Court Opinion

ID: 2952588
Source: CourtListenerOpinion
Date Created: 2015-09-16 22:07:11.745381+00
Date Added: 2024-06-11T11:41:49.056532
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                       NO. 03-08-00175-CV

                                  C. A. Walker, Inc., Appellant

                                                  v.

                              Total Roofing Services, Inc., Appellee

 FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 277TH JUDICIAL DISTRICT
        NO. 05-010-C277, HONORABLE KEN ANDERSON, JUDGE PRESIDING

                             MEMORANDUM OPINION

               Appellee Total Roofing Services, Inc. (“TRS”) filed suit against appellant

C. A. Walker, Inc. (“Walker”) for breach of a construction contract. After a bench trial, the

trial court awarded TRS $5,957.75 in damages, plus attorney’s fees. Walker appeals, arguing that

the trial court erred in failing to find that TRS committed a prior material breach of the contract and

in calculating the award of damages in favor of TRS. We will modify the judgment of the trial court

and affirm as modified.

                      FACTUAL AND PROCEDURAL BACKGROUND

               The following facts are undisputed. TRS, a roofing subcontractor, submitted a bid

to perform work related to the construction of a Randall’s grocery store in Round Rock, Texas.

Walker, the general contractor, accepted TRS’s bid and negotiated a subcontract under which Walker
agreed to pay TRS $289,975.50, subject to any additions and modifications. The contract defined

the scope of the work as follows:

       007410 COMPOSITE METAL PANELS[1], 07415 METAL ROOF PANELS, 07510
       BUILT-UP ASPHALT ROOFING, 07511 ROOFING TESTING & INSPECTION
       SERVICE FOR BUILT-UP ASPHALT ROOFING, 07620 SHEET METAL
       FLASHING AND TRIM AND 7720 ROOF ACCESSORIES including the following
       items: furnish and install composite metal panels, metal roof panels, built-up asphalt
       roofing, roofing testing & inspection service for built-up asphalt roofing, sheet metal
       flashing and trim and roof accessories as shown per the above referenced plans and
       specifications[,] engineering and layout for the roofing & metals scope of work.

The contract further provided that any changes must be made by properly executed written change

order and that “[a]ny and all changes performed prior to, or without receipt of, a properly authorized

written change order will not be paid for by C. A. Walker Construction or by the Owner.”

               TRS began work on the project in January 2004. The following month, a dispute

arose concerning whether TRS was responsible for buying and installing the composite metal panels

to be used on the store’s facade, which were not part of the roofing system. Walker asserted that the

contract unambiguously required TRS to purchase and install all composite metal panels identified

in the architect’s drawings and specifications, including the panels on the building facade, while TRS

took the position that it was responsible only for the panels to be installed as part of the store’s

roofing system.

               In an attempt “to resolve [their] differences regarding the composite panel portion of

[the parties’] contract,” TRS submitted a letter proposal to Walker outlining a compromise: TRS

       1
         Specification number 7410 states that the applications of composite metal panels includes
both exterior and interior composite metal panels.

                                                  2
would purchase only the panels that it believed were covered by its bid (i.e., the roof panels), Walker

would purchase the remaining panels (i.e., the panels for the building facade), and TRS would install

all of the panels. Walker did not respond in writing to TRS’s letter; subsequently, however, the

parties orally agreed that Walker would provide the remaining composite metal panels for the facade

and TRS would install those panels and complete the remaining punch list items for no further

consideration.2 Walker spent $43,765 to purchase the composite metal panels for the building

facade, which TRS then installed.3

               After the installation of all of the composite metal panels was complete, TRS filed

suit against Walker to collect on “unpaid applications for payment and retainage due and owing . . .

for labor, materials, and equipment.” TRS asserted that it was owed $50,966.13 based on Walker’s

breach of the original roofing subcontract or, in the alternative, under quantum meruit. In addition,

TRS sought “recovery in quantum meruit, sworn account and for breach of contract in the sum of

$57,021.59 for the labor provided to Defendants for the non-roof related composite metal panels

installed by Plaintiff . . . , which labor was outside the scope of the contract.” TRS also sought

pre-and post-judgment interest and attorney’s fees.

       2
        The terms of the parties’ oral agreement are recited in Walker’s Third Amended Answer
and Counterclaims, its live pleading in this case, which comports with the description of the oral
agreement in TRS’s statement of facts in its appellee’s brief.
       3
         For reasons that are disputed, the facade was not completed entirely with composite metal
panels, as contemplated by the original plans, and was instead completed with other materials,
including stone and stucco. Michael Kravetz of Heights Venture Architects testified that this was
a design-driven decision made by the owner in order to meet the deadline for the store’s
grand opening.

