Court Opinion

ID: 4060739
Source: CourtListenerOpinion
Date Created: 2016-09-29 19:56:07.524623+00
Date Added: 2024-06-11T14:05:50.397798
License: Public Domain

COURT OF APPEALS
                                EIGHTH DISTRICT OF TEXAS
                                     EL PASO, TEXAS

 GRANBURY MARINA HOTEL, L.P.,                   §
 D/B/A HILTON GARDEN INN,
 GRANBURY,                                      §               No. 08-13-00246-CV

                             Appellant,         §                  Appeal from the

 v.                                             §               County Court at Law

 BERKEL AND COMPANY                             §              of Hood County, Texas
 CONTRACTORS, INC.,
                                                §                   (TC# C06011)
                             Appellee.
                                                §

                                          OPINION

       This appeal arises from a jury verdict in favor of a contractor, Berkel and Company

Contractors, Inc. (hereinafter, “Berkel”), in its breach-of-contract action against a developer,

Granbury Marina Hotel L.P. d/b/a Hilton Garden Inn, Granbury (hereinafter, “Hilton”). The jury

awarded Berkel $40,148.00 in actual damages and $18,600.00 in attorney’s fees. After Berkel

accepted a remittitur of damages, the trial court entered a judgment awarding Berkel $30,348.00 in

actual damages, $18,600.00 in attorney’s fees, $964.59 in court costs, $6,828.30 in pre-judgment

interest, and post-judgment interest at the rate of five percent, compounded annually.

       On appeal, Hilton challenges the sufficiency of the evidence supporting the jury’s verdict

(Issue One), the admission of evidence as business records (Issue Two), and the denial of its
motion for new trial (Issue Three). Concluding that the trial erroneously admitted hearsay

evidence and that this error probably resulted in an improper judgment, we reverse and remand.

                           FACTUAL AND PROCEDURAL BACKGROUND

           Berkel, which has been in business since 1959, installs deep foundations in poor soil

conditions—by driving piles into bedrock—to support tall building and big structures. In May

2007, Berkel entered into a contract with Hilton to install a deep foundation for the construction of

a hotel at a marina. Berkel’s vice president and regional manager, Tracy Brettmann, signed the

contract, which was valued at $391,680.00. The contract required Hilton to make progress

payments but permitted Hilton to withhold 10 percent of the amount owed until completion of the

project.

           The project was completed in early July 2007. Shortly thereafter, Berkel sought final

payment in the amount of $40,148.00. 1 Hilton refused to pay, prompting Berkel to file suit

against Hilton. Berkel brought causes of action for: (1) suit on a sworn account; (2) breach of

contract; (3) quantum meruit; and (4) promissory estoppel.                 Berkel denied the claims and

countersued for breach of contract.2

           The case proceeded to a one-day jury trial. Berkel called two witnesses—Brettmann and

trial counsel—and Hilton called none.               During Brettmann’s testimony, Berkel offered into

evidence two exhibits relevant to the disposition of this appeal. The first was Plaintiff’s Exhibit

No. 2, a document labeled “APPLICATION AND CERTIFICATION FOR PAYMENT” and the

second Plaintiff’s Exhibit No. 3, a document labeled “FINAL Retainage Application for Payment

1
  Berkel installed additional pilings at Hilton’s request. These additional pilings cost Hilton $9,800.00, which
increased the amount of the contract to $401,480.00. Ten percent of $401,480.00 is $40,148.00.
2
    Hilton eventually nonsuited its counterclaim.
                                                        2
and FINAL Lien Releases.” When Berkel moved for the admission into evidence of Plaintiff’s

Exhibit No. 2, the following colloquy occurred:

       [PLAINTIFF’S COUNSEL]: I want to show you what’s been marked as Exhibit
       No. 2. Is this an application certification for payment related to this project?

       [BRETTMANN]: Yes, it is.

       [PLAINTIFF’S COUNSEL]: And is this – You’re the custodian of records,
       correct?

       [BRETTMANN]: Yes.

       [PLAINTIFF’S COUNSEL]: Is this a true and correct copy of that, was it made at
       the time of the date, which is August 8th, 2007?

