester as president of A&H and to becom e m ajority shareholder. Alternatively , he requested dissolution. Af ter f our y ears of litigation, the chan c ellor m et W illiam half way . Bef ore the lawsuit, Chester owned 51% of A&H’s shares, and Wi lliam owned 49%. The chan c e l l o r ordered a stock transf er that would m ake W i lliam a 50% owner, equal with Chester, and directed W illiam have equal say

. ¶4. W i lliam appealed, and Chester cross-appealed. Based on the argum ents p resented to this Court, each m an would m uch pref er he owned the m ajority of A&H’s shares and thus had o utright control. But the equitable r em edy the chancellor c hose was within h is authority

2and d iscretion. And our standard of review gives great def erence to such decisions. Thus, we af f irm this central aspect of

the chancellor’s judgm ent. ¶5. The judgm ent addresse d o t h e r claim s, som e granted and som e denied, and ordered additional rem edies. W illiam and Chester also challenge these decisions respectively

. As explained below, we af

f irm in part and r everse a n d rem a nd in part W i lliam ’s direct appeal. And we af

f irm in part, reverse and rem and in part, and reverse a nd render in part Chester’s cross-appeal. Background Facts & Procedural History
I. Form ation and Evolution of A&H ¶6. Chester and W illiam ’s relationship was not alway s so contentious. ¶7. A & H p r o v i d e s t echnical services f o r n a v a l s h i p s . A & H h a s o n e c l i e n t , n a v a l

contractor SENTEL, Inc. In 1998, Chester f orm ed A&H with then b usiness p artner Jam es Hawkins. The two m en incorporated their business and issued them selves 2,500 shares of

com m on stock each, 5,000 shares total. T hey also entered into a shar e h o lder agreem ent giving each other the right to purchase the o t h e r ’ s s t o ck if one of t hem lef t A&H. This
agreem ent was t o be binding on and benef it any later shareholders. Both m en worked f or the

com pany . A&H also em

ploy ed Chester’s wif

e Carol as of

f ice m anager. Chester served as

com pany president, Jam es as vice president, and Carol as secretary /treasurer. ¶8. W i thin the f

irst y ear, W illiam cam e on board as an engineer. W h ile A&H is based on the Mississippi Gulf Coast, W i lliam worked o u t o f N o r f olk, Virginia. 1 T o incentivize

1 O v er th e y ears, A &H h as em p lo y ed ad d itio n al e n g i n e ers in V irg in ia an d o n th e M ississip p i G u lf

C o ast. 3W i lliam to stay with A&H, in 2004, Chester a nd Jam e s e ach gave W i lliam 125 shares of

A&H stock, a total of

250 shares or 5% ownership. ¶9. A y ear l ater, Jam es lef t A&H to pursue other v entures. H e resigned as vice president and t ransf erred his 2,375 shares t o Chester. His only com pensation was outstanding wages. W i lliam would later claim

he had not known about the stock transf er until 2014. 2 ¶10. W i lliam did, however, p articipate in a shareholders’ m eeting i n 2 0 0 8. A t this m eeting, the two owners a dopted several r esolutions, one that would prove im portant to this litigation.
Af ter adopting t wo resolutions in which each agreed to t ransf er his stock to t he other at his death i n exchange f

or a n annual stipend f

or h is widow, the y next resolved, “[ u]pon health conditions which would render Chester Abbott unable to m ake inf o rm ed decisions as president and m a

jority s tockholder in the m anagem ent of the corporation W illiam Boatright will assum e the of

f ice of President and its responsibilities.” The t w o a l s o approved of a stock reallocation, with Chester transf erring 500 shares to W il l i a m. At the next annual

m eeting, W illiam was elected vice p resident of A&H. Chester rem ai n e d president and director, and Carol rem ained secretary / treasurer. ¶11. In 2010, A&H h i red W i lliam ’s wif e Kelley part tim e to take over som e of Carol’s of f ice duties. Eventually , C arol retired, and Kelley becam e the of f ice m anager. Kelley also

2 Wh en Jam es left , he an d C h ester ex ecu ted a p artn ersh ip d isso lu tio n ag reem en t. T h is a gr e e m e nt m a de no m en tio n o f William ’s 5 % o w n e rsh ip b u t in stead in d icated C h ester woul d b eco m e th e “so l e o w n er” o f A &H af ter Jam es’s d ep artu re. 4served as the f acility s ecurity of

f icer (FSO) o f A&H’s Virginia of f i ce. 3 And in January 2013, Kelley was appointed to replace Carol as secretary / treasurer.
II. Deterioration of Relationship ¶12. In June 2012, Chester m a de W illiam 49% owner b y giving him another 1,700 of his shares. The f

ollowing y ear, over a series of m onths, the two m en exchanged em ails try ing

to ham m er o ut an agreem ent in which C hester would retire and transf er his 51% ownership
to W illiam . But negotiations broke down. ¶13. From the record, t he f i rst snag was in April 2013, when Che s t e r d i r ected Kelley to

m ake out two checks t otaling $1,00 0 t o t h e n onprof it 4 H. W illiam wrote t o Chester on

com pany letterhead that Chester was not authorized to distribute W illia m ’ s s h a r e o f c o rporate f unds. ¶14. A n o t h e r s t i c k i n g point was rent f or A&H’s Virginia of

f ice. Wi l l i a m a n d K e l l e y owned the of

f ice building, and A &H paid them rent. W illiam

wanted to raise the rent, but Chester ref

used, noting the Gulf Coast e m ploy ees, including Chester and C arol, worked f rom their hom es. 4 ¶15. The f

inal straw was the 2013 y ear-end bonuses. Each y ear, A & H g i v e s e m ploy ee bonuses to a void m aking a taxable prof it. On D ecem

ber 13, 2013, Chester em ailed Kelley with em ploy ee-bonus direc tions. Chester awarded three em ploy ees, including W illiam ,

3 T h e D ep artm en t o f

D ef en se req u ires all f

ed eral d ef en se co n tracto rs su ch as A & H to ap p o in t an F S O to d irect an d su p erv ise th e h an d lin g o f classif ied in f o rm atio n . 4 A cco r d in g to th e B o atrig h ts, w o rk in g f ro m h o m e w as n o t f

easib l e. T h ey r esid ed in n earb y N o rth C aro lin a b u t h ad V irg in ia h ealth in su ran c e. T h eir d a u g h ter h ad a p reex istin g co n d itio n . S o th ey n e ed ed an o f f ice in V irg in i a to m a i n tain in su ran ce co v erag e .

