Nandwani v. Queens Inn Motel

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.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

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.

__________

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

__________

Unpublished Opinion No. 2012-UP-385
Heard December 6, 2011 – Filed June 20, 2012
__________

AFFIRMED AS MODIFIED
__________
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.

1
Partnership has been called at various times Coral Seas, Bon Villa, and
Queens Inn Motel Partnership.
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

2
The original partners and respective interests were Vishu T. Bhambhani
(15%), John (20%), Chanderlal Navalani (25%), Respondent (15%), Ashok
Dawani (5%), and Bhagu Ahuja (5%).
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
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.
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 Navlani. In April of 1989,
Partnership issued a promissory note for $47,000 to Navlani secured by a
mortgage. The note was guaranteed by five members of Partnership,
including Respondent and John.

Navlani died in India on December 19, 2004, and was survived by his
wife and two children. Navlani's will devised his entire estate to his wife and
children. An application for informal probate was filled out on May 22,
2008, in Horry County, but was never filed with the probate court. Navlani's
heirs assigned their interests in both notes to Respondent on December 31,
2004.
C. Special Referee's Findings on the Notes

Both Appellants and Respondent sought a determination from the
special referee of their rights to enforce and collect on the notes. Appellants
argued for full payment of both Nandwani notes. Respondent, individually,
asserted a right to both Navlani notes and the $60,000 assignment of the
$160,000 Nandwani note.

In regards to the Nandwani notes, the validity of the assignment of the
notes by the estate to Appellants was not contested by Respondent at trial.
Sammy testified he informed Navlani, in his capacity as managing partner,
about the two notes. Sammy further stated Navlani told him both notes were
valid and payable. Kenny testified that on June 1, 1999, Partnership made a
partial payment on both of the Nandwani notes by Partnership check. The
check was made payable to Kenny in the amount of $6,000.3 Respondent

3
The check was signed by Navlani and the subject line of the check stated
"principal plus interest 456[,]395-6,000= 450,395 Balance." Appellants
presented a handwriting expert who confirmed the check was written by
Navlani.
objected to the testimony regarding statements Navlani made to Sammy, on
ground that the testimony violated the Dead Man Statute. The special referee
did not consider the testimony regarding communication between the two in
his decisions.

The special referee determined (1) the collection claims for the $50,000
Nandwani note and the $47,000 Navlani Note were both barred by the statute
of limitations and (2) the $160,000 Nandwani note and the $133,000 Navlani
note are Partnership debts. In an amended order, the special referee found
Respondent was entitled to the $60,000 assignment of the $160,000
Nandwani note.

II. Prior Litigation

In 1996, members of Partnership sued Respondent for breaching his
fiduciary duties to partners by misappropriating funds and improperly
utilizing Partnership assets. The master ruled Partnership was entitled to
reimbursement of $447,909 and dismissed the action for breach of fiduciary
duty and civil conspiracy with prejudice based on a failure of proof. This
court in Navlani v. Bhambhani, Op. No. 2000-UP-384 (Ct. App. filed May
30, 2000), affirmed the master.

In 1999, JVN, Inc. sued Partnership to collect on promissory notes
issued by Partnership to JVN. Respondent, as an individual and on behalf of
Partnership, filed counterclaims and a third-party complaint alleging
mismanagement by Navlani, as managing partner. The master-in-equity
found Navlani breached his fiduciary duty as a result of his acts and
omissions while serving as managing partner. The master's order
incorporated a settlement agreement between Appellants and Respondent for
issues arising from the business relationship between JVN, Inc. and
Respondent.

The special referee determined matters unknown to Respondent during
the previous lawsuits, partnership assets, and ownership interests of
individual partners were matters specifically reserved for a latter hearing.
The special referee also found Respondent's allegations against Appellants
for breach of fiduciary duty were not barred in this case.

III. Purchase of Lots 3 and 4

Partnership held a leasehold interest on lots 3 and 4, on Block 15 of
Hotel Section in Myrtle Beach, where it operated Bon Villa. Partnership
began leasing the property on September 30, 1988, from Billy and Bonita
Smith. In the late 1990s, the property went into receivership because
Partnership was not paying the property taxes, as required under the lease
agreement.

In 1998, the Smiths offered to sell the lots to Partnership, but
Partnership was unable to purchase the property because of financial reasons.
The Smiths then offered to sell the lots to Appellants. Sammy testified
Navlani was aware of the offer made to Appellants. He also testified no other
partner was informed of the offer, including Respondent who resided within
minutes of Sammy's home. On June 2, 1999, Appellants, acting on behalf of
J's LLC, purchased the fee title to lots 3 and 4 for $800,000. Upon the
purchase of the land, J's LLC became the landlord for Partnership, pursuant
to Partnership's lease agreement with the Smiths.

