Court Opinion

ID: 6342886
Source: CourtListenerOpinion
Date Created: 2022-05-23 07:12:16.225944+00
Date Added: 2024-06-11T12:44:42.020947
License: Public Domain

Supreme Court of Texas
                           ══════════
                            No. 20-0079
                           ══════════

               James Construction Group, LLC and
                 Primoris Services Corporation,
                             Petitioners,

                                   v.

                  Westlake Chemical Corporation,
                             Respondent

   ═══════════════════════════════════════
               On Petition for Review from the
     Court of Appeals for the Fourteenth District of Texas
   ═══════════════════════════════════════

                      Argued October 26, 2021

       JUSTICE LEHRMANN delivered the opinion of the Court, in which
Justice Young joined in full, in which Chief Justice Hecht, Justice
Devine, Justice Busby, and Justice Bland joined as to Parts I and II(D),
and in which Justice Boyd, Justice Blacklock, and Justice Huddle joined
as to Parts I, II(A), II(B), II(C), and II(E).

      CHIEF JUSTICE HECHT filed an opinion dissenting in part, in which
Justice Devine, Justice Busby, and Justice Bland joined.

      JUSTICE BOYD filed an opinion dissenting in part, in which Justice
Blacklock and Justice Huddle joined.
      This case arises out of a construction contract dispute and
involves competing claims of breach stemming from the owner’s
replacement of a contractor for safety violations and the owner’s claimed
entitlement to excess costs incurred in having to change contractors.
The jury found that both the owner and the contractor breached the
contract in various respects and awarded damages and attorney’s fees
to both. The principal issues raised in this Court are: (1) whether the
owner’s entitlement to recover contract damages associated with a
termination of the contractor for default hinged on strict (or only
substantial) compliance with the written-notice conditions precedent to
such recovery; (2) if substantial compliance with the notice conditions
was sufficient, whether legally sufficient evidence supports the jury’s
finding of compliance despite the fact that at least two of the required
notices were not given in writing; and (3) whether a contractual
provision barring recovery of consequential damages merely waived
liability for such damages or constituted a covenant not to sue, such that
asserting a claim to recover consequential damages amounted to a
breach of the contract.
      The court of appeals held, among other things, that strict
compliance was not required, that legally sufficient evidence supported
the jury’s substantial-compliance findings, and that the contractual
provision governing consequential damages was a liability waiver, not a
covenant not to sue. Accordingly, the court of appeals affirmed the
portion of the trial court’s judgment awarding damages and attorney’s
fees to the owner but reversed as to the contractor.

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      We agree with the court of appeals that, as a general matter
under Texas law, a party’s substantial compliance with contractual
notice conditions is sufficient to satisfy those conditions. However, when
a contract mandates written notice, a writing is a necessary part of
complying with that condition, substantially or otherwise. A contrary
holding would allow parties to elide the bargain they freely made and
would open the door to a host of factual disputes about whether proper
contractual notice was given—the very kinds of disputes that the
writing requirement is intended to foreclose.
      Because the owner failed to provide the requisite written notices
to be entitled to recover expenses associated with a termination for
default, and because we disagree with the owner’s alternative argument
that it was independently entitled to recover those same expenses under
a different contractual provision, the judgment awarding them to the
owner cannot stand. However, the portion of the judgment awarding
the owner damages for the contractor’s breach of an indemnity provision
in the contract was properly upheld. Further, we agree with the court
of appeals that the contract did not contain a covenant not to sue for
consequential damages and thus hold that the portion of the judgment
awarding    damages    to   the   contractor    was   properly   reversed.
Accordingly, we affirm the court of appeals’ judgment in part, reverse it
in part, and remand the case to the trial court for further proceedings
consistent with this opinion.

                                    3
                              I. Background

           A. Facts and Pertinent Contractual Provisions

       In May 2012, Westlake Chemical Corporation, on behalf of its
subsidiary Westlake Vinyls Company, L.P., 1 hired James Construction
Group, LLC, as a general contractor to perform civil and mechanical
construction work on Westlake Vinyls’ chlor-alkali plant in Geismar,
Louisiana. Primoris Services Corporation, James’s parent company,
guaranteed the contract.
       The contract itself did not obligate Westlake Chemical to assign
James any work. Rather, under Section 1.2, if Westlake wanted James
to “perform certain services and/or provide equipment, materials,
supplies or other products,” and James “agree[d] to perform and/or
provide such Work,” then Westlake would issue a work order for James
to execute. 2 The contract confirmed that “[u]nless and until a Work
Order has been executed by the Parties,” Westlake was not obligated “to
retain [James] for any Work” and James was not obligated “to accept
any request for any Work.” Further, Westlake was entitled to “retain
other contractors to perform comparable work” as it saw fit. 3

       Unless necessary for clarity or context, we refer to Westlake Chemical
       1

and Westlake Vinyls collectively as Westlake.
       2James had five days after issuance to either return the executed work
order or advise Westlake as to any issues James had with the order and
negotiate in good faith with Westlake to resolve those issues.
       3Relatedly, James “acknowledge[d]” under Section 15.7 that Westlake
“may have the need or desire to enter into other contracts related to the Work
or the Project” and “agree[d] to cooperate and coordinate with all other
contractors of [Westlake] or its Affiliates.”

                                      4
      James was contractually “responsible for the safety and health of
its employees and Subcontractors” and “for the adequacy, stability and
safety of all operations, construction temporary facilities, construction
equipment and the construction site and methods necessary for the
performance of the Work.” At the same time, the contract gave Westlake
certain rights to “intervene” if it had safety concerns.    Specifically,
Section 17.2 authorized Westlake “to intervene in any appropriate way”
if in its reasonable opinion James was, among other things, “performing
its duties under th[e] Contract in an unsafe way or manner” that
Westlake “believe[d] may cause injury or damage to persons or
property.” In such cases, Westlake had the “right to require [James] to
immediately take remedial action,” and James would be “solely
accountable for all costs associated with such intervention and remedial
action” regardless of who incurred the costs.
      Section 21 of the contract governed termination.            Under
Section 21.2, either party could cancel the contract with sixty days’
written notice. Section 21.5 further authorized Westlake, “at any time,”
to terminate the contract “for [Westlake’s] convenience and without
cause.” James was required to take certain actions upon receipt of
written notice of Westlake’s termination for convenience and was
“entitled to receive payment for Work executed, and reasonable actual
costs incurred by reason of such termination.”
      Finally, Section 21.3 authorized Westlake to terminate James for
“[d]efault” if Westlake determined “in its reasonable opinion” that

                                   5
James, among other things, had “serious safety violations.” 4                To
terminate under Section 21.3, Westlake was required to give James
three notices: (1) notice that Westlake had determined there were
serious safety violations, triggering a seventy-two-hour window for
James to “begin to remedy” the violations; (2) notice that Westlake was
“not reasonably satisfied with the pace and the quality of the
remediation effort”; and (3) notice that Westlake had elected to
terminate the contract or a portion of the work. Per Section 9.1, all
notices given pursuant to the contract were required to be in writing.
Upon termination of the contract under Section 21.3, Westlake had the
“right to take possession of the Work or the portion thereof terminated”
and to complete that work, with James being responsible for “[a]ny extra
costs in excess of the Contract Price incurred by [Westlake].”
       Following the contract’s execution, James performed both civil
and mechanical work on the project on a cost-reimbursable basis in
accordance with work orders issued by Westlake. The record shows that
James had several safety incidents between May 2012 and April 2013—
when Westlake transferred all remaining mechanical work to another
contractor—including multiple “OSHA-recordable” injuries and “near
misses.” Though the parties dispute the precise nature, severity, and
cause of many of the safety incidents, it is undisputed that James was

       4  Other grounds authorizing termination for default were: James was
“willfully or in bad faith violating” the contract; James was failing to perform
the work “with promptness and diligence”; James filed for bankruptcy; and
James “fail[ed] to perform any material obligation under” the contract.

                                       6
cited for a serious safety violation that occurred on December 28, 2012,
when James employee Gregory Price suffered a fatal injury on the job. 5
      Immediately following the incident, the parties began discussing
James’s safety record. In an internal Westlake email to project manager
Abram Kuo and others, Westlake Vice President Andrew Kenner began
inquiring about James’s Total Recordable Incident Rate and proposed a
safety review with James to “show us how” James would prevent further
such incidents, saying that “[t]his was completely preventable.” Kuo
forwarded that email to other Westlake employees and copied James’s
project site manager Rusty DeBarge, adding “see Andrew’s comment”
and stating that “[w]e have to develop preventive safety mind set [sic]
with some extraordinary measure[s] on job safety.” Kuo further noted
in the email that he would be at the project office on January 2, 2013,
for a safety meeting that James’s management had “been asked to
attend.” Kenner testified that the meeting’s focus was on improving
safety performance “to make sure we didn’t have another serious
incident.”
      After the meeting, Westlake internally discussed the possibility
of moving a portion of the mechanical work to another contractor “so
that James could have a better chance to manage their scope and keep
their project safe.” The next day, January 3, Kuo contacted Turner
Industries Group, LLC, about potentially taking over some of that work.