       [BRETTMANN]: Yes, it is.

       [PLAINTIFF’S COUNSEL]: Your Honor, we at this time move for admission of
       Exhibit No. 2 – Plaintiff’s Exhibit.

       [TRIAL COURT]: Any objection?

       [DEFENDANT’S COUNSEL]: Yes, Your Honor, two objections; one, as to the
       business records foundation. We object, two, that the witness has not shown the
       requisite personal knowledge of how the records were maintained in the course of
       business. And then we would also object to the hearsay within hearsay from the
       affidavit that is contained in the record.

       [TRIAL COURT]: All right. As to objection – that first objection, that’s
       sustained. Go ahead and lay the foundation on the business records, please.

       [PLAINTIFF’S COUNSEL]: Well, Mr. Brettmann, are you custodian of the
       records?

       [BRETTMANN]: Yes.

       [PLAINTIFF’S COUNSEL]: If you would take a look at this document, is it true
       and accurate and was it made at the time it shows on the date?

       [BRETTMANN]: Yes, it was.

                                                  3
       [PLAINTIFF’S COUNSEL]: Is this the type of document -- is this document kept
       in the normal course of business of Berkel and Company Contractors?

       [BRETTMANN]: It is, yes.

       [PLAINTIFF’S COUNSEL]:         Your Honor, at this time we would move for
       admission of Exhibit No. 2.

       [TRIAL COURT]: All right. The second objection is overruled. The first
       objection is now overruled. No. 2 is admitted.

A similar exchange transpired when Berkel moved for the admission into evidence of Plaintiff’s

Exhibit No. 3:

       [PLAINTIFF’S COUNSEL]: I’m going to show you Plaintiff’s Exhibit No. 3.
       This is entitled Final Retainage Application for Payment and Final Lien Releases.
       Let me ask you the same questions on that one. Are you the custodian of records
       for Berkel and Company?

       [BRETTMANN]: Yes, I am.

       [PLAINTIFF’S COUNSEL]: Is that a true and correct copy of the document -- of
       what it represents to be?

       [BRETTMANN]: Yes, it is.

       [PLAINTIFF’S COUNSEL]: Was that document made on or about the time that it
       shows, which -- on the date it would show?

       [BRETTMANN]: Yes.

       [PLAINTIFF’S COUNSEL]: And is that document kept in the normal course of
       business at Berkel?

       [BRETTMANN]: Yes.

       [PLAINTIFF’S COUNSEL]: Your Honor, at this time we would move for
       admission of Exhibit 3, Plaintiff's.

       [TRIAL COURT]: Objection?

       [DEFENDANT’S COUNSEL]: Your Honor, again, we’d object on the lack of
       proper foundation as to the knowledge of the -- personal knowledge of how the

                                              4
        records or the knowledge of the records were kept by someone with personal
        knowledge and under improper foundation and would also object to the hearsay
        within the document purporting to be an affidavit of Gregory Wileke.

        [TRIAL COURT]: All right. That objection’s overruled. Plaintiff’s Exhibit
        No. 3 are [sic] admitted.

Referring to and relying on the information contained in these exhibits, Brettmann testified that

Hilton owed Berkel $40,148.00. Brettmann also testified that the project was complete when

Berkel submitted the final invoice to Hilton and that Hilton breached the contract when it did not

pay the invoice 30 days after its submission. The jury agreed, finding that Hilton failed to comply

with its contract with Berkel.

        As mentioned earlier, Hilton raises three issues on appeal, the first of which challenges the

legal sufficiency of the evidence supporting the jury’s verdict.           When an appellant asserts

multiple grounds for reversal of the trial court’s judgment, an appellate court should first address

all issues that would require rendition and then, if necessary, consider issues that would result in

remand. See TEX.R.APP.P. 43.3; Natural Gas Pipeline Co. of Am. v. Pool, 124 S.W.3d 188, 201

(Tex. 2003). Because sustaining Hilton’s first issue would result in rendition of judgment in its

favor, we will consider it first.

