Today’s Opinions from the South Carolina Court of Appeals

Court of AppealsThe South Carolina Court of Appeals published two opinions: The SPUR v. Lalla and Hotel and Motel Holdings v. BJC Enterprises.

The SPUR v. Lalla involved Sunil and Sharon Lalla (collectively, the Lallas), co-owners of a unit in a horizontal property regime known as The SPUR at Williams Brice Stadium (The SPUR). This appeal followed the circuit court’s order allowing the SPUR to enforce a restrictive covenant prohibiting the Lallas from renting their unit to any student enrolled in a two or four year college. The Lallas appealed arguing that the restriction had no reasonable basis and discriminates against a specific class of individuals, and that the circuit court erred in failing to hold the covenant null and void.

The Court of Appeals examined the SPUR’s Master Dead, the Association’s by-laws, the pertinent statutes, and the circuit court’s order and found no error in the court’s ruling that when the Lallas became owners of a unit in The SPUR, they voluntarily and intentionally bound themselves by the restrictive covenants barring the rental of any unit to non-familial  college students. Therefore, the Court affirmed the ruling of the circuit court.

In Hotel and Motel Holdings v. BJC Enterprises, BJC Enterprises, LLC  (“BJC”) and other joined parties (collectively, Appellants), appeal several orders from the circuit court arguing that the court erred in: (1) granting First Palmetto Savings Bank’s (“Palmetto”) motion for summary judgment as to Appellants’ third-party claims; (2) granting Hotel and Motel Holdings, LLC’s (“H&M”) motion for summary judgment as to Appellants’ counterclaims; (3) granting Jack Jones, Donald Godwin, and Bhupendra Patel’s (collectively, Individual Respondents) motion to dismiss; and (4) granting H&M’s motion to strike Appellants’ request for a jury trial on H&M’s cause of action for claim and delivery.

The basis of the dispute was Emerald Shores property that was purchased by BJC with a Loan given by Palmetto and a $1 million cash contribution by Coan, a managing member of BJC.  The Palmetto Note was secured by three mortgages: (1) Emerald Shores mortgage; (2) Rainbow Court mortgage; and a (3) Mortgage by Bellamy [another BJC managing member] on a rental duplex. Palmetto perfected its security interest by filing a financing statement on all furniture, fixtures and equipment used in operation of Emerald Shores. In addition, Coan posted a $500,000 certificate of deposit and Bellamy, her brother, and Coan executed personal guarantees for BJC’s obligation on the note.

The note was renewed yearly in 2007 and 2008. In 2008, BJC became late and eventually ceased making monthly payments. A balloon payment became due to which BJC did not satisfy.  There were negotiations made in an effort to renew the Note and bring it current by all managing members. Late in 2008, Bellamy’s uncle (“Uncle”) took over negotiations on the Note via his durable power of attorney for Bellamy. In 2009, Palmetto agreed to accept a small payment to temporarily defer on a foreclosure action and retained counsel to draft documents to sell the Note.

In June 2009, Palmetto  filed a commercial foreclosure action against the property. A few days later, Uncle and David Godwin filed articles of organization and created H&M. Palmetto entered into a loan sales agreement with H&M to assign, inter alia, the 2008 Note for $5 million and loan H&M money to finance the purchase.

A consent order was signed allowing H&M to substitute as plaintiff in the foreclosure action. H&M filed an amended complaint (against BJC) seeking foreclosure, claim and delivery, and the appointment of a receiver. Appellants filed an amended answer including a third-party complaint against Individual Respondents.

In a series of orders, the circuit court granted multiple motions that were appealed. This Court affirmed the findings of the circuit court: First to the dismissal of Appellant’s civil conspiracy claim against Individual Respondents because Appellants failed to plead with specificity any special damages to their third party action and conspiracy counterclaim.  Second the Court affirmed the granting of Palmetto’s summary judgment motion to Appellants’ third-party breach of contract finding Palmetto had a legal right to disclose the information about the 2008 Note to Uncle because there was no evidence that Palmetto had a contractual duty not to disclose information about the Note.   Third, the Court found the circuit court did not err in granting Palmetto’s summary judgment on Appellants’ third-party claims for breach of contract accompanied by a fraudulent act because there record showed no evidence to support this claim.

Further, the Court found that the circuit court properly granted H&M’s motion for summary judgment on Appellant’s counterclaim for breach of contract because it is uncontested that Appellants failed to make the balloon payment on the 2008 Note  and the interest payment to Palmetto.

The Court found that Appellants argument that H&M was a holder in due course to the 2008 Note and the remaining counterclaims were not preserved for appeal. Additionally the Court affirmed the circuit court’s granting of H&M’s motion to strike request for a jury trial on H&M’s claim and delivery cause of action. The Court agreed with the circuit court’s decision that the action for claim and delivery is moot because an action in claim and deliver in an action of law  and there was no undisputed facts surrounding the allegation.

Accordingly, the Court affirmed the decisions of the circuit court.


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