Opinion
NO. 14-15-00914-CV
04-13-2017
GOLDSHIRE DEVELOPERS, LLC, Appellant v. AGGREGATE TECHNOLOGIES, INC., Appellee
On Appeal from the 152nd District Court Harris County, Texas
Trial Court Cause No. 2012-34382
MEMORANDUM OPINION
Aggregate Technologies, Inc. (ATI) sued Goldshire Developers, LLC (Goldshire) for breach of contract and quantum meruit arising out of a subcontract for concrete demolition in connection with Houston's light rail project. The trial court signed a judgment for ATI after a jury trial. In this appeal, Goldshire challenges the trial court's charge, the sufficiency of the evidence supporting the jury's findings, and the trial court's denial of a proposed trial amendment. For the reasons explained below, we affirm.
FACTUAL BACKGROUND
Goldshire is a construction company that regularly contracts with government entities to perform public works projects. ATI is a specialty subcontractor that specializes in sawing, cutting, and removing concrete.
In 2011, The Metropolitan Transit Authority of Harris County (METRO) was in the midst of planning and constructing a light rail project. The $1.1 billion project involved multiple contracts with a joint venture of contractors called Houston Rapid Transit (HRT). One of these contracts involved the partial demolition of the historic North Main Street railroad bridge over White Oak Bayou so a bridge could be constructed that would support the new rail.
Lone Star Road Construction (Lone Star) submitted a bid to HRT to demolish and construct the bridge. In preparing the bid, Lone Star solicited a bid from ATI for the demolition portion of the work. Ultimately, however, HRT decided to perform the construction and contract for the demolition portion. ATI declined to contract directly with HRT.
Goldshire's chief executive officer, Witty Bindra, then contacted ATI's president, Ronnie Wills, about submitting a bid to Goldshire for the demolition work. ATI prepared its quotation to Goldshire using HRT's bid solicitation documents, including detailed plan sheets and addenda. ATI submitted a quotation for the demolition work to Goldshire in March 2011. ATI's quotation read as follows:
Note this bid incorporated the following in bidding project and nothing else: Scope of Work Sheet from Add#2 and Plan Sheets (#6,27, 49 & 50, 71-89.)Goldshire then incorporated ATI's proposal, including this specific language, into its own proposal to HRT.
HRT ultimately awarded the subcontract for the bridge demolition to Goldshire. Goldshire then signed ATI's quotation and it became the subcontract between them (the Subcontract). Functionally, ATI became a second-tier subcontractor to Goldshire, who was in turn a subcontractor to HRT.
ATI planned to perform the demolition work on the bridge in phases. One phase required ATI to remove the supporting structure of the bridge, which consisted of bents, columns, and footings. A "bent" is the horizontal concrete beam under the bridge deck that is supported by a vertical column on each end. At the base of each column is a concrete "footing" which rests on pilings. ATI's Bridge Removal Plan reflected that ATI was obligated to remove the bents, columns, and footings "on lines 30, 36, 37, 38, 40, 41, 43, and 47." ATI was not removing the pilings under the footings.
Most of ATI's work proceeded without incident until December 2011. By then, the deck, bents, most of the columns, and some footings had been removed. In December, however, ATI was unable to locate some of the footings at the depth and in the size indicated on the plans. ATI also discovered an undisclosed, 40-foot concrete structural wall buried beneath the columns at Bent 40.
ATI and Goldshire agreed to a change order in which ATI gave Goldshire a $24,000.00 credit for not removing twelve of the footings shown on the plans, and Goldshire increased the Subcontract by $24,000.00 for the removal of the 40-foot concrete wall at Bent 40. In addition, Goldshire added another $4,000.00 to the Subcontract for additional saw cutting and demolition of the 40-foot wall.
After the change order was made, another HRT contractor, while drilling large-diameter holes for new pilings, discovered a footing at Bent 36 and drilled it out in January 2012. When the footing was discovered, Goldshire and ATI realized that the footings were deeper and larger than they had believed. Goldshire then instructed ATI to remove the footings that ATI had failed to find, but the $24,000.00 change order credit was not reversed and no new written change order was made.
Bents 38 and 40 were located at the southern and northern edge of the bayou. In mid-December, ATI encountered difficulty in its effort to excavate and remove the buried footings at these two bents due to water intrusion. In the Subcontract, ATI had committed to trying to remove structures near and in water without sheet piling or cofferdams "but can't guarantee these items won't be needed." Additionally, the Subcontract provided in pre-printed language at the bottom of each page that ATI was not responsible for water control.
