Court Opinion

ID: 9779344
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:47:41.425415+00
Date Added: 2024-06-11T07:33:25.552809
License: Public Domain

ROBERTSON, Justice,
concurring.
I concur in the result of the majority. The facts and procedural history of the case at bar and Atkinson v. Jackson Bros., 270 S.W. 848, (Tex.Comm’n App.1925, holding approved) are similar. In Atkinson, suit was brought by a lumber company against the builder, Jackson Bros, and the owner, Atkinson, for the balance due on lumber and materials furnished for the construction of the Atkinson residence. Jackson Bros, filed a cross-action against Atkinson for the balance due on the construction contract. In response, Atkinson sought damages for various defects in the workmanship and material used in the construction of the building. The jury found that Jackson Bros, had substantially complied with the contract and had built the house in accordance with the plans and specifications agreed upon. The trial court awarded Jackson Bros, recovery for the full amount owed on the contract.
On appeal, Atkinson complained that the trial court erred in awarding Jackson Bros, the full contract price because the jury, although it found Jackson Bros, had substantially complied with the contract, also found several defects in the construction. 259 S.W. 280 (Tex.Civ.App.—Austin 1924), rev’d and remanded in part, 270 S.W. 848 (Tex.Comm’n App.1925, holding approved). The court of civil appeals held that since Jackson Bros, had substantially complied with the contract, their performance is deemed equivalent to full performance for purposes of suit on the contract. The court reasoned that since Jackson Bros, had fully performed for purposes of suit on the contract, it was entitled to recover the contract price in the absence of pleading and proof of facts by the Atkinsons showing what amount would reasonably cover the cost of remedying any defects so as to fulfill the terms of the contract. 259 S.W. at 285.
The commission of appeals reversed the holding of the court of civil appeals and held:
It being made to appear from the pleadings and the proof that there was not a full compliance with the plans and specifications, Jackson Bros, could not recover at all without invoking the equitable doctrine of substantial performance. We therefore think the burden was on them to furnish the evidence to properly measure the deductions allowable necessary to remedy the defects and omissions.
270 S.W. at 851. This court approved the holding of the commission of appeals. 270 S.W. at 852.
As stated by the majority, 677 S.W.2d at 482, the major issue before this court is whether Texas should continue to follow the Atkinson rule of placing the burden of *485proof of the measure of a defendant’s damages on the party bringing suit on a substantially complete construction contract. In nonsubstantial performance cases, the general rule in Texas is that the party asserting a claim has the burden of proving, by a preponderance of the evidence, every element necessary to sustain his claim. International—Great Northern Co. v. Casey, 46 S.W.2d 669 (Tex.Comm’n App.1932, holding approved); Southern Pacific Transportation Co. v. Allen, 525 S.W.2d 300 (Tex.Civ.App.—Houston [14th Dist.] 1975, no writ). The Atkinson court, however, departed from the traditional burden of proof by effectively requiring the contractor to establish the damages element of the owner’s cause of action. This departure was founded on the belief that at common law the contractor could not recover under the contract in the absence of the doctrine of substantial performance. “No such rule has ever been a part of the common law, much less a rule of equity.” A.L. Corbin, 3A Corbin on Contracts § 709 (1960). Furthermore, this reasoning ignores that, in cases such as Atkinson and the present dispute, both parties have breached the contract and both parties are seeking damages for the breach of the other.
In both Atkinson and this case, the owner sued for damages based upon the contractor’s failure to render complete performance, and the contractor sued for damages based upon the owner’s failure to pay. In both cases, each contracting party alleged an independent breach of contract. In such a case, assuming the owner proves the contractor has not completely performed, but the contractor proves he has substantially performed, the owner is entitled to recover damages resulting from the contractor’s less-than-complete performance. Likewise, the contractor is entitled to recover his damages that result from the owner’s failure to pay. Of course, as a practical matter, the damage claims will be offset against each other and only the party proving the larger amount of damages will actually recover against the other party. Placing the burden of proof on each party to prove his own damages in such a case allows each party to recover exactly that to which he is entitled under the contract.
