Opinion
No. 04-04-00181-CV
Delivered and Filed: May 11, 2005.
Appeal from the 216th Judicial District, Gillespie County, Texas, Trial Court No. 9702, Honorable Stephen B. Ables, Judge Presiding.
Affirmed.
Sitting: Alma L. LÓPEZ, Chief Justice, Sandee BRYAN MARION, Justice, Phylis J. SPEEDLIN, Justice.
MEMORANDUM OPINION
Guerrero-McDonald Associates, Inc., and RLI Insurance Company (collectively "GMA") appeal a final judgment in favor of Phillip Graham d/b/a Graham Construction. GMA presents the following issues on appeal: (1) the evidence is legally and factually insufficient to support the jury's finding that Graham Construction's breach of the agreement was excused; (2) Graham Construction is not entitled to recover damages because its breach of the agreement was not excused; and (3) the evidence supporting the jury's finding that GMA was not entitled to any damages is legally and factually insufficient. We affirm the judgment of the trial court.
Background
In January 2002, the City of Fredricksburg hired GMA to act as the general contractor for the construction of the Fredricksburg Visitor Information Center. To complete the project, GMA accepted bids from subcontractors to handle various aspects of construction. Graham Construction submitted a bid for site clearing and demolition, earthwork, cement concrete pavement, and cast-in-place concrete. GMA accepted Graham Construction's bid, and on January 28, 2002, sent Graham Construction a letter of intent outlining the work to be done and acknowledging Graham Construction's bid of $133,802.00. The parties entered into a subcontract confirming the agreement in mid-February. The construction schedule provided by GMA indicated that concrete work was to begin March 19, 2002, and end with the completion of a concrete slab by April 8, 2002.
On March 22, 2002, GMA represented to the City of Fredricksburg that GMA believed Graham Construction was stopping work on the project over a dispute regarding the scope of the work. GMA requested that the City ask for Phillip Graham's cooperation in keeping the project on schedule. On March 25, 2002, GMA reported to the architect that the project was on schedule. In a letter dated March 27, 2002, GMA expressed its concerns to Phillip Graham that Graham Construction's "portion of the work on this project is falling behind schedule." GMA included in this letter a modified schedule, which indicated the concrete formwork should be completed by Friday, March 29, 2002, and the concrete slab should be completed no later than April 12, 2002.
On March 28, 2002, GMA faxed a letter to Phillip Graham, characterizing a phone call he made to the architect as a breach of contract. GMA also referred Graham "to the attached letter from [our] attorney regarding [the] last successful litigation against a subcontractor." On March 29, 2002, GMA faxed another letter to Graham stating,
Paco said this morning that Graham Construction's personnel left the site, and a minimal amount of work was performed. It's clear to me that you have no intention of keeping to the construction schedule. This is 24-hour notice that you are being replaced as sitework [sic] and concrete subcontractor on this project. There will be another subcontractor on site on Monday.
On Monday, April 1, 2002, GMA reported to the architect that the project was six days behind schedule. While Phillip Graham was attending a meeting at the job site with the architect and GMA representatives, a replacement subcontractor, Kevin Cain, arrived at the job site with his crew, at the request of GMA, to finish Graham Construction's portion of the project.
GMA brought suit against Phillip Graham d/b/a Graham Construction for damages it incurred when Graham Construction failed to comply with the agreement. Graham Construction counterclaimed for damages it incurred because GMA terminated Graham Construction's contract. The jury found that Graham Construction breached the agreement, but that its breach was excused. The jury also found that GMA breached the agreement, and awarded Graham Construction $60,811.00 in damages, plus pre-judgment interest, attorney's fees, and costs. The jury did not award any damages to GMA.
Was Graham's Failure to Comply Excused?
