Opinion
No. 10-95-295-CV.
April 23, 1997.
Appeal from the 66th District Court, Hill County, F.B. (Bob) McGregor, Jr., J.
Sidney H. Davis, Gregory R. Ave, Touchstone, Bernays, Johnston, Beall Smith, L.L.P., Dallas, for appellant.
Patricia Hair, Kathleen Hopkins Alsina, Houston, for appellee.
Before DAVIS, C.J., and CUMMINGS and VANCE, JJ.
OPINION
Hillsboro Independent School District (HISD) contracted with DSA, a construction management firm, to oversee the construction of an elementary school. Before the school was completed, HISD noticed serious problems with the structure of the building and the surrounding landscaping. HISD attributed these defects to DSA's failure to adequately perform its duties in the manner promised by DSA during the contract negotiations and in their written, finalized agreement. HISD eventually brought suit against DSA for breach of contract, negligent misrepresentation, and violations of the Deceptive Trade Practices Act. See TEX.BUS. COMM. CODE ANN. § 17.41-.63 (Vernon 1987 Supp 1997). Trial was before a jury, which found against DSA on each of the three causes of action and awarded HISD $220,661 in actual and $170,000 in exemplary damages.
HISD also sued the project's architectural design firm, the steel supplier, the project's engineering firm, and the roofing contractor for the same or similar transgressions. These named defendants, however, are no longer parties to members agreed, and a meeting was arranged. this suit. The architecture firm and the steel supplier settled with HISD before trial; the engineering firm was voluntarily non-suited before trial; and the roofing contractor was severed from the cause after it filed for bankruptcy.
Through twenty-one points of error, DSA essentially complains of five grouped errors: first, that HISD's DTPA cause of action was barred by limitations; second, that the jury should have been charged on comparative negligence; third, that the evidence is insufficient to support the jury's finding of liability on each of HISD's three causes of action; fourth, that the evidence is insufficient to support the jury's finding of gross negligence; and fifth, that the evidence is insufficient to support the jury's finding on the amount of damages for the roof. We affirm the judgment as reformed.
I. FACTUAL BACKGROUND
To dispose of DSA's points of error, a more thorough rendition of the facts is necessary. In 1984 the voters in the Hillsboro Independent School District passed a bond election that authorized its school board to spend $2,050,000 for the construction of a new elementary school. However, all the bids received were at least $300,000 more than the amount of bonds approved for the construction, and the HISD school board, consequently, rejected each bid. In an effort to locate a more affordable means of seeing the school constructed, Maurice English, then superintendent of HISD, suggested to t he board that they speak to DSA. The board members agreed, and a meeting was arranged.
At the meeting, DSA represented to the board members that it, as a construction management firm, was able to perform the same functions as a general contractor but for a much lower cost because construction managers charge flat rates for their projects and require the landowner to contract with any necessary trade contractors, whereas general contractors inflate their estimations of how much a project will cost to complete because they must allow for cost overruns by their own subcontractors. HISD accepted DSA's offer to manage construction of the school for $2,050,000, and the parties entered a formal, written agreement to that effect.
Upon completion of the project, HISD complained to DSA about three aspects of the construction: (1) a poorly-constructed foundation had allowed excess water to collect underneath the building, causing the ground to swell and damage the under-floor plumbing; (2) the roofing system that was installed was both inadequate for the weather conditions in Hill County and was not installed properly, both problems resulting in numerous leaks into the interior of the school; and (3) the land immediately surrounding the premises was improperly graded, causing rainwater to flow downward and into the school.
II. LIMITATIONS ON THE DTPA CLAIM
In its first point of error, DSA contends that HISD's DTPA allegations were barred by the statute of limitations. It asserts that HISD failed to file its DTPA claims within the two years allowed under the DTPA's statute of limitations and that, because HISD was aware of the injuries resulting from DSA's alleged misrepresentations to the district during the contract negotiations more than two years before filing suit, the discovery rule did not operate to toll the limitations period. In response, HISD concedes that it did not file suit within two years of DSA's alleged misrepresentations; however, it asserts that the limitations period was tolled by the discovery rule because no reasonable person or entity could have discovered, within two years before filing suit, that the three complained-of injuries were the result of DSA's common scheme to injure HISD.
DTPA claims are governed by a two-year statute of limitations that the Legislature has expressly provided may be tolled by the discovery rule. TEX.BUS. COM. CODE ANN. § 17.565 (Vernon 1987); see Burns v. Thomas 786 S.W.2d 266, 267 (Tex. 1990). Section 17.565 of the Business Commerce Code reads as follows:
All actions brought under this subchapter must be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice. The period of limitation provided in this section may be extended for a period of 180 days if the plaintiff proves that failure timely to commence the action was caused by the defendant's knowingly engaging in conduct solely calculated to induce the plaintiff to refrain from or postpone the commencement of the action.
TEX.BUS. COM. CODE ANN. § 17.565.
The essential facts are not in dispute. The contract was entered into on or about August 22, 1985. The school was completed in the fall of 1987 and first occupied in September 1987. The original petition was filed on December 29, 1992. Roof-leaking was identified before the school opened in September 1987. Plumbing damage from the swollen ground underneath the building was first discovered in either September 1989 or around March 1990. The unsuitable draining of the land surrounding the school was first noticed in the fall of 1987.
The parties did not date the contract.
The first three questions submitted to the jury were whether "[DSA] engage[d] in a false, misleading, or deceptive act or practice that was a producing cause of damages to Hillsboro Independent School District"; whether DSA "engage[d] in any unconscionable action or course of action that was a producing cause of damages to Hillsboro Independent School District"; and whether "the failure, if any, of [DSA] to comply with a warranty [was] a producing cause of damages to Hillsboro Independent School District." The jury answered each question in the affirmative. In question four the jury was asked, "By what date should Hillsboro Independent School District in the exercise of reasonable diligence, have discovered any of the acts you have found in answer to Question 1 or 2 or 3[?]" The jury returned the date of July 13, 1992, for each of the three questions.
The only evidence in the record relating to a date of July 13, 1992, was a letter from Johnny M. Tabor of Tabor Associates, Inc., to Leon Murdoch, English's successor as superintendent of HISD, concerning the extent of the plumbing and foundation damage caused by swollen ground underneath the school and by the rainwater that had flowed down and collected around the building. HISD had previously contracted with Tabor Associates to conduct a study of the construction problem with the school and advise the school district on what measures should be. taken to repair the damage that had already occurred and to prevent any further damage from occurring. The letter constitutes the conclusions Tabor Associates reached on the best solutions to remedy HISD's foundation and plumbing problems.
It is beyond question that if the limitations period was tolled until July 13, 1992, then HISD's December 29, 1992, original petition was timely. DSA, however, attacks the jury's finding, contending that the dates upon which HISD undisputedly became aware of the roofing, plumbing, and landscaping problems control for determining when the discovery rule ceased to operate and limitations began to run. Moreover, DSA asserts that since the latest date on which HISD became aware of the roofing and landscaping problems was in the fall of 1987, and the date the plumbing problems were discovered was around March of 1990, the two-year limitations period on the DTPA claims had long-since expired by the time HISD filed its December 1992 petition.
HISD takes a different tack in construing the proper meaning of these undisputed dates, contending that the dates HISD learned of the injuries which led to this suit are irrelevant in the determination of when the limitations period began to run. It asserts that the answer properly lies in determining when it discovered, or should have discovered, not the actual injuries but the misrepresentations by DSA concerning the nature of its role in the school's construction. And, because the actions of DSA were part of a pattern of negligence and misrepresentation, the dispositive date is the one HISD learned of the full extent of the pattern of alleged deceit. HISD maintains that the jury's finding of July 13, 1992, is unassailable because there is legally and factually sufficient evidence to support it.
