Opinion
NO. 01-11-00390-CV
03-15-2012
1.9 LITTLE YORK, LTD., Appellant v. ALLICE TRADING INC., Appellee
On Appeal from the County Civil Court at Law No. 1
Harris County, Texas
Trial Court Case No. 956852
MEMORANDUM OPINION
Appellant, 1.9 Little York, Ltd. ("Little York"), challenges the trial court's judgment, entered after a jury trial, in favor of appellee, Allice Trading Inc. ("Allice Trading"), in Allice Trading's suit for breach of contract and quantum meruit. In its first two issues, Little York contends that the evidence is legally and factually insufficient to support Allice Trading's recovery on its breach-of-contract claim and the jury's damage award. In its third issue, Little York contends that that the trial court erred in denying Little York additional time to present rebuttal witnesses.
We affirm.
Background
In its second amended petition, Allice Trading alleged that Little York, the owner and general contractor of a warehouse construction project, had hired Allice Trading to provide "site preparation, utilities installation, and concrete work" for the project. Pursuant to their contract, Little York was to pay Allice Trading $315,292.10 for its services. Allice Trading sought damages in the amount of $28,529.21 for breach of contract and quantum meruit.
In its counterclaim, Little York alleged that Allice Trading "abruptly stopped" working on the project and left "the job incomplete and wholly unacceptable." Little York specifically claimed that Allice Trading had failed to complete a detention pond, which was required for Little York to obtain a water detention permit from Harris County. Little York asserted that any alteration to the "scope" of the work required by the contract was done "unilaterally and without agreement" by Allice Trading. As a result, the construction site had deteriorated to the point that Little York needed to undertake "a total renovation of the project." Little York alleged, thus, that Allice Trading breached the contract by leaving the project, and it sought actual and consequential damages to salvage the project.
At trial, Allice Trading owner Dan Allice testified that he had previously worked with Little York's owner, Moe Nasr, on two prior projects. In his original estimate, Allice Trading was to provide 200 loads of dirt for the project, but Nasr contacted him and explained that "the dirt portion was a bit over his budget." Nasr suggested that he could supply the dirt at a less expensive price than Allice Trading, so the two agreed that Nasr would supply the dirt for the project and Allice "deduct[ed] the dirt cost" from his estimate.
While on site, Allice took direction from Mario Lanza, the engineer and project manager for the Little York project. Lanza was at the site every day and, to Allice's knowledge, served as Nasr's representative. Although the original agreement called for Allice Trading to remove the driveway used for construction vehicles, Lanza instructed Allice that the removal was not needed. Lanza also instructed Allice to perform at the construction site several other jobs that were not included in the original contract, but were added to the final estimate.
At one point, Allice Trading had "completely finished" the detention pond and was preparing to add a pilot channel to connect the ingoing and outgoing pipes in the pond. Before Allice Trading could begin pouring the concrete for the pilot channel, Lanza informed it that Little York had "ran out of dirt for the foundation" of the warehouse. Lanza then instructed Allice Trading to "pull the dirt" that Little York needed "from the pond" and the adjacent "green space." As a result, although the foundation was finished, the "green space" and the detention pond needed more dirt. Allice then "continually" asked Lanza for the dirt required to fill the "green space" and the detention pond, but Lanza only brought in enough to fill the "green space." When Allice Trading had "maybe four more days" left on the project, Lanza "stopped bringing dirt in." Without enough dirt in the detention pond, Allice Trading could not construct the pilot channel. Allice "called [Lanza] for the next eight months . . . every couple of weeks . . . asking for dirt," but each time Lanza assured Allice that he would bring it in "later." After eight months of Allice Trading asking Lanza for dirt, Lanza informed Allice that because the detention pond "may need to hold additional water," Allice Trading was no longer required to fill in the detention pond or construct the pilot channel.
Because Allice Trading had "been waiting all this time to finish . . . the pilot channel," which was no longer required, it sought payment on the final invoice and "tried to bill the job." Allice noted that $31,229.21 was due on the invoice, and he "discounted" it $3,000 to account for the fact that the pilot channel was not constructed, at a cost of approximately $1,678, and the driveway was not removed. Allice sent to Little York invoices demanding payment of $28,229.21, but, when he went to Little York's office, Nasr told him to "get a lawyer and sue" because Allice Trading had "walked off the job." On cross-examination, Allice admitted that he had negotiated the original contract with Nasr, not Lanza. He also admitted that the pond lacked a "restrictor pipe," but he asserted that this was not brought to his attention until the trial.