                                                  3
                Walker counterclaimed for breach of contract and filed a verified denial as to TRS’s

suit on a sworn account. According to Walker’s pleadings, TRS breached the original contract by

failing to provide all of the composite metal panels required on the project and breached the

subsequent oral contract by failing to complete the punch list items and repairs and by demanding

payment for services that it had previously agreed to provide at no further cost to Walker.

                The case was tried to the court, with the parties stipulating to certain facts at

trial, including:

        Walker made total payments to TRS of $256,383.84.

        Walker asserts TRS’s gross subcontract price, with approved change orders,
        is $295,130.46.

        TRS asserts its gross contract price, with change orders, is $307,349.97.

        The central issue in this case is whether the Parties’ contract required TRS to
        purchase and install these disputed CMPs [composite metal panels].

                At trial, TRS put on evidence that it understood its initial bid to cover only the work

related to the roof installation, not to include the composite metal panels on the building’s facade,

and that this understanding was reflected in the parties’ contract.4 Walker objected to this testimony

        4
          This evidence was introduced primarily through the testimony of Pete Pichini, a part-owner
and officer of TRS, who testified that, as a roofer, he limited his bid to the roofing work and that,
reading the project specifications in conjunction with the architect’s drawings, it was clear that the
installation of any composite metal panels beyond those required for the roof would be outside of
the scope of his bid and subcontract. Documentary and testimonial evidence established that
composite metal panels were called for under the “walls and parapets” section of the architectural
plans for the building, in addition to the roofing system. Pichini further testified that the portion of
TRS’s bid relating to the composite metal panels was only $22,000—far less than the bids Walker
received from other subcontractors to buy and install all exterior composite metal panels to be used

                                                   4
on the basis that the contract was unambiguous in requiring TRS to purchase and install all of the

composite metal panels for the project; however, Walker also put on extrinsic evidence regarding

the meaning of the contract specifications and whether the composite metal panels for the exterior

walls of the building were included in TRS’s scope of work.5

                The trial court also heard evidence regarding the amounts outstanding to TRS based

on its unpaid payment applications. According to Pete Pichini of TRS, it was owed a total of

$49,722.75, which included its unpaid payment applications and change orders (totaling $42,576.34),

and two additional unpaid invoices (in the amounts of $2,628.24 and $4,518.17).                     On

cross-examination, Walker elicited testimony from Pichini that the latter two invoices did not have

written, approved change orders associated with them, nor did one of TRS’s payment applications.

                Walker also put on evidence that it incurred additional expenses—including $8,000

worth of stucco work by Connelly Masonry and $6,850 for additional remedial work by New Dawn

Enterprises—as a result of TRS’s failure to purchase and install all of the composite metal panels

for the building facade and to complete the punch list items for which it was responsible.

                At the conclusion of the trial, the court found in favor of TRS, awarding it actual

damages in the amount of $5,957.75, plus pre- and post-judgment interest and attorney’s fees, and

on the store, i.e., for both the roof and facade.
        5
           Thomas Walker, Walker’s vice president and director of operations, testified that, based
on his reading of the contract, the panels at issue were included within TRS’s scope of work and that
at no time during his negotiations with Pichini did he indicate that there would be any limitation on
the scope of his composite metal panel work. In addition, Michael Kravetz, a representative from
the architecture firm that designed and drew up the construction documents for the Randall’s project,
testified that, in his view, specification 07410 “covers all composite metal panels on the project . . .
regardless of location.”

                                                    5
ordering that Walker take nothing on its counterclaims. The trial court issued the following findings

of fact and conclusions of law relevant to this appeal:

       With change orders and modifications, the Contract total ultimately amounted to
       $306,106.59, payable by CA Walker to Total Roofing.

       CA Walker purchased composite metal panels at a cost of $43,765.00.

       Taking into consideration the cost of the composite metal panels, CA Walker owes
       Total Roofing $5,957.75 pursuant to the terms of the Contract.

       CA Walker failed to prove that Total Roofing owes CA Walker any amount of
       money pursuant to the terms of the Contract.

       CA Walker failed to prove that CA Walker had any right, contractually or otherwise,
       to withhold the $49,722.75 payment to Total Roofing.

       CA Walker breached the Contract by failing to pay Total Roofing $49,722.75, and
       Total Roofing prevails on its breach of contract claim.