In February of 2000, J's LLC commenced an eviction action against
Partnership for the failure to pay the 1999 property taxes, pursuant to the
leasehold agreement. The eviction notice was mailed by certified mail to
Manu Manglani, a general partner of Partnership, at his last known address in
New York. A copy of the return receipt was signed and returned by
Manglani. At trial, Manglani denied signing the return, but confirmed he
owns the apartment located at the address where the letter was mailed and has
previously received mail at the address.4 Additionally, he admitted his
tenants have previously forwarded him mail delivered to the apartment.

4
At trial, Manglani denied ever receiving any mail for Partnership purposes.
He said the accountant would fax any documents concerning Partnership.
Appellants contend service was also made by posting notice at Bon Villa and
through publication in the Myrtle Beach Herald in Horry County.5

No one appeared on behalf of Partnership at the eviction hearing, and
the magistrate issued a warrant of ejection against Partnership on March 13,
2000. Following the eviction, Appellants demolished Bon Villa. Respondents
asserted a claim for breach of fiduciary duty against Appellants for their (1)
involvement in the acquisition of the fee title to the real property upon which
Partnership assets were situated, (2) ejectment suit against Partnership, (3)
demolition of Partnership's building, and (4) self-dealing with regard to the
nonpayment of taxes on Partnership's property.

The special referee determined Appellants breached their fiduciary duty.
The special referee ordered a judgment in the amount of $631,838, the last
recorded value of Bon Villa, be made in favor of Partnership against
Appellants for breach of fiduciary duty.6 This appeal followed.

LAW/ANALYSIS

I. Notes

A. Dead Man's Statute

Appellants maintain the Dead Man's Statute is not applicable because
Partnership and Respondent, the parties against whom Navlani's statements
were being asserted, were not defending the action as Navalni's "executor,
administrator, heir-at-law, next of kin, assignee, legatee, devisee[,] or
survivor." In the alternative, Appellants contend Respondent opened the door
to Sammy's testimony about Navalni by not objecting to the admission of
other evidence barred by the Dead Man's Statute. We disagree.

5
The special referee made the factual determination that no evidence showed
a notice was placed at Bon Villa.
6
In the first two orders, the special referee directed lots 3 and 4 be transferred
or conveyed to Partnership. He later vacated that finding on "the basis that
not all parties with interest in said lots were made parties to the action."
In reviewing the admission or exclusion of evidence, the trial court's
ruling will not be disturbed on appeal absent a clear abuse of discretion.
Hofer v. St. Clair, 298 S.C. 503, 513, 381 S.E.2d 736, 742 (1989). "An abuse
of discretion occurs when the ruling is based on an error of law or a factual
conclusion without evidentiary support." Conner v. City of Forest Acres, 363
S.C. 460, 467, 611 S.E.2d 905, 908 (2005). "To warrant reversal based on
the admission or exclusion of evidence, the appellant must prove both the
error of the ruling and the resulting prejudice, i.e., there is a reasonable
probability the jury's verdict was influenced by the wrongly admitted or
excluded evidence." Id.

The South Carolina Dead Man's Statute, section 19-11-20 of the South
Carolina Code (1985), provides in pertinent part:

[N]o party to an action or proceeding, no
person who has a legal or equitable interest which
may be affected by the event of the action or
proceeding, no person who, previous to such
examination, has had such an interest, however the
same may have been transferred or come to the party
to the action or proceeding, and no assignor of
anything in controversy in the action shall be
examined in regard to any transaction or
communication between such witness and a person at
the time of such examination deceased, insane or
lunatic as a witness against a party then prosecuting
or defending the action as executor, administrator,
heir-at-law, next of kin, assignee, legatee, devisee or
survivor of such deceased person or as assignee or
committee of such insane person or lunatic, when
such examination or any judgment or determination
in such action or proceeding can in any manner affect
the interest of such witness or the interest previously
owned or represented by him . . . .
(emphasis added).

The statute "prohibits any interested person from testifying concerning
conversations or transactions with the decedent if the testimony could affect
his or her interest." Hanahan v. Simpson, 326 S.C. 140, 151, 485 S.E.2d 903,
909 (1997). This statute is viewed as the exception to the general rule on
witness competency and has been found to require a restrictive reading on
which the party requesting its use bear the burden. Id.