      5   Price was on a ladder leaning against a large truck when another
James employee flagged the truck forward without checking to make sure no
one was on the ladder. Price fell and sustained a fatal head injury. OSHA
later cited James for the incident as a serious violation.

                                    7
       For James’s part, on January 9, a week after the meeting,
DeBarge sent an email to several Westlake employees summarizing
James’s pre-accident safety procedures and listing several additional
post-accident procedures that James had implemented or was planning
to implement. On January 18, he sent Kuo another email stating that
he was aware of talk that Westlake was considering “changes in the
execution of the project going forward.” DeBarge asked Kuo to consider
the email an “appeal” of that consideration and emphasized James’s
safety improvements and ability to successfully manage and coordinate
future work. He advocated for James receiving as much potential work
as possible, but he admitted that the addition of certain offsite work
would “be a challenge to our group” because it would require an
“attention level” that had “the potential to affect our efforts within the
plant boundaries,” such that he did “not see a negative effect on the
project if those scopes of work were given to another contractor.”
       Kuo responded to DeBarge’s email the same day, agreeing that
“we have done many good things and set up very good programs” on the
project, including with respect to safety, and stating that “a lot of credit[]
has to go to [James] and its demonstrated willingness to work on [the]
project.” He confirmed the “decision to introduce possible [sic] another
contractor” for the purpose of “ensuring Westlake/[James] will be
successful” on the project and stated that Westlake “[n]ever intended to
wipe out what [James] has been doing well for the project thus far
especially the areas mentioned by” DeBarge’s email. He further stated
that he saw it “necessary” to “separat[e] out independent jobs such as
EDC [ethylene dichloride] and pipelines” to address DeBarge’s admitted

                                      8
concern that they “ha[d] the potential to affect [James’s] efforts within
the plant boundaries.” About two weeks later, on January 30, Westlake
Vinyls and Turner executed a formal contract very similar to the one
between Westlake Chemical and James, and Westlake began allocating
offsite EDC and pipeline work to Turner. There is no dispute that the
contract between Westlake and James authorized Westlake to contract
with Turner to perform that work regardless of Westlake’s satisfaction
with James’s performance.
      Kuo testified that James’s safety performance improved in
January but deteriorated again in February. Westlake’s site manager,
Scott Campbell, testified that starting in January, James had brief
periods without incident followed by regression into old patterns.
Internal Westlake emails—which were not sent to James—stressed
James’s unacceptable Total Recordable Incident Rate and Westlake’s
dissatisfaction with James’s safety improvements, while internal James
emails reflect concerns about Westlake’s “unrealistic expectations and
misperceptions regarding their own impact on our performance.” In any
event, James removed DeBarge as site manager in late February at
Westlake’s request and replaced him with Mark Lammon.
      On March 6, Kenner informed Kuo in an internal Westlake email
that “I think we need to let James Construction know that we are
considering removing them from the job and putting them on notice.”
However, nothing in the record reflects that Westlake communicated as
much to James at that time. In a March 22 internal Westlake email,
Kenner communicated that James’s Total Recordable Incident Rate for
the entire project was “2.2+”—higher than the industry standard—but

                                   9
he also noted a recent safety audit reflecting that “James has stepped
up their safety monitoring and performance.” Kuo responded, again
internally, that since December 2012, Westlake had “seen a trend in
poor performance of [James’s] safety record as well as its productivity in
general coupled with indications of quality issue[s] on piping (excellent
in civil and structural and equipment setting).” Kuo further stated that
Westlake had assigned more mechanical work to Turner “to spread the
job out so that [James] can be more focus[ed] on addressing all the issues
mentioned,” that lightening James’s load had allowed it to focus on those
issues, that James’s new site manager “has made differences as even
our corporate people have noticed,” and that Turner should be set up “as
a strong back up if [James] continues the poor performance after the
scope splitting so that project [sic] will not be in danger of delay.”
      According to Westlake, additional incidents after that internal
March 22 discussion as well as scheduling delays led Campbell to
recommend on April 2 that Westlake remove “the remaining mechanical
work” from James and assign it to Turner. Kuo agreed. On April 11,
James and Westlake representatives had an in-person meeting.
According to Campbell’s description of the meeting, he informed James:
      [W]e have tried to get y’all to improve your safety, we’ve
      done everything we can do, y’all brought another project
      manager in here, you are falling back into the same
      pattern. We want you to – I think I said, you have five days
      to get your remaining piping and mechanical people off the
      job.

                                     10
James VP Conrad Bourg testified by deposition that the meeting was
“very brief,” and that Westlake told James at the meeting that “they
were reassigning our work to Turner.”
      It is undisputed that Westlake sent no written notice of
termination before or after the April 11 meeting.         The record also
contains no other written communication from Westlake to James
memorializing the actions taken at that meeting. Nevertheless, James
ceased mechanical work and confirmed via email on May 8 that at
Westlake’s direction, James “has discontinued mechanical work on the
Chlor-Alkali project and . . . completed the demobilization of the
mechanical forces.” Westlake allocated the remaining mechanical work
to Turner and ultimately paid James in full for the mechanical work it
had already completed. James also retained and completed the civil
work on the project and was paid for that work. Turner completed all
remaining mechanical work on October 31, 2013.

                        B. Procedural History

      In December 2014, Westlake sued James and guarantor Primoris
for breach of contract, seeking damages in the form of costs associated
with transferring work from James to Turner. 6         Initially, Westlake
alleged that James was responsible for those costs under Section 21.3 of
the contract following its termination for default.               Westlake
subsequently amended its petition to allege that James was responsible

      6  Westlake sued other contractors as well, and James asserted claims
against various third-party defendants. Those claims have all been dismissed
or severed and are not at issue here.

                                    11
for the costs under both Section 21.3—the provision governing
termination for default—and Section 17.2—the provision governing
Westlake’s right to intervene if it determined James was performing
unsafely.   Westlake also claimed that James breached its duty to
indemnify Westlake under Section 19.1 of the contract for the costs
Westlake incurred in defending itself in a wrongful-death suit brought
by Price’s family. 7
       James denied that Westlake had terminated the contract for
default but alternatively counterclaimed for breach of contract, alleging
that Westlake breached Section 21.3 by improperly terminating James
without the required notices.         James also alleged that Westlake
breached Section 26 by making claims for consequential damages that
the contract expressly prohibited.
       James also moved for partial summary judgment, arguing that a
significant portion of the damages Westlake sought qualified as
consequential damages barred by Section 26 of the contract, entitled
“Waiver of Consequential Damages.” The trial court granted James’s
motion “only as to Westlake’s chlorine costs”—that is, the trial court
found as a matter of law that those costs constituted consequential
damages that were barred by the contract—and denied the motion as to
Westlake’s other alleged damages. The case proceeded to a jury trial on

       7  Section 19.1 required James to indemnify Westlake against all claims
and liabilities, as well as defense costs, arising out of or related to James’s
performance of the work, but only to the extent of James’s “negligence, strict
liability or other legal fault.” (Capitalization removed).

                                      12
Westlake’s contract claims under Sections 17.2, 19.1, and 21.3 and on
James’s counterclaims under Sections 21.3 and 26.
      The jury found that James failed to comply with Section 17.2 (the
intervention provision), that the failure was not excused, and that
Westlake was entitled to $1,054,251.81 in damages in the form of the
costs associated with its intervention. 8 As to Westlake’s claim under
Section 21.3, the charge asked the jury three predicate questions—3A,
3B, and 3C—to determine whether Westlake provided the three
requisite notices under that provision. Questions 3A and 3B each asked
the jury (1) whether Westlake “provided written notice in strict
compliance with this notice provision,” (2) whether Westlake “notified
James in ‘substantial compliance’ with this notice provision,” and
(3) whether “[s]trict compliance with this notice provision would have
been ‘futile.’” Question 3C, regarding the third required notice, asked
only whether Westlake substantially complied with the provision. To
answer “yes” to the substantial-compliance questions, the jury had to
find that “James received actual notice from Westlake,” the “form of
actual notice to James did not severely impair the purpose of this notice
provision,” and the form “caused no harm to James.”
      The jury answered “no” to the portions of 3A and 3B asking
whether Westlake provided written notice in strict compliance with the
first two notice provisions and whether strict compliance would have
been futile, but it found that Westlake substantially complied with all
three notice provisions. The jury went on to find that James failed to

      8   Westlake had asked the jury to award it $8.5 million.

                                       13
comply with Section 21.3, 9 that the breach was not excused, and that
Westlake was entitled to damages in the same amount that the jury had
awarded for James’s breach of Section 17.2. The jury also found that
James failed to comply with Section 19.1, that the breach was not
excused, and that Westlake was entitled to recover damages comprising
its costs and reasonable attorney’s fees incurred in defending the Price
litigation.
       Because the jury found that Westlake substantially complied
with Section 21.3’s notice provisions and James failed to comply with
Section 21.3, the jury was instructed not to answer the questions
regarding James’s counterclaim for Westlake’s breach of that section or
the question of which party “failed to comply with a material obligation

       9   The jury was instructed that James failed to comply with Section 21.3
if:
       •     Westlake Chemical      discovered or determined in its
             reasonable opinion     that James had serious safety
             violations[;] and
       •     Westlake Chemical was not reasonably satisfied with the
             pace and the quality of the remediation effort; and
       •     Westlake Chemical terminated the Construction Contract or
             a portion of the Work, and took possession of the Work or the
             portion thereof terminated and purchased and/or hired
             materials, tools, supervision, labor, and equipment for the
             completion of the Work; and
       •     James has not paid Westlake Chemical for some or all of the
             extra costs in excess of the Contract Price incurred by
             Westlake Chemical in regards to taking possession of the
             Work or the portion thereof terminated and purchasing
             and/or hiring materials, tools, supervision, labor, and
             equipment for the completion of the Work.