       Because CA Walker purchased composite metal panels at a cost of $43,765.00, it is
       entitled to an offset for that amount.

       Taking into account CA Walker’s offset of $43,765.00, Total Roofing is entitled to
       judgment against CA Walker for $5,957.75 in principal.

       Total Roofing did not breach the Contract, and CA Walker does not prevail on its
       breach of contract counterclaim or any other claim CA Walker asserted against Total
       Roofing in this action.

       Walker did not produce sufficient credible evidence to sustain its burden of proof that
       would entitle it to a credit for its payment to Connolly [sic] Masonry.

       Walker did not produce sufficient credible evidence to sustain its burden of proof that
       would entitle it to a credit for its payment to New Dawn Enterprises.

               Walker now appeals, arguing that (1) TRS committed a prior material breach of the

contract when it declared the purchase and installation of composite metal panels for the building

                                                 6
facade to be outside of its contractual scope of work, thereby relieving Walker of liability as a matter

of law, (2) the trial court erred in its calculation and award of damages to TRS, and (3) the trial court

should have awarded Walker, not TRS, attorney’s fees as the prevailing party.

                                    STANDARDS OF REVIEW

                Walker’s first issue challenges the trial court’s conclusion of law that Walker, not

TRS, breached the parties’ contract and the legal and factual sufficiency of its fact findings in

support of the judgment. We review the trial court’s legal conclusions de novo. BMC Software

Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Appellate courts review the factual

and legal sufficiency of the trial court’s findings of fact according to the same standards as jury

findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In our review of the legal

sufficiency of the evidence supporting the judgment, we must determine whether the evidence at trial

would enable reasonable and fair-minded people to reach the verdict under review. City of Keller

v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We review the evidence in the light most favorable

to the verdict, crediting favorable evidence if a reasonable fact finder could and disregarding contrary

evidence unless a reasonable fact finder could not. Id. A legal-sufficiency issue will be sustained

if the record reveals one of the following: (1) the complete absence of a vital fact, (2) the court is

barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital

fact, (3) the evidence offered to prove a vital fact is no more than a scintilla, or (4) the evidence

established conclusively the opposite of the vital fact. Id. Under our factual-sufficiency standard

of review, we weigh all the evidence in the record and may overturn a finding only if it is so against

                                                   7
the great weight and preponderance of the evidence as to be clearly wrong and manifestly unjust.

See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).

                                           DISCUSSION

                By its first issue, Walker urges that the trial court erred in its interpretation of the

parties’ unambiguous contract by failing to find that TRS committed a prior material breach when

it refused to purchase and install the composite metal panels to be used on the building facade.

According to Walker, the “great weight and preponderance of the evidence demonstrates that TRS’s

prior material breach of the parties’ Subcontract excused Walker’s performance.” TRS responds that

the contract is unambiguous in its favor, requiring TRS to buy and install only those composite metal

panels related to the roofing system. TRS further argues that, even if the contract were ambiguous

on this point, Walker waived any claim that TRS breached the original subcontract when it

subsequently agreed to resolve the dispute pursuant to the oral agreement it reached with TRS, which

amounted to “a novation of the original contract.”

                As it indicated at the close of the evidence, the trial court’s determination that TRS

should prevail on its breach-of-contract claim was predicated on the court’s ruling that the original

contract was ambiguous, thereby creating a fact issue as to the parties’ intent, and on its resolution

of that fact issue in TRS’s favor, despite the absence of any express findings or conclusions that the

contract was ambiguous. Whether a contract is ambiguous is a question of law, subject to de novo

review. Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 705 (Tex. 2008). When construing a

written contract, the court’s primary duty is to determine the intent of the parties as expressed in the

instrument, see J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003), examining all

                                                   8
parts of the contract in light of the circumstances surrounding its formation, Columbia Gas

Transmission Corp. v. New Ulm Gas, 940 S.W.2d 587, 589 (Tex. 1996). A contract is not

ambiguous if it can be given a definite or certain meaning as a matter of law. Columbia Gas

Transmission Corp., 940 S.W.2d at 589. “On the other hand, if the contract is subject to two or more

reasonable interpretations after applying the pertinent rules of construction, the contract is

ambiguous, which creates a fact issue on the parties’ intent.” Id.

