Nandwani v. Mgmt. & Consulting, LLC, Unpublished Opinion No. 2012-UP-385

CourtCourt of Appeals of South Carolina
PartiesSuresh J. Nandwani; Kamal J. Nandwani; J. Bombay Management, LLC; and J. and v. Management and Consulting, LLC, Plaintiffs, Of whom Suresh J. Nandwani and Kamal J. Nandwani are the Appellants, v. Queens Inn Motel, a South Carolina General Partnership, d/b/a Coral Sea Villas Inc./Bon Villas Inc./Bon Villas; Bon Villas Motel, a South Carolina General Partnership; Harkishin Bhambhani; Manu Manglani; Hiroo Manglani; Ashok Dawani; Bhagu Ahuja; Geeta Navlani; Rita Lilani, and Jitender Navlani; Defendants. Harkishin T. Bhambhani, individually and as partner of Queens Inn Motel, a South Carolina Partnership, d/b/a/ Coral Sea Villas, Inc.; Bon Villa and Bon Villa Motel, a South Carolina General Partnership, d/b/a Coral Sea Villa, a South Carolina General Partnership, Third-Party Plaintiffs, Of whom Harkishin T. Bhambhani is the Respondent, v. Suresh J. Nandwani; Kamal J. Nandwani; JVN Corporation, J's LLC; J and V Management and Consulting, LLC; J. Bombay Management, LLC; Manu Manglani; Hiroo Manglani; Ashok Dawani, Suresh J. Nandwani; Kamal J. Nandwani; Bhagu Ahuja; Geeta Navlani; Rita Lilani; and Jitender Navlani; individually and as partners of Queens Inn Motel, a South Carolina General Partnership, d/b/a Coral Sea Villas, Inc., Bon Villa; Bon Villa Motel, a South Carolina General Partnership, d/b/a Coral Sea Villas, Inc.; Bon Villa; and Coral Sea Villa, a South Carolina General Partnership, Third-Party Defendants.
Docket NumberUnpublished Opinion No. 2012-UP-385
Decision Date20 June 2012

Suresh J. Nandwani; Kamal J. Nandwani; J. Bombay Management, LLC;
and J. and v. Management and Consulting, LLC, Plaintiffs,
Of whom Suresh J. Nandwani and Kamal J. Nandwani are the Appellants,
v.
Queens Inn Motel, a South Carolina General Partnership,
d/b/a Coral Sea Villas Inc./Bon Villas Inc./Bon Villas; Bon Villas Motel,
a South Carolina General Partnership; Harkishin Bhambhani; Manu Manglani;
Hiroo Manglani; Ashok Dawani; Bhagu Ahuja; Geeta Navlani; Rita Lilani,
and Jitender Navlani; Defendants.

Harkishin T. Bhambhani, individually and as partner of Queens Inn Motel,
a South Carolina Partnership, d/b/a/ Coral Sea Villas, Inc.; Bon Villa
and Bon Villa Motel, a South Carolina General Partnership, d/b/a Coral Sea Villa,
a South Carolina General Partnership, Third-Party Plaintiffs,
Of whom Harkishin T. Bhambhani is the Respondent,
v.
Suresh J. Nandwani; Kamal J. Nandwani; JVN Corporation,
J's LLC; J and V Management and Consulting, LLC; J. Bombay Management,
LLC; Manu Manglani; Hiroo Manglani; Ashok Dawani, Suresh J. Nandwani;
Kamal J. Nandwani; Bhagu Ahuja; Geeta Navlani; Rita Lilani; and Jitender Navlani;
individually and as partners of Queens Inn Motel, a South Carolina General Partnership,
d/b/a Coral Sea Villas, Inc., Bon Villa; Bon Villa Motel,
a South Carolina General Partnership, d/b/a Coral Sea Villas, Inc.; Bon Villa;
and Coral Sea Villa, a South Carolina General Partnership, Third-Party Defendants.

Unpublished Opinion No. 2012-UP-385

STATE OF SOUTH CAROLINA In The Court of Appeals

Heard December 6, 2011
Filed June 20, 2012


THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD
NOT BE CITED OR RELIED ON AS PRECEDENT IN ANY
PROCEEDING EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

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Appeal From Horry County
Gene M. Connell, Jr., Special Referee

AFFIRMED AS MODIFIED

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Dan V. Butler and Henrietta U. Golding, both of Myrtle Beach, for Appellants.
J. Jackson Thomas, of Myrtle Beach, for Respondent.

PER CURIAM: Suresh (Sammy) and Kamal (Kenny) Nandwani (collectively Appellants) appeal several issues surrounding the special referee's determination regarding (1) the validity and enforceability of four promissory notes, (2) Harkishin Bhambhani's (Respondent) right to pursue claims arising from prior litigation, and (3) Appellants' breach of fiduciary duty and the liability extending from such breach. We affirm as modified in part.

FACTS

In 1987, six individuals formed a general partnership (Partnership)1 for the purpose of purchasing property to operate motels. The partners entered into a signed partnership agreement in 1989.

Partnership's main function was the operation of two hotels, Bon Villa and Queens Inn Motel. At formation, Partnership held an interest in several real properties: (1) a leasehold interest in lots 3 and 4, Block 15, Hotel Section of Myrtle Beach, where Bona Villa was located; (2) a leasehold interest in lots 5 and 6, Block 2, Hotel Section of Myrtle Beach, where Queens Inn Motel was located; and (3) a fee simple interest in lot 9, Block 19, Hotel Section of Myrtle Beach, which was used as a parking lot for Bon Villa. Currently, Partnership's assets include (1) a fee title to lot 9, Block 19, Hotel Section and (2) a leasehold interest in lots 3 and 4, Block 15, Hotel Section.

