Tim McAfee and Judy McAfee, Appellants-Defendants/Counterclaim Plaintiffs v. LLC (2026)

MEMORANDUM DECISION

Case Summary

[1] Tim McAfee (“Tim”) and Judy McAfee (“Judy”) (collectively, “the McAfees”) contracted with Goeglein Homes, LLC d/b/a Callaghan Homes and Fahl Homes (“Callaghan”) to install a modular home on their property. Callaghan subsequently filed a complaint against the McAfees for breach of contract, and the McAfees filed a counterclaim. After a bench trial, the court found that Callaghan had substantially performed its obligations under the contract and that the McAfees had breached the contract by failing to pay the outstanding balance of the purchase price. Accordingly, the court entered judgment in favor of Callaghan and dismissed the McAfees’ counterclaim. On appeal, the McAfees argue that the trial court erred in entering judgment for Callaghan on its breach-of-contract claim. We disagree and therefore affirm.

Facts and Procedural History

[2] In December 2021, the McAfees executed a contract (“the Contract”) with Callaghan for the purchase of a modular home for $210,650. That amount was later increased by $585 for the installation of a flat-top electric stove, resulting in a total purchase price of $211,235. The Contract provides, “Keys and possession upon final full payment[,]” Appellants’ App. Vol. 2 at 55, but it contains no payment schedule. The McAfees made a $1,000 down payment. The Contract further provides that Callaghan is entitled to recover attorney fees, court costs, and expenses if it prevails in any legal action. Finally, the Contract provides that if the McAfees are entitled to any damages against Callaghan, those damages “are limited to the lesser of either the cost of needed repairs or reduction in the market value of the unit caused by the lack of repairs[.]” Id. at 56 (all caps omitted).

[3] The Contract identifies which party is responsible for certain tasks related to construction of the home. The Contract states that Callaghan would be responsible for pouring the foundation, permits, and plumbing, and the McAfees would be responsible for “final grade and seed, landscaping or anything else to do with the exterior[,]” electrical service, guttering, driveway gravel, sidewalk/stoops, the well, and the septic system. Id. at 55.

[4] Callaghan purchased the home directly from the manufacturer, Cavco Manufacturing, LLC (“Cavco”), and paid the invoice in full, “so it did not continue to accrue interest.” Appealed Order at 8. The McAfees “expressed a desire” for the home to be installed on the site of their former residence, which Tim had burned down in preparation for the installation. Id. at 6. Callaghan poured the foundation, put a plastic vapor barrier and gravel in the crawl space, and installed piers consisting of dry-stacked concrete blocks to support the center line (also referred to as the mate line or the marriage line) of the home. In October 2022, the two halves of the home were delivered to the property on flatbed trailers, set on top of the foundation by a crane, and fastened together with lag bolts.¹ To level the center line, wooden shims were inserted on top of the piers in the crawl space. Cavco had installed the wrong flooring in the home, and Callaghan replaced it with upgraded flooring at no cost to the McAfees. At that point, Callaghan had invested approximately $190,000 in the home. In December 2022, the McAfees paid $100,000 to Callaghan, leaving an unpaid balance of $110,235.

[5] On February 24, 2023, Callaghan's project manager, Shawn Cumberland, sent an email to Tim entitled “the Final ․ Final Punch List[,]” which explained who would be responsible for completing each of the remaining tasks; some would be performed by Callaghan, some would be performed by the McAfees, and some would be performed by Cavco. Ex. Vol. 5 at 41. “The punch list said nothing about moisture in the crawl space or drain tile.” Appealed Order at 12. Cumberland asked Tim to print and sign a copy of the punch list so that he could forward it to Cavco. Tim responded, “Okay that's fine[.]” Ex. Vol. 5 at 42. Cumberland “considered that response to be acceptance of the proposed final punch list[,]” Appealed Order at 11, but Tim did not sign the document.

