REVERSE and Remand and Opinio n Filed April 1, 2020 

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In The 

### Court of Appeals Fifth District of Texas at Dallas No. 05-18-01479-CV DIXIE CARPET INSTALLATIONS, INC., Appellant V. RESIDENCES AT RIVERDALE, LP AND RESIDENCES AT RIVERDALE GP, LLC, Appellee On Appeal from the 199th Judicial District Court Collin County, Texas Trial Court Cause No. 199-04903-2012 OPINION Before Justices Bridges, Whitehill, and Nowell Opinion by Justice Whitehill Among other questions, we address whether an agent’s authority to extend an offer on the principal’s behalf concerns an element of a contra ct breach claim—and not an independent ground of rec overy—such that a Rule of Civil Procedure 279 deemed agency finding is proper if (i) supported by the evidenc e, (ii) there was no objection that the charge omitted an agency submission and none was requested, and (iii) no party asked the trial court to make a finding on that issue. On remand from this court, the t rial court entered judgement fo r Dixie Carpet Installations, Inc. on its contr act claim. But the court later granted a judgment–2– notwithstanding the verdict for Residences at Riverdale L.P. (R esidences LP) and Residences of Riverdale, GP, LLC ( Residences LLC) and entered a take-nothing judgment against Dixie. We refer to Residences L.P. and Reside nces LLC as “Riverdale” unless a distinction is warranted. We conclude that (i) Dixie is entitled to recover on its contra ct claim because there is legally sufficient ev idence supporting the jury findin g that Riverdale agreed to and breached its contract with Dixie; (ii) Dixie may not rec over attorney’s fees regarding that claim because Civil Practice and Remedies Code § 38.001 does not apply to a limited partnership or a limited liability company; and (iii) Dixie I is not entitled to a conversion or quantum meruit recovery because its claim against Riverdale sounds in contract. Accordingly, we (i) reverse the trial court’s take-nothing judg ment against Dixie; (ii) render judgment for Dixie and against Residences LP and Residences LLC, jointly and severally, for $114,318.40 plus pre and post j udgment interest as allowed by law; and (iii) remand the case to the trial court fo r further proceedings consistent with this opinion.
I. B ACKGROUND This is the second appeal in this case. Detailed facts may be found in our prior opinion, and we recite only the b ackground necessary to resolve this appeal.–3– Riverdale contracted with Nations Construction Management, Inc. to build an apartment complex. Nations subcontracted Dixie to provide the project’s carpet and flooring. Dixie performed as required, but several of its invoices went u npaid. In fact, Nations did not timely pay many of its subcontractors. So Rive rdale began cutting joint checks with Nations to pay the subcontractors. Ultimatel y, however, there was not enough money to pay all subcontractors. David Stapleton, a Riverdale principal, told John Czapski, Nati ons’ president, to ask the subcontractors to acce pt a 20% claim reduction and r elease their liens in exchange for Riverdale’s prompt payment. Czapski complied. Di xie and the other affected subs agreed to Riverdale’s proposal. Riverdale set up and signed the escrow agreement providing for the reduced subcontractor payments. Exhibit B to the escrow agreement list ed the subcontractors—including Dixie—t hat were to receive their disco unted payments and their corresponding amounts. Riverdale initially funded th e escrow account with sufficient funds to pay all designated payees their respective sums. Riverdale also caused the escrow agent to creat e a check to pay Dixie its prom ised sums. But after Dixie delivered its l ien release, a different subcont ractor reneged on its agreement, filed a lien agai nst the property, and sued.–4– Consequently, Riverdale directed the escrow agent to void Dixie ’s check, which it did. Although the lien -filing subcontractor’s claim w as paid in full, Dixie got nothing more. Dixie sued Riverdale for contract breach, fraud, conspiracy, an d quantum meruit and Nations for contract breach, a sworn account, quantu m meruit, and conspiracy. A jury found for Dixie on its contract, conversion , fraud, and quantum meruit claims against Riverdale and on its contract claims agai nst Nations. Dixie elected to recover on its fraud claim against Riverdale, and the trial court entered judgment for Dixie for $142,898 for actual damages and $285,796 for exemplary damages. 1 Riverdale appealed. We reversed that judgment, rende red a take-nothing judgment aga inst Dixie on its fraud claims, and remanded the case for Dixie to elect a new remedy. Residences at Riverdale, LP v. Dixie Carpet Installations, Inc ., No. 05-15-01030- CV, 2017 WL 2889276, at *1 (Tex. A pp.—Dallas July 7, 2017, no p et.) ( Dixie I ). On remand, the trial court denied Dixie’s motion for judgment o n its conversion claim. Dixie then m oved for judgment on its convers ion claim or, alternatively, on breach of contract or quantum meruit. The tr ial court initially entered judgment for Dixie on its contract claim and for attorn ey’s fees. But

