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rejecting argument that term obligating party to submit insurance "acceptable to" other party "is subjective and amounts to no contract term at all" because when performance is conditioned on one party's judgment, courts imply requirement that such judgment is exercised in good faith
Summary of this case from Jimmie Luecke Children P'ship v. DroemerOpinion
No. 05-19-00153-CV
08-11-2020
EM BUILDING CONTRACTORS SERVICES, LLC, Appellant v. BYRD BUILDING SERVICES, LLC, Appellee
On Appeal from the 199th Judicial District Court Collin County, Texas
Trial Court Cause No. 199-04946-2016
MEMORANDUM OPINION
Before Justices Osborne, Partida-Kipness, and Pedersen, III
Opinion by Justice Pedersen, III
This case involves a subcontractor, appellant EM Building Contractor Services, LLC, that did not complete the work on three construction projects that it had contracted to perform. EM Building, the defendant and counter-plaintiff in the case below, appeals a summary judgment rendered against it. We must decide whether the plaintiff and counter-defendant, Byrd Building Services, LLC, established its breach-of-contract claim as a matter of law and whether it conclusively negated EM Building's counterclaims. We answer "yes" to both of these questions. Further, all issues are well-settled in law; therefore, we issue this memorandum opinion. TEX. R. APP. P. 47.4. We affirm the district court's judgment.
I.
Background
Byrd is a general contractor owned by Thomas Jude. Byrd's construction projects at issue in this case are (i) a Holiday Inn Express in McKinney, Texas (the McKinney project), (ii) a Courtyard Marriot in Austin, Texas (the Austin project), and (iii) a Comfort Inn and Suites in Kyle, Texas (the Kyle project). Thomas Jude's brother, Michael Jude, was Byrd's supervisor over the Austin project, and both brothers are referenced throughout this opinion. For the sake of clarity, we will refer to each of the Jude brothers by his first name.
Byrd hired EM Building as a subcontractor to install the drywall on the McKinney and Austin projects and to do the framing on the Kyle project. Byrd and EM Building signed a separate subcontractor agreement for each project. Each subcontract required the payment of a lump sum "Contract Amount" to EM Building for the "work completed, approved[,] and accepted by [Byrd] and the Owner." In addition, each subcontract provided that "[t]ime is of the essence" and prohibited any subletting or assignment without Byrd's written consent. Each subcontract also required EM Building to carry specified types of insurance "in amounts and in solvent insurance companies acceptable to [Byrd]."
Subsequently, as the work under the subcontracts progressed, Byrd discovered what it believed to be multiple breaches of the contracts by EM Building and gave notices of default and demands to cure. In connection with the McKinney and Kyle projects, Byrd "demand[ed] a full work stoppage" until the defaults were cured. For the McKinney and Austin projects, Byrd also threatened a "swift and immediate" termination "[i]f what I see isn't acceptable and you have no replacement proposal." Byrd claims that EM Building then abandoned its work on the projects. In contrast, EM Building argues that Byrd asserted breach of contract as a pretext to fire EM Building without having to pay it for work that it had already performed. Following EM Building's exit from the projects, Byrd was in jeopardy of defaulting on its contracts with the owners. Accordingly, Byrd hired other subcontractors to complete the subject work and to repair EM Building's purportedly defective workmanship.
Byrd sued EM Building in November 2016 and alleged claims related to the McKinney project. These claims included (i) breach of contract and (ii) violations of Chapter 12 of the Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 12.001-.007 (Liability Related to a Fraudulent Court Record or a Fraudulent Lien or Claim Filed). Byrd alleged that EM Building breached the contract for the McKinney project by, among other things, failing to timely and diligently complete the work that it had agreed to perform.
EM Building denied Byrd's allegations and asserted counterclaims for breach of contract and quantum meruit related to each of the three projects. According to EM Building, it fully performed under the contracts, and Byrd refused to pay the money that it owed. EM Building also sought attorney's fees in connection with its contract counterclaim. See CIV. PRAC. & REM. § 38.001(8).
In May 2018, Byrd amended its petition to assert breach of contract and Chapter 12 claims with respect to each of the projects. It alleged that EM Building breached the contracts "by, among other things, failing to timely, diligently, and properly complete the Work, subcontracting the Work to others without informing [Byrd] or obtaining [Byrd's] consent, and failing to maintain the types and amounts of insurance coverage required by the Contracts." Byrd also sought attorney's fees pursuant to the contracts and Chapters 12 and 38 of the Civil Practice and Remedies Code. See id. §§ 12.006, 38.001(8).
Around this same time, Byrd and EM Building each amended its answer to assert various affirmative defenses. Pertinent to this appeal, EM Building's affirmative defenses included impossibility of performance, mutual mistake, waiver, offset, mitigation of damages, and the doctrine of avoidable consequences. Byrd's affirmative defenses included, among others, prior breach of contract, abandonment and repudiation of contract, and the right of offset by Byrd against any recoveries by EM Building.
Byrd filed a traditional motion for summary judgment with respect to its breach of contract claim. According to the motion, Byrd's summary-judgment evidence established as a matter of law that (i) EM Building materially breached the subject contracts by subcontracting the full scope of work under each contract without Byrd's consent or knowledge and by failing to maintain the types and amounts of insurance coverage required by each contract, (ii) EM Building willfully abandoned the subject projects, and (iii) Byrd incurred damages above the unpaid balance of the lump sum price on each contract, which caused Byrd recoverable contract damages and foreclosed EM Building's counterclaims.
On December 11, 2018, the district court granted Byrd's summary-judgment motion. The court awarded $177,119.23 in damages to Byrd with respect to its breach of contract claim. The court also dismissed all of EM Building's counterclaims and ordered that Byrd recover its reasonable attorney's fees and costs from EM Building, subject to an amount to be determined. The court directed that Byrd file a supplemental motion for summary judgment and submit by affidavit its evidence of fees and expenses.
Byrd filed its supplemental summary-judgment motion as ordered by the court and also filed a motion for a Rule 166 conference and for entry of final judgment. In addition, Byrd abandoned its claims asserted under Chapter 12 of the Civil Practice and Remedies Code. On February 8, 2019, the district court rendered judgment for Byrd in the amount previously awarded in its December 11 order. The judgment also awarded Byrd $85,185.27 in reasonable and necessary attorney's fees and costs. EM Building then filed this appeal.
See TEX. R. CIV. P. 166 (pre-trial conference).
II.
Analysis
EM Building raises five issues, which we repeat verbatim:
1. Did the trial court commit abuse of discretion in failing to grant EM Building's request for a continuance on the MSJ hearing until pertinent additional discovery had been completed?
2. Did the trial court abuse its discretion in admitting Byrd's summary judgment evidence over objections raised by EM Building?
3. Did the trial court err in granting summary judgment for Byrd?
4. Did the trial court err in dismissing EM Building's counterclaims as part of its order granting summary judgment to Byrd?
5. Did the trial court err in awarding Byrd's claimed damages when discovery on that issue was ongoing and there was conflicting summary judgment evidence regarding the amount of damages, if any, Byrd suffered?
Byrd, as the movant, bore the burden of (i) conclusively establishing each of the elements of its contract claim, MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986) (per curiam), and (ii) conclusively negating at least one element of each of EM Building's counterclaims, Adams v. Tri-Continental Leasing Corp., 713 S.W.2d 152, 153 (Tex. App.—Dallas 1986, no writ). In reviewing Byrd's summary-judgment motion, we view the evidence in the light most favorable to EM Building, crediting evidence a reasonable jury could credit and disregarding contrary evidence and inferences unless a reasonable jury could not. Painter v. Amerimex Drilling I, Ltd., 561 S.W.3d 125, 130 (Tex. 2018).
A. Motion for Continuance
On August 23, 2018, EM Building served on Cresencio Ibarra, a third-party subcontractor hired by EM Building to work on the Kyle project, a subpoena duces tecum and a notice of deposition on written questions. According to EM Building, Ibarra possessed information relevant to whether Byrd was aware that Ibarra was working on the project. Ibarra refused to produce the requested documents or to answer the deposition on written questions. EM Building filed a motion with the district court to compel Ibarra to provide the requested information. Its motion was set for hearing on December 11, 2018. The court ordered Ibarra to attend this hearing.
EM Building claims that this service was accomplished after repeated prior attempts to serve Ibarra, who attempted to evade service.