                                        14
of the Construction Contract [not including Sections 19.1 and 26] first.”
As to James’s counterclaim for breach of Section 26, the jury found that
Westlake failed to comply with that provision, that the breach was not
excused, and that James was entitled to $1,270,962.89 in damages
consisting of attorney’s fees James had incurred in defending against
both chlorine costs and any other consequential damages, plus
additional damages for appellate attorney’s fees.
      The trial court rendered judgment, largely on the jury’s verdict,
that: (1) Westlake recover from James and Primoris, jointly and
severally, $1,157,019.50 in contract damages, plus court costs and
prejudgment interest; (2) Westlake recover from Primoris $2,923,600.50
in attorney’s fees (plus conditional appellate attorney’s fees); (3) James
recover from Westlake $1,270,962.89 in contract damages (plus
conditional appellate attorney’s fees); and (4) James take nothing on its
Section 21.3 counterclaim.     The court also ordered post-judgment
interest on the various damage awards. All parties appealed.
      The court of appeals affirmed the judgment as to the award of
damages and attorney’s fees to Westlake and reversed as to the award
to James on its counterclaim. 594 S.W.3d 722 (Tex. App.—Houston
[14th Dist.] 2019). On Westlake’s claims, the court unanimously held
that the doctrine of substantial compliance applied to Section 21.3’s
notice requirements and that the evidence was legally sufficient to
support both the jury’s findings that Westlake substantially complied
and the damages award. Id. at 746, 748–50. Because it upheld the
award under Section 21.3, the court of appeals did not reach James’s
challenge to the jury’s finding that Westlake was entitled to the same

                                   15
damages under Section 17.2. The court further affirmed the judgment
as to James’s liability for failure to comply with the contract’s indemnity
provision. Id. at 754. As to Westlake’s attorney’s fees, the court held in
pertinent part that Westlake was not required to segregate its fees and
that the fees were not excessive. Id. at 766. On James’s counterclaim,
a divided court held that Westlake did not breach the contract by
seeking consequential damages because Section 26 was a liability
waiver rather than a covenant not to sue; the court thus rendered a take-
nothing judgment on James’s counterclaim. Id. at 764–66. The dissent
opined that Section 26 contained a covenant not to sue and would have
affirmed the trial court’s judgment on that claim. Id. at 767 (Frost, C.J.,
dissenting).
      James petitioned for review of the court of appeals’ judgment,
asserting that the court erred in several respects. On Westlake’s claims,
James argues that the court of appeals erred in concluding that
Westlake    could   satisfy   Section    21.3’s   notice   requirements   by
“substantially complying” with them, that Westlake did not comply with
those conditions and thus may not recover damages for James’s
purported breach of Section 21.3, 10 and that the jury’s findings

      10 James also argues that no evidence supports the jury’s liability
finding on this claim, which hinged in part on a finding that Westlake
Chemical incurred extra costs as a result of James’s breach, because it was
undisputed that Westlake Vinyls, not Westlake Chemical, had incurred the
pertinent costs. The court of appeals held that because the jury found that
“Westlake Chemical enter[ed] into the Construction Contract in its own name,
to obtain construction services by James, on behalf and for the benefit of
Westlake Vinyls, and with authority to act on behalf of Westlake Vinyls,”
Westlake Chemical had the right—as Westlake Vinyls’ agent—to recover

                                    16
regarding Section 17.2, which the court of appeals did not address, do
not provide an independent basis to affirm its judgment. James also
argues that Westlake’s “prior material breach” of Section 21.3’s notice
requirements excused its obligation to indemnify Westlake for defense
costs incurred in the Price litigation. As to James’s breach-of-contract
counterclaim under Section 26, James contends that Section 26 did not
merely waive its liability for consequential damages but also contained
a covenant not to sue, which Westlake breached by seeking such
damages in this suit.        Accordingly, James argues that the court of
appeals erred in reversing the judgment in James’s favor on that claim.
Finally, James seeks reversal with respect to the award of Westlake’s
attorney’s fees, asserting that Westlake failed to segregate recoverable
and unrecoverable fees and that the fee award is excessive. 11

damages suffered solely by Westlake Vinyls. Id. at 737–39. James argues that
the jury was not instructed as to the effect of its agency findings on the liability
question and thus could not have found James liable based on the charge as
submitted. Because we hold that Westlake may not recover under Section 21.3
for other reasons, we need not reach this issue.
       11 Westlake complained in the court of appeals that the trial court’s
judgment found only Primoris liable for Westlake’s attorney’s fees and argued
that it was also entitled to recover those fees from James under Texas Civil
Practice and Remedies Code Section 38.001. 594 S.W.3d at 766. The court of
appeals affirmed that portion of the judgment, holding that Chapter 38 does
not permit recovery of attorney’s fees from a limited liability company. Id.
Westlake cross-petitioned this Court for review of that portion of the court of
appeals’ judgment but subsequently filed a motion to dismiss the petition,
which we granted.

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                              II. Analysis

      Because this case involves the parties’ contractual rights and
obligations, we begin by highlighting applicable general legal principles
governing contract interpretation. Texas has a strong public policy
favoring freedom of contract. Chalker Energy Partners III, LLC v. Le
Norman Operating LLC, 595 S.W.3d 668, 672–73 (Tex. 2020). “When a
contract’s meaning is disputed, our primary objective is to ascertain and
give effect to the parties’ intent as expressed in the instrument.” URI,
Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018). We construe
the language of an unambiguous contract according to its plain meaning,
attempting to give effect to all provisions.   See id. at 763–64; J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). Texas courts
regularly enforce unambiguous contract language agreed to by
sophisticated parties in arms-length transactions. See Chalker Energy,
595 S.W.3d at 673. To that end, we do not protect parties “from the
consequences of their own oversights and failures in nonobservance of
obligations assumed.” Dorroh-Kelly Mercantile Co. v. Orient Ins. Co.,
135 S.W. 1165, 1167 (Tex. 1911).

   A. Compliance with Written-Notice Conditions Precedent

      James first argues that Westlake failed to comply with express
contractual conditions precedent to its right to recover costs associated
with terminating James for default under Section 21.3. “A condition
precedent is an event that must happen or be performed before a right
can accrue to enforce an obligation.” Solar Applications Eng’g, Inc. v.
T.A. Operating Corp., 327 S.W.3d 104, 108 (Tex. 2010) (citation omitted);
see also CDI Eng’g Grp., Inc. v. Admin. Exch., Inc., 222 S.W.3d 544, 548

                                   18
(Tex. App.—Houston [14th Dist.] 2007, pet. denied) (“If the condition is
not fulfilled, the contract or obligation attached to the condition cannot
be enforced.”). The conditions precedent to which James refers are the
written notices mandated by Section 21.3, which states in pertinent
part:
        Right of Company to Terminate for Contractor Default. If
        Company [i.e., Westlake] discovers or determines in its
        reasonable opinion that . . . Contractor [i.e., James] has
        serious safety violations . . . then [1] Company may so
        notify Contractor. Upon receipt of any such notice,
        Contractor shall begin to remedy the breach or defect cited
        within seventy-two (72) hours. If at any time, Company is
        not reasonably satisfied with the pace and the quality of
        the remediation effort, [2] Company will so notify
        Contractor and Company may thereafter, at its sole
        discretion, elect to either terminate this Contract or a
        portion of the Work by [3] providing notice to that effect.
        After providing such notice, Company shall have the
        unrestricted right to take possession of the Work or the
        portion thereof terminated and to purchase and/or hire
        materials, tools, supervision, labor, and equipment for the
        completion of the Work or of the unremedied condition, as
        Company elects. Any extra costs in excess of the Contract
        Price incurred by Company in this regard shall be at the
        expense of Contractor. This right is in addition to any
        other remedies Company may have hereunder.
        The parties do not dispute that Section 21.3 contemplated the
provision of three separate notices to James: (1) notice that Westlake
had determined in its reasonable opinion that James had serious safety
violations, triggering a seventy-two-hour window for James to begin to
remedy the violations; (2) notice that Westlake was not reasonably
satisfied with the pace and quality of the remediation efforts; and
(3) notice that Westlake had elected to terminate the contract or a