1 The court also rendered judgmen t against Nations for $142,898 in breach of contract damages and $234,817 in attorney’s fees. Nations, however, is not a party to any of the appeals.–5– Riverdale then moved to modify that judgment and for JNOV. The court granted that motion and on December 13, 2018 rendered judgment that Dix ie take-nothing from Riverdale. 2 Dixie appeals from that judgment.
II. D ISCUSSION A. First Issue: Did the trial court err by gr anting the JNOV and vacating the contract breach and attorn ey’s fees judgment for Dixie? Yes. Czapski’s authority to communicate Riverdale’s offer was a component of Dixie’s contract claim’s valid contract element; and there w as legally sufficient evidence establishing that Riverdale ( i ) agreed to pay Dixie 80% of Dixie’s unpaid invoices in exchange for Dixie releasing its liens and (ii) bre ached that contract by directing the escrow agent to void Dixie’s check for the reduce d sum due.
1. Standard of Review A trial court may disregard a jury’s verdict and render a JNOV if no evidence supports one or more of the jury’s findings or if a directed ve rdict would have been
proper. Tiller v. McLure , 121 S.W.3d 709, 713 (Tex. 2003). We review JNOV’s for legal suffi ciency of the evidence supporti ng the verdict. Id . In such review, we consider t he evidence in the light most f avorable to the verdict and indulge every rea sonable inference that would s upport the challenged finding, crediting favorable evidence if a reasonable factfinde r could and disregarding contrary evidence unless a reasonable factfinder c ould not. Cent.

2 That same judgment also provides that Dixie shall recover cont ract breach damages and attorney’s fees from Nations.–6– Ready Mix Concrete Co. v. Islas , 228 S.W.3d 649, 651 (Tex. 2007). We uphold the jury’s finding if more than a s cintilla of competent evidence s upports it. Tanner v. Nationwide Mut. Fire Ins. Co ., 289 S.W.3d 828, 830 (Tex. 2009). The final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under re view. City of Keller
v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005). Any ultimate fact may be proved by circumstantial evidence. Hoffmann v.
Dandurand , 143 S.W.3d 555, 559 (Tex. App. —Dallas 2004, no pet.) (ultimat e fact is one that is essential to cause of action and would have dire ct effect on judgment);
see also Russell v. Russell , 865 S.W.2d 929, 933 (Tex. 1993). An ultimate fact is established by circumstantial evidence when the fact may be fai rly and reasonably inferred from other facts proved in the case. Blount v. Bordens, Inc ., 910 S.W.2d 931, 933 (Tex. 1995) (per curiam). However, to withstand a leg al sufficiency challenge, circumstantial eviden ce still must consist of more t han a scintilla. Id

. The existence of an oral contract may be proved by circumstanti al or direct evidence . See Heminik Farms, Ltd. V. BLC Const., LLC ., No. 07-17-00457-CV, 2019 WL 1287881, at *6 (Tex. App. —Amarillo Mar. 20, 2019, pet. denied) (mem. op.). Courts consider the communications between the parties a nd the facts and circumstances surrounding those communications when determining the existence of an oral contract. Id

.–7– 2. Contract Breach a. The Contract Formation Issue The jury found that Riverdale and Dixie entered into a contract whereby Riverdale itself would escrow and pay Dixie $114,318.40 (out of the $142,898 Nations owed Dixie):

Dixie argues that the trial court erred by entering judgment no twithstanding this finding. We agree. To prove a breach of contract claim, a plaintiff must establish the existence of a valid contract, performance or tendered performance by the pl aintiff, the defendant breached that contract, and damages resulting from the breach. Tin Star Dev., LLC v. 360 Residential, LLC, No. 05-17-00040-CV, 2018 WL 1804891, at *3 (Tex. App.—Dallas Apr. 17, 2018 , no pet.) (mem. op.). Parties form a binding contract when there is: (i) an offer, (i i) an acceptance in strict compliance with the offer’s terms, (iii) a meeting of the minds, (iv) each–8– party’s consent to the terms, and (v) execution and delivery of the contract with the intent that it be mutual and binding. Healey v. Romero , No. 05-16-00598-CV, 2018 WL 2126903, at *2 (Tex. App.—Dalla s May 7, 2018, no pet. h.) (m em. op.). The only contract breach element at issue here is Riverdale’s J NOV motion argument that there was no evidence supporting the alleged cont ract between Dixie and Residences LP as the jury f ound unless Nation’s president, Czapski, was Riverdale’s agent when he comm unicated Riverdale’s offer. In that vein, Riverdale asserted that Dixie failed to (i) plead and prove that Czapski was Riverdale’s agent and (ii) request a jury question or obtain a finding that Czapski was Riverdale’s agent. To that end, Riverdale urg ed that there was no evidence that Czapski had the express or apparent authority to negotiate the contract with Dixie and Dixie could not establish that Czapski was River dale’s agent through Czapski, because there was no ev idence (other than Czapski’s te stimony) that Riverdale knowingly permitted him to hold himself out as having authority to contract on Riverdale’s behalf. Dixie responded that Riverdale waived the agency issue by not r aising the issue in its pleadings and not objecting to agency being absent in the charge. Furthermore, Dixie argued that ( i) agency is not an independent ground of recovery but is subsumed in the contract formation element and (ii) a Ru le 279 deemed finding is supported by the evidence and the charge as requested and su bmitted. We agree with Dixie.–9– b. Dixie’s Evidentiary Review On appeal, Dixie argues that we previously concluded that there was sufficient evidence to find that Riverdale breached the contract, but for purposes of fraud, there was no evidence that the breach was intended at the time the co ntract was made. Dixie is partially correct. Because the judgment reviewed in Dixie I was based solely on a fraud theory, we did not review the sufficiency of the contract formation evi dence. That is, although Dixie I has several instances expressing the alleged contract’s existe nce, we made those statements while analyzing whether there was lega lly sufficient evidence supporting fraudulent scie nter, not whether the eviden ce supported the contract’s existence as such. Thus, in that context, we conclu ded that, “although Dixie’s evidence may establish Riverdale’s breach of contract, breach alone is no evidence that breach was intended when the contract was origina lly made.” Residences at Riverdale, 2017 WL 2889276, at *6. Because whether there is legally sufficient evidence supporting the alleged contract’s existence is now b efore us, we proceed to conduct th at review.
c. Contract Formation and Breach Evidentiary Review 1. Introduction Riverdale continues to argue t hat it has no contractual liabili ty because Dixie did not plead, prove, or obtain a jury finding that Czapski (a Nations employee) acted as Riverdale’s agent when he communicated Riverdale’s offer to Dixie and the other–10– affected subs. 3 Although Dixie did not plead the word agency, that fact does not resolve the matter in this case because (i) agency is an elemen t of contract formation, not an independent recovery ground; (ii) Dixie put contract for mation at issue, (iii) Riverdale did not plead lack of authority or specially except t o Dixie’s pleadings; (iv) Riverdale did not object to the charge for lack of an agen cy submission or request a finding on the issue; and (v) the evidence supports a finding that Riverdale authorized and approved th e contract at issue. 2. The Pleadings To begin, agency in this context is a component of the offer an d acceptance elements of Dixie’s contract breach claim instead of being an i ndependent ground of recovery. See Frerking v. Southern Cty. Mut. Ins. Co. , 467 S.W.2d 672, 673-74 (Tex. Civ. App.—Amarillo 1971, writ dismissed) (agency is a com ponent element of estoppel theory, not an i ndependent recovery ground). 4

