### I N THE UNI TED STATES COURT OF APPEALS FOR THE FI F TH CI RCUI T

No. 12-40764

GARRISON REALTY, L.P.,
Plaintiff GARRARD CONSTRUCTION GROUP, INC., Intervenor Plaintiff - Appellee Cross Appellant

v. FOUSE ARCHITECTURE & INTERIORS, P.C., Defendant - Appellant Cross Appellee

Appeals from the United States District Court for the Eastern District of Texas USDC No. 2:10-CV-576

Before REAVLEY, ELROD, and HAYNES, Circuit Judges. PER CURIAM: * This appeal arises from a dispute in connection w ith the construc t i o n of

a nursing h ome facility in Garrison, Texas. T he builder o f the facility, Garrard Construction Group, I nc. (“Garrard”), sued the facility’s architect, Fouse Architecture & Interiors, P.C. Both parties appeal following a j u r y v e rdict in favor of Garrard on claims of negligence and negligent misrepresentation. We U n i t e d S t a te s C o u rt o f A p p e al s

F i f t h C i rc u i t 

### F I L E D October 21, 2013 Ly l e W . Cay ce Clerk

* Purs uant to 5 T H C I R

. R

. 47. 5, the court has d eterm ined that this op inion should not be p ublis hed and is not p reced ent excep t und er the lim ited circum s tances s et forth in 5 T H C I R

. R. 47. 5. 4. Case: 12-40764 Document: 00512415458 Page: 1 Date Filed: 10/21/2013No. 12-40764

AFFIRM in p art and REVERSE in p a rt, and REMAND for modification of the judgment. I. In 2008, G arrard entered into a contract with Garrison Realty, L.P. to be the genera l c o n t r actor on construction of a nursing home facility d esigned by Fouse. P ursuant to the contract, Fouse was to act as the communication conduit between Garrard a nd Garrison. Fouse also set the i nitial budget on the project of $2.8 m illion. T his amount was set forth in the c o n t r a c t as the guaranteed maximum pri c e . Garrard had concerns about meeting that price, h owever, because its b id had been approximately $3.2 million. It therefore included an exhibit i n the contract s tating that all parties recognized the contract price had not been met and that the parties would cooperate in c o mpleting t he project as close t o the maximum price as possible. According t o Garrard, Fouse assured it that the owner, Garrison, would work with Garrard in good faith negotiation of the price. The contract provided for cost-plus r emuneration, with G arrard to receive its c osts plus an eight percent profit. During the cours e o f c o n s truction,

numerous change orders were required bec a use Fouse’s design plans were alle g e d l y f

a u lty. These c hange orders increased the cost of the project. Fouse approved the change orders and again assured G a rrard that Garrison would pay the increased costs. Fouse allegedly did not communicate with Garrison about the changes, however, n or did it send to Garrison the exhibit that Garrard had included in the contract. Garrison r e f u s e d t o pay the additional costs of the project, and two lawsuits ensued. In the first suit, Garrison sued both Garrard and Fouse. Garrard, which had placed a lien on the facility, counterclaimed against Garrison. Garrison and G a r r a rd entered a settlement, and Fouse w as dismissed without prejudice. Garrison then initiated the instant suit against Fouse, and G arrard intervened

as a plaintiff. G arrison settled its claims against Fouse, leaving only claims and

