Opinion
NO. 01-20-00438-CV
06-30-2022
TEXAS A&M CONCRETE, LLC, Appellant v. BRAE BURN CONSTRUCTION COMPANY, LTD., L.L.P., Tim Pixley, and Eddie Heikkila, Appellees
Alyssa M. Barreneche, Dallas, D. Randall Montgomery, Abilene, Ashley Smith, Austin, for Appellee. Daniel J. Kasprzak, Houston, Clinton W. Raney, Pasadena, George A. Kurisky Jr., Damian William Abreo, Houston, for Appellant.
Alyssa M. Barreneche, Dallas, D. Randall Montgomery, Abilene, Ashley Smith, Austin, for Appellee.
Daniel J. Kasprzak, Houston, Clinton W. Raney, Pasadena, George A. Kurisky Jr., Damian William Abreo, Houston, for Appellant.
Panel consists of Justices Goodman, Landau, and Countiss.
Julie Countiss, Justice
Appellant, Texas A&M Concrete, LLC ("TAMC"), challenges the rendition of summary judgment in favor of appellees, Brae Burn Construction Company, Ltd., L.L.P. ("Brae Burn"), Timothy Pixley, and Eddie Heikkila (collectively, "appellees"), in TAMC's suit against appellees for foreclosure on mechanic's lien, breach of contract, on a sworn account, breach of fiduciary duty, breach of trust, violations of the Texas Public Prompt Pay Act and the Texas Construction Trust Fund Act ("TCTFA"), quantum meruit, unjust enrichment, and promissory estoppel. In five issues, TAMC contends that the trial court erred in granting appellees summary judgment, and the trial court "improperly dismiss[ed] [its] claims."
See Tex. Gov't Code Ann. §§ 2251.001 –.055.
See Tex. Prop. Code Ann. §§ 162.001 –.033.
We affirm in part and reverse and remand in part.
Background
In its second amended petition, TAMC alleged that it entered a contract with Brae Burn under which TAMC agreed "to provide labor and materials, including but not limited to concrete and foundation work, for a project on [a] property owned by" YSM-Ponderosa, LLC ("Ponderosa") (the "subcontract"). As required by the subcontract, TAMC "provided ... work and materials" for the project, but Brae Burn did not pay "all amounts due" to TAMC. Brae Burn still owed TAMC $418,327.98 for the work and materials that TAMC provided under the subcontract. TAMC gave Brae Burn notice of its claims, filed affidavits with the Harris County Clerk's Office "claiming ... statutory and constitutional mechanic's and materialmen's liens against the [p]roject," and sent notice of the affidavits to Brae Burn and Ponderosa.
TAMC also brought suit against Ponderosa and its principals, but the trial court severed TAMC's claims as to those individuals. They are not parties to this appeal.
The record indicates that Brae Burn was the general contractor on the project and TAMC was a subcontractor.
As to why it was not paid for the work and materials provided for the project, TAMC alleged that either "Ponderosa [did not] tender payments to Brae Burn such that Brae Burn could fully pay [TAMC]" for the work and materials it provided or "Ponderosa tendered payments to Brae Burn" that included the funds to be paid to TAMC, but Brae Burn did not use those funds to pay TAMC for the work and materials it provided.
TAMC brought suit against Brae Burn for foreclosure on its mechanic's lien on the project property. And TAMC asserted that Brae Burn was liable to TAMC for its damages in the amount of the lien under Texas Property Code section 53.083. TAMC also brought claims against Brae Burn for breach of contract and on sworn account, asserting that Brae Burn failed to pay TAMC "for the labor, materials and/or equipment [that TAMC] provided" for the project. And TAMC asserted claims against Brae Burn for violations of the Texas Public Prompt Pay Act and for quantum meruit, unjust enrichment, and promissory estoppel.
See Act of May 26, 1983, 68th Leg., R.S., ch. 576, § 1, 1983 Tex. Gen. Laws 3475, 3544 (repealed 2022). Former Texas Property Code section 53.083 applies to contracts entered into before January 1, 2022.
Further, TAMC brought claims against appellees for violations of the TCTFA, breach of fiduciary duty, and breach of trust, asserting that under the TCTFA, appellees were "trustees," TAMC was "the beneficiary," and appellees received funds from Ponderosa for TAMC's work. And although appellees "received all or part of the construction trust funds" from Ponderosa and had received notice of TAMC's claims for payment, appellees failed to pay TAMC within thirty days after receiving the funds. Instead, "the funds paid by Ponderosa ... were knowingly, used, disbursed, or diverted from Brae Burn's trust account by Pixley and Heikkila" before Brae Burn paid TAMC for "all current and past obligations."
Appellees answered, generally denying the allegations in TAMC's second amended petition and asserting various defenses. Appellees then filed a combined no-evidence and matter-of-law summary-judgment motion on TAMC's claims against them. In their motion, appellees stated that Ponderosa hired Brae Burn as the general contractor on the project and Brae Burn, in turn, hired TAMC, a subcontractor, to complete the concrete work on the project. Under the subcontract, TAMC "would periodically submit pay applications to Brae Burn as its work progressed." Then, according to the prime contract between Brae Burn and Ponderosa, Brae Burn would submit its own pay applications to Ponderosa. Brae Burn's pay applications to Ponderosa included the amounts billed by TAMC in its pay applications to Brae Burn. The subcontract was a "pay when paid" contract, meaning that it specified that TAMC was to be paid upon Brae Burn's receipt of payment from Ponderosa. Appellees attached to their summary-judgment motion a copy of the subcontract between Brae Burn and TAMC. As to payment terms, the subcontract provided:
Appellees filed separate answers.
In the contract between Ponderosa and Brae Burn (the "prime contract"), Brae Burn agreed "to perform and furnish all of the labor, materials and equipment to accomplish" the project, i.e., the "construction of a retail complex." Appellees attached a copy of the prime contract to their summary-judgment motion.
