Opinion
CIVIL ACTION NOS. SA-99-CA-614-OG, DR-99-CA-59-OG, [Consolidated].
March 28, 2003.
MEMORANDUM OPINION AND ORDER
Pending before the Court are the City of Del Rio's Motion to Dismiss or, in the alternative, Motion for Summary Judgment and Malcom Pimie, Inc.'s Motion for Summary Judgment. The parties have filed responses as well as replies. After reviewing the record and the applicable law, the Court finds that the City of Del Rio's Motion to Dismiss or, in the alternative, Motion for Summary Judgment should be GRANTED, and Malcom Pirnie, Inc.'s Motion for Summary Judgment should also be GRANTED.
Dkt. # 115.
Dkt. # 116, 117.
D Dkt. # 122, 124, 125.
D Dkt. # 127, 129.
I. Factual and procedural background
Malcom Pirnie, Inc. is an environmental engineering and consulting firm, incorporated in New York and having its principal place of business in New York. Del Rio ("the City") is a municipality located on the Texas-Mexico border. The City's supply of drinking water is drawn from the San Felipe Springs. Because the San Felipe Springs historically were classified as groundwater, the City pumped water directly from the San Felipe Springs to its residents, treating it only with chlorine and fluoride. However, the Texas Natural Resources Conservation Commission ("TNRCC") became concerned about the turbidity of the drinking water and began more frequent testing of the water. In mid 1995, based on the results of the tests, the TNRCC reclassified the San Felipe Springs as "Ground Water Under the Direct Influence of Surface Water." As a result, the City was required to construct a facility to treat its water, and the TNRCC imposed a deadline for doing so.
D Dkt. # 1, ¶ 8.
D Dkt. # 1, ¶ 8.
D Dkt. # 1, ¶ 9.
D Dkt. # 1, ¶ 10.
The initial deadline of 18 months was later extended.
In October 1996, the City issued a Request for Statement of Qualifications and Request for Proposal ("RFQ") in an effort to retain an engineering firm to develop a plan for a new water treatment plant with a capacity of 25 to 30 million gallons per day ("mgd"). At the time, the City had experienced a peak water consumption of approximately 21-23 mgd. There were also new residential developments that needed water, and known leaks in the distribution system and supply tanks. City officials believed that fixing the leaks would be a very lengthy and costly process. Therefore, they decided that a plant in the 30 mgd range would meet current and future supply demands, and the leaks could be located and fixed at a later time.
Dkt. #1, ¶ 11; Dkt. # 117, Exh. 2, p. 47.1. 1-5, 22-25.
Dkt. # 117, Exh. 2, p. 47, 1. 5-12; Dkt. # 124, Exh. 14.
Dkt. # 117, Exh. 2, p. 47,1. 13-25; p. 48, 1. 11-20.
Dkt. # 125, Exh. 2, p. 49, 1. 18 — p. 50, 1. 8; p. 123, 1. 7-15.
Dkt. # 125, Exh. 2, p. 47,1. 22-25; p. 49,1. 5 — p. 50, 1. 8; p. 104, 1. 6 — p. 105, 1. 23; p. 106, 1. 7-22; p. 123, 1. 7-15.
In December 1996, Malcom Pirnie responded to the RFQ and submitted its proposal for the water treatment plant project. Malcom Pimie's proposal stated, in part:
Dkt. # 109, ¶ 9-10.
Dkt. # 117, Exh. 8, bates nos. MP13219, 13222.
Identification, prioritization, and repair of suspected distribution system losses may also be elected by the City as an important part of this project.
* * *
Meeting future water demands may be addressed through either treatment alone or through treatment and distribution system improvements. The difficulty with treatment alone is that large volume system losses present lost revenue which ultimately must be passed on to rate payers as a premium surcharge. They also impose excessive consumption of a water resource which may be limited in times of drought. Alternatively, the treatment plant could be built to meet current peak demand (20 mgd), and carefully planned distribution system repairs and improvements could be subsequently implemented to balance recovered system losses against increasing growth demands. However, the treatment plant should be easily and cost-effectively expandable to maximize the City's flexibility in responding to future service needs. We understand the City's need to evaluate distribution system transmission and storage impacts as part of this project, and recommend that system loss determinations be a part of that evaluation program.
