Summary
holding that a subcontractor that built a foundation pad for a house did not owe the general contractor a duty to indemnify because the subcontractor "did not place this structural pad in the stream of commerce"
Summary of this case from Centerpoint Builders GP, LLC v. Trussway, Ltd.Opinion
No. 14-03-00400-CV
Memorandum Opinion filed July 27, 2004.
On Appeal from the 234th District Court, Harris County, Texas, Trial Court Cause No. 00-65218A.
Affirmed in Part and Reversed and Remanded in Part.
Panel consists of Chief Justice HEDGES and Justices FROST and GUZMAN.
MEMORANDUM OPINION
At issue in this summary-judgment case is the viability of a homebuilder's conditional third-party claims against a subcontractor in a suit brought by home buyers against the homebuilder for alleged defective construction and workmanship. The homebuilder, while denying liability and insisting that its work and the work of its subcontractors was performed properly, joined its subcontractors as third-party defendants and asserted conditional claims against them. The trial court entered summary judgment dismissing all of the homebuilder's third-party claims against one of the subcontractors. As to the homebuilder's third-party claims for breach of contract, breach of implied warranty, and contribution and as to the subcontractor's status as a responsible third party, we sever, reverse, and remand We affirm the remainder of the trial court's judgment.
I. Factual and Procedural Background
The plaintiffs, David and Janice Rainwater, hired the defendant/appellant, Peterson Homebuilders, Inc. (hereinafter "Peterson"), to build a house in Houston. More than two years after moving into the house, the Rainwaters noticed various alleged defects in the house. Based on these defects, the Rainwaters filed suit against Peterson, alleging Peterson failed to construct, structure, grade, and site the foundation of the Rainwaters' house properly to prevent runoff water from harming the foundation, flooring, and structure of the house. The Rainwaters asserted claims for various alleged violations of the Texas Deceptive Trade Practices — Consumer Protection Act and common law claims for negligent misrepresentation and negligence.
The Rainwaters sued only Peterson; however, Peterson filed a third-party petition against various parties, including third-party defendant/appellee Johnny H. Timmons, Sr. d/b/a Bay Services Company (hereinafter "Timmons"), one of Peterson's subcontractors on the building project in question. In its third-party petition, Peterson denies that it in any way caused or contributed to the damages alleged by the Rainwaters; however, Peterson asserts that, in the unlikely event that it is held liable to the Rainwaters, then it would be entitled to contribution and indemnity against Timmons and others. Peterson alleges that Timmons may be in breach of contract with Peterson, may be in breach of express and implied warranties made to Peterson, and may owe Peterson contractual indemnity and indemnity under Chapter 82 of the Texas Civil Practice and Remedies Code. Peterson also alleges Timmons may be a responsible third party under Chapter 33 of the Texas Civil Practice and Remedies Code and that Peterson is entitled to seek a reduction for any percentage of responsibility attributable to Timmons.
Peterson alleges entitlement to contribution under Chapter 32 and 33 of the Texas Civil Practice and Remedies Code.
Timmons filed a motion seeking both a traditional and a no-evidence summary judgment. In his motion, Timmons asserted the following grounds:
(1) Timmons is entitled to judgment as a matter of law dismissing Peterson's third-party petition against it based on Darwin Peterson's expert testimony that he inspected Timmons's work on the Rainwaters' house and that this work was done in a good and workmanlike manner.
(2) As a matter of law, Chapter 82 of the Texas Civil Practice and Remedies Code does not apply to provide Peterson with an indemnity claim.
(3) As to Peterson's breach-of-contract claim against Timmons, there is no evidence of breach of contract.
(4) As to Peterson's breach-of-implied-warranty claim against Timmons, there is no evidence Timmons breached his implied warranty of good and workmanlike service.
(5) As to Peterson's breach-of-express-warranty claim against Timmons, there is no evidence Timmons made any express warranty to Peterson.
(6) As to Peterson's contractual-indemnity claim, there is no evidence of any contract of indemnity between Peterson and Timmons.
