Reversed and Rendered in Part, Reversed =
and=20
Remanded in Part, and Memorandum Opinion filed November 6,=20
2007.
&=
nbsp; &n=
bsp; &nb=
sp; =20
In The
Fourteenth=20
Court of Appeals
____________
NO. 14-07-00068-CV
____________
RUEBEN AND=20
NICOLE CASAREZ, =
Appellants
V.
ALLTEC=20
CONSTRUCTION CO., INC., =
Appellee
On Appeal from the =
55th Judicial District
Harris County, =
Texas
Trial Court Cause =
No. 04-13358
M E M O R=20
A N D U M O P I N I O N
Appellants,=20
Ruben and Nicole Casarez, sued Alltec Construction, Co. (Alltec) =
and=20
Robert Stoll for breach of contract, fraud, and violations of the =
Texas=20
Deceptive Trade Practices Act. Alltec and Stoll filed a =
counterclaim=20
alleging breach of contract and unjust enrichment. A jury =
found both=20
parties had breached the construction contract, neither Alltec nor =
Stoll=20
committed fraud or violations of the Texas DTPA, and neither =
party=20
was damaged. The trial court subsequently signed a take =
nothing=20
judgment. On appeal, appellants claim the trial court erred =
in=20
submitting the question regarding whether appellants breached the =
contract=20
because the evidence conclusively established Alltec breached the =
contract=20
first, thereby excusing appellants=3D =
performance. Appellants also argue the evidence is legally =
and=20
factually insufficient to support the breach of contract and no =
damage=20
jury verdicts against them. We reverse and render in part =
and=20
reverse and remand in part.
Factual=20
and Procedural Background
In June=20
2001, Tropical Storm Allison hit the Houston area and flooded=20
appellants=3D =
house=20
with approximately two feet of water. Since their house was =
located=20
below the flood plain and because they had experienced similar =
trouble in=20
the past, appellants decided something had to be done. While =
contemplating their options, appellants were introduced through a =
mutual=20
acquaintance to Robert Stoll, the owner of Alltec. Stoll =
proposed a=20
plan to appellants which would enable them to keep their old =
house, which=20
was appellants=3D =
main=20
goal. Stoll=3Ds proposal=20
was to lift the frame of the house off the slab and get the frame =
of the=20
house out of the flood plain. Appellants agreed to hire =
Alltec and=20
Stoll for the job.
Around=20
November 2001, Stoll began performing a feasibility study to =
determine=20
whether it was possible to lift such a large house. Stoll =
testified=20
this method of lifting appellants=3D =
house was=20
new, so he built a prototype before beginning work on the house. =
According=20
to Stoll, the prototype was successful, so Alltec went forward =
with the=20
work on appellants=3D =
house. Although appellants were aware of the feasibility =
study and=20
prototype, they both testified Stoll represented to them he had =
performed=20
this process before. After the feasibility study was =
completed,=20
Alltec began preliminary work on appellants=3D =
house,=20
and in October 2002, appellants signed a contract with =
Alltec. The=20
parties agreed the price for Alltec=3Ds work=20
would be $400,000, time was of the essence, and the work would be=20
substantially completed by July 1, 2003. Alltec did not =
actually=20
begin working on the project until December 2002 because =
appellants were=20
waiting for funding approval.
By April=20
2003, Alltec was approximately one month behind schedule. =
Around May=20
or June 2003, Stoll approached appellants and informed them he was =
out of=20
money and unable to continue work unless appellants paid =
approximately=20
$28,000 out of sequence. Stoll asked appellants to directly =
pay=20
$8,000 to the plumber, $6,000 to the electrician, and $14,000 to =
Juan=20
Duran. Each of these people were subcontractors for Alltec, =
and=20
under the contract, it was Alltec=3Ds=20
responsibility to pay them. In addition, appellants had =
already paid=20
Alltec a portion of the money owed to the plumber, but Alltec put =
the=20
money into its account and used it for something else. =
Therefore,=20
Alltec was unable to pay the plumber and was essentially asking =
for double=20
payment by the appellants. Appellants refused to pay the =
additional=20
money to Alltec.
At this=20
point, Alltec could not go forward with the project. As a =
solution,=20
Stoll proposed to appellants the option of having Duran, one of=20
Stoll=3Ds=20
subcontractors, finish the work independently. Stoll =
proposed the=20
option of appellants paying Duran directly and Stoll staying on =
the=20
project solely as a consultant. Appellants were not willing =
to=20
entrust the completion of the work to Duran, so they decided not =
to go=20
forward with the proposal.
