Hotel & Motel Holdings, LLC v. BJC Enters., LLC

• Citation: 780 S.E.2d 263,414 S.C. 635
• Decision Date: 18 November 2015
• Docket Number: Appellate Case No. 2011–198106.,No. 5363.,5363.
• Court: Court of Appeals of South Carolina
• Parties: HOTEL AND MOTEL HOLDINGS, LLC, Respondent, v. BJC ENTERPRISES, LLC, Wendy J. Bellamy, Americana, Inc., a/k/a Americana Motel of Myrtle Beach, Inc., Mozingo & Wallace Architects, LLC, Kersi S. Shroff, and Shroff Management, Inc., Defendants, BJC Enterprises, LLC, Wendy J. Bellamy, Americana, Inc., a/k/a Americana Motel of Myrtle Beach, Inc., Appellants, v. First Palmetto Savings Bank, F.S.B., Jack Jones, Donald D. Godwin, and Bhupendra Patel, Respondents.

414 S.C. 635

780 S.E.2d 263

HOTEL AND MOTEL HOLDINGS, LLC, Respondent,

v.BJC ENTERPRISES, LLC, Wendy J. Bellamy, Americana, Inc., a/k/a Americana Motel of Myrtle Beach, Inc., Mozingo & Wallace Architects, LLC, Kersi S. Shroff, and Shroff Management, Inc., Defendants,BJC Enterprises, LLC, Wendy J. Bellamy, Americana, Inc., a/k/a Americana Motel of Myrtle Beach, Inc., Appellants,

v.First Palmetto Savings Bank, F.S.B., Jack Jones, Donald D. Godwin, and Bhupendra Patel, Respondents.

Appellate Case No. 2011–198106.

No. 5363.

Court of Appeals of South Carolina.

Heard Dec. 10, 2014.

Decided Nov. 18, 2015.

Kathryn M. Cook, of Kathryn M. Cook, PA, of North Myrtle Beach, for appellants.

Audra McCall Byrd, R. Wayne Byrd, and Carlyle Richardson Cromer, all of Turner Padget Graham & Laney, PA, of Myrtle Beach; and Sarah Patrick Spruill, of Haynsworth Sinkler Boyd, PA, of Greenville, for respondents.

MCDONALD, J.

BJC Enterprises, LLC (BJC), Wendy Jones Bellamy, and Americana, Inc. a/k/a Americana Motel of Myrtle Beach, Inc. (Americana) (collectively, Appellants) seek appellate review of several orders,¹ ARGUING THE CIRcuit 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. We affirm.

FACTS/PROCEDURAL BACKGROUND

On January 14, 2005, Palmetto made a $5,573,146.62 loan (Loan) at a 5.550% interest rate to BJC for the purpose of purchasing Emerald Shores Motel and its first row parking lot (collectively, Emerald Shores). BJC's members included managing member Wendy Jones Bellamy, Bellamy's brother Harvey L. Jones (Brother), and family friend Henry C. "Trip" Coan, III. In addition to the 2005 Loan, BJC used $1,000,000 in cash contributed by Coan for the $6,900,000 purchase. Prior to obtaining this loan, Bellamy, Brother, and their family, through the corporation Americana, owned and operated a neighboring motel known as Rainbow Court Motel, along with various other rental properties in the vicinity.

The terms of the note (2005 Note) called for "23 monthly interest payments ranging from $23543.01 to $26065.48 beginning 02–14–2005 and 1 payment of $5,606,065.48 on 01–14–2007." The 2005 Note was secured by a commercial security agreement and three assignments of leases and rents (2005 Assignments). The 2005 Note was further secured by three mortgages (2005 Mortgages): (1) the Emerald Shores mortgage, consisting of four property parcels mortgaged by BJC; (2) a mortgage on Rainbow Court and various rental properties, consisting of nine parcels mortgaged by Americana; and (3) a mortgage by Bellamy on a rental duplex. Palmetto perfected its security interest on January 19, 2005, by filing a UCC–1 financing statement (UCC–1) as to "[a]ll furniture, fixtures and equipment located at 404 N. Ocean Blvd., Myrtle Beach, SC 29577 and used in the operation of the Emerald Shores Motel." As additional collateral, Coan posted a $500,000 certificate of deposit (CD), and Bellamy, Brother, and Coan executed personal guarantees for BJC's obligations under the 2005 Note.

On January 12, 2007, Palmetto renewed the Loan at an 8.25% interest rate and executed a new promissory note (2007 Note). The terms of the 2007 Note called for "11 monthly interest payments ranging from $35271.15 to $38050.20 beginning 02–12–2007, and 1 payment of $5,612,198.82 on 01–12–2008." The 2007 Note was secured by the 2005 Mortgages and the 2005 commercial security agreement. In her capacity as BJC's managing member, Bellamy executed three mortgage modifications, and all three BJC members executed personal guarantees.