                                    19
portion of the work. Nor do they dispute that all notices under the
contract, including those mandated by Section 21.3, were required to be
in writing. Moreover, the parties agree that the notices constituted
express conditions precedent to Westlake’s right to enforce James’s
obligation to pay Westlake’s excess costs incurred in transferring the
work. 12
       James argues that strict compliance with express conditions
precedent is required and that the jury’s failure to find strict compliance
as to the first two notices, along with Westlake’s undisputed failure to
strictly comply with the third, forecloses Westlake’s right to recover.
Alternatively, James argues that legally insufficient evidence supports
the jury’s findings that Westlake substantially complied with the three
notice conditions. Westlake responds that under well-established Texas
law, substantial compliance with a contract’s notice requirements is
sufficient to satisfy them. Westlake further argues that the evidence
supports the jury’s findings that Westlake substantially complied.
       We hold that substantial compliance is the appropriate standard
when evaluating whether a party complied with a contractual notice
condition. 13 However, we also hold that substantial compliance with a
condition precedent requiring written notice may not be achieved

       12 Other than the intervention provision (Section 17.2), discussed below,
this is the sole provision on which Westlake relies to recover its costs incurred
in changing contractors.
        We do not address whether substantial compliance is the appropriate
       13

standard for satisfying conditions precedent that do not involve notice.

                                       20
without a writing in some form. 14 Here, Westlake provided no writing
at all with respect to at least two of Section 21.3’s required written
notices and thus failed to substantially comply with the provision’s
conditions as a matter of law.

            1. Substantial Compliance and Written Notice

       This Court has not had occasion to address whether some form of
a “substantial-compliance doctrine” applies to contractual notice
provisions like the one at issue here. In a somewhat analogous context,
we have applied a “notice–prejudice rule” in insurance disputes in which
timely notice of a claim is a condition to a policy’s coverage. See Prodigy
Commc’ns Corp. v. Agric. Excess & Surplus Ins. Co., 288 S.W.3d 374,
375 (Tex. 2009). Under that rule, which flows from the more general
principle that “an immaterial breach does not deprive the insurer of the
benefit of the bargain,” “an insured’s failure to timely notify its insurer
of a claim or suit does not defeat coverage if the insurer was not
prejudiced by the delay.” PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630,
631–32, 636 (Tex. 2008). We applied the rule in Prodigy, in which the
insured failed to give notice “as soon as practicable” after the covered
incident, as the policy required, but did give notice within the policy’s
outer boundary of ninety days. 288 S.W.3d at 376–77. We held that the

       14 Texas recognizes a distinct doctrine of “substantial performance,”
which allows a contractor that “has substantially performed a building
contract . . . to recover the full contract price less the cost of remedying those
defects that are remediable.” Vance v. My Apartment Steak House of San
Antonio, Inc., 677 S.W.2d 480, 481 (Tex. 1984). Our decision today does not
address the application of that doctrine when the contractor fails to comply
strictly with an express condition precedent requiring written notice.

                                       21
insured’s failure to meet the “as soon as practicable” requirement did
not defeat coverage absent prejudice to the insurer, concluding that the
requirement was not a “material part of the bargained-for exchange.”
Id. at 378, 382. In PAJ, we noted that requiring strict compliance with
such provisions would have “draconian consequences for even de
minimis deviations from the duties the policy places.” 243 S.W.3d at
636.
       The courts of appeals have more broadly applied the “doctrine of
substantial compliance” to excuse “exactitude in the performance of
contractual duties . . . where any deviations or deficiencies do not
seriously impair the purpose underlying the contractual provision.” In
re G.D.H., 366 S.W.3d 766, 771 (Tex. App.—Amarillo 2012, no pet.); see
also, e.g., Burtch v. Burtch, 972 S.W.2d 882, 889 (Tex. App.—Austin
1998, no pet.).   In G.D.H., for example, which involved an agreed
custody-modification order, the parents agreed that if one of them
intended to travel internationally with their child, that parent would
give written notice to the other containing various details of the trip,
and the other parent would then execute any necessary consent forms.
366 S.W.3d at 768. In reviewing an enforcement order rendered after
the father refused to execute a consent form, the Amarillo Court of
Appeals rejected the father’s argument that his duty to execute had not
been “triggered” because the mother’s notice did not contain “each
detail” required by the notice clause. Id. at 770–71. The court explained
that although the notice was deficient in some respects, it contained “the
bulk of the requisite information” such that “it would be unreasonable

                                   22
to conclude that the trial court erred in holding [the mother]
substantially complied with her duty.” Id. at 771.
      The Dallas Court of Appeals has similarly applied the
substantial-compliance doctrine to notice requirements. In Barbier v.
Barry, the court examined the effectiveness of a party’s written notice of
cancellation of a contract that, though undisputedly received by the
other party, was not sent by registered mail as the contract required.
345 S.W.2d 557, 562 (Tex. App.—Dallas 1961, no writ). The court held
that “the failure to send [the notice] by registered mail did not destroy
its effectiveness as notice” and that the cancelling party substantially
complied with the contract. Id. Similarly, in Texas Utilities Electric Co.
v. Aetna Casualty & Surety Co., the court of appeals held that Aetna
substantially complied with a surety bond’s cancellation requirements
by sending the requisite written termination notice to Texas Utilities’
office in Mesquite, where an authorized agent of Texas Utilities actually
received the notice, despite the bond’s provision that notice be sent to
the company’s office in Allen. 786 S.W.2d 792, 793 (Tex. App.—Dallas
1990, writ denied); see also S. Tex. Elec. Co-op v. Dresser–Rand Co., 575
F.3d 504, 507 (5th Cir. 2009) (citing Barbier and Texas Utilities to hold
that under well-established Texas law, “the doctrine of substantial
compliance [applies] to contractual notice provisions”).
      We agree with the doctrine described and applied in these cases
as a general principle of Texas law: a party’s minor deviations from a
contractual notice condition that do not severely impair the purpose
underlying that condition and cause no prejudice do not and should not
deprive that party of the benefit of its bargain. PAJ, 243 S.W.3d at 636;

                                   23
see also J.M. Davidson, 128 S.W.3d at 229 (“[T]he primary concern of
the court is to ascertain the true intentions of the parties as expressed
in the instrument.”).      Moreover, the doctrine serves the important
purpose of preventing parties from engaging in bad-faith “gotcha” tactics
to avoid their own contractual obligations based on a technicality.
James cites various treatises and other secondary sources to support its
contention that strict compliance with express conditions precedent is
required, particularly in the construction context, but references no
Texas law to that effect. Further, James dismisses our opinions in
P.A.J. and Prodigy as limited to the insurance context, where unique
policy concerns are presented. However, the reasoning in those cases
and the purposes served by applying the substantial-compliance
doctrine are not limited to a particular category or type of contract.
       That said, while Texas law generally recognizes substantial
compliance as a proper standard by which to evaluate satisfaction of
contractual notice conditions, 15 we have found no Texas cases holding
that a party’s provision of oral notice complies, substantially or
otherwise, with a requirement of written notice. Indeed, both our own
precedent and that of the courts of appeals hold the opposite, and the

       15  Our holding regarding substantial compliance with contractual notice
conditions should not be read to undermine well-established, black-letter legal
principles regarding breach of covenants. Specifically, a party is subject to
liability for a breach of contract that causes damages regardless of whether the
breach was material. Bartush-Schnitzius Foods Co. v. Cimco Refrigeration,
Inc., 518 S.W.3d 432, 436 (Tex. 2017) (explaining that while only a material
breach excuses the other party from further performance, a nonmaterial
breach that causes damages still gives rise to a cause of action for breach of
contract).