The special referee properly determined Appellants' testimony
concerning their conversations with Navlani were not admissible under the
Dead Man's Statute. Navlani's heirs were parties to the case and hold a
partnership interest in Partnership. As heirs, they have a present and vested
interest in the $50,000 Nandwani note and the determination of whether they
breached their fiduciary duty to Partnership. In regards to the Respondent, it
is well established that an "assignee . . . stands in the shoes of its assignor . . .
." Singletary v. Aetna Cas. & Sur. Co., 316 S.C. 199, 201, 447 S.E.2d 869,
870 (Ct. App. 1994). Thus, it was proper for the special referee to disregard
the communications under the Dead Man's Statute.

Additionally, Respondent did not open the door to this testimony by
failing to object to other evidence. From a plain reading of the statute, the
open door exception is triggered when a party admits evidence first, thereby
allowing the subject matter into the trial. Hanahan, 326 S.C. at 151, 485
S.E.2d at 908. However, a party's failure to make a Dead Man's Statute
objection to other evidence his opponent admits does not fall within that
exception. Accordingly, we affirm the special referee's decision.

B. Statute of Limitations

Appellants contend the statute of limitations does bar their collection
claim to the $50,000 Nandwani note because of partial payment made in June
1999. We disagree.
Generally, an action to enforce the obligation to pay must be
commenced within three years. S.C. Code Ann. § 15-3-530 (2005).7
However, if payment is made towards the note after the applicable limitations
has passed, the cause of action to enforce payment on a note begins to accrue
again. Wolfe v. Brannon, 211 S.C. 282, 286, 44 S.E.2d 833, 835 (1947).
Note 2 of section15-3-530 states "[p]atrial payment on a note within the
[three-year] period immediately preceding the bringing of an action therein
will remove the bar of the statute." (citing Zaks v. Elliot, 106 F.2d 425, 427
(1939)). A cause of action against the obligor accrues upon demand. Section
36-3-122 of the South Carolina Code (2003)8.

Appellants presented (1) a copy of the $50,000 note, (2) Navlani's
ledger entries, (3) Sammy's testimony of Partnership's partial payment, (4) a
copy of a $6,000 check from Partnership's account dated June 2, 1999, and
(5) a handwriting expert to testify to Navlani's signature. At trial, Partnership
and Respondent's arguments relied heavily on the fact the accounts did not
show a debt for the $50,000 note and that Rabon was not aware of the $6,000
payment being made.

The promissory note was signed in April 1989 and the $6,000 check
was written on June 1, 1999. The special referee found Rabon's lack of
knowledge of the check being written as a significant factor in deciding this
issue. Rabon testified he had access to Partnership's bank accounts and tax
returns to provide accounting services to Partnership, yet he did not know
about the promissory note or the check. Rabon stated he monitored and
maintained Partnership's accounts for tax returns based on whichever partner
brought the books and records to him. Navlani was the partner providing the
records to Rabon during this time period.

7
§15-3-530 was amended in 1988 to reduce the limitations period from six to
three years. .
8
Section 36-3-118 of the South Carolina Code (Supp. 2011) was amended in
2008 to affirmatively state the scope of Article 3 of the commercial code,
including the statute of limitations. 2008 South Carolina Laws Act 204 (S.B.
936) Official Comment 1. At the commencement of this action section 15-3-
530 provided the statute of limitations for both secured and unsecured notes.
The special referee was presented with contradictory evidence from
both parties. Under our scope of review, this court "must affirm the special
referee's factual findings, unless there is no evidence that reasonably supports
those findings." Roberts v. Gaskins, 327 S.C. 478, 483, 486 S.E.2d 771, 773
(Ct. App. 1997). The special referee found no documented payments were
made on the note, as the note did not appear on the accounts as debts or
money paid or owed by Partnership, and the accountant was not aware of the
debt. Therefore, we affirm, relying on the special referee and his advantage
to make credibility determinations of the witnesses before him.

C. Guarantor Liability

Appellants contend both Nandwani notes contain personal guaranties
and the special referee should have addressed these guarantees in the
amended order. We agree.

"A guaranty of payment is an absolute or unconditional promise to pay
a particular debt if it is not paid by the debtor at maturity." AMA Mgmt.
Corp. v. Strasburger, 309 S.C. 213, 219, 420 S.E.2d 868, 872 (Ct. App.
1992). "It is a personal obligation running directly from the guarantor to the
creditor which is immediately enforceable against the guarantor upon default
of the debtor." Id.; see Peoples Fed. Sav. & Loan Ass'n v. Myrtle Beach Ret.
Grp., Inc., 300 S.C. 277, 280, 387 S.E.2d 672, 674 (1989). "Unless the debt
instrument or the instrument of guaranty prohibits assignment, an assignment
does not release the guarantor, who is discharged only when the underlying
debt has been paid or otherwise satisfied in full." AMA Mgmt. Corp., 309
S.C. at 219, 420 S.E.2d at 872.

