Court Opinion

ID: 2929414
Source: CourtListenerOpinion
Date Created: 2015-09-14 23:26:23.559094+00
Date Added: 2024-06-11T15:22:47.359398
License: Public Domain

Affirmed and Opinion filed _____________, 2002

Affirmed and Opinion
filed March 6, 2003.                                                      
 
 
 
 
 
 
 
 
 
 
In The
 
Fourteenth Court of Appeals
____________
 
NO.  14-02-00418-CV
____________
 
PARK
ENVIRONMENTAL EQUIPMENT, LTD., Appellant
 
V.
 
TEXAS CAPITAL FUNDING, INC., Appellee
 

 

On Appeal from the
County Civil Court at Law No. 2
Harris County,
Texas
Trial Court Cause
No.  747,381

 
 

O P I N I
O N
In the course of a real estate
project in Harris County, an owner hired a general
contractor who hired a subcontractor (Gulf Environmental, Inc.) who
bought materials from appellant Park Environmental Equipment, Ltd.  Before completion, Gulf sold its accounts
receivable on the project to appellee, Texas Capital
Funding, Inc., and gave notice to the general contractor of the assignment.  Accordingly, when the owner paid the general
contractor, the general contractor paid Texas Capital; nobody paid Park.
Park
initially sued the president of Gulf and another company, but nonsuited when they could not be found for service.  Park then sued Texas Capital, claiming the
funds it got from the general contractor were trust funds for material-suppliers
like Park.  After a short trial on
stipulated facts and exhibits, the trial court disagreed, and granted a
take-nothing judgment for Texas Capital.
            Park presents ten[1]
points of error, all of which turn on a single legal question: does the Texas
Construction Trust Fund Act apply to the funds received by Texas Capital?  See Tex. 
Prop.  Code §§
162.001–.033.  Because we believe it does
not, we affirm.
            The Act provides
that construction payments to contractors or their agents must be held in trust
for those who furnish labor or material on the project:
 
Construction payments are trust funds under this
chapter if the payments are made to a contractor or subcontractor or to an
officer, director, or agent of a contractor or subcontractor, under a
construction contract for the improvement of specific real property in this
state.
.       .       .
A
contractor, subcontractor, or owner or an officer, director, or agent of a
contractor, subcontractor, or owner, who receives trust funds or who has
control or direction of trust funds, is a trustee of the trust funds.
.      
.       .
An
artisan, laborer, mechanic, contractor, subcontractor, or materialman
who labors or who furnishes labor or material for the construction or repair of
an improvement on specific real property in this state is a beneficiary of any
trust funds paid or received in connection with the improvement.
 
Id., §§ 162.001(a),
162.002–.003.  The Act provides civil and
criminal penalties for those who misappropriate trust funds by not paying for
labor or materials on the project.  See
id., § 162.032.  
The parties agree Park is one of the intended beneficiaries of
the statute.  They also agree Gulf
misappropriated trust funds, either when it sold the accounts receivable to
Texas Capital or when it paid Park nothing from the proceeds.  
But
they disagree whether the statute governs the funds Texas Capital received.  Park argues Texas Capital stepped into Gulf’s trustee shoes when it
bought Gulf’s receivables.  Texas
Capital argues it did not, as it is neither one of the entities (“contractor, subcontractor, or owner”) nor one of the agents
(“officer,
director, or agent”) listed in the statute.  It appears that no court has
addressed this question.
            Unless
a statute is ambiguous, we must follow the clear language of the statute,
adding nothing beyond what appears.  See Cameron v. Terrell & Garrett, Inc.,
618 S.W.2d 535, 540 (Tex. 1981) (stating that “every word excluded from a statute must. . . be
presumed to have been excluded for a purpose.”).  Language is read into a statute only when
necessary to give effect to the clear intent of the legislature. Office of the Attorney General of Texas v. Lee, 92 S.W.3d 526, 529 (Tex. 2002). 
We do not find believe that is necessary here. 
            If
a construction company uses project payments to buy cars for its officers
instead of paying subcontractors, there is no question that company has
misappropriated trust funds under the Act. 
But it does not follow that the car dealership who received the funds is
a party to the fiduciary breach.  There
was no evidence that Texas Capital gave less than full value for the
receivables it bought; indeed, the undisputed evidence was to the contrary—Gulf
collected some of the receivables it had purportedly sold to Texas
Capital.  While the legislature certainly
meant to protect materialmen like Park, there is no
indication it meant to do so at the expense (not to mention the risk of felony)
of a third party who provides necessary services for fair value. 
            Accordingly,
we agree the explicit words of the statute do not apply to the funds once they
were paid to Texas Capital.  The judgment
is affirmed.
 
                                                                                                                                                                                                                                    /s/        Scott Brister
                                                                                    Chief
Justice
 
Judgment rendered and Opinion filed March 6,
 2003.
Panel consists of Chief Justice Brister and
Justices Seymore and Edelman.     

[1] Nine of Park’s points
concern its trust-fund claim; the tenth concerns its claim for attorney’s fees,
which is contingent upon success on the first nine.