Affirmed in Part, Reversed in Part, and Remand in Part and Memorandum 

Opinion filed January 24, 2023.

In The

Fourteenth Court of Appeals

NO. 14-21-00159-CV

ADVANTECH CONSTRUCTION SYSTEMS, LLC AND LUIS G. 

HIGAREDA, Appellants

V.

MICHALSON BUILDERS, INC. AND MICHAEL CZAPSKI, Appellees

On Appeal from the County Civil Court at Law No. 4

Harris County, Texas

Trial Court Cause No. 1089883

MEMORANDUM OPINION

In this construction dispute between a general contractor and a subcontractor, 

the subcontractor challenges the sufficiency of the evidence in support of a judgment 

in the general contractor’s favor after a bench trial. The claims at issue in this appeal 

are the general contractor’s fraudulent lien and breach of contract claims and the 

subcontractor’s counterclaims and third-party claims for breach of contract and 

misapplication of construction trust funds. For the reasons below, we affirm in part, 
2

reverse the trial court’s award of attorney’s fees, and remand to the trial court for 

further proceedings limited to reconsideration of attorney’s fees.

Background

Woods Edge Equity, LLC hired Michalson Builders, Inc. to build a house on 

piers. Michalson was the general contractor for this residential construction project, 

and Michaelson hired AdvanTech Construction Systems, LLC, to construct the 

foundation. To form the foundation of this suspended structure, steel I-beams would 

be placed on top of the piers and then foam panels, structural steel rebar, and forms 

would be used to hold the concrete in place while it was being poured.

Michalson began drilling into the ground for piers and then discovered that 

the title company had failed to identify an easement on the property. Because of this 

omission, the previously planned slab design would encroach into the easement. The 

slab design had to be modified to be moved outside the easement. This modification 

also resulted in pier and beam locations being changed. AdvanTech created several 

sets of revised plans pursuant to the changes. These changes in plans delayed the 

project by several months.

Michalson and AdvanTech’s relationship was rife with disputes. Michalson 

complained that AdvanTech did not adequately staff the project, resulting in delays, 

and that the workers did not have appropriate tools and materials. Some of the panels 

were lost or damaged due to a flood, but there was a dispute as to how many panels 

were affected. Michalson agreed to two change orders to cover the changes to the 

project and replace missing panels. 

Finally, Michalson and AdvanTech had a dispute about implementing a 

requested change to the height of the slab. This final dispute culminated in 

AdvanTech leaving the job. Michalson then sent a 24-hour notice asking AdvanTech 
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to “man the project with an adequate amount of skilled workmen” and warning that 

“[f]ailure to do so will result in Michalson” hiring another crew. AdvanTech did not 

return to the jobsite, and Michalson hired another crew to finish the job. 

Advantech’s general manager, Luis Higareda, recorded a mechanic’s lien 

against the property, which included incorrect amounts owed and other incorrect 

information. AdvanTech released that lien approximately one year later but recorded 

an affidavit from Higareda claiming a “constitutional lien.” Higareda attested that 

Michalson was “believed to be a ‘sham contractor’ as that term is known in Texas 

law and is, therefore, listed as a reputed owner.” 

Michalson brought claims against AdvanTech and Higareda for fraudulent 

lien, breach of oral contract, fraud, negligent misrepresentation, negligence, and 

negligent hiring. AdvanTech and Higareda brought counterclaims against Michalson 

and third-party claims against Woods Edge and Michael Czapski, president of 

Michalson, for breach of contract, under the prompt payment act, to foreclose lien, 

and for misapplication of construction trust funds.1

AdvanTech, Higareda, and Woods Edge signed a settlement agreement 

releasing their claims against each other. AdvanTech then recorded a release of its 

“lien claim” against the property “as well as any other lien rights belonging to . . . 

AdvanTech . . . relating to or arising from the work it performed.” AdvanTech also 

moved to dismiss its claims against Woods Edge, which the trial court granted. 

The remaining claims were tried to the bench, which included (1) Michalson’s 

fraudulent lien claims against AdvanTech and Higareda and breach of contract claim 

1 Michalson alone asserted claims as the plaintiff, but AdvanTech and Higareda brought 

Czapski into the case through third-party claims. We refer to “Michalson” or “Michalson and 

Czapski” as appropriate when addressing claims brought by Michalson or defenses advanced by 

Michalson and Czapski. 
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against AdvanTech, and (2) AdvanTech’s counterclaims and third-party claims 

against Michalson for breach of contract and against Czapski for misapplication of 

construction trust funds. After trial, the trial court rendered judgment in Michalson 

and Czapski’s favor and awarded Michalson actual damages, attorney’s fees, costs, 

and pre- and postjudgment interest. The trial court signed findings of fact and 

conclusions of law, finding, in relevant part, that (1) AdvanTech and Higareda 

intentionally filed false mechanic’s liens, and (2) Michalson and AdvanTech had an 

oral contract, which AdvanTech breached.

Discussion

In four issues, AdvanTech and Higareda challenge the sufficiency of the 

evidence in support of the trial court’s (1) award of attorney’s fees against 

AdvanTech and Higareda on Michalson’s lien removal claims, (2) award of contract 

damages to Michalson, (3) denial of contract damages to AdvanTech, and (4) failure 

to hold Czapski liable for misapplication of construction trust funds. AdvanTech and 

Higareda also challenge the trial court’s jurisdiction over Michalson’s lien removal 

claims. 

We defer to a trial court’s findings of fact after a bench trial when the findings 

are supported by the record and review conclusions of law de novo. Sw. Elec. Power 

Co. v. Lynch, 595 S.W.3d 678, 683 (Tex. 2020). In reviewing the trial court’s 

decision for legal sufficiency of the evidence, we use the same standards applied in 

reviewing the evidence supporting a jury’s finding. Catalina v. Blasdel, 881 S.W.2d 

295, 297 (Tex. 1994); Schear Hampton Drywall, LLC v. Founders Commercial, Ltd., 

586 S.W.3d 80, 85 (Tex. App.—Houston [14th Dist.] 2019, no pet.). Our legal 

sufficiency review requires us to review the evidence in the light most favorable to 

the challenged finding and indulge every reasonable inference that would support it, 

crediting favorable evidence if a reasonable factfinder could and disregarding 
5

contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 

168 S.W.3d 802, 822, 827 (Tex. 2005). 

We sustain a legal sufficiency or “no evidence” challenge only when (1) the 

record discloses a complete absence of evidence of a vital fact; (2) the court is barred 

by rules of law or of evidence from giving weight to the only evidence offered to 

prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a 

mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital 

fact. Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex. 2003); Schear Hampton 

Drywall, 586 S.W.3d at 85. A party attacking the legal sufficiency of an adverse 

finding on an issue on which it had the burden of proof must show that the evidence 

conclusively establishes all vital facts in support of the issue. Dow Chem. Co. v. 