5$8,000 each and his daughter-in-law C y nthia , a l s o a n e m

ploy ee, $3,000. Chester gave him self $105,000. Chester provided no bonus f or Kelley

. Wh e n K e l ley expressed disappointm ent, Chester told Kelley to ask W illiam what he had called Chest e r w h e n they

were bo t h r e c e n t l y working together in San D iego, C alif ornia. A pparently , W illiam had called Chester “greedy ,” which in Chester’s own words “pissed [ him ] of f

. ” In a second em ail

to Kelley , Chester explained that “[ w]hat I’ve done t his y ear is dem onstrate what greedy is. The bonuses stay as indicated. If W illiam had excepted [ sic] m y of f er to retire he would have had $130 K to do with as he p leased this y ear.” Chester would later testif y he set the am ount of h is b onus to even out t he com pensation he a nd W illiam had r eceived f rom A&H over the past several y ears. E ven when including t h e bonus, he asserted that the Boatrights had received 46.46% o f the total shareholder com pensation, despite W i lliam ’s being only a 15% shareholder m ost of

that tim e. ¶16. Things got no better in 2014. That January , C hester’s d aughter-in-law Cy nthia signed

a signif i ca n t agreem ent with A&H’s sole c lient in h er purported capacity as “Pending President/Chairm an o f A&H Technologies, Inc.” Chester and W illiam also clashed over the hiring of a new engineer and whether th e c o m pany could af

f ord to pay her. Things got so bad that in May 2014 W i lliam requested through his attorney an i nf orm al m eeting with Chester. ¶17. Chester declined. I nstead, he c a l l ed the J uly 2014 s pecial shareholder m eeting that
prom pted this case—the m eeting i n which Chester e l ected him self sole director and m ade his daughter-in-law and wif

e c orporate of

f i cers instead of

W i lliam and Kelley . Chester’s f

irst

6response to W illiam ’s lawsuit against him and A &H was t o r evoke the 2008 shareholder

resolutions.
III. Litigation ¶18. The lawsuit lasted f our y ears. W illiam had brought a derivative action, a direct action
f or corporate f

reeze out, a claim f

or breach o f contract of the 2008 shareholder resolutions, and a claim f

or a constructive t rust over 5% of the s h ares Jam es tr a n s f e r red to C hester in
2005. W illiam sought Chester’s rem oval as of f icer a nd director and his own appointm ent
to t he helm instead. W illiam also requested a ctual and punitive dam ages, attorney ’s f ees, and various f orm s of declaratory

and injunctive relief

. ¶19. Soon af

ter f iling suit, W illiam am ended his c om plaint to add Kelley a s a plaintif f and Carol as a def

e ndant—an apparent response to Chester’s t aking away Kelley ’s of ficem anager duties. In May 2015, Chester term inated Kelley ’s position and closed the Virginia of f ice, prom pting t h e o t her Virginia-based engineer besides W illiam to quit. Around this

sam e tim e, W illiam took a job elsewhere too. 5 Based on A&H’s cash-f low problem s, Chester had decided not to pay W illiam his em p loy ee s alary until t heir clien t p a i d o n t he contract. Chester justif

ied this m ove as his sim

ply requiring W illiam to bear som e o f t h e b urden of

com pany ownership. 6

5 D e s p i t e r esig n in g h is em p lo y m en t w ith A &H , William still h ad to en su re A & H f u lf illed its co n t ractu al o b lig atio n s, w h ich is w h y h e w as p erf o rm in g w o rk o n b e h a l f o f A & H an d co u ld n o t atten d th e Ju ly 2 0 1 4 sh areh o ld er m eetin g . 6 A p p aren tly , C h e ster h ad b e e n f l o a tin g A &H d u rin g th e lag b etw een p ay in g its em p lo y ees an d receiv in g p ay m en t f ro m S E N T E L f

o r th e w o rk p erf

o rm ed

. A f

ter th e law su it co m m en c e d , C h ester m ad e an o f f i cial cash call o n t h e sh areh o ld ers. W h en William ref u sed , C h ester d ecid ed n o t to p a y William u n til af ter h is (C h ester’s) l o a n to A &H h ad b een rep aid

. 7¶20. A f

ive-day bench trial was held sporadically over the course of

a y ear, beginning in Septem ber 2016 and ending i n O c t o b e r 2017. In April 2018, the chancellor entered his ruling. The chancellor granted som e but not all of the Boatrights’ requests. ¶21. The chancellor ruled in W illiam ’ s f avor on h is derivative action and his direct freezeout action. He also f

ound Chester had f

rozen out Kelley “ f

r om her position a t A &H.” The chancellor awarded no c om pensatory dam ages but did hold a s eparate punitive-dam ages hearing. A f

ter this hearing, Chester was o rdered t o p a y $ 1 0 , 0 00 to the Boatrights f or his “reprehensible” behavior. ¶22. The c hancellor f

ound dissolution was n o t fe a s i ble given that the com pany ’s m ain asset

was its long-term contract with SENTEL. So instead of dissolution, the chancellor ordered

a stock transf

er f rom Chester to W illiam so t h a t e a c h becam e 50% owner of A&H. The chancellor also ordered that W illiam be rehired and that A&H retain a corporate attorney and certif i ed public accountant. But the chancellor did not order that Kelley be rehired. Instead, the chancellor directed that Chester and W illiam , as 50/50 owners, m ake a l l hiring and f iring decisions together. ¶23. The chancellor ordered Chester to r eim burse A & H $ 5 , 2 6 0

