### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-09-00385- CV

Hebert Acquisition s, LLC, App ellant

v. Trem ur Consul ting Contract ors, Inc.; Chris R. M urray; and

San Ju anita Murray, Appellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 98TH JUDICI AL DISTRICT NO. D-1 -GN-0 8-0 0354 0, H ONO RAB LE RHO NDA HURLEY , JUDGE P RESIDING

M E M O R A N D U M O P I N I O N

After Hebe rt Acquisitions, L L C (“H eber t”) acquir ed the assets of Tremur Consulti ng Contractors, I nc. (“Tr emur” ) from Chris and San J uanita Murra y , Hebe rt broug ht suit for brea ch of
contra ct stemming from alleg ed violations of the Asset Purc hase Ag ree ment (APA) that g overne d the transac tion. The Appellee s broug ht a counter claim for brea ch of the APA. After a bench trial, 1
the trial court found in favor of the Appellee s and awa rded damag es, pre- and post-judgme nt interest, and attorne y s’ fe es and c osts. On appea l, Heber t arg ues that the trial court misconstrued the APA

I n their brief

s, the parties r efe r to Chris and San J uanita Murra y by their first name s and, 1 when nece ssary , ref

er to Tremur as “Old Tremur ” prior to the sale of the company to Hebe rt and to Tremur as “Ne w Tremur ” following the sale of the company . For the sake of consistency , we will ref er to the parties in the same manner . I n addition, we will ref er to Chris, San J uanita, and Tremur collectively as the “Appe llees,” and we will ref er to Hebe rt’s principals, Dane and Patricia Hebe rt, by their first name s.and that the evidenc e is leg ally and fac tually insufficient to support the trial court’s judgme nt. We

aff irm the judg ment in part and r ever se and r ender judgme nt in part.

BACK GR OUND
Tremur is a construction company providing site prepa ration, utilit ies, and plumbing work. The company

was founded by Chris, w ho ran the company for over 20 y ear s. San J uanita, 2
Chris’s wife, serve d as the company ’s safe ty manag er beg inning in 2001, and al s o helped with
pay roll and acc ounting. Chris and San J uanita decide d they wanted to sell Old Tremur , listi ng it for the first time in 2003.

I n 2007, Tremur came to the attention of Hebe rt’s principals, Dane Hebe rt (“D ane” ), his wife Patricia, and Bill L ee. Dane has a master’ s deg ree in acc ounting and was a Certified Public
Acc ountant for more than 20 y ear s. He also had experience as a business consultant, though pr ior
to the acquisition of Tremur he had no experience running a construction company . Dane met with Chris and San J uanita to discuss the oper ations of the business in Marc h or April of 2007.

After Hebe rt expressed interest in acquir ing Tremur , the parties beg an a d u e d ilig ence
proce ss lasting approximately four months. As part of the proce ss, Dane was provided with financ ial
statements for the company , including y ear -end statements for 2005 and 2006 and for the first four months of 2007. The financ ial statements had been revie wed by Tremur ’s CPA, Don Steinle, who 3
indicated in a cover letter attache d to the statements that the fi n an ci al s h ad been prepa red in

The fa cts rec ited here in are from the testimony and exhibits admitted at trial. 2
Dane was a lso provided with y ear -end f inancials for

2002, 2003, and 2004. 3 2acc ordanc e with g ener ally acc epted acc ounting prin ci p l es (GAA P). During the due diligenc e 4 period, Dane was also g iven acc ess to paper and elec tronic files detailing the company ’s financ ials

at Tremur ’s office

. I n addition, Dane was provided with QuickB ooks rec ords containing elec tronic copies of the rec ords two to three w eeks be fore the closing date. J ohn Austin, the business broker for Tremur , testified that Dane was also gi ven a bound paper copy of Tremur ’s financ ial

rec ords, though Dane stated that he did not rec eive any such m at erials. Dane also rec eived Old
Tremur ’s tax returns. 5

Sometime prior to closing , Chris was informed that Old Tre m u r h ad underbid a projec t for the Seton Women’s Tower

. The err or stemmed from confusion involving the site plans, which wer e “vag ue” and did not ref lect the exis tence of an eleva tor pit cra wl space underne ath mass excavation of the building. As a re s u l t , five additional fee t of excavation wer e require d. I n his 6 deposition testimony , C h ri s s t at ed that he discussed the err or with the contra ctor on the projec t, Roge rs-O’ Br ien Construction. Roge rs-O’ Br ien i n d icated that it would attempt to rec tify the 7

Steinle testi fi ed t h at t h e financ ials wer e prepare d in the s ame way that Tremur prepa red 4 repor ts for its bonding c ompanies, which r equire financ ials to be GAAP-c ompliant. Dane testified that he did not have experience using Q uickB ooks prior to closing , which 5 hindere d his ability to make use of the elec tronic files he was g iven. Austin, howeve r, testified that he observe d Dane using QuickB ooks in the Tremur office s prior to closing , and that Dane “showe d [Austi n] something [he] didn’t know how to do,” leading Austin to conclude that Dane was “pre tty g ood” with the prog ram. Acc ording to Chris, J on Scheff , the senior estimator for Old Tremur , indicated t h at the 6 amount of the underbid was $168,760. Chris later testified that the er

ror wa s “about a [n] $80,000 mistake.” Rega

rding bid error s, Chris stated, “All jobs have mist akes. I mean, in the i ndustry , of course [,] the g ener al contention is, whoeve r make s the most mis takes g ets the job[.] ” All of Chris’s deposition testimony was a dmitted; C hris also testified at trial. 7 3situation by incre asi n g compensa tion to Old Tremur via a series of chang e order s. Acc ording to

Chris, these chang e order s resolved a majority of the bid err or, “if not all of it.” At trial, Chris testified that an additional $60,000 pay ment was sent from Seton to New Tremur to cover some of the costs of t h e er ro r. He also testified that 98% of the work on the Seton projec t had been completed pr ior to closing a nd that the cost of the w ork wa s absorbe d by Old Tremur

