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A&P Enterprises, LLC v. SP Grocery of Lynchburg, LLC

Court of Appeals of South Carolina

March 28, 2018

A&P Enterprises, LLC, Appellant,
SP Grocery of Lynchburg, LLC and Suresh "Sam" Patel, Respondents. Appellate Case No. 2015-000498

          Heard November 9, 2017

          Appeal From Lee County Walter Graham Newman, Special Referee

          S. Jahue Moore and John Calvin Bradley, Jr., of Moore Taylor Law Firm, PA, of West Columbia, for Appellant.

          William W. Wheeler, III, of Jennings & Jennings, PA, of Bishopville, for Respondents.

          MCDONALD, J.

         In this action seeking ejectment and monetary damages, A&P Enterprises, LLC (A&P) argues the special referee erred in finding SP Grocery of Lynchburg, LLC and Suresh "Sam" Patel (collectively, Respondents) hold an equitable interest in the real property on which Sam operates a liquor store and convenience store (Tommy's Grill). We affirm in part, reverse in part, and remand for any eviction proceedings that may be necessary.

         Facts and Procedural History

         Kamlesh "Kim" Patel is the sole member of A&P. Payel Suresh Patel, daughter of Sam Patel, is the sole member of SP Grocery. Sam and Kim are brothers.

         Sam immigrated to the United States from India in 1979. By the early 1980s, Sam's extended family lived in Chicago with Sam and his wife. In 1989, Sam purchased a store on Willow Grove Road in Lynchburg, South Carolina. Sam's family, along with his parents and his younger brother, Kim, then moved to South Carolina, where the family worked in and lived on the premises of the Lynchburg store. The business grew and eventually the brothers acquired a store in Sumter. Although there is some dispute as to the circumstances, by 1992, Kim was operating the Sumter store as his own. From this point forward, Sam and Kim conducted their own respective businesses and both eventually came to have other stores and investments.

         By 2010, Sam owned three parcels of improved real estate in Lynchburg (the Property). On two of these parcels, Sam ran a liquor store and Tommy's Grill. On the third parcel, Sam operated a British Petroleum station (the Gas Station); however, the Gas Station was no longer open at the time of the proceeding before the special referee. On February 16, 2010, First Citizens Bank and Trust Co., Inc., initiated foreclosure proceedings against Sam, demanding judgment in relation to the Property. Thereafter, Sam approached Kim about purchasing the Property; A&P later bought it for $350, 001 at a May 9, 2011 foreclosure sale.[1]

         After A&P bought the Property, Sam continued to operate Tommy's Grill; however, no rental agreement or writing of any kind exists to confirm the nature of Sam's occupancy. Due to financial difficulties, Sam placed Tommy's Grill in the name of SP Grocery during the summer of 2011. SP Grocery obtained all of the operating, lottery, and alcohol licenses for Tommy's Grill and the liquor store.

         After Kim's purchase of the Property at the foreclosure sale, Sam failed to pay rent and other expenses necessary for the continued operation of the liquor store and Tommy's Grill; thus, A&P sued for ejectment and monetary damages. Respondents timely answered and counterclaimed, alleging A&P promised Respondents title to the Property and "that in due reliance upon this promise, [Respondents] expended considerable sums of money and [a] large amount of labor in making numerous improvements to the [Property]." A&P denies the existence of any such promise.

         At the hearing before the special referee, Sam and Kim gave conflicting accounts regarding Kim's purchase of the Property and the circumstances of Sam's occupancy. According to Kim, when A&P purchased the Property, Kim told Sam he could continue to operate the liquor store and Tommy's Grill rent-free for six or seven months so that Sam could get back on his feet. Kim testified that he asked and expected Respondents to begin paying monthly rent of $3, 750 in May 2012. Kim explained that Respondents were also responsible for taxes, insurance, maintenance, and upkeep. On direct examination, Kim testified he sent several lease agreements to Sam, who refused to sign any of them. On cross-examination, Kim admitted he neither prepared nor presented Sam with a written lease agreement prior to July 10, 2013.

         Kim denied buying the Property solely to help his brother and testified that he expected a twelve to fifteen percent return on his investment. However, Kim admitted he and Sam had no agreement regarding the sale of the Property or rent payments. According to Kim, the families have had a poor relationship since 1992, and the only time he ever heard from Sam was when Sam needed money.

         Kim further claimed A&P paid $3, 700 in outstanding property taxes on the Property despite Sam's agreement to pay the taxes. Additionally, on two separate occasions, Sam asked Kim to purchase gasoline for Sam to sell at the Gas Station. Initially, A&P purchased gas for Respondents from Turner Oil. Although Respondents agreed to reimburse A&P $17, 415 for this purchase, they had not yet done so at the time of the hearing before the special referee. A&P subsequently incurred approximately $20, 000 in costs for gasoline purchased from Southern Gas and Fuel. Kim testified, and the special referee agreed, Respondents still owe A&P approximately $17, 000 for this purchase.

         Sam's story differs. Sam contends Kim purchased the Property in order to convey it back to Sam, not to rent it to him. Although Kim offered to buy the Property for Sam and title it in Sam's name, Sam insisted on paying Kim back over three to five years. Sam claimed he told Kim not to put the Property in his name until he could repay him. Sam further testified that Kim promised Sam he would be able ...

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