Opinion
No. 14-04-00270-CV
Opinion filed August 1, 2006.
On Appeal from the 295th District Court, Harris County, Texas, Trial Court Cause No. 2002-30460.
Affirmed.
MEMORANDUM OPINION
Appellee, Warehouse Rack Company ("WRC"), sued appellant, Purnell Furniture Services, Inc. ("Purnell") for breach of contract. Purnell counterclaimed alleging violations of the Deceptive Trade Practices Act ("DTPA"). A jury awarded WRC damages, but awarded Purnell no damages on its counterclaim. Appellant raises four issues on appeal: (1) the evidence was legally and factually insufficient to support the judgment in favor of WRC because Purnell performed the contract or, alternatively, was excused from performance; (2) the trial court reversibly erred by refusing to give a limiting instruction to the jury regarding a witness's compliance under the Texas Engineering Practices Act ("TEPA"); (3) the trial court erred when it entered the jury's award for extra-contractual damages; and (4) the evidence was legally and factually insufficient to support the award of attorney's fees. We affirm.
Factual and Procedural Background
WRC specializes in buying and selling warehouse equipment. Purnell specializes in warehousing and shipping furniture for various national retailers, and, in order to better serve its customers, Purnell constructed a new warehouse in Suwannee, Georgia. Purnell contracted with WRC to purchase used furniture cantilever rack from a warehouse in Athens, Texas. WRC was to purchase the rack, ship it to Suwannee, modify the rack to suit Purnell's needs, and then install it in January, 2002.
Purnell provided the dimensions of the warehouse and specifications for the rack. Utilizing those dimensions, WRC hired Rick Denmark in September, 2001 to provide drawings of proposed rack layouts. The original dimensions provided by Purnell did not include certain aspects of the warehouse, as Denmark discovered in November or December, 2001 when he received an AutoCAD drawing of the warehouse. The AutoCAD drawing showed that a wall was not positioned as originally understood, and there was a work area within the warehouse. Denmark and Neil Camberg, WRC's president, discussed the variances with Purnell. All agreed that the best solution would be to move the work area — a solution Purnell said would be no problem, as the warehouse was a work in progress.
On January 4, 2002 — three days before installation was supposed to begin — Purnell informed WRC that a permit was necessary. WRC immediately began the process of obtaining a permit, including hiring Grayson Willard, a Georgia registered professional engineer. Despite beginning the permitting process in January, the permit was not approved until March, 2002. As a result, the installation was delayed until March 8.
WRC hired Don Russell to modify and install the rack. Russell agreed to travel to Georgia in January for ten or twelve days. He was to meet the trucks carrying the rack in Georgia, unload the trucks, and begin working. However, two issues prevented the plan from being carried out. First, the building contractor was preparing to pour the parking lot and would not allow the trucks on the surface. Second, the necessary permit had not been obtained and, as a result, the building contractor would not allow the installation to begin. Although installation could not begin, Russell and Camberg testified that it was necessary for Russell and his crew to make the trip to Georgia to meet the trucks — which had already left Texas when the permitting issue was first raised. Russell unloaded the trucks at an off-site location, and then returned to Texas with his crew.
Purnell points out that Russell and the trucks were two days late arriving in Georgia. Had they arrived on January 7, Purnell argues, they could have unloaded the materials in the warehouse because the parking lot was not under construction at that time. However, that argument ignores the second issue that prevented unloading and installation at the warehouse.
There is also a dispute as to whether or not rack installation requires a permit, or if a permit is necessary only to use rack. Regardless, the evidence indicated the building contractor believed a permit was necessary for installation, and would not allow installation to begin without a permit. The building contractor also informed Russell that the inspector would shut down all construction were he to find that they were installing rack without the appropriate permit.
The lack of permit caused further problems. Specifically, after the first trip to Georgia, Camberg instructed Russell to communicate directly with Purnell and return to Georgia when Purnell asked him to return. Believing the permit was imminent on three other occasions, Elmer Purnell instructed Russell to return to Georgia three other times, though Russell was not able to install the rack because the permit had not issued. Russell complained to Camberg of the added expense of the trips. Camberg agreed that Russell should recover the additional $13,697 in expenses for the four additional trips and orally guaranteed he would pay those expenses.
WRC claimed that its problems in receiving the permit timely were a result of the permitting authority not providing specific enough information on how to obtain a permit. WRC made more than one attempt to receive the permit because its initial application failed.
