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Construction
9 min read
Areas of Expertise :
Construction Defect, Building Envelope, Building Moisture Intrusion, Forensic Engineering, Waterproofing
Published Date:
Last Modified Date:
Jurisdiction:
South Carolina State
Stoneledge at Lake Keowee Owners’ Association, Inc. brought suit against multiple developers, builders, and related entities over widespread defects in a luxury waterfront townhome project in Oconee County, South Carolina. The homeowners’ association alleged that faulty construction led to extensive moisture-related damage discovered after unit owners assumed control of the association. Following a lengthy trial, a jury returned verdicts against several defendants on claims including negligence, breach of implied warranty of workmanlike service, and breach of fiduciary duty, with damages tied to the cost of repairing building envelopes, decks, balconies, windows, and other exterior components affected by water intrusion. The case proceeded through multiple appeals, resulting in two published Court of Appeals decisions and subsequent review by the South Carolina Supreme Court.
In its 2021 opinions, the Supreme Court addressed issues central to a complex construction defect dispute, including jury instructions, directed verdict standards, application of the single business enterprise theory, statute of limitations, settlement setoff, and proper calculation of damages. The Court affirmed portions of the appellate rulings, reversed others, and remanded for recalculation of final judgment amounts consistent with its holdings. The decisions clarified how liability and damages should be evaluated in large-scale residential developments where systemic water intrusion, hidden rot, and exterior envelope failures emerge over time, providing guidance on appellate review of trial management and post-verdict adjustments in multi-defendant construction litigation.
Construction began on a luxury waterfront townhome development in Oconee County, South Carolina, with Bostic Brothers Construction, Inc. acting as the original general contractor. The project used stone cladding, shared decks, balconies, and exterior assemblies typical of waterfront multi-unit construction. These design and construction choices later became central to claims involving water intrusion and concealed moisture damage.
By late 2004, Bostic ceased operations at the site, leaving multiple units unfinished. Some buildings had completed exteriors but unfinished interiors, while others remained partially constructed. The record later connected these conditions to prolonged exposure of structural components and increased susceptibility to moisture infiltration.
IMK Development Company, LLC acquired the project and retained Marick Home Builders, LLC to complete Phase I. Site walkthroughs identified existing leaks and water-related damage around decks, porches, windows, and exterior assemblies. Although construction resumed and units were completed, evidence later showed that underlying water intrusion issues were not fully addressed.
A homeowners’ association was formed and controlled by IMK-affiliated representatives during this period. Control did not transfer to unit owners until 2008. This period of developer control later became relevant to fiduciary duty claims and to the timing of when construction defects were discovered.
After homeowners assumed control of the association, reports of leaks and structural deterioration increased. Destructive testing revealed extensive water intrusion affecting roofs, windows, balconies, firewalls, and foundations. The association concluded that the scope and cost of repairs exceeded available funds, prompting further investigation.
The homeowners’ association filed suit against developers, builders, and numerous subcontractors, asserting claims for negligence, breach of the implied warranty of workmanlike service, breach of the implied warranty of habitability, and breach of fiduciary duty. The action sought recovery of repair costs tied to construction defects involving moisture penetration and hidden deterioration. Extensive discovery followed, and several defendants resolved claims before trial.
At trial, the homeowners’ association presented testimony from forensic engineer Derek Hodgin regarding observed moisture-related damage and water intrusion affecting exterior components, including roofs, windows, balconies, firewalls, and foundations, and discussed how construction details related to the conditions observed. The defense presented expert testimony from Richard Moore, who described a narrower repair scope focused on targeted remediation rather than comprehensive replacement.
Following a two-week trial, the jury returned verdicts in favor of the homeowners’ association on claims for negligence, breach of implied warranty of workmanlike service, and breach of fiduciary duty. The jury considered competing expert analyses regarding the scope and cost of repairs and apportioned responsibility among the remaining defendants. Prior settlements with other parties were disclosed after the verdict, raising questions about cumulative damages and setoff.
The Court of Appeals issued two published opinions addressing jury instructions, directed verdict rulings, the single business enterprise theory, election of remedies, statute of limitations, and settlement setoff. The court affirmed certain trial rulings, reversed others, and adjusted aspects of the damages analysis. These decisions prompted cross-petitions for review by the South Carolina Supreme Court.