Francis, 46 S.W.3d 237, 241 (Tex. 2001). When a party challenges the legal 

sufficiency of the evidence on a finding on which it did not bear the burden of proof, 

the party must show that no evidence supports the finding. Exxon Corp. v. Emerald 

Oil & Gas Co., L.C., 348 S.W.3d 194, 215 (Tex. 2011); Schear Hampton Drywall, 

586 S.W.3d at 86.

In reviewing factual sufficiency, we examine the entire record, considering 

both the evidence in favor of and contrary to the challenged findings. Mar. Overseas 

Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex. 1998); Schear Hampton Drywall, 586 

S.W.3d at 86. When a party attacks the factual sufficiency of an adverse finding on 

which it bore the burden of proof, it must establish that the finding is against the 

great weight and preponderance of the evidence. Dow Chem. Co., 46 S.W.3d at 242; 

Schear Hampton Drywall, 586 S.W.3d at 86. When a party challenges the factual 

sufficiency of the evidence supporting a finding on which it did not have the burden 

of proof, we may set aside the finding only if it is so contrary to the overwhelming 

weight of the evidence as to be clearly wrong and unjust. Mar. Overseas Corp., 971 
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S.W.2d at 407; Schear Hampton Drywall, 586 S.W.3d at 86. If we determine the 

evidence is factually insufficient, we must detail the evidence relevant to the issue 

and state in what regard the contrary evidence greatly outweighs the evidence 

supporting the trial court’s judgment; we need not do so when affirming the 

judgment. Gonzalez v. McAllen Med. Ctr., Inc., 195 S.W.3d 680, 681 (Tex. 2006); 

Schear Hampton Drywall, 586 S.W.3d at 86.

We apply these standards mindful that the factfinder is the sole judge of the 

credibility of the witnesses and the weight to be given to their testimony, and we 

indulge every reasonable inference in support of the factfinder’s findings. See City 

of Keller, 168 S.W.3d at 819, 822; Schear Hampton Drywall, 586 S.W.3d at 86. 

When, as here, there is a complete reporter’s record of the trial, the trial court’s 

findings of fact will not be disturbed on appeal if there is any evidence of probative 

force to support them. See Barrientos v. Nava, 94 S.W.3d 270, 288 (Tex. App.—

Houston [14th Dist.] 2002, no pet.). Likewise, incorrect conclusions of law will not 

require reversal if the controlling facts support a correct legal theory. BMC Software 

Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). We turn to the issues 

presented.

I. Attorney’s Fees

In their first issue, AdvanTech and Higareda bring numerous arguments 

challenging the sufficiency of the evidence in support of the trial court’s award of 

attorney’s fees on Michalson’s fraudulent lien claims. AdvanTech and Higareda 

argue (1) the fraudulent lien claims were not before the trial court because 

AdvanTech voluntarily discharged both liens; (2) the claims were released when 

AdvanTech and Higareda settled with Woods Edge; (3) Higareda is not personally 

liable; (4) the attorney’s fees were required to be segregated but were not; and (5) the 

attorney’s fees award is not equitable. AdvanTech and Higareda also allege the trial 
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court, as a county civil court at law, lacked jurisdiction to remove the liens and the 

issue is moot. Since the latter issues are jurisdictional, we address them first.

A. Jurisdiction over Lien Removal

AdvanTech and Higareda argue the county civil court at law lacked 

jurisdiction over Michalson’s lien removal claims. Whether a court has subject 

matter jurisdiction is a question of law that we review de novo. Haas v. Ashford 

Hollow Cmty. Improvement Ass’n, 209 S.W.3d 875, 879 (Tex. App.—Houston [14th 

Dist.] 2006, no pet.). 

County Civil Court at Law No. 4 of Harris County is a statutory county court. 

Tex. Gov’t Code § 25.1031(4); see Eris v. Giannakopoulos, 369 S.W.3d 618, 620 

(Tex. App.—Houston [1st Dist.] 2012, pet. dism’d). Section 25.0003 of the 

Government Code sets forth the general rule governing jurisdiction of statutory 

county courts. Tex. Gov’t Code § 25.0003(a) (“A statutory county court has 

jurisdiction over all causes and proceedings, civil and criminal, original and 

appellate, prescribed by law for county courts.”); Haas, 209 S.W.3d at 879. Section 

25.1032 contains additional jurisdictional provisions particular to Harris County 

civil courts at law. Tex. Gov’t Code § 25.1032(a); Haas, 209 S.W.3d at 879–80. The 

statute provides that “[i]n addition to other jurisdiction provided by law, a county 

civil court at law” also “has jurisdiction to . . . hear a suit for the enforcement of a 

lien on real property.” Tex. Gov’t Code § 25.1032(d)(3). 

According to AdvanTech and Higareda, jurisdiction to hear a suit to enforce 

a lien on property does not include jurisdiction over a suit to remove a lien. 

Presuming without deciding that AdvanTech and Higareda are correct, Harris 

County civil courts at law also have jurisdiction over certain cases under the general 

statutory jurisdictional grant. See Haas, 209 S.W.3d at 879–80. Harris County civil 

courts at law have concurrent civil jurisdiction with constitutional county courts at 
8

law. Tex. Gov’t Code § 25.1032(a) (“A county civil court at law in Harris County 

has jurisdiction over all civil matters and causes, original and appellate, prescribed 

by law for county courts, but does not have the jurisdiction of a probate court.”), see

Eris, 369 S.W.3d at 620. When, as here, a statutory county court has concurrent civil 

jurisdiction with a constitutional county court, it also has concurrent jurisdiction with 

the district court in civil cases in which the matter in controversy exceeds $500 but 

not $250,000. Tex. Gov’t Code § 25.0003(c)(1); see also Eris, 369 S.W.3d at 620. 

In other words, Harris County civil courts at law have concurrent jurisdiction with 

district courts in which the amount in controversy falls within the statutory 

jurisdictional dollar limit for statutory county courts. See Eris, 369 S.W.3d at 620 

(citing Cont’l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 448 (Tex. 1996)). 

Nothing in these provisions indicates that the legislature intended to exclude suits to 

remove a lien from the county court’s concurrent jurisdiction. See Cont’l Coffee 

Prods., 937 S.W.2d at 448. 

It is undisputed that the amounts in controversy were over $500 and under 

$250,000. We conclude that the county court at law had jurisdiction over 

Michalson’s lien removal claims because the claims are within the amount-incontroversy range over which Harris County courts at law have concurrent 

jurisdiction with district courts. We need not decide whether the additional 

jurisdictional grant over suits for the enforcement of a lien on real property also 

encompass suits for removal of a lien. We next address whether the lien removal 

claims were moot at the time of trial.