                                    CONDITION PRECEDENT

        In its first issue, Hilton argues that the evidence is legally insufficient to support the jurors’

finding that it failed to comply with its contract with Berkel because the evidence conclusively

established “Berkel’s failure to meet a condition precedent to payment.” In so arguing, Hilton

asserts that “[t]he contract required . . . Berkel [to] obtain approval and certification of its work [by

the construction manager] before being entitled to payment[]” and that “Brettmann testified that

this approval and certification never took place.” But Berkel was not required to prove at trial that

                                                    5
it had obtained approval and certification because Hilton did not specifically deny the occurrence

of this condition precedent.3

           In its petition, Berkel pled that “[a]ll conditions precedent to [its] claim for relief have been

performed or have occurred.” Thus, by operation of Texas Rule of Civil Procedure 54, Berkel

was required to prove only the conditions precedent that Hilton specifically denied.                               See

TEX.R.CIV.P. 54 (party is required to prove only those conditions precedent that have specifically

been denied by the opposing party). Hilton did not specifically deny that Berkel failed to meet its

contractual obligation to obtain approval and certification of its work by the construction manager.

Instead, in response to Berkel’s allegation that it had performed all conditions precedent, Hilton

pled what can only be characterized as a hybrid answer encompassing the affirmative defense of

payment (albeit by a third party) and a general denial:

           Berkel failed to perform its contractual obligations that were required to be
           performed in order to bring this cause of action. Berkel’s claim is invalid because
           Granbury Marina paid that amount to MCC 4 for distribution to Berkel, and is
           contractually absolved as Berkel agreed to look to MCC for its payments and not to
           Granbury Marina and explicitly agreed that Granbury Marina has no obligation to
           pay or see to the payment of Berkel once Granbury Marina transmitted funds to
           MCC for distribution to Berkel in accordance with the Contract Documents.

                                         .                  .                 .

           Defendant denies that Plaintiff has satisfied all conditions precedent to the assertion
           of its claims as set forth in its Original Petition or entitlement to recovery of the

3
    We assume, without deciding, that this contractual requirement is a condition precedent.
4
  MCC is MCC Design Build, an entity providing construction management services. It contracted with Hilton to
select and supervise the trade contractors involved in building the hotel. Pursuant to this agreement, MCC “was to
receive all payment applications from the trades, ensure that the work reflected was acceptably performed and the
sums justly owed, and then compile those individual trade applications into one aggregate project payment
application, which it submitted to [Hilton] for payment. [Hilton] then obtained a draw from the bank based on the
project payment application, and paid MCC directly the amount requested in the project payment application. MCC
was to distribute those funds to the prime contractors in accordance with the individual pay applications supporting the
aggregate project pay application.” At trial, Brettmann acknowledged that MCC was involved in the project and had
paid the progress payments on Berkel’s behalf.
                                                           6
       relief sought. Plaintiff failed to perform and/or satisfy all conditions precedent to
       Plaintiff’s right to recovery, if any.

This denial, although contesting the validity of Berkel’s claims, does not specifically deny that

Berkel failed to obtain approval and certification as contractually required. See Hill v. Thompson

& Knight, 756 S.W.2d 824, 825-26 (Tex.App.--Dallas 1988, no writ)(holding that defendant did

not comply with his burden under Rule 54 to specifically deny the plaintiff’s contention that “[a]ll

conditions precedent with respect to Plaintiff's claims against Defendant herein have been

performed or have occurred[]” by responding with “[d]efendant denies that all condition precedent

to the satisfaction of the claim of Thompson & Knight have been satisfied and demand [sic] strict

proof with respect to all conditions precedent[]”). Because Hilton did not specifically deny the

occurrence of this condition precedent, Berkel did not have to prove at trial that the condition

precedent was satisfied, had been performed, or had occurred.

       Nor should Berkel have been expected or required to do so. Under Rule 54, it is sufficient

to aver the performance or occurrence conditions precedent generally. See Greathouse v. Charter

Nat. Bank-Southwest, 851 S.W.2d 173, 174, 176-77 (Tex. 1992)(holding that creditor in a

deficiency suit met its obligation to plead that disposition of the collateral was commercially

reasonable by relying upon Rule 54 in averring generally that all conditions precedent have been

performed or have occurred). Because the purpose of this rule is “to eliminate the necessity of

alleging matters concerning which there is no bona fide dispute[,] . . . [t]he allegation is taken as

true unless put in issue by the defendant’s answer[.]” 2 ROY W. MCDONALD & ELAINE A.

