Custom Performance v. AM Industrial

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.

THE STATE OF SOUTH CAROLINA
In The Court of Appeals

Custom Performance Engineering, Inc., Respondent-
Appellant,

v.

AM Industrial Group, LLC, Appellant-Respondent.

Appellate Case No. 2022-000348

Appeal From Spartanburg County
J. Derham Cole, Circuit Court Judge,
Shannon Metz Phillips, Master-in-Equity

Unpublished Opinion No. 2024-UP-275
Heard June 12, 2024 – Filed July 24, 2024

AFFIRMED

Carmen Vaughn Ganjehsani and Robert Wilder Harte,
both of Richardson Plowden & Robinson, PA, of
Columbia, for Appellant-Respondent.

Adam Crittenden Bach and Emily R. Godwin, both of
Tonnsen Bach, LLC, of Greenville, for
Respondent-Appellant.
PER CURIAM: This is a cross-appeal from the Master-in-Equity's damages
award to Custom Performance Engineering, Inc. (Custom Performance) on its
breach of contract action against AM Industrial Group, LLC (AMI) following the
circuit court's denial of AMI's motion to set aside an entry of default. On appeal,
AMI argues (1) the circuit court erred in denying its motion to set aside the entry
of default because good cause existed to set it aside; and (2) the master erred in its
damages award because Custom Performance failed to meet its burden for
establishing lost profits damages and failed to adduce evidence in support of
portions of its other purported damages. On cross-appeal, Custom Performance
argues the master erred in holding Custom Performance was not entitled to cover
damages. We affirm.

1. AMI argues the circuit court erred in denying its motion to set aside the entry of
default. We disagree. See Richardson v. P.V., Inc., 383 S.C. 610, 614, 682 S.E.2d
263, 265 (2009) ("The decision whether to set aside an entry of default or a default
judgment lies solely within the sound discretion of the [circuit] court."); id. ("The
[circuit] court's decision will not be disturbed on appeal absent a clear showing of
an abuse of that discretion."); In re Estate of Weeks, 329 S.C. 251, 259, 495 S.E.2d
454, 459 (Ct. App. 1997) ("An abuse of discretion . . . occurs when the judge
issuing the order was controlled by some error of law or when the order, based
upon factual, as distinguished from legal conclusions, is without evidentiary
support."); Stark Truss Co. v. Superior Constr. Corp., 360 S.C. 503, 510, 602
S.E.2d 99, 102 (Ct. App. 2004) ("Rule 55(c), [of the South Carolina Rules of Civil
Procedure (SCRCP)], allows the circuit court to set aside an entry of default 'for
good cause shown.'" (quoting Rule 55(c))); Williams v. Vanvolkenburg, 312 S.C.
373, 375, 440 S.E.2d 408, 409 (Ct. App. 1994) ("Whether good cause is
established is within the sound discretion of the [circuit] court."); Sundown
Operating Co. v. Intedge Indus., Inc., 383 S.C. 601, 607, 681 S.E.2d 885, 888
(2009) ("This standard requires a party seeking relief from an entry of default
under Rule 55(c) to provide an explanation for the default and give reasons why
vacation of the default entry would serve the interests of justice."); id. at 609, 681
S.E.2d at 889 (rejecting the petitioner's argument "that it should be granted relief
from the entry of default because it should not be held responsible for the
negligence of its insurance agent in failing to answer the complaint" and holding
the argument was without merit "as the law is clear that an attorney or insurance
company's misconduct is imputable to the client"); Dixon v. Besco Eng'g, Inc., 320
S.C. 174, 178-79, 463 S.E.2d 636, 638-39 (Ct. App. 1995) (affirming the circuit
court's finding that the defendant's misunderstanding of a deadline did not
constitute good cause to set aside the entry of default). We hold the circuit court
did not abuse its discretion in finding AMI did not show good cause to excuse the
default. AMI's insurer's negligence is imputed to it. In addition, there is no
indication in the record AMI reached out to Custom Performance to inquire about
the extended deadline for the answer or to request additional time after the insurer
denied coverage. We therefore affirm the circuit court's denial of AMI's motion to
set aside the entry of default.

2. AMI argues the master erred in its award of damages to Custom Performance
because Custom Performance failed to meet its burden for establishing lost profits
damages and failed to produce evidence in support of its other purported damages.
We disagree. See Austin v. Specialty Transp. Servs., Inc., 358 S.C. 298, 310, 594
S.E.2d 867, 873 (Ct. App. 2004) ("The trial judge has considerable discretion
regarding the amount of damages."); id. at 311, 594 S.E.2d at 873 (stating the
appellate court's "task in reviewing a damages award is not to weigh the evidence,
but to determine if there is any evidence to support the damages award"); S.C. Fed.
Sav. Bank v. Thornton-Crosby Dev. Co., 310 S.C. 232, 234-35, 423 S.E.2d 114,
115 (1992) (stating that in order for a party to recover lost profits as a result of a
breach of contract, the party seeking damages must prove (1) the profits "have
been prevented or lost as a natural consequence of the breach of contract;" (2) the
lost profits were reasonably "within the contemplation of the parties at the time the
contract was made as a probable result of a breach of it"; and (3) the lost profits
with reasonable certainty, as they cannot be "conjectural or speculative" (quoting
Drews Co. v. Ledwith-Wolfe Associates, 296 S.C. 207, 213, 371 S.E.2d 532,
535-36 (1988))); Moore v. Moore, 360 S.C. 241, 255-56, 599 S.E.2d 467, 474-75
(Ct. App. 2004) ("The law does not require absolute certainty of data upon which
lost profits are to be estimated, but all that is required is such reasonable certainty
that damages may not be based wholly upon speculation and conjecture, and it is
sufficient if there is a certain standard or fixed method by which profits sought to
be recovered may be estimated and determined with a fair degree of accuracy."
(quoting Beck v. Clarkson, 300 S.C. 293, 298-99, 387 S.E.2d 681, 684 (Ct. App.
1989))). Custom Performance owner Joseph Adams testified Custom Performance
lost revenue when several of its customers cancelled their contracts because
Custom Performance was unable to fill their orders. He stated Custom
Performance expected profit margins of 2.5 times the cost for the BMW purchase
order because it was high volume mass manufacturing and 3.5 times the costs on
the other contracts.1 Calculating the numbers on the stand, Adams testified the lost