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counterclaims between Garrard and Fouse to be tried t o the j ury. Garrard prevailed on c laims o f n e g l igence and negligent misrepresentation. On the negligence claim, the jury a warded Garrard $330, 0 0 0 f o r additional e xpenses i n curred b y Garrard and $256,000 in l o st profits. On the negligen t misrepresentation claim, the jury awarded Garrard $125,000. The district court reduced the negligence award by a pplying a n offset from Garrard’s settlement with Garrison in t he first suit. Fouse appeals from the jury verdict and the award of damages. Garrard cross-ap p e a l s the district court’s application of the offset. We address Fouse’s claims first. I I. A. Fouse argues first that (1) Garrard lacked sta n d ing because G arrard’s claims are barred by the e c onomic loss rule and (2) as a settling defendant in the f i r s t s uit, Garrard may not, under Texas law, seek contribution from Fouse. These arguments fail. Although Fouse admitted during o r al ar gu m e nt th at it r ai s ed the economic loss rule for the first time on appeal, it argues t hat it may d o s o because the rule implicates Garrard’s standing, and therefore the court’s jurisdiction. It reasons that because it owed no duty in tort to Garrard, Garrard l acked standing and the economic loss rule prevents Garrard’s recovery of what are essentially contract damages. But whether Fouse owed a legal duty t o Garrard is an element of the tort claims, not a c omponent of standing that implicates t h e c ourt’s subject matter j urisdiction. See, e.g. , IHS Cedars Treatment Ctr. of DeSoto, Tex., Inc. v. Mason , 143 S.W.3d 794, 798 (Tex. 2004) (stating the elements for a negligence

cause of action). Whether a part y has standing is a distinct question from whether it has asserted a valid cause of action. See Davis v . P assman , 442 U.S. 228, 239 n.18, 99 S. Ct. 2264, 227 4 n . 18 (1979). Here, Garrard alleged that it suffered injury in the form of increased costs and lost profits as a res u l t o f Fouse’s negligent design of the project, its negligence i n communicating between
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Garrard and Garrison, and its negligent or false a ssurances that Garrison was

aware of the increased costs a nd would pay Garrard. Garrard has sufficiently alleged an injury caused by Fouse that is redressable b y t h e court. See Procter & G amble Co. v. Amway Corp. , 242 F.3d 53 9 , 5 6 0 ( 5 t h Cir. 2001) (stating requirements for standing). Because Fouse’s e conomic-loss-rule argument does not implicate s tanding and is raised for the first t i m e on a ppeal, we decline to address it. See LeMaire v. La. Dep ’ t of T ransp. & Dev. , 480 F.3d 383, 387 (5th Cir. 2007) ( “ [A] r guments not raised before the district c ourt a re waived and cannot be raised for the first time on appeal.”). With respect to the argument that Garrard’s damages claim was an impermissible claim for c ontribution, Garrard’s settlement of c laims against Garrison were primarily as a p laintiff. There is no showing that Garrard paid a disproportionate a mount to G a rrison

as c o mpensation for a c o m m on liability with Fouse. Fouse’s reliance on Beech Aircraft Corp. v. Jinkins , 739 S.W.2d 19, 22 (Tex. 1987), is inapposite. B. Fouse next argues that Garrard’s r ecovery of damages for both negligence and negligent m isrepresentati o n a m o u nt e d t o a n i m p e r m i ssible double recovery. Based on our review of the evidence and the c i rcumstances of this case, we agree. In Texas, a party may not recover twice for the same injury under different legal theories. See, e.g., Hart v. Moore , 952 S.W.2d 90, 97 (Tex. App.–Amarillo 1997, pet. denied) (“Double recoveries f or alternative measures of damages are

n o t permitted.”) (citing B irchfield v. Texarkana Mem’l Hosp ., 747 S.W.2d 361, 367 (Tex. 1 987)). The jury awarde d G a r r ard $330,000 in additional costs and $256,000 in lost p rofits on the negligence claim. The jury also awarded $125,000 in economic loss for negligent misreprese n t a t i o n . Fouse argues that Garrard failed to s how d i s t i n c t injuries arising from the c laims of negligence and negligent misrepresentation and r elied on the same evidence in support of both claims. Fouse is correct.

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Garrard relied primari l y on two documents i n support of its damages claim, and counsel referred to both as justification for the negligence and negligent misrepresentation c laims when a rguing t o the jury. First, exhibit 2A,