ATI found that the continuing water intrusion made it impossible to work on the footings at Bents 38 and 40. ATI spent a month dealing with this issue before a meeting was held on January 18, 2012. At the meeting, an argument ensued over financial responsibility for the installation of sheet piling or cofferdams to control the water intrusion. HRT suggested that the parties split the cost for HRT's contractor to drill out the footings, but ATI objected to paying for drilling. To expedite ATI's completion of its work, HRT agreed to install sheet pilings.
ATI was able to remove one of the footings at Bent 38, but it took three days, extensive excavation, and a large amount of soil to backfill the hole. Because of scheduling constraints, HRT instructed ATI not to attempt to remove the second footing. Instead, HRT had its contractor drill out the footing.
HRT finished driving the sheet pilings at Bent 40 on January 24, and ATI was able to break up and remove one footing at Bent 40. Water flow into the excavations at Bent 40 continued, however, because the sheet pilings had gaps and the pumps on site could not handle the volume of water. This issue continued into February 2012, and even Goldshire's personnel recognized that ATI could make no progress until HRT stopped the water. By February 7, ATI agreed to HRT's proposal to install a trench box at Bent 40 in an attempt to control the water. ATI agreed to proceed only on the condition that if that method did not work, it would have no further obligation to complete the removal of the footings. Once installed, the trench box helped, but did not fix the problem.
With additional pumps, ATI was able to lower the water sufficiently in March so that it could break up the other footing so that it could be extracted. ATI's last day on the site was March 22, 2012.
In mid-February, ATI prepared an internal punch list identifying eight tasks remaining for ATI to complete, including the removal of one footing at Bent 40. By March 22, when ATI left the site, it had completed all but three items on the punch list and one more item not contained on the list. ATI's president, Ronnie Wills, testified at trial that the reasonable cost to complete this work was $15,700.00.
Goldshire also maintained a punch list. By April 2, 2012, Goldshire identified only two items to be completed by ATI: lateral repairs and electrical conduit repairs. Goldshire also informed ATI that it intended to pass along a backcharge between HRT and Goldshire for any footings not removed by ATI. Goldshire estimated that the cost to complete the remaining work was $59,292.16.
When Goldshire failed to pay ATI the total amount that ATI claimed was due under the Subcontract, ATI sued Goldshire for breach of contract and quantum meruit, and also sued HRT and its sureties to recover under a payment bond. After amending its petition, ATI sought to recover $184,156.66 from Goldshire and $85,325.01 from HRT and its sureties. At trial, ATI sought damages for three of its applications for payment that Goldshire had refused to pay. For purposes of this appeal, however, it is necessary to discuss only Pay Application 8, in the amount of $85,325.01. Pay Application 8 was for amounts ATI incurred in attempting to work around and through water to remove the footings at Bents 38 and 40.
At trial, Goldshire took the position that ATI never requested or received Goldshire's written approval for a change order for the additional work at Bents 38 and 40. According to Goldshire, the scope of work incorporated into the Subcontract included a provision requiring that change orders must be approved in writing or they would be subject to nonpayment. This scope of work also required ATI to identify any requirement for coffer dams or sheet piling to perform the demolition of the footings along Bents 38 and 40 in the Bridge Removal Plan. Based on these provisions, Goldshire argued that ATI never presented a written change order for the extra work at Bents 38 and 40 that was approved by Goldshire, and that ATI was responsible for water control in that area because it did not indicate in its Bridge Removal Plan that HRT would need to provide coffer dams or sheet piling.
Although several different documents titled "Scope of Work" were admitted into evidence, Goldshire maintained that the operative document was one taken from Goldshire's contract with HRT, identified at trial as Exhibit 142. Ronnie Wills of ATI had marked up Exhibit 142 with comments and margin notes identifying each party's obligations, but he did not sign the document or initial in the space provided for the subcontractor's acknowledgement of the change order requirement.
The scope of work provision in Exhibit 142 concerning change orders, including Wills's handwritten notation of "AT" for ATI, is reproduced here:
Image materials not available for display.
Wills testified that Exhibit 142 was for pre-bid discussion purposes only and was not the "Scope of Work Sheet from Add#2" referenced in the Subcontract. According to Wills, he had a verbal agreement with Witty Bindra of Goldshire to do the extra work at Bents 38 and 40 and no written change order was required. Wills testified that he told Bindra numerous times that there would be additional costs incurred because HRT was not controlling the water, and Bindra told him to just get the work done and they would figure out the cost later. Wills asserted that ATI was entitled to charge a reasonable amount for the work, and he testified that the work was both reasonable and necessary. When ATI presented Goldshire with Pay Application 8, Goldshire passed it along to HRT for review and payment without objection.