                                      24
results in those cases did not depend on whether the failure to provide
written notice prejudiced the other party. We held over sixty years ago
in Shaller v. Commercial Standard Insurance Co. that oral notice of an
insurance policy’s cancellation was insufficient in the face of a written-
cancellation requirement, barring waiver of that requirement.          309
S.W.2d 59, 61, 64–66 (Tex. 1958). In arguing that it had effectively
cancelled the policy, the insurer in Shaller relied on Austin Fire
Insurance Co. v. Polemanakos, 207 S.W. 922 (Tex. Comm’n App. 1919,
judgm’t adopted), in which the court had held that oral notice of
cancellation was sufficient.     Shaller, 309 S.W.2d at 65.       But we
distinguished Polemanakos on several grounds, most notably including
that the policy at issue in that case, unlike in Shaller, “had no provision
for a written notice of cancellation.” Id.
      The courts of appeals have similarly held, in a variety of contexts
including construction contracts, that oral notice does not satisfy a
contract’s written-notice requirement. For example, in Emerald Forest
Utility District v. Simonsen Construction Co., Emerald hired Simonsen
to construct a sewer line that failed shortly after construction. 679
S.W.2d 51, 52 (Tex. App.—Houston [14th Dist.] 1984, writ ref’d n.r.e.).
Simonsen asserted that wet sand conditions caused the line failure and
that it could not be held liable because it had notified Emerald of the
problem and requested that the design be modified, but Emerald
refused.   Id. at 54.     The Houston Fourteenth Court of Appeals
acknowledged that had Simonsen given such notice in writing, it would
have been relieved of liability under the contract.      Id.   But it was
undisputed that Simonsen did not give written notice as the contract

                                    25
required, and the court held that Simonsen had failed to comply with a
condition precedent and so was not relieved of liability. Id. The Dallas
Court of Appeals similarly held that a lessee could not show it had met
conditions precedent to recovering for breach of contract where the
contract mandated written notice of an alleged breach and all notices
provided were oral. Cheung-Loon, LLC v. Cergon, Inc., 392 S.W.3d 738,
744–45 (Tex. App.—Dallas 2012, no pet.). Finally, in Tennessee Gas
Pipeline Co. v. Technip USA Corp., the Houston First Court of Appeals
addressed a construction contract’s requirement that the owner, as a
condition precedent to recovery for breach of warranty, provide written
notice of any work it deemed defective and additional written notice,
upon the contractor’s failure to cure the defect, that the owner would
repair the defect at the contractor’s expense. No. 01-06-00535-CV, 2008
WL 3876141, at *18 (Tex. App.—Houston [1st Dist.] Aug. 21, 2008, pet.
denied). The court held that the contractor’s “actual notice of defects”
was insufficient in the face of a requirement that the notice be in
writing. Id. at *20.
      The courts’ unfailing refusal to deem oral notice compliant with a
contractual condition requiring written notice, like the doctrine of
substantial compliance as a general matter, is consistent with our
repeated affirmation that “[a]bsent compelling reasons, courts must
respect and enforce the terms of a contract the parties have freely and
voluntarily entered.” Shields Ltd. P’ship v. Bradberry, 526 S.W.3d 471,
481 (Tex. 2017) (quoting Phila. Indem. Ins. Co. v. White, 490 S.W.3d 468,
471 (Tex. 2016)).      The bargained-for requirement of written notice
necessarily serves a purpose beyond actual notice; otherwise, its

                                    26
inclusion is useless. See Shaller, 309 S.W.2d at 66; Emerald Forest, 679
S.W.2d at 54 (holding that actual notice does not overcome the absence
of written notice). For one thing, a writing eliminates after-the-fact
disputes about exactly what notice was given. Parties may still disagree
about whether a writing is sufficient, but unlike with an alleged oral
conversation, they cannot disagree about what has actually been said.
For another, in the context of large-scale contracts like the one at issue
here, involving millions of dollars and significant consequences in the
face of termination under certain circumstances—such as responsibility
for excess costs incurred in completing the project—a party should not
have to guess whether those consequences are being triggered in the
absence of a writing when one is required.
      We long ago highlighted the significance of a statutory written-
notice requirement in Berry v. McAdams, in which we examined the
mechanic’s lien statute’s requirement of written notice to the property
owner as a prerequisite to a materialman’s enforcing such a lien. 55
S.W. 1112, 1114 (Tex. 1900). We explained that “[t]he policy of the law
is to relieve the owner from demands upon the ground of actual
knowledge and constructive notice, because he could rarely defend
himself from such claims.”        Id.    Accordingly, we rejected the
materialman’s argument that written notice was not required when the
owner had actual knowledge of the claim, explaining that “[w]ritten
notice is certain and definite information upon which the owner must
act.” Id.; see also Moore v. Brenham Ready Mix, Inc., 463 S.W.3d 109,
114–16 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (holding that
actual notice of a lien claim did not qualify as substantial compliance

                                   27
with the mechanic’s lien statute’s requirement of “timely written
notice”). Westlake summarily dismisses such precedent as “inapposite
cases involving what constitutes substantial compliance in the context
of statutory requirements for perfecting a lien.” But while the context
is different, our recognition of the significance of a writing requirement
is not so limited. As such, Texas law has addressed the specific issue
presented here: whether in the face of a contractual written-notice
requirement, oral notice can suffice.
      CHIEF JUSTICE HECHT’S dissent, however, suggests that guidance
from the Fifth Circuit is necessary, glossing over this Court’s strong
language on written notice in Shaller. Post at ___. The fact that Shaller
involved cancellation of an insurance policy and discussed the timing of
the notice as well as its form does not diminish its central holding: where
the provision at issue requires written notice, unless “a notice in writing
[is] waived . . . an oral notice, insufficient in law when given, [can]not
mature into an effective cancellation of the [policy].” 309 S.W.2d at 66.
In other words, absent waiver, oral notice does not satisfy a written-
notice requirement as a matter of law. Id.
      Moreover, even if state law had not definitively addressed the
issue, the Fifth Circuit has not either. While we wholeheartedly agree
that the Fifth Circuit offers useful (and appreciated) guidance on
matters of state law that Texas jurisprudence has not yet addressed,
federal law does not fill in the purported gap here. Notwithstanding the
dissent’s assertion that the Fifth Circuit answered the question
presented here in South Texas Electric, it simply did not.

                                    28
      To begin with, we do not disagree with South Texas Electric. On
the contrary, we agree with the Fifth Circuit’s conclusion that Texas law
recognizes the doctrine of substantial compliance with respect to
written-notice conditions, as we have articulated above. S. Tex. Elec.
Co., 575 F.3d at 507. However, we part ways with the dissent’s reading
of South Texas Electric as it relates to whether substantial compliance
is possible when no writing has been provided. In that case, Texas
Electric hired Dresser to install a steam turbine, which Dresser
warranted to repair if there were defects. Id. at 506. The warranty
required Dresser to repair defects after receiving written notice from
Texas Electric and allowed Texas Electric to remedy the defects itself if
it provided Dresser ten days’ written notice.         Id.   The turbine
experienced problems “immediately following its installation.”         Id.
Texas Electric notified Dresser of the issues “early on,” but over the
course of the next two years Dresser failed to make repairs. Id. During
that time, Texas Electric hired a third party to conduct tests, of which
Dresser was “aware” and agreed to cover the costs. Id. Texas Electric
subsequently hired another third party to repair the turbine “without
providing Dresser further written notice.” Id. (emphasis added). The
opinion’s description of the background facts reveals that writings were
involved. See id. (stating that Texas Electric “wrote” to Dresser about
the tests and that the repair work was done without “further written
notice”). As such, the court’s focus was not on the lack of a writing, and
the opinion does not offer definitive guidance thereon.
      Therefore, we hold that, barring waiver, when a contract requires
written notice as a condition precedent to the right to enforce an

                                   29
obligation under the contract, substantial compliance with that
requirement may not be achieved in the absence of a writing. With the
proper standard enumerated, we turn to the evidence of the contractual
notice required and provided in this case.

                 2. Application to Westlake’s Notices

       Westlake was required to give James three notices in order to
terminate James for default under Section 21.3 and recover excess costs
associated with the termination: (1) notice that Westlake had
determined in its reasonable opinion that James had serious safety
violations; (2) notice that Westlake was not reasonably satisfied with the
pace and quality of James’s remediation effort (which James was
required to undertake within seventy-two hours of the first notice); and
(3) notice that Westlake had elected to terminate the contract or a
portion of the work. Each of those notices was expressly required to be
in writing. At best, only the first one was. 16
       As noted, on December 28, 2012, following the Price incident,
Westlake’s project manager (Kuo) forwarded an email from Westlake VP
Kenner to other Westlake employees and cc’d DeBarge, James’s site
manager.    Kenner’s email stated that the incident was “completely
preventable” and discussed having a safety review with James—which
subsequently occurred on January 2—to “show us how” it would prevent

       16With respect to the first two notices, the jury failed to find that
Westlake gave written notice in strict compliance with the contract. This could
mean the jury concluded there was no writing at all, or it could mean the
contents of the writing were deemed insufficient to amount to strict
compliance.

                                      30
such incidents from happening again. Kuo added, “We have to develop
preventive safety mind set [sic] with some extraordinary measure[s] on
job safety.” As James notes, the email did not mention Section 21.3,
default, “serious safety violations,” the commencement of a seventy-two-
hour window for James to begin remediation efforts, or a warning about
termination for default if those efforts were deemed insufficient.
Westlake points to no other written communications relevant to the first
notice requirement.
      While Section 21.3 does not require the use of specific words,
certainly the notice needed to communicate sufficient information to
enable James to reasonably conclude that the section was at play and
that the seventy-two-hour clock was ticking. Given the seriousness of
the incident, Westlake understandably raised concerns about safety
measures and the need to focus on preventing future incidents and
injuries. But expressing safety concerns does not necessarily equate to
triggering Section 21.3. At trial, when Kenner was asked when the
seventy-two-hour period for James to begin remediation under that
section began, he testified:
             A.    Again, this is the one – we’ve acknowledged
      we don’t have as many written notices here. You’ve got
      several notices. We’ve got – you have to go through your
      e-mail chain. So there’s a notice on a couple e-mails where
      James personnel are included in the e-mail. So, clearly,
      you can say a 72-hour period started at that time. But
      we’re not using the word “notice,” and we’re not using the
      word “default.” We are talking about serious safety
      violations.
             Q.     And you’re saying there’s no – so you can’t
      testify to this jury when that 72-hour period began, can
      you, sitting here today, can you?