[TAMC] shall submit periodic written statements of the value of the work completed according to the schedule set forth in the [prime contract] [d]ocuments or, if none is specified, as directed by [Brae Burn], [n]inety percent of the value of each estimate shall be paid within seven days after receipt of payment therefor[ ] by [Brae Burn]. [Brae Burn] shall retain [t]en percent of the value of each estimate until the work has been [a]ccepted under the [prime contract] [d]ocuments, the project for which the [w]ork was performed has been completed for thirty days, and the [TAMC] shall have provided satisfactory evidence that its laborers, materialmen, and suppliers have been paid.
(Emphasis omitted.)
According to appellees, the following facts were undisputed:
• "Brae Burn paid all of TAMC's pay applications upon receipt of funds from Ponderosa";
• In its suit, TAMC sought to recover "monies it claim[ed] [we]re due to it for the months of July, August, and September 2015 totaling $159,247.60 as well as retainage in the amount of $259,080.38 for a total sum of $418,327.98";
• "Brae Burn requested payment from Ponderosa for TAMC's work during [July, August, and September 2015], but received nothing from Ponderosa"; and
• Ponderosa "never paid Brae Burn any monies with relation to retainage for TAMC."
Appellees further stated that in September 2015, Ponderosa made a "partial payment" to Brae Burn of $200,000 related to Brae Burn's June 2015 pay application. That was the last payment that Brae Burn received from Ponderosa. Brae Burn did not make any additional payments to TAMC related to TAMC's July, August, and September 2015 pay applications because it received no further payments from Ponderosa. In asserting that they were entitled to summary judgment on TAMC's breach-of-contract and sworn-account claims, appellees explained that TAMC sought to recover $159,247.60 for its July, August, and September 2015 pay applications billed to Brae Burn plus "retainage in the amount of $259,080.39." But because Brae Burn did not receive any payment from Ponderosa for the Brae Burn's July, August, and September 2015 pay applications, Brae Burn had no contractual duty to pay TAMC for the amounts billed in TAMC's July, August, and September 2015 pay applications. Appellees also asserted that there was no evidence that Ponderosa ever paid Brae Burn any retainage under the prime contract, so TAMC was not entitled to the $259,080.38 it sought for retainage. In short, there was "no evidence to support TAMC's claim that monies were due to TAMC from Brae Burn," and TAMC's claim for violations of the Texas Public Prompt Pay Act failed for that same reason.
In asserting that they were entitled to summary judgment on TAMC's claims for violations of the TCTFA, breach of fiduciary duty, and breach of trust, appellees asserted that although TAMC had alleged that Brae Burn "received all or part of the construction trust funds" from Ponderosa "after [it had] receiv[ed] notice of [TAMC's] claims" and appellees "fail[ed] to pay [TAMC] within 30 days after receipt of the construction funds," Brae Burn "never received any funds from Ponderosa for the monies which TAMC [sought] to recover" and TAMC could not prevail on its claims. In doing so, appellees relied on the deposition testimony of TAMC's principal, David Buzzelli, who testified that (1) he did not know "of any trust violations by Brae Burn of monies that were paid to [Brae Burn] that were not paid to [TAMC]," (2) TAMC was not claiming that Brae Burn made any promises to TAMC outside of the subcontract that Brae Burn did not keep, and (3) TAMC was not asserting that Brae Burn took any equipment, materials, or labor from TAMC.
Appellees attached a copy of Buzzelli's deposition testimony to their summary-judgment motion.
In asserting that they were entitled to summary judgment on TAMC's quantum-meruit and unjust-enrichment claims, appellees argued they were entitled to judgment as a matter of law because the subcontract "was the sole and express contract governing TAMC's provision of labor and services and payment for those services" related to the project and TAMC's "equitable theories of recovery ... [were] unavailable [because] an express contract exist[ed]." Appellees also asserted, as to TAMC's unjust-enrichment claim, that there was no evidence that Brae Burn obtained any benefit from TAMC because "it was never paid for the work for which TAMC s[ought] recovery." And as to TAMC's promissory-estoppel claim, appellees argued that the claim failed as a matter of law "because any ‘promise’ [made by Brae Burn and TAMC was] covered by the subcontract," and there was no evidence of any extracontractual promise.
Finally, in asserting that they were entitled to summary judgment on TAMC's claims for foreclosure on its mechanic's lien on the project property and for damages under Texas Property Code section 53.083, appellees argued that they were entitled to judgment as a matter of law because Brae Burn had no property interest in the project and Texas Property Code section 53.083 "relate[d] to payment of a claimant from an owner" and "not the general contractor," like Brae Burn.
In response to appellees’ summary-judgment motion, TAMC asserted that it did "not seek to enforce a mechanic's lien ... against [Brae Burn]" and was "not pursu[ing] a claim under ... Texas Property Code [section] 53.083 against [Brae Burn]." As to its breach-of-contract claim, TAMC argued that appellees were not entitled to judgment as a matter of law because the subcontract was a valid, enforceable contract, TAMC performed under the subcontract, and Brae Burn breached the subcontract by improperly submitting advance billings to Ponderosa for the concrete work to be performed by TAMC under the subcontract. For instance, by May 2015, Brae Burn had "received [from Ponderosa] approximately $500,000.00 more than TAMC [had] billed [Brae Burn for]." And Brae Burn represented in its May 2015 pay application to Ponderosa that TAMC had completed "$2,347,317.00 in concrete work," even though TAMC had not done any work on the project from November 2014 through May 2015. According to TAMC, the money that Brae Burn received from Ponderosa on or before May 2015, should have been "earmarked for concrete work," and Brae Burn should have retained those funds "for TAMC's benefit."