After reviewing the various proposals and interviewing the engineers, the City selected Malcom Pirnie to work on the project. In March 1997, the City and Malcom Pirnie entered into a Standard Agreement for Professional Services ("the Agreement") in which Malcom Pirnie agreed to conduct the study phase of the water treatment plant project. The Agreement described the study phase services as follows:
Malcolm Pirnie will provide study phase services including regulatory coordination/assistance, preliminary site assessments, water treatment technology selection, grant funding assistance, and coordination with the City's distribution system evaluations consultant.
D Dkt. #1, ¶ 11; Dkt. # 117, Exh. 3.
D Dkt. # 117, Exh. 3, bates no. MP00428.
(emphasis added). The Agreement then described specific tasks that would be part of Malcolm Pirnie's duties. Those tasks included: Task 260 Grant Funding Assistance
Malcolm Pirnie will assist the City with identifying and applying for grant funding assistance for the water treatment plant project and/or distribution system improvements
Dkt. # 117, Exh. 3, bates no. MP 00435.
During the study phase, the City determined that a current water audit was not necessary because such information was already available. Therefore, Malcom Pirnie conducted a review of the City's available records on water usage during the years 1995-1996, and analyzed water demand in the future based on projected population growth. Malcolm Pirnie concluded that a water treatment plant with 26 mgd capacity would be appropriate for current and future needs of the City.
Dkt. # 124, Exh. 9, pp. 186-189.
Dkt. # 124, Exh. 2.
Dkt. # 124, Exh. 2, p. 4.
Generally, a city must have the capacity to supply at least the amount of water needed on its maximum demand day. 30 Tex. Admin. Code Ann. § 290.45.
On or about October 17, 1997, the City and Malcolm Pirnie entered into Amendment No. 1 to the Agreement, in which Malcom Pirnie agreed to provide professional design services for the water treatment plant. Amendment No. 1 described the scope of amended services as follows:
Provide professional design services for a 26 million gallon per day (mgd) water treatment plant, including permitting and coordination with regulatory agency, preparation of construction plans and specifications and bidding phase services in accordance with Attachment A, Scope of Services.
Dkt. # 109, ¶ 12.
Dkt. # 117, Exh. 4.
(emphasis added).
As the project proceeded, the parties entered into three additional amendments to the Agreement. Amendment No. 4 stated, inter alia, that Malcolm Pirnie would "provide additional professional services . . . for Texas Water Development Board (TWDB) Funding Application Assistance." Amendment No. 4 further stated that "[t]he City of Del Rio has applied for State Revolving Fund (SRF) low interest loan financial assistance through the Texas Water Development Board (TWDB), and verbally authorized Malcolm Pirnie to provide application assistance."
Dkt. # 117, Exh. 5, 6, 7.
Dkt. # 117, Exh. 7.
From the time that TNRCC issued its mandate, the City began contemplating ways to pay for a water treatment facility. The City decided to pursue three sources of funding: a low-interest loan, a grant and an increase in water rates. As early as 1996, City officials and representatives of Malcolm Pirnie (on the City's behalf) began making inquiries about available grant monies from the TWDB and North American Development Bank ("NAD Bank"). In 1996-1997, however, grant money was not available through the TWDB. In fact, the TWDB did not have any programs that offered grant money for such projects until 1998, when the Disadvantaged Communities Program was established. In September 1998, TWDB staff met with Mark Roetzel of Malcolm Pirnie, and expressed "concerns about plant sizing." As a TWDB representative later testified, they were also concerned about the amount of water loss in the City's distribution system, and they believed that the project should include measures to correct the loss. Although the TWDB never denied funding, its concerns were clearly communicated and the City responded to such concerns by going back to the drawing board to design a smaller plant. Malcolm Pirnie submitted proposals for a new services agreement to re-design the plant, but the City decided to terminate their relationship in May 1999. Litigation ensued one month later. Ultimately, the City hired another engineering firm and constructed a 16 mgd water treatment plant and a water storage facility. The project was funded, at least in part, by the TWDB.
