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Levy v. Carolinian, LLC

Supreme Court of South Carolina

September 3, 2014

Shaul Levy and Meir Levy, Appellants,
v.
Carolinian, LLC, Respondent Appellate Case No. 2013-000650.

Heard June 25, 2014

Appeal from Horry County. Steven H. John, Circuit Court Judge.

R. Wayne Byrd, Mark B. Goddard, and Carlyle Cromer, all of Turner Padget Graham & Laney, P.A., of Myrtle Beach; and R. Hawthorne Barrett of Turner Padget Graham & Laney, P.A., of Columbia, for Appellants.

Benjamin A. Baroody, of Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers, P.A. of Myrtle Beach, for Respondent.

JUSTICE KITTREDGE. TOAL, C.J., PLEICONES, BEATTY and HEARN, JJ., concur.

OPINION

[410 S.C. 142] KITTREDGE, JUSTICE

This case is about the efforts of Respondent Carolinian, LLC (Carolinian) to acquire the distributional interest of Bhupendra Patel (Patel), a member of Carolinian, from judgment creditors, Appellants Shaul and Meir Levy (collectively " Levys" ), who purchased Patel's distributional interest at a foreclosure sale. The circuit court found that, pursuant to Carolinian's Operating

Page 595

Agreement, Carolinian could compel the Levys to sell their distributional interest after the foreclosure sale. We reverse.

I.

Carolinian is a closely held, manager-managed limited liability company (LLC), which is organized under the laws of South Carolina and which owns and manages various hotel and rental properties in Horry County, South Carolina. In February 2010, the Levys obtained a judgment against Patel [1] in the amount of $2.5 million. Thereafter, the Levys obtained a charging order in the circuit court, which constituted a lien against Patel's distributional interest in Carolinian.

Subsequently, the Levys filed a petition to foreclose the charging lien, and the foreclosure sale was held in April 2012. The Levys were the successful bidders, purchasing Patel's distributional interest for $215,000. Carolinian was represented at the foreclosure sale by its registered agent and its attorney, who unsuccessfully bid $190,000 on Carolinian's behalf.

[410 S.C. 143] Regarding the right to redeem or disencumber a member's distributional interest, Section 3.5 of Carolinian's Operating Agreement provides that a member's financial rights can be redeemed at any time up until foreclosure sale:

Redemption of Member's Financial Rights Subjected to Charging Order. In the event a Member's Financial Rights are subjected to a charging order under Section 33-44-504 of the [South Carolina Code], the Management Committee may cause the Company to redeem the Member's Financial Rights so charged, with Company Property, at any time prior to foreclosure of ...

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