At some=20
point after Alltec informed appellants it could not go forward, =
appellants=20
sent Alltec and Stoll a termination letter. According to the =
construction contract entered into by appellants and Alltec, =
section 19.2=20
allows the owner to terminate the contract with the contractor for =
a=20
number of reasons. However, under section 19.2.2 ,the owner =
was=20
required to obtain certification by the architect that sufficient =
cause=20
existed to justify the termination. During trial, Rueben =
Casarez=20
testified that after Stoll refused to go forward with the =
contract, he did=20
in fact send a termination letter. But, he also testified =
the=20
architect certified sufficient cause existed to justify the =
termination=20
before he sent the letter. However, Stoll testified he =
received a=20
termination letter from appellants but also testified the =
architect never=20
certified sufficient cause existed to justify the =
termination. In=20
addition, Kamran Mouzoon, the architect on the project, never =
testified=20
that he certified sufficient cause existed to terminate the=20
contract. In fact, Mouzoon testified there was no cause for =
stopping=20
the project and no reason he could think of to put the project on=20
hold. He also testified he was unaware of =
Stoll=3Ds refusal=20
to go forward unless appellants paid him more money and his =
failure to pay=20
the plumber.
In July=20
2003, Stoll sent appellants another draw request for work that had =
been=20
done on their home and work yet to be done on their home. =
Rueben=20
testified he did not pay the request because the contract was =
terminated=20
at that point and because the architect had not certified the =
payment,=20
which was a requirement under the contract.
Because=20
appellants=3D =
house was=20
uncompleted and Alltec could not finish it, appellants contacted =
four=20
contractors to look at the house and bid on the cost of =
completion. =20
Rueben testified two of the contractors refused to go forward with =
the=20
work based on their assessment, and two of the contractors placed =
a=20
bid. Rueben also testified the two contractors who placed =
bids were=20
unwilling to do the work for the $180,000, which was=20
appellants=3D =
remaining=20
balance on their contract with Alltec, and were unwilling to =
warrant the=20
work. After taking bids from contractors and hiring =
inspectors to=20
look at the house, appellants decided it made more economic sense =
to tear=20
the house down and start over. Appellants eventually =
demolished=20
their old house and hired a new contractor to build a new=20
house.
In May=20
2004, appellants sued Alltec and Stoll for breach of contract, =
fraud, and=20
violations of the Texas Deceptive Trade Practices Act. =
Alltec and=20
Stoll filed a counterclaim alleging breach of contract and unjust=20
enrichment. After a three day trial, the jury found both =
parties=20
breached the construction contract, neither Alltec nor Stoll =
committed=20
fraud or violations of the Texas DTPA, and neither party suffered=20
damages. Appellants filed a Motion for Judgment =
Notwithstanding the=20
Verdict or, alternatively, a Motion for New Trial. The trial =
court=20
denied both. The trial court subsequently signed a take =
nothing=20
judgment. Appellants appealed, and after filing their notice =
of=20
appeal, Stoll filed for bankrupt ,causing an automatic stay of the =
appeal. Stoll was later discharged, the appeal against him =
was=20
dismissed, and the appeal against Alltec was severed and=20
reinstated.
Discussion
A.=20
Charge Error =20
In their=20
first issue, appellants contend the trial court erred in =
submitting the=20
question regarding whether appellants breached the contract =
because the=20
evidence conclusively established Alltec breached the contract =
first,=20
thereby excusing appellants=3D =
performance. Also within their first issue, appellants =
contend the=20
evidence is legally and factually insufficient to support =
the=20
jury=3Ds finding=20
that appellants breached the contract. =20
We will address the jury charge issue first. Because the =
jury charge=20
issue is dispositive of the appeal, we will not address=20
appellants=3D =
other=20
issues. Tex. R. App. P. 47.1.