Several of our sister courts of appeals have addressed a similar issue, and they are unanimous in holding that the limitations period under section 17.565 begins to run on the date the putative plaintiff either knew or should have known of the injury that provides the basis of his DTPA claim. See, e.g., Cornerstones Mun. Util. Dist. v. Monsanto Co., 889 S.W.2d 570, 576 (Tex.App.-Houston [14th Dist.] 1994, writ denied); Foremen v. Pettit Unlimited, Inc., 886 S.W.2d 409, 411 (Tex.App.-Houston [1st Dist.] 1994, no writ); Smith v. Gray, 882 S.W.2d 103, 105 (Tex.App.-Amarillo 1994), writ denied, 907 S.W.2d 444 (Tex. 1995); Hanmore Dev. Corp. v. JBK Enter., 776 S.W.2d 738, 740 (Tex.App.-Corpus Christi 1989, writ denied). HISD's argument that an exception should apply when the physical injuries are tied to a common scheme is without merit.
HISD, arguing in the alternative, contends that an exception exists when a fiduciary relationship exists between the plaintiff and the defendant. HISD maintains that the instant case is closely akin to Russell v. Campbell, 725 S.W.2d 739 (Tex.App.-Houston [14th Dist.] 1987, writ ref'd n.r.e.).
In Russell, the two plaintiffs, former business partners, sued their former accountant for allegedly misrepresenting to them the nature of a real estate investment partnership in which the accountant successfully persuaded them to invest. Id. at 742. After luring the plaintiffs into joining the partnership by assuring them that their 34% interest in the business would be sufficient to defeat any proposed business maneuvers that they opposed, the plaintiffs agreed to join. Id. Over the course of the next several years, however, the accountant proceeded to add further assets to the business (which six years later had been transformed into a corporation) on his own personal behalf, and he unilaterally acquired more shareholders for the corporation, both actions having the effect of diluting the plaintiffs' ownership interest in the corporation to a relatively powerless 22%. Id.
At trial, the accountant argued that the plaintiffs' negligence, breach of fiduciary duty, and DTPA claims were barred because the plaintiffs either knew or should have known of the accountant's representations about the nature of the business in which he had invited the plaintiffs to invest when the business was incorporated more than four years before the plaintiffs amended their original petition to add a DTPA claim. Id. at 744. The Fourteenth Court concluded that the discovery rule tolled the limitations period on each of the plaintiffs' claims and that, as a result, each of their three causes of action was timely brought. HISD argues that the court reached its conclusions because of the fiduciary obligations the defendant bore to the plaintiffs.
We note a distinction in the Russell decision that HISD fails to mention in its brief The Fourteenth Court utilized the "fiduciary duty" concept to conclude that limitations were tolled for the plaintiffs' breach of fiduciary duty and professional negligence claims. See Russell v. Campbell, 725 S.W.2d 739, 747-48 (Tex.App.-Houston [14th Dist.] 1987, writ ref'd n.r.e.). With regard to the plaintiffs' DTPA allegations, however, the court held that the discovery rule tolled the DTPA limitations provisions because the plaintiffs did not discover the defendant's alleged deceptive trade practices, or any corresponding injuries, until a meeting which took place within two years of the date the DTPA claims were brought. Id. at 747. The nature of the fiduciary relationship between the two parties did not enter the court's analysis; however, as we agree that the fiduciary duty concept allows the tolling of the limitations period under the DTPA, this distinction has no bearing on our analysis of the limitations issues in this case.
Under the DTPA, limitations is tolled until the plaintiff discovers or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice that leads to the plaintiff filing suit. TEX.BUS. COM. CODE ANN. § 17.565. While all plaintiffs are expected to exercise diligence in discovering whether they have been injured by the putative defendant, when there is a fiduciary relationship between the parties, the plaintiff is not expected to be as diligent as someone in an arm's-length transaction; in other words, the diligence expected of the injured party in a fiduciary relationship does not require as prompt or as searching an inquiry into the conduct of the other party. See Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988); Richard Gill Co. v. Jackson's Landing Owners' Assoc., 758 S.W.2d 921, 924 (Tex.App.-Corpus Christi 1988, writ denied).
The reasoning behind this "fiduciary duty" concept makes sense in light of the policy of applying the discovery rule in situations where the putative plaintiff, despite the exercise of due diligence, could not have discovered the nature of his injury. See Willis, 760 S.W.2d at 645. In cases like Russell where the defendant bears a fiduciary relationship toward the plaintiff, the likelihood of the plaintiff timely discovering his injury is greatly reduced because he reasonably expects the defendant to fulfill his fiduciary obligations and be truthful and forthright in his representations. See id. The defendant is often able to take advantage of this fiduciary relationship to manipulate the trust of those relying on him. The consequence of this trust's betrayal is a fraud that may continue to go undiscovered for an extended period of time. See Willis, 760 S.W.2d at 645 (attorney-client fiduciary relationship); Woodbine Elec. Serv., Inc. v. McReynolds, 837 S.W.2d 258, 262 (Tex.App.-Eastland 1992, no writ); Russell, 725 S.W.2d at 748.
The accountant in Russell owed a fiduciary duty to the plaintiffs, and the accountant's abuse of this trust enabled him to cheat the plaintiffs of their rights first as partners and later as shareholders in their business. See Russell, 725 S.W.2d at 748. Therefore, the discovery rule operated to toll the limitations period until the time when the plaintiffs actually discovered the reason for their injury, even though they may have learned of the nature their injury on an earlier date.
While the terms of the agreement were clear that DSA was HISD's agent and, therefore, DSA was HISD's fiduciary, the facts of the case before us are nevertheless distinctly different from those in Russell. See Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 513 (1942) (agency relationship creates a fiduciary relationship as a matter of law); Southland Lloyd's Ins. Co. v. Tomberlain, 919 S.W.2d 822, 831 (Tex.App.-Texarkana 1996, writ denied). Here, HISD was made aware of the injures it suffered more than two years before suit was filed. The fiduciary duties DSA owed to HISD did not enable DSA to keep secret the injuries it may have inflicted upon HISD: the school district was clearly aware of the plumbing, landscaping, and roofing problems associated with DSA's supervision over the construction of the elementary school more than two years before suit was filed. Therefore, the existence of a fiduciary relationship between DSA and HISD did not have the effect of tolling the limitations period beyond the time HISD became aware of the injuries it suffered. DSA's first point of error is sustained.
Due to our disposition of DSA's first point, we need not pass on its second through fourteenth points, as they all relate to the DTPA cause of action. They are, therefore, dismissed as moot.
III. LEGAL SUFFICIENCY ON THE BREACH OF CONTRACT CLAIM
In its eighteenth point of error, DSA complains that the evidence is legally insufficient to support the trial court's judgment that it breached its contract with HISD. We agree with DSA on the drainage complaint, but not on either the roofing or plumbing grounds. The relevant provisions from the agreement are as follows:
1. Upon receipt by DSA from OWNER of the complete and final working drawings, plans and specifications prepared by OWNER's Architect, DSA shall in OWNER's name and behalf and as OWNER's Agent, and based on such complete working drawings, plans, and specifications, secure bids and prices for each category of construction involved, including labor, materials, specialized skilled services and contractors' services so as to make a final estimate of cost of construction (included therein the fees of DSA) and shall advise OWNER of such estimates.
2. Upon receipt by DSA from OWNER of OWNER's approval of such final cost estimate and instruction to DSA to proceed (such instruction to include the date on which OWNER expects construction to commence), DSA shall then, acting as OWNER's Agent and in OWNER's name, place and stead, negotiate and prepare contracts for each category of construction involved, including labor, materials, specialized skilled services and contractors' services. All such contracts as well as all purchase orders and all change orders shall be on DSA forms but shall be subject to approval by OWNER and shall be signed by OWNER, acting by and through the person(s) named in paragraph # 19 below. It is understood that DSA shall not be responsible for the failure of any laborer, materialman, specialized skilled service provider, contractor and/or any other contracting party contracted with or hired under the provisions of this paragraph #2 or paragraph # 10 below to perform his, her or its contractual obligations to OWNER under their respective contracts with OWNER nor for any negligent act, if any, committed by any such laborer, materialman, specialized skilled service provider, contractor or other contracting party in the course of the construction project.