GRAFTON, TEXAS CIVIL PRACTICE, § 8:32, at 336-38 (2th ed. 2003). And, since the contract

between Berkel and Hilton does not mandate that this condition precedent must be proved at a trial

on the merits, there is no conflict between the terms of the contract and the provision of Rule 54

                                                 7
dispensing with such proof in the absence of a specific denial of the occurrence of the condition

precedent in question.          Because Berkel was not required to prove that the approval and

certification condition precedent had been met, its failure to do so affords no grounds for relief for

Hilton.

          In its reply brief, Hilton acknowledges that its “failure to deny occurrence of the condition

precedent bars [it] from relying on Berkel’s failure to introduce evidence of its occurrence as a

basis for reversal.”5 But Hilton counters that the operation of Rule 54 does not preclude it from

adducing evidence concerning the existence and non-occurrence of a condition precedent.

According to Hilton, it adduced evidence conclusively establishing that “Berkel’s contract

required it to obtain approval and certification as a condition precedent to payment but the

company failed to do so.” In support of this assertion, Hilton directs our attention to the following

exchange at trial between Brettmann and Hilton’s counsel:

          [DEFENDANT’S COUNSEL]: Do you have any document showing that Berkel
          and Company’s work was certified by the construction manager to be complete and
          done in accordance with the contract?

          [PLAINTIFF’S COUNSEL]: Objection, Your Honor. This is not a document
          production. This is a trial. If they’re requesting documents, it should have been
          done at pre-trial.

          [TRIAL COURT]: Overruled.

          [BRETTMANN]: No.

          [DEFENDANT’S COUNSEL]: Are you aware of any such document existing?

          [BRETTMANN]: I am not aware of it.

          [DEFENDANT’S COUNSEL]: I’m going to refer you to Article 6 of your
          contract that I’ve highlighted in front of you there under Final Payment: In order

5
 Hilton’s stance has changed. In its initial briefing, Hilton claimed that it “pleaded lack of conditions precedent to
Berkel’s right to recovery . . . .”
                                                          8
       to be entitled to final payment a Final Project Certificate for Payment is to have
       been issued by the construction manager; is that correct?

       [BRETTMANN]: Yes.

       [DEFENDANT’S COUNSEL]: Did I read that correctly?

       [BRETTMANN]: Yes.

       [DEFENDANT’S COUNSEL]: I’ll pass the witness, Your Honor.

       [PLAINTIFF’S COUNSEL]: Nothing further, Your Honor.

       Contrary to Hilton’s assertion, Brettmann’s testimony does not conclusively establish that

Berkel never obtained approval and certification. Rather, his testimony merely suggests this.

Even when viewed in the light most favorable to Hilton, Brettmann’s testimony does no more than

indicate the absence of evidence supporting Berkel’s case. But that is of no consequence because

Berkel was not required to prove at trial that it obtained approval and certification given Hilton’s

failure to specifically deny the non-occurrence of this condition precedent. To show that the

evidence was legally insufficient to support the jury’s finding in favor of Berkel, Hilton was

required to affirmatively disprove Berkel’s case. Brettmann’s testimony falls short of doing so.

       Hilton’s first issue is overruled.

                    BUSINESS-RECORDS EXCEPTION TO HEARSAY

       In its second issue, Hilton contends that the trial court erred in admitting Plaintiff’s

Exhibits Nos. 2 and 3 under the business-records hearsay exception and that this error probably

resulted in an improper judgment. We agree.

                                        Standard of Review

       We review a trial court’s ruling admitting evidence for an abuse of discretion. Texas

Dep’t of Transp. v. Able, 35 S.W.3d 608, 617 (Tex. 2000). A trial court abuses its discretion

                                                 9
when it rules without regard for any guiding rules or principles. Owens-Corning Fiberglas Corp.

v. Malone, 972 S.W.2d 35, 43 (Tex. 1998).

