Court Opinion

ID: 3071737
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:39:33.780928+00
Date Added: 2024-06-11T11:16:45.652974
License: Public Domain

IN THE
                         TENTH COURT OF APPEALS

                               No. 10-11-00310-CV

RMDG CONSTRUCTION, LLC D/B/A DUDLEY
GENERAL CONTRACTORS AND DUDLEY
CONSTRUCTION, LTD D/B/A R.M. DUDLEY
CONSTRUCTION COMPANY,
                                                          Appellants
v.

OAKWOOD CUSTOM HOMES GROUP, LTD
AND INSURORS INDEMNITY COMPANY,
                                                          Appellees

                         From the 361st District Court
                             Brazos County, Texas
                       Trial Court No. 07-002207-CV-361

                          MEMORANDUM OPINION

      RMDG Construction, LLC d/b/a Dudley Construction (Dudley) filed suit

against Oakwood Custom Homes Group, LTD, and Insurors Indemnity Group for

breach of contract, quantum meruit, and action on the bonds. Oakwood filed a counter-

petition alleging breach of contract and other claims. The jury found that both parties

materially breached the contract, but that each party’s breach was excused. The trial
court entered judgment that Dudley take nothing against Oakwood and Insurors

Indemnity and that Oakwood and Insurors Indemnity take nothing against Dudley.

Dudley and Oakwood both appeal from the trial court’s judgment. We affirm.

                               Sufficiency of the Evidence

       In the first issue, Dudley argues that there is no evidence to support a finding

that Dudley materially breached the contract first. Dudley contends that the evidence

establishes that Oakwood was the first to materially breach the contract. In the second

issue, Dudley contends that the evidence is insufficient to support the jury’s finding that

Oakwood’s breach was excused.

       In reviewing a legal sufficiency challenge to the evidence, we credit evidence that

supports the verdict if reasonable jurors could have done so and disregard contrary

evidence unless reasonable jurors could not have done so. City of Keller v. Wilson, 168
S.W.3d 802, 827 (Tex.2005). We will sustain a legal sufficiency challenge when (a) there

is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or

of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the

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

conclusively establishes the opposite of the vital fact. Merrell Dow Pharm., Inc. v. Havner,

953 S.W.2d 706, 711 (Tex.1997).

Background Facts

       Oakwood, a residential homebuilder and developer, contracted to develop a new

residential subdivision to be named Horse Haven Estates. Mark Dudley is a principal

in several construction corporations. Oakwood and Dudley entered into a contract

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                              Page 2
where Dudley was to provide grading work, installation of a sewer system, installation

of a water-line system, and streets for the subdivision. The contract included a time is

of the essence provision and stated that the work would be completed within 60 days

for Phase II and 90 days for Phase III allowing for two weeks for the pre-ordering of

materials.   The contract further provided that Oakwood would make progress

payments on or about the 30th day of each month based upon Dudley’s applications for

payment. The payments were required to be made within ten days from the date of

submission of the pay application.

      The contract further provided that Oakwood “is responsible for removing all

structures (barns, mobile homes, septic systems, fences, concrete slabs, etc.) and trees

before [Dudley] is to proceed with their portion of the Contract.” Oakwood was to

employ and pay for the services of an independent testing laboratory to perform all

inspections, tests, or approvals required by the contract documents.      The contract

further stated that “[b]efore starting work, [Oakwood] will furnish [Dudley] ‘set aside’

letter from his lending institution which will state that the contract amount has been

placed in an account for which the sole purpose is to pay [Dudley]…”

      The record shows that Oakwood did not provide a set-aside letter as provided in

the contract and that Oakwood did not remove all the trees and structures from the job

site as provided in the contract. Dudley, however, began work on the project. There

were many delays, and the project was not timely completed. Oakwood removed

Dudley from the job and hired another contractor to complete the project. Oakwood

made payments to Dudley for the first three pay applications, but the fourth and fifth

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                         Page 3
pay applications remain unpaid. Dudley filed three liens related to the contract, and

Oakwood filed bonds to indemnify against the liens. The liens remain on file.

Jury Findings

      The jury found that Dudley Construction Ltd. and Oakwood Custom Homes,

Ltd. intended to bind themselves mutually to the contract. The jury further found that

both Dudley and Oakwood failed to comply with the contract and that the failure to

comply was material. The jury determined that both Dudley and Oakwood’s failure to

comply was excused. Because the jury found that both parties material breach was

excused, the jury did not award either party damages.

Analysis

      Dudley argues that there is no evidence that Dudley materially breached the

contract first and that the evidence shows that Oakwood was the first to materially

breach the contract. 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. Mustang Pipeline Company, Inc. v. Driver Pipeline

Company, Inc., 134 S.W.3d 195, 196 (Tex. 2004).       Dudley contends that Oakwood

materially breached the contract by:

     failing to remove all structures and trees before Dudley began work on the
      project,
     failing to furnish the set aside letter before Dudley began work,
     failing to pay for inspections and tests,
     failing to furnish materials to maintain access to the Kolbe tract,
     failing to timely pay the pay applications submitted by Dudley, and
     failing to extend the contractual deadlines for delays beyond Dudley’s
      control.