On January 17, 2008, Palmetto again renewed the Loan at the 8.25% interest rate, executed a new promissory note (2008 Note), and executed a new commercial security agreement (2008 CSA). The terms of the 2008 Note called for "11 monthly payments of $47,905.19 beginning 02–17–2008, and 1 balloon payment of $5,509,352.46 on 01–17–2009." The 2008 Note was secured by the 2005 Mortgages, the 2005 Assignments, and a commercial security agreement. In her capacity as BJC's managing member, Bellamy again executed mortgage modifications, and all three members again executed personal guarantees.

Throughout 2008, BJC was late on its monthly payments and eventually ceased making payments in October 2008. In mid-October, BJC met with Palmetto to discuss the 2008 Note. At this meeting, Palmetto indicated that it was not willing to renew the 2008 Note for another year, and that it expected BJC to make the balloon payment of $5,509,352.46 on January 17, 2009. Despite the fact that neither Bellamy nor BJC were financially capable, Bellamy informed Palmetto that she would be able to make the payment "in a relatively short period of time."

This series of events culminated in Bellamy's attempted suicide on November 3, 2008. Bellamy testified in her deposition that she attempted suicide to make her $5,500,000 life insurance policy proceeds available to pay off the 2008 Note and save her family's properties. Following her release from Grand Strand Regional Medical Center, Bellamy was involuntarily hospitalized in Florence for fourteen days. Thereafter, she remained under psychiatric care for approximately two years in Myrtle Beach. Subsequently, Bellamy was not involved with the management of Emerald Shores or Rainbow Court, nor was she involved in further efforts to renegotiate or extend the 2008 Note.

In November 2008, Brother and Coan agreed to bring current the payments on the 2008 Note, and Palmetto agreed to continue negotiations for a possible renewal of the 2008 Loan. In a November 24, 2008 letter to BJC, Palmetto offered to extend the 2008 Note for one year, reduce the interest rate to 7%, and require interest-only payments. Appellants claim they never received this letter because it was mailed to Rainbow Court while Bellamy was incapacitated, and the motel was closed for the season.² Palmetto contends that it mailed the letter to Rainbow Court because the motel's address is the address of record set forth in the loan documents (Loan Documents).

On December 9, 2008, Bellamy signed a durable power of attorney (POA) in favor of her paternal uncle, Jack Jones (Uncle). At this point, Uncle took over all negotiations on the 2008 Note; he faxed a copy of the POA to Palmetto's corporate headquarters on December 15, 2008. Appellants allege that neither Uncle nor Palmetto advised them of the November 24, 2008 offer.

When the 2008 Note matured on January 17, 2009, BJC failed to make the required balloon payment. On January 22, 2009, Brother, Coan, and Uncle (in his capacity as Bellamy's POA) attended a meeting at Palmetto's headquarters in Camden. At this meeting, Palmetto's President and CEO, Sammy Small, Sr., advised the parties that he planned to liquidate Coan's $500,000 CD and apply it to the principal due on the 2008 Note. Appellants claim that Uncle and Small left the room to speak privately and never divulged the substance of their conversation. Later in January, Brother and Uncle returned to Camden for another meeting with Small. Brother alleges that Uncle and Small once again met privately and failed to divulge the substance of their conversation.

In addition to these private meetings, Uncle began having regular contact with Small including, but not limited to, approximately 115 phone calls between January 22, 2009, and June 30, 2009. Appellants claim that Uncle and Small kept secret communications regarding the 2008 Note and the three mortgaged properties. They further allege that Uncle and Small led them to believe that they were "negotiating in good faith to achieve a restructuring, renewal, or workout of the 2008 Note ... and to prevent foreclosure on the properties."

On February 2, 2009, Palmetto initiated an action against BJC, seeking to foreclose on the three mortgaged properties. Subsequently, in exchange for BJC's promise to pay the 2008 property taxes and make a $150,000 interest payment by May 31, 2009, Palmetto approved a payment deferral request and agreed to refrain from seeking foreclosure through May 31, 2009. Bellamy, accompanied by Brother and Uncle, hand-delivered a certified check in the amount of $95,000 to Small on February 3, 2009. Palmetto's payment deferral included the following language: "Customer paid $95,000.00 in delinquent interest and attorney fees. Advancing to May 2009 to give them time to sell the property and pay us off. Loan remains in default and all sums due and payable."

BJC paid the 2008 property taxes on February 5, 2009, and Palmetto voluntarily dismissed the initial foreclosure action on February 13, 2009. On March 23, 2009, Bhupendra Patel, a long-time business associate of Uncle, began managing the hotel properties and continued to manage the properties for nearly a year after the commencement of the foreclosure action at issue in this appeal.³ As manager, Patel was paid $60,000 per year and was responsible for the day-to-day operations of Emerald Shores and Rainbow Court, as well as paying bills, making deposits, making repairs, maintaining the pool, and taking care of the grounds.

Patel opened two checking accounts at Palmetto, one for Emerald Shores and one for Rainbow Court. While manager, Patel never made payments to Palmetto. He did, however, make payments to Uncle in the amount of $20,000; Uncle's brother, Wilbur Jones (Jones), in the amount of $50,000; and himself in the amount of $30,000. In their depositions, Patel and Uncle testified that the payments made to Uncle and Jones were reimbursements for loans made to Emerald Shores and Rainbow Court. As manager, Patel also signed an agreement allowing three...