[6] As of March, the construction had not been completed. The McAfees hired a home inspector, Doug Brenneke, who examined the home on March 6. Brenneke “noted various issues with the home, including grading that sloped towards the home, framing issues in the attic, sloped floors, cracked concrete supports under the mate line, and visible water penetration in the crawl space.” Id. at 12. That same month, Cumberland stopped by the home to see whether the McAfees “had taken care of their items so that [Callaghan] could take care of what [it] had left [there].” Tr. Vol. 2 at 104. Cumberland encountered Judy, whom he had never met, and she told him “in a rage of [expletives] to leave the property now.” Id. at 105.

[7] In May, Callaghan filed a two-count complaint against the McAfees. Count 1 alleged that Callaghan had “fully performed its obligations under the Contract” and that the McAfees had breached the Contract by failing to provide full payment. Appellants’ App. Vol. 2 at 50. Count 2 sought damages under an unjust enrichment theory, alleging that Callaghan had “conferred certain benefits upon the McAfees” and that “[a]llowing the McAfees to retain said benefit[s] would be unjust.” Id. at 53. Callaghan also requested attorney's fees, costs, and expenses pursuant to the Contract. In July, the McAfees filed affirmative defenses and a counterclaim based on alleged uncured “substantial defects” with the home. Id. at 59.

[8] In May 2024, the parties executed a mediation agreement, which was made part of a final settlement and release agreement. The mediation agreement provided that Callaghan and Cavco would perform certain tasks, some of which involved addressing drainage issues and water intrusion in the crawl space. The agreement further provided that a third-party inspector agreed to by counsel would inspect drain tile that was to be installed around the home's perimeter by Callaghan.

[9] The inspector, Andre Mourad, took issue with the drain tile, so Callaghan stopped working on the home and filed a motion to enforce the settlement agreement. In its April 2025 order on the motion, the trial court found that there was no meeting of the minds regarding what would happen if Callaghan's work was not approved by the inspector, so it denied Callaghan's motion and voided both the mediation agreement and the settlement agreement.

[10] The court held a two-day bench trial in February 2026. On April 24, the trial court issued a thirty-page order and entered findings of fact and conclusions thereon pursuant to Indiana Trial Rule 52(A) at the McAfees’ request. In addition to the foregoing, the court found as follows:²

FINDINGS OF FACT

․.

54. ․. Mr. Brenneke testified he went through the entire house [and that] ․ no issues were found and no moisture or organic growth was noted. Mr. Brenneke testified that ․ he noted the crawl space could present issues in the future, but he did not observe mold or rot during his inspection; he testified he did not have an issue with the overall condition of the house.

․.

63. Mr. Cumberland testified that during a visit [in March 2023] in which he was checking the electric line and gutters, which he understood to be the McAfees’ responsibility, Mrs. McAfee instructed him to leave the property in an expletive-laden fashion.

64. Mr. McAfee testified that he initially stated he never instructed Callaghan Homes or its employees to the leave the property, but after his memory was refreshed with deposition testimony he recalled stating he would not allow them back on the property. Mr. McAfee testified he believed Mr. Cumberland should have been available on-site to address all inquiries at all times.

․.

81. The McAfees rejected all of the work performed by Callaghan and refused to go forward with accepting the Modular Home, complaining that the structural integrity of the Modular Home had been compromised and that the drainage provided was inadequate.

82. Mr. Mc[A]fee testified that neither he nor Mrs. McAfee [has] a key to the Modular Home and that they have not signed any punch lists. Mr. McAfee testified he knew he had responsibility to manage items as delineated in the Contract but asserted he would refuse possession of the home as it currently stands.

․.

95. [Chadwick Marchand, a Cavco employee who had visited the home site twice and met with Tim before trial,] testified that Cavco provides a one-year workmanship warranty effective from the time the Modular Home leaves Cavco, which occurred in October 2022 for this Modular Home. He testified he had not seen anything that would void the warranty, that Cavco has continued to honor the warranty, that Cavco generally recommends the homeowner occupy the home for 90 days to identify any defects, and that he would continue to service the home if the McAfees moved in even now.

․.

97. Jer[em]y Bowers (“Mr. Bowers”), a licensed Professional Engineer practicing structural engineering in 46 states and specializing in modular homes, testified that he assessed the Modular Home based on applicable codes and Indiana law. He testified that to reach his conclusions he performed a site review, reviewed Mr. Mourad's deposition and email correspondence, and utilized information gathered by his team, and that he and his team spent several hours on-site conducting a thorough inspection.