The South Carolina Supreme Court issued companion opinions resolving the appeals. The Court affirmed the application of the discovery rule to the statute of limitations, rejected the trial court’s post-verdict increase of damages, clarified limits on applying the single business enterprise theory, and corrected errors in calculating final judgment amounts. The case was remanded for entry of judgment consistent with these holdings, bringing the construction defect litigation to its final resolution.
Court:
Supreme Court of South Carolina
Case Name:
Stoneledge at Lake Keowee Owners’ Association, Inc. v. IMK Development Co., LLC
Building and Structure
Building Code Compliance
Construction Damages
Construction Inspections
Cost of Repair
Decks
Moisture Intrusion
Moisture Testing
Structural Damage
Water Intrusion
Stoneledge at Lake Keowee Owners’ Association, Inc. brought suit against multiple developers, builders, and related entities over widespread defects in a luxury waterfront townhome project in Oconee County, South Carolina. The homeowners’ association alleged that faulty construction led to extensive moisture-related damage discovered after unit owners assumed control of the association. Following a lengthy trial, a jury returned verdicts against several defendants on claims including negligence, breach of implied warranty of workmanlike service, and breach of fiduciary duty, with damages tied to the cost of repairing building envelopes, decks, balconies, windows, and other exterior components affected by water intrusion. The case proceeded through multiple appeals, resulting in two published Court of Appeals decisions and subsequent review by the South Carolina Supreme Court.
In its 2021 opinions, the Supreme Court addressed issues central to a complex construction defect dispute, including jury instructions, directed verdict standards, application of the single business enterprise theory, statute of limitations, settlement setoff, and proper calculation of damages. The Court affirmed portions of the appellate rulings, reversed others, and remanded for recalculation of final judgment amounts consistent with its holdings. The decisions clarified how liability and damages should be evaluated in large-scale residential developments where systemic water intrusion, hidden rot, and exterior envelope failures emerge over time, providing guidance on appellate review of trial management and post-verdict adjustments in multi-defendant construction litigation.
Construction began on a luxury waterfront townhome development in Oconee County, South Carolina, with Bostic Brothers Construction, Inc. acting as the original general contractor. The project used stone cladding, shared decks, balconies, and exterior assemblies typical of waterfront multi-unit construction. These design and construction choices later became central to claims involving water intrusion and concealed moisture damage.
By late 2004, Bostic ceased operations at the site, leaving multiple units unfinished. Some buildings had completed exteriors but unfinished interiors, while others remained partially constructed. The record later connected these conditions to prolonged exposure of structural components and increased susceptibility to moisture infiltration.
IMK Development Company, LLC acquired the project and retained Marick Home Builders, LLC to complete Phase I. Site walkthroughs identified existing leaks and water-related damage around decks, porches, windows, and exterior assemblies. Although construction resumed and units were completed, evidence later showed that underlying water intrusion issues were not fully addressed.
A homeowners’ association was formed and controlled by IMK-affiliated representatives during this period. Control did not transfer to unit owners until 2008. This period of developer control later became relevant to fiduciary duty claims and to the timing of when construction defects were discovered.
After homeowners assumed control of the association, reports of leaks and structural deterioration increased. Destructive testing revealed extensive water intrusion affecting roofs, windows, balconies, firewalls, and foundations. The association concluded that the scope and cost of repairs exceeded available funds, prompting further investigation.
The homeowners’ association filed suit against developers, builders, and numerous subcontractors, asserting claims for negligence, breach of the implied warranty of workmanlike service, breach of the implied warranty of habitability, and breach of fiduciary duty. The action sought recovery of repair costs tied to construction defects involving moisture penetration and hidden deterioration. Extensive discovery followed, and several defendants resolved claims before trial.
At trial, the homeowners’ association presented testimony from forensic engineer Derek Hodgin regarding observed moisture-related damage and water intrusion affecting exterior components, including roofs, windows, balconies, firewalls, and foundations, and discussed how construction details related to the conditions observed. The defense presented expert testimony from Richard Moore, who described a narrower repair scope focused on targeted remediation rather than comprehensive replacement.
Following a two-week trial, the jury returned verdicts in favor of the homeowners’ association on claims for negligence, breach of implied warranty of workmanlike service, and breach of fiduciary duty. The jury considered competing expert analyses regarding the scope and cost of repairs and apportioned responsibility among the remaining defendants. Prior settlements with other parties were disclosed after the verdict, raising questions about cumulative damages and setoff.