The jury (1) found that Goldshire breached the Subcontract but failed to find that ATI breached; (2) failed to find that the Subcontract incorporated any of the various scope of work documents Goldshire claimed to be ATI's scope of work; (3) found that ATI substantially performed the Subcontract; (4) found that ATI was owed payment in full on each of the unpaid Pay Applications; (5) found that ATI was owed the same amount under an alternative quantum meruit claim; (6) found that the reasonable cost to compete any unfinished work was $15,700.00; and (7) found that the work reflected in Pay Application 8 was part of a public works contract and ATI perfected a payment bond in the amount of $85,325.01.
The trial court signed its final judgment on July 30, 2015. After deducting the cost to complete the work, ATI recovered $168,456.99 against Goldshire. The court held that, of the amount awarded to ATI, Goldshire, HRT, and HRT's sureties were jointly and severally liable to ATI for $85,325.01. The judgment also awarded ATI attorney's fees and contractual interest at the rate of eighteen percent.
Goldshire, HRT, and HRT's sureties filed a motion for new trial, which was overruled by operation of law. All defendants appealed, but HRT settled its liability under the judgment based on Pay Application 8 by paying ATI the sum of $200,000.00. The appeal of HRT and its sureties was dismissed on February 4, 2016. Because HRT has paid ATI the principal amount of Pay Application 8 together with prejudgment interest, accrued post-judgment interest, and a portion of the attorney's fees, a disposition of the appeal in Goldshire's favor could affect only the remaining amount of the award of attorney's fees to ATI and post-judgment interest.
ANALYSIS OF GOLDSHIRE'S ISSUES
On appeal, Goldshire contends that the trial court erred by rendering judgment and denying Goldshire's JNOV because: (1) the trial court erred by failing to disregard the damages question after refusing to submit a predicate jury question on whether Goldshire verbally agreed to pay ATI for the extra work on Bents 38 and 40 without a written change order; (2) no evidence supports the amounts recoverable in quantum meruit for the extra work on Bents 38 and 40; (3) ATI was not entitled to recover on its contract claim because and the jury was not asked to determine what amount was reasonable; (4) the evidence was factually insufficient to support the jury's finding that the scope of work document was not part of the Goldshire contract; (5) the trial court erred in denying Goldshire's trial amendment and proposed jury question on mitigation of damages because the defense was tried by consent; and (6) ATI failed to prove an essential element for recovery based on substantial performance.
We first discuss Goldshire's issues one and three concerning ATI's contract claim and conclude that the trial court did not err in rendering judgment for ATI on this claim. Consequently, we do not reach Goldshire's second issue challenging the jury's quantum meruit finding. We address the remaining issues in turn.
I. The Trial Court's Rendition of Judgment for ATI on Payment Application 8
In its first issue, Goldshire contends that the trial court erred in rendering judgment for ATI on Payment Application 8 because the jury was not first asked to determine if Goldshire had agreed to the extra work before answering the damages question.
In Question No. 1, the jury was asked whether Goldshire or ATI had "fail[ed] to comply with the Contract" and answered "yes" as to Goldshire. In Question No. 5, the jury found that ATI was damaged and the amount due and owing under Pay Application 8 was $85,325.01.
At the charge conference, Goldshire did not object to Question No. 1, but did request and tender a proposed jury question asking whether ATI and Goldshire agreed that the work described in Payment Application 8 was part of the contract. The trial court refused the proposed question. Goldshire also objected to Question No. 5 on the grounds that there was no predicate finding of liability as to Pay Application 8.
Goldshire argues that on its face, Pay Application 8 indicates that it is a "change order" for an amount over and above the additional contract price, but the jury was not asked if Goldshire agreed to the additional amount. Goldshire asserts that the jury's answer to Question No. 1—that Goldshire failed to comply with the "Contract"—avails ATI nothing because the charge defines the "Contract" as the ATI quotation that was signed and accepted by Goldshire for the total contract price of $683,801.65; it is not a finding that Goldshire failed to comply with a different verbal agreement to pay more. Because the jury was not asked to determine whether Goldshire was liable for failing to comply with the alleged verbal agreement to pay more, Goldshire argues that the jury's finding as to the amount of damages was immaterial. See Ramirez v. Otis Elevator Co., 837 S.W.2d 405, 413 (Tex. App.—Dallas 1992, writ denied) ("Without a liability finding, the question of damages becomes immaterial."); Turner v. Lone Star Indus., Inc., 733 S.W.2d 242, 246 (Tex. App.—Houston [1st Dist.] 1987, writ ref'd n.r.e) ("[N]o recovery is allowed unless liability has been established."). Consequently, Goldshire contends that the trial court erred by disregarding the jury's damages finding as to Pay Application 8.