Because the members of Partnership signed the notes both as members
and guarantors, the Nandwani notes include both partnership liability and
guarantor liability. The special referee erred in only addressing partnership
liability in the amended order. Under a guarantor analysis, the $50,000
Nandwani note is still barred by the statute of limitations; thus any guarantor
claims would also be time-barred. In regards to the $160,000 note, which the
special referee determined to be properly payable, both Appellants and
Respondent have the right to pursue the claim for payment against the
individuals who signed the promissory note as guarantors. Therefore, we
modify the referee's order and find the guarantors are liable for the $160,000
note.

D. Principal Amounts Owed on the Nandwani Notes

Appellants argue the special referee erred in finding the amounts
payable on both Nandwani notes. They contend the evidence does not
support the finding they are only entitled collect $53,000 on the $160,000
promissory note and nothing on the $50,000 note. We disagree.

"In an action at law, the appellate court will correct any error of law,
but it must affirm the special referee's factual findings unless there is no
evidence that reasonably supports those findings." Roberts, 327 S.C. at 483,
486 S.E.2d at 773.

The special referee provided a thorough explanation of his ruling in the
order. The special referee's determination was based on a careful review of
Partnership's records, exhibits, the testimony of Rabon, the record of
principal paid on the $160,000 Nandwani note, a $9,000 loan made to the
Partnership by Appellants, and the decision the $50,000 note was barred by
the statute of limitations, as discussed in the previous section.

Two significant decisions went into the special referee's determination
of the amount payable on the $160,000 note. The first is a $25,000 payment
on September 9, 1993, to Kenny. The special referee's order determining the
reduction of the $25,000 was based on the evidence presented by defendant's
exhibits 50, 52, and 60. The record contains only exhibit 60, which shows a
payment of $25,000 for "note pay." No evidence in the record contradicts
the referee's finding that the $25,000 was applied to the outstanding debt for
the promissory note, and without the other exhibits, this court may conclude
the $25,000 check was for the payment of the $160,000 note. See Rule
210(h), SCACR (stating the appellate court will not consider any fact that
does not appear in the record on appeal); see also State v. Carlson, 363 S.C.
586, 608, 611 S.E.2d 283, 294 (Ct. App. 2005) (stating the appellant bears
the burden of presenting a sufficient record to allow review).

The second decision by the special referee is the application of the
$6,000 check to the payment of the outstanding debt on the $160,000 note.
While the accountant had no accounting record of the check, the check was
written and credit of payment should be credited towards the payment of
Partnership's outstanding debt. Because the check was not traceable to the
debt barred by the statute of limitations on the $50,000 note, as discussed
previously, the special referee correctly applied the amount paid on the debt
to the $160,000 note.

Evidence in the record supports the determination that John did assign
$60,000 of the $160,000 note to Navlani's heirs. The exhibits cited in the
order for this finding were not included in the record on this appeal. See
Rule 210, SCACR (stating the appellate court will not consider any fact
which does not appear in the record on appeal); see also Carlson, 363 S.C. at
608, 611 S.E.2d at 294 (stating the appellant bears the burden of presenting a
sufficient record to allow review). However, the signed assignment of
$60,000 of the $160,000 Nandwani note is in the record and can be relied on
by this court. Because evidence supports the assignment from John to
Navlani, this increases the principal owed to the Navlani heirs and reduces
the amount payable to Appellants. Accordingly, we affirm the special
referee's decision on this matter.

E. Assignable Rights of the Navlani Notes

Appellants argue the special referee erred in determining the Uniform
Commercial Code (UCC) did not apply to the question of whether the
Navlani notes were assignable under the probate code. They contend the
UCC establishes whether the promissory note is negotiable. They further
assert that because the Navlani notes were not properly assigned, the Navlani
heirs did not have a transferable interest in the notes at the time the notes
were assigned to Respondent. We disagree.
The special referee and Respondent cite section 62-3-101 of the South
Carolina Code (2009) for the proposition that real property transfers at death
from the decedent directly to his heirs or devisees. Section 62-3-101 states:

Upon the death of a person, his real property
devolves to the persons to whom it is devised by his
last will or to those indicated as substitutes for them
in cases involving lapse, renunciation, or other
circumstances affecting the devolution of testate
estates, or in the absence of testamentary disposition,
to his heirs, or to those indicated as substitutes for
them in cases involving renunciation or other
circumstances affecting the devolution of intestate
estates, subject to the purpose of satisfying claims as
to exempt property rights and the rights of creditors,
and the purposes of administration, particularly the
exercise of the powers of the personal representative
under §§ 62-3-709, 62-3-710, and 62-3-711, and his
personal property devolves, first, to his personal
representative, for the purpose of satisfying claims as
to exempt property rights and the rights of creditors,
and the purposes of administration, particularly the
exercise of the powers of the personal representative
under §§ 62-3-709, 62-3-710, and 62-3-711, and, at
the expiration of three years after the decedent's
death, if not yet distributed by the personal
representative, his personal property devolves to
those persons to whom it is devised by will or who
are his heirs in intestacy, or their substitutes, as the
case may be, just as with respect to real property.

(emphasis added). Appellants argue the assignment of the note occurred
prior to the expiration of the three-year period for devolving the interest, thus
making the notes improperly assigned by Navlani's heirs in their transfer to
Respondent.
The special referee also cited section 62-3-101 for the proposition that
the notes had devolved to the named heirs because the three-year period had
passed by the time this case was before him. A plain reading of the statute
does not bear out this portion of the special referee's analysis. The statute
contemplates (1) real property passing to heirs at the time of a decedent's
death and (2) personal property passing by (a) the opening of an estate or (b)
estate property being passed to heirs in the absence of a personal
representative's action after the accrual of a three year period. In this case,
the determination of whether Navlani's heirs had a right to assign their
interest in the notes is dependent on whether the promissory notes, secured by
Bon Villa, were real or personal property for the purpose of probate.

Real property is "[l]and and anything growing on, attached to, or
erected on it, excluding anything that may be severed without injury to the
land. Real property can be either corporeal (soil and buildings) or
incorporeal (easements)." Black's Law Dictionary 1337 (9th ed. 2009).
Incorporeal property is an in rem proprietary right that includes
encumbrances like leases, mortgages, and servitudes. Id. at 1336. "A
mortgagee has both an in personam claim against the mortgagor on the debt
or obligation and an in rem action against the security." Ralph E. Boyer,
Survey of the Law of Property 513 (3d ed. 1981).

The probate code does not define real property. However, section 12-
37-10 of the South Carolina Code (2000) defines real property for the
purpose of assessment of property taxes to mean "not only land, city, town
and village lots but also all structures and other things therein contained or
annexed or attached thereto which pass to the vendee by the conveyance of
the land or lot." Furthermore, in section 31-3-20(14) of the South Carolina
Code (2007), the phrase real property for the housing authority includes
"lands, lands under water, structures and any and all easements, franchises
and incorporeal hereditaments and every estate and right therein, legal and
equitable, including terms for years and liens by way of judgment, mortgage
or otherwise."

Because a mortgage is real property in South Carolina, the Navlani
heirs had the right to assign the notes under section 62-3-101 prior to the
estate being probated under the intestacy statute. Therefore, we affirm the
special referee's decision to uphold the assignment by the Navlani heirs to
Respondent.

II. Prior Litigation

A. Res Judicata/Collateral Estoppel

Appellants contend because Respondent could have raised the breach
of fiduciary duty claim and issues concerning the eviction of Partnership in
the prior suit with JVN, Respondent is barred by res judicata on the breach of
fiduciary duty claim and is further barred by collateral estoppel from bringing
these issues against Appellants in this lawsuit. We disagree.

Under the doctrine of res judicata, a final judgment on the merits in a
prior action will preclude the parties from re-litigating any claims actually
litigated or those that might have been litigated in the first action. Hilton
Head Ctr. of S.C., Inc. v. Public Serv. Comm'n, 294 S.C. 9, 11, 362 S.E.2d
176,176 (1987). To establish res judicata, three elements must be shown: (1)
identity of the parties; (2) identity of the subject matter; and (3) adjudication
of the issue in the former suit. Sealy v. Dodge, 289 S.C. 543, 545, 347
S.E.2d 504, 504 (1986). "Res judicata also bars subsequent actions by the
same parties when the claims arise out of the same transaction or occurrence
that is the subject of a prior suit between those parties." Sub-Zero Freezer
Co. v. R.J. Clarkson Co., 308 S.C., 188, 190-91, 417 S.E.2d 569, 571 (1992).