B. Lien Removal Claims Not Moot

AdvanTech and Higareda argue Michalson’s lien removal claims were moot 

prior to trial because AdvanTech released both liens before trial and the trial court 

dismissed AdvanTech’s lien enforcement claims. A case becomes moot if a 
9

controversy ceases to exist or the parties lack a legally cognizable interest in the 

outcome. Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005). But a 

dispute over attorney’s fees is a live controversy. Id. Here, Michalson filed suit 

seeking, in part, to remove the liens, and the issue of attorney’s fees was presented 

to the trial court. On appeal, we must resolve whether Michalson was entitled to 

those fees. Accordingly, this is a live issue and not moot. See id. We turn to the 

merits of AdvanTech and Higareda’s first issue.

C. Availability of Attorney’s Fees for Lien Removal Claims

AdvanTech and Higareda argue Michalson was not entitled to attorney’s fees 

for its lien removal claims. The trial court concluded AdvanTech and Higareda filed 

two false mechanic’s liens and awarded attorney’s fees to Michalson under Property 

Code section 53.156, which provides in relevant part, “[I]n any proceeding to declare 

that any lien or claim is invalid or unenforceable in whole or in part, the court shall 

award costs and reasonable attorney’s fees as are equitable and just.” Tex. Prop. 

Code § 53.156. AdvanTech and Higareda argue the trial court erred in awarding 

Michalson attorney’s fees because (1) the first lien was released before Michalson 

had any time entries for attorney’s fees; (2) Michalson did not bring an action to 

remove the second lien; (3) the trial court’s judgment does not foreclose or declare 

any lien invalid or unenforceable; (4) AdvanTech released the second lien and the 

trial court dismissed AdvanTech’s lien foreclosure claim; (5) the second lien is a 

constitutional lien, which arose automatically from AdvanTech’s performance of the 

work; and (6) Michalson was Woods Edge’s agent and thus is bound by the terms of 

AdvanTech and Higareda’s settlement with Woods Edge. 

Lien Releases and Lien Removal Claims. Higareda recorded the first lien 

on July 14, 2016. Michalson, represented by The Mastriani Law Firm, filed a 

verified summary motion to remove that lien on February 24, 2017. AdvanTech then 
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filed an “Affidavit Claiming Constitutional Lien,” which we refer to as the second 

lien, on August 16, 2017 and recorded a withdrawal and release of the first lien the 

next day.2 On or before October 17, 2019, AdvanTech and Higareda then brought a 

third-party claim against Woods Edge and a counterclaim against Michalson to 

foreclose the second lien.3 Michalson’s trial counsel Christopher Thornhill 

substituted into the case in February 2019, replacing The Mastriani Law Firm. 

Michalson did not seek to recover any attorney’s fees charged by The Mastriani Law 

Firm. AdvanTech and Higareda assert their settlement with Woods Edge released 

the second lien on March 6, 2020 and the dismissal of the lien foreclosure claim 

disposed of the lien removal claims on March 10, 2020. 

AdvanTech and Higareda’s position on appeal is that Michalson did not bring 

an action to remove the second lien or defend against AdvanTech and Higareda’s 

lien foreclosure claim. AdvanTech and Higareda thus assert the attorney’s fees that 

Michalson sought at trial are not affiliated with any lien removal claims because the 

first lien was released before Thornhill substituted into the case and the second lien 

had been released by the time of trial. However, Michalson’s live petition includes 

a claim for “fraudulent lien.” The pleading states, “Plaintiff re-urges all applicable 

claims from the previously filed pleadings in regards to any and all fraudulent liens 

filed against the property made the basis of this lawsuit.” (Emphasis added.) Thus, 

the live petition covers all allegedly “fraudulent liens filed against the property.” 

During trial, Michalson presented evidence in support of its allegation that

AdvanTech and Higareda filed two fraudulent liens. Michalson also presented 

2 AdvanTech and Higareda refer to the first lien as the pro se lien and the second lien as 

the constitutional lien.

3 This is an approximate date because our record only contains AdvanTech and Higareda’s 

third amended answer, counterclaims, and third-party claims and not any prior versions of that 

pleading.
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evidence and argued it was entitled to attorney’s fees “incurred for removing a false 

mechanics [lien].” The record thus supports the finding that Michalson incurred 

attorney’s fees on its lien removal claims because it advanced those claims at trial. 

AdvanTech and Higareda also argue that the trial court’s judgment does not 

foreclose or declare any lien invalid or enforceable. But the trial court found that 

AdvanTech and Higareda filed false liens on or about July 16, 2016 and August 16, 

2017, “[i]nclud[ed] charges for work on an unapproved payment application for 

work that was never performed or approved and [knew] those charges were false 

when they were reflected in the amount owed on lien,” “[i]ntentionally reflect[ed] 

the work was performed in 2016 to attempt to comply with statutory requirements 

while knowing the work was performed in 2015,” and “[c]laim[ed] money is owed 

to AdvanTech when it is not,” and “Higareda intentionally and/or in the alternative 

filed a mechanics lien when he knew or should have known the lien was filed 

incorrectly and contained false information.” Accordingly, the trial court made 

findings as to the validity and enforceability of the liens.

AdvanTech and Higareda’s remaining arguments regarding the lien releases 

and lien removal claims are similarly unpersuasive. Although AdvanTech eventually 

released both liens and the trial court dismissed the lien foreclosure claim, as 

discussed, the fraudulent lien claims were nonetheless advanced during trial without 

objection, and the trial court ruled on those issues.4 Accordingly, Michalson incurred 

fees in asserting those claims during trial. 

Finally, AdvanTech and Higareda’s argument regarding the distinction

between constitutional and statutory liens is confusing at best. AdvanTech and 

Higareda seem to imply that attorney’s fees are not recoverable in actions to remove 

4 Michalson offered the second lien into evidence. AdvanTech and Higareda initially 

objected but then withdrew their objection.
12

a constitutional lien. But the statute makes no distinction between statutory and 

constitutional liens. The statute allows the trial court to award attorney’s fees in 

“proceeding to declare that any lien or claim is invalid or unenforceable in whole or 

in part.” Id. (emphasis added.)

