Lenz v. Walsh, No. 3930 (NC 1/24/2005), No. 3930

CitationNo. 3930
Case DateJanuary 24, 2005
CourtUnited States State Supreme Court of North Carolina

Page 1

William A. Lenz, Respondent,
James L. Walsh, individually and as Trustee of the James L. Walsh Revocable Trust, and Marsha L. Walsh, individually and as Trustee of the Marsha L. Walsh Revocable Trust, Appellants.
No. 3930
Court of Appeals of North Carolina.
Heard December 14, 2004
Filed January 24, 2005

Appeal From Clarendon County Ralph F. Cothran, Master-in-Equity.

Charles Craig Young, of Florence, and J. Calhoun Land, IV, of Manning, for Appellants.

Marvin E. McMillan, Jr., of Sumter, for Respondent.


James L. Walsh and Marsha L. Walsh appeal from the master's ruling denying them recovery on their counterclaims against William A. Lenz, an unlicensed residential builder who was hired to construct their home. The Walshes contend the master erred in finding they could not recover on their counterclaims because they failed to prove damages in excess of the amount of the final unpaid draw due Lenz under the contract. They argue the master's finding effectively violates the South Carolina statute that prohibits an unlicensed residential builder from enforcing a construction contract. We affirm.


On March 30, 1996, the Walshes entered into a contract with Lenz to construct their home in the Wyboo Plantation subdivision of Manning, South Carolina. Lenz signed the document listing himself as the "contractor." The contract price was $120,960.00, with payments to be made in regular installments or "draws." The house was to be constructed according to plans and specifications attached to the contract. Lenz granted the Walshes allowances for the purchase of certain items used in construction of the home, such as cabinets, flooring, countertops, and appliances. The Walshes were responsible for paying any amount over the stated allowance. All other materials were included in the contract price.

Lenz obtained a building permit on April 10, 1996 and began construction on the home. During construction, the Walshes made changes in some of the materials for the home and often purchased items themselves without going through Lenz. Some of the materials the Walshes purchased, such as plumbing fixtures, light fixtures, and cabinets, were provided for either as part of the contract price or as a stated allowance. Lenz and the Walshes had some disagreements, and Lenz eventually halted construction after the Walshes failed to pay the amount he requested in a June 1997 letter for overages incurred for additional work and materials. The Walshes never paid the fifth and final draw of $18,000.00 due on the contract. The Walshes prohibited Lenz from coming on the property when the house was approximately ninety-five percent complete. The Walshes thereafter spent $2,792.65 on labor and $1,267.91 on materials to complete the house.

In August 1997, Lenz filed a notice for a mechanic's lien and a complaint for foreclosure of the lien and breach of contract. Lenz sought $14,377.58 for unpaid amounts due for construction of the home.

The Walshes answered, denying any amount was due, and counterclaimed for damages for breach of contract, fraud, and intentional infliction of emotional distress. They sought to recover amounts they personally expended for the construction of the house and also sought damages for alleged delays in construction.

The Walshes subsequently moved for summary judgment as to Lenz's complaint on the ground he was not a licensed residential builder as required by the South Carolina Code and was, therefore, statutorily prohibited from enforcing the contract. By order filed March 22, 1999, circuit court Judge Howard P. King granted the Walshes' motion and held Lenz was prohibited by then-section 40-59-130 of the South Carolina Code1 from pursuing any claim against the Walshes on the contract because he was not a licensed residential builder when he entered the contract.

The case was thereafter referred to a master-in-equity, Ralph F. Cothran, who held a hearing and thereafter concluded in an order dated January 22, 2002 that the Walshes were not entitled to recover on any of their counterclaims.

The master found Lenz had provided labor and materials in the amount of $13,695.58 that remained unpaid. He...

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