Opinion ID: 6103948
Heading Depth: 1
Heading Rank: 4

Heading: Direct Damages

Text: IP also appeals the award of direct damages, which the court of appeals affirmed. The jury awarded $2.4 million in direct damages, which reflect the difference between what IP paid and the amount SIS claimed IP owed. The court of appeals reviewed all the evidence and determined that it could not say there was legally insufficient evidence for the full $2.4 million award. 628 S.W.3d at 576–77. IP attacks two 21 discrete portions of the direct damages award, which are reflected in two invoices totaling around $1.2 million. Invoice #1200-6087 shows $622,560.61 in charges to IP for (1) overhead, (2) tax penalties, and (3) lost revenue due to non-payment. IP contends these charges are prohibited by the contract and are therefore unrecoverable as a matter of law. See Wade & Sons, Inc. v. Am. Standard, Inc., 127 S.W.3d 814, 824 (Tex. App.—San Antonio 2003, pet. denied). We agree. First, the contract prohibited SIS from billing IP for the “[w]ages of any employee in [SIS’s] home office or any employee not directly employed on th[is] Project,” “[i]nterest on capital employed either in plant or in expenditures on the Project,” or “[o]verhead or general expenses of any kind.” The invoice charged for back-office staffing costs as well as time that management spent meeting with IP about the project, not for labor on the slaker project itself. These are plainly “overhead or general expenses of any kind,” so the contract forbids SIS from charging IP for those costs. Second, the contract made SIS responsible for “pay[ing] . . . any tax or contribution required by any applicable Federal, State or local laws.” As a result, the tax penalties reflected on the invoice were not chargeable to IP. Third, the invoice’s charge for “lost revenue . . . due to the loss of work from non-payment and suit” would be a matter of consequential damages, not direct payment under the contract. None of the charges reflected in Invoice #1200-6087 is allowed by the contract. SIS has offered no substantive defense of these charges beyond the assertion that the jury could consider all the invoices and 22 arrive at this damages award. And the court of appeals never addressed whether the contract expressly barred the items in Invoice #1200-6087, despite IP’s arguments to that effect. We conclude that the parties’ agreement precludes these charges, and it is undisputed that the direct damages award includes the full amount of this invoice. The direct damages must be reduced by the amount of the invoice, $622,560.61. Invoice #1200-6088 sought $647,309.93 to compensate SIS for the “cost of management and field labor,” “materials,” and “equipment . . . not previously billed to [IP].” The contract makes these expenses chargeable to IP. Moreover, a separate contract between the parties allows for the charges listed, and the court of appeals correctly determined that the jury was allowed to consider that contract as well. 628 S.W.3d at 576. IP argues that because the parties had agreed to negotiate regarding what portion of the costs IP would pay, IP cannot be liable for the full amount of the invoice. But the conclusion does not follow from the premise. The parties did agree to negotiate if disputes arose, but that does not render ephemeral IP’s promise to pay amounts it owed. The agreement to negotiate did not preclude the jury from finding that IP owed the full amount of the invoice. We conclude that sufficient evidence supported the jury’s conclusion that IP owed SIS the amounts reflected in this invoice. City of Keller, 168 S.W.3d at 810. When a lump-sum damages award contains both compensable and non-compensable damages, we have remanded the entire award for retrial based only on the compensable portion. County of Bexar v. Santikos, 144 S.W.3d 455, 464 (Tex. 2004). Here, however, we have 23 concluded as a matter of law that IP did not breach the parties’ contract by failing to pay Invoice #1200-6087, and it is undisputed that the jury awarded SIS damages for the full amount of that invoice— $622,560.61—as part of its award of direct damages for contract breaches. Because SIS cannot legally recover these damages, which are cleanly excisable from the total award, we render judgment reducing the award of direct damages by this amount. See TEX. R. APP. P. 60.2(c) (permitting the Supreme Court to render the judgment that a lower court should have rendered); Barker v. Eckman, 213 S.W.3d 306, 310 (Tex. 2006) (affirming reduction in damages award for contract breaches where recovery for some breaches was legally barred by limitations and amount of damages awarded for each breach was undisputed).