98. Mr. Bowers stated that when he visited in November [2025], the Modular Home was very cold, leading him to worry about inadequate heating in the house. He noted that insufficient heat can especially contribute to foundation cracks.

99. The McAfees had control over the temperature of the Modular Home.

100. Mr. Bowers stated that he conducted a frost and freeze-thaw analysis utilizing local temperature and frost date from the preceding three years. His findings indicated no foundation issues attributable to frost, and he reported that pressure readings were significantly below the threshold required to induce frost-related cracking.

101. Mr. Bowers acknowledged some cracks in the foundation

and testified that cement never stops hardening and that the cracks observed were due to temperature-related shrinkage rather than frost heaving; he testified that vertical cracks indicate shrinkage whereas a 45-degree crack poses a serious concern.

.․

104. Mr. Bowers testified that the cracks observed were inconsistent with frost heaving and aligned with Indiana Code permitting certain crack occurrences, including temperature-induced shrinkage.

105. Mr. Bowers stated that the marriage line showed no offset, creaking is generally not a significant concern, and adding shims is an uncomplicated task. He recommended placing shims at the marriage line, clarifying that their absence does not automatically indicate a structural issue. He also mentioned that a single shim currently in place was inadequate and pointed out that shims can be added even after residents move in.

․.

107. Mr. Bowers testified he observed issues related to ponding water near the house and attributed them to a problem with the downspout, which he believed was the McAfees’ responsibility.

108. Mr. Bowers concluded that, based on his inspection, analysis, and professional experience, the Modular Home as built conforms to accepted residential construction standards for a modular ranch-style dwelling[.]

109. ․. Mr. Bowers testified that, as a Professional Engineer, he disagreed with certain statements and opinions offered by Mr. Mourad and testified those statements lacked empirical backing.

110. Mr. Mourad was initially identified as an expert witness [for the McAfees]; however, it was later concluded that he did not satisfy the requirements for expert testimony and, consequently, was disqualified from serving as an expert witness.

․.

121. When questioned about the scientific principles underpinning his conclusions, [Mourad] replied, “Quite simply, there are none.”

122. The Court finds that Mr. Mourad is not a credible witness. His behavior during testimony, and his tendency to rely solely on his own authority, render his statements insignificant.

[CONCLUSIONS OF LAW]

1. Callaghan Homes asserts claims for Breach of Contract and Unjust Enrichment against the McAfees.

2. The McAfees assert a counterclaim alleging the existence of defects in the installation of the Modular Home. While not specifically requested within the pleading, at trial, the McAfees requested rescission as the remedy sought. The Court reads the Counterclaim as a claim for Breach of Contract.

․.

I. Breach of Contract

․.

6. The Court concludes that a valid and binding contract exists between the parties[.]

․.

12. “Contract law has long recognized substantial performance rather than strict performance as being sufficient in many situations.” ShermansTravel Media, LLC v. Gen3Ventures, LLC, 152 N.E.3d 616, 624 (Ind. Ct. App. 2020), [trans. vacated].

13. “The doctrine of substantial performance ‘applies where performance of a nonessential condition is lacking, so that the benefits received by a party are far greater than the injury done to him by the breach of the other party.’ ” [ShermansTravel Media, 152 N.E.3d at 624 (quoting Dove v. Rose Acres Farms, Inc., 434 N.E.2d 931, 933 (Ind. Ct. App. 1982))].

14. This Court finds that, based on the record presented, Callaghan Homes has at least substantially performed its obligations under the Contract, and did so as of March 20, 2023.

15. “A material breach is one that goes to the heart of the contract, and whether a breach is material is generally a question of fact to be decided by the trier of fact.” Steve Silveus Ins., Inc. v. Goshert, 873 N.E.2d 165, 175 (Ind. Ct. App. 2007).

16. “A party who fails to make payments as required by a contract is guilty of a breach thereof.” Gaddis v. Stardust Hills Owners Ass'n, Inc., 804 N.E.2d 231, 235 (Ind. Ct. App. 2004).