. 5 0 “ f or expenses not related to the business.” The chancellor also awarded the Boatrights $200,000 in attorney ’s f ees to be paid by A&H based on W illiam ’s successf ul derivative ac t i o n , w h i ch the chancellor f

ound benef

itted A&H. See Miss. Code Ann. § 79-4-7.46 (Rev. 2013). ¶24. T h e chancellor al s o f o u n d t h e 2 0 0 8 s h a r e h o l d e r r e s o l u t i o n t o b e a v a l i d a n d enf orceable contract t hat c ould not be unilaterally revoked. But he did not grant W illiam ’s

8request f

or specif ic perf orma n c e o r o t herwise r em o ve Chester as p resident a nd replace
W i lliam in that role. Finally , t he chancellor denied W illiam ’s claim f or a constructive trust. Discussion ¶25. Both parties appealed. 7 Between the direct a p p e a l a n d c r o s s-appeal, alm ost every aspect of t h e c h a n c ellor’s judgm e nt has been challenged. Af ter a brief discussion on the standard of review, which loom s large in this appeal, we f irst address the claim s on which
W i lliam prevailed (his derivative and corporate f reeze-out actions), f

ollowed by the claim s the chancellor denied (rem oval of Chester as of f icer and director, specif

ic perf orm ance, and constructive trust). Finally , we c onsider the c hancellor’s rem edies (stock t ransf er, dam ages, attorney ’s f

ees, and reim

b u rsem ent).
I. Standard of Review ¶26. W h ile the standard of review directs our consideration o f every appeal, the required def erential standard of r eview is particularly im portant here, where there i s l ittle g laring legal

error, but instead m

uch disappointm ent and disagreem ent on both sides with the chancellor’s discretionary

decisions. ¶27. This Court reviews the chancellor’s decision f or abuse of discretion. S

cafidi v. Hille , 180 So. 3d 634, 645 (Miss. 2 0 15). This m eans that, while we review legal determ inations de novo, we analy

ze f actual determ inations f

or m anif est error and w ill n o t d i sturb them if

7 For sim p l icity , this opinion ref

ers to the appellants, W illiam and Kelley Boatright, c ollectively as “W illiam ”—except where the distinction is m ade between W illia m a n d Kelley ’s individual claim s . And this opinion r ef ers t o the appellees, A&H and Chester and Carol A b b o tt co llectiv ely as “C h e ster.” 9t h e y are supported by substantial evidence. I d. at 645-46. Because of this def erenti a l standard, we af

f irm the chancellor’s judgm ent with three exceptions. 8 ¶28. C l e a r l y , b oth owners s eek control over A&H to the exclusion of t he other. W i t h corporate dissolution and division o f A&H’s m a i n a s set—the y ears-long naval subcontract—not f

easible, the ch a n cellor craf ted a rem edy that p revented Chester f rom abusing his 5 1% ownership but at the sam e t im e did not o ust him f rom t he com

pany he built.
W h ile the chancellor’s 50/50 ownership a n d m anagem ent decision m a y m ake both m en unhappy , it is not an abuse of discretion.
II. Prevailing Claim s ¶29. In his com

plaint, W illiam brought both a derivative action and a direct action. ¶30. A derivative acti o n s e e k s r e c o v e ry f or injuries to the c o rporation. Mathis v. ERA
Franchise Sys., Inc. , 25 So. 3d 298, 303 (Miss. 2009). W hile brought by a shareholder, the action is brought on b ehalf of and belongs to the corporation, with the shareholder’s rights being m erely derivative. I d. at 301. In his d erivative a ction, W illiam alleged t hat Chester breached his f

iduciary duties a s of

f ice r a n d director, injuring A&H by the actions Chester took a g ainst W illiam

. See Derouen v. Murray , 6 04 So. 2 d 1 086, 1 092 (Miss. 1992) (citing Fought v. Morris , 543 So. 2d 167, 171 (Miss

. 1 9 8 9 ) ; Ellzey v . Fyr-Pruf, Inc. , 376 So. 2d 1328, 1332 (Miss. 1979)).

8 We f in d th e ch an c ell o r e r r e d b y : (1 ) f in d in g C h ester f

r o ze o u t K e lley , a n o n sh areh o l d er ( see S e ctio n I I

. B ) , (2 ) aw ard in g p u n i tiv e d am ag e s in t h e ab s en ce o f actu al d am ag es ( see S ectio n IV .B ), an d (3 ) o rd er i n g C h e s t er t o reim b u rse A & H $ 1 ,0 0 0 f

o r a co rp o rate d o n a tio n ( s ee S ectio n IV .D ). 1 0¶31. A direct action, by contrast, seeks “ to redress an injury s ustained b y , or enf orce a duty owed t o, the [ share]holder.” Mathis , 25 So. 3d at 303 (quoting Am

. Law Inst., Principles of
Governance § 7.01). The shareholder brings the action in his or her individual capacity

. The action m ay be m aintained w ithout s howing any i n j ury or breach of duty owed to the corporation. Id. I n his direct action, W illiam alleged Chester breached the d uties he owed
W i lliam as f

ellow shareholder in a closely held corporation b y try ing to f reeze W illiam out. See Fought , 543 So. 2d at 171. ¶32. The chancellor f

ound in f avor of W illiam o n both claim s. And Chester cross-appeals both rulings.
A. Derivative Action ¶33. Chester f

irst challenges the f

inding that W illiam had brought a v alid derivative action. Derivative actions are g overned by Mississippi Code S ections 79-4-7.40 through 79-4-7.48 (Rev. 2013), which “im

press[ ] upon derivative actions certain pre-trial p rocedural requisites

over and above the norm .” Derouen , 6 04 So. 2d at 1091 ( citing Miss. Code Ann. § 79-4-7.40 (Rev. 1989)). The chancellor f ound W illiam had m et all the statutory requirem ents to bring

a derivative action, and Chester does not quibble with this f inding. R ather, Chester asserts that W illiam ’s derivative action was “invalid” because W illiam ’s lawsuit resulted in n o benef it t o A&H and, f

urther, t hat W illiam f

ailed to prove C h e s t e r e ngaged in any gross

m ism anagem ent of

the com p any . ¶34. Chester’s actions b eginning in 2 012 were open t o interpretation. Chester had argued

to the chancellor at trial—and no w a rgues to this Court on cross-appeal—that he m ade