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                          Page 4
Dudley argues that it was excused from performing under the contract because of the

prior material breach by Oakwood.

      In Mustang Pipeline Company, Inc. v. Driver Pipeline Company, Inc., both parties

obtained favorable jury findings as to the other’s breach of contract, and both parties

moved for judgment notwithstanding the verdict. Mustang asked the trial court to

disregard the jury’s finding that Mustang wrongfully terminated the contract arguing

that once the jury found Driver breached the contract, it could not also find that

Mustang wrongfully terminated the contract because a breaching party cannot

subsequently enforce the contract. Mustang Pipeline Company, Inc. v. Driver Pipeline

Company, Inc., 134 S.W.3d at 197. The Court stated that the “problems could have been

avoided had the trial court submitted the breach of contract question disjunctively

accompanied by an appropriate instruction directing the jury to decide who committed

the first material breach.” Mustang Pipeline Company, Inc. v. Driver Pipeline Company,

Inc., 134 S.W.3d at 200. However, the Court found that the evidence established that

Driver materially breached the contract and that Mustang was discharged from its

duties under the contract. The Court held that the trial court should have granted

Mustang’s judgment notwithstanding the verdict. Id.

      In the case before us, the jury was not asked to determine which party was first

to materially breach the contract. Dudley did not object to the charge or request an

instruction on who was first to materially breach the contract. Dudley did not seek a

judgment notwithstanding the verdict to set aside the jury’s finding that Dudley

materially breached the contract.

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                        Page 5
       There was conflicting evidence on which trees and structures were to be

removed prior to Dudley beginning work on the project. The record shows that Dudley

began work on the project before all the trees and structures were removed and before

Oakwood provided the set aside letter, even though they were required to occur before

Dudley began work. There is evidence that Oakwood breached the contract by failing

to timely pay Dudley, and there is evidence Dudley breached the contract by failing to

timely complete the project. The jury found that both parties materially breached the

contract and that both parties’ breach was excused. Dudley asserts several breaches by

Oakwood and contends that the breaches by Oakwood were prior to the breach by

Dudley. However, the jury’s answers do not indicate which breach alleged by Dudley

that they found to be material.      We cannot conclude that the evidence is legally

sufficient to establish that Oakwood materially breached the contract first.     Unlike

Mustang Pipeline Company, Inc. v. Driver Pipeline Company, we cannot determine based

upon the record before us that the evidence conclusively establishes that Oakwood

materially breached the contract first discharging Dudley from performing under the

contract. We overrule the first issue.

Excuse

       Dudley also contends that there is no evidence to support the jury’s finding that

Oakwood’s breach of the contract was excused. The jury was instructed that failure to

comply is excused:

   a. By the non-occurrence of certain acts or events that must have occurred
      prior to Dudley’s right to immediate performance.

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                         Page 6
   b. By Dudley’s previous failure to comply with a material obligation of the
      same agreement.
   c. If compliance is waived by Dudley.

       “Waiver” is an intentional surrender of a known right or intentional
       conduct inconsistent with claiming the right.

Again, the jury was not asked to determine which party was the first to materially

breach the contract. The evidence does not conclusively establish that Oakwood was

the first to materially breach the contract. Therefore, we cannot conclude that the

evidence is legally insufficient to support a jury finding that Oakwood’s breach of the

contract was excused by Dudley’s prior material breach. We overrule the second issue.

                                        Damages

       In the third issue, Dudley argues that the record conclusively establishes that

Dudley’s damages include the invoiced amount in the fourth and fifth pay applications.

Because of our disposition of the first and second issues, we need not address the third

issue. See TEX. R. APP. P. 47.1

                                          Liens

       Oakwood brings two issues on appeal as cross-appellant.           Oakwood first

contends that the evidence at trial conclusively establishes that the mechanic’s and

materialman’s liens filed by Dudley are fraudulent as a matter of law. The contract

stated that it was an agreement between Dudley Construction L.L.C and Oakwood

Custom Homes Group, Ltd.          Mark Dudley testified at trial that he owns several

companies and does business under each company. Mark Dudley stated that his main

construction company is Dudley Construction Ltd.            He stated that the contract

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                         Page 7
erroneously named Dudley Construction “LLC” rather than “Ltd.”             Mark Dudley

further testified that Dudley Construction Ltd. and RMDG both do construction work.

Mark Dudley intended to do the project under RMDG construction, but switched the

job to Dudley Construction Ltd. because of the additional insurance and bonding.

      The jury was asked to determine the following:

      For each of the following liens, did either RMDG Construction L.L.C.
      d/b/a Dudley General Contractors or Dudley Construction Ltd. make,
      present or use a fraudulent lien with the intent that the document be given
      the legal effect of evidencing a valid lien to cause Oakwood Custom
      Homes Group, Ltd. to suffer financial injury?