Question No. 3 of the charge asked, "Was Phillip Graham's failure to comply with the agreement excused?" The jury was instructed that Graham Construction's failure to comply with the agreement was excused if (1) GMA previously failed to comply with a material obligation of the agreement; (2) GMA prevented Graham Construction from complying with the agreement; or (3) the agreement was made as a result of a mutual mistake. Mutual mistake was defined for the jury as resulting "from a mistake of fact common to both parties, if both parties had the same misconception concerning the fact in question." The jury answered "Yes" to Question No. 3, indicating that Graham Construction's failure to comply with the agreement was excused. The jury's answer did not indicate under which theory it determined Graham Construction's breach was excused. On appeal, GMA argues the evidence is legally and factually insufficient to support the jury's finding that Graham Construction's failure to comply with the agreement between the parties was excused. GMA also asserts that because Graham Construction's breach was not excused, Graham Construction is not entitled to recover any damages.
When a party not bearing the burden of proof on an issue challenges the legal sufficiency of the evidence, we consider all the evidence in the light most favorable to the jury's finding, disregarding all evidence and inferences to the contrary. Potter v. GMP, L.L.C., 141 S.W.3d 698, 702 (Tex.App.-San Antonio 2004, pet. dism'd). If more than a scintilla of evidence supporting the finding exists, we uphold the finding. Id. When reviewing a factual sufficiency challenge, we examine the entire record to determine whether some probative evidence exists to support the jury finding. Id. We then determine whether the evidence supporting the finding is so weak or so contrary to the overwhelming weight of the evidence as to be clearly wrong and manifestly unjust. Id.
GMA relies heavily on the Texas Supreme Court's recent decision in Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc. in support of its argument that any breach by GMA occurred, if at all, after Graham Construction's material breach by failing to show up for work on March 29, 2002, and failing to timely complete the concrete framework. Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195 (Tex. 2004). The underlying facts in Mustang are similar to those in the instant case. In January 1997, Mustang entered into a contract with Driver under which Driver was to construct one hundred miles of pipeline by April 30, 1997. Id. at 196. Fifty-eight days into the construction schedule, with only forty days remaining, Driver had completed only fifteen miles of pipeline and had suspended operations. Id. On March 17, 1997, Driver stated that it would not resume work on the pipeline due to inclement weather, and Mustang's project engineer certified Driver to be in default under the contract. Id. at 197. Mustang hired a replacement pipe contractor to finish the project, which was completed in September 1997. Id. Mustang brought suit against Driver for breach of contract and Driver counterclaimed for wrongful termination. Id. The jury found that Driver failed to comply with the contract, but also found that Mustang was not justified in terminating the contract. Id. at 198. The court of appeals held that because the jury question did not ask whether Driver's breach was material, the trial court was not required to find the breach was material as a matter of law. Id.
The Supreme Court, however, disagreed with the appellate court's requirement that Mustang needed to obtain an express jury finding that Driver's breach was material. Id. The Court indicated that the evidence presented at trial established that Driver's failure to comply was a material breach because time was a material aspect of the contract between the parties. Id. at 199. Additionally, the Court found that Mustang was discharged from its duties under the contract based on that breach. Id. The Court pointed out that when Mustang terminated the contract, Driver had already breached, and "there was virtually no chance that Driver would be able to cure its breach and complete the construction on time." Id. at 200. The Court determined that the jury's answer regarding Driver's breach rendered its answer regarding Mustang's subsequent wrongful termination immaterial.
GMA contends that the instant case closely parallels Mustang. GMA asserts that the contract specifically called for completion by a certain date and adherence to a specific schedule. GMA further asserts that when it realized Graham Construction was behind schedule, it asked for assurances and that when GMA terminated the contract, there was no chance Graham Construction would be able to complete its portion of the project on time. While GMA accurately cites these parallels to Mustang, GMA fails to recognize the distinguishing factors.