                                  31
                A.    No.   We met with them multiple, multiple
      times.
             Q.    You met with them? The 72 hours called for
      in the notice provision, you can’t tell this jury when that
      clock started to run?
            A.    It was, you know – Rusty [DeBarge]’s office
      from our people was, like, past the men’s room, three offices
      down on the left. So they were going down and talking –
                [Attorney]: Objection. Nonresponsive.
                A.    No, I cannot testify.
      If Westlake could not determine from the various communications
when the seventy-two-hour period under Section 21.3 began, we fail to
see how James could reasonably be expected to do so. Thus, although
Kuo’s email characterized the incident as “preventable” and stressed the
need to develop additional safety procedures, we find it questionable
whether the email qualified as the requisite first notice under
Section 21.3.
      Even if it did, see City of Keller v. Wilson, 168 S.W.3d 802, 827
(Tex. 2005) (evidence is legally sufficient if it “would enable reasonable
and fair-minded people to reach the verdict under review”), two more
written notices were required and were not provided. As to the second
notice—that Westlake was not reasonably satisfied with the pace and
quality of James’s remediation effort—Westlake points to the
January 18, 2013 email from Kuo to DeBarge, which was a response to
DeBarge’s email addressing rumors that Westlake was considering
assigning offsite EDC and pipeline work to another contractor. Kuo’s
email stated:

                                     32
Dear Rusty:
Thanks for the email.
I agree[] that in this project we have done many good things
and set up very good programs from safety,
cost/productivity control measures to all procedural
systems for a well executed project; and a lot of credit[] has
to go to [James] and its demonstrated willingness to work
on Westlake CA [chlor-alkali] project.
I also agree[] that we all would like to be judged by our
intentions and efforts; we are in fact judged by the results.
And the results / final judgment has yet to come which only
due [sic] when we have completed and started up the
project safely and successfully without any more serious
safety incident[s].
The intent of the decision to introduce possible [sic] another
contractor to take care of EDC and Pipeline jobs is to help
ensur[e] Westlake / [James] will be successful in the CA
project. Never intended to wipe out what [James] has been
doing well for the project thus far especially the areas
mentioned by your E mail below.
We all make mistakes and we all need to learn from it and
our responsibilities as leader[s] includes take [sic]
proactive action(s) deem[ed] necessary preventing [sic]
re-occurrence; besides what we have implemented of safety
enhancements after the incident, separating out
independent jobs such as EDC and pipelines is what I see
necessary so that we can avoid, as you have said it, “This
attention level does have the potential to affect our efforts
within the plant boundaries. For this reason, I [DeBarge]
do not see a negative effect on the project if those scopes of
work were given to another contractor.”
I trust that you understand where I am coming from and
will have your continued supports [sic] and commitment as
an individual and as a company working together with
Westlake, CDI, and other potential contractors as a team
for a safe and successful project.

                             33
      In this email, Kuo praised James’s progress on safety, stated that
the “final judgment” on safety “has yet to come,” and explained why
Westlake had decided to give EDC and pipeline work to another
contractor—which it was undisputedly entitled to do under Section 1.2
of the contract. 17 As with the first notice, this email did not mention
Section 21.3, default, or termination. Nor did it say more generally that
Westlake was not reasonably satisfied with the pace and quality of
James’s remediation effort. If anything, it seemed to express Kuo’s
opinion that the two companies were both doing what was necessary to
ensure a “safe and successful project.”
      That conclusion is consistent with Kuo’s trial testimony that
James’s safety performance temporarily improved in January 2013. It
is also consistent with evidence showing that in February, Westlake
assigned James $10,000,000 in additional mechanical, civil, and
installation work on the project. An internal Westlake document from
the “CA Project Team” requesting management approval for the
additional work stated that “[b]ased on James’s performance, improved
safety programs, quality of work completed, and meeting current
construction schedule, the CA Team recommends continuing to issue
work order [sic] based on the T&M [Time & Materials] base rate to
James Construction for Phase IV of the chlor-alkali project.” Based on
the substance of Kuo’s January 18 email and Westlake’s subsequent

      17 Westlake has never alleged that excess costs associated with its
assignment of mechanical work to Turner before April 11 are recoverable as
damages under Section 21.3. Nor has James ever alleged that Westlake
breached the contract by giving Turner such work.

                                   34
actions, the email provides no indication that Westlake was dissatisfied
with James’s efforts, let alone that the circumstances had progressed to
the point that Westlake had determined it had the right to terminate
James for default and recover any excess costs incurred in completing
the project.
       To be sure, internal Westlake communications reflect Westlake’s
renewed concern with James’s safety record, with Kenner going so far
as to say on March 6, well after the January 18 email on which Westlake
now relies, that “I think we need to let James Construction know that
we are considering removing them from the job and putting them on
notice.”    But again, Westlake fails to cite evidence showing that it
followed through on that plan, and the email reflects Westlake’s opinion
that James was not “on notice” at that time. Indeed, on March 22,
Kenner identified a recent safety audit indicating that “James has
stepped up their safety monitoring and performance.” In light of all this
evidence, the January 18 email cannot qualify as the second required
notice under Section 21.3, and Westlake identifies no other writing that
can.
       Finally, it is undisputed that Westlake did not provide the third
requisite written notice: that it had elected to terminate the contract or
a portion of the work for James’s default. 18 Internal Westlake emails

       18 On March 21, Westlake informed James via email that some
additional mechanical work would be transferred to Turner as of April 15.
However, the email further stated that the plan was to focus James’s efforts
on a specific area “in an effort to meet our current end date” and that the
transfer of work “is not an indication of your efforts to date. A noticeable

                                    35
indicate that on April 2, following an onsite incident the previous day
that resulted in a broken finger, Westlake made the decision to transfer
the remaining mechanical work to Turner because James had failed “to
improve their safety performance” and was “continuing to fall further
behind in their schedule.” On April 11, Westlake and James had a
meeting at which, according to Campbell, he told James’s representative
that James was “falling back into the same pattern” with respect to
safety and instructed him “to get your remaining piping and mechanical
people off the job.” Campbell and Kuo both testified at trial that safety
was the primary reason for transferring the remaining mechanical work
to Turner. Westlake sent no letter, email, or other writing to James
memorializing the actions taken at the meeting.
      As Westlake points out, there is no dispute that James ceased all
mechanical work after the April 11 meeting. 19 Westlake thus contends
that the lack of a written termination notice is immaterial because
James’s actions demonstrate it knew that it had in fact been terminated.
However, as explained, actual notice is not a substitute for written
notice. 20 Moreover, the contract allowed Westlake to assign work to

change in your staff, field supervision, and craftsman is clearly vi[si]ble.”
Moreover, Westlake has never alleged that this email constituted either a
default notice or a termination notice. And again, Westlake has never alleged
that James is responsible for costs associated with work assigned to Turner
before the April 11 meeting.
      19 As noted, Westlake did not transfer any of the civil work that had
been assigned to James, and James completed that scope of work.
      20Westlake presented evidence that James VP Conrad Bourg lost his
temper at the meeting and complained that Westlake was penalizing James

                                     36
other contractors as it saw fit, and the contract could also be terminated
for any number of reasons.          Only termination for default under
Section 21.3, however, triggered James’s obligation to pay “[a]ny extra
costs in excess of the Contract Price incurred by [Westlake]” in
completing the work. Again, James was entitled to the requisite written
notice that would give rise to that obligation, but no such notice was
given. 21
         CHIEF JUSTICE HECHT’S dissent focuses on two writings to support
the conclusion that Westlake provided the requisite notice: (1) the
December 28 email in which Westlake expressed safety concerns; and
(2) the January 18 exchange between DeBarge and Kuo.                  Neither
supports the dissent’s position.
         As discussed above, while the December 28 email expresses a
belief that there were safety problems, it did not mention Section 21.3,
default, the commencement of a seventy-two-hour window for James to
begin remediation efforts, or a warning about termination for default if
those efforts were deemed insufficient.         But assuming that email
satisfies the first notice requirement, no writings satisfy the second or
third.        Contrary to the dissent’s description, not only does the

even though “[e]very contractor has fatalities.” Such comments are certainly
distasteful and hurtful, but they do not demonstrate that Westlake provided
the requisite notice of termination for default under Section 21.3.
          James cites DeBarge’s testimony that James would have reacted
         21

differently had it known that Westlake considered James to be in default or
indicated that it would terminate the contract for that reason. The jury
appears to have rejected this testimony given its finding that James was not
prejudiced by the form of notice. Regardless, as explained, when written notice
is required, lack of prejudice does not override the absence of a writing.