We review a claim of jury charge error for abuse of discretion. Shupe v. Lingafelter, 192 S.W.3d 577, 579 (Tex. 2006) (per curiam); MEMC Pasadena, Inc. v. Riddle Power, LLC, 472 S.W.3d 379, 388 (Tex. App.—Houston [14th Dist.] 2015, no pet.). We will not reverse the trial court's judgment unless the error "probably caused the rendition of an improper judgment." Tex. R. App. P. 44.1(a)(1); Shupe, 192 S.W.3d at 579. An error is harmless, however, "when the findings of the jury in answer to other issues are sufficient to support the judgment." Shupe, 192 S.W.3d at 579 (citing Boatland of Houston, Inc. v. Bailey, 609 S.W.2d 743, 750 (Tex. 1980)). When reviewing jury findings, the court must try to interpret them in a manner that supports the judgment and we may examine the record to ascertain the jury's intent. W & F Transp., Inc. v. Wilhelm, 208 S.W.3d 32, 44 (Tex. App.—Houston [14th Dist.] 2006, no pet.).
In Question No. 5, the jury was asked to determine what sum of money, if any, would fairly and reasonably compensate ATI for its damages resulting from Goldshire's failure to comply to with the parties' contract as found in Question No. 1. The jury awarded $85,325.01 for Pay Application 8—the full amount ATI sought for the extra work on Bents 38 and 40. Additionally, in Question No. 9, the jury was asked to determine the amount of the claim that ATI perfected on the payment bond. Question No. 9 instructed the jury to consider the labor, materials, and equipment furnished by ATI for any "work required by a Public Work Contract." The jury found that the amount of the claim ATI perfected on the payment bond for work required by a public works contract was $85,325.01, the same amount it found was due under Pay Application 8. The jury's answers to these questions show that the jury resolved the parties' dispute over Pay Application 8 in favor of ATI and are sufficient to support the judgment.
Further, whether Goldshire agreed to compensate ATI for the extra work reflected in Pay Application 8 was hotly contested, and in its closing argument, Goldshire asked the jury to answer "zero" because "it was never agreed." Goldshire similarly told the jury to answer "zero" as to the payment bond question because there "was never an agreement to pay anything." The jury twice rejected Goldshire's position, and on appeal, Goldshire does not challenge the sufficiency of the evidence supporting the jury's finding that ATI was entitled to the amount of its claim on the payment bond for its performance of a public works contract. Assuming without deciding that the trial court erred by refusing to submit Goldshire's predicate question, we conclude that any error was harmless. See Shupe, 192 S.W.3d at 579; Boatland, 609 S.W.2d at 750. We overrule Goldshire's first issue.
II. No Jury Finding that Amount of Extra Work was Reasonable
Goldshire argues that ATI admitted that there was no agreement by Goldshire to pay a specific amount for the claimed extra work, and Wills testified that when Goldshire permitted the work to proceed, ATI was entitled to charge a "reasonable" amount for the work. Yet, the jury was not asked what amount was reasonable. Therefore, Goldshire posits, there is "no finding on an essential element of ATI's contract claim."
Goldshire did not object to the charge on this ground. "Any complaint as to a question, definition, or instruction, on account of any defect, omission, or fault in pleading, is waived unless specifically included in the objections." Tex. R. Civ. P. 274. We overrule Goldshire's third issue.
III. Sufficiency of Evidence Supporting Jury's Failure to Find that Any Version of Scope of Work was Incorporated into Subcontract
In Question No. 2, the jury was asked whether ATI and Goldshire agreed to any of five possible scope of work descriptions, including Exhibit 142, which Bindra insisted was the scope of work incorporated in the Subcontract. The jury answered "no" to each of the scope of work descriptions. In its fourth issue, Goldshire contends that the evidence is factually insufficient to support the jury's failure to find that Goldshire and ATI agreed that any version of the Scope of Work for the bridge demolition project from the HRT/Goldshire contract was part of the Subcontract.