According to TAMC, it did not receive any funds from Brae Burn for its June, July, or August 2015 pay applications. Yet, Brae Burn, on September 4, 2015, "received $200,000.00 from Ponderosa," a payment that "was earmarked for TAMC." "Rather than pay[ ] that money [in its entirety] to TAMC," Brae Burn wrote a check to TAMC for $184,995.63—the amount of TAMC's June 2015 pay application—and "diverted the remaining amount elsewhere."
TAMC attached to its response a copy of a check, dated September 4, 2015, from Ponderosa to Brae Burn. In the memo portion of the September 4, 2015 check, a handwritten notation states: "Partial pmt—Pay App TAMU Concrete."
TAMC further asserted that "Brae Burn left the project in January of 2016, citing [a] lack of payment from Ponderosa." But TAMC "was never paid for its work during July, August, and September ... 2015." According to TAMC, "[a]s a result of Brae Burn's failure to safeguard" the funds that Ponderosa had paid Brae Burn for TAMC's concrete work, TAMC was "damaged in the amount of $159,247.45"—the total amount owed under TAMC's July, August, and September 2015 pay applications.
As to TAMC's sworn-account claim, TAMC acknowledged that its claim was merely "a procedural device for certain breach of contract claims." And it asserted that appellees’ motion for summary judgment on TAMC's sworn-account claim should "be denied for the [same] reasons" that appellees’ motion for summary judgment on TAMC's breach-of-contract claim should be denied.
See Tex. R. Civ. P. 185.
As to TAMC's claims for quantum meruit, unjust enrichment, and promissory estoppel, TAMC acknowledged that the "existence of a valid, enforceable contract nullifie[d]" those claims, but it asserted that if the trial court found that the subcontract was not an enforceable contract or did not govern the dispute, then TAMC was entitled to pursue its claims for quantum meruit, unjust enrichment, and promissory estoppel. Further, TAMC asserted that Brae Burn, by billing Ponderosa in its May 2015 pay application for concrete work that TAMC had not yet performed, "obtained a benefit by taking undue advantage."
As to its claims for violations of the Texas Public Prompt Pay Act and the TCTFA, breach of fiduciary duty, and breach of trust, TAMC asserted that Brae Burn received payment from Ponderosa, which was "earmarked" for TAMC, but Brae Burn only paid TAMC the amount set forth in TAMC's June 2015 pay application; the "remaining amount" was diverted elsewhere.
The trial court held a hearing on appellees’ summary-judgment motion. At the beginning of the summary-judgment hearing, appellees’ trial counsel informed the trial court that appellees were "out of a lot of the case due to a settlement that [had] occurred, ... so [appellees were] very limited as to what [they] ha[d] left ... in th[e] case, and so [appellees were] trying to get out on the remaining portion of the case" with their summary-judgment motion. A discussion then ensued:
[Trial Court]: We are here on [appellees’] ... Traditional [and] No-Evidence Motion for Summary Judgment. I think [TAMC] has clarified some of the issues, that the causes of action pertaining to property, they are not asserting against [appellees]. So the constitutional lien, mechanic's lien, Texas Property Code [section 53.083 claims] don't go to [appellees].
[Appellees’ trial counsel]: ... We may be able to eliminate a few more, if we can, before we start. ... I think we're in agreement that [the] sworn[-]account [claim] is out as to [appellees]—
[TAMC's trial counsel]: That's correct.
[Appellees’ trial counsel]: —constitutional lien, I think [TAMC's trial counsel] said [that its claims for], foreclosure, liability under [Texas] Property Code [section 53.038], quantum meruit, unjust enrichment—
[Trial Court]: Okay. So you're talking the equitable claims?
[Appellees’ trial counsel]: Yes[,] ... and promissory estoppel [are out].
[Trial Court]: So we're here, then, basically on [TAMC's claims for] breach of contract, the violations of the [Texas Public] Prompt Pay Act and the violations of the [TCTFA] and the breach of fiduciary duty.
....
[Appellees’ trial counsel]: ... And there was one other issue which is eliminated out. [TAMC] also w[as] trying to claim the retainage ... which was 10 percent. They're now conceding—
[TAMC's trial counsel]: No, [TAMC] never intended to bring that [claim] against [appellees]. [TAMC] acknowledged ... that [Ponderosa] never paid retainage on those[.]
....
[TAMC's trial counsel:] So [TAMC's] know[s] that [appellees] do[ ] [not] have it.
Trial Court: Okay. So retainage is out. So literally we're just looking at those three months of pay apps that [TAMC] submitted to [Brae Burn] that [Brae Burn] sa[id] [it] never got paid for by Ponderosa. And [TAMC is] saying it doesn't matter because [Brae Burn had] already been paid way more than enough by Ponderosa to cover that.
[TAMC's trial counsel]: And that's the purpose of the [TCTFA]. Yes, Your Honor.
The parties then argued the merits of appellees’ summary-judgment motion as to TAMC's claims for breach of contract and violations of the Texas Public Prompt Pay Act and the TCTFA. The trial court granted appellees summary judgment on TAMC's claims against them for breach of contract and violations of the Texas Public Prompt Pay Act and the TCTFA. And it asked appellees’ trial counsel to "[s]ubmit [to the trial court] an order [granting summary judgment] with the[ ] specific claims since the other claims [the parties] agreed d[id] [not] apply to [appellees] anyway" and were "no longer being pursued against" appellees. TAMC's trial counsel interjected: "The lien claims, I don't have any problem saying they don't apply to [appellees]. ... The other claims I'd just assume [the trial court] grant summary judgment on." In response, the trial court asked appellees’ trial counsel to "[c]irculate an order" and "[h]ave everybody agree on it."