a change o rder log, listed twenty-nine items th a t G a r r a r d alleged resulted in change orders and additional expenses. Garrard’s theory at trial was that these change o rders were necessitated by Fouse’s negligence, that Fouse approved the change o rders, and that Fouse also assured Garrard that Garrison would pay for the changes. Garrard also presen t e d e xhibit 3, a printout from G arrard’s accounting software program showing the project c o s t s . Because the contract provided for cost-plus remuneration, Garrard sought to recover a s damages not only the additional c osts incurred from the change orders shown in exhibit 2A, but also i t s contracted profit of eight percent of t he total project cost shown in exhibit 3. Exhibit 3 s h ows that the total cost of the project w as approximately $3.2 million. Eight percent of $3.2 million yields t he $256,000 that the jury awarded Garrard as lost profits on the negligence claim. The difficult y a rises from the amounts awarded for Garrard’s economic loss of additional expenses. Exhibit 2A shows the total a m o u n t o f change orders to be $567,807. Garrard did not seek to recov e r t h i s entire amount, however, because it acknowledged that it was paid for som e o f the changes and that t he work for

some of the o thers was never performed. 1 Garrard s ought recovery only f or work performed for which it w as not paid. Excluding t he items for which Garrard was paid and the items for which no work was done, Garrard’s counsel argued that the remainder owed was $417,000. 2

1 Tes tim ony from Eric Slus s s how ed that Garrard received p aym ent f or the f ire p um p , natural gas H VAC units , c a b i n ets / d oor in break room , a f reezer, and the d is h N et Work Sys tem

. Tes tim ony als o s how ed that the w ork w as not d one f or the pavilion and the f encing ad d itions

.

2 It is not clear howcouns el d erived the am ount of $417, 000 as our ow n review of the exhibit s how s a higher am ount. But s ince that is w hat couns el s ought f rom the jury, w e w ill 5 Case: 12-40764 Document: 00512415458 Page: 5 Date Filed: 10/21/2013No. 12-40764

At trial, Eric Sluss testified that G arrard’s total damages were $673,000. When Garrard’s counsel argued to the jury, he first a ddressed t h e n e g l igence claim and a lso argued that Garrard’s d amages were $673,000. H e urged that the jury should find that Garrard’s lost profits were $256,000 a nd that its additional
exp e n s e s were $417,000. Significantly, when turning to the negligent misrepresentation claim, counsel argued that the damages were a lso $673,000

. He made no d i s t i n c tion between the damages sought for negligence and negligent misrepresentation, and exhibits 2A and 3, upon which counsel relied, do not show a different injury or differentiate between the two theories. 3

accep t that num ber f

or p urp os es of the ap p eal.

3 Couns el argued to the jury as f ollow s on the tw o claim s: I am going to go through very quick ly w ith you the d am ages in this cas e. We have s uf

f ered d am ages
. M y client has s uf fered d am ages of $417, 000 f or thes e things that w ere prom is ed to be p aid andw eren’t.
You w ill rem em ber the p avilion is n’t at is s ue, it w as n’t d one, it w as s ugges ted and then not done. An d you w ill rem em ber that the fencing is not at is s ue becaus e it w as n’t d one. And then m y client tes tif ied w hat they got paid f or, they got p aid f

or – on this lis t [ in exhibit 2A] they got p aid f or N o. 6, they got p aid f or N o. 9, they got p aid f or N o. 13, they got p aid f or N o. 15, and they got paid f or N o. 19. So thos e aren’t at is s ue. But if you ad d the res t of thos e up , it’s $417, 000.
M y client

- - there w as a p rof it in that contract b e caus e they end ed up getting cros s w ays w ith the ow ner becaus e of M r. Fous e, they end ed up los ing an 8 p ercent p rof

it $256, 000. So they have los t a total of $673 ( s ic)

. **** If you go on to Ques tion 3 [ concerning the negligence claim ] , it’s going to as k you to w rite in the d am ages , and w e have los t $417, 000 as w ell as $256, 000.
And they are go i n g t o as k you d id Mr. Fous e m ak e a negligent
m is rep res entation and w e belie ve that the ans w er to that ques tion is yes . H e negligently m is rep res ented m any things to us . And then t h e re is a d am age ques tion and i t ’s the sa m e am ount of money . Hi s negl i

gence, hi s negl i

gent m i srep resenta ti on cost us $673, 000. ( Em p has is ad ded)