3. It is expressly recognized and agreed that the relationship between the parties is that of Principal and Agent. DSA covenants with OWNER to furnish DSA's best skill and judgment in forwarding the interests of OWNER during the course of the construction project so as to permit OWNER, insofar as possible, to complete such construction in the best and soundest way and in the most expeditious and economical manner consistent with the interests of OWNER. In furtherance of this covenant, DSA, as OWNER's Agent, shall
(a) insist upon adequate performance by each laborer, materialman, specialized skilled service provider, contractor and other contracting party who enters into a contract with OWNER under the provisions of paragraph # 2 above or who is hired under the provisions of paragraph # 10 below of his, her or its contractual obligations to OWNER, and, if it is determined by DSA that any such laborer, materialman, specialized skilled service provider, contractor or other contracting party is not adequately performing such obligations after being called upon to do so, DSA shall recommend courses of action to OWNER in order that corrective action may be taken by OWNER;
(b) insist upon reasonable compliance by each such laborer, materialman, specialized skilled service provider, contractor and other contracting party with the Architect's said final working drawings, plans and specifications for this construction project, and, if it is determined that there is a failure to comply after being called upon to do so, DSA shall recommend courses of action to OWNER in order that corrective action may be taken by OWNER;
(c) endeavor to protect OWNER against defects and deficiencies in the work being performed, and, if deemed appropriate by DSA, recommend courses of action to OWNER such as, for example, special inspections and/or testings in order that corrective action may be taken by OWNER.
. . .
5. For and on behalf of OWNER, DSA, as OWNER's Agent, shall seek out and secure the services of a Job Superintendent who shall be paid by OWNER for on-the-job supervision and coordination of the work. Such Job Superintendent shall be a properly qualified full time supervisor who shall be authorized and directed to report directly and regularly to DSA, as OWNER's Agent, on the progress of construction and DSA shall evaluate such work progress and advise the OWNER from time to time of such evaluation. Also, DSA's Project Manager shall regularly visit the job site and report to the OWNER his evaluation of construction progress and made recommendations in respect thereof Owner agrees that when such Job Superintendent is released by OWNER, OWNER shall execute that certain release form which shall be furnished by DSA.
. . .
10. OWNER does not desire that its officers or building committee be burdened with the day to day hiring and discharge of casual, manual and skilled labor for the subject construction work. It is, therefore, understood and agreed that its Job Superintendent shall effect such hiring and discharge of casual, manual and skilled labor, but this delegation of authority shall not in any manner limit OWNER's right at any time and from time to time to hire or discharge any labor personnel or its right to establish, approve and disapprove of labor policies.
At trial, HISD argued that the plumbing, draining, and roof damage suffered by the school would not have occurred had DSA performed its contractual duties to make certain (1) that the school was constructed properly; (2) that a non-expandable filler was used to refill the excavation; (3) the plumbing was hung further away from the expanding soil underneath; and (4) the exit drain from the sinkhole was on a higher elevation than the sinkhole, itself. In particular, HISD alleged, with regard to the plumbing problem, that the plumbing damage would not have occurred had DSA made certain that the crawl space beneath the building was deep enough to accommodate the expansion and contraction of the ground below and that non-expandable filler had been used. Concerning the excavation, HISD maintained that the drainage problem would not have occurred had DSA recognized that the grade of the parking lot was improperly designed to permit the flow of rainwater down to the school building. With regard to the roof, HISD contended that it would not have leaked had DSA fulfilled its responsibility to make certain that it was a suitable roof for the building and that it was installed properly.
When the complaining party raises a point challenging the legal sufficiency of the evidence to support a finding that favors the party who had the burden of proof on that finding, we must sustain the finding if, considering only that evidence and the inferences which support the finding, and disregarding the evidence and the inferences to the contrary, any probative evidence supports it. American Derringer Corp. v. Bond, 924 S.W.2d 773, 786 (Tex.App.-Waco 1996, no writ); see Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex. 1993).
a. The Roof
We disagree with DSA's contentions that there is no evidence to support the jury's findings that DSA breached its duty to adequately coordinate the installation of the original roof. At trial, HISD argued that DSA breached the contract by not fulfilling its duty to use its best judgment in seeing the roof installed, and not fulfilling its duty to make certain the trade contractors did not perform their work negligently. DSA responds that it could not be responsible for any of the problems with the roof because (1) the problems with the roof were purely the fault of the design established by the architecture firm that prepared the blueprints for the school, and (2) assuming that the trade contractors did perform some of the work negligently, DSA bore no duty to make certain that it was not. Because we find that there is legally sufficient evidence to support the jury's finding that DSA breached its duty to use its best judgment in seeing the roof installed, we will not address the question of whether DSA bore and breached a duty to make certain the roofing contractor did not perform its work negligently.
Prior to contacting DSA, HISD hired an architecture firm, Darrow, McSpedden Sellars, Inc., (DMSI) to design the school. DMSI's original specifications called for a non-ballasted, generally flat, elastomeric single-ply membrane roof that was equal to a "Carlisle-manufactured Sure-Seal Design A, non-ballasted." Upon reviewing DMSI's plans, DSA considered that a non-ballasted single-ply flat roof might prove inadequate for the high winds that plague Hill County. DSA opined that the winds might catch underneath the roof and pull it away from its moorings, which would eventually result in substantial leakage. Accordingly, DSA suggested to HISD that a non-ballasted built-up, or gabled, roof be installed.
According to the record, ballast is a weight, usually gravel, that is placed over a roof both to weigh it down and to prevent it from shrinking. Non-ballasted roofs are mechanically fastened to hold them down and keep them from shrinking.
The record indicates that the roof was not exactly flat. The specifications called for a roof for which the height either increases or decreases one-and-one-half inches for every twelve inches of length.
DSA contends it recommended the built-up roof HISD maintains that DSA never indicated that the single-ply roof would not work and merely suggested a built-up roof as an alternative.
Upon receiving this suggestion, HISD inquired from DMSI whether it desired to substitute a built-up roof for the non-ballasted, single-ply flat roof that it originally called for in its specifications. DMSI rejected this suggestion, and HISD instructed DSA to proceed with the singly-ply, non-ballasted roof.
Despite DMSI's specifications that a non-ballasted roof be used, DSA then solicited bids on a ballasted, single-ply roof, and several roofing trade contractors submitted bids based upon the use of roofs manufactured by several different businesses, including manufacturers referred to at trial as Carlisle Syn Tech Systems, Firestone Industrial Products Company, and Syenergy Methods, Incorporated. DSA decided to award the contract to a roofing trade contractor referred to by the parties as McKenzie Cross. Upon discovering that McKenzie Cross's bid was based upon the installation of a Carlisle-manufactured ballasted, single-ply flat roof instead of a non-ballasted one and then learning of DMSI's opinion that the walls of the school were not strong enough to support the extra weight of the ballast, HISD rejected the bid. Nevertheless, DSA decided to proceed with McKenzie Cross as the roofing trade contractor, but with McKenzie Cross using a Syenergy-manufactured non-ballasted, single-ply roof rather than the ballasted roof specified in its bid. DMSI subsequently approved the Syenergy roof for the school.
