Court Opinion

ID: 2894127
Source: CourtListenerOpinion
Date Created: 2015-09-07 22:55:44.234577+00
Date Added: 2024-06-11T11:36:43.334061
License: Public Domain

NO. 07-05-0200-CV

                            IN THE COURT OF APPEALS

                     FOR THE SEVENTH DISTRICT OF TEXAS

                                      AT AMARILLO

                                       PANEL B

                                  APRIL 17, 2006
                         ______________________________

               INTERSTATE HIGHWAY CONSTRUCTION, INC., AND
                  PACIFIC INDEMNITY COMPANY, APPELLANTS

                                           V.

                    LANCO TURF & SEEDING, INC., APPELLEE
                      _________________________________

             FROM THE 47TH DISTRICT COURT OF POTTER COUNTY;

                  NO. 90,213-A; HONORABLE HAL MINER, JUDGE
                       _______________________________

Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.

                              MEMORANDUM OPINION

      Appellants, Interstate Highway Construction, Inc. (Interstate) and Pacific Indemnity

Company (Pacific), appeal a summary judgment granted in favor of appellee, Lanco Turf

& Seeding, Inc. (Lanco). We affirm.
                           Factual and Procedural Background

       Interstate contracted with the City of Amarillo to upgrade a runway at the Amarillo

International Airport.1 Because portions of the work would be subcontracted, Interstate

obtained a payment bond from Pacific to guarantee that subcontractors would be paid for

the work they furnished.

       Lanco entered into a subcontract with Interstate to seed, mulch, and water 80 acres

at the airport.2 The Contract provided specifications for this subcontract work, which were

specifically incorporated into the Subcontract, requiring that a “good stand of grass of

uniform color and density” be established on the 80 acres.

       Lanco began performing the work required under the Subcontract in April of 2002.

After Lanco had seeded the acreage, Amarillo received significant rains. Because of the

rain, Interstate notified Lanco that the City was satisfied with the work and that watering

would not be required. Lanco submitted an invoice to Interstate that included a charge of

$110,400 for seeding, mulching, and watering the 80 acres, in accordance with the terms

of the Subcontract.3 Upon receipt of the invoice, Interstate requested credit from Lanco for

       1
        Further reference to the contract between the City of Amarillo and Interstate will
be by reference to the “Contract.”
       2
         Further reference to the contract between Interstate and Lanco will be by reference
to the “Subcontract.”
       3
         The invoice actually identified $124,200 as the amount owed, which included
seeding of an additional 10 acres that the parties agreed to separately from the
Subcontract. While the parties agreed that Lanco would perform this additional work, the
parties dispute the amount of compensation Lanco is owed for performing this work. As
with the Subcontract, Interstate contends that Lanco is not entitled to payment for watering

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the watering services that were not provided. Lanco refused to provide such credit.

Interstate made a partial payment of $7,300, but did not pay the remaining balance of

$116,900.

       Lanco filed suit against Interstate and Pacific for breach of contract and quantum

meruit. Interstate and Pacific filed answers in which they asserted the affirmative defense

of unjust enrichment and counterclaimed for declaratory judgment, promissory estoppel,

and breach of contract.

       After discovery, Interstate and Pacific filed motions for partial summary judgment on

their counterclaim for declaratory judgment. Lanco also filed a motion for summary

judgment. The trial court granted Lanco’s motion, denied Interstate’s and Pacific’s motions,

severed Lanco’s claim for attorney’s fees, and ordered that Lanco recover from Interstate

and Pacific, jointly and severally, $116,900, plus 18 percent interest per annum from June

26, 2002 until paid. It is from the summary judgment in favor of Lanco that Interstate and

Pacific now appeal.

       By their sole issue, Interstate and Pacific contend that the trial court erred in granting

summary judgment in favor of Lanco. See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119,

121 (Tex. 1970) (a general issue contending that the trial court erred in granting summary

services not provided on these additional 10 acres. Lanco contends that it is entitled to the
“per unit” price identified in Schedule A of the Subcontract for the additional 10 acres.
Thus, our determination of whether the Subcontract entitles Interstate to a credit for the
watering that Lanco did not perform will also determine the amount of compensation due
Lanco for this additional work.

                                               3
judgment allows argument as to all grounds upon which summary judgment should have

been denied).

                                  Standard of Review

      A traditional summary judgment, such as the one granted to Lanco, is proper when

the movant conclusively establishes that no genuine issue of material fact exists and,

therefore, the movant is entitled to judgment as a matter of law. See TEX . R. CIV . P.

166a(c); Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002). We review the

granting of traditional summary judgment using the standards set out in Nixon v. Mr. Prop.

Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985):

      (1) The movant for summary judgment has the burden of showing that there
      is no genuine issue of material fact and that it is entitled to judgment as a
      matter of law.