When conducting a factual sufficiency review, we consider and weigh all the evidence, both supporting and contradicting the finding. See Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998). We set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id. at 407. We may not substitute our own judgment for that of the trier of fact or pass upon the credibility of the witnesses. See id. The amount of evidence necessary to affirm the factfinder's judgment is far less than that necessary to reverse its judgment. GTE Mobilnet of S. Tex. Ltd. P'ship v. Pascouet, 61 S.W.3d 599, 616 (Tex. App.—Houston [14th Dist.] 2001, pet. denied).
Goldshire argues that it is undisputed that the scope of work document in a public works contract is critical because it "sets out the terms on which the general contractor and the owner are prepared to proceed." Goldshire points out that Wills admitted that he received the scope of work from Bindra identified as Exhibit 142, and that he made handwritten notations in the margin indicating which party would be responsible for the particular obligations imposed, writing GD for Goldshire, AT for ATI, and HRT for that entity. Bindra testified that he understood Wills's actions as indicating ATI's agreement to those divisions of responsibility. Goldshire also points to the testimony of ATI's project manager, Chris Allen, who testified that he would understand the reference in the Subcontract to the "Scope of Work" to mean Exhibit 142. Allen also testified that he understood that written change orders were required or there would be a risk of not being paid. According to Goldshire, the only possible source for Allen's understanding is the provision in the scope of work requiring that change orders be in writing.
Wills acknowledged marking up Exhibit 142 to identify "who was going to do what," but he denied signing the document or initialing his name on any part of it. Wills testified that Exhibit 142 was just for pre-bid discussions, and he denied that Exhibit 142 was incorporated into the Subcontract. According to Wills, the scope of work incorporated into the Subcontract was limited to the "Scope of Work Sheet from Add#2" as stated in the Subcontract.
On appeal, Goldshire questions Wills's credibility, suggesting that it was in Wills's and ATI's self-interest to try to avoid the consequences of Exhibit 142 being incorporated into the Subcontract because if ATI were bound by its provisions it would be harmful to its case. But this court may not substitute its findings for that of the jury because "the jury is the exclusive judge of the facts, the witnesses' credibility, and the weight to give their testimony." See Turner v. KTRK Television, Inc., 38 S.W.3d 103, 134 (Tex. 2000) (citing Benoit v. Wilson, 239 S.W.2d 792, 796-97 (Tex. 1951)).
Goldshire also suggests that it is unreasonable for the jury to ignore "the plain terms of the ATI quotation that was accepted by Goldshire," namely:
Note this bid incorporated the following in bidding project and nothing else: Scope of Work Sheet from Add#2 and Plan Sheets (#6, 27, 49, & 50, 71-89.)Goldshire maintains that the only reasonable grammatical construction of this language is that the quotation incorporated three things: (1) the "Scope of Work"; (2) the "Sheet from Add#2"; and (3) the designated "Plan Sheets." Wills testified to the contrary, explaining that that the Subcontract referred to two items: (1) the "Scope of Work Sheet from Add#2"; and (2) the designated Plan Sheets. Goldshire argues that no such separate "Scope of Work Sheet from Add#2" was ever shown to the jury, and expresses doubt that any such thing exists. Therefore, Goldshire maintains, Wills's construction of the provision is unreasonable to the point of being absurd and the jury was not free to disregard the incorporation language in deciding that the scope of work was not part of the Subcontract.
Although it is not discussed by the parties, Joint Exhibit No. 2, Goldshire's bid proposal to HRT, includes HRT's Addendum No. 2 to its bid solicitation. Addendum No. 2 recites that it was created to "Revise Scope of Work" and make other revisions and additions; however, no attachments are included in the exhibit.
ATI responds that its evidence demonstrated that the Subcontract signed by ATI and Goldshire did not incorporate the entire scope of work in the HRT/Goldshire contract. Instead, the Subcontract incorporates only the "Scope of Work Sheet from Add#2," the designated plan sheets, and "nothing else." ATI notes that the plan sheets which were identified and incorporated into the Subcontract were in evidence and were limited to the plans describing the demolition portion of the work, and Goldshire even incorporated the language from the Subcontract into its own proposal to HRT, as reproduced here:
Image materials not available for display. Thus, Goldshire's own representation to HRT about the documents incorporated into the Subcontract belies its argument.