      March 13, 2006 Affidavit for Mechanic’s & Materialman’s Lien
      Answer “Yes” or “No”__________

      September 15, 2006 Affidavit for Mechanic’s & Materialman’s Lien
      Answer “Yes” or No” __________

      December 15, 2006 Affidavit for Mechanic’s & Materialman’s Lien
      Answer “Yes” or “No” __________

      A lien is “fraudulent” if at the time the lien was filed, the party who filed
      the lien made a material false representation with the lien document, and
      such representation was either known to be false when made or was
      asserted without knowledge of its truth.

The jury answered “no” to each of the three questions on the liens. Oakwood filed a

motion for judgment notwithstanding the verdict asking the trial court to set aside the

jury’s answers on the fraudulent liens, render judgment for Oakwood, and award

damages.

      The denial of a motion for judgment notwithstanding the verdict is reviewed

under a no-evidence standard. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005).

We credit evidence favoring the jury verdict if reasonable jurors could, and disregard

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                             Page 8
contrary evidence unless reasonable jurors could not. Id. at 827. We will uphold a

judgment based on the jury's finding if more than a scintilla of competent evidence

supports it.    Tanner v. Nationwide Mutual Fire Insurance Co., 289 S.W.3d 828, 830

(Tex.2009). Therefore, we must decide whether the evidence presented at trial could

allow reasonable and fair-minded people to reach the verdict under review. Id.

      Section 12.002 of the Texas Civil Practice and Remedies Code provides:

      (a) A person may not make, present, or use a document or other record
          with:

          (1) knowledge that the document or other record is a fraudulent court
          record or a fraudulent lien or claim against real or personal property
          or an interest in real or personal property;
          (2) intent that the document or other record be given the same legal
          effect as a court record or document of a court created by or
          established under the constitution or laws of this state or the United
          States or another entity listed in Section 37.01, Penal Code, evidencing
          a valid lien or claim against real or personal property or an interest in
          real or personal property; and
          (3) intent to cause another person to suffer:
              (A) physical injury;
              (B) financial injury; or
              (C) mental anguish or emotional distress.
              …

      (b) A person who violates Subsection (a) or (a-1) is liable to each injured
      person for:

               (1) the greater of:
                       (A) $10,000; or
                       (B) the actual damages caused by the violation;
               (2) court costs;
               (3) reasonable attorney's fees; and
               (4) exemplary damages in an amount determined by the court.

      (c) A person claiming a lien under Chapter 53, Property Code, is not liable
      under this section for the making, presentation, or use of a document or

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                             Page 9
        other record in connection with the assertion of the claim unless the
        person acts with intent to defraud.

TEX. CIV. PRAC. & REM. CODE ANN. 12.002 (West Supp. 2013).

        Oakwood claims that the liens were fraudulent because two of the liens were

filed by RMDG and RMDG did not perform any labor or provide materials to

Oakwood. Oakwood was billed for the project by RMDG and made payments under

that billing name. Mark Dudley owns all of the companies involved in the project with

Oakwood. Mark Dudley testified that the liens were filed under the RMDG name

because the invoices to Oakwood were in that name. The record does not show that

Dudley acted with intent to defraud Oakwood in filing the liens under the RMDG

name.

        Oakwood argues that the liens are fraudulent because they encumber property

outside the 14.43 acres involved in the project. Mark Dudley agreed that he filed the

lien on 29 acres of Horse Haven rather than the approximately 14 acres involved in the

project. Mark Dudley stated that he believed the lien was good for the other properties

because the work he performed increased the value on other areas of Horse Haven

Estates. He further stated that he did not intend to harm Oakwood and that he filed the

liens to secure payment. The jury could have reasonably found that Dudley did not

intend to defraud Oakwood in filing the lien.

        Oakwood next argues that the liens are fraudulent because they contain an

inaccurate amount allegedly owed by Oakwood. Oakwood argues that the lien amount

was $81,860.39 and that the fourth pay application was for the amount of $80,928.85.

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                       Page 10
Mark Dudley testified that he believes that the amount of $81,860.39 remains unpaid on

the project. Mark Dudley stated that the higher amount reflects revisions that were

made at the request of the engineer. The record does not show that the lien was

fraudulent.   The evidence does not conclusively establish that any of the liens are

fraudulent as a matter of law. We overrule Oakwood’s first issue. In the second issue,

Oakwood argues that it is entitled to receive statutory damages under Section 12.002 of

the Texas Practice and Remedies Code as a matter of law. Because we found that the

liens were not fraudulent, we need not address the second issue. TEX. R. APP. P. 47.1

                                      Conclusion

      We affirm the trial court’s judgment.

                                           AL SCOGGINS
                                           Justice

Before Chief Justice Gray,
       Justice Davis, and
       Justice Scoggins
Affirmed
Opinion delivered and filed June 5, 2014
[CV06]

RMDG Construction, LLC v. Oakwood Custom Homes Group, LTD                         Page 11