Agency. AdvanTech and Higareda also assert that Michalson brought the lien 

removal claims as an agent for Woods Edge and thus the settlement agreement with 

Woods Edge released Michaelson’s lien removal claims. AdvanTech and Higareda 

had the burden to prove agency. See MEMC Pasadena, Inc. v. Riddle Power, LLC, 

472 S.W.3d 379, 399 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (“An agency 

relationship will not be presumed, and the party asserting the relationship has the 

burden to prove its existence.”); see also Miles v. Plumbing Servs. of Houston, Inc., 

668 S.W.2d 509, 511 (Tex. App.—Houston [14th Dist.] 1984, writ ref’d n.r.e.) 

(“[Subcontractor] had the burden to prove agency [of general contractor]; it cannot 

be presumed to exist.”). AdvanTech and Higareda point to no evidence showing 

Michalson was an agent for Woods Edge. Moreover, Michalson was not a party to 

the settlement agreement with Woods Edge. AdvanTech and Higareda have not 

shown on this record that Michalson was an agent for Woods Edge. 

D. Personal Liability against Higareda

AdvanTech and Higareda challenge the trial court’s award of attorney’s fees 

against Higareda personally for the lien removal claims. According to AdvanTech 

and Higareda, Higareda signed the second lien as an authorized agent for 

AdvanTech, not as an individual. Michalson argues that Higareda is personally liable 

because the trial court found that he filed two false liens and did so intentionally and 

knowingly and thus committed fraudulent or tortious acts while in the service of 

AdvanTech. 

The general rule is well established in Texas that an agent is personally liable 
13

for his own torts even if he acts at the principal’s command. Grand Overseas 

Destinations, Inc. v. Baker Hughes, Inc., No. 14-98-01427-CV, 2000 WL 1508827, 

at *4 (Tex. App.—Houston [14th Dist.] Oct. 12, 2000, pet. denied) (mem. op.); cf. 

Steward Health Care Sys. LLC v. Saidara, 633 S.W.3d 120, 150 (Tex. App.—Dallas 

2021, no pet.) (Schenck, J., concurring) (regarding corporate agents) (“[T]his Court 

and other Texas courts of appeals—although not the Texas Supreme Court—have 

suggested that a corporate agent can . . . be held liable. . . for . . . committing a tort 

or wrong while engaged in the business of the corporate principal based on the 

agent’s personal acts.”); Stull v. LaPlant, 411 S.W.3d 129, 135 (Tex. App.—Dallas 

2013, no pet.) (regarding corporate agents) (“[A] corporate agent can be held liable 

for committing a tort or wrong while engaged in the business of the corporate 

principal based on the agent’s personal acts.”), overruled on other grounds by 

Steward Health Care Sys., 633 S.W.3d 120; Shapolsky v. Brewton, 56 S.W.3d 120, 

133 (Tex. App.—Houston [14th Dist.] 2001, pet. denied) (“It is the general rule in 

Texas that corporate agents are individually liable for fraudulent or tortious acts 

committed while in the service of their corporation.”), disapproved of on other 

grounds by Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 788 

(Tex. 2005). 

Section 343 of the Restatement (Second) of Agency sets out this rule as 

follows:

An agent who does an act otherwise a tort is not relieved from liability 

by the fact that he acted at the command of the principal or on account 

of the principal, except where he is exercising a privilege of the 

principal, or a privilege held by him for the protection of the principal’s 

interests, or where the principal owes no duty or less than the normal 

duty of care to the person harmed.

Restatement (Second) of Agency § 343 (Am. L. Inst. 1958). Under this general rule, 

an agent’s liability is based on the agent’s own actions, and not his status as agent. 
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Grand Overseas Destinations, 2000 WL 1508827, at *4.

Accordingly, under this general rule, Higareda would be liable for his own 

tortious acts. However, Advantech and Higareda argue that Higareda is shielded 

from liability under Business Organizations Code section 101.114, which is 

applicable to limited liability companies such as AdvanTech and provides, “Except 

as and to the extent the company agreement specifically provides otherwise, a 

member or manager is not liable for a debt, obligation, or liability of a limited 

liability company, including a debt, obligation, or liability under a judgment, decree, 

or order of a court.” Tex. Bus. Orgs. Code § 101.114. 

Presuming without deciding that the statute would shield a member or 

manager of an LLC from tortious acts such as fraud, there is no evidence that 

Higareda is a member or manager of AdvanTech as defined under the statute. To be 

sure, Higareda testified that he was the “general manager” of the company, but a 

manager of an LLC has specific responsibilities under the statute. An LLC is 

required to have a “governing authority” consisting of “the managers of the 

company, if the company agreement provides that the company is managed by one 

or more managers; or . . . the members of the company, if the company agreement 

provides that the company is managed by the members.” Tex. Bus. Orgs. Code 

§ 101.251; see also Nguyen v. Nguyen, No. 14-19-00913-CV, 2021 WL 786628, at 

*6 (Tex. App.—Houston [14th Dist.] Mar. 2, 2021, no pet.) (mem. op.). The record 

in this case does not show that Higareda was a “governing person” under the statute, 

and we do not have the company agreement in our record to ascertain that 

information. See, e.g., Nguyen, 2021 WL 786628, at *6. 

AdvanTech and Higareda also argue Higareda is shielded from personal 

liability under section 21.223(a)(2) of the Business Organizations Code. Section 

21.223(a)(2) provides, 
15

A holder of shares, an owner of any beneficial interest in shares, or a 

subscriber for shares whose subscription has been accepted, or any 

affiliate of such a holder, owner, or subscriber or of the corporation, 

may not be held liable to the corporation or its obligees with respect 

to . . . any contractual obligation of the corporation or any matter 

relating to or arising from the obligation on the basis that the holder, 

beneficial owner, subscriber, or affiliate is or was the alter ego of the 

corporation or on the basis of actual or constructive fraud, a sham to 

perpetrate a fraud, or other similar theory.

Tex. Bus. Orgs. Code § 21.223(a)(2). Section 21.223(a)(2) also applies to “a limited 

liability company and the company’s members, owners, assignees, affiliates, and 

subscribers.” Tex. Bus. Orgs. Code § 101.002(a). Because there is no evidence on 

this record that Higareda is an owner, assignee, affiliate, or subscriber of the LLC, 

he has not shown that section 21.223(a)(2) applies.

Because the record does not show that either of the liability shield statutes 

relied on by Higareda applies under these circumstances, the general rule applies, 

and Higareda is liable for his own torts despite his agency status.

E. Segregation Required

Having found no merit in the above arguments, we turn to AdvanTech and 

Higareda’s argument that Michalson failed to segregate its fees. Michalson argues 

that attorney’s fees were available for both of its lien claim and breach of contract 

claim, so it was not required to segregate. We disagree.

Section 38.001 Applicability. We first address whether attorney’s fees are 

recoverable against a limited liability company under section 38.001. See Alta Mesa 

Holdings, L.P. v. Ives, 488 S.W.3d 438, 452-53 (Tex. App.—Houston [14th Dist.] 

2016, pet. denied). 