Dkt. # 117, Exh. 2, p. 59.
Dkt. # 124, Exh. 4.
Dkt. # 117, Exh. 2, pp. 65-67.
Dkt. # 117, Exh. 9, pp. 51-52.
Dkt. # 124, Exh. 11, bates no. MP 25341.
Dkt. # 124, Exh. 15, pp. 25-27.
Dkt. # 117, Exh. 9, p. 66.
Dkt. # 124, Exh. 16, p. 2.
Dkt. # 134, Exh. 16, p. 2.
The live pleadings in this case are Malcolm Pirnie's original complaint and the City of Del Rio's third amended complaint. In Del Rio's third amended complaint, the City urges the Court to add implied terms to the Agreement which would create a condition precedent to payment under the Agreement. Specifically, the City seeks an implied covenant that Malcolm Pirnie would design a water treatment plant that would be approved for grant funding by governmental agencies, and that Malcom Pimie would not be entitled to payment unless the water treatment plant, as designed, was approved for grant funding by governmental agencies. The City further argues that Malcom Pimie breached the implied contract because its design was not approved for grant funding.
Dkt. # 109, ¶ 28, 32-33.
Dkt. # 109, ¶ 28, 32-33.
Dkt. # 109, ¶ 28-29, 32-33.
In Malcolm Pirnie's original complaint, it claims that the City refused to comply with the dispute resolution procedures under the terms of the Agreement and Malcolm Pirnie seeks specific performance of such terms. Malcolm Pirnie also sues for unbilled fees for services. Malcolm Pirnie claims that such services were performed under the written Agreement between the parties or an oral contract authorizing additional services, and that the City breached such agreement by refusing to pay for such services. Alternatively, Malcolm Pirnie asserts a claim in quantum meruit for the value of additional services the City allegedly received and which remains unpaid. Finally, Malcolm Pirnie seeks declaratory relief as to the parties' rights and obligations under the Agreement and its Amendments. Specifically, Malcolm Pirnie requests that the Court determine and declare whether either party breached the Agreement and whether the City must comply with the dispute resolution procedures under the Agreement prior to effectively terminating the Agreement. In September 2002, the parties filed cross motions for summary judgment on all claims herein.
Dkt. # 1, ¶ 29.
Dkt. # 1, ¶ 31-32; 37-38.
Dkt. # 1, ¶ 34-35.
Dkt. # 1, ¶ 40-41.
II. Summary judgment standard
Federal Rule of Civil Procedure 56(b) provides that a defending party may, at any time, move with or without supporting affidavits for a summary judgment in the party's favor. Summary judgment shall be rendered if the pleadings and evidence show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. Civ. P. 56(c). A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986). The party opposing a motion must present affirmative evidence in order to defeat a properly supported motion for summary judgment. Anderson v. Liberty Lobby, Inc, 477 U.S. 242, 257, 106 S.Ct. 2505, 2514 (1986). An adverse party may not rest upon mere allegations or denials in his pleadings, but his response, by affidavits or otherwise, must set forth specific facts showing that there is a genuine issue for trial; if he does not so respond, summary judgment, if appropriate, shall be entered against him. FED. R. Civ. P. 56(e). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact. Anderson, 477 U.S. at 247-248, 106 S.Ct. at 2510. The dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.Id. All of the evidence and inferences drawn from that evidence must be viewed in the light most favorable to the party opposing the motion for summary judgment. Hibernia Nat'l Bank v. Camer, 997 F.2d 94, 97 (5th Cir. 1993).