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“When a party tries a case on alternative theories o f recovery and a jury returns favorable f

indings o n t w o o r more theories, the party has a right t o a judgment on the theory e ntitling him to the gre a t e st o r most favorable relief.” Boyce Iron Works, Inc. v. Sw. Bell Tel. Co. , 747 S.W.2d 785, 787 (Tex. 1988). Here, the jury’s award on the neglig e n c e c laim afforded Garrard the greatest relief and was supported by G arrard’s exhibits. A s noted, t he j ury awarded the $256,000 in l ost p rofits (as c o u nsel requested) but $330,000 in additional

e x p e n s e s , slightly less than counsel requested. The award of $125,000 for economic los s d u e to negligent misrepresentation w as an improper double
recovery for the same i njury. That award was also contrary to t he argument of Garrard’s o wn counsel a nd appears to be based on pure speculation. 4 Therefore, Garrard should have been entitled t o a judgment only on the higher award for negligence, and the district court’s judgment must be reversed. C. Fouse also raises several arguments c h allenging the district court’s jury charge, the statute of limitations, a n d v a r i o u s evidentiary issues. None of Fouse’s arguments have merit. Fouse asserts that the di strict court erroneously instructed the jury on the standard of care for architects a nd i m properly placed the standard of care instruction in a section of t he charge a part f rom the def initions of negligence and negligent misrepresentation. T he c ourt’s charge

was virtually id e n t i cal to the charge that Fouse requested, however, and was consistent with Texas law. See, e.g., Dukes v. Philip Johnson/ Alan Ritchie Architects, P.C. , 252 S.W.3d 586, 594 (Tex. App.–Fort Worth 2008, pet. denied).

4 I t m i ght be argued that the jury’s com bined aw ard f or negligence and negl i g e n t m is rep res entation ( $711, 000) w as clos e to the total am ount argued by G arrard as its d am ages ( $673, 000)

. H ow ever, the jury aw ard ed m ore than even G arrard as s erted as its harm , and it cannot b e d is cerned f rom the record how the jury arrived at the aw ard it m ad e. Although math e matical p recis ion is not required , “d am ages m us t be as certainable in s om e manner other t h an by mere sp eculation or conjecture, and by ref erence to som e f

airly d ef inite stand ard , es tablis hed exp erience, or direct inf erence f rom know n facts

. ” R i c h t er, S. A

. v . Ba nk of A m . N a t’l Trust & Sa v . A ss’n , 939 F. 2d 1176, 1188 ( 5th Cir. 1991)

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Furthermore, the court specifically i nstructed the j ury to consider the charge as a whole. We presume the jury followed its instructions, and w e see no error in the charge. See Zafiro v. Un i t e d States , 506 U.S. 534, 540, 113 S. Ct. 9 33, 939 (1993); U

nited States v. Davis , 609 F.3d 663, 677 (5th Cir. 2010). With respect to l i m itations, claims f or negligence and negligent misrepresentation are subj e c t to a two-year limitations period. See Hendricks

v. Thornton , 973 S .W.2d 348, 364 (Tex. App.—Beaumont 1 998, pet. denied). Here, t h e l i m i t ations period began “when the elements o f duty, breach, and resulting injury o r damage [were] present.” Waxler v. Household Credit Servs., Inc. , 106 S.W.3d 277, 280 (Tex. App.—Dallas 2003, no pet. ) (internal quotation marks and citation omitted); see also Black v. Wills , 758 S.W.2d 809, 816 (Tex. App.—Dallas 1988, no pet. ) (“Under t he ‘legal injury’ rule, a cause o f a c t i on sounding i n tort gen e rally a ccrues w hen the tort is completed, that is, the act

c o m m i t t ed and damage suffered.