Meanwhile, Byrd filed its motion for summary judgment on November 20, 2018. This motion was set for hearing on December 11, the same day as the hearing on EM Building's motion to compel. In its response to Byrd's motion for summary judgment, EM Building requested a continuance of the summary-judgment hearing. EM Building attached an excerpt of the court's docket sheet, which shows that the December 11 hearing was scheduled to last only fifteen minutes. It also submitted an affidavit of its principal owner, Erik Mendez. See TEX. R. CIV. P. 166a(g) ("Should it appear from the affidavits of a party opposing the motion that he cannot . . . present by affidavit facts essential to justify his opposition, the court may . . . order a continuance to permit . . . depositions to be taken or discovery to be had."); Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 647 (Tex. 1996) ("When a party contends that it has not had an adequate opportunity for discovery before a summary judgment, it must file either an affidavit explaining the need for further discovery or a verified motion for continuance." (citing TEX. R. CIV. P. 166a(g), 251, 252)). This affidavit was based on Mendez's conversations with his attorney, and it set forth the reasons for EM Building's request for a continuance. Among other grounds, Mendez averred that Byrd "ha[d] essentially 'piggybacked' on top of EM Building's December 11 . . . hearing" and that fifteen minutes was an insufficient amount of time to hear both motions. Byrd objected to the Mendez affidavit as inadmissible hearsay. See TEX. R. EVID. 802.
The district court's December 11, 2018 order granting a partial summary judgment in favor of Byrd does not reference the motion for continuance. EM Building asserts that the court implicitly denied the motion for continuance by ruling on the motion for summary judgment. See TEX. R. APP. P. 33.1(a)(2)(A) ("As a prerequisite to presenting a complaint for appellate review, the record must show that . . . the trial court . . . ruled on the request, objection, or motion, either expressly or implicitly." (emphasis added)). Its first issue contends that the court abused its discretion in denying this request. See Cooper v. Circle Ten Council Boy Scouts of Am., 254 S.W.3d 689, 696 (Tex. App.—Dallas 2008, no pet.) ("We review a trial court's decision whether to grant a party additional time for discovery before a summary judgment hearing for an abuse of discretion.").
Byrd responds that EM Building did not obtain a setting or a ruling on its motion for continuance, and, therefore, it failed to preserve its complaint that the district court erred by not granting the motion. As support, Byrd cites cases from this Court that held an appellant, by not obtaining a ruling on its motion to continue a summary judgment hearing, waived its complaint regarding the court's refusal to grant the motion. For example, in Gonerway v. Corr. Corp. of America, the record did not show that the appellant called her motion for continuance to the attention of the trial court, nor was there anything in the record to show the appellant objected to the court's purported refusal to grant her motion. 442 S.W.3d 443, 445-46 (Tex. App.—Dallas 2013, no pet.); accord Hightower v. Baylor Univ. Med. Ctr., 251 S.W.3d 218, 224-25 (Tex. App.—Dallas 2008, pet. struck). However, in Restaurant Teams International, Inc. v. MG Sec. Corp., this Court held that the trial court implicitly denied the appellants' motion for continuance when it proceeded with the hearing on the appellees' motion for summary judgment and then granted that motion. 95 S.W.3d 336, 338 (Tex. App.—Dallas 2002, no pet.); see also In re Z.L.T., 124 S.W.3d 163, 165 (Tex. 2003) (concluding error preserved by implicit ruling on request for bench warrant where court proceeded to trial without issuing the warrant); Favour Leasing, LLC v. Mulligan, No. 05-13-01000-CV, 2014 WL 4090130, at *10 (Tex. App.—Dallas Aug. 19, 2014, no pet.) (mem. op.) ("[A]lthough the record does not reflect the trial court explicitly ruled on [cross-appellant's] motion for continuance, the trial court implicitly denied the motion when it proceeded with the special appearance hearing and denied the special appearance."); cf. Seim v. Allstate Tex. Lloyds, 551 S.W.3d 161, 166 (Tex. 2018) (per curiam) (noting that a ruling may be implied if the implication is "'clear.'" (quoting In re Z.L.T., 124 S.W.3d at 165)).
Based on the record before us, we conclude that the district court's grant of Byrd's summary-judgment motion clearly implied that the court had denied EM Building's request for a continuance. This implicit denial preserved for our review EM Building's complaint regarding the denial.
In Seim, the Texas Supreme Court held that a trial court's ruling on an objection to summary-judgment evidence is not implicit in its ruling on the motion for summary judgment. 551 S.W.3d at 165-66 (discussing Well Sols., Inc. v. Stafford, 32 S.W.3d 313, 316-17 (Tex. App.—San Antonio 2000, no pet.); Dolcefino v. Randolph, 19 S.W.3d 906, 926 (Tex. App.—Houston [14th Dist.] 2000, pet. denied)). In the words of the supreme court, "if sustaining the objection was not necessary for the court to grant summary judgment, how can the summary-judgment ruling be an implication that the objections were sustained?" Id. at 166. In contrast, the denial of EM Building's request for a continuance was necessary before the district court could proceed to the merits of Byrd's summary judgment motion. Thus, in our view, Seim is not contrary to our holding in this case that the district court implicitly denied EM Building's request for a continuance.
We next consider Byrd's objection, which was sustained by the district court, that Mendez's affidavit in support of EM Building's motion for continuance is inadmissible because it is "[r]ife with hearsay" regarding what EM Building's attorney said to Mendez. See TEX. R. EVID. 802 (providing that hearsay is not admissible, subject to certain enumerated exceptions). EM Building counters that Rule 166a(g) refers to "the affidavits of a party opposing the motion [for summary judgment]"—in this case, EM Building. In light of this rule, EM Building contends that Mendez's affidavit, though based on hearsay, was admissible. See TEX. R. EVID. 802 (providing that hearsay is admissible if permitted by "a statute," "these rules," or "other rules prescribed under statutory authority" (emphasis added)).
We are not persuaded by EM Building's argument. The reference to "affidavits" in Rule of Civil Procedure 166a(g) must be read in the context of Rule 166a(f), which states that "[s]upporting and opposing affidavits . . . shall set forth such facts as would be admissible in evidence." TEX. R. CIV. P. 166a(f) (emphasis added). In light of this language, we do not interpret Rule 166a(g) as providing an exception to the rule against hearsay evidence contained in Rule of Evidence 802. Nor has EM Building offered any other statute or rule that would excuse Rule 802 from applying to Mendez's affidavit. Cf. TEX. CODE CRIM. PROC. ANN. art. 38.072, sec. 2(b) (permitting admission of hearsay statements of certain abuse victims). Accordingly, we conclude that the Mendez affidavit is inadmissible. Absent this affidavit, EM Building's motion for continuance lacks the supporting evidence mandated by Rule 166a(g); cf. El Dorado Motors, Inc. v. Koch, 168 S.W.3d 360, 369 (Tex. App.—Dallas 2005, no pet.) (absent affidavit or verification, summary-judgment non-movant's motion for continuance failed to comply with rules of civil procedure); Selz v. Friendly Chevrolet, Ltd., 152 S.W.3d 833, 836 (Tex. App.—Dallas 2005, no pet.) (absent an affidavit explaining the need for further discovery or a verified motion for continuance, trial court did not err in granting summary judgment without affording non-movant more time for discovery).
In addition, even if we were to conclude that Mendez's affidavit is admissible, we cannot say that the district court abused its discretion in denying EM Building's motion for continuance. In evaluating the district court's ruling in this context, we consider the length of time the case has been on file before the hearing, the materiality of the discovery sought, whether the party seeking the continuance exercised due diligence in obtaining the discovery, and what the party expects to prove. Cooper, 254 S.W.3d at 696.
Here, Byrd's case had been on file for over two years when EM Building filed its motion for continuance. Although the claims in Byrd's original petition did not mention the Kyle project, which is the project on which Ibarra worked, EM Building's counterclaims with respect to this project had been on file for over twenty-two months when it requested a continuance.
As for the materiality of the discovery sought and what EM Building expects to prove with this discovery, Mendez's affidavit states that Ibarra "did work on the Comfort Suits project in Kyle, Texas" and it also describes the categories of information that EM Building sought from Ibarra—i.e., any written contract or agreement, or any communications, between Ibarra and Byrd, and any certificate of liability insurance for the Kyle project. However, the affidavit did not specify how or why the foregoing information was material to EM Building's case.
EM Building's motion to compel also urged that Ibarra is believed to possess documents pertaining to the Kyle project. In addition, its summary-judgment response argued that the discovery requested from Ibarra "is essential to the case, as it would touch on whether Byrd was aware that Ibarra was working on the [Kyle] project, and[,] therefore[,] waived any claim to breach of contract regarding the use of subcontractors." However, it is the affidavit—not the arguments of counsel—that must explain the materiality of the evidence sought. See id. As described above, Mendez's affidavit does not explain how or why the information sought from Ibarra is material.