Lanza testified that he had never represented that he was authorized to modify the contract between Allice Trading and Little York. He did not tell Allice not to remove the driveway, not to fill in the detention pond, or not to construct the pilot channel. Lanza also did not agree to obtain the dirt to fill in the detention pond. He explained that Allice Trading should have obtained the dirt to fill in the detention pond and submitted a change order to seek compensation from Nasr. On cross-examination, Lanza admitted that he was at the project site about "every other day."
Nasr testified that he was the only person from Little York with the authority to modify the parties' contract and, at the outset, their agreement was for Allice Trading to take any dirt needed for the rest of the project out of the detention pond. Allice Trading was then to determine how much dirt it needed to fill in the detention pond and give Nasr a change order for any needed dirt. When Allice contacted Nasr eight months after "walk[ing] away from the project," Nasr told him to "come finish the job" and only then would Allice Trading "get paid in full." Nasr held the remaining 10% of the contract price as retainage "in case the contractor does not show up at the end," a practice common in the construction industry. He asserted that as a result of Allice Trading leaving the detention pond unfinished, it would cost approximately $40,000 to fully complete the detention pond.
The jury found that both Allice Trading and Little York had failed to comply with their agreement but Allice Trading's failure was excused. The jury also found that Allice Trading's breach was not material while Little York's breach was material. The jury further found that a sum of $28,229.21 would fairly and reasonably compensate Allice Trading for Little York's unexcused failure to comply with the agreement. Based on the jury's findings, the trial court entered judgment in favor of Allice Trading, awarding it $28,229.21 on its breach-of-contract claim. Little York filed a motion for a judgment notwithstanding the verdict and a motion for new trial, arguing that the evidence is legally and factually insufficient to support the verdict and the jury's damage award is excessive.
Sufficiency of the Evidence
In its first issue, Little York argues that the evidence is legally and factually insufficient to support the jury's findings because it is "undisputed" that Allice Trading committed the first material breach by abandoning the project and, as a result, Allice Trading could only recover on a theory of substantial performance for which it did not plead or request a jury issue. In its second issue, Little York argues that the evidence is legally and factually insufficient to support the jury's damage award because Allice's testimony regarding the cost of completion of the pilot channel was based on an "approximate guess" and "speculative testimony."
We will sustain a legal-sufficiency or "no-evidence" challenge if the record shows one of the following: (1) a complete absence of evidence of a vital fact, (2) rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). In conducting a legal-sufficiency review, a "court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it." Id. at 822. The term "inference" means,
In the law of evidence, a truth or proposition drawn from another which is supposed or admitted to be true. A process of reasoning by which a fact or proposition sought to be established is deduced as a logical consequence from other facts, or a state of facts, already proved. . . .Marshall Field Stores, Inc. v. Gardiner, 859 S.W.2d 391, 400 (Tex. App.— Houston [1st Dist.] 1993, writ dism'd w.o.j.) (citing BLACK'S LAW DICTIONARY 700 (5th ed. 1979)). For a jury to infer a fact, "it must be able to deduce that fact as a logical consequence from other proven facts." Id.
If there is more than a scintilla of evidence to support the challenged finding, we must uphold it. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). "'[W]hen the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is no more than a scintilla and, in legal effect, is no evidence.'" Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)). However, if the evidence at trial would enable reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. City of Keller, 168 S.W.3d at 822; see also King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). "A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement." City of Keller, 168 S.W.3d at 822.
In a factual-sufficiency review, we must examine both the evidence supporting and contrary to the verdict. See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001); Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We note that the jury is the sole judge of the witnesses' credibility, and it may choose to believe one witness over another; a reviewing court may not impose its own opinion to the contrary. See Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003). In our review of the factual sufficiency of the evidence, we must consider and weigh all of the evidence, and we will set aside a verdict only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986).