1
In the post-hearing documents Custom Performance submitted the following
purchase orders: (1) Saleen Automotive dated October 9, 2020 for $144,590.60;
(2) Blow-By-Blow Racing dated April 2, 2021 for $125,235; and Purem by
Eberspaecher (BMW) dated August 26, 2021 for $197,835.
profits totaled $257,680. Based on the foregoing, we hold the evidence supports
the master's damages award for lost profits.

AMI's argument that the master erred in announcing her decision to award
$257,680 for lost profits before she reviewed the post-hearing documents is not
preserved as AMI never made this argument to the master. See Wilder Corp. v.
Wilke, 330 S.C. 71, 76, 497 S.E.2d 731, 733 (1998) ("It is axiomatic that an issue
cannot be raised for the first time on appeal, but must have been raised to and ruled
upon by the trial judge to be preserved for appellate review.").

In addition, AMI's argument that Custom Performance did not prove its lost profit
damages were foreseeable is not preserved. AMI did not make this argument to
the master and the master did not address this element of lost profit damages.
AMI's argument does not challenge the sufficiency of the evidence to support the
master's finding because the master did not make a finding on this issue; therefore,
a post-trial motion was necessary to bring the matter to the master's attention. See
Stevens & Wilkinson of S.C., Inc. v. City of Columbia, 409 S.C. 563, 567, 762
S.E.2d 693, 695 (2014) ("Issue preservation rules are designed to give the trial
court a fair opportunity to rule on the issues, and thus provide the [appellate c]ourt
with a platform for meaningful appellate review."); Wilder Corp., 330 S.C. at 76,
497 S.E.2d at 733 ("It is axiomatic that an issue cannot be raised for the first time
on appeal, but must have been raised to and ruled upon by the trial judge to be
preserved for appellate review."); Life of Georgia Ins. Co. v. Bolton, 333 S.C. 406,
412, 509 S.E.2d 488, 491 (Ct. App. 1998) (holding an issue that was not ruled
upon by the master was not preserved when no post-trial motion was filed to bring
the matter to the master's attention).

AMI argues Custom Performance failed to mitigate any potential damages caused
by the issues with the defective machine Custom Performance purchased from
AMI (Original Machine). This argument is not preserved because the master did
not address it and AMI failed to bring it to her attention in a post-trial motion. See
Life of Georgia Ins. Co., 333 S.C. at 412, 509 S.E.2d at 491 (holding an issue that
was not ruled upon by the master was not preserved when no post-trial motion was
filed to bring the matter to the master's attention).

AMI also argues the record does not support the master's award of $132,000 for the
Original Machine. We disagree. The evidence in the record clearly shows the
consideration for the Original Machine was $132,000, which Custom Performance
paid with a trade-in of a welder valued at $20,000 and $112,000 in funds. See
Austin, 358 S.C. at 311, 594 S.E.2d at 873 (stating the appellate court's "task in
reviewing a damages award is not to weigh the evidence, but to determine if there
is any evidence to support the damages award"). AMI also contends the record
does not support the master's award of $8,694 for tooling the original machine.
We disagree. Adams's testimony that Custom Performance spent $8,694 for
tooling the Original Machine supports this award. See Matter of Campbell, 427
S.C. 183, 192 n.2, 830 S.E.2d 14, 19 n.2 (2019) (noting testimony is evidence).

3. Custom Performance argues the master erred in refusing to award it damages to
cover the difference in price between the Original Machine and the machine
Custom Performance bought to replace the Original Machine when it did not work
(Replacement Machine). We disagree. See S.C. Code Ann. § 36-2-712(1) (2003)
(allowing the buyer to "'cover' by making in good faith and without unreasonable
delay any reasonable purchase of or contract to purchase goods in substitution for
those due from the seller"); S.C. Code Ann. § 36-2-712(2) ("[T]he buyer may
recover from the seller as damages the difference between the cost of cover and the
contract price together with any incidental or consequential damages . . . , but less
expenses saved in consequence of the seller's breach."); § 36-2-712 cmt. 2
(explaining cover goods need not be "identical with those involved but
commercially usable as reasonable substitutes under the circumstances of the
particular case"); id. ("The test of proper cover is whether at the time and place the
buyer acted in good faith and in a reasonable manner, and it is immaterial that
hindsight may later prove that the method or cover used was not the cheapest or
most effective."). Here, the Original Machine's price was $132,000, while the
Replacement Machine's price was $255,087. Adams acknowledged the
Replacement Machine had additional features, which Custom Performance could
use to be more automated and more efficient. We hold this evidence supports the
master's finding that the Replacement Machine was not a reasonable substitute and
Custom Performance was not entitled to cover damages.

AFFIRMED.

THOMAS, MCDONALD, and VERDIN, JJ., concur.