(7) As to Peterson's contribution claims, there is no evidence Timmons contributed to the Rainwaters' damages.
Timmons submitted uncontroverted summary-judgment evidence proving, among other things, that the contract between Timmons and Peterson was oral, not written, and that Peterson hired Timmons to provide the following services as subcontractor on the building project in question: (1) clear the lot of all trees within the building envelope, (2) strip the vegetation at the building site, (3) build a structural pad for the foundation, (4) rough grade the lot after the foundation was poured, and (5) perform a final grade of the lot after the exterior of the house was complete in preparation for the landscaping work.
In its response to Timmons's motion for summary judgment, Peterson denies that any act or omission of Peterson or its subcontractors caused construction defects and damages to the Rainwaters' house. Peterson states that, because the Rainwaters are alleging that defects in the foundation and the grade of the construction site caused their damages, Peterson joined Timmons as a third-party contribution defendant. In the trial court, Peterson asserted that its own motion for summary judgment should be granted and that the Rainwaters' claims should be dismissed.
Peterson later supplemented its summary-judgment response to include a supplemental response filed by the Rainwaters in opposition to Peterson's motion for summary judgment. This supplement contained an expert report and affidavits from two of the Rainwaters' experts.
The trial court granted Timmons's motion for summary judgment without specifying the grounds and severed Peterson's third-party claims against Timmons to make the judgment final.
II. Issues Presented
Peterson asserts the following issues for appellate review:
(1) Did the trial court err in granting Timmons's no-evidence motion for summary judgment as to Peterson's breach-of-contract claim because Peterson raised a genuine issue of material fact?
(2) Did the trial court err in granting Timmons's no-evidence motion for summary judgment as to Peterson's breach-of-implied-warranty claim?
(3) Did the trial court err in granting Timmons's motion for summary judgment as to Peterson's contribution and indemnity claims?
(4) Did the trial court err in granting summary judgment dismissing Peterson's joinder of Timmons as a responsible third party under Chapter 33 of the Texas Civil Practice and Remedies Code?
III. STANDARDS OF REVIEW
In reviewing a traditional motion for summary judgment, we take as true all evidence favorable to the non-movant, and we make all reasonable inferences in the non-movant's favor. Dolcefino v. Randolph, 19 S.W.3d 906, 916 (Tex. App.-Houston [14th Dist.] 2000, pet. denied). If the movant's motion and summary-judgment evidence facially establish its right to judgment as a matter of law, the burden shifts to the non-movant to raise a genuine, material fact issue sufficient to defeat summary judgment. Id.
In reviewing a no-evidence motion for summary judgment, we ascertain whether the non-movant produced any evidence of probative force to raise a genuine issue of fact as to the essential elements attacked in the no-evidence motion. Id. We take as true all evidence favorable to the non-movant, and we make all reasonable inferences therefrom in the non-movant's favor. Id. A no-evidence motion for summary judgment must be granted if the party opposing the motion does not respond with competent summary-judgment evidence that raises a genuine issue of material fact. Id. at 917.
IV. Issues and Analysis
A. Is there a genuine issue of material fact as to whether Timmons contributed to the Rainwaters' alleged damages?
The main issue on appeal is whether the trial court correctly granted summary judgment based on Timmons's assertion that there is no evidence that any act or omission by Timmons contributed to the Rainwaters' alleged damages. The Rainwaters asserted that there were defects in the foundation and grading from the original construction of the house that caused their damages. A principal of Peterson, Darwin Peterson, testified at his deposition that Timmons had performed his work properly. Moreover, Peterson maintained in the trial court that neither Peterson nor Timmons caused any of the Rainwaters' alleged damages. However, Darwin Peterson's statements that Timmons did his job in a good and workmanlike manner and Peterson's steadfast position in the trial court that Timmons did not cause the Rainwaters' damages do not preclude Peterson from asserting, in the alternative, that Timmons contributed to the Rainwaters' alleged damages. Peterson's primary position was that its motion for summary judgment should be granted and the Rainwaters' claims should be dismissed. However, as long as the Rainwaters' claims remained pending, Peterson asserted its conditional third-party claims against Timmons. Therefore, we must examine the summary-judgment evidence to determine whether, taking as true all evidence and reasonable inferences favorable to Peterson, Peterson produced any evidence of probative force to raise a genuine issue of fact as to whether Timmons contributed to the Rainwaters' alleged damages.