                                      37
January 18 email from Kuo express no dissatisfaction with James’s
safety efforts; it commends James on its progress in that regard.
Finally, the absence of a third written notice is uncontroverted. That is,
Westlake undisputedly never provided James with written notice that
James was actually terminated from the project for default.           The
dissent’s suggestion that James’s writing—its email to Westlake after
the April meeting acknowledging that James had discontinued its
mechanical work on the project—can satisfy Westlake’s obligation to
provide notice to James turns the notice provision on its head. While
this communication may serve as some evidence that James had actual
notice of its termination, it does nothing to satisfy Westlake’s obligation
under Section 21.3.     Moreover, it is doubtful that the email even
reflected actual notice of termination. Since Westlake had discretion to
allocate work to other contractors without terminating the contract,
James’s acknowledgment that it had discontinued mechanical work does
not equate to an acknowledgment that it had been terminated for
default.
      In sum, because the contract required Westlake to give three
written notices as conditions precedent to the right to enforce James’s
obligations under Section 21.3, and because at least two of those notices
were not given, James had no obligation to pay Westlake’s excess costs,
and the jury’s award of breach-of-contract damages under that provision
cannot stand.    In so holding, we give effect, as we must, to the
contractual language the parties chose.

                                    38
                 B. Intervention Under Section 17.2

      Westlake argues that even if it is not entitled to the $1,054,251.81
in contract damages the jury found for James’s failure to comply with
Section 21.3, the trial court’s judgment awarding Westlake those
damages may nevertheless be upheld because the jury independently
awarded the same amount for James’s failure to comply with
Section 17.2, which contains no “notice” requirement.      That section,
entitled “Intervention,” states:
      Company [Westlake] shall at any time during the
      execution of the Work by Contractor [James] have the right
      to intervene in any appropriate way, if in the reasonable
      opinion of Company, . . . (c) Contractor is performing its
      duties under this Contract in an unsafe way or manner in
      which [sic] Company believes may cause injury or damage
      to persons or property. In such cases Company shall have
      the right to require Contractor to immediately take
      remedial action to the satisfaction of Company. Contractor
      shall be solely accountable for all costs associated with
      such intervention and remedial action, whether incurred
      by Contractor, Company or any third party.
      Westlake contends that pursuant to this provision’s authorization
“to intervene in any appropriate way,” it “intervened by trying to get
James to improve its safety performance and then, when James’s safety
did not improve, informing James that Westlake would be transitioning
the remainder of James’s mechanical work to Turner.” James responds
that Section 17.2 allows Westlake to require James to take remedial
action and bear the associated cost, but it does not provide a mechanism
to terminate any portion of the work and shift the cost of hiring
replacement contractors to James.       If it did, James contends, then
Section 21.3 does nothing. We agree with James.

                                   39
         Section 17.2 broadly allows Westlake to intervene “in any
appropriate way,” but it goes on to focus on Westlake’s authority to
require James to take remedial action and bear the cost, and it implies
that those costs will be incurred “during the execution of the Work,” not
later.    Even if Westlake is authorized to intervene in other ways,
Section 17.2 does not purport to encompass terminating the contract or
any portion of the Work. To the contrary, the contract details very
specifically how work is to be terminated, and construing the
intervention clause as Westlake does improperly reads those provisions
away entirely. See J.M. Davidson, 128 S.W.3d at 235 (“Contracts are to
be read as a whole, and an interpretation that gives effect to every part
of the agreement is favored so that no provision is rendered meaningless
or as surplusage.”). As discussed above, Section 21.3 allows Westlake to
terminate James for default for “serious safety violations” and to recover
the costs associated with hiring another contractor to complete the work,
but only after satisfying specific notice requirements and giving James
an opportunity to engage in remediation efforts.          If Section 17.2
authorizes recovery of those same costs, but without the required notice
and opportunity to cure, then as James argues, there would be no reason
to invoke Section 21.3 at all because “intervening” would be far easier.
In other words, Section 17.2 would swallow Section 21.3 entirely.
         In sum, we do not interpret Section 17.2 as allowing an end-run
around the more stringent requirements to terminate for default and
recover costs under Section 21.3.        Accordingly, the jury’s award of
damages for James’s failure to comply with Section 17.2 cannot stand

                                    40
and thus does not serve as an independent basis for upholding a portion
of the court of appeals’ judgment.

                       C. Indemnity Provision

      Although most of the contract damages awarded to Westlake—
$1,054,251.81—do not survive the above analysis, Westlake was also
awarded $102,767.69 in damages for James’s failure to comply with
Section 19.1, the indemnity provision. As noted, those damages consist
of litigation costs Westlake incurred in defending the Price litigation.
James argues that Westlake’s improper termination of James for default
under Section 21.3 constituted a prior material breach of the contract
that excused James’s continued performance, including satisfying its
obligations under the indemnity provision. The court of appeals rejected
this argument, as do we.
      As James itself argues, the notice provisions in Section 21.3 were
conditions precedent, not covenants. A covenant “is an agreement to act
or refrain from acting in a certain way.” Solar Applications, 327 S.W.3d
at 108. A breached covenant gives rise to a cause of action for damages,
and a material breach excuses the other party from performance.
Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d
432, 436 (Tex. 2017) (“It is a fundamental principle of contract law that
when one party to a contract commits a material breach of that contract,
the other party is discharged or excused from further performance.”
(citation omitted)). By contrast, a “condition precedent is an event that
must happen or be performed before a right can accrue to enforce an
obligation,” and “if an express condition is not satisfied, then the party
whose performance is conditioned is excused from any obligation to

                                     41
perform.” Solar Applications, 327 S.W.3d at 108. The contract gave
Westlake the right to terminate the contract for any reason it chose and,
even in the absence of termination, to assign work to any contractor it
chose.    But James’s obligation to pay Westlake the excess costs it
incurred in doing so was conditioned on Westlake’s satisfying
Section 21.3’s written-notice requirements. Because Westlake failed to
do so, as discussed above, it may not enforce James’s obligation to pay
those costs.
         However, this did not excuse James from complying with other
provisions of the contract. That is, Westlake’s failure to provide the
requisite notice did not constitute a material (or nonmaterial) breach of
the contract that “affect[ed] the enforceability of the remaining
provisions.” Id. Again, as James itself argues, Westlake had authority
to reassign the work without terminating James at all, let alone for
default. And James’s primary position is that it was not terminated but
simply removed from the mechanical work. Indeed, after purportedly
being “wrongfully terminated,” James was paid for its mechanical work
and continued to perform civil work under the same contract. While we
do not disagree with the general principle that wrongful termination of
a contract can constitute a material breach, see, e.g., STR Constructors,
Ltd. v. Newman Tile, Inc., 395 S.W.3d 383, 388 (Tex. App.—El Paso
2013, no pet.) (holding sufficient evidence supported the jury’s finding
that STR materially breached by terminating the contract without
proper cause), that principle does not apply here because noncompliance
with a condition precedent simply precludes the noncomplying party
from enforcing its conditional right. Westlake’s actions foreclose its

                                   42
entitlement to recover under Section 21.3, but they do not amount to a
material breach of the contract excusing James from all further
performance. 22 We therefore hold that the court of appeals properly
affirmed the portion of the trial court’s judgment awarding Westlake
damages for James’s failure to comply with Section 19.1.

            D. Section 26: Waiver of Consequential Damages

       The parties agree that under Section 26 of the contract, neither
party is liable for consequential damages.          The issue presented is
whether Section 26 also contains a covenant not to sue for such damages,
such that it may provide the basis for a breach-of-contract claim. Taking
the position that it does and that Westlake “made claims against James
for consequential damages as expressly prohibited by Section 26,” James
counterclaimed for breach of contract. As noted, the jury found that
Westlake failed to comply with Section 26 and awarded James damages
for its “reasonable and necessary attorney’s fees” incurred “in defending
against any consequential damages.” The court of appeals reversed the
trial court’s judgment on that portion of the verdict, holding that
Section 26 only waived liability for consequential damages and did not
give rise to a contractual obligation not to sue for such damages. 594
S.W.3d at 766.
       Section 26 provides:
       WAIVER OF CONSEQUENTIAL DAMAGES
       Neither [Westlake] nor [James] shall be liable to the other
       for any consequential, incidental, indirect or punitive

        For the same reason, we reject James’s assertion that it is entitled to
       22

judgment as a matter of law on its Section 21.3 counterclaim.