In this action, Respondent pled a breach of fiduciary duty against
Appellants based on their involvement with the purchase, ownership, and
operation of lots 3 and 4 in connection with Appellants' membership in
Partnership. Additionally, Respondent pled the damages resulting from such
breach to Partnership's assets and ownership of those assets to Partnership
and partners, individually. In the prior order from the JVN action, the trial
court found "the issues of ownership of the various lots, whether owned or
leased, which were partnership assets as of 1996, are specifically not
addressed in the Settlement Agreement or this Order." "Neither are the
various partners' equity and percentage of ownership in these lots addressed
herein and the same shall be determined at a later [h]earing."

The special referee correctly determined res judicata did not bar
Respondent in this action because (1) the trial court's order in the JVN action
did not address Partnership property, (2) Appellants' breach of fiduciary duty
had not occurred at the time of the counterclaim, and (3) the time for
additional pleadings had passed under Rule 15, SCRCP.

The trial court's order in the JVN action provided that a separate
hearing would determine issues of ownership of Partnership's assets. The
breach of fiduciary duty raised in this appeal is one arising out of the property
excluded from the trial court's order and settlement agreement. Additionally,
the breach of the fiduciary duty pled in this case involves the eviction of
Partnership and the failure of Appellants to notify the other partners under
their obligations of good faith and loyalty. Litigation with JVN commenced
in 1999, prior to the eviction and ejectment by J's and Appellants. While the
parties are comprised of the same individuals, the subject matter before the
trial court was a separate and distinct cause of action.

"Under the doctrine of collateral estoppel, also known as issue
preclusion, when an issue has been actually litigated and determined by a
valid and final judgment, the determination is conclusive in a subsequent
action whether on the same or a different claim." Zurcher v. Bilton, 379 S.C.
132, 135, 666 S.E.2d 224, 226 (2008). "While the traditional use of collateral
estoppel required mutuality of parties to bar relitigation, modern courts
recognize the mutuality requirement is not necessary for the application of
collateral estoppel where the party against whom estoppel is asserted had a
full and fair opportunity to previously litigate the issues." Snavely v.
AMISUB of S.C., Inc., 379 S.C. 386, 398, 665 S.E.2d 222, 228 (Ct. App.
2008) (emphasis added) (citing Beall v. Doe, 281 S.C. 363, 370-71, 315
S.E.2d 186, 190-91 (Ct. App. 1984)). "[H]owever, to assert collateral
estoppel successfully, the party seeking issue preclusion still must show that
the issue was actually litigated and directly determined in the prior action and
that the matter or fact directly in issue was necessary to support the first
judgment." Beall, 281 S.C. at 371, 315 S.E.2d at 191 (emphasis added).
In this case, Respondent did not have a full and fair opportunity to
litigate the breach of fiduciary duty within the factual context of evicting
Partnership in the prior litigation. A fiduciary duty can be held by more than
one person and in more than one circumstance. The fact the issue of a
fiduciary duty was litigated previously does not stop another from breaching
his or her own fiduciary duty later. Thus, the breach being claimed in this
case is a separate issue warranting a separate determination. Therefore, we
find the special referee correctly found neither res judicata nor collateral
estoppel barred Respondent's claim for breach of fiduciary duty.

B. Settlement Agreement

Appellants argue the express terms of the settlement agreement bar the
claims against them in this case. The record supports the special referee's
interpretation and finding that matters regarding partnership assets and
ownership interests were "reserved to be determined at a later hearing."
Therefore, we affirm the special referee's determination that Appellants'
breach of fiduciary duty was not barred by the settlement agreement.

III. Property

A. Breach of Fiduciary Duty

Appellants argue the special referee erred in determining they breached
their fiduciary duty to Partnership when J's purchased lots 3 and 4.
Appellants suggest the evidence in the record does not support a breach of
fiduciary duty. We disagree.

"A claim of breach of fiduciary duty is an action at law [,] and the trial
judge's findings will be upheld unless without evidentiary support." Jordan v.
Holt, 362 S.C. 201, 205, 608 S.E.2d 129, 131 (2005). "Partners are
fiduciaries [to each other] and their relationship is one of mutual trust and
confidence, imposing upon them requirements of loyalty, good faith, and fair
dealing." Redwend Ltd. P'ship v. Edwards, 354 S.C. 459, 475, 581 S.E.2d
496, 505 (Ct. App. 2003); accord Few v. Few, 239 S.C. 321, 336, 122 S.E.2d
829, 836 (1961). "A fiduciary relationship is founded on the trust and
confidence reposed by one person in the integrity and fidelity of another."
Ellis v. Davidson, 358 S.C. 509, 519, 595 S.E.2d 817, 822 (Ct. App. 2004);
Regions Bank v. Schmauch, 354 S.C. 648, 670, 582 S.E.2d 432, 444 (Ct.
App. 2003). "Parties in a fiduciary relationship must fully disclose to each
other all known information that is significant and material, and when this
duty to disclose is triggered, silence may constitute fraud." Ellie, Inc.v.
Miccichi, 358 S.C. 78, 100, 594 S.E.2d 485, 497 (Ct. App. 2004) (quoting
Anthony v. Padmar, Inc., 320 S.C. 436, 449, 465 S.E.2d 745, 752 (Ct. App.
1995)).