1 1legitim ate, good-f aith business decisions based o n A&H’s c a s h

- fl o w p r o b l e m s a n d W i l liam ’s recalcitrance. But the chanc e l l or—whose role it was as f act f inder to interpret Chester’s actions—took a dim m e r view and f ound Chester h ad harm ed A&H in the process. And the record supports the chancellor’s i nterpretation of the f acts. For exam

ple, C h ester’s closing the Virginia of

f ice to stop pay ing the Boatrights rent led an A&H engineer to quit, thereby reducing the revenue this engineer generated f or A&H. It also m eant the loss of Kelley as

an FSO, potentially creating security problem s . The sam e is t rue f or Chester’s decision not
t o p a y Wi l l iam during the c ash-f low shortage. W illiam had t o start working elsewhere , im p acting A&H’s ability to f ulf ill its c ontractual obligations. I n all, there i s record evidence

to support the c hancellor’s determ ination that C h ester, in his personal a n ger toward W illiam and his disdain f

or being called “greedy ,” violated his duty of g ood f aith and care to act in the best interest of A&H and in doing so jeopardized A &H as a going con c e r n . See id. at 1092 ( explaining the corporate duty of care); see also Miss. Co d e A n n . § 79-4-8.30 (Rev. 2013) (im posing on a corporate d irector the d uty to a c t i n good f

a ith a nd in the corporation’s best interest). ¶35. W h ile Chester insists there was no evidence of m ism anagem ent on his part during the contentious period im m ediately bef ore and af ter W illiam f

iled this lawsuit—asserting rather all his decisions were v alid business decisio n s n e c e ssitated by W illiam’s actions—the chancellor f

ound Chester was in t he wrong. And we can f ind no m anif

est error in his determ ination.

B. Freeze Out

1 2¶36. Chester next challenges the chancellor’s f reeze-out determ ination. ¶37. Owning a controllin g ma j o r i t y o f A &H shares did not allow C h ester to m ake any decision he wanted. B ecause A & H i s a closely held corporation, the law r equired that

m ajority owner Chester act “intrinsically f air” t oward m inority owner W illiam

. F ought , 543
So. 2d a t 170. Our law recognizes that “[ m ]inority shareholders in closely held corporations

are particularly vulnerable, because they usually lack the control the m a jority has and there is seldom a f

air m a rket available f

or selling their shares.” Brothers v. Winstead , 129 So. 3d 906, 918 (Miss. 2014) (citing Fought , 543 So. 2d at 170). So, “if a dispute arises between the m inority m em

ber and the m ajority , it is usually the c ase that a ‘m inority shareholder can neither prof

itably l eave, nor saf

ely stay with, the corporation.’” Id. (quoting Fought , 543 So. 2d at 171). T he f

reeze-out a ction redresses the p roblem that arises when “ the majority , through i ts right of control, intentionally reduces or elim inates the mi n o r ity shareholder’s right to c orporate earnings or g ains,” but the m i nority m em ber is unable to withdraw or sell.
Id. at 918. ¶38. A f

reeze-out action has f

our elem ents—“(1) the e x i s t e n c e of a legally def ined duty owed t o or right of a m inority shareholder arising out of his or h er ownership inte r e s t i n a corporation; (2) the intentional or willf ul breach of

that duty by

the m ajority

or controlling shareholder(s); (3) that the b reach proxim ately caused plaintif f ’s d irect i n

j u r y ; a n d (4) the
f act and extent of injury .” Id. a t 9 1 9. Concerning the f reeze-out claim , the chancellor clearly erred when he f

ound that Chester engaged in a f reeze out of K

e l l e y a s w e l l as W illiam

. Because Kelley is not a shareholder, she could not be f rozen out. And Chester owed her no

1 3duties based on o w nership interest in A&H. 9 See id. S o we reverse and r e n d e r the

chancellor’s f

r e e z e - out ruling to the extent it f ound Kelley too had been f rozen out. That said, the e vidence s hows that both m en derived a s ignif icant am ount of com

pensation as

owners through the em

ploy m e nt i ncom e of their wives. Thus, t here was no r eversible error in the chancellor’s considering Chester ’ s a c t ions toward Kelley as evidence o f Chester’s
f reeze out of

W i lliam

. ¶39. Turning to W i lliam ’ s f reeze-out claim , “[ i]n its m ost c l assic f orm , a f r eeze-out of

the mi n o r i ty shareholders by the m ajority occurs when the m ajority purposef ully denies th e

m inority m em

ber f rom sharing proportionally i n corporate ear n i n g s or gains.” Id. at 918.
On cross-appeal, Chester argues there coul d b e n o f r eeze o ut b ecause A&H a warded no

c o r p o r a t e dividends. But the record shows, f or tax purposes, A&H p urposef ully m ade n o corporate incom e. Instead, b oth o wners enjoy e d the prosperity of A&H through both their

own salarie s a n d their wives’ salaries. Thus, the chancellor r easonably concluded that, by reducing and then elim inating Kelley ’s salary and then later not pay ing W illiam , Chester had engaged in a f

reeze out of W illiam

. ¶40. Chester f

urther contends that by not pay ing W illiam , Chester p ulled of f t he opposite of a f ree z e o u t

. H e c l a im s he w as instead treating W illiam as a n owner who should have responded to C hester’s cash c all when A&H was waiting to be paid. In his view, W illiam voluntarily r esigned. Chester f urther contends that his decision to c l ose the Virginia of f ice

w a s a cost-saving m easure m ade in response to having t o def end the lawsuit. Agai n , t h e