3 Generally, Texas courts do not p resume that an agency relations hip exists. Community. Health Servs. Corp. v. Hansen , 525 S.W.3d 671, 697 (Tex. 2017). Rather, if the existence of an agency relationship or the extent of the authority conferred is at issue, the party ma king the allegation has the burden of proving it by a preponderance of the evidence. Id.

4 More specifically, according to Frerking : The trial court is required to submit to the jury any group of facts which, if true, would constitute a ground of recovery if plead and supported by the evidence. R ule 277. In this case recovery on the theory of estoppel consisted of several component parts of which agency is one. The issue of agency is not within itself an independent ground of recovery b ut is a vital element of plaintiff’s right of recovery. The court submitted some elements of the gr ound of recovery but omitted the one vital element of agency, and there was no objection to the failure to submit the same. The parties are considered on appeal to have agreed to waive a jury trial on the unsubmitted element and to have submitted it to the c ourt for determination. Before judgment was entered, either party could have requested the court to make a finding on the agency issue, and the court could have found as the evidence justified. However, there being no reque st or express finding, the agency–11– We agree with our sister court: Dixie’s pleading that it, Natio ns, and Riverdale all agreed to the cash for lien release deal was sufficient to put Riverdale on notice that as a component of Dixie’s contract existence element Czaps ki’s authority to extend the offer and acceptance was an issue for trial. Specifically, Dixie’s petition alle ged that (i) Riverdale repre sentatives and Czapski “agreed that Nations must contact the unpaid claimants and negotiate a discounted amount to be paid to each” and (ii) Dixie, Nations, and Riverdale agreed that Dixie would reduce the amount of its claim to $114,318.40 and execute a final lien release in favor of Riverdal e in exchange for which Riverd ale agreed to pay Dixie. Thus, we conclude that Dixie’s pleadings put Czapski’s authority as Riverdale’s agent at issue as p art of Dixie’s contract formatio n element. 3. The Charge and Dixie’s Deemed Finding As we showed in part II(A)(2)(a) above, Question 1 asked the ju ry whether Dixie and Riverdale agreed that Riverdale would pay Dixie with the escrowed money if Dixie reduced its claim. Immediately below that question, the charge explained that in a nswering that question the jury could consider (i) what the parties said and did in light of the

element is not waived. Wichita Falls & O.R. Co. v. Pepper , 134 Tex. 360, 135 S.W.2d 79 (1940); T EX

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. P. 279. Since the submitted issue of agency was not waived, the court was not authorized to render judgment non obstante veredicto on the first ground of defendant’s motion. 467 S.W.2d at 673-74.–12– surrounding circumstances, (ii) t hey could not consider unexpre ssed thoughts or intentions, and (iii) an oral agr eement may be enforceable as a contract. Furthermore, earlier in the charge, the trial court instructed the jury regarding the existence of a valid contract that:

Neither Dixie nor Riverdale objected to Question 1 or the relat ed instructions. And neither party requested an agency question or agency instru ctions. Indeed, both parties acknowledged their consen t to the questions and instruc tions as given. Accordingly, Riverdale cannot c omplain about an allegedly missi ng agency question or agency instructions. See Bombardier Aerospac e Corp. v. SPEP Aircraft Holdings, LLC , 572 S.W.3d 213, 228 n. 17 (Tex. 2019) ( citing Burbage v. Burbage , 447 S.W.3d 249, 258 (Tex. 2014) (pa rties agreed to charge as su bmitted).–13– Two additional principles inform our analysis: First, we measure the sufficien cy of the evidence supporting an unobjected to question and instructions accord ing to the charge’s language. Seger v. Yorkshire
Insur. Co. Ltd. , 503 S.W.3d 388, 407 (Tex. 2016). Applying this principle, we review the record to determine whether there is sufficient evid ence of contract formation based on the charge a s written and conclude that ther e is. Second, Rule 279 provides for a deemed finding on missing eleme nts where, as here, (i) at least one element of a cause of action is submi tted and found, (ii) there is no objection to an omitted element, (iii) neither party requ ested that the element be included in the charge, and (i v) neither party asked the tri al court to make written findings on the omitted element. T EX