. 8
On J uly 31, 2007, the parties closed the asset sale of the company pursuant to the
terms of the APA executed by the parties. At closing , the parties wer e repr esented by counsel. Under the terms of the APA, Hebe rt paid $1,395,000 for the company and its assets. The APA also 9
included a provision detailing additional pay ments, called conting ent price pay ments, to be made on the first three anniver saries of the closing if specifie d thresholds for g ross reve nues wer e met. For the fi rs t co n t i n g ent price pay ment, which was to be based on g ross reve nues for the y ear ending
J uly 31, 2008, Hebe rt ag ree d to pay the Appellee s $ 4 4 7 , 6 0 0 if total g ross reve nues exceede d 1 0 $5 milli on. 1 1

Chris c ould not reca ll whether he informed Dane of the err or. Dane testified that he was 8 not told of the err or bef

ore c losing. The purcha se was fi n ance d via a Small Business Administration (SBA) loan that was 9 approve d based on the financ ial repor ts of Old Tremur . Dane testified that the loan was approve d only afte r an “ extensive” and “ stringe nt” re view of the company ’s financ ials by the SBA. Whil e the company ’s financ i al s are g ener ally calc ulated based on a y ear -end date of 1 0 Dec ember 31, the APA specifie d that the g ross reve nues cal cu l ati ons for the conting ent price pay men t woul d be calculated for the period ending on the first, second, and third anniver saries of the date of

closing , resulting in a y ear -end da te of July 31 for those pe riods. Acc ording to the financial repor ts revie wed b y Steinle, “Reve nues Earned” for the y ear 1 1 en d i ng Dec ember 31, 2005 totaled $1,633,025, while “Reve nues Earne d” for the y ear en d i n g Dec ember

31, 2006 totaled $3,363,033. 4Chris and San J uanita ag ree d to rema in at Tremur as consultants for up to six months

afte r closing in order to assist Dane and Patricia in manag ing the company at the outset. Chris and
San J uanita also ag ree d to a non-compe te clause in the APA that preve nted them from involvement in a competing business for five y ear s after the closing date.
Dane testified that, in J anuar y 2008, he beca

me conce rned about the company ’s cash flow, as he did not have the cash he expected ba sed on the 2005 a nd 2006 financ ial repor

ts. After
compar ing the financ ials he had rec eived during the due diligenc e proce ss with company rec ords in the QuickBooks progra

m, Dane conclude d that the financial repor ts he had rec eived had not been
proper ly prepa

red and that he had p ai d t oo much for the company

. After a meeting between the 1 2 parties and their co u n s el , He bert filed suit ag ainst Chris, San J uanita, and Tremur in September
2008. Hebe rt contende d that the Appellee s had brea ched the APA by failing t o provide GAAPcompliant financ ial statements, making misrepre sentations as to the value of the company , and failing to disclose m at er i al adver se chang es i n the company prior to closing , including a bi d err or and undisclosed injuries r esulting in wor ker’ s compensation cla ims. 1 3 The Appellees countercla imed for breac h of contract. T h e Ap pellees asserted that Hebe rt was in brea ch of the APA for failing to make the first require d conting ent price p aym en t ,
Dane testified that afte r perf orming adjustments to the 2005 and 2006 financ ials that, in 1 2 his opinion, made them GAAP-c ompliant, h e v a lu e d O ld T r e mu r at $1,228,050—$771,950 less than the purcha se price he ag ree d to based on the 2005 and 2006 fi n an cials he rec eived from the Appellee s. Dane testified th a t if h e h a d b e e n provided GAAP-c ompliant financ ial statements, Hebe rt would have of

fer ed $771,950 less to buy Old Tremur

than it actually

did. Although the complaint about undisclosed worke r’s compensa tion claims is stated as part 1 3 of Hebe rt’s first issue on appea l, Hebe rt failed to include any arg ument or briefing in support of this complaint and it is, there fore , waived. See Tex. R. App. P . 38.1(h); Lairsen v. Slutzky , 80 S.W .3d 121, 130 (Tex. App.—Austin 2002, pet. denied). 5noting that New Tremur had acc umulated more than $5 milli on in g ross reve nues for the y ear ending

J uly 31, 2008, but had not paid t he Appellees t he $ 4 4 7 ,600 conting ent price pay ment specifie d in the AP A. I n addition, the Appellees asser ted claims based on brea ch of the AP A resulting from 1 4
Hebe rt’s failure to manag e New Tremur i n a m an n er consistent with the prior prac tices of Old
Tremur , failure to pay reta inag e monies conce rning projec ts completed by Old Tremur , and failure
to proper ly cre dit stored ma terials. The Appellee s also broug ht counter claims for conver sion, money had and rec eived, tortious interfe renc e with contra ct, conseque ntial damag es, and failure to comply with conditions prece dent of the A PA. 1 5

After a five-day bench trial, the trial court rende red judgme nt in favor of the Appel le e s . T he trial court awa rded $447,600 for the conting ent price pay ment for 2008, $127,989.80
in reta inag e moni es m inus any reta inag e moni es alre ady paid, and $22,297.95 in stored materials, along with pre- and pos t -j u d gm ent interest and attorney s’ fee s and costs. The trial court enter ed finding s of fa ct and c onclusions of law, a nd this appeal followe d.