"The affidavit must describe the evidence sought, explain its materiality, and set forth facts showing the due diligence used to obtain the evidence prior to the hearing." Cooper, 254 S.W.3d at 696 (citing MKC Energy Invs., Inc. v. Sheldon, 182 S.W.3d 372, 379 (Tex. App.—Beaumont 2005, no pet.) and Carter v. MacFadyen, 93 S.W.3d 307, 310 (Tex. App.—Houston [14th Dist.] 2002, pet. denied)); accord Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520-22 (Tex.1995).
In addition, the Mendez affidavit does not describe the due diligence undertaken by EM Building in obtaining the requested discovery. Although such an explanation is provided in EM Building's motion to compel and in its summary-judgment response, it is their motion for continuance affidavit, not these documents, that we consider when determining whether the district court abused its discretion in denying the requested continuance. See id. Here, EM Building's continuance affidavit failed to show that it diligently pursued discovery. It is not an abuse of discretion to deny a motion for continuance when the party seeking the continuance fails to show it diligently pursued discovery. Tejas Motel, L.L.C. v. City of Mesquite by & Through Bd. of Adjustment, No. 05-19-00667-CV, 2020 WL 2988566, at *7 (Tex. App.—Dallas June 4, 2020, no pet. h.) (mem. op.) (citing Zaidi v. N. Tex. Tollway Auth., No. 05-17-01056-CV, 2018 WL 6426798, at *1 (Tex. App.—Dallas Dec. 6, 2018, no pet.) (mem. op.)).
Finally, it is generally not an abuse of discretion to deny a motion for continuance where, as here, the party seeking the continuance has received the twenty-one days' notice required by Rule 166a(c). Cooper, 254 S.W.3d at 697.
Based on this record, we cannot say that the court abused its discretion. We overrule EM Building's first issue.
B. Objections to Summary-Judgment Evidence
EM Building's second issue urges that the district court abused its discretion by admitting, over EM Building's objection, portions of a declaration that Byrd submitted in support of its motion for summary judgment. See CIV. PRAC. & REM. § 132.001 (providing for unsworn declaration in lieu of affidavit required by statute, rule, or order). The admission and exclusion of evidence is committed to the trial court's sound discretion. Texas Dept. of Transp. v. Able, 35 S.W.3d 608, 617 (Tex. 2000). We must uphold a trial court's evidentiary ruling if there is any legitimate basis for it. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998).
1. Contradictions
The subject declaration was signed by Thomas, who was Byrd's owner, Vice President, and custodian of records. EM Building objected to two paragraphs in the declaration that, in EM Building's view, contain contradictions that render them inadmissible. Specifically, Thomas avers in paragraph nine that Byrd's damages are "shown in more detail in the expense records and summary of the same attached hereto as Exhibit H-1 ," but he concedes in paragraph eleven that "[t]here are a few checks or proofs of expense in the records attached hereto as [E]xhibit H-1 which included expenses not chargeable to the Projects." (Emphasis added). EM Building invoked Rule 166a(c), which provides that "[a] summary judgment may be based on uncontroverted testimonial evidence of an interested witness . . . if the evidence is clear, positive and direct, otherwise credible and free from contradictions and inconsistencies, and could have been readily controverted" (emphasis added)). Based on this rule, EM Building urged that Thomas's declaration was inadmissible in its entirety. We disagree because, in our view, paragraph eleven of the declaration simply clarifies, rather than contradicts, paragraph nine. See Hernandez v. Lukefahr, 879 S.W.2d 137, 143 (Tex. App.—Houston [14th Dist.] 1994, no writ) ("[T]he kind of inconsistency prohibited by the rule is an affiant's stating equivocating positions which do not serve to clarify the pertinent issues in the case for which the affidavit is being offered.").
2. Legal conclusions
EM Building also objected to several paragraphs in Thomas's declaration on the basis that they contain legal conclusions. See Anderson v. Snider, 808 S.W.2d 54, 55 (Tex. 1991) (per curiam) ("[T]estimony comprised only of legal conclusions is insufficient to support summary judgment as a matter of law."); 6200 GP, LLC v. Multi Serv. Corp., No. 05-16-01491-CV, 2018 WL 3154594, at *5 (Tex. App.—Dallas June 28, 2018, no pet.) (mem. op.) (noting that a "conclusory" statement may set forth an unsupported factual conclusion or an unsupported legal conclusion and that such statements are neither credible nor susceptible to being readily controverted (citing, inter alia, TEX. R. CIV. P. 166a(c)).
Specifically, paragraph five lists the tasks that EM Building was contractually obligated to perform in installing the drywall system on the McKinney and Austin projects and in completing the framing on the Kyle project. Paragraph six describes other contractual requirements, i.e., the prohibition against subcontracting out the work without Byrd's consent and the requirement that EM Building maintain the insurance specified in the contracts. Thomas's declaration also attaches copies of the contracts to which the foregoing paragraphs refer. "[T]o 'the extent the complained-of statements explain the content of the attached documents . . . they are not conclusory.'" Rogers v. RREF II CB Acquisitions, LLC, 533 S.W.3d 419, 436 (Tex. App.—Corpus Christi-Edinburg 2016, no pet.) (quoting Rockwall Commons Assocs., Ltd. v. MRC Mortg. Grantor Tr. I, 331 S.W.3d 500, 512 (Tex. App.—El Paso 2010, no pet.)). Accordingly, we conclude the trial court did not err in overruling EM Building's objection to the foregoing statements in paragraphs five and six.
Paragraphs six, seven, eight, nine, and twelve also refer to "material" requirements and obligations under the contracts, "breaches" or "material breaches" by EM Building, and EM Building's "repudiat[ion]" of the contracts. These phrases are not competent summary-judgment evidence because they amount to legal conclusions. See Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984) (holding affidavits stating legal conclusions, not facts, are incompetent summary-judgment proof); Chhim v. Univ. of Houston, 76 S.W.3d 210, 216 (Tex. App.—Texarkana 2002, pet. denied) ("The affidavit must allege specific facts of a nature that can be effectively countered by opposing evidence." (citing Casso v. Brand, 776 S.W.2d 551, 558 (Tex. 1991))). Thus, we conclude that the district court abused its discretion in overruling EM Building's objection to the above-quoted phrases.
3. Inadmissible expert testimony
Paragraph nine of Thomas's declaration states that Byrd retained other subcontractors to repair EM Building's "defective work." EM Building objected to this averment on the basis that Thomas is not qualified as an expert witness to render such an opinion. We agree that the foregoing averment is in the nature of expert testimony because it necessarily requires the application of technical or specialized knowledge. See TEX. R. EVID. 702; cf. Reid Rd. Mun. Util. Dist. No. 2 v. Speedy Stop Food Stores, Ltd., 337 S.W.3d 846, 851 (Tex. 2011) (stating that testimony regarding fair market value of real property will generally be considered expert testimony "when the main substance of the witness's testimony is based on application of the witness's specialized knowledge, skill, experience, training, or education to his familiarity with the property"). To the extent Thomas's status as a contractor was insufficient to render him competent to testify as an expert regarding EM Building's "defective work," the district court abused its discretion in overruling EM Building's objection. See TXI Transp. Co. v. Hughes, 306 S.W.3d 230, 234 (Tex. 2010) ("For an expert's testimony to be admissible, the expert witness must be qualified to testify about 'scientific, technical, or other specialized knowledge'" (quoting TEX. R. EVID. 702)).
4. Inadmissible hearsay
Exhibit H-1 to Thomas's declaration is a spreadsheet that reflects the mitigation costs incurred by Byrd in completing the subject projects after EM Building purportedly abandoned them. The spreadsheet is accompanied by supporting expense records. With respect to these records, Thomas's declaration essentially tracks the language of Texas Rule of Evidence 803(6), thereby excepting the records from the rule against hearsay. See id. (excepting "Records of a Regularly Conducted Activity" from the rule against hearsay). However, EM Building objected that Thomas's declaration does not establish that the spreadsheet itself is a record of regularly conducted activity, and thus the spreadsheet is inadmissible hearsay.
EM Building also objected that the spreadsheet was not produced in discovery, but its appeal brief does not explain why such non-production requires reversal of the district court's judgment.
Byrd countered that the spreadsheet is admissible as a summary of the attached voluminous records, see TEX. R. EVID. 1006, and as a calculation of the sum of expenses attested to in Thomas's declaration. We agree with Byrd. "A summary is admissible under Rule 1006 over a hearsay objection if the proponent of the summary establishes that the underlying documents are admissible under one of the exceptions to the hearsay rule." Williams v. Crawford, No. 03-16-00696-CV, 2018 WL 1124306, at *12 (Tex. App.—Austin Mar. 2, 2018, no pet.) (mem. op.). Since the records attached to Thomas's declaration are admissible under Rule 803(6), the district court did not abuse its discretion in admitting into evidence the spreadsheet that summarizes these records.