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. P. 279. Here Question 1 submitted some elements of Dixie’s contr act breach cause of action and ne ither party objected to the question, requested an agency instruction, or asked the trial court to make a written finding regarding Czapski’s authority to act for Riverd ale. Thus, we review the record to determine whether there is legally sufficient evi dence to support a deemed finding that Czapski had the express or apparent authori ty to negotiate the Dixie agreement on Riverdale’s be half and conclude that there i s. 4. Evidence Supporting the Answer to Question 1 To begin, the record shows that b efore the subject agreement ca me into being, Nations and Riverdale worked together to identify subcontractor s that needed to be paid and jointly cut checks to effect such payments.–14– And Czapski (with Nations) testified that Stapleton (with River dale) told him to try to get the subcontractors to accept a 20% reduction of t heir claims in exchange for prompt payment. Thus, Czapsk i contacted Dixie about accept ing Riverdale $114,318.40 offer, and Dixie accepted. Residences LP does not deny instructing Czapski to make the offer to Dixie. Consistent with Czapski’s testim ony, the written escrow agreeme nt between Riverdale, Riverdale’s bank, and the escrow agent was admitted into evidence. That agreement recited that Riverdale ’s project had sixty-eight unpa id subs that agreed to waive or release their liens in exchange for payment from funds that Riverdale and its bank were placing in the escrow account. Among other thing s, the agreement required the escrow agent to immediately pay without further in struction the unpaid subs listed on the related Exhibit B the corresponding amounts shown on that exhibit (once the sub provided a lien and release). The Exhibit B spec ified that Dixie was to receive $114,318.40 out to th e $142,898.00 it was owed. The escrow agreement and its Exhibit B are legally sufficient e vidence from which the jury could reasonably have found that (i) Riverdale w ould not have signed that agreement had it not authorized its terms and (ii) Riverda le authorized and approved its offer (that Czapski undisputedly communicated) to pay Dixie 80% of the amount Nations owed Dixie if Di xie released its lien claims

. Furthermore, Howard Akin, a Riverdale limited partner, testifie d regarding an email to himself predating the es crow agreement where he memori alized a–15– conversation he had with Czapski and others regarding the proje ct. Akin noted that the group discussed Riverdale’s need to close out the job and i ts plan to offer discounted payments for quick payments:

Akin also confirmed that Riverdale needed the subcontractors to accept discounted amounts and provide lien releases to satisfy its lender. Akin set up the schedule to track the discounts and emailed Nations the template for the tw enty percent discount. Additionally, Stapleton (with Riv erdale) did not dispute that j oint checks were issued from Nations and Riverdale before the escrow agreement o r that Dixie agreed to take twenty percent less than what it was owed so that it co uld get paid. Stapleton also did not dispute that Dixie was owed the $114,318.40 it agr eed to accept in exchange for the released lien. Stapleton signed the escrow ag reement on Riverdale’s behalf. Moreover, once the f unds were escrowed, Nations exercised no co ntrol; only Riverdale, Chicago Title, and Legacy Bank controlled the funds. There is no dispute that Riverdale told Chicago Title to void the check to Dixie fr om the escrowed funds. In sum, there was evidence of the project’s financial problems, Riverdale’s awareness and tracking of the unpaid subs and their outstanding balances, Riverdale’s discussions with Czapski regarding his communicatin g regarding–16– Riverdale’s willingness to promptly pay 80% of the subs’ unpaid sums due in exchange for lien releases. Fin ally, in light of the above, Ri verdale signed the escrow agreement implementing the agreem ent with Dixie. This evidence was more than legally sufficient direct and circumstantial evidence supportin g the jury’s “Yes” answer responding to Question 1. 5. Czapski’s Express or Apparent Authority Additionally, an agent may have actual or apparent authority. See United Residential Prop., L.P. v. Theis, 378 S.W.3d 552, 564 (Tex. App.—Houston [14th Dist.] 2012, no pet.). Actual authority is that authority a principal intentionally co nfers upon an agent, intentionally allows the a gent to believe he possesses, or allows the agent to believe he possesses by want of due care. Spring Garden 79U, Inc. v. Stewart Title
Co ., 874 S.W.2d 945, 948 (Tex. App.—H ouston [1st Dist.] 1994, no writ). Apparent authority arises “either from a principal knowingly pe rmitting an agent to hold [himself] out as having authority or by a princip al’s actions which lack such ordinary care as to clothe an agent with the indicia of au thority, thus leading a reasonably prudent person to believe that the agent has the aut hority [he] purports to exercise.” Gaines v. Kelly , 235 S.W.3d 179,183 (Tex. 2007). Apparent authority is based on estoppel and requires Dixie to s how that (i) it reasonably believed that Czapski was Residences LP’s agent, (ii ) this belief was generated by Residences LP’s affirmatively holding Czapski out as its agent or by–17– Residences LP’s knowingly permitting Czapski to hold himself ou t as such, and (iii) Dixie justifiably relied on the representation of authority. See Baptist Mem’l Hosp. Sys. v. Simpson , 969 S.W.2d 945, 949 (Tex. 1998). Based on these standards, we conclude that the evidence discuss ed in the preceding section also supports the deemed finding of Czapski’s express or apparent authority to negotiate Riverdale ’s deal with Dixie that is the subject of Question 1. Consequently, the evidence supports the jury’s contract formati on and breach findings against Riverdale and Dixie was entitled to judgment o n its breach of contract claim. 6. Residences LLC’s Liability Dixie argues that, as a matter of law, once the jury found that Residences LP was liable to Dixie, Resid ences LLC was also liable. 5 We agree. Residences LLC is Residences LP’s general partner. As such, Re sidences LLC is jointly and severally liabl e for the partnership debts. Forney 921 Lot. Dev. Partners I, LP v. Paul Taylor Homes, Ltd ., 349 S.W.3d 258, 272–73 (Tex. App.— Dallas 2011, pet denied); see also T EX

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. C ODE § 153.152. Therefore, Residences LLC and Residences LP are jointly and severally liab le to Dixie for breach of contract. Accordingly, we sustain the first part of Dixie’s first issue.