In March, when the permit was finally approved, WRC and Purnell again discussed the terms of their agreement. Camberg was concerned that Purnell would not pay the remaining contract installment. There was one remaining truckload of materials to deliver to Georgia and WRC refused to ship those materials until Purnell signed a letter reaffirming all original terms — except for the dates — of the original agreement. The letter made no mention of the additional trip expenses for Russell. However, in a telephone conversation, Camberg told Richard Purnell that he would not invoice those extra expenses if Purnell would sign the letter and pay according to its terms. Richard Purnell signed and returned the letter.
Russell returned to Georgia with his crew in March — his fifth trip — and completed installation on March 23. Yet not even installation went according to plan. When Russell and his crew began installation, they learned that the work area had not been moved as Purnell had agreed to do. Despite the apparent problem, Russell testified that he was able to install all of the rack as provided in the AutoCAD drawings. However, Elmer Purnell directed Russell to remove 600 feet of rack. Russell offered to reinstall the rack at a different location in the warehouse, but Elmer Purnell refused. Having made the modifications to Purnell's satisfaction, Russell placed the unused rack outside of the warehouse and returned to Texas.
WRC expected its final payment from Purnell within seven days of installation. In April, 2002, WRC attempted to contact Purnell regarding payment as WRC had not received the final installment. Purnell responded that it was measuring the installed rack and would remit payment once the measurements were complete. Eventually, Purnell sent a final payment to WRC, but reduced the contractual amount by $6,612 (760 feet of uninstalled rack multiplied by $8.70/ft installation cost). WRC then hired an attorney and filed suit for breach of contract alleging that Purnell breached by not paying the contract amount, and by causing additional travel expenses by not having the warehouse ready for installation as agreed. Purnell counterclaimed alleging WRC violated the DTPA.
Both parties disputed how much rack had been finally installed. WRC provided evidence that 600 feet of rack had been removed at Elmer Purnell's request, which accounted for any rack shortage. Purnell argued that 760 feet of rack had not been installed. Purnell computed the amount of missing rack by measuring the unused rack sitting outside of its warehouse. However, WRC provided evidence showing that methodology would not be accurate because it had purchased and shipped extra rack in the event it was needed. Therefore, according to WRC, its methodology of computing the missing rack — by taking measurements of removed rack within the warehouse — was accurate. As we explain below, the jury resolved this conflict in favor of WRC.
A jury awarded damages to WRC on its claims, and no damages to Purnell on its claims. Purnell filed a motion for new trial, which was overruled by operation of law. Purnell then timely filed notice of appeal.
Analysis
I. The Evidence was Sufficient to Support the Jury's Findings
In its first issue, Purnell contends the evidence was both legally and factually insufficient to support the jury's findings that Purnell breached the contract, or, alternatively, that the evidence conclusively established that Purnell's failure to comply was excused. As part of its issue, Purnell argues that the jury implicitly and improperly found for WRC on a theory of "substantial performance," even though substantial performance had not been pled or tried by consent as a theory of recovery. However, as we explain, the evidence was sufficient to support the finding that Purnell failed to comply with its agreement, and the evidence was sufficient to support the finding that Purnell was not excused from performance.
A. Legal Sufficiency
1. WRC's Claim
When conducting a legal sufficiency review, we must view the evidence in the light most favorable to the verdict. City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005). WRC provided evidence that it had performed the contract fully. Russell testified that he actually installed all of the contracted-for rack before Purnell required that he deviate from the plans and remove some of the rack — an additional service not provided for in the contract. That Purnell instructed some rack to be removed was undisputed at trial. Also undisputed was that Russell offered to install the removed rack elsewhere — additional work not provided for in the contract — but Purnell refused this additional service. Viewed in the light most favorable to the verdict, WRC met and exceeded its obligations under the contract. It not only installed all of the contracted-for rack, but also performed additional labor by then removing some of the installed rack. Thus, the only remaining dispute is whether the evidence conclusively established that Purnell's failure to comply with the agreement was excused.
Purnell argues that because Russell believed he removed only 600 feet of rack, and because Purnell measured 760 feet of rack sitting behind its warehouse, 160 feet of contracted-for rack was never installed. However, that ignores evidence that WRC shipped extra rack to the work site. It also ignores Purnell's sole witness's testimony that Purnell never undertook a measurement of the rack installed, only a measurement of rack sitting outside of its warehouse.
Additionally, Purnell does not argue that the rack was installed in an unworkmanlike manner, or otherwise installed in an unsatisfactory manner. Neither did Purnell argue WRC and Russell failed to perform under the contract to deliver, receive, and customize the rack according to the contract specifications. Its argument is merely that it has less rack installed than provided for in the contract.