                                      43
          damages . . . arising under this Contract or as a result of,
          relating to or in connection with the Work and no claim
          shall be made by either [Westlake] or [James] against the
          other for such damages REGARDLESS OF WHETHER
          SUCH CLAIM IS BASED OR CLAIMED TO BE BASED
          ON      NEGLIGENCE         OR      STRICT      LIABILITY
          (INCLUDING SOLE, JOINT, ACTIVE, PASSIVE,
          CONCURRENT             NEGLIGENCE          OR      GROSS
          NEGLIGENCE) OR ANY OTHER THEORY OF LEGAL
          LIABILITY,       AND     INCLUDING        PRE-EXISTING
          CONDITIONS BUT EXCLUDING GROSS NEGLIGENCE
          AND WILLFUL MISCONDUCT.
James argues that Section 26 constitutes a clear covenant not to sue
because it plainly states, in an independent clause, that “no claim shall
be made” for consequential damages.           Westlake responds that the
provision clearly functions solely as a waiver of consequential damages
that prevents a party from recovering them, not a covenant not to sue
that prohibits a party from seeking certain damages merely because a
court may ultimately conclude that they are consequential. We agree
with Westlake.
          First, we have held that “headings and titles provide context and
can inform the meaning of the sections they label,” and that “[g]enerally,
courts should construe contractual provisions in a manner that is
consistent with the labels the parties have given them.” RSUI Indem.
Co. v. The Lynd Co., 466 S.W.3d 113, 121 (Tex. 2015). The title of
Section 26 is simply “Waiver of Consequential Damages,” not “Waiver of
Consequential Damages and Covenant Not to Sue” or words to that
effect.
          Second, while “no claim shall be made” is contained in an
independent clause from “[n]either [party] shall be liable,” it is followed

                                      44
by language clarifying its scope: “no claim shall be made . . . for such
damages regardless of whether such claim is based or claimed to be
based on negligence . . . or any other theory of legal liability . . .
excluding gross negligence and willful misconduct.”          (Capitalization
removed).      Thus, the parties have relinquished a claim to any
consequential damages to which they might be entitled in the event of a
lawsuit, which the paragraph explicitly contemplates; they have not
relinquished the right to bring a suit in the first place. We therefore
disagree with James’s contention that limiting Section 26 to a waiver
renders any of its language superfluous. Indeed, if anything, construing
the second clause as a covenant not to sue for consequential damages—
such that it prevents a claim for consequential damages in the first
place—renders the language waiving liability for such damages
superfluous.
       Third, the nature of the purported covenant not to sue informs
our discussion. See Dillon Gage Inc. of Dall. v. Certain Underwriters at
Lloyds Subscribing to Policy No. EE1701590, 636 S.W.3d 640, 643 (Tex.
2021) (“We determine the parties’ intent through the terms of the
[contract], giving words and phrases their ordinary meaning, informed
by context.”). As Westlake notes, none of the cases James cites involve
covenants not to sue for consequential damages, and we have been
unable to locate any. Rather, such covenants typically foreclose a party
from bringing suit at all 23 or, more commonly, from asserting causes of

       23Palestine Contractors, Inc. v. Perkins, 386 S.W.2d 764, 765 n.1 (Tex.
1964) (“[W]e, the undersigned, do hereby covenant and agree not to sue, make

                                     45
action arising from or related to specific incidents—often incidents that
were the subject of a prior, settled lawsuit. 24            When those types of
covenants are at issue, whether a party has brought a prohibited suit or
claim is fairly discernible from the outset of the litigation. That is not
the case with an agreement not to sue for consequential damages given
that legitimate disputes often arise, as they did in this case, regarding
whether contractual damages sought are properly classified as “direct”
or “consequential.” See, e.g., San Antonio River Auth. v. Austin Bridge
& Road, L.P., 601 S.W.3d 616, 630–31 (Tex. 2020); Dallas/Fort Worth
Int’l Airport Bd. v. Vizant Techs., LLC, 576 S.W.3d 362, 373–74 (Tex.
2019). Indeed, the line between direct and consequential damages often
is not a bright one. 25 Thus, a party seeking damages that it believes in

claim, or institute any action or proceeding directly or indirectly against [the
other parties] to recover damages of any kind or character.”).
       24   Robertson v. Trammell, 83 S.W. 258, 260 (Tex. App. 1914, writ ref’d)
(“[Plaintiff] hereby agrees and covenants never to make the matters and things
set out and the circumstances described in plaintiff’s petition herein, the basis
of a suit against said defendant in any court, and never to bring or to maintain
an action because thereof against said defendant.”); Pape Equip. Co. v. I.C.S.,
Inc., 737 S.W.2d 397, 400–01 (Tex. App.—Houston [14th Dist.] 1987, writ ref’d
n.r.e.) (“[Dow] agrees and covenants not to sue, claim or make claims or
institute any action or proceeding directly or indirectly against I.C.S.,
Inc. . . . to recover damages of any kind or character, . . . received in or
resulting from . . . [a specific] accident . . . .”); Leong v. Wright, 478 S.W.2d 839,
840 (Tex. App.—Houston [14th Dist.] 1972, writ ref’d n.r.e.) (describing the
covenant at issue as an agreement not to “institute any action or proceeding”
against the other party “for any damages which may have resulted to the
plaintiffs from the incident made the basis of the suit”).
       25We recently reiterated that direct damages “‘are the necessary and
usual result of,’ and ‘flow naturally and necessarily from’” a contractual breach,
while “consequential damages ‘result naturally, but not necessarily,’ from the

                                         46
good faith, but ultimately incorrectly, are direct rather than
consequential will not know whether it is in breach by asserting a claim
until the nature of the claim has been determined on the back end of the
suit. 26
           That appears to be exactly what happened here. Westlake alleged
that James breached various sections of the contract and sought to
recover its “actual damages.” The parties litigated whether a portion of
the costs Westlake sought qualified as (recoverable) direct damages or
(unrecoverable) consequential damages, and James obtained favorable
rulings as to some of those costs. If Section 26 contains a covenant not
to sue, the consequence of Westlake’s taking an erroneous, but by no
accounts frivolous, position on the nature of its claimed damages is that
it has breached the contract by even making the argument. While
parties are free to agree to that consequence, however unusual or
impractical, we do not read Section 26’s plain language to reflect that
intent here.
           Because Section 26 waives liability for consequential damages
but is not a covenant that Westlake breached by seeking damages that
were determined to qualify as consequential, the court of appeals

defendant’s breach, and are not ‘the usual result of the wrong.’” Vizant Techs.,
576 S.W.3d at 373 (quoting Arthur Andersen & Co. v. Perry Equip. Corp., 945
S.W.2d 812, 816 (Tex. 1997)) (emphasis removed). This distinction is not
always so easily applied in practice.
          Of course, if consequential damages are barred and a party seeks to
           26

recover them in bad faith or by making groundless and frivolous arguments, it
is subject to sanction like any other party who asserts a frivolous claim. See
TEX. CIV. PRAC. & REM. CODE §§ 10.001–.002; TEX. R. CIV. P. 10.

                                      47
properly rendered judgment that James take nothing on its
counterclaim. 27

                           E. Attorney’s Fees

      What remains of the trial court’s judgment is an award to
Westlake of (1) $102,767.69 in damages for James’s failure to comply
with the contract’s indemnity provision and (2) $2,923,600.50 in
attorney’s fees, plus conditional appellate fees.       As Westlake is a
prevailing party and was awarded damages on a breach-of-contract
claim, it is entitled to recover its reasonable attorney’s fees under Civil
Practice and Remedies Code Section 38.001. Mustang Pipeline Co. v.
Driver Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004). However, in light
of the significantly reduced damages award and the fact that the jury’s
award of attorney’s fees was based in part on the “results obtained,” the
part of the trial court’s judgment awarding Westlake its attorney’s fees
cannot stand, and the court of appeals erred in affirming it. Barker v.
Eckman, 213 S.W.3d 306, 314 (Tex. 2006) (reversing an award of
attorney’s fees and remanding for further proceedings because of the
significant appellate adjustment to the amount of damages awarded).
Accordingly, we reverse the court of appeals’ judgment as to Westlake’s
attorney’s fees and remand to the trial court for further proceedings.

      27  Westlake argues that several independent grounds exist to uphold
this portion of the court of appeals’ judgment, but we need not address those
arguments.

                                     48
                            III. Conclusion

      We hold that Westlake did not comply with the written-notice
procedure under Section 21.3 of the contract and thus failed to satisfy
conditions precedent to its right to recover damages for James’s failure
to comply with that provision. We further hold that Westlake may not
recover those same damages under Section 17.2. However, Westlake is
entitled to recover damages for James’s breach of Section 19.1 because
Westlake’s failure to satisfy Section 21.3’s notice requirements did not
constitute a prior material breach. Finally, we hold that Westlake did
not breach Section 26 by making a claim for consequential damages
because that provision waives liability for such damages but does not
contain a covenant not to sue. We affirm the judgment of the court of
appeals in part, reverse it in part, and remand the case to the trial court
for further proceedings on Westlake’s attorney’s fees.

                                         Debra H. Lehrmann
                                         Justice

OPINION DELIVERED: May 20, 2022

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