17. The Court concludes that the McAfees have materially breached the Contract by virtue of their non-payment.

18. As discussed above, Callaghan Homes has substantially performed, and as a result, [has] not materially breached the Contract.

․.

23. Based on the finding that Callaghan Homes has substantially performed its obligations under the Contract, and that the McAfees have materially breached the Contract, the McAfees are not entitled to rescission.[3]

24. The record shows that the issues the McAfees complain of are easily remedied, already resolved, or otherwise, non-existent.

․.

II. Unjust Enrichment

32. While the court has found that Callaghan Homes is entitled to recover under a theory of Breach of Contract, even if there were not a valid and binding contract breached by the McAfees, Callaghan would be entitled to recover for unjust enrichment.

33. “To recover for unjust enrichment, the plaintiff must show that (1) he rendered a measurable benefit to the defendant at the defendant's express or implied request; (2) he expected payment from the defendant; and (3) allowing the defendant to retain the benefit without restitution would be unjust.” Neibert v. Perdomo[,] 54 N.E.3d 1046, 1051 (Ind. Ct. App. 2016).

34. There is no question that Callaghan Homes rendered a measurable benefit to the McAfees at their request.

35. There is no question Callaghan Homes expected payment from the McAfees.

36. The record taken as a whole clearly shows that the McAfees retaining the benefit conferred upon them without restitution would be unjust.

37. As such, Callaghan Homes is entitled to recover under a theory of Unjust Enrichment, as well as Breach of Contract.

III. Damages

38. Callaghan Homes is entitled to an award of damages against Tim and Judy McAfee, jointly and severally.

․.

FINAL JUDGMENT AND ORDER

This Court, being duly advised in the premises, hereby enter[s] judgment in favor of Callaghan Homes and against Tim and Judy McAfee, jointly and severally, as follows:

a. For the principal amount due and owing under the Contract in the amount of $110,235.00;

b. Reasonable attorney fees in the amount of $86,504.00;

c. Expert witness fees in the amount of $9,950.00.

This Court further finds, additional work to fully conclude the requirements of the Contract include[s] mold remediation in the crawl space, adding wood shims at the marriage line and the need for backfilling and rough grading. The Court deducts $8,800.00 from the Judgment amount above and requires the Defendant[s] to contract for these services. The total judgment entered in favor of Callaghan Homes and against Tim and Judy McAfee totals $197,889.00. Callaghan Homes, as the prevailing party, may submit a post-trial cost memorandum for consideration by the Court of any additional fees or costs incurred as a result of the instant litigation.

This judgment shall accrue post-judgment interest at a rate of 8% per annum.

The Mc[A]fees’ Counterclaim is hereby dismissed, with prejudice.

Appealed Order at 1-30.

[11] Following the parties’ joint motion on hearing for proceedings supplemental and for post-trial attorney's fees and costs, the court issued an order entering

post trial fees and costs as to the following: (a) For the principal amount due and owing under the Contract in the amount of $101,435.00; reasonable attorneys fees in the amount of $105,419.00; expert witness fees in the amount of $14,850.00; and for a total judgment in the amount of $221,704.00, relating back to the April 24, 2026 Order.

Appellants’ App. Vol. 2 at 115. This appeal ensued.

Discussion and Decision

[12] The McAfees argue that the trial court erred in entering judgment for Callaghan on its breach-of-contract claim.⁴ “On appeal we neither reweigh the evidence nor assess witness credibility, and we consider only the evidence most favorable to the judgment.” Blackwell v. Sup. Safe Rooms, Inc., 174 N.E.3d 1082, 1091 (Ind. Ct. App. 2021), trans. denied. “In deference to the trial court's proximity to the issues, we will disturb the judgment only where there is no evidence supporting the findings or the findings fail to support the judgment.” Id. “The challenger on appeal has the burden of establishing that the trial court's findings and conclusions are clearly erroneous.” Id. “Findings and conclusions are clearly erroneous when a review of the record leaves the appellate court firmly convinced that a mistake has been made.” Id. “We evaluate questions of law de novo, and we owe no deference to the trial court's determination on such issues.” Id.