5. Harmful error
Having determined that the district court abused its discretion in admitting into evidence the above-referenced portions of Thomas's declaration that contained legal conclusions and inadmissible expert testimony, we next consider whether this error was harmful. See TEX. R. APP. P. 44.1 (a)(1) ("No judgment may be reversed on appeal on the ground that the trial court made an error of law unless the court of appeals concludes that the error complained of . . . probably caused the rendition of an improper judgment."). In conducting such an analysis, we review the entire record and require EM Building to demonstrate that the judgment turns on the particular evidence admitted. Kia Motors Corp. v. Ruiz, 432 S.W.3d 865, 883 (Tex. 2014); see also In re Estate of Marley, 390 S.W.3d 421, 425 (Tex. App.—El Paso 2012, pet. denied) (noting that appellant bears burden to establish that trial court committed reversible error).
Here, the inadmissible averments in Thomas's declaration were a very small portion of the declaration as a whole. Upon excluding these particular averments from our review, the remainder of the declaration contains numerous admissible averments of fact. As detailed below, the admissible averments support the rendition of summary judgment for Byrd. Accordingly, EM Building has not shown that the district court committed reversible error by admitting the foregoing evidence. See TEX. R. APP. P. 44.1(a)(1); Kia Motors, 432 S.W.3d at 883; In re Estate of Marley, 390 S.W.3d at 425. We overrule EM Building's second issue.
C. Byrd's Claims
EM Building's third issue asserts that the district court erred in granting summary judgment for Byrd with respect to its breach of contract claim. We review a trial court's summary-judgment ruling de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A party moving for traditional summary judgment bears the burden of proving that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. SeaBright Ins. Co. v. Lopez, 465 S.W.3d 637, 641 (Tex. 2015) (citing, inter alia, TEX. R. CIV. P. 166a(c)). In the context of this case, Byrd, as the plaintiff, had the burden of conclusively establishing each essential element of its contract claim. MMP, 710 S.W.2d at 60; Dallas, Garland & Ne. R.R. v. Hunt Cty., 195 S.W.3d 818, 820 (Tex. App.—Dallas 2006, no pet.).
The elements of a breach of contract claim are (i) the existence of a valid contract, (ii) performance or tendered performance by the plaintiff, (iii) breach of the contract by the defendant, and (iv) damages to the plaintiff resulting from that breach. Woodhaven Partners, Ltd. v. Shamoun & Norman, L.L.P., 422 S.W.3d 821, 837 (Tex. App.—Dallas 2014, no pet.); see also Myers v. Hall Columbus Lender, LLC, 437 S.W.3d 632, 635 (Tex. App.—Dallas 2014, no pet.) (describing such elements as (i) a contract existed between the parties, (ii) the contract created duties, (iii) the defendant breached a material duty under the contract, and (iv) the plaintiff sustained damages). With respect to these elements, EM Building's third issue urges that (i) there was no valid enforceable written contract for the Kyle project, and (ii) Byrd did not establish material breaches as a matter of law on each project contract. We will consider these arguments in turn.
1. Existence of an enforceable contract
Byrd attached to its motion for summary judgment a copy of the Kyle project contract. The contract lists the project's address as 5213 Physicians Way, Kyle, Texas 78640. Its terms require EM Building to "furnish all necessary labor, supervision, materials, equipment, transportation, scaffolding and hoisting required to furnish, install and complete the Building Framing Systems."
The contract also incorporates an "Attachment A," entitled "Subcontractor Scope of Work," which describes forty-three numbered tasks to be performed by EM Building in installing the subject framing. Task one refers to an inspection by the City of Kyle inspection department and engineer of record. Pertinent to this appeal, other tasks in Attachment A refer to the McKinney project, not the Kyle project. Specifically, task forty states:
Framing notes and details for the Holiday Inn Express-McKinney will be given to you on your start day. Structure to be ready for dry on or before Per Schedule. Rain days will be credited on a day for day basis.
Task four also describes the subject work as including framing walls on four floors of the project. EM Building points to the deposition transcript of Ron Kilman, the onsite supervisor of the Kyle project, which EM Building attached to its summary-judgment response. According to Kilman, the Kyle project had only three floors. Thus, EM Building asserts that there was no enforceable written contract with respect to the Kyle project.
Byrd responds that the foregoing discrepancies in the Kyle contract, while they reveal an apparent scrivener's error, are immaterial to the existence of a binding contract. We agree with Byrd. The elements of a binding contract are (i) an offer, (ii) an acceptance in strict compliance with the terms of the offer, (iii) a meeting of the minds, (iv) each party's consent to the terms, and (v) execution and delivery of the contract with the intent that it be mutual and binding. Effel v. McGarry, 339 S.W.3d 789, 792 (Tex. App.—Dallas 2011, pet. denied). The Kyle contract, interpreted as a whole, establishes a meeting of the minds and consent to its material terms, which obligated EM Building to install the framing on the Kyle project. Cf. Sadeghi v. Gang, 270 S.W.3d 773, 776-77 (Tex. App.—Dallas 2008, no pet.) (summary judgment evidence established meeting of minds and consent to terms of oral stock purchase agreement announced in open court, notwithstanding that such agreement had not been reduced to a formal writing as contemplated by the parties). Accordingly, Byrd has met its summary-judgment burden of establishing as a matter of law the existence of a binding contract. See TEX. R. CIV. P. 166a(c)); SeaBright, 465 S.W.3d at 641 (Tex. 2015).
See Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 892 (Tex. 2017) ("We have repeatedly affirmed that every contract should be interpreted as a whole and in accordance with the plain meaning of its terms.").
2. Breach
Byrd's summary-judgment evidence included a copy of each of the subject contracts. Each contract contains a detailed project schedule and states that "[t]ime is of the essence." Each contract also requires EM Building to, among other things (i) keep itself "fully informed as to the progress of this project," (ii) adhere to the project schedule, (iii) neither "sublet nor assign[ ] [the contract or its proceeds] either wholly or in part without written consent by [Byrd]," and (iv) "carry workman's Compensation, public liability, property damage and commercial liability insurance in amounts and in solvent insurance companies acceptable to [Byrd]." Byrd's amended petition alleged that EM Building breached the foregoing provisions, among others.
a. Byrd's burden of proof
We next consider whether Byrd's evidence met its summary-judgment burden.
i. Subcontracting without Byrd's consent
EM Building's principal owner, Mendez, testified in deposition that he reviewed each of the subject contracts and that he understood them. Notwithstanding the prohibition in these contracts against assignment or subletting, Mendez acknowledged that EM Building subcontracted (i) the McKinney project to Jose Garcia, (ii) the Austin project to Jose's brother, Julio, and (iii) the Kyle project to Ibarra. According to Mendez, EM Building did not notify Byrd of the foregoing subcontracts because "they never asked me[,] and I just wanted to do the work." Thomas averred that the subcontracts were unknown to Byrd and that, upon discovering them, it served written notices of default upon EM Building and demanded that EM Building cure the default. Moreover, Byrd "encouraged [EM Building] to submit proof of insurance and other materials for the subcontractors to enable [Byrd] to consider and potentially approve of [EM Building's] subcontractors." Mendez acknowledged that he received the foregoing notices on July 22 and July 23, 2016. Notwithstanding the notices, according to Thomas, EM Building "never supplied proof of the required coverages," and it "ultimately . . . abandoned the Projects and the Contracts." Mendez likewise testified that, starting July 23, 2016, EM Building never had another subcontractor or employee on any of the three projects.
As noted below, Jose Garcia also worked on the Austin and Kyle projects.
Four of EM Building's employees were also staffed on the Kyle project.
EM Building argues that it did not "assign" the subject contracts, but, instead, it merely "staff[ed] the project[s] in order to do the job." The foregoing evidence submitted by Byrd establishes to the contrary.
EM Building alternatively contends that, even if its retention of subcontractors was a breach of its contracts with Byrd, the breach was immaterial. In EM Building's view, an immaterial breach of contract is not actionable. We disagree. Although an immaterial breach does not excuse the non-breaching party from performance under the contract, such party may still sue for damages caused by the breach. Gilbert v. Fitz, No. 05-16-00218-CV, 2016 WL 7384167, at *656 (Tex. App.—Dallas Dec. 21, 2016, no pet.) (mem. op.); see also Levine v. Steve Scharn Custom Homes, Inc., 448 S.W.3d 637, 656 (Tex. App.—Houston [1st Dist.] 2014, pet. denied) ("[A] party can still recover damages for immaterial breaches."). Moreover, to the extent EM Building asserts that the duty it breached was immaterial, see Myers, 437 S.W.3d at 635 (breach of contract elements include the breach of a material duty), Byrd's summary-judgment evidence proves otherwise. Namely, Thomas averred that, but for the contracts' prohibition against assignment and their requirement that EM Building maintain insurance, Byrd "would not have entered into the [c]ontracts or allowed [EM Building] on the Projects."