      (2) In deciding whether there is a disputed material fact issue precluding
      summary judgment, evidence favorable to the non-movant will be taken as
      true.

      (3) Every reasonable inference must be indulged in favor of the non-movant
      and any doubts resolved in its favor.

      When both parties move for summary judgment and the trial court grants one motion

and denies the other, the appellate court reviews the summary judgment evidence of both

parties, determines all questions presented, and renders the judgment that the trial court

should have rendered. Bradley v. State ex rel. White, 990 S.W.2d 245, 247 (Tex. 1999).

If the trial court does not specify the basis on which it granted summary judgment, the

judgment will be affirmed if any of the grounds in the motion are meritorious. See State

Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex. 1993).

                                            4
                                     Contract Ambiguity

         The goal of a court in construing a contract is to determine and give effect to the

objective intention of the parties as expressed in the contract. See Gulf Ins. Co. v. Burns

Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000). When a contract is worded such that it can

be given a certain or definite legal meaning, it is not ambiguous and will be enforced as

written. See id. However, a contract is ambiguous if the terms of the contract are

susceptible to more than one reasonable interpretation. See Nat’l Union Fire Ins. Co. of

Pittsburgh v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). Whether a contract is

ambiguous is a question of law. Id. If a contract contains an ambiguity, the granting of a

motion for summary judgment is improper because the proper construction of the contract

presents a genuine issue of material fact. Coker v. Coker, 650 S.W.2d 391, 394 (Tex.

1983).

         The Subcontract defines the work to be performed by reference to the incorporated

Schedule A, which provides that Lanco’s “work” was to seed, mulch, and water the 80

acres. Paragraph 1 of the Subcontract places upon Lanco the responsibility to complete

all of the work identified in Schedule A, specifically makes Schedule B incidental to

Schedule A, and incorporates the terms and conditions of the Contract into the

Subcontract. Paragraph 4 provides that Lanco “agrees to accept as full and final payment

. . . the amounts of compensation as defined in Schedule A . . . .” Further, paragraph 4

provides that Lanco “agrees to accept such . . . payment . . . as final payment in

consideration for the completion of all items, in full accordance with obligations and

responsibilities of this Subcontract Agreement and the Contract as it applies to the

                                              5
Subcontractor’s work” (emphasis added). Paragraph 4 further provides that Interstate has

the right to deviate or omit work from the Subcontract “as necessary to meet obligations

under the Contract.” Any change in the work that would decrease the compensation to

Lanco “shall be as the parties agree.”4 Paragraph 5 of the Subcontract provides that

Interstate agrees to pay for the performance of the work required under the Subcontract

and that Lanco agrees to accept as its full and only compensation the sums of money

properly owed to it and as set forth in the Subcontract and any documents incorporated into

the Subcontract. Finally, in paragraph 26, the Subcontract incorporates “Schedule A to

Subcontract: Listed Subcontract items of work, prices and methods of compensation

therefor” and “Schedule B to Subcontract: Subcontract Special Provisions.”

       Schedule A provides that Lanco shall do all things necessary to perform the work

described in Schedule A in accordance with the specifications and drawings contained in

the Contract and that Lanco shall be paid in accordance with the prices set forth in

Schedule A. As relevant to this appeal, Schedule A identifies item 39 as “T-901 [the

specifications for the seeding work contained in the Contract] Seed & Mulch & Water.” Item

39 contains a “plan quantity” of 80, a unit price of $1,380, and a subtotal for all 80 units of

$110,400.

       4
        The Subcontract contains a specific procedure imposing upon Lanco certain
responsibilities should any changes to the work require additional compensation. However,
the only provision that relates to a decrease in the compensation owed is the “as the
parties agree” provision. This provision goes on to require Lanco to complete the work,
even if a dispute arises, but in no way addresses a decrease in compensation arising after
all items of work had already been completed.

                                              6
      Paragraph 13 of Schedule B provides that, “At the Contractor’s option,

Subcontractor will perform Item #39B – Watering to Stand. The Contractor may elect to

use all or none of the total quantity.” Interstate, in its appellate brief, also highlights

paragraph 9 of Schedule B which states, “Contractor agrees to pay for all work performed

by the Subcontractor, as directed by the Contractor, that is accepted by the Owner [City].”