Breach of Contract
In order to prevail on its breach-of-contract claim, Allice Trading was required to prove (1) the existence of a valid contract between it and Little York, (2) its performance or tender of performance, (3) Little York's breach of the contract, and (4) its damages as a result of the breach. Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). "A breach of contract occurs when a party fails or refuses to do something he has promised to do." B & W Supply, Inc. v. Beckman, 305 S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).
Little York argues that because Allice Trading abandoned the project in January 2009, leaving the detention pond unfinished, Allice Trading committed the first breach of the contract. As a result, Little York asserts that Allice Trading would have to recover under the doctrine of substantial performance. However, the jury found that any breach by Allice Trading was excused and Little York's failure to comply with the agreement was material. The trial court instructed the jury that a failure to comply with an agreement may be excused by "the other party's previous failure to comply with a material obligation of the . . . agreement" or by "the other party's prior repudiation of the . . . agreement." Thus, within its substantial-performance argument, Little York challenges the sufficiency of the evidence supporting the jury's finding that any breach by Allice Trading was excused.
Allice Trading argues that the evidence supports the jury's finding that Allice Trading's breach of the contract was excused. It asserts that it completed its obligations with the exception of the pilot channel and its failure to construct the pilot channel was excused either by Little York's failure to supply the necessary materials under the contract or Little York's repudiation of the contract.
A material breach by one party to a contract can excuse the other party from any obligation to perform. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) ("It is a fundamental principle of contract law that when one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance."). The materiality of a breach, i.e., the question of whether a party's breach of a contract will render the contract unenforceable, generally presents a dispute for resolution by the trier of fact. See Cont'l Dredging, Inc. v. De-Kaizered, Inc., 120 S.W.3d 380, 394-95 (Tex. App.—Texarkana 2003, pet. denied) (citing Hudson v. Wakefield, 645 S.W.2d 427, 430 (Tex. 1983)).
There are five significant factors to consider in determining whether a failure to perform is material:
(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;See Mustang Pipeline, 134 S.W.3d at 200 (quoting RESTATEMENT (SECOND) OF CONTRACTS § 241 (1981)).
(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;
(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;
(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of the circumstances including any reasonable assurances; and
(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.
The trial court's charge tracked four of these five factors to aid the jury in determining the materiality of the breach, omitting only "the extent to which the party failing to perform or to offer to perform will suffer forfeiture."
A contractor who is unjustifiably prevented by an owner from finishing his work may sue and recover as provided by the contract. Farris v. Smith Erectors, Inc., 516 S.W.2d 281, 283 (Tex. App.—Houston [1st Dist.] 1974, no pet.). Also, delay caused by an owner on a construction project may constitute a breach of contract. See, e.g., Beard Family P'ship v. Commercial Indem. Ins. Co., 116 S.W.3d 839, 847 (Tex. App.—Austin 2003, no pet.) (holding that owner breached contract for construction project when owner's initial plans were inadequate and required several revisions over course of project); see also Anderson Dev. Corp. v. Coastal States Crude Gathering Co., 543 S.W.2d 402, 406 (Tex. Civ. App.— Houston [14th Dist.] 1976, writ ref'd n.r.e.) (holding that contractor's failure to timely perform under contract was excused when it was prevented from timely performing by owner).
Here, there is evidence that Little York prevented Allice Trading from completing its contract. Allice testified that the two parties had agreed that Little York would supply the necessary dirt, and it submitted into evidence a change order removing the cost of dirt from the amount due to Allice Trading. And, when Allice Trading's only remaining obligation was to install the pilot channel in the detention pond, Lanza told him to remove dirt from the detention pond. Little York then failed to supply the dirt needed to fill in the detention pond, halting its completion. Lanza, who had been directing the contractors on site, then informed Allice Trading that Little York no longer needed the detention pond to be completed.
Viewing this evidence in the light most favorable to the verdict, we conclude that the jury could have reasonably found that Little York committed the first breach of the contract, either by failing to supply the necessary materials or by repudiating Allice Trading's remaining obligations. See Farris, 516 S.W.2d at 283. Furthermore, considering all of the evidence, we cannot conclude that the evidence supporting the jury's findings is so weak that the findings are clearly wrong and manifestly unjust. See Pool, 715 S.W.2d at 635.