STANDARD OF REVIEW When rev i ewing a finding for leg al s ufficie ncy , we must cre dit evidenc e favorable
to the judgme nt if a rea sonable fac tfinder could, disreg ard co n t ra ry evidenc e unless a rea sonable

Acc ording to a financ ial repor t admitted into evidenc e, New Tremur had a “Total I ncome” 1 4 of $5,577,496 for the fiscal y ear ending J uly 31, 2008. Even afte r pay ing Dane and Patricia annual salarie s totaling $127,500, Ne w Tre mur had a “Ne t I ncome” of $656,507. The Appellees contended that the APA barr ed Hebert from asser ting a claim for failure 1 5 to disc lose the perc entag e completion of contra cts in proce ss at the time of closing beca use Hebe rt did not submit the perc entag e-c ompletion claim to a third party prior to trial. Acc ording to the APA, upon a disag ree ment as to allocation of costs, the parties “shall submit such information to the third party that cer tifies such completion and the rea fter a ttempt to resolve any

discrepa ncies.” 6fac t-finder could not, and reve rse the fac tfinder’ s deter mination only if the evidenc e prese nted in the trial court would not enable a rea sonable and fair -m i n d ed fa ctfinder to rea ch the judgme nt under revie w. City of

Keller v. W

ilson , 168 S.W .3d 802, 827 (Tex. 2005). We will sustain the appellant’ s leg al-suff iciency challeng es if the rec ord reve als: (1) the complete absenc e of evidenc e of a vital fac t; (2) that the court is barr ed by rules of law or evidenc e from g iving weig ht to the only evidenc e offe red to prove a vital fac t; (3) that the evidenc e offe red to prove a vital fac t is no more than a mere scintilla; or (4) that the evidenc e conclusively establishes the opposite of a vital fac t. See id. at 810.
More than a scintilla of evidenc e exis ts if the evidenc e rises to a level that would enable rea sonable and fair- minded people to differ in their conclusions. Ford Motor Co. v. Ridgway , 135 S.W .3d 598, 601 (Tex. 2004).

When appea ling the leg al sufficie ncy of the evidenc e supporting an adver se finding

on which appellant had the burden of proof, the appellant must show the evidenc e establishes, as a
matter of law, all vital fac ts in support of the issue. Dow Chem. Co. v. Francis , 46 S.W .3d 237, 241 (Tex. 2001). I n revie wing a “matter of law” challeng e, we must first examine the rec ord for evidenc e supporting the finding , then we will examine the entire rec ord to deter mine if the contra

ry proposition is e stablished as a matter of law. Id. The point of err or should be sustained only if the
contra ry proposition is conclusively established. Id. Under our leg al-suff

iciency revie w, we cannot disreg ard contra ry evidenc e t h at conclusively establishes the opposite of a vital f act. Id. “Proper leg al-suff iciency revie w preve nts revie wing courts from substitut ing their opinions on cre dibilit y for those of the [factfi n d er] , but
proper revie w also preve nts the [factfinder s] from substitut ing their opinions for undisputed truth.

7When evidenc e contra ry to a verdic t is conclusive, it ca n n o t be disreg arde d.” City of Keller , 168 S.W .3d at 816-17. This is equally true when the fac tfinder is the trial court, rathe r than a jury

. See i d

. at 8 1 6 n.66 (citing Murdock v. Murdock , 811 S.W .2d 557, 560 (Tex. 1991)). Whil e the fac tfinder is the sole judge of cre dibilit y , decisions reg arding cre dibilit y must be rea sonable, and the fac tfinder is not permitted to ig nore undisputed testimony that is “ clea r, positive, dire ct, otherwise

cre dible, fre e from contra dictions and inconsistencies, and could have been rea dily controve rted.” Id. at 820.
I n deter

mining the fac tual sufficie ncy of the evidenc e to support a finding , courts of
appea ls are to weig h all the evidenc e, both for and ag ainst the finding

. Dow Chem. Co. , 46 S.W .3d

at 242. I n revie wing a fac tual-suffic iency challeng e to a finding wher e the burden of proof is on the complaining party , that party must show that “t he adver se finding is ag ainst the g rea t weig ht and preponde ranc e of the evidenc e.” Id. I n conducting our revie w, we may not substitut e our judgme nt for that of the factfinder , who i s the s ole j udg e of the credibility of witnesses a nd the weig ht to be
g iven to their testimony

. Golden Eagle Archery , Inc. v. Jack

son , 116 S.W .3d 757, 761 (Tex. 2003).
We revie w the trial court’ s conclusions of law de novo. BMC Software Belgium, N.V.

v. Marchand , 83 S.W .3d 789, 794 (Tex. 2002). Although appellants may not challeng e a trial court’s conclusions of law for fac tual sufficie ncy , we may revie w the trial court’s leg al conclusions draw n from the f acts to dete rmine whe ther the c onclusions are corr ect. Id.

DISCUSSIO N Hebert’s Claim s

I n its first two issues, Hebert challeng es t he trial court’s finding that the Appellees “fulfilled their obliga tions under the APA and satisfied the intent of the sales transac tion.” Hebe rt
8identifies four way s in which it contends the Appellee s brea ched the AP A ca u s i n g it damag es.

Hebe rt contends that they failed to pr ovide GAAP-c ompliant f inancial statements prior to closing , failed to disclose an adver se materia l chang e in Old Tremur prior to closing , failed to pay Hebe rt for
costs incurre d due to b a c k c h a r g e s a n d war ranty work, and misrepre sented the perc entag e completion of projec ts in proce ss by failing to p ro p er l y disclose reve nues in excess of costs in a manner that
overstate d the value of

Old Tremur . We will address ea ch conte ntion in turn.
GAAP-Compliant Financial Statements

Hebe rt asser

ts that it conclusively proved that the Appellee s b re ached the APA by providing financ ial statements for the y ear s 2005 and 2006 that wer e not prepa red in acc ordanc e with
GAAP and that, as a conseque nce, Hebe rt suffe red “valua tion damag es” in the amount of $771,950. On appeal, Hebert asks thi s C o u rt t o reve rse the trial court’s judgment and rende r j udg ment in its favor on both liability and damag es re s u l ting from this alleg ed brea ch. Having revie wed the evidenc e, howeve r, we conclude that even assuming that the Appellee s brea ched the APA in t h e

manner alleg ed, an issue we need not rea ch, He b er t i s not entitled to the relief it seeks. The evidenc e He bert re lies upon as “c onclusive proof ” of its damag es is, in fac t, leg ally insufficient to support an aw ard of