In Mustang, the parties agreed to a fourteen-week schedule, with work occurring eleven hours a day, seven days a week. Id. at 196. In this case, Graham Construction and GMA agreed only that the work was to be completed between March 19, 2002 and April 8, 2002. In Mustang, Driver indicated unequivocally that it did not intend to resume work. Id. at 197. Graham Construction made no such indication. Most importantly, in Mustang, the jury was asked if Mustang was justified in terminating Driver, to which the jury answered yes, indicating the jury determined Driver breached the agreement first. Id. In this case, the jury was only asked if either party failed to comply with the agreement; the jury was not asked whether GMA was justified in terminating Graham Construction.
Jurors often find that both parties failed to comply with a contract unless instructed that they must decide who committed the first material breach. Id. at 200. As in Mustang, these problems could have been avoided if the trial court had submitted the breach of contract question disjunctively and included an appropriate instruction directing the jury to determine who committed the first material breach. Id.
The jury heard testimony that on March 25, 2002, GMA assured the City and its architect, Randy Stehling, that the project was on schedule. A field report prepared by Stehling indicates that on March 25, trenching of foundation beams was underway and the forming of the foundation was to begin. The daily project log maintained by GMA personnel shows that on March 26, Graham Construction manned the work site, excavating porch beams and moving fill mounts around the pad perimeter.
GMA argues that evidence presented at trial showing that only three men from Graham Construction were present on the job site on March 27, 2002, and only two men were present on March 28, 2002, demonstrates Graham Construction's breach. The jury, however, heard testimony that at no time between March 25 and March 29 did GMA indicate to Graham Construction that the job site was not properly manned. The jury also heard the expert testimony of Kednel Kasper, a superintendent for Huser Construction located in Kerrville, Texas, that, based on his experience and examination of the daily log book, the site was properly manned.
The project log for March 27, 2002 indicates that Paco Guajardo, the job site superintendent for GMA, reminded Todd Graham of Graham Construction that nothing had been done yet in regard to the perimeter hard forming. GMA points to the March 27 log entry and the letter dated March 27, 2002 as evidence that Graham Construction was the first to materially breach the agreement. The March 27 letter stated that GMA is "concerned that your portion of the work on the project is falling behind schedule. The Electrical and Plumbing subcontractors need the concrete formwork in place before they can work on the items in the concrete slab." Stehling testified that on March 25 the batter boards and string lines were up. Both Phillip Graham and Kevin Cain, the replacement subcontractor, testified that it was common and not unusual for electricians and plumbers to make their necessary measurements from the batter boards and string lines.
The March 27 letter also provided a modified schedule, indicating that the concrete formwork should be completed by March 29, and the concrete slab should be completed by April 12. Mary Guerrero-McDonald, president of GMA, admitted that the original schedule did not provide a specific date by which the formwork should be completed. Guerrero-McDonald indicated that as general contractor, GMA was authorized to modify the schedule, and she did not believe it would have been impossible to have the formwork complete by March 29. Phillip Graham, however, testified that he understood the March 27 letter to mean that by March 29 the site must be ready for concrete to be poured. Phillip further testified that he believed that no one in his industry could have accomplished that requirement in that short period of time.
The jury heard testimony that on March 28, GMA was still concerned about the pace of Graham Construction's work. GMA sent Graham Construction a letter indicating that GMA expected Graham Construction to keep the schedule contained in the March 27 letter. The March 28 letter concluded, "If [GMA doesn't] see satisfactory progress by Monday, [GMA] will be forced to replace you as sitework and concrete subcontractor on this project." The letter also addressed a phone call Phillip Graham made to Stehling. Guerrero-McDonald testified that in her opinion, the contract had been materially breached when Phillip Graham directly contacted Stehling with questions. However, Guerrero-McDonald admitted on cross-examination that GMA had also requested that a representative from the City contact Phillip Graham directly, in violation of the contract, to discuss the timeliness of Graham Construction's work.