Little York asserts that it is "undisputed" that Allice Trading committed the first material breach and the jury's answers do not reflect a finding that Little York was the first to materially breach the contract. The jury found that both parties breached the contract, but, in Question 2, further found that Allice Trading's breach was "excused." Question 2 included an instruction that a "[f]ailure to comply by a party is excused by the other party's previous failure to comply with a material obligation of the same agreement." We conclude that the evidence presented supports the jury's implied finding that Little York committed the first material breach.
Little York argues that Allice Trading is nevertheless precluded from recovering on its breach-of-contract claim because it is undisputed that Allice Trading breached the contract by failing to complete the detention pond, which was "essential to the project." In support of this argument, Little York relies on Atkinson v. Jackson Bros., 270 S.W. 848 (Tex. 1925). In Atkinson, the Texas Supreme Court held that in order to recover on its breach-of-contract claim, a "contractor must have in good faith intended to comply with the contract" and any defects could not be "pervasive" or "a deviation from the general plan contemplated for the work." Id. at 851. However, in Atkinson, the defendant's only breach was a failure to fully pay for lumber and materials that the plaintiff had already acquired for the job. Id. at 848-49. Here, in contrast, the jury found that Little York had committed the first breach of the contract and any failure by Allice Trading to comply with the contract was a result of Little York's prior breach or repudiation.
"Substantial performance is a doctrine that allows breaching parties who have substantially completed their obligations to recover on a contract," but a lack of substantial performance does not preclude recovery for a breach of contract when the other party has committed the first material breach. Tips v. Hartland Developers, Inc., 961 S.W.2d 618, 623 (Tex. App.—San Antonio 1998, no pet.). For example, in Tips, the plaintiff alleged that the defendant had failed to make the final payment on a construction contract, although he had not completed some of the requirements under the contract himself. Id. at 620-21. The Fourth Court of Appeals conceded that the plaintiff had not substantially performed under the contract but found substantial performance "irrelevant to the resolution of [the] case." Id. at 623. Because the plaintiff was injured by the defendant's anticipatory breach, it could sue for damages under a breach-of-contract theory, despite not having substantially performed itself. Id. In such a case, "[a] contractor can recover on a contract when the failure to substantially perform is the fault of the other party." Id.; see also Fuentes v. San Anastacio Dev. Ltd., No. 13-08-00743-CV, 2010 WL 2967158, at *2-3 (Tex. App.—Corpus Christi July 29, 2010, no pet.) (mem. op.) (holding that because jury found that defendant committed first material breach, plaintiff did not have to obtain jury finding on its substantial performance); Flood Control Dist. v. Calgary Inc., No. 05-01-01462-CV, 2002 WL 1495017, at *1-2 (Tex. App.—Dallas July 15, 2002, no pet.) (mem. op.) (not designated for publication) ("The trial court's determination that the [defendant] breached the contract first renders whether [the plaintiff] substantially performed immaterial.").
Likewise, here, although the jury found that Allice Trading had breached the contract, the issue of Allice Trading's substantial performance was irrelevant because the jury further found that any breach by Allice Trading was excused by Little York's prior material breach. Because the jury found that Little York committed the first material breach, and the evidence supports that finding, Allice Trading was relieved from the obligation of further performance. See Mustang Pipeline Co., 134 S.W.3d at 196. Accordingly, we hold that Allice Trading was not required to prove its substantial performance under the contract.
We overrule Little York's first issue.
Damages
In its second issue, Little York argues that the evidence is legally and factually insufficient to support the jury's damages award because Allice's testimony regarding the cost of completion for the pilot channel was based on an "approximate guess" and "speculative testimony." Little York asserts that the only competent evidence of the cost of completion was given by Nasr, who testified that it would cost about $40,000 for him to complete the detention pond.
In support of this argument, Little York relies upon Malone v. E.I. du Pont de Nemours & Co., 8 S.W.3d 710 (Tex. App.—Fort Worth 1999, pet. denied). In Malone, the court held that the plaintiff had submitted no evidence on the issue of damages for lost profits where the defendant had allegedly sold him defective paint. Id. at 715-16. The plaintiff testified that he had "bought about 100,000 gallons of paint and about 5,000 gallons was bad and it cost me about $1 a gallon." Id. at 716. He further testified that his estimate of 5,000 gallons of paint being defective was "pulled out of the air" and "purely a guess." Id.