In addition, to the extent EM Building's breach was material, Byrd was excused from future performance. See Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam).
In short, Byrd carried its burden of establishing a breach by EM Building of the contracts' prohibition against subletting or assignment.
ii. Failure to maintain insurance
The subject contracts required EM Building to "carry workman's Compensation, public liability, property damage and contractual liability insurance in amounts and in solvent insurance companies acceptable to [Byrd]." In addition, EM Building was obligated to "provide [Byrd] with copies of Certificates of Insurance from [EM Building's] insurance company before commencing work on the project site." Moreover, "[s]aid certificates shall list [Byrd] as an additional insured and grant a waiver of subrogation in favor of [Byrd]."
Mendez testified that EM Building obtained insurance for itself. However, Byrd requested that EM Building supply proof of insurance for its subcontractors. EM Building did not submit such proof with respect to its subcontractors for the McKinney or Austin projects. Although EM Building did submit proof with respect to Ibarra, its subcontractor for the Kyle project, Mendez conceded that this proof did not show that Byrd had been named as an additional insured under EM Building's general liability policy. The foregoing evidence establishes a breach of contract by EM Building.
In arguing to the contrary, EM Building asserts three reasons as to why, in its view, it did not breach the subject contracts.
First, it urges that the contracts (i) do not require insurance for second-tier subcontractors such as those hired by EM Building, and (ii) are ambiguous as to what type of insurance is required. We are not persuaded by these arguments. Although each contract refers to a single "subcontractor" (defined elsewhere in the contract as EM Building) who is required to carry insurance, this is because the contract elsewhere precludes any subletting or assignment without Byrd's written consent. Absent such consent, which EM Building did not obtain, it could not sublet or assign the contract at all, and the requirement of insurance for sub-lessees or assignees was never triggered. Moreover, as described above, each contract specifies the types of insurance that EM Building was required to carry.
Assuming EM Building had obtained Byrd's written consent to assign or sublet each contract, then the insurance provision would apply to EM Building's assignees or sub-lessees in the same manner that it applied to EM Building, the sub-lessor. Cf. URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 764 (Tex. 2018) ("[T]o home in on the meaning the parties intended, we have long allowed that words must be construed in the context in which they are used. Context is not . . . confined to the two-dimensional contractual environs in which the words exist but may also encompass the circumstances present when the contract was entered." (citation and internal quotation marks omitted)).
Second, EM Building contends that the term obligating it to submit insurance "acceptable to [Byrd]" is subjective and amounts to no contract term at all. We disagree. "When, as here, performance is conditioned on one party's judgment or determination, courts imply a requirement that such judgment is exercised in good faith." Young v. Neatherlin, 102 S.W.3d 415, 420 (Tex. App.—Houston [14th Dist.] 2003, no pet.). EM Building also asserts that Byrd did not exercise its judgment in good faith. However, it is undisputed that EM Building did not submit proof of insurance with respect to the McKinney or Austin projects, and Mendez also conceded that his submission with respect to the Kyle project did not include proof that Byrd had been named as an additional insured under EM Building's general liability policy. The foregoing evidence establishes that the insurance provision was valid and was enforced by Byrd in good faith.
Third, EM Building asserts that "any sub/subcontractor hired by [it] would not be able to hold Byrd liable as the general contractor if the worker [were] injured," and thus, "Byrd would suffer no injury as a result of EM Building's sub/subcontractors not being covered by worker's compensation insurance." Even assuming this to be the case, EM Building does not claim that Byrd would suffer no injury from the absence of coverage for EM Building's subcontractors with respect to the other types of insurance required by the subject contracts. Additionally, Byrd was injured when EM Building ceased work on the projects once Byrd notified EM Building that it was in default of the non-assignment and insurance provisions.
In sum, Byrd met its burden to establish a breach by EM Building of the contracts' non-assignment and insurance requirements. Therefore, the burden shifted to EM Building, the non-movant, to raise a genuine issue of material fact precluding summary judgment. Lujan v. Navistar, Inc., 555 S.W.3d 79, 84 (Tex. 2018).
b. EM Building's affirmative defenses
EM Building could meet this burden by raising an issue of fact with respect to at least one element of Byrd's contract claim, see Marx v. FDP, LP, 474 S.W.3d 368, 377 (Tex. App.—San Antonio 2015, pet. denied), or with respect to each element of at least one of EM Building's pleaded affirmative defenses, Brownlee, 665 S.W.2d at 112; Seale v. Nichols, 505 S.W.2d 251, 254 (Tex. 1974).
EM Building's summary-judgment response attached sixteen exhibits. We next consider its contention that these exhibits raised a genuine issue of fact with respect to EM Building's affirmative defenses of impossibility of performance, waiver, and mutual mistake.
EM Building also alleged modification of contract as an affirmative defense, and its appeal brief cites case law that explains this defense. E.g., Arthur J. Gallagher & Co. v. Dieterich, 270 S.W.3d 695, 701-02 (Tex. App.—Dallas 2008, no pet.) ("A contract modification must satisfy the traditional requirements of a contract—there must be a meeting of the minds supported by consideration."). However, EM Building has not cited any portion of the record or otherwise made any argument regarding this defense. In this circumstance, we need not consider EM Building's modification defense. See TEX. R. CIV. P. 38.1(i) (nothing that appellant's "brief must contain a clear and concise argument for the contentions made.").
i. Impossibility
Texas law distinguishes between original impossibility and supervening impossibility. Janak v. Fed. Deposit Ins. Corp., 586 S.W.2d 902, 906 (Tex. Civ. App.—Houston [1st Dist.] 1979, no writ). Original impossibility exists when the contract was to do something that from the outset was impossible. Id.
In contrast, supervening impossibility occurs when, "'after a contract is made, a party's performance is made impracticable without his fault by the occurrence of an event the non-occurrence of which was a basic assumption on which the contract was made.'" Samson Expl., LLC v. T.S. Reed Props., Inc., 521 S.W.3d 766, 775 (Tex. 2017) (citing RESTATEMENT (SECOND) OF CONTRACTS § 261 (1981)). Under this scenario, the party's "'duty to render that performance is discharged, unless the language or the circumstances indicate the contrary.'" Id. (citing RESTATEMENT (SECOND) OF CONTRACTS § 261).
In Samson Exploration, the Texas Supreme Court referred to "supervening impracticability," 521 S.W.3d at 775, consistent with the terminology used in section 261 of the Second Restatement of Contracts. In this context, the terms "impracticability" and "impossibility" are interchangeable. See Solar Soccer Club v. Prince of Peace Lutheran Church of Carrollton, 234 S.W.3d 814, 824 (Tex. App.—Dallas 2007, pet. denied) (noting that sections 261 and 264 of the Second Restatement of Contracts address "supervening impossibility").
The question of impossibility "is generally considered to be one of law rather than fact." RESTATEMENT (SECOND) OF CONTRACTS, ch. 11, introductory note (1981). However, in Texas, defenses for breach of contract are usually considered questions for the jury unless the facts are uncontested. Tractebel Energy Mktg., Inc. v. E.I. Du Pont De Nemours & Co., 118 S.W.3d 60, 65 (Tex. App.—Houston [14th Dist.] 2003, pet. denied), opinion supplemented on overruling of reh'g, 118 S.W.3d 929 (Tex. App.—Houston [14th Dist.] 2003, no pet.).
McKinney project
Regarding the evidence offered by EM Building in support of its impossibility defense, Jose Garcia, the subcontractor who worked on the McKinney project, testified that Thomas told him to wait to start on the project because it had not yet passed inspections related to "chases for air ducts."
EM Building also offered a July 19 and July 20, 2016 e-mail exchange between Dustin Cassel, the Superintendent of the McKinney project, and Mendez. On July 19, Mendez promised to "get other crews to get it done" if "Jose not do nothing per our contract." Mendez also stated, "Jose told me that still are same [sic] inspection not done." Cassel responded, "I fully agree. This sheetrock job should have been completed long ago." He also wrote, "[i]f you are referencing the mechanical shaft inspections, I am and have previously waited on work to be completed. I am waiting today for work to be completed before I can schedule another inspection." In a subsequent paragraph, Cassel stated, "[y]ou pushing me to start is irrelevant. You can't start before inspections. The timeframe I am referring to is solely for the sheetrock and mud[-]tape. You are behind." While Cassel described "the City of McKinney [a]s tough," he also accused EM Building of delaying its work on the "known issues required to be addressed by the inspector."