The availability of attorney’s fees under a particular statute is a question of 

law for the court. Holland v. Wal–Mart Stores, Inc., 1 S.W.3d 91, 94 (Tex. 1999). In 
16

construing a statute, our main goal is to determine and give effect to the legislature’s 

intent. Nat'l Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex. 2000). To do 

so, we look primarily to the language of the statute itself, as we consider it “a fair 

assumption that the Legislature tries to say what it means, and therefore the words it 

chooses should be the surest guide to legislative intent.” Fitzgerald v. Advanced 

Spine Fixation Sys., Inc., 996 S.W.2d 864, 866 (Tex. 1999). If a statute defines a 

term, courts are bound to construe that term by its statutory definition. Tex. Gov't 

Code § 311.011(b); Tex. Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 

2002). Under the “American Rule,” “litigants may recover attorney’s fees only if 

specifically provided for by statute or contract.” Epps v. Fowler, 351 S.W.3d 862, 

865 (Tex. 2011). 

Michalson sought attorney’s fees, among other things, for its breach of 

contract claim under section 38.001, which provides that “[a] person may recover 

reasonable attorney’s fees from an individual or organization other than a 

quasi-governmental entity . . . , in addition to the amount of a valid claim and costs, 

if the claim is for ... an oral or written contract.” See Tex. Civ. Prac. & Rem. Code § 

38.001(b)(8). 

Notably, section 38.001 was amended to allow recovery of attorney’s fees 

against all types of for-profit business organizations for lawsuits filed on or after 

September 1, 2021. Tex. Civ. Prac. & Rem. Code § 38.001 (amended effective 

September 1, 2021 to allowing recovery of attorney’s fees for breach of contract 

from an “organization” as defined under Business Organizations Code section 

1.002). Michalson, however, was required to establish the availability of attorney’s 

fees under the version of the statute applicable to this case.

As section 38.001 was previously written, a party could only recover its 

attorney’s fees where the party brought one of the enumerated claims against an 
17

“individual” or a “corporation.” Act of May 17, 1985, 69th Leg., R.S., ch. 959, § 1, 

sec. 38.001, 1985 Tex. Gen. Laws 3242, 32.78, amended by Act of May 28, 2021, 

87th Leg., R.S., ch. 665.

5 This lawsuit, however, was filed (and a final judgment 

signed) before to September 1, 2021, the effective date of the amendment. Act of 

May 28, 2021, 87th Leg., R.S., ch. 665, § 3 (“This Act takes effect September 1, 

2021.”).

Accordingly, section 38.001 does not authorize attorney’s fees for 

Michalson’s breach of contract claim against AdvanTech.6 Nevertheless, the inquiry 

does not end here.

Fee Segregation. We next address AdvanTech’s argument that Michalson 

had a duty to segregate fees. Under the segregation rule, “fee claimants [are] required 

to segregate fees between claims for which they are recoverable and claims for which 

they are not.” Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006); 

see Sterling Title Guar. Co. v. Sterling, 822 S.W.2d 1, 12 (Tex. 1991). “Intertwined 

facts do not make tort fees recoverable; it is only when discrete legal services 

advance both a recoverable and unrecoverable claim that are so intertwined that they 

need not be segregated.” Tony Gullo Motors I, L.P. at 311. When segregation is 

required, attorneys do not have to keep separate time records for each claim. Id. at 

314. Rather, segregation is sufficiently established if an attorney testifies that a given 

percentage of fees would have been incurred even if the claim for which attorney's 

fees are unrecoverable had not been asserted. Id.; see also State Farm Lloyds v. 

5 The former version of the statute reads, in relevant part:

A person may recover reasonable attorney's fees from an individual or 

corporation, in addition to the amount of a valid claim and costs, if the claim is for 

. . . an oral or written contract.”

6 The trial court’s conclusion of law stated “[t]he contract and the breach thereof apply to 

. . . [AdvanTech] only, and it is the sole liable party for the breach of contract and ensuing damages. 

[Higareda], individually, is not liable for the breach of contract thereof.”
18

Hanson, 500 S.W.3d 84, 102 (Tex. App.—Houston [14th Dist.] 2016, pet. denied); 

Jarvis v. Rocanville Corp., 298 S.W.3d 305, 320 (Tex. App.—Dallas 2009, pet. 

denied). 

The need to segregate attorney’s fees is a question of law, and the extent to 

which certain claims can or cannot be segregated is a mixed question of law and fact. 

Id. at 312–13; CA Partners v. Spears, 274 S.W.3d 51, 81 (Tex. App.—Houston [14th 

Dist.] 2008, pet. denied). When a fee claimant fails to properly segregate attorney’s 

fees, we may remand the issue to the trial court for reconsideration. Kinsel v. 

Lindsey, 526 S.W.3d 411, 428 (Tex. 2017); Tony Gullo Motors, 212 S.W.3d at 314.

Here, the trial court awarded Michalson $33,866.53 in attorney’s fees, and in 

its findings of fact, stated that “[t]he attorney’s fees incurred by [Michalson] were 

reasonable and necessary and had been segregated for those fees incurred for 

removing a false mechanics lien.” AdvanTech posits that Michalson’s recoverable 

and unrecoverable claims are not so inextricably intertwined that they need not be 

segregated. We agree.

In his declaration in support of attorney’s fees, Christopher M. Thornhill, 

Michalson’s attorney, described the claims against which he defended Michalson 

and the legal services he and his associates provided during that representation, 

including: (1) reviewing the initial lien filed on the property and drafting and filing 

a verified motion to remove invalid lien; (2) reviewing Advantech’s original answer 

and counterclaims and all amendments and supplements thereto; (3) drafting the 

answer to the counterclaims and supplemental petitions against Advantech and all 

amendments and supplements thereto; (4) preparing and filing a motion for summary 

judgment; (5) attending hearings; (6) drafting and filing numerous motions; (7) 

creating a litigation strategy for the case; and (8) attending and participating in a 
19

three-day bench trial on the matter.7 Thornhill asserted that Michalson incurred 

attorney’s fees in the amount of $33,866.53.

Further, Thornhill asserted that Michalson’s defenses to AdvanTech’s 

counterclaims “arose out of the same nucleus of facts or the same transactions or 

occurrences as the ones underpinning [Michalson’s] claims—that is validity, 

enforceability, meaning, application, and effect of the contract and also the validity 

of [AdvanTech and Higareda’s] liens.” Thornhill explained in his opinion that he did 

not need to segregate attorney’s fees between defending against Advantech’s claims 

and pursuing its own because the “discrete legal services performed by 

[Michalson’s] counsel advanced both recoverable and unrecoverable claims or 

defenses, making those fees and services inextricably intertwine[d].” See Tony Gullo 

Motors, 212 S.W.3d at 313–314; see Am. Int’l Indus., Inc. v. Scott, 355 S.W.3d 155, 

162–63 (Tex. App. – Houston [1st Dist.] 2011, no pet.). 