. . . This is the date of legal injury a n d t h e statute of limitations begins to run at that time.” (citation omitted)). Ga r r a rd

was not injured, and i ts claims did not accrue, until Garrison refused to pay the additional costs that Fouse h ad assured would be p aid, which was “ ‘the factor essential to c onsummate the wrong—only t h en was the to r t c o m plained of completed.’” Waxler , 106 S.W.3d at 281 (quoting Atkins v. Crosland , 417 S.W.2d 150, 1 53 (Tex. 1967)). Fouse did not meet i t s b u r d e n o f s howing that this occurred outside of the limitations period. See Rogers v. R icane Enters., Inc. , 772 S.W.2d 76, 80–81 (Tex. 1989). The district court’s evidentiary rulings are reviewe d f o r a n abuse of discretion. See Jowers v. Li n c o l n E l e c. Co. , 617 F.3d 3 46, 355 (5th Cir. 2010). Fouse has not shown that the district court abused its discretion with respect to any evidentiary issues. Although it challenges the sufficiency of the evidence becau s e it argues that exhibit 2A and exhibit 3 w e re admitted as i mproper summaries, Fouse does not address t he district court’s ruling that the exhibits

were admissible a s b usiness records pursuant t o t h e hearsay exception of
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Federal Rule of E vidence 803(6). Therefo r e , t h i s issue is not properly briefed. See B rinkmann v. Da llas Cnty. Deputy SheriffAbner , 813 F.2d 744, 748 (5th Cir. 1987) (holding that the failure to identify erro r i n t h e district court’s legal analysis is the same as failing to appeal the judgment). Fouse relatedly argues that the district court improperly reconsidered the admission of exhibit 2A after engaging in ex parte communication and without giving it time to file a response to Garrard’s motion for reconsideration. Fouse do e s not mention, let alone analyze, the district court’s e xplanation that Garrard’s counsel re-urged the motion during a p retrial conference after informing the court’s l aw clerk merely that he would b e d o i n g s o . Nor does Fouse address the c ourt’s finding and t hat Fouse was not e ntitled under t he local

r ules to file a written r esponse to the o ral motion. There was no ex p a r t e communication, and this issue is both frivolous and improperly brief e d

. Se e Brinkmann , 813 F.2d at 748. Finally, F ouse argues that the district court i mproperly limited the t e s t i m o n y of its expert economic witness, but it fails to explain what the purportedly excluded testimony would h ave been or w hat the testimony would have p r oved, a n d i t does not explain how the district court improperly limited the expert. Fouse’s citation to thirty-five p age s o f the transcript where its expert’s testimony appears, and its conclusory assertion that the district court had no basis to l imit the e x p ert’s testimony, is insufficient to preserve this issue for review. See Yohey v. Collins , 985 F.2d 222, 225 (5th Cir. 1993) (a party m ay not incorporate by reference arguments made in the district court); see also Fed. R. App. P. 28(a)(9). III. We next t urn to Garrard’s cross-appeal. Garrard argues t h at the district court erroneously reduced t h e j ury’s damages award by the amount of the settlement it r eceived from Garrison in the f irst suit. It argues in part t h at Fouse did not plead offset as an affirmative defense, and therefore the o ffset was 9 Case: 12-40764 Document: 00512415458 Page: 9 Date Filed: 10/21/2013No. 12-40764

waived. It further argues that its damages model a t t rial h ad already taken into account t he f

act that it had recovered some damages from Garrison in the first suit and that in the instant case it sought only d amages a ttributable to Fouse’s conduct. It reasons that had it not been surprised by F ouse’s belated a ssertion of the offset defense, it could have submitted additional evidence of damages. Garrard is corre c t t h at an offset due to a settlement credit is an affirmative d efense that m ust be pleaded and proved by the defendant. See Giles

v. G en. Elec. Co. , 245 F.3d 474, 494 & n.36 (5th Cir. 2001); see also G oose Creek Consol. Indep. Sch. Dist. v. Jarrar’s Plumbing, Inc. , 74 S.W.3d 486, 501–02 (Tex. App.—Texarkana 2002, pet. denied). The failure t o plead an affirmative defense generally results in wa i v e r of that defense. See Davis v. Huskipower Outdoor Equip. Corp. , 936 F.2d 193, 198 (5th Cir. 1991); see also Fed. R. Civ. P. 8(c). A c ourt may excuse the failure to plead an a ffirmative defense, h owever, if the opposing part y i s n o t p r ejudiced. Giles , 245 F.3d a t 494; see BlonderTongue Labs., Inc. v. U niv. of Ill. Found. , 402 U.S. 313, 350, 9 1 S. Ct. 1 434, 1453 (1971) ( stating that the purpose of t he pleadi n g r e q uirement in Rule 8(c) is to give the opposing party notice and a n o p p o rtunity to argue why the defense is inappropriate). This c o u r t e mploys a fact-specific a nalysis w hen deciding whether the plaintiff was unfairly s urprised. Woodfield v. Bowman , 193 F.3d 354, 362 (5th Cir. 1999). In Giles , for example, we held that the failure to plead offset was excused where both parties had addressed t he issue before trial in a motion in limine and in a trial brief. Giles , 245 F.3d at 494. Here, Fouse did not expressly p lea d an offset or settlement credit as an affirmative defense. I t argues, however, that it did plead that Garrard’s claims