In an independent action against a contractor for breach of a construction contract, the burden of proof is on the owner to establish the contract’s existence, Franks v. Harkness, 117 S.W. 913 (Tex. Civ.App.—1909); the alleged breach, Schulz v. Tessman, 92 Tex. 488, 49 S.W. 1031 (1899); and any damages sustained. County of Tarrant v. Butcher & Sweeney Constr. Co., 443 S.W.2d 302 (Tex.Civ.App.—Fort Worth 1969, writ ref’d n.r.e.); see Franks v. Associated Air Center, Inc., 663 F.2d 583, 590 (5th Cir.1981) (“Under Texas law, the reasonable cost of repairs is an essential element in plaintiff’s proof of damages.”) In a suit by an owner against a contractor for failure to complete the contract on time, the owner must meet the burden of proof as to the measure of damages. See generally Walsh v. Methodist Episcopal Church South, 212 S.W. 950 (Tex.Comm’n App.—1919, judgmt adopted); McKnight v. Renfro, 371 S.W.2d 740 (Tex. Civ.App. — Dallas 1963, writ ref’d n.r.e.). Similarly, in a suit by an owner for a contractor’s failure to complete construction, the owner must satisfy the burden of proof as to the measure of damages to complete the structure. Zang v. Hubbard Bldg. & Realty Co., 125 S.W. 85 (Tex.Civ.App.—1910). See generally Marshall v. San Antonio, 63 S.W. 138 (Tex.Civ.App.—1901).
However, under Texas law following Atkinson, when a contractor brings a cause of action for the owner’s failure to pay, after substantially performing on the contract, and the owner counterclaims for defective workmanship, the contractor effectively has the burden of proof of the damage element of the owner’s cause of action by furnishing evidence on “deductions allowable necessary to remedy the defects and omissions.” Matador Drilling Co., Inc. v. Post, 662 F.2d 1190, 1195 (5th Cir.1981). In addition to proving his own damages, a contractor must prove the owner’s damages, to his own disadvantage, or risk *486forfeiture of his right to enforce the contract. BPR Construction & Engineering, Inc. v. Rivers, 608 S.W.2d 248, 249-50 (Tex.Civ.App.—Dallas 1980, writ ref d n.r.e.). It is anomalous that the contractor, in suing on the contract, must prove breach on his own part and the value of that breach. Todd Shipyards Corp. v. Jasper Electric Service Co., 414 F.2d 8, 15 (5th Cir.1969) (placing of the burden on the owner is a “better view”). In the absence of such proof the contractor can recover nothing in his suit and the owner receives what may be, depending upon how much has already been paid under the contract, a substantial windfall. See generally Ryan v. Thurmond, 481 S.W.2d 199 (Tex.Civ.App.—Corpus Christi 1972, writ ref’d n.r.e.). Additionally, the contractor is faced with the risk of proving the owner’s damages so convincingly that the finder of fact determines he, the contractor, did not substantially perform. If the contractor attempts to meet the burden imposed by the rule of Atkinson and the fact finder thereafter finds he did not substantially perform, he cannot receive a judgment on the contract and is left with only a quantum meruit claim. Atkinson v. Jackson Bros., 270 S.W. at 851. In this way, the rule of Atkinson may require the contractor to defeat his own suit. The contractor’s alternative to this delicate balancing act is to forego suit on the contract altogether and sue only for the value of his services. From the contractor’s perspective, neither alternative is desirable. From the juristic perspective, neither alternative is fair.
An additional compelling reason for placing the burden of proof on the owner is found in the general rule long recognized by this state that the party having peculiar knowledge of the facts to be proved has the burden of proof of such facts. W.A. Ryan & Co. v. M., K. & T.Ry.Co., 65 Tex. 13, 19 (1885). In a substantial performance case the same measure of damages applies to both the contractor and the owner. Atkinson v. Jackson Bros., 270 S.W. at 850. Those damages are expressed as the contract price less the reasonable cost of repair of the defect or omission. The alleged defect is exclusively within the control and access of the owner. In both the case at bar and Atkinson, the owner either made or had the repairs made. The contractor did not know and should not have been expected to know without investigation the measure of damages. “Ultimately, it is the dissatisfied party who knows best what particular phase of the construction is unsatisfactory to it.” Hopkins Construction Co. v. Reliance Ins. Co., 475 P.2d 223, 226 (Alaska 1970). The owner, having responsibility for and usually supervising any repair work, is in the better position to establish the measure of damages.