Later, the trial court signed an order granting appellees summary judgment. In its order, the trial court recited:
TAMC stated that it was not seeking to enforce a mechanic's lien, whether statutory or constitutional, against [appellees]. Additionally, TAMC stated that it was not pursuing a claim under the funds trapping provisions of [ Texas Property Code section 53.083 ] against [appellees]. Finally, TAMC stipulated that it was not seeking to recover any retainage amounts from Brae Burn and was only seeking reimbursement for work it performed in July, August, and September of 2015.
And the trial court noted:
In its [summary-judgment] [r]esponse, TAMC specified that its claims asserted against Brae Burn were for (1) breach of contract, (2) sworn account, (3) quantum meruit, (4) unjust enrichment/promissory estoppel, (5) violations of the [Texas Public] Prompt Pay Act, and (6) violations of the [TCTFA], breach of fiduciary duty, and breach of trust. Against Pixley and [Heikkila], TAMC asserted claims for violations of the [TCTFA], breach of fiduciary duty, and breach of trust.
The trial court concluded that "TAMC's claims against [appellees] fail[ed] as a matter of law" and ordered that:
All of ... TAMC's claims against [Brae Burn] which include and are not limited to (1) breach of contract, (2) sworn account, (3) quantum meruit, (4) unjust enrichment/promissory estoppel, (5) violations of the [Texas Public] Prompt Pay Act, and (6) violations of the [TCTFA], breach of fiduciary duty, and breach of trust are therefore dismissed in their entirety with prejudice.
It also ordered that: "TAMC's claims against Pixley and [Heikkila] ... for violations of the [TCTFA], breach of fiduciary duty, and breach of trust are ... dismissed in their entirety."
To the extent that TAMC alleged claims against appellees for breach of fiduciary duty and breach of trust, separate and apart from its claim against appellees for violations of the TCTFA, TAMC does not challenge on appeal the trial court's granting of summary judgment in favor of appellees on TAMC's claims for breach of fiduciary duty and breach of trust. See Tex. R. App. P. 38.1(f), (i).
Standard of Review
We review a trial court's summary judgment de novo. Valence Operating Co. v. Dorsett , 164 S.W.3d 656, 661 (Tex. 2005) ; Provident Life & Accident Ins. Co. v. Knott , 128 S.W.3d 211, 215 (Tex. 2003). In conducting our review, we take as true all evidence favorable to the non-movant, and we indulge every reasonable inference and resolve any doubts in the non-movant's favor. Valence Operating , 164 S.W.3d at 661 ; Knott , 128 S.W.3d at 215. When the trial court fails to specify the grounds on which it granted summary judgment, we must affirm if any of the summary-judgment grounds are meritorious. See FM Props. Operating Co. v. City of Austin , 22 S.W.3d 868, 872–73 (Tex. 2000) ; see also Rodriguez v. Lockhart Contracting Servs., Inc. , 499 S.W.3d 48, 62–63 (Tex. App.—San Antonio 2016, no pet.). By contrast, when the trial court's summary-judgment order specifies the ground or grounds upon which summary judgment was granted, we must review those grounds that the trial court ruled on, but we may also consider other summary-judgment grounds that were before the trial court but on which the trial court did not rule, if doing so serves the interest of judicial economy. See Cincinnati Life Ins. Co. v. Cates , 927 S.W.2d 623, 625–26 (Tex. 1996) ; Hamilton as Tr. of Joan Carol DeYoung-Burland Tr. v. Maynard , No. 01-19-00925-CV, 2020 WL 6787514, at *3 (Tex. App.—Houston [1st Dist.] Nov. 19, 2020, no pet.) (mem. op.).
A party seeking summary judgment may combine in a single motion a request for summary judgment under the no-evidence standard with a request for summary judgment as a matter of law. Binur v. Jacobo , 135 S.W.3d 646, 650–51 (Tex. 2004). When a party has sought summary judgment on both grounds, we typically review first the propriety of the summary judgment under the no-evidence standard. See Merriman v. XTO Energy, Inc. , 407 S.W.3d 244, 248 (Tex. 2013) ; Ford Motor Co. v. Ridgway , 135 S.W.3d 598, 600 (Tex. 2004) ; Littles v. Riverwalk Council of Co-Owners, Inc. , No. 01-16-00790-CV, 2018 WL 4781142, at *3 (Tex. App.—Houston [1st Dist.] Oct. 4, 2018, pet. denied) (mem. op.). However, we may review a summary judgment under the matter-of-law standard first if it would be dispositive. Littles , 2018 WL 4781142, at *3 ; Deweese v. Ocwen Loan Serv. L.L.C. , No. 01-13-00861-CV, 2014 WL 6998063, at *2 n.1 (Tex. App.—Houston [1st Dist.] Dec. 11, 2014, no pet.) (mem. op.).
To prevail on a matter-of-law summary-judgment motion, a movant has the burden of establishing that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c) ; Cathey v. Booth , 900 S.W.2d 339, 341 (Tex. 1995). When a defendant moves for summary judgment on the plaintiff's claim, it must either (1) disprove at least one essential element of the plaintiff's cause of action or (2) plead and conclusively establish each essential element of its affirmative defense, thereby defeating the plaintiff's cause of action. Cathey , 900 S.W.2d at 341 ; Centeq Realty, Inc. v. Siegler , 899 S.W.2d 195, 197 (Tex. 1995). Once the movant meets its burden, the burden shifts to the non-movant to raise a genuine issue of material fact precluding summary judgment. See Siegler , 899 S.W.2d at 197 ; Transcon. Ins. Co. v. Briggs Equip. Tr. , 321 S.W.3d 685, 691 (Tex. App.—Houston [14th Dist.] 2010, no pet.). The evidence raises a genuine issue of fact if reasonable and fair-minded jurors could differ in their conclusions in light of all of the summary-judgment evidence. Goodyear Tire & Rubber Co. v. Mayes , 236 S.W.3d 754, 755 (Tex. 2007).
