Map shows the location of a parcel that extends from Andy’s Express Wash east toward Lindenberger Road.
A lawsuit between two developers in Menifee could have an impact on the sales value of undeveloped land on the north side of Newport Road east of Menifee Road.
On Dec. 17, the Menifee City Council approved the filing of a parcel map that will divide a 28-acre parcel into two separate parcels of 15 and 13 acres. The land is owned by Diamond Brothers Five Partnership LP, which has previously sold three parcels in that area to developer Andy Sehremelis. According to Ron Sullivan, a general partner in Diamond Brothers Five Partnership, company officials believe it will be easier to sell both parcels to developers if they are smaller in size.
The concern, Sullivan said, is that it will be difficult to sell the parcels as commercial centers if the court rules that they cannot include certain kinds of full-size grocery stores.
Sullivan said that in 2023, Diamond Brothers Five Partnership had agreed to sell the entire 28-acre parcel to Shea Properties, which planned to build a grocery store, restaurant, and two drive-through businesses on the property. The sale fell through, Sullivan said, after officials of Shea Properties learned about restrictions in an agreement between Diamond Brothers Five and Sehremelis.
The agreement, a legal document described as a covenant, was granted by Diamond Brothers Five at the request of Sehremelis, who in 2015 purchased land from Diamond Brothers Five on which he built an ARCO gas station, AM-PM minimart and a car wash on the northeast corner of Newport and Menifee roads.
Diamond Brothers Five subsequently sold parcels on the southwest corner of that intersection to Sehremelis, who in 2016 opened a Rite Aid store and in 2017 an Archibald’s restaurant.
Also in 2017, the parties agreed to a covenant that was Sehremelis’ attempt to restrict competition to his businesses. Included in the covenant was a clause stating that developers within a 3-mile radius of the ARCO station, minimart and car wash could not build “fueling stations, convenience stores, or car washes” on that property.
Sullivan said that the 2023 pullout of Shea Properties was due to company officials’ fear that the covenant could potentially prevent Shea Properties from building a grocery store on the property. At issue was whether the covenant precluded the presence of grocery stores that have on-site kitchens.
Diamond Brothers Five argued that the covenant did not prevent the construction of a grocery store, only a convenience store. In October 2024, Diamond Brothers Five filed a lawsuit against Sehremelis and his company Menifee Auto Care LLC, claiming that Sehremelis refused to amend the covenant to include allowing a full-size grocery store or provide his clarification of the clause mentioning “groceries.”
According to Diamond Brothers Five’s complaint in the lawsuit, Sehremelis demanded a $2 million payment before he would agree to such an amendment.
“We could sell the land even with the lawsuit going, but the project couldn’t include a grocery store,” Sullivan said. “According to the retired judge who handled the mandatory settlement conference, even if we win the lawsuit, he will just appeal. That would be another 2 ½-year process.
“Andy can pay his attorney $100,000 to file an appeal. We estimate that his profit is $25,000 a week. He can afford to lose this lawsuit. On appeal, he still comes out money ahead.”
Sullivan said that, under Diamond Brothers Five’s interpretation of the covenant language, a full-size grocery store would be allowed. Sehremelis says that is not necessarily true.
In an email to Menifee 24/7, Sehremelis said, “At no time did I ever prevent a market development (referring to the Shea Properties issue). The market, whoever they may be, was not willing to change their model to accommodate the recorded restrictions agreed to by Diamond Brothers and myself at the time I purchased their land.”
Sehremelis’ attorney, John Grienauer, said that the covenant protects Sehremelis’ business model.
“A convenience store’s income is generated by food prepared on the premises and drinks served in cups,” he said. “We are objecting to making food on the premises because that’s what the AM/PM does. Andy hasn’t expressed opposition to the construction of grocery stores. The objection he has is the presence of a grocery store that’s making food on the premises.”
Sehremelis has such an objection, Grienauer said, because his ARCO AM/PM minimart has a kitchen where baked goods and other foods are prepared on site.
“Not all grocery stores have that,” he said. “You take a Trader Joe’s; its food is delivered and sold as is. We have no objection to a Trader Joe’s. But a grocery store that prepares food on site would be in competition with Andy’s business model.”
A recent visit to the AM/PM by this reporter revealed that the minimart sells hamburgers, hot dogs, chicken sandwiches, breakfast sandwiches, and other food items. But the phrase “prepared on site” is open to interpretation. Many of these items are delivered pre-made and frozen to the AM/PM, where they are heated up and presented for sale at the time they are delivered, said an employee of the store.
In essence, much of this lawsuit is based on semantics – how certain terms are interpreted. The trial is scheduled for September.