The Court of Appeals issued two published opinions addressing jury instructions, directed verdict rulings, the single business enterprise theory, election of remedies, statute of limitations, and settlement setoff. The court affirmed certain trial rulings, reversed others, and adjusted aspects of the damages analysis. These decisions prompted cross-petitions for review by the South Carolina Supreme Court.
The South Carolina Supreme Court issued companion opinions resolving the appeals. The Court affirmed the application of the discovery rule to the statute of limitations, rejected the trial court’s post-verdict increase of damages, clarified limits on applying the single business enterprise theory, and corrected errors in calculating final judgment amounts. The case was remanded for entry of judgment consistent with these holdings, bringing the construction defect litigation to its final resolution.
1. Forensic Engineering Expert Witness (Plaintiff)
A forensic engineer, Derek Hodgin, testified at trial on behalf of the homeowners’ association regarding the physical condition of the townhomes and observed moisture-related damage. His testimony addressed water intrusion pathways and deterioration affecting exterior components, including roofs, windows, balconies, firewalls, and foundations, and discussed how construction details related to those conditions. The jury considered this engineering evidence in assessing causation issues and the nature of the alleged construction defects.
2. Cost of Repair and Estimating Expert Witness (Plaintiff and Defense)
The trial record reflects expert testimony comparing alternative repair scopes and associated cost estimates related to correcting the identified construction defects. The homeowners’ association presented cost evidence supporting a comprehensive repair approach, while the defense offered a narrower remediation strategy with lower estimated costs. These competing repair analyses informed the damages issues presented to the jury and later formed part of the damages-related questions addressed on appeal.
3. Construction Defect Expert Witness
The case centered on systemic failures in building envelopes, moisture management, and exterior assemblies rather than isolated workmanship issues. In litigation of this nature, construction defect experts are often engaged to explain how construction practices and sequencing contribute to widespread water intrusion and concealed damage.
4. Business Transaction Expert Witness
In cases involving complex development and construction arrangements, business transaction experts are sometimes consulted to provide context regarding ownership relationships, organizational structure, and operational coordination among affiliated entities.
1. Early Defect Discovery and the Discovery Rule Shape Limitations Defenses
Stoneledge demonstrates that construction defect claims involving hidden water intrusion and concealed deterioration often depend on when defects were reasonably discoverable, not when construction ended. Courts closely evaluate evidence of developer control, delayed homeowner access, and destructive testing when applying the discovery rule. Attorneys should build a detailed factual record showing how and when building envelope failures and moisture-related damage became apparent.
2. Jury Verdict Management Is Critical in Multi-Claim Construction Defect Trials
The case highlights the importance of clear verdict forms and jury instructions when multiple defect-based claims arise from the same construction failures. Uncertainty over whether damages are cumulative can complicate post-verdict rulings and appellate review. Trial counsel should proactively address how repair costs for systemic construction defects are allocated across overlapping liability theories.
3. Engineering Evidence Drives Causation and Repair Scope in Water Intrusion Litigation
Forensic engineering testimony was central to explaining how roofs, balconies, decks, windows, firewalls, and related exterior assemblies allowed moisture intrusion to spread throughout the structures. Competing repair scopes illustrated how expert analysis can significantly influence damages calculations in construction defect cases. Attorneys should ensure expert opinions are grounded in physical evidence and aligned with accepted construction and building science principles.
4. Single Business Enterprise Theories Require Focused and Fact-Specific Proof
The Supreme Court clarified that related developers and builders are not automatically treated as a single enterprise in construction defect litigation. Courts require concrete evidence of unified operations and inequitable conduct before disregarding separate corporate identities. Counsel should concentrate on documented operational control, financial integration, and decision-making authority connected to the defective construction work.
5. Settlement Setoff and Post-Verdict Adjustments Demand Careful Accounting
Stoneledge illustrates how prior settlements with subcontractors and related parties can materially affect final judgment amounts in large construction defect actions. Courts examine whether settlements compensate for the same repair costs addressed by the jury’s verdict. Attorneys should maintain precise settlement records and present clear accounting to avoid errors in final damages calculations.
The Stoneledge at Lake Keowee litigation illustrates how complex residential development disputes can unfold when latent construction issues surface years after initial completion. Through multiple trial phases and layered appellate review, the case demonstrates the importance of careful trial management, precise jury instructions, and disciplined post-verdict analysis in multi-defendant matters. The South Carolina Supreme Court’s decisions emphasize adherence to established legal standards when evaluating evidence, allocating responsibility, and correcting damages calculations, reinforcing the role of appellate courts in ensuring consistent application of construction-related liability principles.