ATI also argues that if Goldshire had wanted ATI to assume a scope of work broader than what was assumed, Goldshire could have required that a different scope of work be attached to the Subcontract and signed, but it did not. Instead, Goldshire signed the Subcontract with a defined and limited scope of work. And, ATI asserts that the jury never received a clear picture of exactly which version of a different written scope of work Goldshire believed should apply, pointing out that the jury was asked to choose among five different documents contained in four exhibits. Thus, ATI argues, the five documents proffered by Goldshire were less clearly defined than the scope of work that was specifically identified in the ATI Subcontract.
The proper construction of a contract is a legal question for the court unless the contract is ambiguous, in which case its interpretation becomes a fact issue. Coker v. Coker, 650 S.W.2d 391, 393-94 (Tex. 1983). Goldshire does not argue that the court should construe the contract in its favor as a matter of law, but only that the jury's answer is contrary to the overwhelming weight of the evidence. In resolving this argument, we assume without deciding that the interpretation of the contract on this point was a fact issue for the jury. Considering all of the evidence presented and deferring to the jury's resolution of evidentiary and credibility issues, we conclude that on this record, the evidence supporting the jury's answer to Question No. 2 is not so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. We overrule Goldshire's fourth issue.
V. The Trial Court's Denial of Goldshire's Trial Amendment and Proposed Jury Question to Assert Mitigation
In its fifth issue, Goldshire acknowledges that it did not plead the defense of mitigation, but contends that the issue was tried by consent. Goldshire argues that the trial court abused its discretion by refusing to allow Goldshire a trial amendment and a jury question on whether ATI failed to mitigate its damages, when the issue was tried by consent.
Goldshire argues that in the January 18, 2012 meeting to address ATI's inability to timely remove the four footings at Bents 38 and 40, HRT proposed to have its drilling contractor, Interstate, do the work by using its large-diameter augers to drill through the footings at an estimated cost of $3,000.00 to $4,000.00 per footing, with HRT and ATI splitting the cost of having Interstate do the work. According to Goldshire, ATI could have avoided all of the additional costs it sought to recover on Pay Application 8 merely by stepping aside and letting Interstate do the work at a much lower cost.
To demonstrate that the issue was tried by consent, Goldshire points to portions of the record in which ATI's Wills and Allen, Goldshire's Bindra, and HRT's chief project engineer, Dan Horvath, testified without objection concerning their understanding of HRT's offer and ATI's refusal to agree to it. Because conflicting evidence was developed without objection over whether ATI should have mitigated its damages, Goldshire maintains that it is entitled to a new trial to rectify the trial court's action in depriving it of this meritorious defense.
ATI responds that the circumstances under which the evidence of HRT's proposal was introduced did not put ATI on notice that Goldshire was attempting to try an unpleaded defense, and when mitigation was raised, ATI timely objected. Additionally, ATI repeatedly objected to any evidence of the actual cost to complete the work on the ground that Goldshire had not produced that information in discovery. Therefore, ATI argues, the issue of mitigation, which requires Goldshire to prove not only a failure to mitigate but also the amount by which the damages were increased by such failure, was never tried by consent and the trial court did not err by rejecting Goldshire's proposed jury question on the issue.
Issues not raised in pleadings can be tried by express or implied consent of the parties, and the issues will be treated as if they had been raised in the party's pleadings. See Tex. R. Civ. P. 67; Moore v. Altra Energy Techs., Inc., 321 S.W.3d 727, 733 (Tex. App.—Houston [14th Dist.] 2010, pet. denied). This rule applies only where it appears from the record that the issue, though not pleaded, was actually tried. Johnston v. McKinney Am., Inc., 9 S.W.3d 271, 281 (Tex. App.—Houston [14th Dist.] 1999, pet. denied); see also RE/MAX of Tex., Inc. v. Katar Corp., 961 S.W.2d 324, 328 (Tex. App.—Houston [1st Dist.] 1997), pet. denied), ("[Trial by consent] is not intended to establish a general rule of practice and should be applied with care, and in no event in a doubtful situation."). Whether an issue was tried by consent is reviewed for abuse of discretion. RR Maloan Invs., Inc. v. New HGE, Inc., 428 S.W.3d 355, 363 (Tex. App.—Houston [14th Dist.] 2014, no pet.).
