If one of you is sued personally, the corporation is not liable for the judgement. In the even that that person is not able to satisfy the judgement from his personal sources, this ownership to the extent of his share may be at stake.
Let me know if you have any question.
Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.
If you transfer the ownership just so that you can avoid the judgement than such a transfer will be questionable. You can show a sale of his share and other person buying it.
If there is a chance that he may be liable than you might want to consider having him sell his shares to the other person if he is willing to do that.
However, if he is not going to be liable than I would suggest to not do anything.
I would also suggest you to go to an asset protection attorney. he may advise him to form a LLC and have the LLC own the interest in S Corp....if that would help protect his interest to some extent. However, this would need information on State law and hence attorney should be able to guide you better with asset protection.