Here, Allice provided a more detailed breakdown of the specific costs involved. Allice testified that the pilot channel would cost him about $1,678 dollars to complete at the time that he was instructed that it was no longer needed. To arrive at this number, he calculated that he would have needed about $700 worth of concrete, $95 worth of steel, $145 worth of two-inch-by-four-inch pieces of lumber, and about $150 per day for labor. He estimated that removing the driveway would cost $135 to procure the necessary dump trucks and installing the restrictor pipe for the detention pond would cost $200, arriving at a total cost of completion of approximately $2,000. Allice rounded the number up to $3,000 when asked about the retainage. Although he, on cross-examination, testified that the $3,000 figure was an "approximate guess" in that it was a "lump sum" of the required cost for the pilot channel, driveway removal, and restrictor pipe, his earlier testimony was more precise and was sufficient for the jury to rely upon it in calculating the damages, unlike the inadequate testimony in Malone. Viewing the evidence in the light most favorable to the jury's award, we conclude that the jury could have reasonably found that an award of $28,529.21 would compensate Allice Trading for Little York's breach of contract. We further conclude that the evidence that supports the jury's award is not so weak as to render the award clearly wrong and manifestly unjust. Accordingly, we hold that the evidence is legally and factually sufficient to support the jury's damage award. We overrule Little York's second issue.
Rebuttal Testimony
In its third issue, Little York argues that the trial court erred in not allowing it sufficient time to call rebuttal witnesses because it asserts that it was prevented from challenging portions of Allice's testimony that were inconsistent with his previous answers in discovery. As a result, Little York asserts, this "handcuffed [it] from presenting a complete case."
A complaint is not preserved for appellate review unless it was made to the trial court "with sufficient specificity to make the trial court aware of the complaint." TEX. R. APP. P. 33.1(a). To preserve error in regard to the exclusion of evidence, an offer of proof must be specific enough to enable the reviewing court to determine the admissibility of the disputed evidence. Hooper v. Chittaluru, 222 S.W.3d 103, 107 (Tex. App.—Houston [14th Dist.] 2006, pet. denied); In re N.R.C., 94 S.W.3d 799, 806 (Tex. App.—Houston [14th Dist.] 2002, pet. denied). Error may not be predicated on the exclusion of evidence unless a party's substantial rights are affected and "the substance of the evidence was made known to the court by offer, or was apparent from the context within which questions were asked." Wade v. Comm'n for Lawyer Discipline, 961 S.W.2d 366, 374 (Tex. App.—Houston [1st Dist.] 1997, no pet.); TEX. R. EVID. 103(a)(2).
At the beginning of the trial, the trial court asked both parties about the amount of time that they needed to call their witnesses, cross-examine the other parties' witnesses, call rebuttal witnesses, and make closing arguments, allotting each side one hour and forty-five minutes per their agreement. After Allice's testimony, the trial court informed Little York that it had used one hour and five minutes of its allotted time during its cross-examination of Allice. Little York informed the trial court that it had "woefully underestimated the time that [it] need[ed]" and explained that it would need more time to "call a rebuttal witness" later in trial. The trial court denied this request, but it kept both parties informed of their remaining time at the conclusion of each witnesses' testimony and before their closing arguments. Although Little York now asserts that it needed more time to call Allice as a rebuttal witness to point out inconsistencies with his testimony and his discovery responses, at trial it requested only that it call "a rebuttal witness" without identifying the witness or its proposed line of questioning. Under these circumstances, we hold that Little York did not make the substance of its proposed rebuttal testimony known with sufficient specificity and it has not preserved this issue for our review. See TEX. R. APP. P. 33.1(a).
We also note that Little York had already spent a substantial amount of its time during cross-examination confronting Allice with his previous responses in discovery.
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We overrule Little York's third issue.
Conclusion
We affirm the judgment of the trial court.
Terry Jennings
Justice
Panel consists of Justices Jennings, Sharp, and Brown.