April 2, 2019
From Charleston County Mikell R. Scarborough, Master in
Bright Ariail, of Law Office of A. Bright Ariail, LLC, of
Charleston, for Appellants.
K. Epting, Jr. and Jaan Gunnar Rannik, both of Andrew K.
Epting, Jr., LLC, of Charleston, and Michelle Nicole
Endemann, of Clarkson, Walsh & Coulter, P.A., of Mt.
Pleasant, for Respondent.
Specialists, LLC (Restoration) and its owners, Ruben Mark
Ward and Lynnette Pennington Ward (collectively Appellants),
appeal a master-in-equity's order denying their motion
for relief from an entry of default and motion to stay and
compel arbitration. We dismiss the appeal as interlocutory.
2011, Restoration, a Georgia company, and Palmetto
Construction Group LLC, (PCG), a South Carolina LLC, entered
into an agreement to work together on multiple construction
projects. In 2012, the Veteran's Administration (the VA)
awarded Restoration a contract to serve as the general
contractor on the completion of a parking garage at the VA
facility in Augusta, Georgia (the VA Project) for $1.8
million. On September 10, 2014, Restoration and PCG entered
into a subcontract agreement under which Restoration would
act as the general contractor and would be responsible for
hiring the other subcontractors. The subcontract provided
that PCG would perform the concrete work and act in a
supervisory capacity. The subcontract stated Restoration
would pay PCG for the subcontract work. The subcontract also
contained a provision requiring mandatory mediation or in the
alternative, binding arbitration, of claims arising out of
claims in addition to the subcontract, Mark Ward asked PCG
for help in obtaining a bond from PCG's surety to cover
the VA Project. Restoration and PCG entered into a surety
bond agreement with Hanover Insurance Company to provide a
surety bond for the VA Project. Hanover required PCG,
Restoration, and their respective principals and their
spouses to sign an indemnity agreement requiring them to
indemnify Hanover for any claims made on the bond. As the VA
Project neared completion, several subcontractors filed
claims under the bond asserting they did not receive payment.
PCG claims Hanover paid $1, 425, 144.00 to subcontractors in
accordance with the bond.
February 12, 2016, PCG filed a summons and complaint against
Appellants. PCG alleged breach of contract against
Restoration for failure to pay amounts owed under the
subcontract. In addition, PCG alleged actual and constructive
fraud and negligent misrepresentation against the Appellants.
On the same day, PCG filed a motion to stay and compel
arbitration as provided in the subcontract agreement.
personally served the summons and complaint as well as the
motion to compel on Appellants on March 14, 2016. After
Appellants did not answer, PCG filed an affidavit of default
on April 18, 2016, and withdrew its motion to stay and compel
arbitration. The circuit court granted PCG's motion for
entry of default and referred the case to the
master-in-equity for final judgment against Appellants on
April 20, 2016.
5, 2016, the day before the damages hearing, Appellants filed
a motion for a continuance and a motion to be relieved from
default. At the damages hearing before the master, Appellants
submitted an affidavit from Mark Ward to support their motion
to be relieved from the entry of default. The master granted
Appellants' motion for a continuance and held the motion
for relief from default in abeyance. On July 11, 2016,
Appellants filed a motion to stay and compel arbitration. At
a hearing on July 14, 2016, the master found Appellants in
default and declined to address Appellants' motion to
stay and compel arbitration because of their default status.
The master issued an order on the same day denying
Appellants' request for relief from default, ordering a
damages hearing on October 4, 2016, and denying
Appellants' motion to stay and compel arbitration
"as [Appellants are] in [d]efault." Appellants
filed a Rule 59(e), SCRCP, motion to alter or amend on July
27, 2016. Appellants asked the master to schedule a hearing
on this motion prior to the damages hearing. However, the
master decided to keep the damages hearing on October 4,
2016, and scheduled a hearing on the Rule 59(e) motion for
October 11, 2016.
September 30, 2016, Appellants served a notice of appeal on
PCG and notified the master of their appeal of the
master's July 14, 2016 order, but did not file the notice
with this court until November 18, 2016. In the meantime, the
master held a third hearing on October 4, 2016. The master
allowed PCG to proffer evidence on damages and Appellants to
argue their Rule 59(e) motion. On October 28, 2016, the
master issued an order denying Appellants' Rule 59(e)
motion. In his order, the master states: "After a review
of the file and memoranda submitted by counsel, the court
finds as follows: 1) [Appellants'] Motion to Amend is
respectfully DENIED, insomuch as [Appellants] have not shown
good cause to lift the default; and 2) the affirmative
defense of arbitration has been waived and [Appellants']
Motion to Stay and Compel filed July 11, 216 was not properly
appeal both the master's July 14, 2016 order and the
October 28, 2016 ...