More broadly, the case offers guidance for attorneys handling construction defect claims involving systemic water intrusion, building envelope failures, and concealed deterioration. It highlights the need for thorough investigation, well-supported engineering analysis, and clear documentation of repair scope and costs when defects affect multiple exterior assemblies over time. Stoneledge underscores how courts assess construction defect allegations in large residential developments, providing a measured framework for evaluating causation, damages, and legal accountability while balancing the interests of homeowners, developers, and builders.
What was the Stoneledge at Lake Keowee lawsuit about?
The case involved claims that defective construction in a luxury waterfront townhome development caused widespread water intrusion and hidden moisture damage. The homeowners’ association sought recovery for repair costs tied to building envelope failures affecting roofs, decks, balconies, windows, and other exterior components. The dispute focused on whether construction practices and project oversight contributed to long-term deterioration.
When did the construction defects at Stoneledge become known?
Significant issues emerged after homeowners assumed control of the association, when reports of leaks and structural deterioration increased. Destructive testing later revealed concealed damage that was not readily visible during earlier occupancy. The timing of discovery played a key role in how courts evaluated the construction defect claims.
What types of construction defects were alleged in the case?
The allegations centered on systemic water intrusion, improper exterior assemblies, and failures in moisture management. These conditions affected multiple parts of the building envelope. The case addressed how interconnected construction defects can cause widespread damage over time rather than isolated workmanship problems.
Why did the case go through multiple appeals?
After the jury verdict, the parties disputed several legal and procedural issues, including how damages were calculated and whether liability was properly allocated. The South Carolina Court of Appeals and Supreme Court reviewed these issues to ensure correct application of existing law. The appellate process resulted in partial affirmances, reversals, and a remand for recalculation of final judgment amounts.
How did the courts approach damages in the construction defect claims?
Damages were tied to the cost of repairing the defective construction rather than replacement of the entire development. Courts examined whether repair costs reflected the scope of water intrusion and related deterioration. The decisions emphasized accuracy in allocating damages across overlapping construction defect claims.
1. Forensic Engineering Expert Witness (Plaintiff)
A forensic engineer, Derek Hodgin, testified at trial on behalf of the homeowners’ association regarding the physical condition of the townhomes and observed moisture-related damage. His testimony addressed water intrusion pathways and deterioration affecting exterior components, including roofs, windows, balconies, firewalls, and foundations, and discussed how construction details related to those conditions. The jury considered this engineering evidence in assessing causation issues and the nature of the alleged construction defects.
2. Cost of Repair and Estimating Expert Witness (Plaintiff and Defense)
The trial record reflects expert testimony comparing alternative repair scopes and associated cost estimates related to correcting the identified construction defects. The homeowners’ association presented cost evidence supporting a comprehensive repair approach, while the defense offered a narrower remediation strategy with lower estimated costs. These competing repair analyses informed the damages issues presented to the jury and later formed part of the damages-related questions addressed on appeal.
3. Construction Defect Expert Witness
The case centered on systemic failures in building envelopes, moisture management, and exterior assemblies rather than isolated workmanship issues. In litigation of this nature, construction defect experts are often engaged to explain how construction practices and sequencing contribute to widespread water intrusion and concealed damage.
4. Business Transaction Expert Witness
In cases involving complex development and construction arrangements, business transaction experts are sometimes consulted to provide context regarding ownership relationships, organizational structure, and operational coordination among affiliated entities.
1. Early Defect Discovery and the Discovery Rule Shape Limitations Defenses
Stoneledge demonstrates that construction defect claims involving hidden water intrusion and concealed deterioration often depend on when defects were reasonably discoverable, not when construction ended. Courts closely evaluate evidence of developer control, delayed homeowner access, and destructive testing when applying the discovery rule. Attorneys should build a detailed factual record showing how and when building envelope failures and moisture-related damage became apparent.
2. Jury Verdict Management Is Critical in Multi-Claim Construction Defect Trials
The case highlights the importance of clear verdict forms and jury instructions when multiple defect-based claims arise from the same construction failures. Uncertainty over whether damages are cumulative can complicate post-verdict rulings and appellate review. Trial counsel should proactively address how repair costs for systemic construction defects are allocated across overlapping liability theories.
