You say the contractor was told about the backfilling. Is there anything in writing saying so?

Writing no. Pictures yes. The project was delayed more than 2 months because of unprecedented rain in our area, so he would stop here to check out the conditions several times a week. We live at the property because this is a demo/rebuild project, so we were here for every visit. I can't even count how many conversations both my husband and I had with him about the plans for the front of the house. Our water table is high. We wanted a basement, yet didn't want the house to be too high. Backfilling the front was the solution we came up with together. At one point, during the wall construction, we decided to go up an extra course from 10. Again, the backfill was discussed.

I don’t have a solution but moving forward make sure every single thing is in writing

The added course was only for added height. We didn't want an average size man to have to duck their head to walk in the back door. But the subject of the backfill came up again at the time we discussed the extra course.

Unfortunately if it's not in writing, there's not much you can do in terms of blame.

^^^ and your builder should have KNOWN THIS.

First--and I'm not chiding you--the situation you've found yourself in can be avoided by investing in a site development plan (produced by a surveyor or engineer) which shows the finished floor elevation of the basement slab and the 1st floor of the home as well as the before and after contours on the lot. The elevation views in the architectural plans should be "true" elevations which reflect the actual site conditions, not some imaginary flat lot.

With respect to modifying the existing foundation to allow for greater differential backfill, your best route is to contact a local structural engineer and get his/her recommendation for what can be done on a retrofit basis.

Who provided revised plans & engineering, civil grading, etc. Was an architect involved?

This should have already been run by the engineer for approval before any change was discussed. As is, it is potentially unsafe and not stable.

It was surveyed and engineered. The only change made was an additional course of block, from 10 to 11. It had no bearing on the engineering. The added course was added because the contractor was able to control the water situation more than anticipated. Initially we only wanted a basement to be used for the "mechanicals," anticipating constant dampness. We never anticipated we could actually have a usable dry basement. When that became apparent, we figured, why not go an extra block so no one has to duck. After much research, we are convinced the contractor is wrong. We can raise the grade more than 4' once the house is set and the top is supported.

If an engineer was involved in the original design of the foundation, then consulting them regarding the wall height and any back fill limitations should be easy to do.

To be sure, no back filling should be done before the 1st floor platform is framed and sheathed.

There were no changes made except for one added course of block, from 10 to 11, which did not require engineering changes whatsoever. And that change has zero to do with backfill/raising grade. We are waiting to hear from the engineer, but at this point, we believe the contractor is incorrect. The 4' limit is only if there is no support at the top of the wall...ie, the house or shoring/bracing.

What I'm getting at is the foundation wall, whether block or concrete, has to be engineered for the fill and likely in conjunction with a wider structural footing. If its engineered for up to 48" of fill, that's what you get. If he is responsible for plan changes (drafting, design, engineering, etc), he screwed up. If you.... he should have had you revise the plans and engineering.

Consider adding a masonry veneer for the exposed foundation.

There are parts of our region the foundations are this high and not noticeable.

The engineer will let you know what it correct.

How the mistake was made is irrelevant to the solution. This is a common structural problem but it usually occurs in existing buildings. Only an engineer should solve this problem and the solution will depend on what, if any, reinforcing was placed in the CMU wall.

If the wall was not reinforced, some possible solutions are short block bracing walls, vertical steel I-beams/channels or carbon fiber strips on the interior side of the wall. Its also possible to add earth anchors on the exterior side of the wall.

If the CMU wall was not grouted and the floor above is not yet installed, it may be possible to install reinforcing in the cells.