Todd Graham testified that the ditching work was completed on Thursday, March 28 and that Graham Construction planned to begin the hard forming on April 1, 2002. GMA presented evidence that on March 28 no forms or reinforcing steel were on site, arguing that this showed Graham Construction was behind schedule. Todd Graham, however, testified that Graham Construction had the ability to properly cut and configure the rebar necessary for the project. He also indicated that it is customary to order the rebar the day it is to be used to avoid weather damage and theft. Phillip Graham testified that when forming, it was his company's policy not to leave forms at the job site, but to work directly off a truck. When questioned why the forming could not be accomplished while the interior excavation and ditching were underway, both Todd and Phillip Graham indicated that the small construction area and the varying nature of the different tasks and equipment precluded the overlap of work. Phillip Graham also testified that he did not envision any problems with completing the job by the April 12 deadline that GMA had imposed in its March 27 letter.
The jury had before it a letter dated March 29, which Phillip Graham characterized as "when she [Guerrero-McDonald] fired me." GMA argues that the March 29 letter was sent because Graham Construction had materially breached the contract when it failed to man the job site on the morning of March 29. The letter, which Guerrero-McDonald testified was likely sent at 12:55 a.m. on the morning of Friday, March 29, states that "Paco said this morning that Graham Construction's personnel left the site, and a minimal amount of work was performed." Guerrero-McDonald's testimony regarding the timing of the letter contradicts the contention that the letter was sent in response to Graham Construction not manning the site on March 29. Guajardo, the job site supervisor, noted in the March 29 log entry that when he called Graham Construction to inquire why no one was on site, Todd Graham informed Guajardo that it was Good Friday. He also told Guajardo that Phillip Graham wanted to attend the Monday, April 1, meeting because Graham was mad about a fax from GMA.
Based on the record, the evidence is both legally and factually sufficient to support the jury's finding that Graham Construction's failure to comply with the agreement was excused because Graham Construction was not the first to materially breach the agreement. The jury had before it evidence that Graham Construction properly manned the job site; it was not necessary for the formwork to be complete for the electricians and plumbers to begin their portion of the project; and the Graham Construction portion of the project could have been completed by the modified April 12 deadline despite the fact that the formwork was not completed by March 29. As the trier of fact, the jury was free to judge the credibility of witnesses, to assign the weight afforded their testimony, and to resolve inconsistencies within or conflicts among the witnesses' testimony. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003). Because we hold that the evidence is legally sufficient to support the jury's finding that Graham Construction's breach was excused, we conclude that Graham Construction was properly awarded damages.
Was GMA Entitled to Damages?
Finally, GMA contends that the evidence supporting the jury's refusal to award damages to GMA is legally and factually insufficient. When a party attacks the legal sufficiency of an adverse finding on an issue on which it has the burden of proof, it must demonstrate that the evidence establishes, as a matter of law, all vital facts in support of the issue. Dow Chemical Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam) (citing Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989)). When reviewing such a challenge, we first examine the record for evidence supporting the finding, ignoring all evidence to the contrary. Id. If no evidence exists supporting the finding, we then examine the entire record to determine whether the contrary proposition is conclusively established. Id. (citing Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983)).
When a party attacks the factual sufficiency of an adverse finding on which it has the burden of proof, it must demonstrate that the adverse finding is against the great weight and preponderance of the evidence. Id. at 242. We consider and weigh all the evidence, and set aside a verdict only if the evidence is so weak, or the finding is so against the great weight and preponderance of the evidence, that it is clearly wrong and unjust. Id. (citing Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986)).
Question No. 4 asked the jury what amount of money would fairly and reasonably compensate GMA for its damages, if any, that resulted from Graham Construction's failure to comply with the agreement. The jury was directed to consider only the following elements of damages, if any: the reasonable and necessary costs to complete or correct those portions of the construction job that Graham Construction failed to perform or inadequately performed, less the unpaid portion of the contract price; the reasonable and necessary expenses incurred in hiring other subcontractors to complete or correct the work agreed to be done by Graham Construction; and losses due to delay and hindrance of work for which Graham Construction was responsible. The jury was also instructed not to include in its answer any amount it found GMA could have avoided by the exercise of reasonable care. The jury answered "$0" damages to Question No. 4.