were barred because of the settlement with G arrison. We are n ot persuaded. Fouse pleaded that “[Garrard’s] claims are barred in whole due t o its settlement with Plaintiff [Garrison].” U nder our fact-specific review, and in the c o ntext of th i s case, Fouse’s pleading was insufficient to indicate that i t was asserting a defense of offset or settlement credit.
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F i rst, the defense did not explicitly assert that an o ffset or set t l e m e n t credit should partiall y r e d u c e any judgment. This is u nlike several other affirmativ e defenses pleaded by Fouse in which Fouse did specifically assert that Garrard’s claims were “barred in whole or in part” by the various defenses. Had Fouse been seeking a p artial reduction o f G a r r a r d ’ s c laims due to a n o ffset, it lo g i c a l l y would have included similar language in the defense concerning the settlement. Second, all through the pre-trial a n d trial stages o f litigation, Fouse’s theory was that Garrard’s claims were completely barred be c a u s e the settlement meant t hat Garrard was a s ettling defendant a nd its claims against Fouse amounted to i mpermissible claims for contribution. This wa s t h e o nly theory that Fouse a rgued i n its motion for summary judgment and in a subsequent motion f or reconsideration. Fouse did not rai s e t h e p rospect of an o ffset until after the verdict. T his is unlike Giles , where offset was affirmatively raised in a motion in limine. See Giles , 245 F.3d at 494. B e c a use Fouse neither articulated the theory nor proved the basis f o r offset, it could not be a l l o w e d. See Woodfield , 193 F.3d at 362 (stating that a defendant “must plead an affirmative defense with enough specificity or factual particularity to give the plaintiff ‘fair notice’ of the defense that is being advanced”). In support of i t s c laim of undue surprise, Garrard submitted evidence post-verdict suggesting that its d amages model at trial was limited to damages caused b y Fouse a nd did not include any amounts obtained i n the first suit. Had Garrard known about Fouse’s offset defense, it could have developed this evidence during trial and tried t o show that its damages were actually more than those presented in its trial exhibits. Furthermore, Fouse was aware that Garrard w as seeking d amages in this suit that were at least s imilar to claims G arrard had made against G arrison in t h e f irst suit, and i t therefore knew that offset or a settlement credit mi gh t b e relevant in this case. Its failure to explicitly p lead o ffset w as therefore

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unjustified. Cf. Trinity Carton C o. v . Falstaff B rewing Corp. , 767 F.2d 184, 194 (5th Cir. 1 985) (holding that the district cour t did not erroneously preclude assertion of affirmative defenses where the defendant failed to r a ise them until several months after a jury’s verdict, and the delay could not be justified because the d efendant necessarily knew from the nature of the suit that the affirmative defenses would be r elevant). The judgment should not have been reduced by the amount of the offset. IV. The district c ourt’s entry of judgment o n the j u r y ’ s verdict in favor of Garrard was proper, but we conclude that there was error in t he calculation of the damages. The jury’s a ward o f $125,000 for negligent misrepresentation was

an improper double reco v e ry. Additionally, the application of the offset or settlement credit was erroneous. W e r emand for t he district cou r t to modify Garrard’s damages by omitting t he $125,000 for negligent misrepresentation and applying no settlement offset. AFFIRMED IN PART, REVERSED IN PART, and REMANDED.

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