       When taken as a whole and attempting to give meaning to all of its provisions, the

Subcontract envisions that the successful completion of the project is to be assessed by

Lanco performing all of the work Interstate directed it to perform and by the City’s

acceptance of the work. The Subcontract makes Lanco’s watering of the 80 acres at the

election of Interstate, but does not provide that Interstate’s election to forego watering

would effect the amount of compensation owed to Lanco, unless the parties agreed

otherwise. We acknowledge that Schedule A of the Subcontract includes watering as a

component of the “work” required to be performed by Lanco. However, the Subcontract

further provides that Interstate had authority to alter the work required of Lanco and

paragraph 13 of Schedule B specifically made Lanco’s obligation to water subject to the

election of Interstate.   Nothing in the Subcontract addresses or even implies that

Interstate’s election to forego components of the “work” defined by the Subcontract would

affect Lanco’s compensation, other than by agreement of the parties. When viewed as a

whole, the Subcontract provides that Lanco has performed the “work” required by the

Subcontract if (1) Lanco performed all work as directed by Interstate, (2) Lanco did “all

things necessary to perform the work” described in the Subcontract and in the Contract’s

specification T-901, and (3) Lanco’s work was accepted by the City. Upon completion of

                                            7
the work, Lanco was entitled to the compensation identified in Schedule A as full and final

payment. Thus, so long as Lanco performed all work that Interstate directed it to perform,

the work conformed to the requirements of the Contract’s specification T-901, and the work

was accepted by the City, Lanco is entitled to the compensation identified in item 39 of

Schedule A of the Subcontract.

       Considering the Subcontract as a whole, we fail to see any provision that is

susceptible to two or more reasonable constructions. Therefore, we conclude that the

Subcontract is unambiguous and will enforce the Subcontract as written. See Gulf Ins. Co.,
22 S.W.3d at 423. We construe the contract to unambiguously entitle Lanco to recovery

of the full contractual compensation for the successful completion of the work. Further, the

Subcontract indicates that the work is successfully completed if Lanco followed the

directions of Interstate, conformed their work to the Contract’s specifications, and the work

was accepted by the City. The record reflects that Lanco fulfilled each of these obligations.

Therefore, Lanco is entitled to the compensation identified in the Subcontract.

       Because the Subcontract specifically governs Lanco’s rights to compensation, we

overrule Interstate and Pacific’s affirmative defense of unjust enrichment. See Fortune

Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000) (when a valid, express contract

covers the subject matter of a dispute, there can be no recovery for unjust enrichment).

                                          Interest

       Interstate contends that Lanco is not entitled to interest under the Subcontract and

that Lanco is further not entitled to attorney’s fees. As the trial court severed the issue of

                                              8
attorney’s fees from the present dispute, that issue is not before us. The trial court also

ordered interest from June 26, 2002 at a rate of 18 percent per annum until paid. Interstate

and Pacific do not contest the amount of interest ordered by the trial court,5 but rather

contend that Lanco’s refusal to grant a credit for the watering services not provided made

a tender of payment for seeding and mulching futile and, as a result, the failure to pay is

excused and an award of interest is improper.

       Interstate and Pacific cite Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565,

160 S.W.2d 509, 514 (1942), and Warrior Constructors, Inc. v. Small Business Inv. Co. of

Houston, 536 S.W.2d 382, 386 (Tex.Civ.App.–Houston [14th Dist.] 1976, no writ), to support

their contention that their failure to pay was excused where it was assumed that the partial

tender would not have been accepted. However, we find these cases inapposite. In

Kinzbach Tool, the excused party actually tendered the proper amount due in a timely

fashion, but this tender was rejected by the payee. The court held that the payee’s

rejection of the proper payment excused the payor’s failure to make subsequent payments

because, “The law does not require an actual tender when the party to whom the money

is due has signified in advance that he will refuse to accept it.” Kinzbach Tool Co., 160
S.W.2d at 514. In Warrior Constructors, Inc., the court held that tender is excused where

a creditor has clearly indicated that he is unwilling to accept what is due in discharge of a

debt. See Warrior Constructors, Inc., 536 S.W.2d at 386. However, in each of these

cases, the payor was excused from tendering payment because the payee had refused to

       5
        Paragraph 11 of Schedule B of the Subcontract provides that “All invoices are due
45 to 60 days after the invoice date. Any past due unpaid sums . . . shall bear interest at
the rate of 18% per annum until paid.”

                                             9
accept the amount that was actually due. Here, Interstate never offered payment to Lanco

in the amount that was due under the Subcontract.

       Additionally, Interstate and Pacific contend that it should be excused from interest

on the partial payment that it was willing to tender because it was evident that such a

tender would not be accepted by Lanco. However, as evidence for this proposition,

Interstate and Pacific cite Lanco’s refusal to give a credit for the watering services, Lanco’s

continued billing and demand letters for the full amount owed under the Subcontract, and

summary judgment evidence that Interstate and Pacific would have paid an invoice for

$58,400 if one had been received. We fail to see how any of this evidence establishes that

Lanco would not have accepted a partial payment of the amount owed had such a payment

been offered.

       Therefore, having found that payment was not tendered by Interstate and Pacific in

the amount due and payable to Lanco in a timely fashion and that Interstate and Pacific

have failed to establish that their failure to make such a timely tender was excused, we

affirm the trial court’s award of interest to Lanco.

                                         Conclusion

       We affirm the judgment of the trial court.

                                                    Mackey K. Hancock
                                                        Justice

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