               It is well settled that a court may conclude that a contract is ambiguous even

in the absence of such a pleading by either party. Progressive County Mut. Ins. Co. v. Kelley,

284 S.W.3d 805, 808 (Tex. 2009); J.M. Davidson, Inc., 128 S.W.3d at 231; Sage St. Assocs.

v. Northdale Constr. Co., 863 S.W.2d 438, 445 (Tex. 1993); Coker v. Coker, 650 S.W.2d 391, 393

(Tex. 1983). To determine if a contract is ambiguous, we may examine extrinsic evidence

concerning the circumstances surrounding the execution of the contract as they bear on the meaning

of the terms the parties used. See National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517,

521 (Tex. 1995); Sun Oil Co. v. Madeley, 626 S.W.2d 726, 731 (Tex. 1981); City of Pinehurst

v. Spooner Addition Water Co., 432 S.W.2d 515, 518-19 (Tex. 1968). The court may not consider

extrinsic evidence, however, in order to contradict or vary the meaning of the explicit language of

the written contract. National Union Fire Ins., 907 S.W.2d at 521. We examine that evidence only

to assist us in understanding the object and purpose of the contractual language. Id.

               Applying these rules to the present case, we hold that the trial court did not err in

ruling that the contract at issue is ambiguous as to the scope of the subcontract work to be performed

by TRS. Examining that contract as a whole and the circumstances present when Walker and TRS

                                                  9
entered into the agreement, we find two reasonable readings of the scope of work. On one hand, the

contract states that it is for “Roofing and Metal,” and that the work to be performed “will include,

but is not limited to” providing material and labor for “composite metal panels” as well as “metal

roof panels.” This language could reasonably mean that the scope of the project would involve the

purchase and installation of metal panels beyond what was required for the construction of the

roof—i.e., composite metal panels for other parts of the building, such as the walls and parapets.

On the other hand, as TRS argued, the reference in the contract to the specification “007410

COMPOSITE METAL PANELS” could be read much more broadly, referring not only to metal

panels for the roof and exterior walls and parapets, but also to any panels that might be used for the

interior of the building, in accordance with the description contained in specification 07410. Thus,

it would be reasonable to infer that the many references to “roofing” circumscribed the scope of the

metal work, confining it only to the composite metal panels related to or necessary to construct the

roof, as opposed to all metal panels for the entire building.

               Because the contract’s scope-of-work provision cannot be given a certain or definite

legal meaning, we agree with the trial court that it is ambiguous; therefore, the trial court properly

considered extrinsic evidence of the parties’ intent. The extrinsic evidence admitted at trial showed

that TRS, a roofing company, intended its bid to cover only those composite metal panels related to

the roofing system—those panels “that tied into [the] roofing system as defined on the drawings,”

as Pichini testified—and that the break-out of its bid dedicated only a small portion to materials

costs, indicating that it did not intend to supply the composite metal panels to be used on the

building’s exterior walls and parapets. Accordingly, we conclude that the trial court did not err in

                                                 10
impliedly finding as a matter of fact that the parties intended that their contract would not include

composite metal panels unrelated to the roof’s construction within its scope, and therefore did not

err in concluding that TRS did not breach the contract. We overrule Walker’s first issue.6

               In its second issue, Walker complains that the trial court erred in awarding TRS

damages “where the unambiguous language of the subcontract required TRS to purchase and install

all composite metal panels identified within the architect’s specifications.” We have already

addressed this argument in our resolution of Walker’s first issue, having determined that the contract

is ambiguous and cannot be construed as a matter of law to require that TRS purchase and install the

composite metal panels for the building facade.

               Within its second issue, Walker further argues that the trial court erred in calculating

the total contract price to be $306,106.59, asserting that this amount erroneously includes change

orders that were not approved by Walker in writing pursuant to the terms of their contract governing

modifications. According to Walker, the total amount of the subcontract, as modified by the

approved change orders, was only $295,130.46, meaning that the trial court “inflated” the final

contract price by $10,976.13.

               TRS responds that, of the $10,976.13 in dispute, $7,146.41 represents work that TRS

performed under the contract to remedy damage done to the roofing system by other subcontractors

and additional labor costs owing to the improper location of work performed by another

subcontractor. In support of its recovery, TRS points to two invoices, which Pichini testified were

       6
         Accordingly, we need not reach Walker’s third issue regarding attorney’s fees, which is
predicated on this Court’s reversing the trial court’s judgment that Walker breached the contract and
rendering judgment that Walker, not TRS, is the prevailing party.