To determine whether an issue was tried by consent, we must examine the record not for evidence of the issue, but rather for evidence of trial of the issue. Moore, 321 S.W.3d at 734; Johnston, 9 S.W.3d at 281. A party's unpleaded issue may be deemed tried by consent when evidence on the issue is developed under circumstances indicating both parties understood the issue was in the case, and the other party failed to make an appropriate complaint. Moore, 321 S.W.3d at 734; Case Corp. v. Hi-Class Bus. Sys. of Am., Inc., 184 S.W.3d 760, 771 (Tex. App.—Dallas 2005, pet. denied). On the other hand, trial by consent is not applicable when evidence relevant to an unpleaded issue is also relevant to a pleaded issue. In that situation, admitting such evidence is not calculated to elicit an objection and its admission ordinarily would not prove the parties' clear intent to try the unpleaded issue. Moore, 321 S.W.3d at 734; Case, 184 S.W.3d at 771.
In its pleading, ATI claimed amounts due under three pay applications totaling $184,156.66. ATI asserted that it had performed or substantially performed the work and claimed breach of contract. Goldshire counterclaimed, alleging that ATI did not complete all the work and that Goldshire was entitled to damages from ATI because HRT retained and withheld from Goldshire costs allegedly incurred to complete the work. Because the issue of the proposal was relevant to the parties' competing claims, ATI's counsel did not object when Goldshire's counsel questioned the witnesses concerning ATI's rejection of HRT's proposal to have Interstate drill out the footings and split the estimated costs with ATI. But, when Goldshire suggested to Wills that Interstate did in fact drill out the footings, ATI objected, asserting that Goldshire had not produced evidence of actual costs relating to the completion of the work in response to discovery. The trial court allowed Goldshire to continue, but ruled that the discussion of costs was off limits.
Later, when Bindra attempted to testify as to costs, ATI again objected to evidence of actual costs. A bench conference was held in which Goldshire brought up mitigation for the first time. ATI further objected that Goldshire did not plead a mitigation defense or respond to discovery concerning completion costs. Additionally, ATI complained that if it had been made aware of the issue, it would have taken the deposition of Interstate and hired an expert witness to opine on drilling costs. The trial court sustained ATI's objections, allowed no testimony of actual costs, and refused to allow Goldshire to argue mitigation of damages. Before the jury, Bindra testified that HRT estimated it would cost $16,000.00 to drill out four footings, split between HRT and ATI, so that it would cost each party $8,000.00 or "maybe $10,000." Horvath testified that he made a proposal to ATI to split the cost of drilling out the footings for an estimated cost of just over $3,200.00 per footing and that ATI disagreed. A second HRT witness testified to HRT's estimated costs to complete the remaining work, but the trial court sustained ATI's objection to the witness attempting to "back door" expert testimony about how the estimates were calculated. The trial court pointed out that the witness was not designated as an expert and reminded Goldshire that it did not plead mitigation or provide discovery on the issue. The witness did not identify any costs to complete ATI's work.
Although Goldshire made a bill of exception on this witness's proposed testimony outside the presence of the jury, the trial court denied the bill and Goldshire has not raised an issue on appeal complaining of this ruling.
At the conclusion of the evidence, the trial court denied Goldshire's motion for a trial amendment consistent with ATI's objection. The court also denied a mitigation instruction and overruled Goldshire's objection.
Texas law requires a plaintiff to mitigate its damages if it can do so with "trifling expense or with reasonable exertions." Gunn Infinity, Inc. v. O'Byrne, 996 S.W.2d 854, 857 (Tex.1999) (internal quotations and citations omitted). The defendant has the burden to prove not only a failure to mitigate but also the amount by which the damages were increased by such failure. City of San Antonio v. Guidry, 801 S.W.2d 142, 151 (Tex. App.—San Antonio 1990, no writ); Geotech Energy Corp. v. Gulf States Telecomms. & Info. Sys., Inc., 788 S.W.2d 386, 390 (Tex. App.—Houston [14th Dist.] 1990, no writ).
On this record, we conclude that the trial court did not err by determining the mitigation was not tried by consent. Evidence of HRT's proposal was presented in the context of the difficulties ATI was encountering at Bents 38 and 40 and the dispute about financial responsibility for water control. The evidence also was relevant to ATI's claim of substantial performance and Goldshire's competing counterclaim concerning the cost to complete the work. And, when Goldshire raised the issue of mitigation, ATI objected to the unpleaded defense. Because Goldshire did not plead mitigation, the issue of HRT's proposal was relevant to claims pleaded by both parties, and ATI objected when Goldshire first raised mitigation, the trial court could have reasonably concluded that the circumstances under which the evidence of HRT's proposal came in did not put ATI on notice that Goldshire was attempting to try the unpleaded defense of mitigation. See Moore, 321 S.W.3d at 734-35; Case, 184 S.W.3d at 771-72. We overrule Goldshire's fifth issue.