III. Should a contractual duty be implied?
A. Analysis of the law:
Implied covenants are disfavored under Texas law. Scot Properties, Ltd. v. Wal-Mart Stores, Inc., 138 F.3d 571, 575 (5th Cir. 1998); Bank One. Texas, N.A. v. Stewart, 967 S.W.2d 419, 434 (Tex.App.-Houston [14th Dist.] 1998, pet. denied). Generally, the courts look beyond the written agreement to imply a covenant only if necessary to effectuate the intention of the parties as disclosed by the contract as a whole, but not to make the contract fair, wise, or just. Bank One, 967 S.W.2d at 434. "Necessity" does not include reformation of the contract through the use of an implied covenant in order to achieve what a court views as a more balanced agreement. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 889 (Tex. 1998). An implied covenant is necessary to effectuate the parties' intentions only if the obligation is "so clearly within the contemplation of the parties that they deemed it unnecessary to express it." Bank One, 967 S.W.2d at 434 (citing Danciger Oil Ref. Co. v. Powell, 137 Tex. 484, 154 S.W.2d 632, 635 (Tex. 1941)). Courts interpreting contracts cannot imply terms contrary to the express language the parties have written into their contract. See Dallas Power Light Co. v. Cleghorn, 623 S.W.2d 310, 311 (Tex. 1981) ("There is no implied covenant when the agreement expressly negates the covenant"). If the written agreement clearly defines the parties' obligations, nothing may be left to implication. See Emmer v. Phillips Petroleum Co., 668 S.W.2d 487, 490 (Tex.App.-Amarillo 1984, no writ). Courts will not redraft the terms of a contract while professing to construe it. Bailey, Vaught, Robertson and Co. v. Remington Investments, Inc., 888 S.W.2d 860, 865 (Tex.App.-Dallas 1994, no writ). The parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement. Id. (citing Westwind Exploration, Inc. v. Homestate Sav. Ass'n, 696 S.W.2d 378, 382 (Tex. 1985)). Thus, courts will imply provisions in contracts only if it is indispensable to effectuate the intent of the parties. Id.
B. Application of the facts:
In this case, the City of Del Rio requests that the Court impose an implied contractual duty on Malcolm Pirnie to design a water treatment plant that would be funded, in whole or in part, by grant money. Because implied terms, if any, must be consistent with the intent of the parties and the express terms of the contract, the Court must analyze the terms of the contract. As noted above, the Agreement narrowly defines Malcolm Pirnie's duties during the study phase to include assistance with identifying and applying for grant funding. The amendments to the Agreement did not expand this duty. Amendment No. 4 was simply more specific in stating that Malcolm Pirnie's assistance would include assistance with the funding application for TWDB. It is undisputed that Malcolm Pirnie performed these duties as agreed. It assisted in identifying possible sources for grant funding, and it also assisted in the funding application for TWDB. While the parties could have agreed that Malcolm Pirnie's compensation was contingent, in whole or in part, upon securing grant funds, they did not make such agreement. See 2A Am Jur Legal Forms 2d, Architects, Engineers and Surveyors, §§ 24:79-24:80 (West 2002). Nor was that the parties' intent at the time they entered into the Agreement and the amendments thereto. The Agreement, along with its four amendments, was negotiated, discussed, reviewed and approved by resolution of City Council prior to being signed by the parties. Jud Warren, the managing engineer for Malcolm Pirnie in South and Central Texas, clearly states in his affidavit that Malcolm Pirnie did not agree to design a water treatment plant for which governmental agencies would provide grant funding. Gus Pappas, the Del Rio City Manager, was involved in the negotiations and he signed the Agreement on behalf of the City. He testified that Del Rio had to build a water treatment plant whether it got grant money to pay for it or not. He further testified that Malcolm Pirnie never promised that the BECC or the NAD Bank would give Del Rio grants to build a plant, and explained that ". . . the grant application would be made by the city. I mean, there's no way that an engineer could have guaranteed that . . . no engineering firm would guarantee a — a grant." James Bayne, the Del Rio City Attorney, testified that he reviewed and approved the contracts prior to presentment to City Council. He stated that they were "standard-type contracts" and represented the parties' complete bargain.
Although the City uses the term "buildable" rather than "fundable," the City is clearly complaining of the inability to secure grant funds for the plant that was designed by Malcolm Pirnie. There is no evidence whatsoever that the plant was not capable of being built as designed.
Dkt. # 117, Exh. 3, bates nos. MP 00428, 00435.
Dkt. # 117, Exh. 7.
Dkt. # 117, Exh. 1; Exh. 14, p. 16.
Dkt. # 117, Exh. 1.