5 Riverdale does not address this argument.–18– Having concluded that Dixie is entitled to recover against Rive rdale for contract breach, we now consider Dixie’s attorneys’ fees claim. 3. Attorney’s Fees a. General Principles Texas follows the American Rule , which provides that litigants may recover attorneys’ fees only if specifically provided for by statute or contract. See Epps v.
Fowler , 351 S.W.3d 862, 865 (Tex. 2011) . Dixie is not entitled to re cover its attorneys’ fees from Riverdale because no statute or contract t erm imposes liability on them for Dixie’s attorneys’ fees. Indeed, Dixie does not su ggest that there a contract provision requiring Riverdale to pay Dixie’s fees in t his case. So we turn to the statutory prong. Civil Practice and Remedies Code § 38.001 authorizes an attorne ys’ fees award for certain types of claims brought by a “person” against “an individual or corporation.” See T EX

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. C ODE § 38.001. Thus, under § 38.001’s plain language, a trial court ca nnot order limited liability pa rtnerships, limited liability companies, or limited partnerships to pay attorneys’ fees. Top Cat Ready Mix, LLC v. Alliance Trucking , No. 05-18-00175-CV, 2019 WL 275880, at *5 (Tex. App.—Dallas Jan. 22, 2019 , no pet.) (mem. op.). b. Riverdale’s Trial Court Preservation Generally Dixie concedes that attorney’s fees are not ordinarily recovera ble from entities that are not corporations, but it maintains that Riverdale waiv ed its argument because–19– it didn’t raise the issue in the trial court. We disagree beca use Riverdale raised this issue in its motion to modify the judgment and for JNOV. See Steves Sash & Door Co., Inc. v. Seco , 751 S.W.2d 473, 477 (Tex. 1988). Likewise, we reject Dixie’s add itional arguments that the River dale entities needed to file (i) Rule 93 verified denials that they are corpo rations and thus not covered by § 38.001 or (ii) a Rule 94 affirmative defense raisi ng the issue.
c. Rule 93 A Rule 93 verified denial of lack of capacity to be sued is req uired to deny a partnership’s existence (but not to argue that a statue does not apply to an entity in its actual legal form). See T EX

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. P. 93(5); see also Ingram v. Deere , 288 S.W.3d 886, 892–93 (Tex. 2009). In other words, an affidavit is required to preserve a complaint that a party is not the type of entity a plaintiff alleges in his suit. See e.g., Washburn v. Krenek , 684 S.W.2d 187, 191 (Tex. A pp.—Houston [14th Dist.] 1984, writ ref’d n.r.e.) (failure t o deny partnership status is an admission of partnership that cannot be controverted at trial). Here, Dixie did not plead that the Riverdale defendants were corporat ions and it is undisputed that they are not . Therefore, Rule 93 was not implicated. See Top
Cat , 2019 WL 275880, at *5. Moreover, by its text, a Rule 93 verified denial is not necessa ry where the truth of the matter appears of record. T EX

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. P. 93; see also Pledger v. Schoellkopf , 762 S.W.2d 145, 146 (Tex. 1988). Here, that the Riverdale defendants–20– are not corporations appears of record in Dixie’s pleadings. T hus, Rule 93 did not apply.
d. Rule 94 Dixie also argues that Riverdale failed to plead the § 38.001 “ exemption” as an affirmative defense under Rule 94. See T EX

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. 94. We reject that argument because § 38.001’s inapplicability to business organiz ations other than corporations is a matter of statutory coverage in the first ins tance and not exemption. Rule 94 requires a party to plead affirmatively those affirmati ve defenses listed in the rule “and any ot her matter constituting an avoida nce or affirmative defense.” T EX

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. 94; Davis v. City of San Antonio , 752 S.W.2d 518, 519 (Tex. 1988). Stated differently, an affirmative defense is by nature one of confession and avoidance and “does not see k to defend by merely denying th e plaintiff’s claims, but rather seeks to ‘establish an independent reason why the pl aintiff should not
recover.’” Texas Beef Cattle Co. v. Green , 921 S.W.2d 203, 212 (Tex. 1996). Here, Rule 94 does not apply because Riverdale is not within th e class of parties to which the statute sweeps. See Base-Seal, Inc. v. Jefferson Cty. , 901 S.W.2d 783, 787-88 (Tex. App.—Beaumont 1995, writ denied) (§ 38.001 in applicable because counties not within the class of covered entities). Be cause the statute on its face does not bring the Riverdale defendants within its scope i n the first place, there was nothing for them to confess and avoid within Rule 94’s reac h.–21– Nonetheless, Dixie cites County of El Paso v. Boy’s Concessions, Inc. , 772 S.W.2d 291, 293 (Tex. App.—El Pa so 1989, no pet.) for the contr ary premise that Riverdale had to plead their status as non-corporations as an a ffirmative defense. We reject our sister court’s language to that effect. Boys’ Concessions’ reasoning is faulty because it ch aracterized the county’ s argument in terms exemption from § 38.001, which implies that the county would be covered by the statute but for an exemption removing it from coverage. But that analysis is cont rary to § 38.001’s plain text. 6 In this case, however, Riverdale raised the issue in the court below. In addition to raising the issue in a motion for directed verdict during trial, Riverdale also raised the issue when the court awarded breach of contract damages and attorney’s fees on remand. 7 Under these circumstances, we cannot conclude the issue was waived. See, e.g ., Rhodes v. Kelly , No. 05-16-00888-CV, 2017 WL 2774452, at *14 (Tex. App.—Dallas June 27, 2017, pet. denied) ( mem. op.) (party wishing to argue on appeal that a statute does not authorize an award of attorney’s fees must preserve its complaint in the trial court). We resolve the second part of Di xie’s first issue against it.