South Carolina case law recognizes the fiduciary duty owed between
partners. Moore v. Moore, 360 S.C. 241, 252, 599 S.E.2d 467, 473 (Ct. App.
2004). The court held in Lawson v. Rogers:

The law holds each member of a partnership to the
highest degree of good faith in his dealings with
reference to any matter which concerns the business
of the common engagement, and each partner, being
the agent of the firm, must be held to the same
accountability as other trustees, in all matters which
affect the common interest. The relationship of a
partnership is fiduciary in character and imposes on
the members the obligation of refraining from taking
any advantage of one another by the slightest
misrepresentation or concealment.

312 S.C. 492, 498-99, 435 S.E.2d 853, 857 (1993); see also Edwards v.
Johnson, 90 S.C. 90, 99, 72 S.E. 638, 642 (1911) (stating each member of a
partnership is held to the highest degree of good faith in his dealings with
reference to any matter concerning the business of the common engagement,
and each partner, being an agent of the firm, must be held, during the
existence of the relation, to the same accountability as other trustees in all
matters affecting the common interest).
Appellants contend they acted within the confines of the law in their
purchasing of lots 3 and 4 and did not breach their fiduciary duty to
Partnership. Kenny testified Mrs. Smith approached him with the offer to
sell the lots only after Partnership refused to purchase the lots. Following the
purchase, the Appellants argue they were entitled to evict Partnership under
the leasehold agreement and section 27-37-10 of the South Carolina Code
(2007).9 Furthermore, they contend they should not be held liable for the
demolition of Bon Villa because proper ejectment occurred.

In this case, Appellants' undisclosed purchase of the property was
intimately connected with Partnership's purpose and function. Kenny's
testimony that Mrs. Smith contacted him does not lessen his duty Partnership
because the line of communication between Kenny and Mrs. Smith existed
due to his role in Partnership. Mrs. Smith stated in her deposition that she
knew Appellants because of their involvement with the payment of
Partnership's taxes in the past. The option to purchase was made through a
partner relationship and is statutorily guarded under section 33-41-540 of the
South Carolina Code (2006). Furthermore, Appellants were aware
Partnership had been interested in purchasing the fee tail previously and
owed a duty to inform all of the partners of the opportunity, as provided in
the statute. Appellants, as fiduciaries, violated their obligations of mutual
loyalty, good faith, and fair dealing. Redwend Ltd. P'ship, 354 S.C. at 475,
581 S.E.2d at 505.

The more troubling breach of fiduciary duty by Appellants is their
inaction regarding the notification of the eviction process and the demolition
of Bon Villa. Appellants, as members of Partnership, are in a fiduciary
relationship requiring they disclose to each partner all information that is
significant and material. Ellie Inc., 358 S.C. at 100, 594 S.E.2d at 497. J's
does not have this duty, but Appellants are held to a higher standard. As
discussed with the notice requirements for the Rule to Show Cause, infra,
failure to show proof of delivery is not an automatic failure of service under
Rule 4; however, when applied to the duties required of partners, this is a
9
Section 27-37-10 states a tenant may be ejected when "the terms or
conditions of the lease have been violated."
substantial breach of a fiduciary duty. Appellants were informed of
significant and substantial information affecting the interest of Partnership
and failed to act with good faith and loyalty towards the other partners.
Strong evidence of Appellants' bad faith is Appellants' decision not to pay the
1999 property taxes or seek payment of taxes by Partnership or its other
members.

Appellants' brief argues in great detail that the special referee erred in
finding "no evidence [Respondent] acted with unclean hands against
[Appellants]," which they asserted as a defense to the breach of fiduciary
duty claimed by Respondent. Neither the special referee's finding nor this
equitable defense by Appellants affect Appellants' fiduciary duty owed to
Partnership. To sustain an equitable defense of unclean hands, there must be
(1) inequitable conduct by the plaintiff, (2) related directly to the subject
matter of the litigation, which (3) causes prejudice or injury to the defendant.
This court's holding in Navlani v. Bhambhani is independent of Appellants'
breach of fiduciary duty in this case. Appellants' decisions to purchase lots 3
and 4 and then evict Partnership were not legally connected with
Respondent's mismanagement of money or the court ordered repayment of
funds to Partnership. Accordingly, evidence supports the special referee's
finding that Appellants breached their fiduciary duty toward Partnership and
the partners.