By placing on the contractor the burden of proving the cost to remedy defects, the Atkinson court created a good defense to any suit on the contract by the contractor. As observed by a concurring opinion in BPR Construction and Engineering, Inc., v. Rivers, 608 S.W.2d at 250:
According to the logic of Atkinson, if [the contractor] proves the cost of remedying one or more defects asserted by the owner, the dilemma still exists because the court or jury may find another defect raised by the evidence, but concerning which the amount of the owner’s damage has not been shown. All an owner needs to do in order to establish a defense to the contractor’s entire claim, while retaining the benefit of the contractor’s work, is to raise a fact issue concerning any defect, no matter how slight in relation to the total of the work performed.
The possibility of the owner’s unjustifiably alleging a series of defects presents the contractor with a most onerous burden. The contractor must present evidence regarding the cost to remedy every defect, and in the absence of such proof forfeits his contract rights. The smaller his breach, the greater the forfeiture. A.L. Corbin, 3A Corbin on Contracts § 710 (1960).
The majority urges the fact an owner has peculiar knowledge of the damages to be proved and the onerous burden placed upon the contractor of presenting evidence of *487every defect alleged by an owner may be avoided by use of Texas’ broad discovery rules. Although these problems may be lessened by our discovery rules, the prodigiously unfair and awkward position of a contractor attempting to show compliance with a construction contract while simultaneously being required to establish damages from his alleged breach of that same contract is indefensible. Therefore, I would overrule our previous decision in Atkinson v. Jackson Bros, and adopt the rule that in an action by a party for collection of the contract price of a substantially completed construction contract the defendant, in order to avail himself of a set-off for damages sustained from incomplete or defective work, has the burden of proof as to the measure of such damages. United States for use of Acme Maintenance Engineering Co. v. Wunderlich Contracting Co., 228 F.2d 66 (10th Cir.1955); United States for Use and Benefit of Lichter v. Henke Const. Co., 157 F.2d 13 (8th Cir.1946); United States for Use and Benefit of Foster Wheeler Corp. v. American Surety Co., 142 F.2d 726 (2nd Cir.1944); United States ex rel Johnson v. Morley Const. Co., 98 F.2d 781 (2d Cir.1938); United States, for use of Baltimore Cooperage Co. v. McCay, 28 F.2d 777 (D.C.1928); Alaska State Housing Authority v. Walsh & Co., Inc., 625 P.2d 831 (Alaska 1980); Charest v. Busby, 141 So.2d 466 (La.App.1962); Antonoff v. Basso, 347 Mich. 18, 78 N.W.2d 604 (1956); Rickertsen v. Carskadon, 172 Neb. 46, 108 N.W.2d 392 (1961); Dyer v. Lintz, 76 N.J.L. 204, 68 A. 908 (1908); Charles A. Burton, Inc. v. Durkee, 162 Ohio St. 433, 123 N.E.2d 432 (1954); Exton Drive-In, Inc. v. Home Indemnity Co., 436 Pa. 480, 261 A.2d 319 (1969); Vermont Structural Steel Corp. v. Brickman, 126 Vt. 520, 236 A.2d 658 (1967); De Blasio v. Town of Kittitas, 57 Wash.2d 208, 356 P.2d 606 (1960); A.L. Corbin, 3A Corbin on Contracts § 710 (2d ed. 1960 and 1962 supplement) (stating the rule requiring the placing of the burden on the owner is “sensible and self-evident”); S. Williston, 6 Williston on Contracts § 842 (3d ed. 1962) (“The burden of establishing the amount of the allowance for defective work falls upon the owner”).
WALLACE and KILGARLIN, JJ., join in this concurring opinion.