6 Dixie also cites Chan v. Jade King, Inc. , No. 01-00-00054-CV, 2000 WL 1538606, at * 1 (Tex. App.— Houston [1st Dist.] Oct. 19, 2000, no pet); Fall Cty. v. Perkins & Cullum , 798 S.W.2d 868, 872 (Tex. App.—Fort Worth 1990, no writ); and Dickey v. McComb Dev. Co. , 115 S.W.3d 42, 47 (Tex. App.—San Antonio 2003, no pet) as, “ see also ” support for its waiver argument. We are not persuaded by tho se cases.
7 Specifically, Riverdale raised the issue in its Motion to Modi fy the Judgment and for Judgment Notwithstanding the Verdict.–22– B. Second Issue: Did the trial court err by denying Dixie’s co nversion claim? No, because Dixie’s conversion claim rests on Dixie’s lost barg ained for consideration in the discounted payment contract. 1. Background Dixie’s second issue, as presented in its opening brief, argues that the trial court erroneously rejected Dixie’ s conversion claim because: (i ) Dixie I did not limit Dixie to only non-tort remedies and (ii) the evidence supports a recovery for converting money. Riverdale’s brief does not contest whether the evidence support s the jury’s conversion finding. Instead, it responded that (i) the economi c loss rule prevents Dixie from recovering under its conversion claim and (ii) an ac tion will not lie for converting money represente d as a general debt. Dixie’s reply asserts that (i) the economic loss rule does not apply to intentional torts; (ii) Riverdale waived this argument because it was not pled or objected to at the charge conference; and (iii) the one satisfa ction rule does not apply. The jury found that by causing Dixie’s check to be voided Resid ences LP converted Dixie’s property:–23– We assume without deciding that (i) the charge correctly submit ted Dixie’s conversion claim; (ii) the evidence supports the jury’s answer to that question; and (iii) Dixie could recover on its conversion claim unless the ec onomic loss applies. Thus, the dispositive question is not whether the evidence supp orts the jury’s answer; it is whether the economic loss rule limits Dixie’s rec overy to its lost bargained for contract consideration.
2. The Mandate We begin with our mandate’s sc ope. When an appellate court rev erses a lower court’s judgment and remands to the trial court, the trial cour t is authorized to take the actions necessary to give effect to the appellate court’s o pinion and mandate.
Goldman v. Olmstead , No. 05-15-01470, 2016 WL 7163876, at *2 (Tex. App.—–24– Dallas 2016, no pet.) (mem. op.). When a case is remanded with specific instructions, the trial court is limited to complying with thos e instructions. Id.
In Dixie I , we said: The jury found in favor of Dixie on multiple, alternative theor ies of recovery. Riverdale has asked in its prayer for remand “for Di xie to elect a non-tort remedy.” Accord ingly, we remand the case to t he trial court for Dixie to make a new election of remedies. Dixie I , 2017 WL 2889276, at *8. Our manda te said, “we remand to the trial court for further proceedings cons istent with t his opinion.” Reading the opinion and mandate together, as we must, see Cessna Aircraft Co. v. Aircraft Network, LLC , 345 S.W.3d 139, 144 (Tex. App.—Dallas 2011, no pet.), referring to Riverdale’s r equested relief did not limit Dixie to electing a nontort remedy. Instead, Dixie was free to elect any of its remai ning remedies. We thus consider Dixie’s other conversion arguments.
3. Preservation Dixie cites Equistar Chems. L.P. v. Dresser-Rand Co ., 240 S.W.3d 864, 868 (Tex. 2007) to argue that Riverda le waived the economic loss ru le by not pleading it as an affirmative defense or objecting to the charge. We di sagree because that rule is not an affirmative defense and Riverdale (twice) opposed Dix ie’s effort to obtain a conversion judgment because of the economic loss rule. First, the economic loss rule i s not an affirmative defense. Id. ; see also 64
B AYLOR L. R EV

. 204, 208 (2012) (the economic loss rule is not an affirmative–25– defense that must be pled but instead refers to what is to be c onsidered as the proper measure of damages in a ca se to which it applies). 8 Second, Riverdale opposed Dixie’s post-remand motion for judgme nt based on conversion by arguing that the economic loss rule prevented that tort recovery. 9 Accordingly, Riverdale preserved its argument that the economic loss rule precludes a Dixie judgment based on conversion (and its attenda nt potential ability to also recover the punitive d amages that the jury found). See T EX

. R. A PP

. P. 33.1.
4. The Economic Loss Rule According to Riverdale, Dixie’s “injury is only the economic lo ss to the subject of a contract.” Thus, Riverdale urges that Dixie canno t recover for conversion because its claim sounds in contract, not tort. We agree with Riverdale. “The economic loss rule generally precludes recovery in tort fo r economic losses resulting from a party’s failure to perform under a cont ract when the harm consists only of the economic lo ss of a contractual expectancy. ” Chapman Custom Homes, Inc. v. Dall. Plumbing Co ., 445 S.W.3d 716, 718 (Tex. 2014); see also Southwestern Bell Tel. Co. v. DeLanney , 809 S.W.2d 493, 495 (Tex. 1991) (same); Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex. 1986) (same).