The basic concept behind this roof was that a metal deck rested over the top of the building structure and attached to the top of the deck were steel joists. On top of the steel joists lay sheets of polystyrene insulation boards, and over those, was installed a half-inch thick sheet of wooden fibre board. On top of the wooden fibre board rested a flexible, elastic membrane. The membrane covered the entire expanse of the roof and ended along the perimeter at a wall referred to at trial as a "parapet wall." The parapet wall was an extension of the walls constituting the perimeter of the building; the parapet wall was designed exclusively for use with the roof's installation. The height of this parapet wall varied from eight inches to two or three feet. The membrane was designed to run up the entire height of the parapet wall from its base to the top. The deck and membrane were held down mechanically, i.e. by screws, and not by ballast.
At trial, expert testimony was offered from Vernon Dunagin, a roofing consultant, that the Syenergy roof was installed negligently. Dunagin testified about a number of mishaps and omissions that occurred in the roof's installation, including, among other things: (1) the metal deck upon which the roof's membrane laid was not fastened in every instance to the steel joists underneath the roof; (2) the mountings for the several skylights installed in the roof were missing a number of wooden "nailers" that were supposed to hold up the skylights; (3) the insulation boards underneath the roof were installed with wide gaps between them, which created a potential for rupture to the membrane should a person unsuspectingly step on a portion of the membrane covering one of the voids; (4) workers apparently used gasoline to clean parts of the membrane as it was installed but these workers permitted the gasoline, which has a corrosive effect on insulation boards, to spill on the boards and deteriorate them; (5) in a similar fashion, the workers permitted an adhesive they used in the installation of the roof to spill onto the insulation, which caused further deterioration of it; and (6) insufficient adhesive was used along the edge of the membrane where the. membrane was installed to run up the parapet wall, which allowed the membrane to pull apart at the seams.
DSA's defense to all these instances where the roof was allegedly installed negligently was that only the roofing contractor, McKenzie Cross, and perhaps the roofs manufacturer, Syenergy, could be held liable to HISD under the agreement. DSA referred to the disclaimer of liability clause located in paragraph two:
It is understood that DSA shall not be responsible for the failure of any laborer, materialman, specialized skilled service provider, contractor and/or any other contracting party contracted with or hired under the provisions of this paragraph # 2 or paragraph # 10 below to perform his, her or its contractual obligations to OWNER under their respective contracts with OWNER nor for any negligent act, if any, committed by any such laborer, materialman, specialized skilled service provider, contractor or other contracting party in the course of the construction project.
In disposing of this point of error insofar as it relates to the roofing allegations, we need not consider, generally, whether DSA was able to insulate itself from liability under the contract in every instance where McKenzie Cross, as a "service provider" under paragraph 2, performed its duties negligently. Instead, we find that there is "some evidence" that DSA breached its duty under paragraph 3 of the contract to "furnish DSA's best skill and judgment in forwarding the interests of OWNER during the course of the construction project so as to permit OWNER, insofar as possible, to complete such construction in the best and soundest way and in the most expeditious and economical manner consistent with the interests of OWNER."
As indicated above, DMSI's original specifications for the roof called for a roof comparable in quality to the Carlisle-manufactured elastomeric single-ply membrane roof. In the course of receiving bids from various roofing trade contractors on the job, McKenzie Cross in its bid indicated that it would perform the job using a ballasted Carlisle-manufactured elastomeric single-ply membrane roof. DSA then learned from HISD that it did not want a ballasted roof; nevertheless, DSA inquired from McKenzie Cross whether it could perform the job using a non-ballasted roof. McKenzie Cross responded that it would use a Syenergy-manufactured non-ballasted roof, and DSA agreed to proceed with McKenzie Cross as the roofing trade-contractor on this basis.
Evidence was admitted at trial from Vernon Dunagin that a Syenergy roof was inappropriate for the high-winds of Hill County. As indicated above, the record indicates that the Syenergy roof was designed to end, and then run up the entire length of, the parapet wall. According to Dunagin, all the manufacturers of single-ply roofs of which he is aware specify that a "termination bar" be situated at the base of the parapet wall. Implied in Dunagin's comments is the assertion that the termination bar is used to secure the membrane against the bottom of the parapet wall. Dunagin testified that, when the membrane becomes detached from the bottom of the parapet wall, wind will catch underneath the membrane, causing it to flap up, which creates voids that pull on the seams, weakening them.
According to Dunagin, the membrane of the Syenergy roof was designed to be attached to the parapet wall only by using glue. Through Dunagin, evidence was offered that, due to the lack of a termination bar, the membrane pulled away from the parapet wall and helped cause the leaks about which HISD complained. We hold that DSA's recommendation to HISD that it use the Syenergy roof, which by design lacked a termination bar, was some evidence that DSA breached its duty to HISD under paragraph 3 of the contract.
DSA asserts that all non-ballasted, single-ply roofs would fail on this school and that, therefore, it cannot be held responsible for suggesting that one particular type of non-ballasted, singly-ply roof, namely, the Syenergy roof, be used. It also contends that, had HISD used a built-up roof as it had originally suggested and has since been installed on the school, the roof problems would never have occurred. Dunagin, however, testified that non-ballasted, single-ply roofs built by manufacturers other than Syenergy would have been appropriate for the school. Therefore, there is some evidence to defeat DSA's argument.
DSA argues that it is not a roofing expert and therefore could not be expected to provide expert opinions to HISD on the quality of various roofs. However, DSA must take some responsibility for persuading HISD to use a roof that was different than what DMSI's original specifications called for. The record is clear that DMSI subsequently approved DSA's suggestion that McKenzie Cross be hired for the job using a Syenergy roof, but DMSI's "stamp of approval" on DSA's suggestion does not cleanse DSA of all responsibility for its actions. DMSI may have been negligent in approving the Syenergy roof, but that does not absolve DSA of its responsibility to make certain that its recommendations for changes in the school's specifications are made reasonably.
Deposition testimony from Francis BeVier, DSA's project manager for the construction of the school, was offered at trial wherein he conceded that DSA did no investigation into the strength of Syenergy-manufactured roofs. Instead, DSA deferred absolutely to McKenzie Cross on what kind of roof to use, and because McKenzie Cross wanted to use a Syenergy-manufactured roof, DSA went along with the suggestion and made the recommendation to HISD. DSA's failure to investigate the strength of Syenergy-manufactured roofs before recommending to DMSI that one be used in lieu of a Carlisle-calibre roof is some evidence that DSA breached its contractual duty to HISD.
DSA defends itself by arguing that DSA was merely following a directive from DMSI to try to consider lesser-expensive alternatives in putting on the roof when it decided to recommend that the Syenergy-manufactured roof be used. This directive from DMSI, however, does not justify DSA's using a substandard-quality roof. Therefore, there is some evidence to support the jury's finding that DSA breached its contractual obligations to HISD in overseeing the construction of the roof
b. The Plumbing
The evidence adduced at trial is legally sufficient to support the judgment that DSA breached its agreement with HISD with regard to the plumbing problems. The evidence at trial was uncontroverted that DMSI's original design of the school specified that a pier-and-beam foundation would be used with a single "sinkhole" to be located underneath the center of the building through which excess water could drain. The record indicates, roughly, that in a pier-and-beam foundation, piers are driven to a level deep enough in the ground where the amount of moisture level of the soil is so minimal that it could not cause any significant expansion or contraction of either the soil or the piers. Once the piers are set at this level, beams are then connected across the piers and the building is constructed thereon. With a building constructed using a pier-and-beam foundation, a crawl space is dug underneath the building and in that crawl space the plumbing is hung from the bottom of the building.
In its brief, DSA alleges that any problems with water collecting under the school was due to HISD's insistence on using the pier-and-beam foundation and that this foundation, coupled with the sinkhole, was woefully inappropriate for the school. DSA maintains, therefore, that any problems with-improper drainage can only be attributed to this faulty design that it, under its agreement with HISD, was obliged to follow. We agree with DSA that it was obliged to follow DMSI's specifications, whether those specifications concerned the plumbing, the roofing, the excavation, or any other aspect of the school's construction.