Breach of Contract
In its first issue, TAMC argues that the trial court erred in granting appellees summary judgment on TAMC's breach-of-contract claim because the evidence raised a fact issue as to whether "Brae Burn breached the subcontract with TAMC by over billing for TAMC's work and then under paying."
A breach-of-contract claim requires proof of four elements: (1) the existence of a valid contract, (2) performance or tendered performance by the plaintiff, (3) breach of the contract by the defendant, and (4) damages sustained by the plaintiff as a result of the defendant's breach. See B & W Supply, Inc. v. Beckman , 305 S.W.3d 10, 16 (Tex. App.—Houston [1st Dist.] 2009, pet. denied).
In their summary-judgment motion, appellees argued that they were entitled to judgment as a matter of law on TAMC's breach-of-contract claim because "[t]he evidence ... conclusively establishe[d] that Brae Burn did not breach [the] [sub]contract with TAMC." According to appellees, TAMC alleged that Brae Burn breached the subcontract by failing to pay TAMC for TAMC's July, August, and September 2015 pay applications, but Brae Burn was never contractually obligated to pay TAMC for the amounts billed in those pay applications. In making their argument, appellees relied on the "pay when paid" provision in the subcontract, which required TAMC to "submit periodic written statements of the value of the work completed" to Brae Burn and then required Brae Burn to pay TAMC "[n]inety percent of the value of each estimate ... within seven days after receipt of payment" by Brae Burn from Ponderosa for those pay applications submitted by TAMC. And TAMC admitted that Brae Burn never "got paid monies for its work in July, August, or September 2015."
On appeal, TAMC argues that appellees were not entitled to summary judgment on TAMC's breach-of-contract claim because a different provision of the subcontract raised a fact issue as to whether Brae Burn breached the subcontract. The provision on which TAMC relies purportedly required Brae Burn to hold any excess funds it received for TAMC's work for the benefit of TAMC until earned. Specifically, the subcontract provision provided:
All sums tentatively earned by [TAMC] by the partial or complete performance of [TAMC's] [w]ork and any balance of unearned [s]ubcontract funds shall constitute a fund for the purpose of: (a) first, full completion of [TAMC's] [w]ork; (b) second, payment of any backcharges or claims due [Brae Burn] from [TAMC]; and (c) third, payment to the sub-subcontractors, laborers, materialmen, and service suppliers of [TAMC] who have performed or provided labor, material, equipment, or services in the prosecution of the [w]ork ....
But TAMC does not explain how this language supports its breach-of-contract claim, and it did not invoke this provision in its summary-judgment response in the trial court. See City of Houston v. Clear Creek Basin Auth. , 589 S.W.2d 671, 678 (Tex. 1979) (summary judgment non-movant could not raise for first time on appeal additional fact issue that was not raised in its response); Daniels v. Bertolino , No. 03-14-00671-CV, 2015 WL 4909929, at *2 (Tex. App.—Austin Aug. 12, 2015, no pet.) (mem. op.) ("A party may not raise new reasons why a summary judgment should have been denied for the first time on appeal."). Further, we do not read the above-quoted language in the subcontract, on which TAMC relies, as altering the language in the subcontract's "pay when paid" provision, which required Brae Burn to pay TAMC only after it received payment from Ponderosa on the pay applications that TAMC had submitted to Brae Burn. TAMC does not dispute that Brae Burn requested payment from Ponderosa based on TAMC's pay applications for July, August, and September 2015, but received nothing from Ponderosa.
In its appellant's brief, TAMC asserts for the first time on appeal that its breach-of-contract claim was not limited to Brae Burn's failure to pay TAMC for its July, August, and September 2015 pay applications. Instead, TAMC asserts that there were "multiple instances prior to July 2015, where Brae Burn breached the subcontract by withholding funds due TAMC." This assertion is contrary to the position that TAMC articulated in its summary-judgment response, in which it alleged damages "in the amount of $159,247.45," the total sum owed to it under the July, August, and September 2015 pay applications. And TAMC provides no citation to the record for evidence and argument about those "multiple" breaches. Thus, TAMC has not preserved and/or waived this argument on appeal. See Tex. R. App. P. 33.1(a), 38.1(i).
Because the undisputed evidence shows that Brae Burn did not breach its contractual duty to pay TAMC under the subcontract for the July, August, and September 2015 pay applications submitted by TAMC, we hold that the trial court did not err in granting summary judgment in favor of appellees on TAMC's breach-of-contract claim.
For the first time, in its reply brief, TAMC asserts that the "pay when paid" provision of the subcontract was not dispositive and that a contractor that acts outside the subcontract's payment terms waives strict adherence to such provision. An issue raised for the first time in a reply brief is ordinarily waived and need not be considered by this Court. See, e.g., McAlester Fuel Co. v. Smith Int'l, Inc. , 257 S.W.3d 732, 737 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) ; N.P. v. Methodist Hosp. , 190 S.W.3d 217, 225 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). TAMC waived this argument; thus, we do not address it. See Tex. R. App. P. 47.1.
We overrule TAMC's first issue.
Suit on Sworn Account
In its second issue, TAMC argues that the trial court erred by granting appellees summary judgment on TAMC's sworn-account claim because the evidence raised a fact issue as to whether "Brae Burn breached the subcontract with TAMC by over billing for TAMC's work and then under paying" and "TAMC pled for suit on a sworn account in the alternative."
In its appellant's brief, TAMC states that "[a]ppellees [were] not entitled to summary judgment on TAMC's sworn[-]account claim for the same reasons" that they were not entitled to summary judgment on TAMC's breach-of-contract claim.