damag es ar ising fr om the alleg ed bre ach.
I n its brief, Hebe rt asser

ts that “the only evidenc e of damag es is Dane ’ s te stimony that Hebe rt ag ree d to pay almost $800,000 mor e t h an i t wo uld have if the Murra y s had g iven GAAPcompliant financ ial statements, as war rante d.” At trial, Dane testified that, rely ing on the alleg edly defic ient 2005 and 2006 financ ial statements, he evalua ted Old Tremur ’s worth using a “ca sh flow”
approa ch and arr ived at the purcha se price he offe red. Dane testified that, afte r he had purcha sed the
company , he discovere d that the 2005 and 2006 financ ial statements he had relied on to arr ive at his
9offe ring price contained what he believed was improper ac counting trea tment of cer tain ong oing projec ts. Dane testified that he “we nt bac k an d d i d a rec alculation based upon the adjusted financ ials, and it shows the perc ent completion, if I had these adjustments in those financ ials, what the ac tual income would have be en fr om business sales, and I used those new

numbers to g o back and rec alculate what I would have offe red as a purcha se pri ce h ad I had the actua l—the corr ect GAAP financ ials.” Hebe rt contends that it suffe red damag es i n the amount of $771,950—the differ ence betwee n what it c laims it would have offe red f or the c ompany

and wha t it actually

paid for the c ompany .

As Hebe rt conce des in its brief, the only evidenc e of Hebe rt’s damag es arising from this a lleg ed brea ch is Dane ’s testimony that if the Murra

y s had provided Hebe rt GAAP-c ompliant financ ial statements, Hebe rt would have offe red $771,950 less than it actua lly paid. Howeve r, there is no evidenc e in the rec ord that the Appellee s would have acc epted Hebe rt’s offe r and ag ree d to sell the company for the lower price

. Damag es must be established with a rea sonable deg ree of cer tainty

. See A. B. F. Freight Sys., Inc. v. Austrian Import Serv., Inc. , 798 S.W .2d 60 6 , 6 15 (Tex. App.—Dallas 1990, writ denied)

. “The re can be no rec overy for damag es which are specula tive or conjec tural.” Id. The damag es must be asce rtainable in some manner other than by mere specula tion

o r co n j ectur e, and by ref

ere nce to some fairly definite standard, established experience , or direc t infere nce, from known fac ts. Berry Contracting, Inc. v. Coastal States P et r ochem ical Co. , 635 S.W .2d 759, 761 (Tex. App.—Corpus Christi 1982, writ ref ’d n.r.e.)

. There was no e vidence that, had Hebe rt offe red to purcha se the company for $771, 9 5 0 less, the Appellee s would have

acc epted that offe r. Rather, it is at least equally likely that Appellee s would have reje cted Hebe rt’s

10lower offe r. Consequently , Dane ’s testimony is too specula tive to support an awa rd of damag es. 1 6
See Formosa Plastics Corp. v. Presidio Eng’rs & Contractors, Inc. , 960 S.W .2d 41, 50 (Tex. 1998) (testimony about what a bid “would have been” is not legal l y s u ff icient evidenc e of damag es). Hebe rt asser

ts that Dane ’s t estimony was uncontroverte d and is , there fore , conclusive proof of its damag es. The mere fac t that evidenc e is uncontrove rted, howeve r, does not make it conclusive. See City of Keller , 168 S.W .3d at 816 (“O f course , there are few instances in w hich disputed evidenc e is conclusive, and many instances in which undisputed evidenc e is not.”). Neither Dane ’s own belief that Hebe rt could have acquir ed the company for $771,950 less than it paid nor his testimony about

a hy pothetical, specula tive barg ain that was never struck constitutes conclusive proof, or even probative e vidence , of dama g es.

Nor are these so-c alled “valua tion damag es” rec overa ble under a benef

it-of-thebarg ain theory

. Gene rally , the measure of benef it-of- t h e-ba

rg ain damag es is the differ ence betwee n the value as re p re s en t ed t o the injured party and the value actua lly rec eived. Fortune Prod. v. Conoco, Inc. 52 S.W .3d 671, 681 (Tex. 2000). The plaintiff m u s t prove benefit-of-thebarg ain damage s by o ff

er i n g ev idence of bot h the value as represe nted and the value of what was
actua lly rec eiv ed

. See, e.g. , Gunn Infi niti, Inc. v. O’By rne , 18 S.W .3d 715, 716 (Tex. App.—San Antonio 2000, no pet.).

I n fac t , Da n e testified that is prec isely what happene d in a previous unconsummated 1 6 transac tion. Dane testified that he had an opportunity to buy a differ ent business and that “we wer e down t o the l ast couple of day s, and then some numbers chang ed on their fin ancials, and we tried to go back and rene g otiate with them about that, and they didn’t want to rene g otiate or c hang e the numbers, so we pulled out of the dea l.” 11I n this case , there was no evidenc e that the Appellee s made any repres en t at i on to

Hebe rt re gar d i n g t h e value of the assets convey ed in the APA. The valuation work was done by
Dane himself afte r conduc ting a n extensive r eview of the company ’s re cords, including paper and elec tronic files detailing the company ’s financ ials and QuickB ooks rec ords containing elec tronic copies of company rec ords, and apply ing a valuation methodology of his choosing

. Moreove r, fair marke t v al u e has g ener ally been define d as the price proper ty would bring if it wer e offe red by a willing but not obliga ted seller and purcha sed by a willing but not obliga ted buy er. Ford Motor Co.

v. Cooper , 125 S.W .3d 794, 799 (Tex. App.—Texarkana 2004, no pet.). Una cc ep t ed o ffers to purcha se proper

ty are n o t evidenc e of its fair marke t value. See Mieth v. Ranchque st, Inc. , 177 S.W .3d 296, 307 (Tex. App.—Houston [1st Dist.] 2005, no pet.). Dane ’s testimony reg arding what he would have offered to pay for the company is not evidenc e of its fair marke t value in the absenc e of testimony that the Appellee s would have ag ree d to sell at that price