[13] The McAfees do not challenge the trial court's finding that a valid and binding contract existed between them and Callaghan. They do, however, make the following argument regarding the trial court's finding that they breached the Contract:

Given the evidence in the record and the trial court's findings of fact, the trial court's conclusion that Callaghan was entitled to full payment as of May 2023 is clearly erroneous. First, the uncontradicted evidence shows that the modular home was not finished as of May 2023, which means that payment was not yet due. Second, substantial performance does not entitle Callaghan to recovery where it abandoned the job of its own accord.․

․.

The difficulty with applying substantial performance in this case is that there is no fair way to do it.․ Callaghan still had work to do by May 2023. Even if it could reasonably be concluded that Callaghan's failures were insubstantial, the McAfees had no way to know that Callaghan was demanding full payment prior to the completion of the work.

Appellants’ Br. at 12, 16.

[14] As stated above, “[c]ontract law has long recognized substantial performance rather than strict performance as being sufficient in many situations.” ShermansTravel Media, 152 N.E.3d at 624. “Substantial performance applies where performance of a nonessential condition is lacking, so that the benefits received by a party are far greater than the injury done to him by the breach of the other party.” Dove, 434 N.E.2d at 933. “Substantial performance as applied to construction of a house does not mean that every detail must be in strict compliance with the specifications and the plans. Something less than perfection is the test of specific performance unless all details are made the essence of the contract.” Johnson v. Taylor Bldg. Corp., 371 N.E.2d 404, 407 (Ind. Ct. App. 1978) (quoting Plante v. Jacobs, 103 N.W.2d 296, 298 (Wis. 1960)). “No mathematical rule relating to the percentage of the price, of cost of completion, or of completeness can be laid down to determine substantial performance of a building contract.” Id. (quoting Plante, 103 N.W.2d at 298). “In a situation where there has been substantial performance of a contract but not full performance, the amount of the value of the labor and material is the contract price less deductions for errors or omissions in doing the work and less payments received.” Id.

[15] The McAfees do not argue that all details were made the essence of their Contract with Callaghan, nor do they specifically challenge the trial court's finding that Callaghan substantially performed its obligations under the Contract.⁵ Moreover, the McAfees cite no record evidence or relevant cases to support their assertion that Callaghan abandoned the project. In fact, as the trial court specifically found, Judy ordered Cumberland off the property “in an expletive-laden fashion” as he was attempting to address the final punch-list items in March 2023,⁶ and Tim acknowledged “stating that he would not allow [Callaghan or its employees] back on the property.” Appealed Order at 13.⁷ In sum, the McAfees barred Callaghan from their property, thereby preventing full completion of the project, and did not pay the outstanding $110,235 balance of the contract price. Cf. Burras v. Canal Constr. & Design Co., 470 N.E.2d 1362, 1366 (Ind. Ct. App. 1984) (concluding that home construction contractor was “justified in suspending performance of its obligations under the contract” and suing for breach after buyers repudiated the contract).

[16] As for the McAfees’ complaint that they had no way of knowing that Callaghan would demand full payment before completion of the work, Callaghan correctly observes that they “cite no authority requiring a builder to serve a formal notice of completion or a written demand for final payment where, as here, the contract requires neither.” Appellee's Br. at 23.⁸ Ultimately, Callaghan did not obtain a judgment for full payment under the Contract; the trial court deducted $8,800 for the cost of certain uncompleted tasks, consistent with the dictates of Johnson, 371 N.E.2d at 407.

[17] Based on the foregoing, we conclude that the McAfees have failed to carry their burden to establish that the trial court's judgment in favor of Callaghan on its breach-of-contract claim is clearly erroneous. Therefore, we affirm it.

[18] Affirmed.

FOOTNOTES

1.   The delay between the execution of the Contract and the delivery of the home was attributable, at least in part, to the McAfees’ confusion between a “cash deal” and financing, which they ultimately used to facilitate the purchase of the home. Appealed Order at 5-6. The trial court found that “this confusion is attributable only to the McAfees.” Id. at 5.