2. Purnell's Affirmative Defenses
Taking a different tack, Purnell contends that it was excused from performing its obligation to pay under the contract. Waiver and excuse are affirmative defenses. See TEX. R. CIV. P. 94; CDS Enters., Inc. v. Myrad Real Estate, Inc., 14-97-00197-CV, 1999 WL 548226, at *4B5 (Tex.App.-Houston [14th Dist.] July 29, 1999, no pet.) (not designated for publication). As such, Purnell bore the burden of proof at trial. A party bringing a legal sufficiency challenge to an adverse finding on an issue on which she had the burden of proof must demonstrate on appeal that the evidence establishes, as a matter of law, all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam). We must examine first the record for evidence supporting the finding while ignoring all contrary evidence. Id. If there is no evidence to support the finding, then we will examine the entire record to determine if the contrary proposition is established as a matter of law. Id. We will not reverse unless the contrary proposition is conclusively established. Id. Purnell cannot meet this burden.
Purnell's theory of excuse and waiver relied entirely on the lack of finally installed rack. Yet it ignored at trial, and continues to ignore on appeal, the contrary evidence that it was responsible for the lack of installed rack. As we outlined above, the jury heard testimony that all contracted-for rack was installed. The jury also heard testimony that Purnell was the reason less rack remained installed due to its onsite changes to the layout. Viewed in the light most favorable to the verdict, we cannot say that anything less than all of the contracted-for rack was installed. After installation, some of the rack was removed at Purnell's instruction. The evidence supports the jury's finding that Purnell's failure to comply with the agreement was not excused.
B. Factual Sufficiency
1. WRC's Claim
Purnell also raises a factual sufficiency challenge. In evaluating a factual sufficiency challenge, we will set the verdict aside only if it is so contrary to the overwhelming weight and preponderance of the evidence that it is clearly wrong and manifestly unjust. Arrellano v. State Farm Fire and Cas. Co., ___ S.W.3d ___, 2006 WL 909931, at *2 (Tex.App.-Houston [14th Dist.] 2006, no pet.). We will review all of the evidence in the record, both supporting and contrary to the finding. Id. Of course, in conducting our review, we may not merely substitute our judgment for that of the jury. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).
We have already discussed the evidence supporting the jury's findings. The only contrary evidence that WRC did not install all of the contracted-for rack came from Purnell's sole witness, David Jester, Purnell's Vice-President of Operations. Jester's testimony simply relayed that 760 feet of rack were behind Purnell's warehouse following installation. He never disputed that 6,720 feet of rack were actually installed, as required under the contract. Neither did he dispute testimony that Elmer Purnell explicitly directed Russell to remove rack. He did not even testify that Purnell or he measured the amount of rack actually installed in the warehouse.
The jury heard testimony that WRC and Russell had performed fully under the contract; indeed, Russell's testimony indicated he had provided service beyond contractual obligations. In essence, it was a credibility determination for the jury to make: was Russell accurate in his testimony that the contract had been performed fully, or was Jester accurate that the contract was not performed fully. The evidence was not complicated and merely required the jury to resolve conflicts in testimony. The jury resolved this conflict and we will not disturb its finding when there is sufficient evidence to support it, as here.
2. Purnell's Affirmative Defenses
When a party had the burden of proof at trial on an issue, and raises a factual sufficiency challenge to an adverse finding on that issue, we must consider and weigh all of the evidence. Dow Chem. Co., 46 S.W.3d at 242. We will set the verdict aside only if the evidence is so weak or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust. Id. As always, we may not merely substitute our judgment for that of the jury. Golden Eagle Archery, 116 S.W.3d at 761.
Purnell's defense was simply that it had no obligation to pay for rack that was not installed and it could not use. There was ample evidence that WRC installed all of the contracted-for rack. The undisputed testimony was that Purnell expressly demanded that installed rack be removed. The evidence was factually sufficient to support the jury's verdict in this regard and we will not set it aside.
C. Summary
The evidence was both legally and factually sufficient to support the jury's verdict. Thus, we overrule appellant's first issue.
II. Trial Court Did Not Err in Refusing to Give the Jury a Limiting Instruction
In its second issue, Purnell argues the trial court erred in not giving the jury a limiting instruction pursuant to Texas Rule of Evidence 105 regarding Denmark's legal ability to hold himself out as an engineer. We review evidentiary rulings for abuse of discretion. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 906 (Tex. 2000). We will not reverse unless the trial court's ruling — if erroneous — probably caused the rendition of an improper judgment. Id. Thus, we must first determine if the trial court's refusal to give the limiting instruction was error. If the trial court did not err, then we need not conduct a harm analysis.