At the hearing on appellees’ summary-judgment motion, TAMC's trial counsel confirmed in open court that it was "correct" that TAMC was in agreement that its sworn-account claim "[wa]s out" as to appellees. The court reporter recorded this agreement between the parties. The agreement meets the requirements of Texas Rule of Civil Procedure 11. See TEX. R. CIV. P. 11 (agreement is enforceable if it is "in writing, signed and filed with the papers as part of the record," or "made in open court and entered of record"); see also Parks v. Affiliated Bank , No. 05-16-00784-CV, 2018 WL 2057545, at *7 (Tex. App.—Dallas May 3, 2018, pet. denied) (mem. op.) ("[A]n agreement complies with [R]ule 11 if the agreement is made in open court and entered of record."). An enforceable Rule 11 agreement about an issue constitutes an express waiver of the prior dispute about that issue on appeal. See, e.g., Farris v. Ray , 895 S.W.2d 351, 352 (Tex. 1995) (consent to venue waived challenge to venue on appeal); Petro-Tex Drilling Co. v. Anschutz Corp. , No. 01-96-01564-CV, 1998 WL 191561, at *2 (Tex. App.—Houston [1st Dist.] Apr. 23, 1988, no writ) (not designated for publication) (appellant waived complaint about admission of witness's attorney's-fee testimony by entering into Rule 11 agreement that witness would testify). Because TAMC agreed on the record that it was not prosecuting its sworn-account claim, we hold that it waived any complaint about the trial court's disposition of its sworn-account claim.
Equitable Claims
In its third issue, TAMC argues that the trial court erred in granting appellees summary judgment on TAMC's claims for quantum meruit, unjust enrichment, and promissory estoppel because they were not barred by the existence of an express contract.
Appellees assert that TAMC waived any complaints about the trial court's disposition of TAMC's equitable claims because TAMC's trial counsel stated at summary-judgment hearing that TAMC was no longer pursuing such claims. However, the language relied on by appellees, which is quoted earlier in this opinion, is not the unequivocal and unambiguous language that would lead us to conclude that a waiver occurred. See, e.g., EWB-I, LLC v. PlazAmericas Mall Tex., LLC , 527 S.W.3d 447, 466 (Tex. App.—Houston [1st Dist.] 2017, pet. denied) ("In determining if waiver has occurred, courts must examine the acts, words and conduct of the parties, which must unequivocally manifest an intent to no longer assert the right being waived."); Shannon v. Mem'l Drive Presbyterian Church U.S. , 476 S.W.3d 612, 627 (Tex. App.—Houston [14th Dist.] 2015, pet. denied) (court should conclude waiver occurred only when party unequivocally manifested intent not to assert its rights); see also Teal Trading & Dev., LP v. Champee Springs Ranches Prop. Owners Ass'n , 593 S.W.3d 324, 335–36 (Tex. 2020) (failure to mention pre-existing restrictive easement in replat filed in real property records and note that restrictive easements were "not allowed unless they are dedicated to the county" was not unequivocal statement that would conclusively demonstrate "an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right" that would result in waiver of easement).
Quantum meruit is an equitable theory of recovery based on an implied agreement to pay for benefits received. Heldenfels Bros., Inc. v. City of Corpus Christi , 832 S.W.2d 39, 41 (Tex. 1992). Unjust enrichment is an independent cause of action. A claim that a defendant is unjustly enriched by retaining the benefits of services rendered by the plaintiff can also be the basis for a quantum meruit cause of action, rather than a separate claim. Pepi Corp. v. Galliford , 254 S.W.3d 457, 460 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) ; see Vortt Expl. Co., Inc. v. Chevron U.S.A., Inc. , 787 S.W.2d 942, 944 (Tex. 1990) (recognizing recovery when non-payment for services rendered would result in unjust enrichment to party benefited).
Under Texas law, a plaintiff who seeks to recover the reasonable value of services rendered or materials supplied through a quantum-meruit claim generally may do so only when there is no express contract covering those services or materials. Truly v. Austin , 744 S.W.2d 934, 936 (Tex. 1988) ; Christus Health v. Quality Infusion Care, Inc. , 359 S.W.3d 719, 723 (Tex. App.—Houston [1st Dist.] 2011, no pet.). Texas courts recognize three exceptions to that general rule: (1) when a plaintiff has partially performed an express contract but, because of the defendant's breach, the plaintiff is prevented from completing the contract; (2) when a plaintiff partially performs an express contract that is unilateral in nature; and (3) if the defendant accepts and retains benefits arising as a direct result of the plaintiff's partial performance, a breaching plaintiff in a construction contract can recover the reasonable value of services less any damages suffered by the defendant. Bluelinx Corp. v. Tex. Constr. Sys., Inc. , 363 S.W.3d 623, 627 (Tex. App.—Houston [14th Dist.] 2011, no pet.).
In their summary-judgment motion, appellees argued that they were entitled to judgment as a matter of law on TAMC's quantum-meruit and unjust-enrichment claims because the subcontract was the "sole and express contract governing TAMC's provision of labor and materials and payment for those services." And appellees asserted that TAMC had no evidence that Brae Burn obtained a benefit from TAMC by fraud, duress, or the taking of an unfair advantage because Brae Burn was never paid by Ponderosa for the work for which TAMC sought recovery and thus "obtained no benefit from the work performed by TAMC."
In its summary-judgment response, TAMC acknowledged that "the existence of a valid, enforceable contract nullifie[d] its claims for quantum meruit[ ] [and] unjust enrichment." But it also asserted that Brae Burn, by billing Ponderosa in its May 2015 pay application for concrete work that TAMC had not yet performed, "obtained a benefit by taking undue advantage." The parties dispute whether Brae Burn was entitled to take those additional funds under the prime contract with Ponderosa as overhead and profit. But Brae Burn's conduct in May 2015 under the prime contract with Ponderosa, without more, is not evidence that Brae Burn took undue advantage or obtained a benefit as a direct result of TAMC's later performance under the subcontract. Because TAMC has not raised a fact issue showing that that the existence of an express contract does not bar its claims for quantum meruit and unjust enrichment, we hold that the trial court did not err in granting appellees summary judgment on TAMC's quantum-meruit and unjust-enrichment claims.