Peterson produced an affidavit of David Eastwood, an engineer with Geotech Engineering and Testing hired by the Rainwaters to conduct tests on the foundation of their house. In his affidavit, Eastwood stated:
I am the Principal Engineer with Geotech Engineering and Testing and have been employed with them for eighteen years.
. . .
I ran multiple tests on the residence, including soil borings, concrete borings, and core samples of the slab itself to evaluate the sufficiency and efficiency of the structure, the slab, and the consistency of the pad itself.
. . .
Based on the information we have developed up until this point, I am confident to say that the design of the foundation, the construction of the foundation, and the materials used in forming the foundation were inadequate and, in all probability, have caused the movement which the Rainwater's residence has experienced. . . .
Specific items which have caused and/or contributed to the foundation movement which we have found thus far include:
1. An incorrect soil report on which the foundation was based;
2. Inadequate grade beam thickness on two (2) of the four (4) beams tested:
3. A Coke bottle, a chunk of concrete, and other debris found in the fills next to the slab. Debris should not have been used as fills.
4. Improper silty sand materials mixed with fat clay soils used as fills under the slab, which allow water to seep through these materials causing these expansive soils to swell and result in the distress noted; and
5. Poor grading conditions found around the residence which contribute to the overall distress of the foundation.
Clearly these factors have contributed to the stress and overall condition of the Rainwater's [sic] foundation . . .
Peterson also produced an affidavit from Stephen Tien, a project manager with Geotech Engineering and Testing, as well as an expert report that contained substantially similar statements. The expert report also contained the results of various tests that had been performed by Geotech Engineering and Testing. On appeal, Timmons correctly points out that this summary-judgment evidence does not specifically refer to Timmons's work. Nonetheless, we conclude that Peterson produced some evidence showing the Rainwaters' alleged damages were caused by alleged improper construction of the house's foundation and poor grading conditions. Though the alleged poor grading conditions around the house arguably might also have been caused by other contractors after the house was constructed, Timmons performed the original grading work. Furthermore, Timmons prepared the site before the foundation was poured, and this evidence states that use of improper materials under the foundation was a cause of the Rainwaters' damages. Although Peterson's summary-judgment evidence does not specifically refer to Timmons's work, it refers in part to work that, according to Darwin Peterson's deposition testimony, was performed by Timmons. We find that there is a reasonable inference from this evidence that Timmons's performance of his work contributed to the Rainwaters' alleged damages. Under the applicable standard of review, we conclude that Peterson responded with summary-judgment evidence that raises a genuine issue of material fact on this issue. Because of this fact issue, the trial court erred in granting summary judgment as to Peterson's breach-of-contract, breach of implied-warranty, and contribution claims. For the same reason, the trial court also erred in dismissing Timmons from the case despite Peterson's assertion that Timmons is a responsible third party under chapter 33 of the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. REM CODE § 33.004 (Vernon 1997). Accordingly, we sustain Peterson's first, second, and fourth issues, as well as its third issue as to the contribution claims. See Longoria v. Graham, 44 S.W.3d 671, 673-76 (Tex. App.-Houston [14th Dist.] 2001, no pet.) (reversing no-evidence summary judgment and finding genuine issue of material fact as to causation).
Timmons asserts the two affidavits are invalid and insufficient to raise a fact issue because they do not state that the facts set forth therein are true and correct and based on the affiant's personal knowledge. Timmons does not cite, and we have not found, any place in the record where Timmons objected on this basis in the trial court or any order ruling on such an objection. Therefore, Timmons has waived this objection. See Grand Prairie Indep. Sch. Dist. v. Vaughn, 792 S.W.2d 944, 945 (Tex. 1990) (stating objection based on affidavit's failure to explicitly state that it was based on personal knowledge and that witness was competent was waived by failure to object in the trial court); Youngblood v. U.S. Silica Co., 130 S.W.3d 461, 468-69 (Tex. App.-Texarkana 2004, pet. filed) (holding objection based on affidavit's failure to explicitly state that statements therein were "true and correct" and within affiant's personal knowledge was waived by failure to object and obtain ruling in the trial court).