TEPA requires that a person not practice engineering or hold himself out as an engineer in Texas if he is not licensed and registered as an engineer by the State. TEX. OCC. CODE § 1001.301. Purnell argues that Denmark violated the statute because he affirmatively represented himself at trial as an engineer, able to perform engineering. Additionally, Purnell states that WRC misled Purnell by referring to Denmark as an engineer. Purnell misstates the record.
At trial, Denmark was clear in stating that while he holds an engineering degree from a preeminent educational institution, Texas AM University, he is not a licensed engineer. Additionally, Denmark testified that he had merely provided AutoCAD drafting services, which do not require an engineering license. Finally, Denmark had not been held out to Purnell as a licensed engineer. Thus, there was no testimony or evidence requiring a limiting instruction. We hold that the trial court did not err in refusing a limiting instruction to the jury and overrule Purnell's second issue. III. Trial Court Properly Awarded Consequential Damages
We also note that the only harm Purnell attributes to this alleged error concerns Denmark's credibility before the jury, and Purnell's belief it did not receive professional engineering services as the contract required. Yet, Purnell cross-examined Denmark extensively regarding his lack of an engineering license. Also, the evidence was undisputed that WRC hired a professional engineer to certify and stamp the plans as required under Georgia law.
WRC pleaded two breaches of contract. The first was that it was not paid as required under the contract. The second was that Purnell did not have the warehouse ready for installation and therefore caused WRC to incur additional installation expenses in the amount of $13,697 for the four extra trips to Georgia. The jury ultimately awarded WRC $6,848.50, half of the consequential damages it sought. Purnell contends this claim is nothing more than a pass-through claim, and was improper as a matter of law because WRC was not liable to its subcontractor, Russell. WRC counters that the claim is WRC's claim for additional expenses it incurred. As a result, WRC argues, it is not a pass-through claim. We agree with WRC.
Texas first recognized pass-through claims in 2004. See Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605, 607 (Tex. 2004) (answering certified questions from the United States Circuit Court for the Fifth Circuit). A pass-through claim is a claim (1) by a party who has suffered damages (typically, a subcontractor), (2) against a responsible party with whom it has no contract (typically, the owner of property), and (3) presented through an intervening party who has a contractual relationship with both (typically, the contractor). See id. at 610. Pass-through litigation allows for the efficient resolution of disputes because any settlement by the owner is a full and final settlement because the subcontractor promises to release the contractor from liability to the extent the contractor presents the subcontractor's claim and renders any recovery to the subcontractor. Id. at 616. Pass-through litigation thus prevents the situation where multiple suits are needed to finalize one claim. This case does not satisfy the requirements for a pass-through claim.
The jury heard ample evidence that WRC was liable to its subcontractor for the full $13,697. It also heard evidence that WRC's liability to the subcontractor was not contingent upon a favorable ruling in the underlying case. These facts clearly remove this case from the realm of pass-through claims as WRC brought its own claim for damages, not Russell's. Purnell has never argued that it should not be liable for extra-contractual damages for which the jury believed it was liable to WRC; Purnell has argued only that WRC was not liable to Russell. However, the evidence was undisputed that WRC was obligated to Russell for $13,697 in additional travel expenses. The evidence established, and the jury found, that Purnell was partly at fault for the additional expenses incurred in the four extra trips to Georgia. Therefore, the jury awarded WRC relief for half of the additional travel expenses. The trial court did not err in entering the judgment on the jury's verdict. We overrule Purnell's third issue.
IV. There Was Sufficient Evidence on the Issue of Attorney's Fees
In its final issue, Purnell argues the evidence presented regarding attorney's fees was both legally and factually insufficient. Purnell's argument concerns WRC's failure to segregate fees among the claims. See Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 10B11 (Tex. 1991). Purnell has not argued that the evidence presented was incompetent or that the fees were excessive or otherwise were unreasonable under the Arthur Andersen factors. See generally, Arthur Andersen Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex. 1997). Purnell simply argues that because fees were not segregated, they were waived; also, because Purnell believes the judgment for actual damages was error, it argues WRC should not recover its fees on those claims. We disagree.
There were two experts presented at trial regarding attorney's fees — one expert for WRC, and one for Purnell. Both experts testified that the fees could not be segregated. One of those experts was Curt Langley, Purnell's counsel on appeal. Therefore, it is not only the case that the evidence was sufficient, but also that it was undisputed and affirmatively presented by both parties that the fees could not be segregated. Additionally, because we have found no error with regard to the actual damages, WRC was entitled to recover attorney's fees. We overrule Purnell's final issue.
Conclusion
Having overruled each of Purnell's issues, we affirm the judgment of the trial court.