We note that HISD represented at trial that it is content with the pier-and-beam foundation and that it did not wish that another foundation had been used. Nevertheless, we will address at this juncture the question of whether DSA was obligated to follow DMSI's specifications because it will have a bearing later in our discussion of DSA's seventeenth point of error.
Paragraph one of the agreement clearly provides that DSA was to commence its work on the project "[u]pon receipt by DSA from OWNER of the complete and final working drawings, plans and specifications prepared by OWNER's Architect", and paragraph 3 clearly provides that DSA shall "insist upon reasonable compliance by each such laborer, materialman, specialized skilled service provider, contractor and other contracting party with the Architect's said final working drawings, plans and specifications[.]" The direct implication from these statements is that DSA was to follow the specifications of DMSI to see that DMSI's design of the proposed school was implemented. The testimony from the several witnesses at trial further substantiates this theory of the case. Dr. Roy B. Young, a veterinarian in Hillsboro who was a member of the HISD school board at the time of the school's construction and was president of the board at the time of trial, testified that during the contract negotiations DSA offered to have its own in-house architect design the building. According to Dr. Young, HISD responded that it had already obtained a design for the building from DMSI and that it wished its design to be followed. HISD also offered that DMSI would continue to oversee the construction of the school so that any necessary changes in the design of the school, discovered during the construction process, could take place. Therefore, given the clear instructions that DSA was merely to follow the design of the school as provided by DMSI, there could have been no expectation on the part of HISD that DSA would either correct any flaws in the design of the school or override any specifications in the design with which DSA might have disagreed.
There is evidence in the record, however, that DSA did make recommendations to HISD that it question of whether DSA otherwise failed to comply with the terms of the agreement. change some elements of the design, and there also is evidence that DSA on its own added a weight room to the school's construction that had previously been eliminated. Whether DSA did deviate from the specifications, however, does not mean that DSA bore a duty under the agreement to do so.
Unlike HISD's allegations concerning the roof, there is no evidence that DSA was somehow at fault in selecting the type of foundation to be used. We thus turn to the question of whether DSA otherwise failed to comply with the terms of the agreement.
DSA defends itself against HISD's accusations that the foundation was negligently constructed by asserting (1) it bore no duty under the contract to make certain that the trade contractor who constructed the foundation did not perform his work negligently, and (2) that the pier-and-beam foundation was doomed to fail no matter how it was built. DSA's arguments are without merit.
The agreement between the parties clearly provided that DSA was to obtain trade contractors for the completion of the several areas of the school's construction, including the excavation and foundation. DSA did that. It located a business referred to at trial as Hillsboro Sand and Gravel (hereafter HS G) to excavate the land and build a foundation for the school. A second trade contractor was hired to install the plumbing. Four problems apparently arose from the manner in which HS G constructed the foundation: (1) HS G was negligent in not providing sufficient clearance in the crawl space for the ground to expand without coming into contact with the plumbing located underneath the building, (2) HS G was negligent in failing to use "select fill," a type of soil that does not expand when wet, to refill the excavation, (3) the plumbing contractor was negligent in not hanging the plumbing high enough to avoid the expanding ground, (4) HS G was negligent in not constructing the exit drain at a lower elevation than the sinkhole, and (5) HS G was negligent in placing the drain for the sinkhole higher than the surrounding ground. At trial HISD sought to attribute, at least in part, the blame for both the faulty design and the negligent construction of the foundation to DSA.
DSA maintains that it cannot be held responsible for these negligent acts of HS G and the plumbing trade contractor because it had no obligation under the contract to make certain that these trade contractors did not perform their duties negligently.
The DSA-HISD agreement provides that "DSA shall not be responsible for the failure of any laborer, materialman, specialized skilled service provider, contractor and/or any other contracting party contracted with or hired under the provisions of this [agreement] to perform his, her or its contractual obligations to OWNER under their respective contracts with OWNER nor for any negligent act, if any, committed by any such laborer, materialman, specialized skilled service provider, contractor or other contracting party in the course of the construction project."
However, the agreement also unequivocally imposes on DSA a duty to "insist upon adequate performance by each laborer, materialman, specialized skilled service provider, contractor and other contracting party" who enters into a contract with DSA.
DSA essentially contends that it cannot be held liable for any negligence practiced by any of the trade contractors because of the waiver-of-liability clause quoted above. But this clause does not excuse DSA from fulfilling its duty to "insist upon adequate performance" by the several trade contractors.
Paragraph 4 of the agreement provided that DSA was to hire a job superintendent to oversee the day-to-day construction operations at the job site. The agreement also provided that the project manager was required to monitor the progress of the school's construction. BeVier, DSA's project manager, however, testified that no one from DSA made an effort to inspect every element of the school's construction. Evidence that BeVier and the job superintendent failed to conduct these inspections supports the finding that DSA breached the contract.
Assuming that it did bear this duty, DSA nevertheless argues that the trade contractors were not negligent and that they constructed the building according to DMSI's specifications.
The record reveals that DMSI called for a one-foot crawl space underneath the school. In that crawl space the plumbing was designed to hang, at the least, four inches below the school. BeVier testified that he was aware at the time of construction that the ground around the school had the potential to expand, when wet, from four to ten inches. As might be expected, when heavy rains came, the ground underneath the school expanded greatly and crushed the plumbing. HISD maintains that, as BeVier was aware that more clearance was needed underneath the school than was provided by HS G, then DSA necessarily breached its contractual duties to make certain that the crawl space was not negligently constructed.
There is no evidence that the crawl space was negligently constructed. The height of the crawl space was mandated by DMSI in the specifications it provided for the construction of the school. DSA and HS G abided by these specifications. Under the agreement, DSA had an obligation to report to HISD instances when the trade contractors were performing their duties negligently, at least at the times when DSA was aware of negligent performance. It was not a part of HS G's duties, however, to make certain that there was sufficient clearance in the crawl space for both the plumbing and the expanded soil. Therefore, DSA could not have failed to carry out its contractual duties to make certain that HS G was not acting negligently in constructing the foundation and crawl space.
Similarly, DSA could not have been responsible for any negligence that may have been conducted in hanging the plumbing beneath the school. According to DMSI's specifications, the plumbing, no matter how high it was hung, was going to encounter the expanded soil. Therefore, any error with regard to the depth at which the plumbing was hung can only be attributed to DMSI.
There is some evidence in the record, however, to support the other alleged instances of neglect. We have examined the record and find no evidence that the inlet was designed by DMSI to be higher than the surrounding ground or that the exit point for the drainage pipe was designed by DMSI to be higher than the sink hole. The specifications indicate that soil from the excavation site may be used to refill the excavation, but there is also evidence, from Dr. Young's testimony, that select fill was supposed to be used around the plumbing to prevent the soil from expanding into it. The conclusion necessarily follows from this evidence that the shortcomings in the construction of the school could very well have been the result of the negligence of one of the trade contractors involved in that particular area of the construction.
Thus, the fact that neither DSA's job superintendent, BeVier, nor any other representative made a sufficient effort to identify the plain errors of the trade contractors in making the sinkhole drain level to the surrounding grounds and in not using select fill, failed to make certain that water in the sink hole would be able to flow downward to an exit point is some evidence to support the jury's finding that DSA had breached its duty under the agreement.
Again arguing in the alternative, DSA asserts that any conclusion by this court that it breached its duty to make certain the several trade contractors performed their duties reasonably is irrelevant given DSA's position that the pier-and-beam foundation was doomed to fail. They maintain that HISD and DMSI are the only blameworthy parties for the plumbing problems because they refused to follow DSA's recommendation that a concrete slab foundation be used instead of the pier-and-beam.