VI. Substantial Performance
The jury found that Goldshire materially breached the Subcontract, failed to find that ATI materially breached the Subcontract, and found that ATI substantially performed the contract. The jury also found that the reasonable and necessary cost to complete or remedy all of ATI's work under the contract was $15,700.00. In its sixth issue, Goldshire argues that ATI is not entitled to recover damages based on substantial performance because it failed "to introduce any evidence of the cost to complete the removal of the footings at Bents 36, 38, and 40, which ATI failed to remove."
We construe Goldshire's issue to be a challenge to the legal sufficiency of the evidence supporting the jury's finding that ATI substantially performed the Subcontract. Evidence is legally sufficient if it would enable reasonable and fair- minded people to reach the verdict under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In conducting a legal sufficiency review, we credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not. Id.
The legal doctrine of substantial performance generally permits a party to a contract who breaches nonmaterial terms (but has otherwise substantially performed) to sue the other party to the contract for breach. Bayer Corp. v. DX Terminals, Ltd., 214 S.W.3d 586, 598 n.11 (Tex. App.—Houston [14th Dist.] 006, pet. denied) (citing Patel v. Ambassador Drycleaning & Laundry Co., 86 S.W.3d 304, 306 (Tex. App.—Eastland 2002, no pet.)). In a substantial performance claim, the contractor must prove its substantial performance; the amount unpaid under the contract; and "the cost of remedying the defects due to his errors or omissions." Vance v. My Apartment Steak House, Inc., 677 S.W.2d 480, 483 (Tex. 1984); Atkinson v. Jackson Bros., 270 S.W. 848, 850 (Tex. Comm'n App. 1925, holding approved).
As discussed above, when ATI was unable to locate some of the footings it was supposed to remove, ATI gave Goldshire a $24,000.00 credit for not removing twelve footings shown on HRT's plans, including the footings at Bents 36, 38, and 40. An HRT witness testified that the change order credit removed the footings from ATI's contractual scope of work. The witness also testified that the obligation to remove the footings nevertheless remained in the scope of work between Goldshire and HRT, and confirmed that if there was a backcharge for hitting a footing later, it "would be Goldshire's problem, not ATI's." The change order was never reversed.
HRT continued to insist that ATI remove the footings at Bents 38 and 40 so that the project could move forward. Wills testified that after many discussions, Goldshire instructed ATI to do the work and agreed to figure out the cost later. Although Bindra denied making any such agreement, he acknowledged that he knew ATI was working hard to get the footings out and never told ATI to stop.
Subsequently, ATI was able to remove one of the footings at Bent 38, but because of the time and effort it took to complete the removal, HRT instructed ATI not to attempt to remove the second footing. ATI was able to break up and remove one footing at Bent 40, and after water was sufficiently lowered in March it was able to break up the other footing at Bent 40 so that it could be extracted. Goldshire's own punch list showed the work that remained after ATI left the work site. By April 2, 2012, all that remained to be done was the replacement of a conduit and some lateral repairs. The removal of footings was not on the list, and even the backcharge estimate received from HRT was silent as to Bent 40 footings, confirming their removal.
In summary, the jury had evidence showing that removal of the footings at Bents 36, 38, and 40 was within the original scope of the Subcontract; the change order crediting Goldshire $24,000.00 for twelve footings not removed by ATI removed the footings from ATI's scope of work; Goldshire agreed to the change order credit; ATI then attempted to remove the footings at Bents 38 and 40 for which ATI sent Pay Application 8 for the extra work; and ATI removed all but one footing at Bent 38, which HRT instructed it to not remove.
Viewing the evidence in the light most favorable to the verdict, the evidence is sufficient to enable a reasonable jury to conclude that ATI was not required to present evidence of the cost to complete the removal of footings at Bents 36, 38, and 40. Consequently, the evidence is sufficient to support the jury's finding that ATI substantially complied with the Subcontract. We overrule Goldshire's sixth issue.
ATI also argues that it did not need to obtain a finding of substantial performance in order to recover damages because the jury also found that Goldshire materially breached the contract, which relieved ATI from further performance. See STR Constructors, Ltd. v. Newman Tile, Inc., 395 S.W.3d 383, 390-91 (Tex. App.—El Paso 2013, no pet.). Because we conclude that the jury's finding of substantial performance is supported by legally sufficient evidence, we need not consider this argument.
CONCLUSION
We overrule Goldshire's issues and affirm the trial court's judgment.
/s/ Ken Wise
Justice Panel consists of Justices Boyce, Busby, and Wise.