We are not persuaded that Michalson and Czapski’s breach of contract claim 

and fraudulent lien claim are so “intertwined that they need not be segregated.” Tony 

Gullo Motors I, 212 S.W.3d 299 at 311. Even though the final judgment stated that 

the attorney’s fees incurred by Michalson “have been segregated for those fees 

incurred for removing a false mechanics [lien],” there is no evidence in the record 

that the fees for the recoverable and nonrecoverable claims were segregated. 

Thornhill attached to his declaration a billing spreadsheet detailing dates, hours 

spent, hourly rate, and a narrative description of the legal services performed. The 

billing spreadsheet does not differentiate between claims for which attorney’s fees 

are recoverable (i.e. false mechanic’s liens) and claims for which they are not (i.e. 

breach of contract). Id. The billing spreadsheet does indicate that Thornhill removed 

7 Thornhill’s represents Michalson and Czapski and collectively refers to them as 

“Czapski” in his declaration. In this discussion, we refer to “Czapski” as “Michalson and Czapski.”
20

The Mastriani Law Firm time and fees from the calculation of fees and then reduced 

the remaining balance by 10%. This 10% reduction, however, does not amount to a 

segregation of fees for recoverable and nonrecoverable claims because Thornhill 

asserted that this “10% reduction across the board . . . capture[d] and eliminate[d] . 

. . any duplicative, unnecessary, excessive, unproductive, or inadequately 

documented fees.” There is no other evidence supported by the record that 

Michalson attempted to otherwise reduce the attorney’s fees. Further, Michalson 

presented evidence and argued they were entitled to “substantial attorney’s fees for 

[its] breach of contract [claim] under [section] 38 and for efforts in removing the 

[mechanic’s] liens.” In support thereof, Michalson and Czapski elicited copious 

testimony and presented considerable evidence regarding its breach of contract claim 

against AdvanTech.8

As discussed above in section E-1, supra, section 38.001 does not authorize

attorney’s fees for Michalson’s breach of contract claim against AdvanTech in this 

case. Our court has previously determined that, when unsegregated attorney’s fees 

claims are affirmed in part and reversed in part, the proper disposition is to reverse 

the fee award and remand for reconsideration of attorney’s fees. See O.C.T.G., LLP 

v. Laguna Tubular Prods. Corp., 557 S.W.3d 175, 193 (Tex. App.—Houston [14th 

Dist.] 2018, pet. dism’d by agr.). Given the disposition of the issues in this case, we 

reverse the fee award against AdvanTech and Higareda and remand the case for 

further proceedings limited to reconsideration. See Tex. R. Civ. P. 131 (awarding 

costs to “successful party to a suit”); O.C.T.G., LLP, 557 S.W.3d at 193; see also

Tex. R. App. P. 44.1(b) (court must consider whether issues on remand are 

“separable without unfairness to the parties”). Michalson’s failure to segregate its 

attorney’s fees does not mean they cannot recover any fees. Unsegregated attorney’s 

8

In its conclusion of law, the trial court found that only AdvanTech breached the contract.
21

fees for the entire case are some evidence of what the segregated amount should be. 

See Stewart Title Guar. Co., 822 S.W.2d at 12.

Accordingly, we sustain AdvanTech’s first issue as to the segregation of the 

fee award only.

F. Equity of Attorney’s Fees Award

AdvanTech and Higareda finally argue as to the attorney’s fees award that it 

is not equitable and just because Higareda made pro se lien mistakes on the first lien 

and, according to AdvanTech and Higareda, Michalson did not challenge the second 

lien. The statute states that a trial court “shall” award costs and fees in an action to 

foreclose a lien “as are equitable and just.” Tex. Prop. Code § 53.156. Awarding fees 

in an equitable and just manner falls into the trial court’s discretion. Schear Hampton 

Drywall, 586 S.W.3d at 94. A trial court abuses its discretion when it acts arbitrarily, 

unreasonably, or without regard to guiding legal principles. Id. 

Here, the trial court admitted evidence that the first lien was signed under oath 

and contained numerous misstatements regarding the year the work was performed, 

the amount of work performed, the amount due, and service of notice of the lien. 

The deadline for filing a lien was “not later than the 15th day of the third month after 

the month in which the original contractor’s work was completed, terminated, or 

abandoned.” Tex. Prop. Code § 53.052. The trial court, as factfinder, could 

reasonably conclude that the lien incorrectly stated when the work was completed 

due to an attempt to circumvent this deadline and not due to mistakes resulting from 

a non-attorney filing the lien.

As to the second lien, we disagree with AdvanTech and Higareda’s assertion 

that Michalson did not challenge that lien, as discussed above. That lien, moreover, 

included incorrect information characterizing Michalson as an owner of the 
22

property. The trial court reasonably could have concluded that information was 

included on the lien in bad faith. 

AdvanTech and Higareda argue, however, that there was a sham contract 

between Michalson, Czapski, Woods Edge, and another company. Under this theory, 

AdvanTech and Higareda posit that Michalson and Czapski controlled all the 

relevant entities and the construction project. But there is no evidence on this record 

that Michalson and Czapski owned or controlled Woods Edge, which AdvanTech 

and Higareda were required to show to establish their sham contract theory under 

the version of the Property Code applicable to this case.9

For the foregoing reasons, we sustain AdvanTech and Higareda’s first issue 

as to the segregation of fees; otherwise, we overrule AdvanTech and Higareda’s first 

issue.

II. Breach of Contract Damage Findings Supported by Sufficient 

Evidence 

The trial court awarded breach of contract damages in favor of Michalson for 

$39,802.34. In their second issue, AdvanTech and Higareda challenge the 

sufficiency of the evidence in support of the trial court’s award of damages for 

breach of contract to Michalson against AdvanTech, contending (1) Michalson 

9 The former version of the statute reads, in relevant part:

A person who labors, specially fabricates materials, or furnishes labor or materials 

under a direct contractual relationship with another person is considered to be in 

direct contractual relationship with the owner and has a lien as an original 

contractor, if: . . . the owner contracted with the other person for the construction 

or repair of a house, building, or improvements and that other person can effectively 

control the owner through ownership of voting stock, interlocking directorships, or 

otherwise.