        To obtain reversal of a judgment based upon an erroneous evidentiary ruling, the appellant

must show that the error probably resulted in the rendition of an improper judgment.

TEX.R.APP.P. 44.1(a); Able, 35 S.W.3d at 617. This usually requires the appellant to demonstrate

that the whole case turned on the evidence in issue. Able, 35 S.W.3d at 617. To determine if the

appellant has met its burden, we review the entire record. Id.

                                                 Applicable Law

        Hearsay is an out-of-court statement offered in evidence to prove the truth of the matter

asserted and is inadmissible unless a statute or rule of exception applies. TEX.R.EVID. 801(d);

802; Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 908 n.5 (Tex. 2004). Under the

business-records exception, evidence that is otherwise inadmissible as hearsay may be admissible

if the proponent of the evidence demonstrates that: (1) the records were made and kept in the

course of a regularly conducted business activity; (2) it was the regular practice of the business

activity to make them; (3) they were made at or near the time of the event they record; and (4) they

were made by a person with knowledge who was acting in the regular course of business.

TEX.R.EVID. 803(6)6; In re E.A.K., 192 S.W.3d 133, 142 (Tex.App.--Houston [14th Dist.] 2006,

6
  The language of Rule 803(6) was amended in 2015 as part of the general restyling of the Texas Rules of Evidence
“to make [them] more easily understood and to make style and terminology consistent throughout.” See 78 TEX. B.J.
374, 374, 377 (Tex. & Tex.Crim.App. 2015). When this case was tried, Rule 803(6) read:

        A . . . record . . . made at or near the time by, or from information transmitted by, a person with
        knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular
        practice of that business activity to make the memorandum, report, record, or data compilation, all
        as shown by the testimony of the custodian or other qualified witness, or by affidavit that complies
        with Rule 902(10), unless the source of information or the method or circumstances of preparation
        indicate lack of trustworthiness.

                                                         10
pet. denied). The predicate witness may be the custodian of records or another qualified witness.

TEX.R.EVID. 803(6); In re E.A.K., 192 S.W.3d at 142. Although the predicate witness does not

need to be the creator of the record or have personal knowledge of its content, he must have

personal knowledge of the manner in which the records were prepared. In re E.A.K., 192 S.W.3d

at 142.

                                                Discussion
                                                  1. Error

          The trial court abused its discretion in admitting Plaintiff’s Exhibits Nos. 2 and 3 because

Berkel failed to establish the proper predicate for their admission as business records. Brettmann

testified that he was the custodian of records for Berkel, that both exhibits were made at or near the

time indicated on them, and that the exhibits were kept in the ordinary course of Berkel’s business.

But significantly—and fatally—Brettmann never testified that it was Berkel’s regular practice to

make the exhibits or that they were made by a knowledgeable person with a duty to make them. It

is clear that Brettmann did not make the exhibits, and Berkel proffered no affidavit or testimony

from a qualified witness establishing that the exhibits were business records and admissible over

Hilton’s objections.

          Berkel offers two reasons why the trial court did not abuse its discretion in admitting the

two exhibits as business records. Neither reason is persuasive.

          First, Berkel argues that Hilton waived its right to complain of the admission of Plaintiff’s

Exhibit No. 2 by failing to renew its prior successful objection when the exhibit was offered again.

In support of its argument, Berkel cites Richardson v. Green, 677 S.W.2d 497 (Tex. 1984), and

Marling v. Maillard, 826 S.W.2d 735 (Tex.App.--Houston [14th Dist.] 1992, no writ), for the

TEX.R.EVID. 803(6), 61 TEX. B.J. 374, 394 (Tex. & Tex.Crim.App. 1998, amended 2015).
                                                    11
proposition that a party waives its objection to the admission of evidence when the same or similar

evidence is later admitted without objection. This proposition is colorfully known as the “futility

rule.” See Leday v. State, 983 S.W.2d 713, 718 (Tex.Crim.App. 1998)(“Our rule which requires

objection to every offer is sometimes called ‘the “futility rule”; that is, despite ruling of judge that

evidence is admissible, party must keep making futile objections on pain of waiver.’”)[Internal

citations omitted]. But Berkel’s reliance on the futility rule is misplaced given the particular

circumstances of our case.       In both Richardson and Marlin, the appellants did not lodge

objections to the admission of evidence after initially having done so, nor could subsequent

objections be imputed to them based on the surrounding circumstances. In our case, the converse

is true. Based on the circumstances surrounding the admission of Exhibit No. 2, an objection to

its admission the second time it was offered can be imputed to Hilton.