Dkt. # 117, Exh. 2, p. 256.
Dkt. # 117, Exh. 2, p. 256-257.
Dkt. # 117, Exh. 14, p. 8, 1. 4-6.
Dkt. # 117, Exh. 14, p. 9, 1. 6-8; p. 19, 1. 15-19.
The record does not support the City's allegation that the intent of the parties was anything other than what is expressly stated in the Agreement and its amendments. The parties agreed that Malcolm Pirnie would assist the City in its attempt to obtain funding, and Malcolm Pirnie fulfilled that duty. To imply a duty to guarantee funding — a matter completely outside Malcolm Pirnie's control — would clearly be inconsistent with the express terms of the contract and the parties' intent at the time they entered into the contract. Texas law dictates that when an architect or engineer designs a project according to details dictated or approved by the owner, and the final cost to the owner is more than expected, the architect or engineer will not be precluded from recovering compensation for his design services. Baylor University v. Carlander, 316 S.W.2d 277, 289 (Tex.Civ.App.-Dallas 1958, writ ref'd n.r.e.). Unless the contract expressly calls for a design according to a certain-priced building or available funding, the architect or engineer has no implied duty to design with respect to such. See Holmquest v. Priesmeyer, 574 S.W.2d 173, 177 (Tex.Civ.App.-Houston [1st Dist.] 1978, no writ); see also Cobb v. Thomas, 565 S.W.2d 281,288 (Tex.Civ.App.-Tyler 1978, writ ref'd n.r.e.); see also Moore v. Bolton, 480 S.W.2d 805, 809 (Tex.Civ.App.-Houston [14th Dist.] 1972, writ ref'd n.r.e.). In this case, the Court cannot imply the contractual duty which the City seeks to impose upon Malcolm Pirnie. The record does not support such a conclusion.
The City argues that Malcolm Pirnie should have known that the TWDB would not approve grant funding for a project which did not include correction of existing leaks in the distribution system. However, even the TWDB staff who raised concerns about the "water loss" could not point to a rule or regulation that would have put Malcolm Pirnie on notice that the project would not be approved for grant funding for that reason. Dkt. # 124, Exh. 15, pp. 25-26; Dkt. # 127, Exh. 3, p. 54.
IV. Is dispute resolution a moot issue?
Malcolm Pirnie claims the City failed to comply with the dispute resolution requirements in the parties' Agreement, and seeks specific performance thereof. Malcolm Pirnie also alleges that the City must comply with the dispute resolution procedures under the Agreement prior to effectively terminating the Agreement, and Malcolm Pirnie seeks a declaration as to whether the Agreement has been effectively terminated. The City requests summary judgment on these issues.
The dispute resolution provision in the Agreement reflects the parties' intent to negotiate and mediate any dispute prior to litigating the dispute. The City claims that the parties held one meeting in an attempt to resolve their dispute, but were unsuccessful. Shortly thereafter, Malcolm Pirnie filed its lawsuit. Mediation was not even discussed until after litigation had commenced. Thus, neither party made a good faith effort to comply with the dispute resolution provision in the Agreement. At this juncture, however, the issue is moot.
Dkt. # 117, Exh. 3, bates nos. MP00421-MP00422.
The termination issue is separate and distinct from the issue of dispute resolution. There is nothing in the Agreement which indicates that the parties' right to terminate the contract was contingent upon participation in dispute resolution. The Agreement simply provides that in the event the City terminated the Agreement prior to completion of services thereunder, Malcolm Pirnie would be paid in full for services rendered and expenses incurred to the date of termination. The City's termination letter was clearly effective under the terms of the Agreement.
Dkt. # 117, Exh. 3, bates no. MO00420.
Dkt. # 117, Exh. 3, bates no. MP00420.
Dkt. # 125, Exh. 13.
V.
