Family squabble leads to promissory estoppel claim

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SC Court of Appeals doesn’t buy it

The facts of a recent Court of Appeals* case involve a dispute between brothers who immigrated from India. Sam Patel moved first, in 1979, and settled in Chicago. Sam’s extended family followed and lived with Sam and his wife. In 1989, Sam moved to Lynchburg, South Carolina, after he purchased a store on Willow Grove Road.

Sam’s family, along with his parents and his younger brother, Kim, followed. The family worked in and lived on the store property. The business grew, and the brothers acquired a store in Sumter. Kim Patel operated the store in Sumter, while Sam Patel continued to operate the store in Lynchburg. Over the years, Sam helped Kim financially.

grocery store country

By 2010, Sam owned three parcels in Lynchburg and operated a liquor store, a grill and a gas station. Sam, himself, faced financial difficulties at this time, and his properties were foreclosed on by First Citizens. At Sam’s request, Kim purchased the properties through the foreclosure in the name of a limited liability company. Sam continued to run businesses on the properties and placed his businesses in the name of another limited liability company.

Sam’s LLC obtained the operating, lottery and alcohol licenses for the properties and made improvements. But Kim’s LLC expended funds for gasoline purchases and property taxes. There was never a lease or written agreement between the brothers or their entities concerning rent and expenses. And when Sam failed to pay rent, Kim’s LLC brought a suit for ejectment and damages. Sam and his LLC counterclaimed, alleging Kim had promised to convey the title to him.

At trial, the brothers gave conflicting accounts of their verbal arrangement. Kim testified that he told Sam he could continue to operate the businesses for six or seven months rent-free so Sam could get back on his feet. After that time frame, Kim expected his brother to pay rent, taxes, insurance and maintenance. Sam testified that Kim purchased the properties in order to convey them back to Sam. Sam intended to repay Kim over three to five years and have title returned to him after repayment.

The special referee’s order stated that Sam owned an equitable interest in the properties and had a right to repurchase them, but that Sam owed Kim approximately $42,000 for expenses.

The Court of Appeals held that Sam’s claim of an equitable interest based on promissory estoppel failed, stating that promissory estoppel is a flexible doctrine that aims to achieve equitable results, but it, like all creatures of equity, has limitations. The court said promissory estoppel is a quasi-contract remedy with four elements:  (1) a promise unambiguous in its terms; (2) reasonable reliance upon the promise; (3) the reliance is expected and foreseeable by the party who makes the promise; and (4) the party to whom the promise is made must sustain injury in reliance on the promise. The court held that Sam’s claim failed on the first two elements.

The testimony of Sam and Kim at trial made it clear, according to the Court, that there was no meeting of the minds as to the terms of the alleged contract. In other words, there was no unambiguous promise to be enforced. And Sam’s reliance was held to be unreasonable in light of the ambiguities of the alleged promise.

The case was remanded to the special referee to conduct the eviction proceeding and to determine rent and expenses between the parties.

 

A&P Enterprises, LLC. v. SP Grocery of Lynchburg, LLC, South Carolina Court of Appeals Opinion 5545 (March 28, 2018).

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