. And there is ample evidenc e in the rec ord to support the trial court’s finding that Hebe rt acquir ed a sound and profitable commercial construction company . The parties ag ree d that the Appellee s would be entitled to conting ent price pay

ments tied to g ross reve nue g oals. T h e m ax i m u m conting ent price pay ment available for the first y ear rang ed from $55,950 if the company had g ross reve nues of at least $2 milli on up to $447,600 if the company achie ved g ross reve nues of at least $5 milli on during the first y ear it was operated by Hebe rt. I n fac t, the g ross reve nues for the first y ear wer e $6 milli on. Whil e the Appe llees made no repr esenta tions or g uara ntees reg arding the company ’s profitability , the rec ord evidenc e supports that Hebe rt go t what he barg ained for—a profitable construction
company whose reve nue stream has exceede d that which the parties ag ree d would entitle Appellee s

12to a dditional c onsideration; in e ssence a highe r, not lower, purcha se price

. The only evidenc e on 1 7
which it relies—Da

ne’s testimony reg arding what he would have offe red to pay —is too specula tive
to support an awa

rd of damag es. Consequently , Hebe rt has not established that it is entitled to rendition of judgme nt in its favor for the amount it claims to h av e overpa id as a result of the alleg edly misleading 2005 and 2006 fina ncial stateme nts. Fur thermore , even if Dane ’s testimony could be considere d sufficie nt to support an

awa rd of d amage s, Hebe rt has failed to conclusively establish that the Appellee s committed a materia l brea ch of the APA. Dane testified that he first discovere d the mistakes he conte nds were contained in the 2005 and 2006 financ ial statements only afte r the closing of the Old Tremur sale. His own testimony , howeve r, indicates that he had acc ess to Old Tremur ’s financ ial information four months befor e closing and had possession of an elec tronic copy of the QuickB ooks files three wee ks befor e the J uly 2007 closing

. This testimony reve als that, for sever al wee ks prior to closing , Hebe rt had acc ess to the paper and elec tronic rec ords Dane relied upon to conduct the post-closing valuation

on which Hebe rt bases its curr ent claim. Ba sed on Dane ’s acc ess to this financ ial information prior
to the sale, the trial court could have conclude d that no materia l brea ch resulted from any failure to provide GAAP-c ompliant state ments, as Dane had rec eived the information that he now claims he lacke d in another form. We overr ule Hebe rt’s appellate issue seeking rendition of judgme nt in its 1 8

The trial court found that Hebe rt judicially admitted that, but for t h e cl ai m s and offsets 1 7 asser ted in its cause s of action ag ainst the Appellee s, it otherwise owes the $447,600 conting ent price pay ment to the Appellee s. Hebe rt does not cha lleng e this finding. Whil e the tri al co u rt m ade no specific finding reg arding the materia lity of the brea ch 1 8 resulting from any lack of GAAP-c ompliant statements, we “indulg e ever y rea sonable presumption in favor of the finding s and judgme nt of the trial court.” See Vicke ry v. Comm’n for Lawyer Discipline , 5 S.W .3d 241, 251-52 (Tex. App.—Houston [14t h Dist.] 1999, pet. denied) (explaining that “the pr esumption of validity will provide [an] omitted element by implication”). 13favor

on both liabilit y

and damag es arising fr om its allega tion that the Appellees f ailed to provide
GAAP-c ompliant 2005 and 2006 financ ial statements for O ld Tremur.

Bid Error Hebe rt next arg ues that Appellee s brea ched the APA by failing to disclose a bid err or rela ting to the Seton Women’s Tower contra ct. Unde r s ection 3.08 of the APA, the Appellee s

war rante d that Old Tremur had not “suff ere d any materia l adver se chang e in its financ ial condition,

as s et s , liabiliti es, or business

. . . that has aff ecte d, or should rea sonably be expected [t ]o af fe ct , materia lly and adver sely Seller’s business, opera tions, assets, liabiliti es or financ ial condition” betwee n April 30, 2007 and the time of the execution of the APA.

Her e, the parties do not dispute that a bi d er ro r occur red on the Seton projec t. Acc ording to Chris, the senior estimator for Old Tremur indicated that the a mount of the bid err or

was $168,760, while Chris himse l f t es t i fi ed that the err or was “about a[n] $80,000 mistake.” He testified that he did not reme mber whether he had told Dane about the mistake or not. Dane , on the other hand, testified that h e wa s n o t told about the bid err or on the Seton job, and estimated the damag es to be be tween $182,000 a nd $218,000. Chr i s al s o testified, however, that err ors of the s ort involved here occur fre quently in the construction industry , and are often dealt with by the parties to the construction contra cts. He further testified that the contra ctor on the Seton projec t indicated it would work with Tremur to cover the cost of the projec t. Chris testified that Tremur rec eived six or eig ht chang e order s that cover ed most, if not all, of the cost of the err or. He further testified that 98% of the work on the projec t had been completed and any losses stemming from the bi d err or were a bsorbed by Old Tremur befor e
14closing , and that Ne w Tre mur rec eived a $60,000 chang e orde r af ter c losing for

work done on the Seton project. This testimony provides some evidenc e for the trial court to find that the bid err or did
not result in a materia l adver se chang e that “should rea sonably be expected [t ]o aff ect, materia lly and adver sely [, the] business” and that Hebe rt suffe red no economic injury due to the bid er ro r. As Hebe rt’s claim is based primarily on Dane ’s testimony and calc ulations reg arding the bid err or, we further conclude that the finding is not ag ainst the g rea t weig ht and preponde ranc e of the evidenc e.