Austin project
Michael, who was Byrd's supervisor over the Austin project, testified that this project was behind schedule because "[w]e had design issues and architectural issues" that required "changes to the project." For example, the distances between the building's "support metal" were incorrect due to an architectural error. Also, Mendez notified Michael in a July 16, 2016 e-mail that there were many places where the framers "were not doing right" and thus it would be more difficult for "my guys" to install the drywall. Michael replied to Mendez the following day with two e-mails, the first of which stated that EM Building's on-site workers lacked experience working with a steel structure, and the second of which asked, "[w]hat is the problem with the framing?" In addition, Jose Garcia testified that the Austin project was delayed because its firewalls, which needed to be complete before the drywall could be installed, had failed to pass inspection.
EM Building also submitted (i) documents related to change orders for additional drywall on the Austin project, and (ii) a plumbing invoice that, in EM Building's view, shows that Michael had tasked it with working on aspects of the project that had nothing to do with drywall.
Kyle project
In a July 11, 2016 e-mail from Ron Kilman, Byrd's supervisor on the Kyle project, to Mendez, Kilman identified defects in the project's floor trusses and forty of its "window headers" that occurred as a result of Kilman's errors. He requested that Mendez "fix" these defects at Byrd's expense. EM Building's motion also attached a change order that Kilman testified related to these fixes.
In addition, Jose Garcia testified that the plans for the Kyle project "[were] not right" and that, in several instances, his team had to "come back and fix" problems that arose because they had followed the defective plans.
Analysis
The foregoing evidence, when viewed in the light most favorable to EM Building, Painter, 561 S.W.3d at 130, at most establishes that the subject projects suffered from delays that made it more difficult for EM Building to perform its contractual obligations. "Simply because a contract is more burdensome to perform than originally anticipated does not excuse its performance." Metrocon Constr. Co. v. Gregory Constr. Co., 663 S.W.2d 460, 462 (Tex. App.—Dallas 1983, writ ref'd n.r.e.); see also RESTATEMENT (SECOND) OF CONTRACTS § 261 cmt. d ("A mere change in the degree of difficulty or expense due to such causes as increased wages, prices of raw materials, or costs of construction, unless well beyond the normal range, does not amount to impracticability since it is this sort of risk that a fixed-price contract is intended to cover. Furthermore, a party is expected to use reasonable efforts to surmount obstacles to performance . . . and a performance is impracticable only if it is so in spite of such efforts."). Byrd also cites Metrocon, among other authorities, for the proposition that "[w]here the obligation to perform is absolute, impossibility of performance occurring after the contract was made is not an excuse for nonperformance if the impossibility might have reasonably been anticipated and guarded against in the contract." Id. at 462 (citation and internal quotation marks omitted). However, subsequent to Metrocon, the Texas Supreme Court noted that "the foreseeability factor" with respect to the defense of supervening impossibility "has decreased in importance." Centex Corp. v. Dalton, 840 S.W.2d 952, 954 (Tex. 1992). The Court observed that section 261 of the Second Restatement of Contracts omitted the foreseeability requirement, explaining that many factors may excuse a failure to deal with contingencies, and that even if the event was reasonably foreseeable, or even foreseen, the contracting party may still be discharged." Id. at 955; see also Brath, Inc. v. GFCS, Inc, No. 03-97-00149-CV, 1998 WL 29977, at *2 (Tex. App.—Austin Jan. 29, 1998, no pet.) (per curiam) (not designated for publication) (noting that Metrocon pre-dated Centex and relied heavily on a foreseeability analysis). Nonetheless, EM Building has not met its burden to raise a genuine issue of material fact with respect to its impossibility defense.
ii. Mutual mistake
To establish the defense of mutual mistake in a written instrument, the proponent of the defense must plead and prove (i) the original agreement, and (ii) a mutual mistake made in reducing the original agreement to writing. Hydroscience Techs., Inc. v. Hydroscience, Inc., 401 S.W.3d 783, 798 (Tex. App.—Dallas 2013, pet. denied). Mutual mistake is generally established from all the facts and circumstances surrounding the parties and the execution of the instrument. Id. The proponent must offer evidence showing that both parties were acting under the same misunderstanding regarding the same material fact. Samson Exploration, 521 S.W.3d at 779; see also Hydroscience Techs., 401 S.W.3d at 798 (noting proponent's defense is not established by mere "proof that there was an agreement which is at variance with the writing"); Smith-Gilbard v. Perry, 332 S.W.3d 709, 713 (Tex. App.—Dallas 2011, no pet.) ("[T]he mistake must be mutual rather than unilateral."). Moreover, the mistake must have materially affected the agreed-upon exchange, de Monet v. PERA, 877 S.W.2d 352, 357 (Tex. App.—Dallas 1994, no writ) (citing RESTATEMENT (SECOND) OF CONTRACTS § 152 (1981)), and the risk of the mistake must not have been allocated to the party asserting the defense, see id. at 359 ("[A] party bears the risk of mistake when the risk is allocated to him by agreement or when he knowingly treats his limited knowledge of the facts surrounding the mistake as sufficient." (citing RESTATEMENT (SECOND) OF CONTRACTS § 154(a) & (b) (1981)).
EM Building repeats its contention that there was no enforceable contract with respect to the Kyle project and urges that the parties operated under the mutually mistaken belief that there was such a contract. We reject this argument given our conclusion, referenced above, that the contract for the Kyle project was enforceable.
EM Building also asserts a mutual mistake based on it and Byrd's erroneous belief that (i) the framing on the Austin project had been done correctly, (ii) the architectural plans for the Kyle project were correct, and (ii) Kilman had made no errors with respect to the Kyle project. The parties' mistaken prediction that the foregoing errors would not occur does not excuse EM Building from its performance obligations. See City of Austin v. Cotten, 509 S.W.2d 554, 557 (Tex. 1974) ("[A]n error in predicting a future fact known to be uncertain is not the kind of mistake which will relieve a party from a contract."); Walden v. Affiliated Comput. Servs., Inc., 97 S.W.3d 303, 326 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) ("Here, the alleged 'mistake' did not concern any presently existing fact, but rather a belief regarding some future occurrence."). Moreover, there is no evidence that the predicted non-occurrence of the foregoing errors was essential to EM Building's decision to enter the contracts. See de Monet, 877 S.W.2d at 357. "A mutual mistake is not material if it relates merely to a collateral matter." Id. "It must be 'essential to an understanding of the consequences of the agreement.'" Id. (citing Plains Cotton Co-op. Ass'n v. Wolf, 553 S.W.2d 800, 805 (Tex. Civ. App.—Amarillo 1977, writ ref'd n.r.e.); quoting Simpson v. Simpson, 387 S.W.2d 717, 719 (Tex. Civ. App. Eastland 1965, no writ)). Rather, the provision for change orders in the subject contracts suggests that the parties anticipated that construction errors might occur.
As noted previously, EM Building was not responsible for the framing on the Austin project.
Each contract states that Byrd "agrees to pay [EM Building] for the performance of [EM Building's] work and/or materials furnished, including any agreed upon additions or deductions, provided these are supported by contract change orders" executed by Byrd's representatives.
EM Building has not met its burden of raising a genuine issue of material fact as to its mutual mistake defense.
iii. Waiver
"[W]aiver can be asserted against a party who intentionally relinquishes a known right or engages in intentional conduct inconsistent with claiming that right." Tenneco, 925 S.W.2d at 643. Its elements include (i) an existing right, benefit, or advantage, (ii) a knowledge, actual or constructive, of its existence, and (iii) an actual intention to relinquish it (which can be inferred from conduct). Pratt-Shaw v. Pilgrim's Pride Corp., 122 S.W.3d 825, 831 (Tex. App.—Dallas 2003, pet. denied).
Waiver may be established by conduct, but such conduct "must be unequivocally inconsistent with claiming a known right." Shields Ltd. P'ship v. Bradberry, 526 S.W.3d 471, 485 (Tex. 2017) (citation and internal quotation marks omitted). Stated another way, "[w]aiver is largely a matter of intent, and for implied waiver to be found through a party's actions, intent must be clearly demonstrated by the surrounding facts and circumstances." Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003). In addition, "[s]ilence or inaction, for so long a period as to show an intention to yield the known right, is . . . enough to prove waiver." Tenneco, 925 S.W.2d at 643. Waiver is ordinarily a question of fact, but when the surrounding facts and circumstances are undisputed, the question becomes one of law. Jernigan, 111 S.W.3d at 156-57.