9 M o reo v er, i n th e am en d ed co m p lain t, William alo n e b ro u g h t th e f reeze-o u t claim

. 1 4chancellor v iewed Chester’s actions dif f erently —as a willf

ul breach of Chester’s duty to W i lliam as m inority shareholder, which injured W illiam

. As with the derivative claim , there is record evidence to support the chancellor’s f reeze-out determ ination. In particular, closing the V irginia of

f i ce cost the Boatrights their health insurance, which they needed to m aintain because of

their daughter’s preexisting condition. ¶41. W i th the exception of c o r r e c t i n g t h e e r r o neous f inding t hat Kelley a lso had been
f rozen out, we do not disturb the chancellor’s f r eeze-out f

inding.
III. Denied Requests ¶42. W i lliam ’ s com

plaint also sought other claim s f or r elief that were den i e d , w h i c h he appeals.
A. Chester’s Rem oval ¶43. First and f

orem ost, W illiam com

plains the c hancellor e rred by not r em o ving Chester

as A &H’s director. Tied to t his claim is W illiam ’s assertion that both he and Kelley should have been restored as of

f icers and Kelley

should have been restored as em ploy ee. ¶44. Under Mississippi Code Section 79-4-8.09(a) (Rev. 2013), The chancery court

. . . m ay rem ove a director of the corporation f rom of f ice in a proceedi n g com m e nced either by the corporation o r by its shareholders holding at least ten percent (10%) of t he outstanding shares o f any class if the court f inds that ( 1) the director engaged in f raudulent o r dishonest conduct, or gross abuse of authority or discretion, with respect to the corporation, and (2) rem oval is in the best interest of the corporation. The chancellor agreed with Wi l l i a m t h at Chester’s actions rose to the level required by Section 79-4-8.09(a)(1). The chancellor f o und Chester had a c ted reprehensibly toward
W i lliam i n his attem

pt to f reeze him out. The chancellor also, in r uling in f avor of W illiam ’s

1 5derivative a ction, f ound that C hester’s a ctions had harm e d the c orporation. But the chancellor stopped short of f inding Chester’s rem oval was in t he best interest of A&H—the second requirem ent of Section 79-4-8.09(a). Ins t e a d o f o u s t ing Chester, the chancellor f ound
A&H would be better served by checking Chester through e q u a l o wnership with W illiam

. ¶45. Based on the “m ay ” language of Section 79-4-8.09(a), this was a discretionary call f or the chancellor to m a ke. And we af f irm his decision on appeal. From his judgm e nt, it is clear the chancellor intended co-m anagem ent of A&H, as opposed to s ole m anagem ent by either
C h e s t e r o r William

. Now, W illiam will have equal voting power about who will serve a s corporate of

f icers a nd whom the corporation will hire. W h ile W illiam asked f o r s o le decision-m aking authority , we f i nd no abuse of discretion in the chancellor’s determ ination that neither owner should be allowed exclusive control.

B. Specific Perform a nce ¶46. Section 79-4-8.09(a) was not the only m eans by which W ill i a m s o u g h t C h e s t er’s

rem oval. W illiam brought a breac h-of -contract claim based on the 2008 shareholder resolutions—the resolutions Chester unilaterally revoked in 2014 af

t er voting him self

sole director. W illiam sought specif ic perf orm ance of the third resolution, in which both m en had resolved that “[ u ]pon health conditions which would render Chester Abbott unable to m ake inf orm ed decisions a s p r esident and m ajority stockholder in the m anagem ent of the corporation W illiam Boatright will assum e the of f ice of President and i ts responsibilities.”
W h ile the chancellor f

ound the resolutions f

orm ed a valid and enf

orceable c o ntract that could

1 6not have been unilaterally r evoked by Chester six y e ars l ater, the chancellor declined to order

the specif ic perf orm ance of

presidency

- assum

ption resolution. ¶47. Both parties take issue with the c h a n c e l l o r ’ s r e s o l u t i o n - r e l a t e d r u l i n g . W illiam appeals the denial of his claim f or specif ic pe r f orm ance. And Chester cross-appeals the
f inding the resolutions f

o rm ed a contra c t

. Because W illiam ’s specif ic perf orm ance claim
f ails regardless of

whether a contract existed, there is no reason to disturb these f indings. ¶48. Specif

i c perf orm ance is a n equitable rem edy f or breach of contract. Bus. Com m c’ns,
Inc. v. B anks , 90 So. 3d 1221, 1225 (Miss. 2012). And to prove breach of c ontract, W illiam had to show not only the e xistence of a contract but also that Chester breached it. Id. At trial, W i lliam f

ailed to prove the triggeri n g e v e n t to Chester’s stepping down as president—that Chester had a health condition that rendered him unable to m ake inf

orm ed decisions. W hile Chester m a y b e a d v a n c i n g in age, this is hardly record proof that the

c i r c u ms t a n ce both m e n anticipated in 2008 would lead to W illiam ’s taking over had occurred. So the denial of specif ic perf orm a n ce was not m anif

est error. C. Constructive Trust ¶49. W i lliam raises one f inal i ssue on appeal i n a n attem pt to steer c ontrol of A & H