2.   Although not raised by the parties, we note that many of the trial court's findings state that a certain witness “testified that ․.” A court “does not find something to be a fact by merely reciting that a witness testified to X, Y, or Z.” In re Adoption of T.J.F., 798 N.E.2d 867, 874 (Ind. Ct. App. 2003) (citing Perez v. U.S. Steel Corp., 426 N.E.2d 29, 33 (Ind. 1981)). “Rather, the trier of fact must find that what the witness testified to is the fact. Additionally, the trier of fact must adopt the testimony of the witness before the ‘finding’ may be considered a finding of fact.” Id. Because the parties do not challenge the validity of any findings on this basis, we do not address the matter further.

3.   In their appellate brief, the McAfees concede that they “did not enter much evidence of damages they suffered due to Callaghan's [alleged] material breach of contract” and thus they are not entitled to rescission. Appellants’ Br. at 19.

4.   The McAfees also argue that the trial court erred in entering judgment for Callaghan on its unjust-enrichment claim. Callaghan acknowledges that “where a valid written contract governs, recovery generally proceeds under the contract rather than unjust enrichment.” Appellee's Br. at 27 (citing Zoeller v. E. Chicago Second Century, Inc., 904 N.E.2d 213 (Ind. 2009)). But Callaghan claims that the trial court's finding of unjust enrichment “merely confirms the equity of the result and provides an independent basis for affirmance.” Id. (citing Neibert, 54 N.E.3d at 1051). Quite simply, Neibert does not support this proposition. Regardless, because we affirm the trial court's judgment on Callaghan's breach-of-contract claim, we need not delve into this further.

5.   The McAfees assert that, “as of May 2023, Callaghan failed to meet its contractual obligations in at least three ways: (1) failing to insulate [between the floor joists] per code, (2) failing to install drain tile per code, and (3) failing to do a rough grade [of the landscaping] per the contract.” Appellants’ Br. at 15. The McAfees do not suggest that insulating the floor joists would be considered a major undertaking. With respect to the rough grade, Callaghan's obligation to perform this task is merely implied by the Contract language making the McAfees responsible for the final grade. In any event, Cumberland testified that Callaghan did “an initial rough grade” when it completed the foundation. Tr. Vol. 2 at 99. As of March 20, 2023, the McAfees had not yet buried an electrical line or installed gutters, the lack of which can lead to water “drip[ping] right next to the foundation and creat[ing] basically a gully along the foundation[.]” Id. at 100. Accordingly, Callaghan was waiting for the McAfees to perform their obligations under the Contract so that it could perform the final rough grade. Id. And as for the drain tile, the McAfees provide no developed argument on this point.

6.   The McAfees note that “Cumberland admitted that he didn't leave and instead continued his work on the property.” Appellants’ Br. at 18 (citing Tr. Vol. 2 at 106-07). But that does not alter the fact that Judy indicated that Callaghan employees were no longer welcome on the McAfees’ property.

7.   The McAfees assert that Tim's “statement about his position during litigation shows nothing about whether he removed Callaghan from his property in spring 2023.” Appellants’ Br. at 18. In light of Judy's statement, it was reasonable for the trial court to infer that Tim's statement was made at or around the same time, i.e., in March 2023.

8.   The McAfees complain that by filing a lawsuit against them before the work was completed, Callaghan converted the substantial performance doctrine from a shield “that protects a contractor from unreasonable forfeiture into an offensive weapon against the consumer.” Reply Br. at 7. We disagree. In its complaint, Callaghan alleged that it had “fully performed its obligations under the Contract.” Appellants’ App. Vol. 2 at 50. When evidence was presented that Callaghan had performed most, but not all, of its obligations, Callaghan was entitled to rely on the doctrine to avoid unreasonable forfeiture. Assuming for argument's sake that the McAfees could have raised the lack of a written demand as an affirmative defense, they waived it by failing to do so. See Mizen v. State ex rel. Zoeller, 72 N.E.3d 458, 466 (Ind. Ct. App. 2017) (“Our courts have generally held that the failure to raise an affirmative defense in a pleading results in waiver of the issue.”), trans. denied.

Bailey, Judge.

Bradford, J., and Altice, J., concur.