To recover on a claim for promissory estoppel, a plaintiff must show: (1) a promise; (2) foreseeability of reliance thereon by the promisor; and (3) substantial reliance by the promisee to its detriment. See Davis v. Tex. Farm Bur. Ins. , 470 S.W.3d 97, 107 (Tex. App.—Houston [1st Dist.] 2015, no pet.).
As to TAMC's promissory-estoppel claim, appellees, in their summary-judgment motion, argued that they were entitled to judgment as a matter of law because TAMC could not show a "promise" that "Brae Burn made to TAMC that it did not fulfill." (Internal quotations omitted.) And Brae Burn argued that because any promise by Brae Burn to pay TAMC would have been covered by the subcontract, TAMC could not recover on its promissory-estoppel claim. See Koehler v. Amoco Fed. Credit Union , No. 01-13-00498-CV, 2014 WL 6602446, at *2 (Tex. App.—Houston [1st Dist.] Nov. 20, 2014, no pet.) (mem. op.) ("[A] promissory-estoppel claim cannot be based upon enforcement of a contract."); see also BP Am. Prod. Co. v. Zaffirini , 419 S.W.3d 485, 507 (Tex. App.—San Antonio 2013, pet. denied).
In its summary-judgment response, TAMC acknowledged that "the existence of a valid, enforceable contract nullifie[d] its claim[ ] for ... promissory estoppel." It also stated, though, that Brae Burn had represented to TAMC that "payment was forthcoming" and that TAMC had relied on that statement in continuing to work on the project. But Brae Burn's assurance does not alter the payment terms set forth in the subcontract and thus does not support a promissory-estoppel claim. Thus, we hold that the trial court did not err in granting appellees summary judgment on TAMC's promissory-estoppel claim.
We overrule TAMC's third issue.
TCTFA
In its fourth issue, TAMC argues that the trial court erred in granting appellees summary judgment on TAMC's claim for violations of the TCTFA because the evidence raised a fact issue as to whether Brae Burn withheld funds from TAMC that were "attributable to TAMC's work."
"[T]he [TCTFA] was enacted for the protection of laborers and materialmen, and is a remedial statute that should be given a broad construction." Dealers Elec. Supply v. Scoggins Constr. Co. , 292 S.W.3d 650, 658 (Tex. 2009). It "imposes fiduciary responsibilities on contractors to ensure subcontractors, mechanics, and materialmen are paid for the work they complete." Fuller v. Le Brun , 616 S.W.3d 31, 39 (Tex. App.—Houston [14th Dist.] 2020, pet. denied). Construction payments are trust funds if they are made to a contractor or subcontractor or to an officer of the contractor or subcontractor "under a construction contract for the improvement of specific real property in this state." TEX. PROP. CODE ANN. § 162.001(a) ; WeKnow Techs., Inc. v. Hayes , No. 05-17-00554-CV, 2018 WL 3359085, at *4 (Tex. App.—Dallas July 10, 2018, no pet.) (mem. op.). "A contractor, subcontractor, or owner or an officer, director, or agent of a contractor, subcontractor, or owner who receives trust funds or who has control or direction of trust funds, is a trustee of the trust funds." Id. § 162.002. "An artisan, laborer, mechanic, contractor, subcontractor, or materialman who labors or who furnishes labor or material for the construction ... of an improvement on specific real property ... is a beneficiary of any trust funds paid or received in connection with the improvement." Id. § 162.003(a). By imposing a limited fiduciary relationship between trustees and beneficiaries, the TCTFA creates a special protection for subcontractors when contractors refuse to pay subcontractors for labor and materials. See Choy v. Graziano Roofing of Tex., Inc. , 322 S.W.3d 276, 282 (Tex. App.—Houston [1st Dist.] 2009, no pet.).
The TCTFA expressly provides that a contractor and its agents may be held criminally liable if it misapplies trust funds by disbursing or otherwise diverting trust funds without first fully paying all "current or past due obligations," namely, "those obligations incurred or owed by the trustee for labor or materials furnished in the direct prosecution of the work under the construction contract prior to the receipt of the trust funds and which are due and payable by the trustee no later than 30 days following receipt of the trust funds." TEX. PROP. CODE ANN. §§ 162.005(2) (defining "[c]urrent or past due obligations" (internal quotations omitted)), 162.031 ("A trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds, has misapplied the trust funds."), 162.032 (offense of misapplication of trust funds constitutes either "a felony of the third degree" or "a Class A misdemeanor"); see, e.g., Allen v. State , Nos. 14-15-00115-CR, 14-15-00116-CR, 2016 WL 3635863, at *1–7 (Tex. App.—Houston [14th Dist.] July 7, 2016, no pet.) (mem. op., not designated for publication) (defendant convicted of offense of misapplication of trust funds); Bolding v. State , No. 13-15-00332-CR, 2016 WL 3626224, at *1–2, *7–9 (Tex. App.—Corpus Christi–Edinburgh June 30, 2016, no pet.) (mem. op., not designated for publication) (defendant convicted of offense of misapplication of trust funds "in connection with a construction project on which he was a general contractor"). Texas courts have consistently recognized that the duties imposed by the TCTFA also provide a basis for civil liability. See Dealers Elec. Supply Co. , 292 S.W.3d at 657 ; Young v. Bella Palma, LLC , No. 14-17-00040-CV, 2022 WL 578442, at *9 (Tex. App.—Houston [14th Dist.] Feb. 25, 2022, no pet.) (mem. op.) ; Choy , 322 S.W.3d at 283–88 ; C & G, Inc. v. Jones , 165 S.W.3d 450, 453–54 (Tex. App.—Dallas 2005, pet. denied) ; Lively v. Carpet Servs., Inc. , 904 S.W.2d 868, 873 (Tex. App.—Houston [1st Dist.] 1995, writ denied).