3. Engineering Evidence Drives Causation and Repair Scope in Water Intrusion Litigation
Forensic engineering testimony was central to explaining how roofs, balconies, decks, windows, firewalls, and related exterior assemblies allowed moisture intrusion to spread throughout the structures. Competing repair scopes illustrated how expert analysis can significantly influence damages calculations in construction defect cases. Attorneys should ensure expert opinions are grounded in physical evidence and aligned with accepted construction and building science principles.
4. Single Business Enterprise Theories Require Focused and Fact-Specific Proof
The Supreme Court clarified that related developers and builders are not automatically treated as a single enterprise in construction defect litigation. Courts require concrete evidence of unified operations and inequitable conduct before disregarding separate corporate identities. Counsel should concentrate on documented operational control, financial integration, and decision-making authority connected to the defective construction work.
5. Settlement Setoff and Post-Verdict Adjustments Demand Careful Accounting
Stoneledge illustrates how prior settlements with subcontractors and related parties can materially affect final judgment amounts in large construction defect actions. Courts examine whether settlements compensate for the same repair costs addressed by the jury’s verdict. Attorneys should maintain precise settlement records and present clear accounting to avoid errors in final damages calculations.
The Stoneledge at Lake Keowee litigation illustrates how complex residential development disputes can unfold when latent construction issues surface years after initial completion. Through multiple trial phases and layered appellate review, the case demonstrates the importance of careful trial management, precise jury instructions, and disciplined post-verdict analysis in multi-defendant matters. The South Carolina Supreme Court’s decisions emphasize adherence to established legal standards when evaluating evidence, allocating responsibility, and correcting damages calculations, reinforcing the role of appellate courts in ensuring consistent application of construction-related liability principles.
More broadly, the case offers guidance for attorneys handling construction defect claims involving systemic water intrusion, building envelope failures, and concealed deterioration. It highlights the need for thorough investigation, well-supported engineering analysis, and clear documentation of repair scope and costs when defects affect multiple exterior assemblies over time. Stoneledge underscores how courts assess construction defect allegations in large residential developments, providing a measured framework for evaluating causation, damages, and legal accountability while balancing the interests of homeowners, developers, and builders.
What was the Stoneledge at Lake Keowee lawsuit about?
The case involved claims that defective construction in a luxury waterfront townhome development caused widespread water intrusion and hidden moisture damage. The homeowners’ association sought recovery for repair costs tied to building envelope failures affecting roofs, decks, balconies, windows, and other exterior components. The dispute focused on whether construction practices and project oversight contributed to long-term deterioration.
When did the construction defects at Stoneledge become known?
Significant issues emerged after homeowners assumed control of the association, when reports of leaks and structural deterioration increased. Destructive testing later revealed concealed damage that was not readily visible during earlier occupancy. The timing of discovery played a key role in how courts evaluated the construction defect claims.
What types of construction defects were alleged in the case?
The allegations centered on systemic water intrusion, improper exterior assemblies, and failures in moisture management. These conditions affected multiple parts of the building envelope. The case addressed how interconnected construction defects can cause widespread damage over time rather than isolated workmanship problems.
Why did the case go through multiple appeals?
After the jury verdict, the parties disputed several legal and procedural issues, including how damages were calculated and whether liability was properly allocated. The South Carolina Court of Appeals and Supreme Court reviewed these issues to ensure correct application of existing law. The appellate process resulted in partial affirmances, reversals, and a remand for recalculation of final judgment amounts.
How did the courts approach damages in the construction defect claims?
Damages were tied to the cost of repairing the defective construction rather than replacement of the entire development. Courts examined whether repair costs reflected the scope of water intrusion and related deterioration. The decisions emphasized accuracy in allocating damages across overlapping construction defect claims.
What broader lessons does the case provide for construction defect litigation?
Stoneledge shows how complex construction defect disputes can arise years after project completion when latent problems surface. It highlights the importance of clear documentation, careful trial management, and consistent application of legal standards. The case provides a framework for evaluating liability and damages in large residential developments affected by systemic construction defects.
Building and Structure
Building Code Compliance
Construction Damages
Construction Inspections
Cost of Repair
Decks
Moisture Intrusion
Moisture Testing
Structural Damage
Water Intrusion
Geotechnical Engineering, +4
Construction
Industrial Hygiene, +7
Construction
What broader lessons does the case provide for construction defect litigation?
Stoneledge shows how complex construction defect disputes can arise years after project completion when latent problems surface. It highlights the importance of clear documentation, careful trial management, and consistent application of legal standards. The case provides a framework for evaluating liability and damages in large residential developments affected by systemic construction defects.