In support of its argument, DSA identifies two reasons why the pier-and-beam foundation should not have been used: first, the tremendous expansiveness of the soil in Hill County, due to its heavy clay content, meant that the ground could easily expand to the point that the plumbing underneath the school would be damaged; and second, the amount of water that would collect under the school in severe rainstorms could not be adequately dispatched away from the building and out of harm's way by a single sinkhole. DSA maintains that it suggested two alternatives to HISD that would have resolved the problems with both the pier-and-beam foundation and the sinkhole. First, the pier-and-beam foundation design should have been replaced by a concrete slab foundation; and second, assuming that the pier-and-beam foundation would have been used anyway, an alternative drainage system should have been used instead of a sinkhole. HISD rejected both of these suggestions, preferring to proceed with the pier-and-beam foundation along with a single sinkhole drain underneath the school.
We recognize that under their agreement DSA was obligated to follow DMSI's specification that the pier-and-beam foundation be used.
Billy Sullins, superintendent of Hillsboro ISD at the time of trial and an assistant principal at the elementary school from 1988 to 1990, referred to the soil around the school as "Houston black clay."
The original design for the school called for a sump pump to be situated in the sinkhole to help dispatch water to a location out of harm's way. The sump pump, however, was never installed.
The record reveals that once the problem with the damaged plumbing was discovered, a plumber was hired by HISD to repair the damage. Upon this plumber's recommendation, the depth of the crawl space was increased in certain areas, and all of the plumbing was hung higher than it had been previously. The soil in the crawl space was also resloped to permit the more expedient flow of water into the single drain hole. The area surrounding the school was similarly regraded to permit the flow of rainwater away from the school instead of underneath it. With these adjustments, no further damage has been done to the school despite the continued expansion and contraction of the soil underneath the school. Therefore, we conclude that there is some evidence in the record that the pier-and-beam foundation with a single sinkhole design could effectively provide for the adequate dispatch of excess rainwater's entering beneath the school.
There is evidence in the record that, even after these remedial measures had been taken, HISD employees occasionally examine the crawl space to determine the amount of clearance between the ground and the plumbing hanging above it. These employees periodically remove some of the soil in the crawl space so that it will not reach the plumbing fixtures. Nevertheless, evidence in the record indicates that no further damage has been done to the plumbing.
c. The Excavation of the Parking Lots
With regard to the improper draining of the parking lots, DSA saw that they were graded according to the specifications of DMSI. HISD argues that DSA was negligent in permitting the parking lots to be built in a fashion that would allow rainwater to flow directly toward the front door of the school. However, as we indicated in the above discussion concerning the problems with the plumbing, DSA was under no contractual obligation to make certain that structural or design problems did not occur. Its obligation was only to make certain that the work was "adequately performed" according to DMSI's design. The evidence from trial is conclusive that the improper draining of the parking lots was due solely to the grade provided by DMSI, not because of any negligent construction of the parking lots.
HISD also maintains that the reason for the improper drainage was that DSA failed to see that lime-stabilizing soil was placed over the ground before the parking lots were covered with asphalt. But DMSI's specifications did not call for the stabilization of the soil before applying asphalt. DSA was under no contractual obligation to alter the specifications of DMSI. Accordingly, we conclude that there is no evidence to support the jury's finding that DSA breached its contractual duties to HISD with respect to the construction of the parking lots.
Point of error eighteen is sustained in part and overruled in part.
IV. WHETHER THE TORT CLAIMS SOUND ONLY IN BREACH OF CONTRACT
In its seventeenth point of error, DSA complains that the portion of the judgment relating to both HISD's DTPA and negligent misrepresentation causes of action should be reversed and rendered because HISD's causes of action sounded solely in breach of contract, not tort. As we will reverse and render judgment for DSA on the DTPA cause of action on limitations grounds, we will consider this point of error only as it relates to the negligent misrepresentation claim.
DSA relies primarily upon the Supreme Court's recent opinion in Crawford v. Ace Sign, Inc., 917 S.W.2d 12 (Tex. 1996), to support its argument. In Crawford, the court considered whether a telephone book publishing company could be liable both under the DTPA and for breach of contract when it failed to publish an advertisement as properly agreed to by the parties. Id. at 12-13. In analyzing the issue the court quoted with approval its earlier language in Ashford Dev., Inc. v. USLife Real Estate Serv. Corp., 661 S.W.2d 933, 935 (Tex. 1983), that "[a]n allegation of a mere breach of contract, without more, does not constitute a' false, misleading or deceptive act' in violation of the DTPA." Crawford, 917 S.W.2d at 14 (quoting Ashford Dev., 661 S.W.2d at 935). The court then found that the publishing company had made no fraudulent or deceptive statements to the plaintiff, that it had merely failed to perform its duties under the contract. Crawford, 917 S.W.2d at 14-15. Therefore, held the court, the plaintiff's cause of action sounded only in breach of contract. Id. at 15.
In the instant case, however, HISD's negligent misrepresentation cause of action was dependent upon representations that DSA's employees made during the contract negotiations. By these representations, DSA allegedly promised to carry out its contractual duties above-and-beyond what was later indicated in the contract. It is because DSA allegedly failed to perform these duties as represented by DSA during the contract negotiations that HISD decided to bring its cause of action for negligent misrepresentation. These allegations are separate and apart from the breach of contract allegations. Therefore, we conclude that HISD's negligent misrepresentation cause of action is not merely a breach of contract claim. See Howell Crude Oil Co. v. Donna Refinery Partners, Ltd., 928 S.W.2d 100, 109 (Tex.App.-Houston [14th Dist.] 1996, writ denied); Decision Control Sys., Inc. v. Personnel Cost Control, Inc., 787 S.W.2d 98, 100-01 (Tex.App.-Dallas 1990, no writ). DSA's seventeenth point is overruled.
V. SUFFICIENCY EVIDENCE ON THE ROOF DAMAGES
In its nineteenth point of error, DSA argues that the evidence is legally insufficient, or in the alternative factually insufficient, to support the jury's finding that HISD suffered $170,000 in damages for the roof The only evidence at trial concerning the amount of damages for the roof was $168,661.73 to replace the roof and $921.60 to replace ceiling tiles that had been damaged by rainwater leaking through the roof The sum of these two figures is $169,583.33, or $416.67 less than the amount of damages awarded under the breach of contract cause of action for the roof. Therefore, we order a remittitur of $416.67. See Tacon Mechanical Contractors, Inc. v. Grant Sheet Metal, Inc., 889 S.W.2d 666, 670 (Tex.App.-Houston [14th Dist.] 1994, writ denied) (non-breaching party is entitled to all its actual damages necessary to put it in same position had contract not been breached); see also Kiewit Texas Mining Co. v. Inglish, 865 S.W.2d 240, 245 (Tex App. — Waco 1993, writ denied). DSA's nineteenth point of error is sustained in part.
VI. SUFFICIENCY OF THE EVIDENCE ON THE NEGLIGENT MISREPRESENTATION CLAIM
DSA, in its twenty-first point of error, complains that the evidence is legally, or alternatively, factually, insufficient to support the jury's finding of liability on the negligent misrepresentation cause of action.
The elements of a cause of action for the breach of this duty are: (1) the representation is made by a defendant in the course of his business, or in a transaction in which he has a pecuniary interest; (2) the defendant supplies "false information" for the guidance of others in their business; (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information; and (4) the plaintiff suffers pecuniary loss by justifiably relying on the representation. Federal Land Bank Assoc. of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991); see also RESTATEMENT (SECOND) OF TORTS § 552 (1977). In reviewing a factual sufficiency point, the court of appeals must weigh all of the evidence in the record, both favorable and unfavorable to the judgment. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); TCA Bldg. Co. v. Northwestern Resources Co., 922 S.W.2d 629, 638 (Tex.App.-Waco 1996, writ denied). The findings of the trier of fact may be overturned only if they are so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. Ortiz, 917 S.W.2d at 772; TCA Bldg. Co., 922 S.W.2d at 638. As indicated above in our discussion of the breach of contract issue, the evidence is legally sufficient to support the judgment if, after considering only that evidence and the inferences which support the finding in the light most favorable to the judgment, there is some probative evidence to support it. American Derringer, 924 S.W.2d at 786; see Browning-Ferris, 865 S.W.2d at 928.