McKinney project
Cassel testified that he learned EM Building had hired a crew of subcontractors "[w]hen they showed up at the job site," but he had no specific recollection as to when that occurred. The record also contains a July 20, 2016 e-mail from Cassel to Mendez, cc'ing Thomas, in which Cassel stated that "[t]he 'changes' you mention are a direct result of inadequate communication between you and the subcontractor you hired." Despite Cassel's apparent knowledge as of July 20 that EM Building had retained subcontractors, the Notice of Non-Performance/Job Abandonment that Cassel prepared and sent on Byrd's behalf six days later makes no reference to the use of subcontractors, or the lack of required insurance, as a basis for the notice.
Austin project
On July 21, 2016, Michael sent Mendez a Notification of Non-Performance/Job Abandonment with respect to the Austin project. Michael reported in the notice that he had "just been informed by one of the workers that they are not your employees but are sub/subcontract [sic] which is a breach of our contract." Michael testified that he could not recall whether he had previously known that any of EM Building's workers on the Austin project were not employees. EM Building attempts to impute such knowledge to Michael based on the fact that Thomas, who was Michael's boss, was cc'd on the above-referenced July 20 e-mail from Cassel to Mendez with respect to the McKinney project. EM Building also points to a July 8, 2016 invoice from EG Plumbing Services, LLC to EM Building for work done on the project's roof drains. EM Building claims this invoice evidences that Michael directed it to retain a subcontractor to work on the Austin project's plumbing.
In contrast, Michael testified that he had no recollection of asking EM Building to do any plumbing work on the Austin project.
Kyle project
As discussed previously, EM Building hired Ibarra as its subcontractor to install the framing for the Kyle project. EM Building contends that Byrd knew of this retention and thus waived its right to sue for breach of the contract's prohibition against hiring subcontractors without Byrd's consent. For example, the record contains a July 26, 2016 non-disclosure agreement between Byrd, "the Contractor," and Ibarra Construction, "the Subcontractor."
Also, on July 27, Kilman sent an e-mail to Mendez which sought to confirm that the "necessary insurance and documentation will be submitted [by EM Building] today and hopefully approved so framing can continue." Approximately twenty-five minutes later, Mendez sent an e-mail to Thomas, cc'ing Kilman, which attached a certificate of liability insurance for Ibarra. Mendez's e-mail also stated, "let me know if this meets your requirements so [I] can send my guys back tomorrow." At the close of that same day, Kilman sent an e-mail to Mendez, cc'ing Thomas, which acknowledged that EM Building "[had] submitted the insurance and other paperwork to the office." Kilman's e-mail also noted that "this oversight on the front end of the project has affected the schedule and production in a negative fashion." According to Kilman, " IF all is in order and you are able to return[,] then every effort must be made to make up lost time including . . . longer days and weekends."
Analysis
The foregoing evidence shows that Byrd was aware as of late July 2016 that EM Building was using subcontractors on the subject projects. However, this evidence does not suggest an actual or implied intent by Byrd to relinquish its rights under the no-assignment provision. To the contrary, the evidence demonstrates an intent by Byrd to enforce its rights under this provision. In short, no reasonable juror could infer from the summary-judgment evidence that Byrd waived its rights under the contracts. See Painter, 561 S.W.3d at 130.
Because EM Building did not raise an issue of material fact with respect to each element of at least one of its affirmative defenses, the district court did not err in granting summary judgment for Byrd as to its breach of contract claim. We overrule EM Building's third issue.
D. EM Building's Counterclaims
EM Building's fourth issue urges that the district court erred in dismissing its breach of contract and quantum meruit counterclaims as part of the court's order granting Byrd's motion for summary judgment. The party moving for summary judgment in opposition to a counterclaim is in the position of a defendant opposing a plaintiff's motion for summary judgment. Adams, 713 S.W.2d at 153. To defeat such a counterclaim by a summary judgment, the counter-defendant must show that no issue of material fact exists as to at least one element of the counter-plaintiff's cause of action and that the counter-defendant is entitled to judgment as a matter of law. Id.
1. Substantial performance
EM Building contends that Byrd failed to negate as a matter of law at least one element of EM Building's counterclaims. To the contrary, the evidence submitted by Byrd establishes that EM Building abandoned the contracts for the McKinney and Austin projects without substantially performing them. Cf. Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex. 1990) (per curiam) (failing to establish substantial performance bars recovery under contract). This failure by EM Building constituted a material breach of the McKinney and Austin contracts, see Casarez v. Alltec Const. Co., Inc, No. 04-07-00068-CV, 2007 WL 3287933, at *6 (Tex. App.—Houston [14th Dist.] Nov. 6, 2007, no pet.) (mem. op.) ("[I]f a party fails to substantially perform, its breach of the contract is material."), which excused Byrd from further performance of its own obligations under the contracts, see Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) ("[W]hen one party to a contract commits a material breach of that contract, the other party is discharged or excused from further performance."). Accordingly, Byrd has conclusively negated EM Building's counterclaim for breach of these contracts.
With respect to the Kyle project, Jose Garcia testified that this project was ninety percent complete when he stopped working on it. This evidence gave rise to an issue of material fact as to whether EM Building substantially performed the Kyle contract before abandoning it. However, as explained below, Byrd conclusively established that its contract damages exceed the unpaid sums purportedly owed to EM Building, thereby negating EM Building's breach of contract and quantum meruit counterclaims in their entirety.
Assuming this to be the case, then EM Building would be entitled to recover the full contract price, less the cost of remedying those defects that are remediable. Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480, 481 (Tex. 1984); see also Gulf Liquids New River Project, LLC v. Gulsby Eng'g, Inc., 356 S.W.3d 54, 81 (Tex. App.—Houston [1st Dist.] 2011, no pet.) ("If a contractor has substantially complied with a construction contract, it cannot be said to have materially breached the construction contract.").
2. Quantum Meruit
Byrd's motion for summary judgment also urged that it incurred damages over and above the lump-sum contract price on each of the subject contracts, which, as a matter of law, (i) caused Byrd recoverable contract damages, and (ii) foreclosed EM Building's counterclaims for breach of contract and for quantum meruit.
See Turner, Collie & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160, 164 (Tex. 1982) ("[I]f the contractor has substantially performed, the owner can recover the cost of completion less the unpaid balance on the contract price."); Tips v. Hartland Developers, Inc., 961 S.W.2d 618, 624 (Tex. App.—San Antonio 1998, no pet.) (damages awarded to contractor were to be offset by owner's cost of installing electrical outlets).
See Knight Renovations, LLC v. Thomas, 525 S.W.3d 446, 454 (Tex. App.—Tyler 2017, no pet.) ("If the plaintiff breached the contract after partially performing it, the plaintiff can recover in quantum meruit for the materials and services provided, offset by the damages to the defendant from the plaintiff's breach." (emphasis added)); Beeman v. Worrell, 612 S.W.2d 953, 956 (Tex. Civ. App.—Dallas 1981, no writ) ("We conclude that the trial court properly allowed recovery in quantum meruit for the owner's net benefit after offsetting the owner's damages against the market value of the building." (emphasis added)); City of Ingleside v. Stewart, 554 S.W.2d 939, 946 (Tex. Civ. App.—Corpus Christi 1977, writ ref'd n.r.e.) ("[I]n an action on quantum meruit, the cost of correcting any defects may be adjudged as an offset to be deducted from the reasonable value of plaintiff's services and materials.").
EM Building argues to the contrary. It cites excerpts from Mendez's deposition testimony regarding the amount of materials and labor that EM Building provided to Byrd for the subject projects. EM Building urges that this testimony raised an issue of material fact that precluded the rendition of summary judgment for Byrd. Byrd responds that the district court sustained its objection to this testimony, and thus, it cannot be considered by this Court. EM Building counters— without citation—that Byrd was precluded from objecting to testimony elicited by Byrd's own counsel.
We agree with Byrd that we may not consider the portions of Mendez's deposition testimony that the district court excluded from admission into evidence. The fact that this testimony was in response to questions from Byrd's counsel does not render the testimony admissible. Cf. In re Brookshire Grocery Co., No. 12-06-00065-CV, 2006 WL 2036569, at *3 (Tex. App.—Tyler July 21, 2006, no pet.) (mem. op.) ("[A]dmissibility is not the test for determining the scope of discovery." (citing Axelson, Inc. v. McIlhany, 798 S.W.2d 550, 553 (Tex. 1990))). We note that no rule precludes a party from objecting to testimony elicited in deposition by the party's own counsel. See generally TEX. R. CIV. P. 192.3, 199.5.