       In Richardson, a mother sought to terminate a father’s parental rights to their

three-year-old son, alleging that the father had sexually abused the child. 677 S.W.2d at 498. At

trial, the evidence on which the mother relied consisted primarily of uncorroborated, hearsay

statements made by the child to various witnesses, including a caseworker for the Texas

Department of Human Resources. Id. at 498-99. The caseworker testified, over the father’s

hearsay objection, as to what the child told her in their initial interview while they were alone in

her office before going to another room to videotape their session. Id. at 499, 501. The father

later consented to the admission of this videotaped interview for the purpose of impeaching the

caseworker’s testimony that she did not ask the child leading questions during their initial

interview. Id. at 499, 501. The court of appeals, relying on the futility rule, held that the father

had waived his hearsay objection to the caseworker’s testimony regarding the initial interview

                                                  12
because he consented to the admission of the videotape recording of the second interview.

Richardson, 677 S.W.2d at 501. The Texas Supreme Court disagreed, concluding that the two

pieces of evidence were not sufficiently similar to invoke the futility rule because they were

distinct in substance: whereas the videotape interview was evidence of the actual dialogue between

the child and the caseworker and was replete with leading questions, the testimony of the

caseworker was hearsay evidence of what was said in her office “supposedly without any leading

or solicitation on her part.” Id.

       In Marling, the plaintiff sued a physician for misdiagnosing the cause of her neck swelling

and performing unnecessary modified neck surgery. 826 S.W.2d at 737. At trial, the physician

offered the testimony of a retired dental surgeon regarding the appropriateness of the surgery. Id.

at 739, 740. The plaintiff objected to the dentist’s qualification to render an opinion “on whether

‘a modified radial neck dissection was appropriate for [plaintiff] under the circumstances[]”’ on

the basis that the dentist “‘was not qualified in the area of head and neck surgery.’” Id. at 739.

The trial court sustained the objection. Id. Opposing counsel proceeded to elicit additional

testimony establishing the proper predicate, and the trial court twice overruled the plaintiff’s

objections to the dentist’s qualifications. Id. Opposing counsel then asked the dentist if he

“‘fe[lt] like a modified neck dissection was appropriate treatment for [the plaintiff]’” “‘based on

the information that [he] [had] based on patients that [he had] treated in the past[] and [his]

training[?]’” Without objection, the dentist answered, “‘I think it was entirely appropriate based

on my background.’” Id. On appeal, the plaintiff claimed that the trial court erred by admitting

the dentist’s testimony. Id. The appeals court disagreed, concluding that the plaintiff had failed

to preserve her complaint for appellate review by permitting the dentist to give his previously

                                                13
undisclosed opinion without objection. Id. In so concluding, the court reasoned that, “[c]ounsel

for [plaintiff], by her silence, created the impression that she had decided against challenging the

testimony in light of the additional predicate.” Id. at 739.

         In this case, the particular circumstances surrounding the admission of Plaintiff’s Exhibit

No. 2 into evidence lead us to conclude that Hilton did not waive appellate review of its

evidentiary objections to the exhibit. As recounted above, Hilton objected to the introduction of

this exhibit on two bases: (1) the proper predicate for its introduction as a business record had not

been established; and (2) the affidavits in the exhibits contained hearsay within hearsay. The trial

court sustained Hilton’s proper-predicate objection and directed Berkel to lay the proper predicate.

Berkel responded by eliciting further testimony from Brettmann, which has been reproduced

above in full. Berkel re-offered the exhibit, and the trial court—immediately—ruled as follows:

         All right. The second objection is overruled.                   The first objection is now
         overruled. No. 2 is admitted.