In its second amended petition, TAMC alleged that appellees were "trustees" as defined by the TCTFA and TAMC was a beneficiary under the TCTFA. See TEX. PROP. CODE ANN. §§ 162.002 ("A contractor, subcontractor, or owner or an officer, director, or agent of a contractor, subcontractor, or owner, who receives trust funds or who has control or direction of trust funds, is a trustee of the trust funds."), 162.003 ("An artisan, laborer, mechanic, contractor, subcontractor, or materialman who labors or who furnishes labor or material for the construction or repair of an improvement on specific real property in this state is a beneficiary of any trust funds paid or received in connection with the improvement."). According to TAMC, Ponderosa funded the project "with funds borrowed from a lending institution." And to the extent that "Ponderosa tendered payments to Brae Burn for concrete work performed by [TAMC]," TAMC did not receive payments from Brae Burn. TAMC alleged, "[o]n information and belief, the funds paid by Ponderosa to Brae Burn were knowingly, used, disbursed, or diverted from Brae Burn's trust account by Pixley and Heikkila without first paying" TAMC for "all current and past obligations." TAMC alleged that this constituted a violation of the TCTFA, and appellees were liable for the misapplication of trust funds.
The record shows, and appellees do not dispute, that in Brae Burn's May 2015 pay application to Ponderosa, Brae Burn asked Ponderosa to pay it for concrete work that TAMC had not yet performed. The fact that TAMC had not yet performed the work, though, does not change the nature of the funds that Brae Burn received from Ponderosa. Notably, a general contractor cannot avoid its trustee status, or its subcontractor's beneficiary status, simply by asking for and receiving payment from an owner for a subcontractor's work before the subcontractor has performed it. See id. § 162.031(d) ("A trustee who commingles trust funds with other funds in the trustee's possession does not defeat a trust created by this chapter."). Having requested funds to pay its concrete subcontractor in its May 2015 pay application to Ponderosa, Brae Burn received Ponderosa's payment for future concrete work under a statutorily-imposed fiduciary duty to hold those funds in trust for TAMC. See id. §§ 162.001(a) (construction payments are trust funds); 162.002 (contractor, "who receives trust funds or who has control or direction of trust funds, is a trustee of the trust funds"); 162.003 (subcontractors are beneficiaries of "any trust funds paid or received in connection with the improvement").
Appellees assert that they were entitled to retain, use, and disburse those funds because Brae Burn had no "current or past due obligations" to TAMC when it received the funds. See id. § 162.031(a). It is true that Brae Burn did not incur or owe any obligations to TAMC "prior to the receipt of the trust funds" or that were "due and payable" by Brae Burn "no later than 30 days following receipt" of those funds. See id. § 162.005(2). As a result, the record does not support a criminal prosecution against Brae Burn for the misapplication of trust funds. See id. §§ 162.031 ("A trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses, disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds, has misapplied the trust funds."), 162.032 (offense of misapplication of trust funds constitutes either "a felony of the third degree" or "a Class A misdemeanor"). But, in determining whether Brae Burn can be held civilly liable, we do not read the fiduciary duties imposed by the TCTFA so narrowly. When TAMC submitted its July, August, and September 2015 pay applications to Brae Burn, they each gave rise to a duty for Brae Burn to pay TAMC from the funds that Brae Burn had already received from Ponderosa for TAMC's concrete work.
Viewing the evidence in the light most favorable to TAMC, Brae Burn's receipt of funds, based on its May 2015 pay application, for concrete work that TAMC had not yet performed and its failure to pay those funds to TAMC when payment was due on TAMC's July, August, and September 2015 pay applications constitutes more than a scintilla of evidence that appellees breached the duty they owed to TAMC under the TCTFA. Thus, we hold that the trial court erred in granting appellees summary judgment on TAMC's claim for violations of the TCTFA.
We sustain TAMC's fourth issue.
Propriety of Trial Court's Judgment
In its fifth issue, TAMC argues that the trial court's judgment granting appellees summary judgment is improper because the trial court "dismiss[ed] TAMC's claims and did not render ... summary judgment on the merits."
We note that the trial court's judgment dismissed TAMC's claims "in their entirety with prejudice." "[I]t is well established that a dismissal with prejudice functions as a final determination on the merits." Mossler v. Shields , 818 S.W.2d 752, 754 (Tex. 1991).
To preserve a complaint for appellate review, a party must first present the issue to the trial court. TEX. R. APP. P. 33.1(a). A motion for new trial and a motion to modify a judgment are the appropriate methods for preserving a complaint about an alleged defect in the trial court's judgment. See Sheets v. Autogrp. Premier, Inc. , No. 14-18-00279-CV, 2020 WL 548366, at *4 n.6 (Tex. App.—Houston [14th Dist.] Feb. 4, 2020, no pet.) (mem. op.) (party's responsibility to challenge contents of signed final judgment via motion for new trial or motion to alter, modify, or correct judgment); see also TEX. R. APP. P. 33.1 ; Valdez v. Valdez , 930 S.W.2d 725, 728 (Tex. App.—Houston [1st Dist.] 1996, no writ) (because party never complained to the trial court, he never gave trial court opportunity to correct alleged error). The record does not reflect that TAMC filed such a motion for new trial or a motion to modify the trial court's judgment or otherwise brought the alleged error to the attention of the trial court. Thus, we hold that TAMC did not preserve its complaint about the trial court's judgment for appellate review.
Conclusion
We reverse the portion of the trial court's judgment granting appellees summary judgment on TAMC's claim for violations of the TCTFA and dismissing that claim with prejudice. We affirm the remaining portion of the trial court's judgment. We remand the case for further proceedings consistent with this opinion. All pending motions are dismissed as moot.