B. Judgment for $631,838

Appellants argue the special referee erred in finding Partnership is
entitled to a judgment of $631,838 for breach of Appellants' fiduciary duty.
We disagree.

A party cannot complain about the valuation of an asset by a court
when the party fails to present a valuation. S.C. Dep't of Transp. v. M & T
Enters. of Mt. Pleasant, LLC, 379 S.C. 645, 672, 667 S.E.2d 7, 22 (Ct. App.
2008). "Generally, in order for damages to be recoverable, the evidence
should be such as to enable the court or jury to determine the amount thereof
with reasonable certainty or accuracy." Whisenant v. James Island Corp.,
277 S.C. 10, 13, 281 S.E.2d 794, 796 (1981). "While neither the existence,
causation nor amount of damages can be left to conjecture, guess or
speculation, proof with mathematical certainty of the amount of loss or
damage is not required." Id.

"Ordinarily a property owner, who is familiar with his property and its
value, may give his estimate of its value or the damage inflicted upon it even
though he is not an expert." Barton v. Superior Motors, Inc., 309 S.C. 491,
494, 424 S.E.2d 524, 526 (Ct. App. 1992); see also Abercrombie v.
Abercrombie, 372 S.C. 643, 647, 643 S.E.2d 697, 699 (Ct. App. 2007)
(recognizing general rule in South Carolina that a property owner is
competent to offer testimony as to the value of his property).

The fact [the special referee] heard the evidence and
was more familiar than we with the evidentiary
atmosphere at trial gives [the special referee], we
think a better informed view than we have. This is
particularly true when the elements of damage are
intangibles and the appraisal depends somewhat on
the observation of the [witnesses] and evaluation of
their testimony.

Jordan, 362 S.C. at 207, 608 S.E.2d at 132.

Testimony in the record supports the special referee's view that Bon
Villa was worth $631,838 based on the 1997 federal tax return. Appellants
suggest the evidence in the record does not support such a finding on the
grounds (1) Partnership did not have a successful business venture with Bon
Villa; (2) a portion of Partnership's properties had been condemned by the
city of Myrtle Beach; (3) the lease agreement provided the definition of
abandonment, which Appellants assert had occurred; and (4) Partnership's
assets were valued at $241,254 in 2000, as discussed in a prior opinion by
this court.

Appellants reference both the condemnation action and the valuation of
property discussed in Navlani v. Bhambhani. Appellants did produce
evidence of the condemnation action and provided testimony at the trial of
the condemnation and the state of the property at the time J's evicted
Partnership. However, Appellants provided no evidence to support a
different fair market value of the property at the time of condemnation or the
demolition of Bon Villa. Furthermore, Appellants reference to this court's
holding in Navlani v. Bhambhani for the value of the property is misplaced.
The $241,250 figure in that case is the value of the disbursements taken by
Respondent, not the value of the property. Also, the accounting for the
fiduciary breach in that case is not the same because the values of the
buildings were not the subject of the assets being discussed by the court.
Therefore, we affirm the special referee's determination that Respondent is
entitled to a judgment of $631,838, as evidence exists in the record to support
his decision.

C. Service of Rule to Show Cause for Eviction

Appellants contend evidence fails to support the finding that the
partners and Partnership were not properly notified of the eviction of
Partnership from lots 3 and 4. Appellants argue they served the eviction
action on Partnership by three methods, which demonstrates adequate
notification was given and the requirements for the eviction's Rule to Show
Cause were met. The special referee found no evidence to support the Rule
to Show Cause was affixed to the Bon Villa. Therefore, the special referee
determined by the preponderance of the evidence, the ruling on the
Appellants' breach of fiduciary duty could not be changed. This court need
not reach this issue because the determination does not affect whether
Appellants are liable for breach of fiduciary duty. See Futch v. McAllister
Towing of Georgetown, Inc., 335 S.C. 598, 613, 518 S.E.2d 591, 598 (1999)
(providing an appellate court need not review remaining issues when its
determination of a prior issue is dispositive of the appeal).

CONCLUSION

Based on all of the foregoing, the order of the special referee is

AFFIRMED AS MODIFIED.
FEW, C.J., and THOMAS and KONDUROS, J.J., concur.