Back Charges and W

arranty W

ork Next, Hebe rt contends that the Appellee s brea ched the APA by ref using to pay back char g es they incurre d and war ranty work they undertook prior to closing

. Acc ording to Dane , back char g es ref

er to work or materia ls for which reve nues had been rea liz ed by Old Tremur but costs not
y et incurre d. Warranty work, on the other hand, ref ers to work to cover war

ranties on work that had previously been completed, with the term of war ranty cover ing one y ear from the date of completion of the proje ct. Hebe rt arg ues that, under section 3.23 of the APA, the Appellee s wer e obliga ted to reimburse Hebe rt for back char g es. Section 3.23 states that, within 60 day s of closing , Hebe rt and the Appellee s would meet to deter mine t h e al l o ca tion of and pay ment for “costs, expenses, and
prepa id items.” Reg arding war ranty work, section 5.12 of the second amendment to the APA states that the Appellee s would reimburse H eber t for any war ranty work done by

New T remur. We first examine the rec ord for any evidenc e supporting the trial court’s finding that the Appellee s did not brea ch the APA by failing to reimburse Hebe rt for back char g es and war ranty

15work. Chris testified that, althoug h Dane submitt ed invoices to him for back char g es and war ranty work, the claims wer e not supported by adequate documentation that was standard in the industry

. Chris also testified that a revie w of the invoices submitt ed by Hebe rt contained vag ue or incomplete information, specifie d time billed to employ ees who wer e not working on the projec ts that wer e the subject of the invoice s, and re fer ence d inacc urate financ ial fig ures.

This testimony provides some evide n ce that the Appellee s did not fail to pay back char g es or war

ranty work it owed to Hebe rt, as the validity of the invoices submitt ed by Hebe rt was in dispute. Fur

ther, revie wing the rema inder of the rec ord, we conclude that the trial court’s finding is not ag ainst the g rea t weig ht and preponde ranc e of the evidenc e. Hebe rt relies primarily on Dane ’s testimony and a one-pa g e sheet of financ ial fig ures that he prepa red detailing the amount alleg edly owed to him by the Appellee s. The trial court, howeve r, was fre e to cre dit Chris’s t es t i m ony
reg arding the back char g es and war ranty wor k an d t o d etermine that Dane had not submitt ed any invoices that would have require d the Appellee s to reimburse Hebe rt. Acc ording ly , the evidenc e is leg ally and factually sufficie nt to support the t rial court’s judgme nt reg arding back char g es and

war ranty work.

Perce ntage Completion

Hebe rt arg ues that the evidenc e conclusively established that the Appellee s brea ched the APA b y fa i l i n g t o disclose the perc entag e completion for contra cts in proce ss at the time of closing . Section 3.23 provides, in re levant par t:

16At closing , Seller shall cer tify to Purchase r the actua l perc entag e completed on eac h Contract-in-pr ocess as of the Closing Date and that Seller has invoiced the customers only to the extent of such perc entag e of completion as of the Closing Date. Any thing to the contra

ry notwithstanding, to the extent there are any costs, expenses or prepa id items applicable to the Contracts-in-pr ocess at Closing, Seller and Purchase r shall allocate such costs, expenses or prepa id items based on proper acc rual of such costs, expenses or prepa id items attributable to perc entag e of work completed and billed by Seller as of

the Closing Da te.

Her e, the parties disag ree as to what conduct was require d under t h e l an gu age of section 3.23. The pa

rties’ dispute cente rs around the term “ac tual perc entag e completed.” Hebe rt
arg ues that the “per centa g e completio n ” c o n te mp la te d in section 3.23 ref

ers to fiscal completion, that i s , t h e co mparison of actua l costs incurre d to estimated t otal costs of a projec t. Appellee s, on the other hand, arg ue that “per centa g e completion” ref ers to phy sical completion, that is, the extent to which the projec t ha s been built or c onstructed, a s determined by compar ing the billing amount of work done to the total contrac t amount.

We first addre ss, as a threshold matter, whether Hebe rt was barr ed by the APA from bring ing this cla im at trial. Section 3.23 of the APA fur ther states, 1 9

To the extent the parties disag ree on an allocation of such costs, expenses or prepa id items, the Seller and Purchase r shall submit such information to the third party that cer tifies such completion to the customers for deter mination and there afte r attempt to resolve any discrepa

ncies

. T o the ex tent such di scre pancie s rema in unresolved, the parties shall have their reme dies available as set forth in t his Ag ree ment and at law.

Hebe rt primarily

discusses this issue in it s fifth issue on appe al, discussed be low. 1 9 17The trial court conclude d that this lang uag e imposed a condition prec edent on Hebe rt

to submit perc entag e-c ompletion disputes to a third party befor e filing suit, and acc ording ly that such claims wer e bar

red in this litigation bec ause H eber t had conc ededly

failed to do so.
A “condition prec edent” that aff ects an obliga t i o n t o perf orm is an act or event,

occur ring afte r the making of a contra ct, that must occur befor e there is a rig ht to perf ormanc e and befor e there can be a brea ch of contra ctual duty

. Centex Corp. v. Dalton , 840 S.W .2d 952, 956 (Tex. 1992). Normally , i n order to cre ate a condition prec edent, a contra ct m ust use a term such as “on

co n d ition that,” “if,” “provide d that,” or some simil ar conditional phrase

. Crisw ell v. E u r o p ea n Crossroads Shopping Ctr., Ltd. , 792 S.W .2d 945, 948 (Tex. 1990). When these terms are not used, the contra ct provision will g ener ally be construed as a covena nt in order to preve nt a forf eiture. See PAJ, Inc. v. Hanove r Ins. C o
. , 243 S.W .3d 630, 636 (Tex. 2008) (explaining that conditions
prec edent are not favor ed in law and courts tend to construe contra ct provisions as covena nts rathe r than as conditions). I n addition, althoug h there is no require ment that these terms must be used, their absenc e is probative of the parties’ intention th at a promise was made instead of a condition imposed. Hirschfeld Steel v. Kellogg Brown & Root , 201 S.W .3d 272, 281-82 (Tex. App.—Houston [14t h Dist.] 2006, no pet.).

Her e, the terms of section 3.23 state that the parties “shall” submit their claims to a third party befor e pursuing their claims i n co u rt

. Section 3.23 does not include the terms “on condition that,” “if,” or “provide d that,” and the rema inder of the contra ct does not indicate that the parties intende d the sec tion to rec ite a condition ra ther than a promise. Acc ording ly , we c onclude that Hebe rt did not forfe it its perc entag e-c ompletion claims.

18We proce ed to the meaning of “ac tual perc entag e completed” as used in section 3.23.