EM Building additionally contends that Byrd's objections overlooked some of the Mendez deposition excerpts pertinent to EM Building's counterclaims. As support, EM Building points to a single unobjected-to excerpt in which Mendez agreed that EM Building was owed $59,794.50 for its work on the McKinney project. Byrd responds that, even if the Mendez deposition excerpts were admissible, this evidence does not rebut Byrd's proof that its own damages from EM Building's breach of the subject contracts "effectively subsumed any alleged quantum meruit claim EM Building may have had." We agree with Byrd.
Thomas's declaration states that Byrd's costs to complete the subject projects "exceeded the unfunded balances under the lump sum Contracts, and resulted in damages to [Byrd]," as shown in the cost summary and expense records attached to the declaration. According to Thomas, these excess costs totaled $209,193.89. However, Byrd subsequently conceded in its summary-judgment reply brief filed in the district court that, net of change orders, the excess costs actually totaled $177,119.23. This reduced sum, which was the amount of damages awarded by the district court, greatly exceeds the $59,794.50 purportedly owed to EM Building for its work on the McKinney project. Accordingly, Byrd has conclusively proven that these damages exceed the unpaid sums purportedly owed to EM Building, thus negating EM Building's breach of contract and quantum meruit counterclaims.
The excess costs for each project amounted to $34,113.48 for the McKinney project, $164,827.17 for the Austin project, and $10,253.24 for the Kyle project.
The excess costs totaled $9,038.82 for the McKinney project, $157,827.17 for the Austin project, and $10,253.24 for the Kyle project.
We will not consider the amounts allegedly owed to EM Building for its work on the Austin and Kyle projects because EM Building's only record citations with respect to these projects are to evidence that has been excluded by the district court.
We overrule EM Building's fourth issue.
E. Damages
EM Building's fifth issue contends that the foregoing evidence has not, as a matter of law, established Byrd's damages for breach of contract.
1. Change orders
As an initial matter, EM Building asserts that Byrd failed to account for change orders that lowered the excess costs on the projects, thereby reducing Byrd's damages. We disagree because, as discussed previously, Byrd acknowledged these change orders in the district court, and the amount of damages awarded to Byrd was reduced accordingly.
2. Mitigation
EM Building also urges that Byrd did not mitigate its damages. Mitigation of damages is an affirmative defense that EM Building, the breaching party, must plead and prove. Smith Protective Servs., Inc. v. FedEx Nat'l LTL, Inc., No. 05-11-00715-CV, 2013 WL 241938, at *5 (Tex. App.—Dallas Jan. 23, 2013, no pet.) (mem. op.); see also Houston Chronicle Publ'g Co. v. McNair Trucklease, Inc., 519 S.W.2d 924, 929 (Tex. Civ. App.—Houston [1st Dist.] 1975, writ ref'd n.r.e.) ("[T]he burden of proof as to the extent to which the damages were or could have been mitigated lies with the party who has broken the contract."). In the procedural posture of this case, EM Building, as the non-movant, may meet its burden by offering summary-judgment evidence sufficient to raise a fact issue with respect to this defense. See Brownlee, 665 S.W.2d at 112; Seale, 505 S.W.2d at 254.
To meet its burden, EM Building submitted Mendez's testimony that, in his opinion, the cost to complete each of the projects was unreasonable. Byrd objected to this testimony on the basis that (i) Mendez lacked the qualifications to testify as an expert witness, and (ii) his testimony lacked a factual basis. The district court sustained Byrd's objections, and EM Building has not challenged this ruling on appeal.
EM Building also submitted testimony by Mendez that, in his opinion, Byrd did not actually incur the expenses that it sought from EM Building. Specifically, Mendez testified:
Q. [By Byrd's counsel]: [I]s it your opinion that the amount of money might be a reasonable sum to get that work complete but you just don't believe that he spent the money?
A: Yes, sir. I don't believe . . . he spent the money.
In response, Byrd invoked the rule of optional completeness, see TEX. R. EVID. 107, and requested the district court to construe this testimony to be an admission by Mendez that the expenses sought by Byrd may have been reasonable. Byrd also argued that this testimony confirmed that Mendez's opinion regarding the unreasonableness of Byrd's costs had no factual basis. We agree that Mendez's opinion testimony as to whether Byrd actually incurred the expenses at issue is conclusory and is therefore insufficient to raise a genuine issue of material fact to avoid summary judgment. See Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam) (noting that "[c]onclusory affidavits are not enough to raise fact issues" and "are not credible, nor susceptible to being readily controverted" (citing, inter alia, TEX. R. CIV. P. 166a(c))); Brownlee, 665 S.W.2d at 112 ("Affidavits consisting only of conclusions are insufficient to raise an issue of fact."); Cox v. Galena Park Indep. Sch. Dist., 895 S.W.2d 745, 748 (Tex. App.—Corpus Christi-Edinburg 1994, no writ) ("Conclusory assertions and speculation are insufficient to raise a genuine issue of material fact precluding summary judgment.").
3. Equivocation regarding personal knowledge
EM Building's summary-judgment response also submitted a passage from Thomas's deposition in which EM Building's counsel asked Thomas whether he had knowledge of the payments that Byrd made to third parties to complete the projects. Thomas answered, "[p]ossibly." The pertinent passage, in its entirety, reads as follows:
Q: [By EM Building's counsel]: [T]his is the Notice of Oral Deposition . . . . [W]hat we asked for is the calculation of damages alleged in Byrd's response to our request for production . . . This would include someone with knowledge of the payments made to third-parties to complete the projects after [EM Building] was removed and the amount still owed to those third parties. . . . Are you able to testify about that today?
A: Possibly.
Q: Okay.
A: It all depends on -
[Byrd's Counsel]: He's here to answer the questions on the topics in the Notice, but you're going to have to ask him the questions.
[EM Building's Counsel]: Okay.
EM Building interprets Thomas's response as an expression of doubt that gave rise to a genuine issue of material fact regarding EM Building's damages. See TEX. R. CIV. P. 166a(c). It also contends that the foregoing testimony contradicts Thomas's subsequent declaration, in which he averred that he "ha[s] personal knowledge of all of the facts stated in this Declaration," including facts regarding the amount of expenses incurred by Byrd to complete the work that EM Building had left unfinished.
We disagree that Thomas's use of the word "possibly" cast doubt on his deposition testimony. In effect, EM Building's counsel asked Thomas, at the beginning of his deposition and before any particular question had been asked, to affirm that he had personal knowledge of every fact pertaining to Byrd's damages. In this context, Thomas's answer that he could "possibly" answer counsel's questions did not make his testimony equivocal. Nor do we interpret the foregoing testimony as inconsistent with Thomas's subsequent declaration, which averred only that he had personal knowledge of the facts "stated in this Declaration." (Emphasis added).
4. Evasive testimony
EM Building additionally contends that (i) Thomas was evasive in his deposition testimony about Byrd's damages, and (ii) this evasiveness gave rise to issues of material fact. As support, EM Building cites an excerpt from Thomas's deposition transcript in which he was asked a series of hypothetical questions as to whether a general contractor is unharmed by the removal and replacement of its subcontractor if such replacement does not result in an increase of the original contract price. Thomas responded that he could not answer these questions "because every hypothetical has many variables." Although Thomas was designated as a testifying expert on the topic of EM Building's damages, and thus, hypothetical questions on this topic were potentially fair game, see SPI Fed. Credit Union v. Big H Auto Auction, Inc., 761 S.W.2d 800, 803 (Tex. App.—Houston [1st Dist.] 1988, no writ) ("It is well established that an expert witness may give an opinion based on a hypothetical question containing facts previously admitted into evidence."), we conclude that Thomas's inability to answer this question given the "many variables" does not give rise to a genuine issue of material fact regarding Byrd's damages.
5. Offset
EM Building further contends that its evidence of damages creates a fact issue regarding its affirmative defense of offset, see Brown v. Am. Transfer and Storage Co., 601 S.W.2d 931, 936 (Tex. 1980) (noting that right of offset is an affirmative defense), thereby precluding summary judgment for Byrd. We disagree, given that Byrd has proven that its contract damages exceed the unpaid sums purportedly owed to EM Building.
For each of the foregoing reasons, we conclude that Byrd has proven its contract damages as a matter of law. We overrule EM Building's fifth issue.
III.
Conclusion
We affirm the judgment of the district court.
/Bill Pedersen, III//
BILL PEDERSEN, III
JUSTICE 190153f.p05
JUDGMENT
On Appeal from the 199th Judicial District Court, Collin County, Texas
Trial Court Cause No. 199-04946-2016.
Opinion delivered by Justice Pedersen, III. Justices Osborne and Partida-Kipness participating.
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee BYRD BUILDING SERVICES, LLC recover its costs of this appeal from appellant EM BUILDING CONTRACTORS SERVICES, LLC. Judgment entered this 11th day of August, 2020.