. He claim s the chancellor err e d b y not granting him a constructive trust of 5% or 118 of the shares Jam es Hawkins transf erred to Chester in 2005. W illiam a rgues t hat he was entitled

to those shares under the 1998 shareholder agreem e nt between Chester and Jam es, which by its term s also a

pplied to a ny p erson to whom shares w ere transf erred. W illiam reasons that,

1 7when the 118 shares are added to the o ther 2,450 shares Jam es and Chester had given him ,

it is he and not Chester who is 51% m ajority shareholder. ¶50. On appeal, there is no reason to disturb the chancellor’s denial o f a constructive trust. ¶51. “The m ere f

ailure to perf

orm an agreem e nt does not r aise a constructive trust . . . .” Saulsberry v. Saulsberry , 223 Miss. 684 , 6 9 0 , 7 8 S o. 2d 758, 7 60 (1955). A constructive

trust i s a rem edy f

o r unjust enrichm ent, the f raudulent o btainm ent of property

. Id. And the law recognizes the distinction “between the breach of a prom i se not f raudulently m ade and the b r e ach of a p r om ise m ade with no intention of perf orm i ng it.” Id. Only the latter can f orm the basis f

o r a constructive trust. Id. ¶52. Chester m aintained that, because he and J am es were dissolving their partnership, the
1998 shareholder agreem ent would no longer be i n e f f e c t—especially as a b enef it to W illiam , who n e ver signed it. W h ile Chester m a y have been m istaken about the legal ef f ect of the shareholder agreem ent, there is no evidence he com m itted f raud. ¶53. There is also n o e vidence that Chester h eld o n t o p r o p e r t y rightf ully belonging to
W i lliam

. See id. W hile W illiam d id not r eceive 5% or 118 of Jam es’s shares directly f rom Jam es when he lef

t A&H in 2005, over the course of the next seven y ears, W illiam was given 2,200 or 93% of Jam es’s f orm er shares. So any v iolation of the 1998 shareholder agreem ent in 2005 had been re me d i e d alm ost twenty tim es over by the tim e W illiam asserted his constructive-trust claim

in 2014. 10

10 A co n stru ctiv e -tru st c laim , if p u r ely eq u itab le, h as a ten -y e ar statu te o f lim itatio n s. M iss. C o d e A n n . § 1 5 -1 -3 9 (R ev . 2 0 1 9 ); s ee a lso H o o k er v. G reer , 8 1 S o . 3 d 1 1 0 3 , 1 1 1 0 (M iss. 2 0 1 2 ). F o r th is r easo n , William asserted h is c o n stru ctiv e-tru s t claim w as tim ely , an d C h ester d i d n o t raise a statu te-o f -lim itatio n s d ef

en se. 1 8¶54. Had W illiam received 118 shares in 2004 i n a c c o r d a nce with the 1998 shareholder

agreem ent, there i s sim

ply no support f

or his argum ent that h e would have been the m ajority shareholder by 2014. The record m akes a bsolutely c l ear that Chester’s intention was that he (Cheste r ) rem ain m ajority s hareholder, so it is saf e to a ssum e that Chester would have
f actored in W illiam ’s additional 118 shares when transf erring just enough shares in 2014 to

m ake W illiam 4 9% owner. S o the chancello r d i d n o t a buse his discretion by deny ing
W i lliam ’s constructive-trust claim , advanced as a m eans of becom ing m ajority shareholder.
IV. Rem edies ¶55. Finally , both sides appeal and cross-appeal several rem e dy -related rulings.

A. Stock Transfer ¶56. The m a in rem edy

awarded W illiam was equal ownership of A&H. ¶57. A s a l t e r n a tive relief to becomi n g ma j o r i t y s h a r e h o l d e r a n d p r e s i d e n t , Wi l l i a m requested A&H be dissolved. 11 See Scafidi , 180 S o. 3d at 650 (hold i n g t h a t a claim to

com pel the shareholders dissolve the corporation is a direct action). But the c hancellor f ound dissolu t i o n u

n fe a s i b l e , g i v e n t

h a t A&H’s m ajor asset—its contract with SENTEL—could not be liquidated a nd divided. So the chancellor craf ted the alternative rem edy that Chester and
W i lliam should equally

own and m anage A&H. ¶58. On cross-appeal, Cheste r a r g u e s t h e c h a n c e l l o r erred by a w a r ding W illiam 50% ownership instead o f dissolving the com pany . He acknowledges that, under Mississippi law,
“a chancellor does n o t h a ve to order a dissolution, even if grounds such as oppression or

11 B y m o tio n , C h ester h ad also req u ested A &H b e d isso lv ed

. 1 9deadlock are m e t.” 12 Id. at 652. “This is because the general view in Mississippi is that

‘dissolution is an extraordinary rem edy to be s paringly adm inistered in exceptional cases only

. ’ ” Id. (quoting C

apitol Toyota, Inc. v. Gervin , 381 So. 2d 1038, 1039 (Miss. 1980)). “[ T]he m ore com m on relief in m o dern cases is to provide r elief alternative t o dissolution.”
Id. (quoting F.H. O’Neal & R. T h o mp s o n , O ’Neal’s Close C orporations § 9.25 (3d ed. 1971)); see also Miss. Code Ann

. § 79-4-14.34(i) (Rev. 2013) (“Nothing contained in this section s hall dim inish the inherent equity powers of the court to f ashion alternative rem edies

to judicial dissolution.”). And in Scafidi , this Court listed am o ng “several r em edies available
f or oppressive conduct as an a lternative to dissolution” t he transf er of s tock “‘to achieve a 50/50 balance or som e other ownership structure f a ir to the shareholders

. . . .’” Id. at 653-54 (quoting O’Neal’s Close Corporations § 9.35). ¶59. Still, Chester challenges this alternative rem edy f or two reasons. First, he asserts the
f acts of Scafidi were substantially dif f erent than these. In t hat case, a f euding b rother and sister owned a n equal am o unt of shares in a corporation u n t i l t h e brother used corporate f unds to purchase m i nority shares and becom e m ajo r ity shareholder. Id. at 640, 643. The chancellor ordered the brother to transf e r half of the newly purchased s hares to his sister to
restore equal ownership. Id. at 643-44. Here, by contrast, Ches t e r asserts, W illiam has alway s b een a m inority shareholder, having r eceived all his shares a s a gif t. W hile the f

acts

are indeed dif

f erent, S c a f i di m akes clear that the chancellor had authority to order the

12 Mississippi Code Section 79-4-14.30(2) (Rev. 2013) authorizes the chancery court to dissolve a corporation if a s h areholder establishes, a m ong other things, h opeless deadlock or oppressive conduct by

the corporate directors.