8 Moreover, unlike this case, Equistar involved the economic loss rule in a products liability contex t. Although the case involved torts and warranty, the jury was onl y asked to find one damages amount for both tort and contract. The Texas Supreme Court concluded that Dresser’s failure to object to the improper submission resulted in waiver of its challenge concerning the p roper measure of damages. Id . at 868.

9 Riverdale also opposed Dixie’s pre-remand motion for judgment by arguing that the economic loss rule prevented Dixie’s ability t o recovery under any tort theor y.–26– However, that rule does not pre vent economic losses from being “recoverable under a variety of intentional tort theories absent a contractu al obligation.” Eagle Oil & Gas Co. v. Shale Exploration, LLC , 549 S.W.3d 256, 268 (Tex. App.— Houston [1st Dist.] 2018, pet. dism’d). Further, “[e]ven if th e matter in dispute is the subject of a contract, a party may elect a recovery in tort if the duty breached stands independent from th e contractual undertaking , and the alleged damages are not solely the result of a bargained-for contractual benefit.” Id . (citing Chapman , 445 S.W.3d at 718) (em phasis added). Dixie argues that intentional torts such as conversion are excl uded from the economic loss rule. Although the rule has been held inapplicab le in certain cases involving intentional torts, the emphasis is not on the tort al leged per se, but whether the duty breached is independent from the underlying contractua l undertaking and the harm suffered is not merely the lost contract economic bene fit. 10 See Chapman , 445 S.W.3d at 718; Stauffacher v. Coadum Capital Fund 1, LLC , 344 S.W.3d 584, 591 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (economi c loss rule applied to claims against joint venturer for contract and fiduciary dut y breaches because, although there was evidence of a fiduciary breach, there was no evidence of how the

10 The supreme court has listed several torts that the economic l oss rule does not bar, including negligent misrepresentation, legal or accounting malpractice, breach of f iduciary duty, fraud, fraudulent inducement, tortious interference with contract, nuisance, wrongful death c laims related to loss of support from the decedent, business disparagement, and some statutory causes of action. See Sharyland, 354 S.W.3d at 418– 19. The key to these exclusions is whether the defendant owes the plaintiff a duty independent from the contractual duty. See id.–27– investment fund was damaged “specifically by” the joint venture r’s fiduciary breach separate from his fail ure to comply with the joint-venture agre ement). For example, the rule does not apply if a person negligently pe rforms a contract duty in a way that injures property or persons inciden tal to the contract work being done. See Chapman , 445 S.W.3d at 718–719 (plumber hired to install a hot water heater negligently flooded the house); Montgomery Ward & Co. v.
Scharrenbeck , 204 S.W.2d 508, 510 (Tex.1947) (heater repair performed so negligently that defenda nt burned down the house). Similarly, the economic loss rule does not apply where the plai ntiff is injured by the defendant’s mal-conduct i ndependent of the defendant per forming a contract obligation. See Formosa Plastics Corp. USA v. Pr esidio Eng’rs & Contractors, Inc. , 960 S.W.2d 41, 46 (Tex. 1998) (fraud in the inducement). On the other hand, the rule bars tort or statutory recovery whe re the defendant negligently performed or failed to perform contract duty result ing in the plaintiff losing the benefit of the promised contract consideration. See Crawford v. Ace Sign,
Inc. , 917 S.W.2d 12. 13-14 (Tex. 1996) (DTPA inapplicable to claim that publisher omitted promised advertising); Southwestern Bell Telephone Co. v. DeLanney 809 S.W.2d 493, 495 (Tex. 1998) (negligent failure to publish promi sed advertising sounds only in contract); Jim Walters Homes, Inc. v. Reed , 617, 618 (Tex. 1986) (negligent poor home construction sounds only in contract).–28– Dixie cites Cass v. Stephens , 156 S.W.3d 38, 69 (Tex . App.—El Paso 2004, pet denied) as an example of where the economic loss rule did n ot apply to a conversion claim. But the Cass conversion, unlike the present case, was incidental to the agreed contact performance. 11 We are also unpersuaded by Dixie’s reliance

on MSMTBR, Inc. v. Mid-A tlantic Fin. Co., Inc. , No. 01-12-00501-CV, 2014 WL 3697736, at *4 (Tex. App.—Houston [1st Dist.] 2014, pet. denied ). We next consider whether the ru le applies to Dixie’s conversion claim.
5. Dixie’s Contract B reach Injury and Loss Our analysis of whether Dixie may recover for conversion distil ls to whether Dixie’s conversion claim sounds in contract or in tort. Courts consider two factors to d etermine whether a cause of act ion sounds in contract or tort: (i) the source of the duty giving rise to the injury and (ii) the nature of the injury itself. DeLanney , 809 S.W.2d at 495. Contractual duties are those that arise solely from the agreeme nt between the parties. Id. at 494. On the other hand, tort duties are “imposed by law—ap art from