Has the City breached a duty to pay more fees? Malcolm Pirnie claims that services were performed under the written Agreement between the parties and/or an oral contract authorizing additional services, and that the City breached such agreement by refusing to pay for the services rendered.A. Written agreement:
Pursuant to the parties' written Agreement, the total contract amount for services provided thereunder was $3,042,971.00. The parties agreed to a standard billing schedule, based on a fixed hourly rate. They further agreed that invoices, issued in accordance with the standard billing schedule, would be sent to the City as actual work was performed and reimbursable expenses were incurred. The City agreed to pay such invoices within 30 days after receipt. In the event the City terminated the contract prior to completion of Basic Services, as described in the contract, Malcolm Pirnie would be paid in full for services rendered and expenses incurred "to the date of termination."
Dkt. # 17, Exh. 7.
Dkt. # 116, Exh. 3, bates nos. MP00436-MP00437.
Dkt. # 117, Exh. 3, bates no. MP00420.
Dkt. # 117, Exh. 3, bates no. MP00420.
It is undisputed that the parties' written Agreement was terminated prior to completion of the Basic Services described therein, and Malcolm Pirnie now alleges that at least $9,925.86 remains unpaid for services performed under the Agreement. However, Malcolm Pirnie never submitted invoices describing the services rendered and the hours expended in performing such services. Malcolm Pirnie claims that submission of invoices was not necessary because the City's termination of the contract constituted anticipatory breach and repudiation of the contract. Neither the terms of the contract nor the applicable law support such an argument.
Anticipatory breach occurs when a party who is obligated to make future payments of money to another absolutely repudiates the obligation, without just excuse, and the obligee suffers damages as a result thereof. When such a breach occurs, the obligee is entitled to maintain an action for damages for the entire breach, and is entitled to receive damages for the present value of the future payments under the contract. See Taylor Publishing Co. v. Systems Marketing Inc., 686 S.W.2d 213, 217 (Tex.App.-Dallas 1984, writ ref'd n.r.e.); see also Valdina Farms, Inc. v. Brown, Beasley Associates, Inc., 733 S.W.2d 688, 692 (Tex.App.-San Antonio 1987, no writ). That is not the situation here. When the City of Del Rio terminated its contract with Malcolm Pirnie, the parties had reached a mutual understanding that the 26-28 mgd water treatment plant would not be built as planned and Malcolm Pirnie was submitting proposals for a new agreement to re-design the plant. The City's notice of termination clearly stated that a new contract would not be forthcoming, and the City did not obligate itself to payments for future services. On the other hand, the City did not refuse to pay any amount due for Basic Services already rendered by Malcolm Pirnie under the written Agreement. The terms of the Agreement clearly reflect the parties' understanding that Malcolm Pirnie would submit invoices for services rendered "to the date of termination" and there was no reason for Malcolm Pirnie to believe that an invoice was not necessary to collect any outstanding amounts due at the time oftermination. Because Malcolm Pirnie has never submitted an invoice for work allegedly performed under the written Agreement — a condition precedent to payment — the City has not breached its duty to pay for such services. See Hohenberg Bros. Co. v. George E. Gibbons Co., 537 S.W.2d 1, 3 (Tex. 1976) (Conditions precedent to an obligation to perform are those acts or events that must occur before there is a right to immediate performance and before there is a breach of contractual duty).
Dkt. # 125, Exh. 13.
Dkt. # 125, Exh. 13.
Dkt. # 117, Exh. 3, bates no. MP00420.
B. Oral agreement:
Malcolm Pirnie further claims that additional fees in the amount of $177,519.98 are due and owing, and that such fees arose out of an oral agreement to perform re-design services after it became apparent that the water treatment plant would be down-sized. The City claims that the parties never entered into an oral contract and that Malcolm Pirnie's fees were incurred as part of its own marketing effort to persuade the City to continue to use its services after it was determined that the plant would need to be down-sized.
The elements of written and oral contracts are the same and must be present for a contract to be binding. Walmart Stores, Inc. v. Lopez, 93 S.W.3d 548, 555 (Tex.App.-Houston [14th Dist.] 2002, no pet.). The following elements are required for the formation of a binding contract: (1) an offer, (2) acceptance in strict compliance with the terms of the offer, (3) a meeting of the minds, (4) each party's consent to the terms, and (5) execution and delivery of the contract with the intent that it be mutual and binding. Id.; see also Harris and USAA Casualty Ins. Co. v. Balderas, 27 S.W.3d 71, 77 (Tex.App. — San Antonio 2000, pet. denied). For an agreement to be enforceable, there must be a meeting of the minds with respect to its subject matter and essential terms. Lopez, 93 S.W.3d at 556.