2 0transf

er of shares f

rom Ches t e r to W illiam to achieve 5 0/50 ownership as a rem edy f or Chester’s oppressive conduct. Id. ¶60. Second, C hester argues this rem edy —coupled with t h e u n n e cessary and expensive requi r em ents t hat A&H hire a c orporate attorney and accountant—will only lead to deadlock. Given what has happened in the past, Chester m ay prove to be right. But t he only alternative

route Chester suggests the chancellor should have f ollowed w as that Chester retain his 51% ownership and m anagem ent control, which the chancellor f o und untenable due to Chester’s oppressive conduct. ¶61. Because the r e c o r d s u p p o r t e d t h e c h a n c e l l o r ’ s f i n d i n g C h e s t er had engaged in oppressive conduct suf

f icient to warrant corporate dissolution and because t h e c h ancellor did

not exceed his authority by ordering 50/50 ownership as an alternative rem edy to dissolution, we do not disturb this central aspect of the chancellor’s judgm e nt. B. Dam ages ¶62. W e do, however, reverse and rem and the award of d am ages—or lack thereof

. ¶63. The chancellor f

ound Chester had engaged in a f reeze out of W illiam and Kelley

. Yet he awarded no m onetary dam a ges, except $10,000 in punitive dam ages based on Chester’s “reprehensible” conduct. But as Chester rightly asserts on cross-appeal, without actual dam ages, punitive dam ages are not recoverab l e . Jenkins v. CST Tim ber Co. , 761 So. 2d 177, 180 (Miss. 2000) (holding “punitive dam ages a re not recoverable if no actual dam ages are allowed”). Under Mississippi Code Section 11-1-65(c) (Rev. 2019), punitive dam ages

2 1m ay only be considered “[ i]f , but o nly if

, an award of com

pensatory dam a ges has been m ade against a party

. . . .” ¶64. Here, the chancellor e xpressly awarded punitive dam ages due t o Chester’s f reeze-out actions and only did s o af

t er reviewing Section 11-1-65 and h olding a special hearing. Thus, it appears the chancellor determ ined punitive d am ages were available under Section 11-1- 65(c). T his raises the question whether the chancellor m istakenly b elieved punitive dam ages

were available b ecause W illiam had been “com

pensated” f

or his f reeze-out action through the equitable reme d y o f t he stock transf er. But as already discussed, the rem edy awarded—equal ownership—is an alternative rem e dy f or a dissolution c laim

. By contrast, the rem edy f

or a f reeze out i s legal , in the f

orm of dam ages to com

pensate the personal injury

to the m inority shareholder. Brothers , 129 So. 3d at 923-24. So despite f inding the elem ents of a f reeze out had b e en p roved—including “the f a c t and e xtent of injury ”—the chancellor awarded no com

pensatory dam ages. Id. at 919. ¶65. W e note that the chancellor in S c a f i d i craf ted the very sam e rem edy —he awarded equal o wnership as an alternative to corporate d issolution but did n o t a ward t he sister any dam ages f

or the intentional tort of corporate f r eeze out. Scafidi , 180 So. 3d at 655. But in that case, the sister did not appeal the lack of a dam ages award, whereas h ere W illiam does.
W i lliam claim s t he l ack o f m oney dam age is insuf f icient, prim arily because K elley was not

com pensated f

or her lost wages. But as already discussed, the c hancellor erred by ruling that Chester had engaged in a f reeze out of Kelley because Kelley w as not an owner. S h e w as

an at-will em

ploy ee, who did not bri ng—and could not bring under Mississippi law—an

2 2a c t i o n f

o r wrongf

ul t erm ination. So she has no direct right to r ecover d am ages f or h e r alleged injury

. To the extent W illiam argues h e w a s not adequately a warded m onetary dam ages f

or the injuries to h im f

or t h e f r e e z e o u t, which m ay have included Kelley ’s lost

com pensation as well as t he consequential dam ages f lowing f rom the closing of the Virginia of f ic e , this Court reviews the l ack of dam ages a w a r d f or abuse o f discretion. Lane v. Lam pkin , 175 So. 3d 1222, 1227 (Miss. 2 015). In so doing, w e f i nd t he chancellor abused h i s d i s cretion w hen h e w ent straight to punitive dam ages without f irst awarding actual dam ages. ¶66. F o r t h i s r e a s o n , w e reverse and r e m and the issue of d a ma g e s

— b o t h a c t u a l a n d punitiv e

— a s t hey r elate to W illiam ’s successf ul f reeze-out claim

. Clearly , t he chancellor
f ound Chester’s breach of f iduciary duty as the m ajority shareholder w a r ranted punitive dam ages. See Fought , 543 So. 2d at 173 (noting that breach of f iduciary duty is one of the
“extrem e or a special additional circum stance when punitive d a ma g es m a y be awarded” (quoting U

.S. For Us e and Benefit of Control Sys., Inc. v. Arundel Corp. , 814 F.2d 193,
199 (5th Cir. 1 9 8 7 ) ) )

. B u t he e rred by f inding the equitable rem edy awarded f orm ed the
necessary predicate to punitive dam ages u n d e r Section 11-1-65(c). On rem and, the chancellor should consider if any actual dama g es should be awarded based on Chester’s
f reeze out of

W i lliam (but not Kelley ) and, if

so, if punitive dam ages are still appropriate.
C. Attorney’s Fees ¶67. Wh i l e a w a r d i ng no dam ages f or the f reeze out, the chancellor did award W illia m $200,000 in attorney ’s f

ees to be paid by

A&H. Both W illiam and C hester have a ppealed.

