Contract – Construction Contract – Foreclosure

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Appellant unjustifiably breached a construction contract for his custom home, and we rejected his claims of negligence, fraud, SCUTPA violations, and breach of fiduciary duty.

We affirmed the judgment in Respondent’s favor.

A dispute arose from a construction contract between Respondent Montgomery Holdings, LLC, doing business as IBI Builders (IBI), and Appellant for the construction of a custom home. The original contract, executed in 2017, set a base price of $625,000 with additional payments for change orders and allowance overages. IBI was responsible for construction means and methods, and Appellant provided the home plans, which were slightly modified for his lot and personal requests. Over two years of construction, disputes arose regarding rework items and change orders, but these were largely addressed through communication. In May 2019, Appellant agreed to allow change order costs to be added to a project balance sheet while securing a home equity line of credit to pay them. IBI obtained a guaranty from Appellant confirming payment obligations, including past and future overages, with a waiver of certain defenses.

By October 2019, the project was nearing completion, with inspections indicating it was approximately 93% complete. When IBI requested payment for the outstanding balance, Appellant cited funding issues tied to obtaining a certificate of occupancy and terminated the contract on October 12, 2019, citing extensive rework and delays. IBI subsequently filed a mechanic’s lien and foreclosure action, along with a breach of contract claim, and Appellant counterclaimed against IBI and sued the company’s principal members individually for negligence, fraud, misrepresentation, SCUTPA violations, and breach of fiduciary duty. The cases were consolidated and heard by a master-in-equity in a four-day bench trial.

The master ruled in favor of IBI, finding Appellant had unjustifiably breached the contract first and that IBI had substantially performed its obligations. The judgment awarded IBI $402,861.66, including damages, interest, and attorney’s fees, and ordered the sale of Appellant’s property to satisfy the debt. The master also granted directed verdicts against Appellant on claims of negligence, fraud, misrepresentation, SCUTPA violations, and breach of fiduciary duty, noting he failed to establish damages, the existence of fiduciary duties, or public harm. The master found Appellant not credible and concluded that the construction, including change orders and disputed items, was performed in accordance with the plans and contract terms. Specific disputes, including basement ceiling height, driveway and boulder wall placement, retaining wall construction, and add-on costs, were either consistent with the contract, approved by Appellant, or unsupported by evidence of damages.

On appeal, Appellant argued the master erred in denying his directed verdict motions, improperly resolved legal issues, and made unsupported findings of fact. Wes rejected these claims, emphasizing the master’s credibility determinations, the sufficiency of evidence supporting contract performance, proper handling of change orders, and the absence of legal error. We also dismissed arguments regarding waiver of appeal rights due to IBI’s satisfaction of judgment, as federal precedent allows appeal despite payment unless an explicit compromise bars it.

Affirmed.

Montgomery Holdings LLC v. Merlo (Lawyers Weekly No. 001-010-26, 14 pp.) (Aphrodite K. Konduros, J.) Appealed from Oconee County (Steven C. Kirven, Master-in-Equity) Townes Boyd Johnson, III, of Townes B. Johnson III, LLC, of Greenville, for Appellant. Jason M. Tarokh, of Tampa, Florida, for Respondents. South Carolina Court of Appeals