Malcolm Pirnie relies on several letters from January 1999 through April 1999 which contain certain opinions and proposals relating to re-design of the water treatment plant. While parts of the letters could be construed as an offer, an acceptance of the offer is conspicuously absent from the record. Moreover, the essential terms of the agreement, if any, are unclear. The record does reflect that discussions about re-design occurred at City Council meeting(s); however, there is no indication that the parties had a meeting of the minds. In fact, Jud Warren of Malcolm Pirnie testified:
Q: You said that the bill upon which Del Rio is suing was not sent out. Do you know why that bill was not sent out?
A: Because we did not have a signed agreement with the City allowing us to bill that money.
Dkt. # 125, Exh. 8, 10, 11, 12.
Dkt. # 125, Exh. 4, pp. 44, 80.
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Q: — you've just told me that it was important to you that the contract and the Amendments 1, 2 and 3 and 4 to the contract were approved by the City Council.
A: I think I just told you that we have consistently been asked to do work before contracts were signed:
Q: Well, was it important for you to get that approval eventually?
A: Yes.
Q: And why was that?
A: So there would be a valid contract.
Thus, it is clear that both parties understood that any agreement would need to be reduced to writing and approved by City Council. This was never done, because the City rejected Malcolm Pirnie's proposal and hired another engineering firm.
C. Quantum Meruit:
Because there was no contract for additional services, the Court must address Malcolm Pirnie's alternative claim that the City is liable in quantum meruit. Generally, a party may recover under quantum meruit only when there is no express contract covering the services or materials furnished. Vortt Exploration Co., Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990). This remedy "is based upon the promise implied by law to pay for beneficial services rendered and knowingly accepted."Id. (citing Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988) and Campbell v. Northwestern Nat'l Life Ins. Co., 573 S.W.2d 496, 498 (Tex. 1978)). Recovery in quantum meruit will be had when non-payment for the services rendered would "result in an unjust enrichment to the party benefitted by the work." Id. (citing City of Ingleside v. Stewart, 554 S.W.2d 939,943 (Tex.Civ.App.-Corpus Christi 1977, writ ref'd n.r.e.)). To recover under quantum meruit a claimant must prove that: (1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) which services and materials were accepted by the person sought to be charged, used and enjoyed by him; and (4) under such circumstances as reasonably notified the person sought to be charged that the plaintiff in performing such services was expecting to be paid by the person sought to be charged. Id. (citing Bashara v. Baptist Memorial Hospital System, 685 S.W.2d 307, 310 (Tex. 1985)).
The City contends that Malcolm Pirnie's proposals for re-designing the water treatment plant were self-serving and did not provide anything of value to the City. The City further contends that it did not accept, use or enjoy the benefit of the proposals. Instead, the City hired another engineering firm to complete the project, and Malcolm Pirnie's work was not used or integrated into the work of the other engineering firm. As a result, the City was not unjustly enriched.
Dkt. # 115, Exh. 2.
Although Malcolm Pirnie contends that it expected to be paid for its work, there is no evidence of unjust enrichment. The City may have reviewed and discussed the proposals submitted by Malcolm Pirnie, but the City ultimately rejected them and hired another firm to complete the project. There is no evidence whatsoever that Malcolm Pirnie's proposals were used, in whole or in part, to complete the project. Without evidence of unjust enrichment, Malcolm Pirnie's claim must fail.
It is therefore ORDERED that Malcom Pirnie, Inc.'s Motion for Summary Judgment (Dkt. # 116, 117) is hereby GRANTED, and the City of Del Rio's Motion to Dismiss or, in the alternative, Motion for Summary Judgment (Dkt. # 115) is also GRANTED.
It is further ORDERED that all claims herein are DISMISSED in their entirety, and all attorneys' fees and costs shall be assessed against the party incurring same. Final Judgment may be entered accordingly.