Evidence was adduced at trial from Dr. Young that various representatives from DSA told the school board members that "they had all the expertise that anyone could need in building an elementary school, and that [HISD] had no need to look any further than DSA to obtain what [HISD] needed." These representatives further indicated that the building would be of "number one quality," that it would be "a lasting building," and that if any problems arose post-construction that they would "stick with [HISD] . . . [to] see that it was remedied[,] whatever it took." According to Dr. Young, DSA represented that it would operate in the same manner as a general contractor.
A general contractor, however, generally warranties every element of a building's construction and warrants that he will remedy any problems that should become apparent either during or after the construction is completed. Therefore, there is legally sufficient evidence that DSA, by representing to the school board that it would operate as a general contractor and then subsequently failing to operate as such, made a negligent misrepresentation to HISD.
With regard to DSA's factual sufficiency challenge, we have weighed the evidence and determined that the jury's finding was not so against the great weight and preponderance of the evidence as to be manifestly wrong or unjust. Ellis County State Bank v. Keever, 888 S.W.2d 790, 794 (Tex. 1994) (court of appeals is not required to give details supporting evidence when affirming factual sufficiency of the evidence underlying trial court judgment). DSA's twenty-first point of error is overruled.
VII. WHETHER A COMPARATIVE NEGLIGENCE CHARGE SHOULD HAVE BEEN GIVEN ON THE NEGLIGENT MISREPRESENTATION CLAIM
In its twentieth and final point of error, DSA complains that the trial court erred in failing to submit a comparative negligence charge on HISD's negligent misrepresentation claim.
The authority on the issue of whether a defendant is entitled to a jury charge on comparative negligence in response to a negligent misrepresentation claim is sparse. Indeed, we are aware of only one appellate opinion that even addresses the issue. In Federal Land Bank Assoc. of Tyler v. Sloane, 793 S.W.2d 692, 696 n. 4 (Tex App. — Tyler 1990), aff'd in part and rev'd in part on other grounds, 825 S.W.2d 439 (Tex. 1991), the Tyler Court of Appeals in a footnote stated presumptively and without any analysis that "[c]ontributory negligence is a defense to the cause of action for negligent misrepresentation." As its authority, the Tyler court cited section 552A of the Second Restatement of Torts. Id. (citing RESTATEMENT (SECOND) OF TORTS, § 552A (1977)).
Most of the jurisdictions that have addressed the question have determined that a defendant to a negligent misrepresentation cause of action, upon a showing of some evidence, is entitled to a contributory or comparative negligence jury charge. See Sonja Larsen, Annotation, Applicability of Comparative Negligence Doctrine to Actions Based on Negligent Misrepresentation, 22 A.L.R. 5th 464 (1994); see also, e.g., Williams Ford, Inc. v. Hartford Courant Co., 232 Conn. 559, 657 A.2d 212 (1995); Wegad v. Howard Street Jewelers, Inc., 326 Md. 409, 605 A.2d 123 (1992); Silva v. Stevens, 156 Vt. 94, 589 A.2d 852 (1991); Gurnsey v. Conklin Co., Inc., 230 Mont. 42, 751 P.2d 151 (1988); Florenzano v. Olson, 387 N.W.2d 168 (Minn. 1986); Darner Motor Sales, Inc. v. Universal Underwriters Ins. Co., 140 Ariz. 383, 682 P.2d 388 (1984); H. Rosenblum, Inc. v. Adler, 93 N.J. 324, 461 A.2d 138 (1983); Christenson v. Commonwealth Land Title Ins. Co., 666 P.2d 302 (Utah 1983). The rationale for this view rests on the notion that there is no reason to differentiate negligent misrepresentations from any other forms of negligence and, therefore, the ordinary rules as to comparative or contributory negligence should apply. Larsen, 22 A.L.R.5th at 471.
Several jurisdictions, however, have concluded that a party who misrepresents facts to another while reasonably expecting that party to rely upon those facts should not be permitted to benefit from a comparative negligence instruction. See, e.g., Estate of Braswell v. People's Credit Union, 602 A.2d 510 (R.I. 1992); Wilson v. Came, 116 N.H. 628, 366 A.2d 474 (1976); Carroll v. Gava, 98 Cal.App.3d 892, 159 Cal.Rptr. 778 (Cal.App. 1979). Rationales for the minority position include a desire to avoid chaos in the jury room when the jurors attempt to allocate the amount of negligence attributable to the parties; a concern that a contributory or comparative negligence charge would be redundant because an element of a negligent misrepresentation cause of action is that the plaintiff justifiably rely upon the misrepresentation; a recognition that business ethics require parties to be truthful in their factual representations, which justifies placing the entirety of the blame on the defendant; and an expectation that by introducing comparative negligence as a defense to negligent misrepresentation one would undermine the very purpose of a negligent misrepresentation cause of action, that being consumer protection. See Larsen, 22 A.L.R.5th at 471-72.
We, however, will overrule DSA's twentieth point of error because it was not preserved for our review. See TEX.R.APP.P. 52 (a). The record reveals that the question DSA submitted on the comparative negligence issue asked what percentage of the negligence that caused the roof and foundation damage could be attributed to DMSI, DSA, HISD, McKenzie Cross, and two other trade contractors. The trial court refused to give the charge.
To preserve a complaint about the jury charge, a party must make a timely and specific objection, or request, and obtain a ruling. See TEX.R.APP.P. 52(a); TEX.R.CIV.P. 274; State Dep't of Highways Pub. Transp. v. Payne, 838 S.W.2d 235, 240 (Tex. 1992) (on rehearing). The charge requested by DSA would have asked the jury to apportion the amount of negligence each of the listed defendants committed in causing damage to the roof and foundation. The record is clear that, at trial, DSA argued that it had no duty to make certain that the several trade contractors used by DSA in constructing the school performed their duties reasonably. In the alternative, should the court decide that DSA did bear this duty, DSA contended that it should not be held entirely responsible for the negligent construction but that the several trade contractors should share in the blame.
The charge requested by DSA is ambiguous. It could very well be read as applying only to this defensive theory of the case and not at all to HISD's negligent misrepresentation cause of action. Due to this ambiguity in the request, we conclude that DSA failed to meet its duty of providing the trial court with a sufficiently specific objection, by means of a request, to the jury charge. See Castleberry v. Branscum, 721 S.W.2d 270, 277 (Tex. 1986). Therefore, DSA failed to preserve its complaint for our review, and its twentieth point of error is overruled.
VIII. SUFFICIENCY OF THE EVIDENCE ON GROSS NEGLIGENCE
In its fifteenth and sixteenth points of error, DSA contends the evidence is legally and factually insufficient to support the jury's findings that DSA had acted with gross negligence. As we reversed and rendered judgment in favor of DSA on the DTPA allegations, the only ground upon which the gross negligence findings may stand is the negligent misrepresentation cause of action.
At the time of trial, "gross negligence" was defined in the Civil Practice and Remedies Code as "more than momentary thoughtlessness, inadvertence or error in judgment." It meant an entire want of care as to establish that the act or omission was the result of conscious indifference to the rights, safety, or welfare of the person affected. Act of June 16, 1987, 70th Leg., 1st C.S., ch. 2, § 2.12, 1987 Tex. Gen. Laws 44 (formerly codified at TEX.CIV.PRAC. REM. CODE ANN. § 41.001 (5)). The Supreme Court in Transportation Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994), found two components to this statutory definition (1) the defendant's act or omission, and (2) the defendant's mental state. Id. at 23; Strahan v. Davis, 872 S.W.2d 828, 834 (Tex.App.-Waco 1994, writ denied). To constitute gross negligence, (1) the act or omission, viewed objectively from the standpoint of the actor, must involve an extreme degree of risk, considering the probability and magnitude of the potential harm to others, and (2), with regard to the defendant's mental state, he must have actual, subjective awareness of the risk involved, but nevertheless proceed in conscious indifference to the rights, safety, or welfare of others. Moriel, 879 S.W.2d at 23; Strahan, 872 S.W.2d at 834.