Deposition excerpts containing this testimony were part of Timmons's summary-judgment evidence.
The Legislature has amended section 33.004 and other sections of Chapter 33 of the Texas Civil Practice and Remedies Code. See Act of June 2, 2003, 78th Leg., R.S., ch. 204, art. 4, §§ 4.01-4.12, 2003 Tex. Gen. Laws 847, 855-59. However, these amendments apply only to suits filed on or after July 1, 2003, and, therefore, do not apply to this suit. See id., art. 23, § 23.02(c), 2003 Tex. Gen. Laws at 899.
B. Did the trial court err in granting summary judgment in favor of Timmons on Peterson's indemnity claim under Chapter 82 of the Texas Civil Practice and Remedies Code?
Peterson also asserts the trial court erred in granting summary judgment as to its indemnity claim against Timmons under Chapter 82 of the Texas Civil Practice and Remedies Code because there is a genuine issue of material fact as to whether that chapter applies to the facts of this case. We disagree. The undisputed summary-judgment evidence shows that Timmons provided certain services relating to the construction of the Rainwaters' house, including building a structural pad for the foundation. Peterson asserts it raised a fact issue as to whether Timmons owes indemnity under section 82.002 of the Texas Civil Practice and Remedies Code as a manufacturer of this structural pad. Presuming for the sake of argument that this pad is a product, as asserted by Peterson, the summary-judgment evidence conclusively proved that Timmons did not place this structural pad in the stream of commerce, as required by Chapter 82. See TEX. CIV. PRAC. REM. CODE § 82.001 (defining "manufacturer" as "a person who is a designer, formulator, constructor, rebuilder, fabricator, producer, compounder, processor, or assembler of any product or any component part thereof and who places the product or any component part thereof in the stream of commerce"); Barham v. Turner Constr. Co. of Tex., 803 S.W.2d 731, 737-38 (Tex. App.-Dallas 1990, writ denied) (holding products liability law did not apply to general contractor who allegedly placed a defective column into the stream of commerce during construction of office building, because, as a matter of law, contractor did not place the column in the stream of commerce and was not in the business of selling such columns); Becker v. Tessitore, 812 A.2d 369, 380 (N.J. Ct. App. 2002) (holding that, for products-liability purposes, a product is released into the "stream of commerce" when "'the product itself is presently and physically sold, leased or its possession exchanged'") (quoting Woods v. Luertzing Corp., 400 A.2d 562, 566 (N.J. Sup.Ct. 1979)). Accordingly, the trial court correctly granted Timmons's motion for summary judgment as to Peterson's indemnity claim under Chapter 82 of the Texas Civil Practice and Remedies Code.
V. Conclusion
Because there is a genuine issue of material fact as to whether Timmons contributed to the Rainwaters' alleged damages, the trial court erred in granting summary judgment as to Peterson's claims for breach of contract, breach of implied warranty, contribution, and as to Timmons's status as a responsible third party. However, because the summary-judgment evidence conclusively proved that Timmons did not place the structural pad in the stream of commerce, the trial court correctly granted summary judgment as to Peterson's indemnity claim under Chapter 82 of the Texas Civil Practice and Remedies Code. We sustain Peterson's first, second, and fourth issues. We sustain Peterson's third issue as to its contribution claims and overrule the remainder of that issue. Accordingly, as to Peterson's claims for breach of contract, breach of implied warranty, and contribution and as to Timmons's status as a responsible third party, we sever, reverse the trial court's judgment, and remand for further proceedings consistent with this opinion. We affirm the remainder of the trial court's judgment.
On appeal, Peterson does not challenge the trial court's dismissal of Peterson's claims against Timmons for breach of express warranty and for contractual indemnity.