11 This Cass excerpt illustrates the point: Frank and Michael's unlawful appropriation of the jointly-owned equipment, for the use and benefit of their solely ow ned wells, breached an obligation that exists independent of the JOAs. Just as the unauthorized removal by a third party con stitutes theft, the unauthorized appropriation of the jointly-owned equipment, here , constitutes conversion. The conduct breaches an obligation which exists outside the con tract, and had nothing to do with the JOAs. As a consequen ce, we conclude that Frank and Michael breached a duty imposed by law. 156 S.W.3d at 69.–29– and independent of promises made and therefore apart from the m anifested intention of the parties—to avoid injury to others.” Id. Here, the jury found that Riverdale converted Dixie’s property by voiding the check made payable to Dixie. But that check was the vehicle by which Riverdale was going to perform its contract duty to pay Dixie the promise d discounted sum. Thus, Dixie’s conversion claim amounts to Riverdale causing Dix ie to lose the payment Riverdale owed Dixie under the contract the jury found in response to Question 1. Stated differently, Dixie’s conversion claim rests on the fact that Riverdale’s conduct deprived Dixie from receiving its bargained for consideration in exchange for Dixie’s agreement to surrender its lien against Riverdale’s property. Thus, Dixie’s claim sounds in contract and Dixie cannot recover damages for conversion arising from the contract’s breach. 12 Accordingly, we resolve Dixie’ s second issue against it. C. Quantum Meruit Because Dixie is entitled to recover from Riverdale for breachi ng the Riverdale-Dixie contract, we need not consider Dixie’s quantum meruit argument.
See T EX

. R. A PP

. P. 47.1; see also In re Kellogg Brown & Root, Inc . 166 S.W.3d 732,

12 A party breaches its contract when it prevents the other party from receiving its promised contract benefits. See TLC Hospitality , LLC v. Pillar Income Asset Mgmt. . Inc ., 570 S.W.3d 749, 765 (Tex. App.— Tyler 2018, pet. denied) (contr act breach by making other party ’s performance impossible); Tacon Mech. Contractors, Inc. v. Grant Sheet Metal, Inc. , 899 S.W.2d 666, 670 (Tex. App.—Houston [14th Dist.] 1994, writ denied) (same); Marvin v. Rogers, 115 S.W. 863, 865–66 (Tex. App.—Dallas 1909, no writ); Sheldon v. Caples , 26 S.W. 330, 331 (Tex. App.—El Paso 1894, writ ref’d).–30– 740 (Tex. 2005) (party may genera lly not recover under quantum meruit when there is a valid contract).
D. One Satisfaction Rule In a footnote Riverdale argues that Dixie’s judgment against Na tions, which is to compensate Dixie for the unpaid for flooring, and the one satisfaction rule combine to negate Dixie’s right to recover from Riverdale at al l. Riverdale is correct that Dixie can recover economically only o nce for its injury, not getting paid for its flooring, but we reject Riverd ale’s premise that the one satisfaction rule precludes a Dixie judgment against Riverd ale. Instead, the rule means that Riverdale is entitled to credits against that judgme nt for any payments Dixie receives regarding its judgment against Nations that comp ensate Dixie for its unpaid for flooring. See Sky View at Las Palmas, LLC v. Mendez , 555 S.W.3d 101, 106-09, 111-13 (Tex. 2018) (allowing settlement credits in a co ntract-based case involving numerous parties and numerous legal theories).
III . C ONCLUSION We deny Dixie’s motion for leave to file a post-argument letter brief as moot. We conclude that Dixie is entitled to recover for breach of con tract but may not recover attorney’s fees from Riverdale. We resolve Dixie’s remaining issues against it. Accordingly, we (i) reverse the trial court’s take-nothing judg ment against Dixie; (ii) render judgment for Dixie and against Residences LP and Residences–31– LLC, jointly and severally, for $114,318.40 plus pre and post j udgment interest as allowed by law; and (iii) remand the case to the trial court fo r further proceedings consistent with this opinion.

181479F.P05 /Bill Whitehill/ BILL WHITEHILL JUSTICE–32– 

# S

Court of Appeals Fifth District of Texas at Dallas JUDGMENT

DIXIE CARPET I NSTALLATIONS, INC., Appellant

No. 05-18-01479-CV V. RESIDENCES AT RIVERDALE, LP AND RESIDENCES AT RIVERDALE GP, LLC, Appellees On Appeal from the 199th Judicial District Court, Collin County, Texas Trial Court Cause No. 199-04903- 2012. Opinion delivered by Justice Whitehill. Justices Bridges and Nowell participating.

In accordance with this Court’s opinion of this date, the tria l court’s takenothing judgment against DIXIE CARPET INSTALATIONS, INC . is REVERSED, judgment is RENDERED for DIXIE CARPET INSTALATIONS, INC . for $114,318.40 plus pre a nd post judgment interest as allowed by law against RESIDENCE AT RIV ERDALE LP AND RESIDENCES AT RIVERDALE, GP, LLC, jointly and severally, and this cause is REMANDED to the trial court for furthe r proceedings consistent with thi s opinion. It is ORDERED that appellant DIXIE CARP ET INSTALLATIONS, INC. recover its costs of this appeal from appellee RESIDENCES AT RI VERDALE, LP AND RESIDENCES AT RIVERDALE GP, LLC.
Judgment entered April 1, 2020.