LeonLanford,
it seems like SoX failed when downmixing the intermediate Wave file to two channels. The downmix is required for MP3 encoding, as the MP3 format is Stereo only.
Multi-channel AC3 to MP3 conversion seems to work okay for me:
http://pastie.org/private/3dlynbbsuux4hj9v02i2a
Can you provide a short sample file to re-produce the issue? Also, what version are you using?