I n deter mining whether a party brea ched the contra ct in question, t h e court must deter mine what conduct is require d of the parties under the contra ct. E.P. Towne Center P a r t ners v. Chopsticks , 242 S.W .3d 117, 123-24 (Tex. App.—El Paso 2007, no pet.). Our primary objective in construing

a written contra ct is to asce rtain and g ive eff ect to the intentions that the parties have objectively manifes t ed i n t h e written i nstrument. Frost Nat’l Bank v. L & F Distribs., Ltd. , 165 S.W .3d 310,
311-1 2 ( T e x. 2 0 0 5 )

. Co n tr a c t te rms are g iven their plain, ordinary , and g ener ally acc epted meaning s. Valence Operating Co. v. Dorsett , 164 S.W .3d 656, 662 (Tex. 2005). I f a c ontrac t can be g iven a

cer tain or def

inite leg al meaning or interpre tation, it is not ambig uous and is c onstrued as a matter of law. Coker v. Coker , 650 S.W .2d 391, 393 (Tex. 198 3 ). A court may not rew rite the parties’
contra ct or add to its lang uag e under the gu i s e o f i n terpre tation. American Mfrs. Mut. Ins. Co. v. Schaefe r , 124 S.W .3d 154, 162 (Tex. 2003).

The term “ac tual perc entag e completed” does not, in and of itself, have a definite and unambig uous meaning , as the plain meaning of the words themselves could ref er to either phy sical

co m p l etion or fiscal completion. Hebe rt arg ues that the context in which the term is used in t h e APA, howeve r, sheds light on its proper interpre tation. I n section 3.23, the term is used in ref ere nce
to the allocation and acc rual of additional costs, expenses, and prepa id items. Fur ther, section 3.23 also ref ere nces section 1.04 of the APA, stating that the allocation of costs and expenses on the basis of perc entag e completion shall form the basis of adjustment to the p u rc h as e p rice as set forth in section 1.04. Section 1.04 states that the “purc hase price for Contracts-in-pr ocess shall be equal to Seller’s cost as of the Closing Date.” (Emphasis added.) Acc ording to Hebe rt, this additional cost19based analy sis indicates that the “ac tual perc entag e completion” ref ere nced in section 3.23 ref ers to fiscal c ompletion of the contra cts-in-proc ess.

We disag ree with Hebe rt’s conclusions reg arding the meaning of “ac tual perc entag e completed” in the APA. Whil e the term is used to adjust financ ial terms in the APA, the adjustments could be based as easily on the phy sical completion of the projec t as on the fiscal completion of the projec t. Acc ording ly , we hold tha t the contra ct is a

mbiguous. Columbia Gas Transmissi on Corp.

v. New Ulm Gas , 940 S.W .2d 587, 589 (Tex. 1996) (explaining that contra ct subject to two or more

rea sonable interpr etations is ambiguous a s matter of la w).
An ambig uous contra ct cre ates a fac t issue as to the parties’ intent. Id. Acc ording ly ,

we turn to the fi n d i n g s of the trial court. The trial court deter mined that the parties’ use of “p ercentag e completion” in section 3.23 of the APA ref err ed to phy sical completion, m ak i n g an additional finding that s u ch a d efinit ion comported with the industry standard in the construction industry . At trial, the cour t hear d testimony from numerous witnesses, including the experts from

ea ch side, that the industry standard for perc entag e completion ref ers to phy sical completion of work. This testimony provides some evidenc e to support the trial court’s finding

. Fur ther, while 2 0
the court hear d some testimony indicati n g that the t erm has a differe nt meaning in the accounting context, in light of the entire rec ord the finding is not ag ainst the g rea t weig ht and preponde ranc e of

Hebe rt’s acc ounting expert was Mike Fig er, a cer tified public acc ountant with 32 y ear s’ 2 0 experience , including doing acc ounting for construction companies

. Terr y McGe e, a cer

tified public acc ountant with forty y ear s’ experience revie wing construction acc ounting documents, testified as an acc ounting expert on behalf of the Appellee s. Both experts ag ree d that the industry standard for calc ulating pe rce ntag e completion is to base it on phy sical completion of the w ork. 20the evidenc e. Acc ording ly , as Hebe rt’s claims reg arding perc entag e completion rest on calc ulations

of fisca l completion, its challeng e fa ils.

We overr ule Hebe rt’s first two issues challeng ing the trial court’s fi n d ing that the Appellee s had “fulfilled their obliga tions under the APA and satisfied the intent of the sales
transac tion.”
Appellees’ Counterclaim s

I n six issues, Hebe rt also asser ts on appea l that the trial court err ed in finding for the Appellee s on their counter claims. Specifica lly , Hebe rt contends that the trial court err ed in finding that Hebe rt brea ched the APA by failing to opera te New Tremur in acc ordanc e with prior prac tices, misrepre senting the cre dentials of its principals, failing to submit the dispute to a third party , failing
to pay the Appellee s for stored materia ls, withholding reta inag e monies, and failing to make the 2008 conting ent price pay

ment. We will address ea ch conte ntion in turn.
Operation of New Tremur, Misrepresentation , and Failure to Submit Dispute to T hird Party
I n its third, fourth, and fifth issues on appea l, Hebe rt arg ues that the trial court err ed in finding tha t H eber

t br eac hed the APA by

failing to opera te New

Tremur in a manner

consistent with prior pract i ce , m i srepr esenting the qualifica tions of its principals, and failing to submit its dispute to a third party prior to bring ing su i t as require d under the APA. Hebe rt arg ues that the 2 1 Appellee s should take nothing on the se cla ims.

We have a lrea dy

addre ssed the trial c ourt’s finding reg arding submissi on of t he dis pute 2 1 to a third party

when discussing Hebe rt’s first two issues. 21We need not addre ss these issues, howeve r, as the Appellee s did not rec over on these

claims. See State v. Bachy nsky , 770 S.W .2d 563, 566 (Tex. 1989) (dec lining to addre ss evidentiar y

co m p l ai n ts that did not aff ect ultimate liability ); In re Grossnickle , 115 S.W .3d 238, 253 (Te x . App.—Texarkana 2003, no pet.) (“[T]he trial court need only enter finding s, or additional finding s,

on ultimate o r co n t ro l l i n g issues, rathe r than on mere evidentiar y issues.”). As the finding s wer e

unnece ssary , they are not binding on appea l or rema nd, and we conseque ntly “unfind” them. See Keisling v. Landrum , 218 S.W .3d 737, 743 (Tex. App.—For t Worth 2007, pet. denied) (holding that court of a ppeals c an “unf

ind” unnec essar

y finding s of fa ct).