                                                  11
not change orders and therefore did not require Walker’s prior, written approval.7 In the alternative,

TRS suggests that, “[e]ven if the invoices represented work done outside the scope of the

subcontract, the trial court’s inclusion of them in the damages award is supportable under the

theory of quantum meruit, which TRS pleaded.” Finally, TRS argues that the remainder of the

disputed amount is supported by evidence in the form of a pay application that it submitted to

Walker stating that the value of the work that TRS had completed under the parties’ contract as of

November 18, 2004, “including approved change orders, totaled $298,960.18.”

               In its reply brief, Walker urges that the pay application on which TRS relies includes

a proposed change order for $2,519.98 that Walker states was never approved and was in fact

rejected on the basis that the work it related to fell within TRS’s scope of work under the contract.

We agree with Walker that TRS presented no evidence that this $2,519.98 change order was

approved in writing pursuant to the terms of the parties’ contract. Therefore, the trial court erred in

including that amount in the total contract price. As to the remaining disputed amounts, however,

TRS presented more than a scintilla of evidence that they should be recovered in payment for work

that it performed under the contract and that Walker was responsible for any remedial work and labor

costs that were necessary for TRS to complete the work within the scope of its contract. See City

of Keller, 168 S.W.3d at 827.

               Finally, Walker challenges the sufficiency of the evidence supporting the trial court’s

findings that Walker failed to produce sufficient credible evidence entitling it to credits for its

       7
         Invoice number 244885-D for $4,518.17 states that it is for the installation of “new T-tops
and lead jacks that were damaged by others”; invoice number 244883-B for $2,628.24 is for
“additional labor due to curbs being set in wrong location and having to be reset in proper location.”

                                                  12
payments to Connelly Masonry and New Dawn Enterprises or supporting its claim for damages

resulting from TRS’s failure to supply a warranty. With respect to its request for an offset of $8,000

to Connelly Masonry, Walker asserts that it presented undisputed documentary evidence of damages

arising from TRS’s failure to complete the scope of its work, which forced Walker to substitute stone

and stucco for the composite metal panels that Walker should have initially purchased and installed

near the entrance of the store. Having already rejected Walker’s argument that the contract was

unambiguous in requiring TRS to purchase and install these disputed composite metal panels, we

likewise reject its claim for damages based on TRS’s purported breach.

                Regarding the payments Walker made to New Dawn to “repair roof leaks and install

missing flashing and other punch list items that were indisputably within TRS’s roofing scope of

work,” the trial court heard conflicting testimony that it apparently resolved in TRS’s favor. The

trial court, as fact-finder, resolves conflicts in the evidence and determines the weight and credibility

to give to witness testimony. Young Chevrolet, Inc. v. Texas Motor Vehicle Bd., 974 S.W.2d 906,

914 (Tex. App.—Austin 1998, pet. denied); see City of Keller, 168 S.W.3d at 819. Accordingly, the

trial court was entitled to credit Pichini’s testimony that TRS completed all punch list items for

which it was responsible, and that any repairs or punch list items that it did not perform resulted from

Walker’s preventing TRS from gaining access to the store. We will not disturb the court’s resolution

of evidentiary conflicts that turn on credibility determinations or the weight of the evidence. See City

of Keller, 168 S.W.3d at 819-20. Moreover, Walker produced no evidence that Walker tried to make

any claim on the warranty, that TRS refused to perform warranty work, or that established the value

                                                   13
of the warranty.8 For the foregoing reasons, we sustain Walker’s second issue in part, holding that

the trial court erred in including the $2,519.98 change order in the final contract price. We overrule

Walker’s second issue in all other respects.

       8
          The only testimony regarding the value of the warranty came during Walker’s
cross-examination of Pichini:

       Q.      There is certainly a value associated with a warranty. Is there not?

       A.      Yes, sir.

       ....

       Q.      Is it a flat fee?

       A.      Yes, sir.

       ....

       Q.      What’s the value of the warranty?

       A.      It depends on the job.

       Q.      What’s the value of the warranty on this job?

       A.      I don’t remember.

       Q.      Thousands of dollars at least. Agreed?

       A.      No, sir.

       Q.      It’s only hundreds of dollars?

       A.      Yes, sir.

                                                 14
                                         CONCLUSION

               We modify the judgment to delete the $2,519.98 award for the change order that was

erroneously included in the trial court’s determination of the final contract price, thereby reducing

the actual damage award in favor of TRS to $3,437.77, plus pre- and post-judgment interest at the

rates determined by the trial court. As modified, we affirm the judgment of the trial court.

                                              J. Woodfin Jones, Chief Justice

Before Chief Justice Jones, Justices Puryear and Pemberton

Modified and, as Modified, Affirmed

Filed: April 13, 2010

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