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The parties have presented the court with extensive legal arguments and factual information regarding the relationships between the partners and Partnership's prior complex litigation. The parties involved include: (1) Jariam Nandwani (John), an original member of Partnership who died in 1990; (2) Kenny and Sammy, John's sons who operate J's, LLC and JNV, LLC; (3) Chanderlal Navlani, an original member of Partnership who died December 19, 2004, in India, survived by his wife, Geeta, and two children, Kumari Navlani and Jitender Navlani; (4) Respondent, an original member of Partnership; and (5) Ernest Rabon, the accountant for Partnership since 1989.

Partnership had very little structure. The hotel operations were managed by a managing partner, who made both the governance and day-to-day decisions for Partnership. No partnership meetings were held; however, each partner had access to Partnership's books and records maintained by the accountant. Partnership has had three managing partners since its inception: (1) Vishu T. Bhambhani from 1988 to 1991; (2) Respondent from 1991 to August 1996; and (3) Chanderlal Navlani from August 1996 to October 1999, when he left the United States for India. No partner took over as the managing partner following Navlani's departure to India, nor did any partner direct the hotel operations or management of Partnership's real property interest. The current members and their respective interests are as follows: Kenny (8.75%), Sammy (8.75%), Respondent (15%), Jitender Navlani (10%), Geeta Navlani (20%), Rita N. Lilani (10%), Manu and Haroo Manglani (17.5%), Ashok Dawani (5%), and Bhaju Ahuja (5%).2

This action was commenced October 13, 2000, by Appellants to collect on two promissory notes. The complaint was twice amended prior to trial, adding two limited liability companies owned by Appellants, along with added claims for dissolution of Partnership and for rent due from Partnership. In response, Respondent, individually and as a partner of Partnership, filed a second amended answer, amended counterclaim, and amended third-party complaint with defenses and claims against Appellants, Partnership, and the

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individual partners. The action was referred by consent to a master-in-equity August 12, 2002, and later referred to the special referee August 25, 2009.

The special referee issued an order ending the action, dissolving Partnership, and selling Partnership's property. Both Appellants and Respondents filed Rule 52 and Rule 59, SCRCP motions for amendment or alteration to the final order. Motions were heard and the special referee issued two supplemental orders. The final order and supplemental orders made the following rulings: (1) Appellants' claim for collection on the $50,000 Nandwani note was barred by the statute of limitations; (2) Appellants' claim for collection on the $160,000 Nandwani note and mortgage was granted, but in a reduced amount; (3) claims for unpaid rent against Partnership were barred by the statute of limitations; (4) Partnership should be dissolved; (5) Respondent's claim for collection on the $133,000 Navlani Note and mortgage was granted; (6) Respondents claim for collection of $60,000 on an assignment was granted; and (7) Partnership was granted judgment against Appellants for breach of fiduciary duty in the amount of $631,838. This appeal followed and involves four promissory notes issued by Partnership, prior litigation between Appellants and Respondent, and the purchase of lots 3 and 4.

I. Promissory Notes

To fund its business ventures, Partnership borrowed money from several partners, who provided promissory notes as a form of guarantee. The notes include two notes belonging to John (Nandwani notes), and two belonging to Navlani (Navlani notes). Both men are now deceased. The special referee considered the validity of these notes and the right of the parties to collect on these notes.

The partnership agreement states:

The undersigned parties shall contribute in percentage of their ownership above [the percentages listed in footnote 3] in any additional capital that they may deem to be necessary for the operation of the

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Partnership. Any such contribution of additional capital will be first agreed upon by majority of the Partners.
Each Partner agrees to make such loans to the PARTNERSHIP in an amount determined by applying his percentage ownership interest in the
PARTNERSHIP to the total additional loan required.

Additionally, the partnership agreement states "heirs of a deceased Partner may succeed to the deceased Partner's interest and continue as Partners in the Partnership."

A. Nandwani Notes

On December 25, 1987, Partnership executed and delivered a promissory note made payable to Ashok T. Bhambhani for $160,000. The note was secured by a mortgage on Partnership's interest in all of its real property. The note was personally guaranteed by Respondent, John, Navlani, Ashok Dawani, and Bhaug Ahugja. On May 19, 1988, Ashok T. Bhambhani assigned the note and the mortgage to John. In April 1989, John assigned $60,000 of the note to Navlani.

In April of 1989, Partnership executed and delivered a promissory note to John for $50,000. The note was secured by a mortgage and personally guaranteed by Respondent, Navlani, Manu Manglani, and Ashok Dawani. John died in 1990 and was survived by his wife and Appellants.

Appellants discovered the $160,000 note and a copy of the $50,000 note following the probating of John's estate in 1990, which was handled by the New York superior court. John's estate was re-opened by Kenny, as administrator, and the estate assigned both notes to John's wife, Kenny, and Sammy on July 18, 2005. The wife then assigned her interest in the notes to Kenny and Sammy in a subsequent transaction on the same day.

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B. Navlani Notes

On December 25, 1987, Partnership issued a promissory note for $133,000 to Ashok T. Bhambhani. The note was secured by a mortgage on Partnership's interest in all real property. On May 19, 1988, Ashok T. Bhambhani assigned the note and mortgage to...

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