Stored Materials

I n its six th issue on appea l, Hebe rt arg ues t hat t he trial court erre d in aw ar d i n g t h e Appellee s $22,297.95 in “stored materia ls.” Steven Moorhea d, an assistant manag er at Tremur , testified that stored materia ls are materia ls purcha sed for a specific projec t, and are there fore distinct from inventory , a def

inition t hat Chris ag ree d with. The trial court found that stored materia ls did
not transfe r to Hebe rt in the APA, and conseque ntly Hebe rt was liable for t h e v al u e o f the stored materia ls in it s possession.

Section 1.01 of the APA lists all of the assets that wer e transfe rre d to Hebe rt pursuant
to the sale of the company . Whil e section 1.01 does not specific ally list “stored materia ls ” as an
asset that would transfe r to Hebe rt, section 1.01(f) indicates that the APA cover s “[a]ny and all other assets used in the Seller ’s business (and not e x cluded a s provided in Section 1.02 her ein).”

Chris arg ues that stored mater ials differ from other

kinds of assets that would have been transfe rre d under the APA. Acc ording to his testim ony , the m ater ials in question conce rned

22projec ts that wer e completed prior to closing and conseque ntly wer e not contemplated by the APA.

Howeve r, Chris does not dispute that the stored materia ls wer e purcha sed by Tremur in the proce ss of completing its c onstruction projec ts. I n addition, while Moorhea d testified about the differ ence betwee n stored materia ls and inventory , he did not claim that the stored materia ls at issue in this case did not belong to Tr emur.

Ba sed on this testim ony , stored mater ials qualify as company “asse ts” acc ording to the plain meaning of that term. Acc ording ly , as section 1.02 contains no mention of stored materia ls being excluded from transfe r, we conclude that the stored materia ls in question wer e transfe rre d to Hebe rt under the APA. We sustain Hebe rt’s six th issue, reve rse the p o rt i on of the trial court’s judgme nt awa

rding dam age s fo r stored materia ls, and rende r judgme nt that the Appellee s take nothing on that c laim.
Offsets for Retainage and Contingent Price Payme nts

I n its seventh and eig hth issues on appea l, H eber t a rg ues that the trial court err ed in concluding that it brea ched the APA by failing to make reta inag e pay ments and the 2008 conting ent price pay ment for $447,600 to the Appellee s. Whil e Hebe rt does n o t d i s p u t e that it owed the 2 2 Appellees these pay

ments, it claims that its obliga tions are offse t due to its rec overy in this case under the terms of the A PA.

I n construction, the ter

m “re tainag e” r efe rs to a per centa g e of billings that are held back 2 2 or reta ined by a contra ctor, usually in the amount of five to te n perc ent, pending completion of the projec t. 23Section 9.14 of the APA states, “Notwithstanding any thing to the cont ra ry here in, [Appellees] ag re e t h at [Hebert] shall be entitled to cre dit and offse t ag ainst any pay ments due by [Hebert] as a resu l t o f the transac tions contemplated here [] by an ag g reg ate amount equal to all
amounts due [Hebert] by [Tremur].” Reg arding offse ts, H eber t a rg ues the $771,950 in damag es 2 3
incurre d as a result of the misrepre sentations in the 2005 and 2006 financ ial repor ts excuse it f

rom making the reta inag e and conting ent price pay ment s . Howeve r, as we aff irm the trial court’s judgme nt de ny ing Hebe rt relief on that and other claims, we c onclude that no offse ts a re available to Heber t as a re sult of this l itigation. He bert’s se venth and e ighth issues a re ove rruled.

Attorn eys’

Fees Although not assig ned as an ap p ellate issue, in its brief Hebe rt challeng es the trial
court’s awa

rd of attorney s’ fee s and costs to the Appellee s as the preva iling parties. As nothing in this opini on would upset that deter mination, we over

rule this issue. 2 4

Although in its brief Hebe rt states the damag es fig ure is $750,500, Dane testified that the 2 3 damag es suffe red was the $771,950 differ ence betwee n what it actua lly paid for Old T remur and what it would have of

fer ed had it had sa tisfactory 2005 and 2006 fina

ncial stateme nts. Hebe rt points out that the trial court’s judgme nt awa rds the Appellee s appellate attorney s’ 2 4 fee s without conditioning the awa rd on the Appellee s’ succe ss on appea l. Whil e the trial court’s orde r d o es not expressly condition the awa rd of appellate fee s on a succe ssful appea l, such a condition is nece ssarily implied beca use unconditional appellate fee s are improper. See Solomon v. Steitler , 312 S.W .3d 46, 59-60 (Tex. App.—Texarkana 2010, no pet.); see also Houston Livestock Show & Rodeo, Inc. v. Hamrick , 125 S.W .3d 555, 586 (Tex. App.—Austin 2003, no pet.); W estec h Eng’g Inc. v. Clearwater Constructors, Inc. , 835 S.W

. 2 d 1 9 0 , 2 0 5 (Tex. App.—Austin 1992, no writ). 24CONCLUSION
We reve rse the portion of the trial court’s j u d gm en t that awa rds the Appellee s $22,297.95 for stored materia ls and rende r judgme nt that the Appellee s take nothing on that claim. We affir m the rema inder of the trial court’ s judgme nt. 2 5

__________________________________________ Diane M. H enson, Jus tice
Be fore Chief J ustice Jones, J ustices Pury ear and He nson Affir med in part; Rever sed and Rende red in pa rt Filed: F ebrua

ry 4, 2011

Authoring duties for this case wer e re assig ned in Novembe r 2010. 2 5 25