Act of May 19, 1997, 75th Leg., R.S., ch..526, § 4, sec. 53.0026(a), 1997 Tex. Gen. Laws 

1880, 1881 (Tex. Prop. Code § 53.026(a)(2), amended by Act of May 28, 2021, 87th Leg., 

R.S., ch. 690, § 7, sec. 53.0026(a).
23

received a double recovery because its costs were paid by Woods Edge, (3) there is 

no evidence the damages award was reasonable; (4) Michalson did not procure a 

finding that the breach of contract was material or that AdvanTech repudiated the 

contract; and (5) there is no evidence tying AdvanTech’s required scope of work to 

the damages awarded. As to the issue involving damages awarded outside 

AdvanTech’s required scope of work, we conclude that Michalson did not present 

evidence showing AdvanTech was responsible for the increased height of the slab 

but Michalson did present evidence of increased costs resulting from the need to hire 

another contractor to finish the project. Accordingly, we reverse the judgment in part 

and remand for further proceedings on AdvanTech’s breach of contract claim, as 

discussed below. However, we address the other issues challenging the damages 

award first because if AdvanTech and Higareda were to prevail on one of those 

issues, the appropriate remedy would be to reverse and render in AdvanTech’s favor 

on the breach of contract claim. See Bradleys’ Elec., Inc. v. Cigna Lloyds Ins. Co., 

995 S.W.2d 675, 677 (Tex. 1999) (“Generally, when a party presents multiple 

grounds for reversal of a judgment on appeal, the appellate court should first address 

those points that would afford the party the greatest relief.”) (citing Tex. R. App. P. 

43.3).

A. No Double Recovery

AdvanTech and Higareda argue that Michalson invoiced Woods Edge for its 

costs and Woods Edge paid Michalson so the contract damages award permits a 

double recovery. Michalson argues that the double recovery rule does not apply and 

even if it did, Michalson presented evidence that it incurred damages for additional 

costs resulting from AdvanTech’s breach that were not passed on to Woods Edge.

Texas law does not permit double recovery. Parkway Co. v. Woodruff, 901 

S.W.2d 434, 441 (Tex. 1995). When the prevailing party fails to elect between 
24

alternative measures of damages, the court should render the judgment affording the 

greatest recovery. Id. Here, Michalson did not elect between alternative measures of 

damages. Michalson did not bring any claims against Woods Edge in this lawsuit. 

Moreover, Michalson presented evidence that it was not paid in full by Woods 

Edge. Czapski testified, 

[W]e were shorted . . . like, $200,000 at the end of the project by the 

owner. So the question is where those funds got applied to. We don’t 

break it out on a single invoice statement. We say we have not been 

paid on the entire job. So the question is where those funds get applied 

to. We don’t break it out on a single invoice statement. We say we have 

not been paid on the entire job. We don’t look at it as a specific, we 

weren’t paid for this invoice or that invoice. We look at it as a whole. 

AdvanTech and Higareda argue that there was evidence that Woods Edge paid 

Michalson for all costs related to the foundation project. However, in considering 

the evidence as a whole, the trial court, as factfinder, reasonably could have 

concluded that Michalson did not receive a double recovery because Woods Edge 

did not pay Michalson in full. See Schear Hampton Drywall, 586 S.W.3d at 86 (“We 

apply these standards mindful that the factfinder is the sole judge of the credibility 

of the witnesses and the weight to be given to their testimony, and we indulge every 

reasonable inference in support of the factfinder’s findings.”). 

B. Damages Award Reasonable

AdvanTech and Higareda also contend that there is insufficient evidence that 

the damages awarded were reasonable. There are two measures of damages for the 

breach of a construction contract: (1) remedial damages, which is the cost to 

complete or repair less the unpaid balance on the contract price, and (2) differencein-value damages, which is the difference between the value of the building as 

constructed and its value had it been constructed according to the contract. McGinty 

v. Hennen, 372 S.W.3d 625, 627 (Tex. 2012). A party seeking to recover remedial 
25

damages must prove that the damages sought are reasonable and necessary. Id. 

(citing Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 200 (Tex. 

2004) (per curiam)). To establish that, the plaintiff must show more than simply “the 

nature of the injuries, the character of and need for the services rendered, and the 

amounts charged therefor.” Id. Instead, some other “evidence showing that the 

charges are reasonable” is required. Id. However, “reasonable” and “necessary” are 

not magic words that a witness must speak to support a damages award. Gilbane 

Bldg. Co. v. Two Turners Elec. Co., No. 14-05-00908-CV, 2007 WL 582252, at *8 

(Tex. App.—Houston [14th Dist.] Feb. 27, 2007, pet. denied) (mem. op.). Instead, a 

party need only present sufficient evidence to support the finding. Id. Out-of-pocket 

expenses do not establish that the cost of repair was reasonable. McGinty, 372 

S.W.3d at 627–28. Some other evidence is necessary. Id. at 628. In some cases, the 

process will reveal factors that were considered to ensure the reasonableness of the 

ultimate price. Id.

Here, the trial court awarded remedial damages. No trial witness explicitly 

testified that the expenses incurred to hire another subcontractor were reasonable 

and necessary. However, Michalson’s construction superintendent Juan Perez 

testified, “It’s a higher cost [to bring in a new contractor versus using the existing 

one] because no contractor wants to come in on a job that’s already been started. So 

they’re [sic] pricing is going to be really steep.” Czapski testified it would have been 

cheaper to keep AdvanTech on the job: 

It’s definitely cheaper, and it’s generally less messy to keep the guy on 

the job. That’s why we sticked [sic] with him for so long through all 

these problems and headaches. We were really just hoping he would 

finish it because . . . it was substantially more expensive to have 

somebody else go in there and finish it after him.

Michalson also presented evidence comparing the original costs to the 
26

completion costs. The original cost of the project was to be $77,400. Michalson 

approved change orders of $6,790 for a total of $84,190. The additional cost of 

completion of the project was $39,802.34, which is consistent with the trial 

testimony that bringing in another contractor would be “substantially more 

expensive,” but it was less than half of the original cost of the project. Based on this 

evidence, a rational factfinder could have concluded that the completion costs were 

reasonable and necessary. See, e.g., O.C.T.G., L.L.P. v. Laguna Tubular Products 

Corp., 557 S.W.3d 175, 187 (Tex. App.—Houston [14th Dist.] 2018), pet. granted 

without consideration of merits, judgments of court of appeals & trial court vacated, 

& case remanded to trial court for rendition of judgment in accordance with parties’ 

settlement agr., (No. 18-0906 (Tex. May 10, 2019).

C. Findings on Material Breach or Repudiation Not Required

AdvanTech and Higareda also complain that Michalson did not procure a 

finding on material breach of contract or repudiation. First, materiality is not a 

required element of breach of contract.10 See S & S Emergency Training Sols., Inc. 

v. Elliott, 564 S.W.3d 843, 847 (Tex. 2018) (listing elements). Second, the trial court 

found that AdvanTech breached the contract. It was not additionally required to find 

AdvanTech repudiated the contract. We conclude these arguments are without merit.