The trial court’s ruling reveals that it re-considered and overruled the proper-predicate objection it

had initially sustained. Because the trial court explicitly identified this evidentiary objection as

the same one it was reconsidering and overruling, an objection to the admission of the exhibit on

this basis the second time it was offered can be imputed to Hilton without requiring it to re-urge the

same objection. 7       Accordingly, Hilton preserved its complaint for appellate review.                        See

TEX.R.APP.P. 33.1(a)(To preserve a complaint for appellate review, a party must make a timely

and specific objection followed by an adverse ruling.).

         Second, Berkel asserts that Plaintiff’s Exhibits Nos. 2 and 3 were admissible as business

records because there is nothing to indicate that they are untrustworthy. Berkel points out that the

7
  Of course, had Hilton wished to lodge different evidentiary objections to the exhibit, it was incumbent upon Hilton
to do so at that time.
                                                         14
two exhibits are both standardized company forms signed by Berkel’s Assistant Corporate

Secretary “before a notary at the time [they were] created.” But in arguing that Hilton has failed

to demonstrate that the source of information or the method or circumstances of preparation of the

exhibits indicate a lack of trustworthiness, Berkel puts the cart before the horse.

        The trustworthiness of a business record comes into play only if its proponent has first

established that: (1) the record was made and kept in the course of a regularly conducted business

activity; (2) it was the regular practice of the business activity to make the record; (3) the record

was made at or near the time of the event it records; and (4) the record was made by a person with

knowledge who was acting in the regular course of business. See TEX.R.EVID. 803(6)(A)-(E).

As our discussion above illustrates, Brettmann’s testimony failed to establish that the exhibits met

elements (2) and (4). And nothing in the exhibits affirmatively establishes that the Assistant

Corporate Secretary had personal knowledge of the matters set forth in the exhibits or that he

prepared the exhibits based on information transmitted by a person with knowledge. Nor does the

creation of the exhibits establish that they were made in the regular practice of Berkel’s business

activity.

                                             2. Harm

        The trial court’s erroneous evidentiary rulings probably resulted in the rendition of an

improper judgment. Without Plaintiff’s Exhibits Nos. 2 and 3, there would be insufficient

evidence to prove the damages sustained by Berkel, and thus insufficient evidence upon which the

trial court could have reasonably rendered a judgment in Berkel’s favor.

        Berkel contends that Hilton “has failed to show the admission of either exhibit resulted in

an improper verdict” because the exhibits “were used to support [Brettmann]’s own testimony as

                                                 15
to the balance due under the contract.” In so contending, Berkel posits that “[t]he same testimony

could have been secured from [Brettmann] without introducing either exhibit, or in the alternative,

the documents could have been used to refresh [Brettmann]’s memory without admitting the

documents as exhibits.” Contrary to Berkel’s assertion, the exhibits are not cumulative of

Brettmann’s testimony.

         As noted above, Brettmann referred to and relied on the information contained in

Plaintiff’s Exhibits Nos. 2 and 3 when testifying to the amount Hilton owed Berkel. It is obvious

that Brettmann’s knowledge concerning the amount of non-payment was derived from his review

of the exhibits; Brettmann admitted that he lacked personal knowledge of the work and accounting

on the project. As a result, the entire case turns on the admission of these exhibits, and the trial

court’s judgment likely would not have remained the same without them. We, thus, conclude that

the trial court erroneously admitted hearsay evidence and that this evidence was essential to the

judgment.

         Hilton’s second issue is sustained.8

                                                 CONCLUSION

         The trial court’s judgment is reversed, and the cause is remanded for a new trial.

August 14, 2015
                                                      YVONNE T. RODRIGUEZ, Justice

Before McClure, C.J., Rodriguez, J., and Larsen, Senior Judge
Larsen, Senior Judge (Sitting by Assignment)

8
  Given our resolution of this issue, we need not address Hilton’s third issue, which if sustained, would have resulted
in the same outcome: remand. See TEX.R.APP.P. 47.1 (“The court of appeals must hand down a written opinion that
is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.”).
                                                          16