In 1995, the legislature removed gross negligence as a means by which a party could recover punitive damages. See Act of April 20, 1995 74th Leg., R.S., ch. 19, § 1, 1995 Tex. Gen. Laws 108, 109. This amendment to the law, however, was made applicable by the legislature only to causes of action that accrued on or after September 1, 1995. See Act of April 20, 1995, 74th Leg., R.S., ch. 19, § 2, 1995 Tex. Gen. Laws 108, 109.
a. Extreme Degree of Risk of Harm
The "extreme degree of risk of harm" factor is a significantly higher standard than the "reasonable person" test for ordinary negligence. Moriel, 879 S.W.2d at 22; Convalescent Services, Inc. v. Schultz, 921 S.W.2d 731, 735 (Tex.App.-Houston [14th Dist.] 1996, writ denied); Strahan, 872 S.W.2d at 835. The risk created by the defendant's conduct must have been so extreme as to have created the "likelihood of serious injury" to the person affected. Universal Services Co. v. Ung, 904 S.W.2d 638, 642 (Tex. 1995); Moriel, 879 S.W.2d at 22; Schultz, 921 S.W.2d at 735; Strahan, 872 S.W.2d at 835. The extreme risk prong is not satisfied by a remote possibility of injury or even a high probability of minor harm, but rather it requires the likelihood of serious injury to the plaintiff. Ung, 904 S.W.2d at 641; Moriel, 879 S.W.2d at 22; Schultz, 921 S.W.2d at 735; Strahan, 872 S.W.2d at 835. Extreme risk of harm is a function of both the magnitude and the probability of the anticipated injury to the plaintiff Ung, 904 S.W.2d at 641; Moriel, 879 S.W.2d at 22; Schultz, 921 S.W.2d at 735; Strahan, 872 S.W.2d at 835. We analyze the events and circumstances surrounding the issue from the defendant's perspective at the time the tort occurred without resorting to hindsight. Moriel, 879 S.W.2d at 23; see Schultz, 921 S.W.2d at 735.
Evidence was adduced at trial that DSA represented to HISD that it would perform its duties in the same manner as a general contractor and that it would oversee the construction of the school and make certain that the several trade contractors involved performed their various duties reasonably. DSA informed HISD that, upon completion, it would have a first-rate school and that DSA would take whatever steps that would be necessary to repair any defects. Based upon these representations, HISD entered into its contract with DSA, believing that it would obtain a safe and solid school for its students.
Throughout the time of the construction, DSA did not make certain either that the materials used in the construction were sufficient for the job or that the construction was performed properly. Even before construction began, DSA had persuaded HISD to use a type of roof that was not in accordance with the specifications of DMSI. The record reveals that DSA's malfeasance and nonfeasance were the proximate cause of at least two serious problems in the school's construction, that of the leaky roof and the damaged plumbing. The leaks from the roof saturated the ceiling tiles so thoroughly that some of them became so weakened that they fell to the floor inside the building. With elementary school-aged children attending classes, the potential for injury to those children was great. The evidence at trial revealed, that the burst plumbing caused the spillage of sewage, and sewage emits methane gas, a toxic substance. While the methane gas may not have presented a serious danger to the adults in the building, the grade school-aged children were more susceptible to injury.
The record thus contains evidence that DSA's actions created a risk of serious injury. The question remains, however, whether there was a "likelihood" of serious injury. By not overseeing the construction progress in the manner that it had indicated to HISD that it would, DSA left open the possibility that any one of the trade contractors might perform its duties negligently. Many of the elements of a building's construction, if performed negligently, could result in serious bodily injury. For instance, improperly installed wiring may result in a deadly fire, a negligently constructed foundation could cause a building to collapse with fatal consequences, or a carelessly assembled roof may mortally wound someone when it comes crashing to the floor. Any one of these injuries could have occurred as a result of DSA's lack of supervision of the school's construction. Moreover, the evidence is legally and factually sufficient to support the jury's implied finding that one of these types of injuries was likely to occur given DSA's stark lack of supervision over the project.
b. Actual Subjective Knowledge
There also is legally and factually sufficient evidence in the record to support the jury's implied finding that DSA, at the time of its negligent misrepresentation, possessed "subjective awareness of the risk[s] involved, but nevertheless proceed[ed] in conscious indifference to the rights, safety, or welfare of others." Moriel, 879 S.W.2d at 20; Strahan, 872 S.W.2d at 834. In considering the intent prong of Moriel, we analyze whether the defendant, although not actually intending to cause harm, nevertheless proceeded with knowledge that harm was a highly probable consequence. See Schultz, 921 S.W.2d at 737. The defendant's subjective mental state may be proven by direct or circumstantial evidence. Moriel, 879 S.W.2d at 23.
The evidence indicates that DSA has been in the construction management business since it first opened its doors in 1966. BeVier testified that he had been working with DSA since 1986 or 1987. Testimony was offered from several witnesses that DSA had substantial experience in constructing schools, churches, and other buildings. BeVier further testified that he was aware of the differences between general contractors and construction managers. BeVier understood that in a construction manager relationship, the owner of the building to be constructed must look to the several trade contractors hired by the construction manager should a part of the construction be performed negligently. Thus, BeVier was aware that the nature of the construction manager relationship requires the owner to take an active interest in making certain that the trade contractors are performing their work reasonably and soundly. By failing to undertake this responsibility, the owner runs a tremendous risk that various portions of the construction, perhaps crucial portions, could be completed negligently and the whole building could wind up a disaster.
DSA, however, represented to HISD that it would perform the same functions as a general contractor but for a lot less money. DSA went so far as to agree in its contract with HISD to provide two representatives, a project manager and a job superintendent, who would oversee the construction and compel the several trade contractors to perform their duties reasonably. DSA, nevertheless, failed to perform these duties, and moreover, there is evidence in the record that it never intended to perform these duties.
With regard to the plumbing, DSA admitted that it did nothing to make certain that the plumbing was installed properly. No one checked to see that the drain for the sink hole was level with the surrounding ground or that the exit drain was lower than the actual sinkhole. Concerning the roof, BeVier admitted that no one checked into the quality of the Syenergy-manufactured singly-ply, non-ballasted roof to see whether it was of the same quality as what DMSI had ordered in its specifications. DSA knew of the potential dangers of remaining so aloof in performing its duties under the agreement, yet it did nothing to become more involved in the school's construction.
DSA argues that it could not have been grossly negligent given the several instances in which it made suggestions to HISD for how the design of the school could be changed for the better. These instances, however, are insufficient to overcome the abundant evidence that DSA told HISD that it would make certain that every element of the construction was performed adequately but then did very little to follow up on these promises.
Therefore, given the recklessness with which DSA made its promises to HISD, the severe risk of harm that DSA knew was a likely result of its actions, and the recognition by DSA of the risk involved in performing its functions as a construction manager while permitting HISD to believe it would act as a general contractor, we conclude the evidence is legally and factually sufficient to support the jury's findings on gross negligence. DSA's fifteenth and sixteenth points are overruled.
The judgment is reformed to provide that HISD recover $220,244.33 in actual damages, $170,000 in exemplary damages, attorneys' fees as provided therein, prejudgment interest at 10% compounded annually from June 19, 1993, until July 3, 1995, and postjudgment interest at 10% per annum from July 3, 1995, until paid.