D. Offset for Slab Height Increase Not Required

AdvanTech and Higareda also argue that there is no evidence that the damages 

awarded were within the scope of the job to be performed by AdvanTech. In a 

nutshell, they contend that they were entitled to an offset for the increased height of 

the slab because the plans called for an eight-inch slab and the contractor that 

10 The case cited by AdvanTech and Higareda is inapposite because it involves the 

affirmative defense of prior material breach. See Earth Power A/C & Heat, Inc. v. Page, 604 

S.W.3d 519, 524 (Tex. App.—Houston [14th Dist.] 2020, no pet.). Here, Michalson brought 

breach of contract as a claim, not the affirmative defense of prior material breach. 
27

replaced AdvanTech installed a thirteen-inch slab. 

Michalson contends AdvanTech did not “request any additional cost based on 

the design change” and the changes to the project were nominal. But in support of 

this argument, Michalson relies on Czapski’s testimony regarding changes to the 

project involving revised engineering drawings that changed I-beam placement. 

Czapski was not referring to later changes to the project involving increased slab 

height. However, AdvanTech and Higareda presented evidence that they requested 

approval of the slab height change by an engineer before they would agree to the 

change. Higareda testified that the increase in slab height would change the cost and 

the scope of work. He said he would anticipate a “change of that magnitude” to cost 

“a lot.” He estimated the cost would be $30,000 to $40,000. Michalson did not 

present any evidence that contradicted this testimony. 

Despite this testimony from Higareda, however, Michalson presented other 

evidence that it incurred extra costs related to AdvanTech’s performance. Czapski 

testified that AdvanTech did not adequately supervise the project, lacked 

organization, and understaffed the project. Czapski also testified that AdvanTech’s 

employees did not have proper tools and had to use a lot of Michalson’s equipment 

and Michalson had to purchase materials for the project that AdvanTech should have 

supplied. Michalson also hired additional workers to help move the project along. In 

addition, Michalson presented evidence that it had to supply the steel fiber needed 

for the job.11

Considering the evidence as a whole, we conclude the trial court reasonably 

could have found that AdvanTech was not entitled to an offset for the cost of the 

increased slab height. Moreover, the trial court’s damages finding is not against the 

11 AdvanTech and Higareda presented evidence that AdvanTech provided the steel fiber, 

but we defer the trial court as factfinder to resolve any inconsistencies the evidence.
28

great weight and preponderance of the evidence. We overrule AdvanTech and 

Higareda’s second issue. We turn to AdvanTech and Higareda’s remaining two 

issues.

III. No Error in Denial of Contract Damages to AdvanTech

AdvanTech and Higareda argue in their third issue that the trial court erred in 

failing to find that AdvanTech was entitled to breach of contract damages. As 

mentioned, when a party attacks the legal sufficiency of an adverse finding on an 

issue on which it has the burden of proof, it must demonstrate on appeal that the 

evidence establishes, as a matter of law, all vital facts in support of the issue. Dow 

Chem. Co., 46 S.W.3d at 241. Accordingly, to prevail on this issue, AdvanTech and 

Higareda were required to present conclusive proof that AdvanTech was entitled to 

breach of contract damages from Michalson.

First, AdvanTech and Higareda argue that AdvanTech did not abandon the 

project, contending that Michalson refused to meet with AdvanTech before it left 

the job. Michalson points to evidence that Czapski emailed Higareda and said he 

could not meet on the requested day but “[r]egardless, no additional payments can 

be made until we have a written resolution on this project. Send everything you are 

claiming is owed and we will review to see if an amicable resolution can be 

accomplished before this is turned over to attorneys.” A reasonable factfinder could 

reject AdvanTech’s argument that Michalson refused to meet.

Second, AdvanTech argues it performed work and provided materials for 

which it was not paid, as follows: $5,150 for work performed, work performed after 

Michalson’s last payment to AdvanTech; work performed outside AdvanTech’s 

required scope of work; money Michalson owed AdvanTech for steel fibers that 

AdvanTech purportedly left on site; and an increase in cost for patching damaged 

panels after the site flooded. Michalson relies on evidence that AdvanTech did not 
29

adequately staff the project or provide enough supplies and materials, and Michalson 

had to redo some of AdvanTech’s work. Michalson, moreover, presented evidence 

that it had to hire workers to help AdvanTech with the work. Michalson also 

disagrees with AdvanTech’s contention that AdvanTech did work outside the agreed 

scope of the contract and points to emails in which the parties discussed revisions to 

the project showing AdvanTech was aware of the changes and went forward with 

the project. The plans for the project were revised before AdvanTech started the job, 

and Michalson approved two change orders.12 Michalson also presented evidence 

that it had to purchase steel fiber itself and presented evidence disputing 

AdvanTech’s claim it left steel fiber on site.

Based on this record, AdvanTech and Higareda have not conclusively shown 

that AdvanTech was entitled to breach of contract damages. We overrule issue three.

IV. Misapplication of Construction Trust Funds

In their fourth and final issue, AdvanTech and Higareda assert the trial court 

erred in failing to find that Czapski misapplied construction trust funds under chapter 

162 of the Property Code, which provides, “A contractor, subcontractor, or owner 

or an officer, director, or agent of a contractor, subcontractor, or owner, who receives 

trust funds or who has control or direction of trust funds, is a trustee of the trust 

funds.” Tex. Prop. Code § 162.002. AdvanTech and Higareda contend AdvanTech 

is a beneficiary of construction trust funds that were held in trust by Czapski. See id. 

§ 162.003. But a prime contractor is not liable under the statute if it pays its 

subcontractor for labor or materials supplied and does not otherwise misapply trust 

funds. Dealers Elec. Supply Co. v. Scroggins Const. Co., 292 S.W.3d 650, 659 (Tex. 

12 AdvanTech and Higareda argued that whether a subcontract requires a change order has 

no bearing on a claim for breach of contract. The relevance of the approved change orders, 

however, is to show that the parties both agreed to certain changes to the scope of the project.
30

2009). A reasonable factfinder could have found on this record that AdvanTech and 

Higareda did not establish Czapski failed to pay AdvanTech what it was owed or 

that Czapski misapplied trust funds. We overrule AdvanTech and Higareda’s fourth 

issue. 

Conclusion

Having sustained in whole or in part, AdvanTech’s first issue, we reverse the 

trial court’s judgment as to its award of attorney’s fees. We otherwise affirm the trial 

court’s judgment as challenged on appeal. We remand the case to the trial court for 

further proceedings limited to (1) reconsideration of attorney’s fees and 

AdvanTech’s breach of contract claim.

/s/ Frances Bourliot

Justice

Panel consists of Chief Justice Christopher and Justices Bourliot and Spain.