At trial, GMA presented evidence of the following costs and charges it associated with completing or correcting Graham Construction's work: $13, 653.00 payable to Cullen Co., Inc. for sitework; $600.00 payable to Excamate for sitework; $114,600.00 payable to Kevin Cain Construction for concrete building slab; $76,456.00 payable to Phoenix Construction Co. for sitework concrete and lightpole; $1,945.00 payable to Survetex for redoing the survey; $180.00 payable for tree trimming; $195.00 payable to Western Technologies for retesting; $2,500 liquidated damages due to ten days of delay caused by Graham Construction; and $1,954.50 for "general requirements" charges resulting from the delay.
GMA argues that because it presented expert testimony that the amounts were reasonable, the jury is bound by that expert testimony. We may not pass, however, upon witness credibility or substitute our judgment for that of the jury. See Pool, 715 S.W.2d at 633-35. As fact finder, the jury is free to disbelieve any witness, including an expert witness. See Waltrip v. Bilbon Corp., 38 S.W.3d 873, 882 (Tex.App.-Beaumont 2001, pet. denied); see also Yap v. ANR Freight Sys., Inc., 789 S.W.2d 424, 427 (Tex.App.-Houston [1st Dist.] 1990, no writ). "[O]pinion testimony, even when uncontroverted, does not necessarily bind the jury." Waltrip, 38 S.W.3d at 882.
[T]he judgments and inferences of experts or skilled witnesses, even when uncontroverted, are not conclusive on the jury or trier of fact, unless the subject is one for experts or skilled witnesses alone, where the jury or court cannot properly be assumed to have or be able to form correct opinions of their own based upon evidence as a whole and aided by their own experience and knowledge of the subject of inquiry.
McGalliard v. Kuhlmann, 722 S.W.2d 694, 697 (Tex. 1986) (citing Coxson v. Atlanta Life Ins. Co., 142 Tex. 544, 179 S.W.2d 943, 945 (1944)).
In the instant case, the experts disagreed. The jury heard testimony from Kednel Kasper and Phillip Graham that the going rate in the Hill Country for concrete slab work of the type required in this case was approximately $5.50 per square foot. Kevin Cain, the replacement subcontractor, completed the job for $114,600, which equates to approximately $12 per square foot. Cain testified that he progressed as quickly as he could on the job, calling in favors to get the job completed quickly. GMA points to Cain's testimony that he arrived at the job site one morning between 3:00 and 3:30 a.m. as evidence of extraordinary measures justifying the increased price. Phillip Graham presented testimony, however, that it was very common to arrive at job sites that early for a concrete pour was that could take all day.
Larry Nelson, GMA's professional engineer, testified that the cost of replacing a subcontractor would be more than hiring a subcontractor to do the work originally. Nelson also testified that costs to complete work are generally considerably more than original contract costs. Kasper and project architect, Randy Stehling, testified that, according to the plans and specifications, the deepest a beam would need to be dug would be approximately four and a half feet. The jury heard testimony that Cain dug some beams six and seven feet deep, accounting for some of the increased costs.
Stehling also testified that the delays on the project were due primarily to rain and change orders. Stehling further indicated that he did not "recall specifically any day that [GMA] attributed to the penalty days with respect to Phillip Graham." The jury heard testimony that GMA had requested a draw and received payment for work completed solely by Graham Construction. Stehling testified that he had certified that the work completed by Graham Construction conformed with the project plans and specifications. The jury was within its discretion to believe one expert over another.
The jury determined in Question No. 3 that Graham Construction's failure to comply was excused. In declining to award GMA damages in Question No. 4, the jury could have determined that the costs incurred by GMA after Graham Construction was replaced were damages that GMA could have avoided by the exercise of reasonable care.
Having previously found that the evidence adduced at trial was both legally and factually sufficient to support the jury's finding that Graham Construction's failure to comply with the agreement was excused, we cannot say that the jury's refusal to award damages to GMA was not supported by legally and factually sufficient evidence. We overrule GMA's issues on appeal, and affirm the judgment of the trial court.