2 3W i lliam asserts the $200,000 am ount was insuf f icient. And b oth parties argue A&H should not have been ordered to pay

. ¶68. As to the am ount, this Court has expressed its reluctance to disturb the chancellor’s determ ination of what i s an a ppropriate am ount of attorney ’s f e e s. Sm ith v. Sm ith , 614 So. 2d 3 9 4, 398 (Miss. 1993). So we w i l l n o t d i sturb the $200,000 am ount. W h ile W illiam claim s it was not enough, it was certainly not nothing. ¶69. As to A&H’s being ordered to pay , the c hancellor based h is directive on Mississippi Code S ection 79-4-7.46(1) (Rev. 2013). This s tatute a uthorizes that, “[ o]n term ination of the derivat i v e p r o c e e d i ng t he court m ay . . . [ o]rder the corporation t o pay the plaintif f ’s reasonable expenses ( including attorney ’s f ees) i ncurred in the proceeding if it f inds that the proceeding has resulted in a s ubstantial benef it to the corporation.” I

d. H ere, the chancellor expressly f

ound that W illiam ’s derivative action resulted in a substa n t i a l benef it to A&H.
On cross-appeal, Chester challenges the attorney ’s f ees award f

o r the sam e reason he argues W i lliam ’s derivative action was not valid—he claim s W illiam ’s action resulted in no benef it

to A&H. But as d iscussed above, the chancellor’s f inding that W illiam ’s derivative action benef itted A&H was supported by the record. ¶70. W i lliam also challenges the chancellor’s application of S ection 79-4-7.46(1), but f or

a dif f erent reason. He a sserts the statute is discretionary a nd not m andatory

. So even though
W i lliam w as successf

ul i n the derivative action, he em phasizes A&H did not have to pay his

attorne y ’s f

ees under t he statute. Instead, W illiam asserts, the chancellor should have required Chester to pay individually based on h is willf u l a c t i o ns, which supported the

2 4chancellor’s punitive-dam ages f inding. See Aqua-Culture Techs., Ltd. v. H olly , 677 So. 2d 171, 184-85 (Miss. 1996) (holding that a t rial court m ay validly award attorney ’s f e es based

on a f inding p unitive d am ages would be appropriate, even when no punitive dam age are awarded). If we have f

ollowed his argum ent cor r e ctly , W illiam is arguing the chancellor abuse d h i s d i s cretion by choosing one available avenue of attorney ’s f e es over another available avenue. B ut having available options is the essence of discretion. W illiam does

not argue Section 79-4-7.46(1) c ould not apply based on the c hancellor’s f inding. He sim

ply
argues Section 7 9-4-7.46(1) should not apply because Chester could have been ordered to
pay the attorney ’ s f

ees instead. ¶71. Because the chancellor would have been within his discretion to award no attorney ’s f ees at all, w e ref

use to second-guess th e c h a ncellor in this r egard but instead af f irm the attorney ’s f

ees award, includi n g t he order that A&H m u st pay , on both appeal and crossappeal.
D. Corporate Reim bursem ent ¶72. Finally , C hester cross-appeals the order that he reim burse A&H $ 5 , 2 6 0

. 5 0 , w hich represents $1,000 he directed Kel l e y to donate to 4H and $4,260.50 he spent on a therm al

cam era. ¶73. W e af

f irm the order t o the extent Chester m ust reim burse A&H f

or the cam era. The chancellor heard conf

licting evidence about w hy Chester purchased the cam era with A&H f u n d s. W hile Chester testif ied the c am era served a legitim ate business purpose, W illiam

2 5claim ed Chester bought i t f o r recreational h u n ting. As with m uch of the o ther conf

licting evidence, the chancellor believed W i lliam over Chester, which was within his discretion. ¶74. But we reverse the order the extent it requires Chester t o r eim burse A&H f

or the 4H donation. Like the cam e ra, the chancellor deem ed the donation was an “expense[ ] n ot related

to t h e b u s i n e ss.” But under Mississippi Code Section 79-4-3.02(13) (Rev. 2013), every corporation has the power to “[ t]o m ake donations f or the public welf

are or f o r charitable, scientif ic or educational purposes . . . . ” So by directing the donation, C hester in his role as sole d irector was e x ercising a legitim a t e corporate power. W hile W illiam , as 49% shareholder m ay have pref erred A&H direct i ts generosity elsewhere, we f ail to see on what

a u thority the c hancellor could order that Chester was personally liable f or t his am ount

. W h ile the record does indicate C hester i n t h e past had also m ade additional corporate donations without consult i n g Wi l l i a m , the e vidence i s not substantial e nough to support a f inding that the 4H donation was a personal expense.
Conclusion ¶75. On appeal, we af

f irm the chancellor’s d enial of C h e s t e r ’ s rem oval a s president and director, the denial of specif ic perf orm ance, and t he denial of a c onstructive trust. W e also also af f irm the $200,000 attorney ’s f ees award assessed against A&H. B ut we reverse the

zero a ctual-dam ages award f o r the f reeze out of W illiam and rem and this issue to the chancellor to be considered along with punitive dam ages. ¶76. On cr o s s - a p p e a l , w e a f f i rm the chancellor’s f

inding that W illiam brought a valid derivative action a nd that Chester had engaged in a corporate f reeze out o f W illiam , but we

2 6reverse and render the f inding Kelley

was also f

rozen out. W e also reverse and render the order to reim

b urse A&H t he $1,000 4H donation. W e reverse and re ma n d t h e p u n itivedam ages a ward b ased on the f re e z e o u t

. And, as on appeal, we af f irm t he chancellor’s attorney ’s f

ees award, a ssessed against A&H based o n W illiam ’s derivative action. Finally , and m ost im

portant, we a f

f irm t h e c h a n c e llor’s decision t hat 50/50 ownership was a pref erable rem edy

to corporate dissolution. ¶77. O N D I R E C T A P P E A L : A F F I R M E D I N P A R T ; R E V E R S E D A N D REMANDED IN PART. ON CROSS-APPEAL: AFFIRMED IN PART; REVERSED AND REMANDED IN PART; REVERSED AND RENDERED IN PART. RANDOLPH, C.J., K ITCHENS AND KING, P.JJ., COLE M A N , BEAM, CHAMBERLIN, ISHEE AND GRIFFIS, JJ., CONCUR.

2 7