1. =20
Standard of Review
We review=20
the trial court=3Ds=20
submission of instructions and jury questions under an abuse of =
discretion=20
standard. Toles v. Toles, 45 S.W.3d 252, 263 (Tex.=20
App.CDallas=20
2001, pet. denied). The trial court has =
broad=20
discretion in submitting jury questions so long as the questions =
submitted=20
fairly place the disputed issues before the jury. Id. =
(citing=20
Varme v. Gordon, 881 S.W.2d 877, 881 (Tex. App.CHouston=20
[14th Dist.] 1994, writ denied)). A trial court abuses its=20
discretion by acting arbitrarily, unreasonably, or without =
consideration=20
of guiding principles. Walker v. Gutierrez, 111 =
S.W.3d 56, 62=20
(Tex. 2003).
If a trial=20
court abuses its discretion when it submits a question or =
instruction, we=20
do not reverse in the absence of harm. See Tex. R. =
App. P.=20
44.1(a); 4901 Main, Inc. v. TAS Automotive, Inc., 187 =
S.W.3d 627,=20
631 (Tex. App.CHouston=20
[14th Dist.] 2006, no pet.). Harm occurs when the error in =
the=20
charge probably caused the rendition of an improper judgment, or =
prevented=20
appellant from properly presenting the case to the court of =
appeals. =20
Tex. R. App. P. 44.1(a); 4901 Main, 187 S.W.3d at =
631. To=20
determine harm, the appellate court must consider the entire =
record,=20
including the parties=3D =
pleadings, the evidence, and the charge. 4901 Main, =
187=20
S.W.3d at 631. Submission of an improper jury question can =
be=20
harmless error if the jury=3Ds answers=20
to other questions render the improper question immaterial. =
City=20
of Brownsville v. Alvarado, 897 S.W.2d 750, 752 (Tex. 1995); =
Rebel=20
Drilling Co. v. Nabors Drilling USA, Inc., No. 14-02-00841-CV, =
2004 WL=20
2058260, at *8 (Tex. App.CHouston=20
[14th Dist.] Sept. 16, 2004, no pet.) (mem. op.). A jury =
question is=20
considered immaterial when its answer can be found elsewhere in =
the=20
verdict or when its answer cannot alter the effect of the =
verdict. =20
Alvarado, 897 S.W.2d at 752; Rebel Drilling, 2004 WL =
2058260, at *8. Submission of an immaterial issue is not =
harmful=20
error unless the submission confused or misled the jury. =20
Alvarado, 897 S.W.2d at 752; Rebel Drilling, 2004 WL =
2058260, at *8. When determining whether a particular =
question could=20
have confused or misled the jury, we Aconsider=20
the probable effect on the minds of the jury in the light of the =
charge as=20
a whole.@ =20
Alvarado, 897 S.W.2d at 752; Rebel Drilling, 2004 WL =
2058260, at *8.
2. =20
Analysis
We must=20
first determine whether the trial court abused its discretion when =
it=20
submitted the question regarding whether appellants breached the=20
contract. It is a fundamental principle of contract law that =
when=20
one party to a contract commits a material breach of that =
contract, the=20
other party is discharged or excused from further =
performance. =20
Mustang Pipeline Co. v. Driver Pipeline Co., 134 =
S.W.3d 195,=20
196 (Tex. 2004) (citing Hernandez v. Gulf Group =
Lloyds, 875=20
S.W.2d 691, 692 (Tex. 1994)). Thus, when a party to a =
contract fails=20
to perform its obligations under that contract, it may not =
thereafter=20
enforce the remaining terms of the contract against the other =
party. =20
Nova Info. Sys. v. Nidhi & Roneil, Inc., No. =
14-05-00845-CV,=20
2007 WL 925813, at *4 (Tex. App.CHouston=20
[14th Dist.] March 29, 2007, no pet.) (mem. op.). Because we =
are=20
dealing with dual findings that both parties breached the =
agreement, we=20
must determine whether it was conclusively established that Alltec =
materially breached the contract first. Hooker v.=20
Nguyen, No.=20
14-04-00238-CV, 2005 WL 2675018, at *8 (Tex. App.CHouston [14th Dist.] =
Oct. 20,=20
2005, pet. denied) (mem. op.).
During=20
trial, both sides testified that after Alltec ran into serious =
financial=20
difficulties, Stoll informed appellants he was unable to continue =
the=20
project unless appellants paid additional money to its=20
subcontractors. Rueben testified A[Stoll]=20
told me that he had run out of money, [he] couldn=3Dt go=20
forward unless I gave him some more money.@ =20
Rueben again testified on cross-examination A[Stoll]=20
told me he wouldn=3Dt=20
B =
could not=20
go further B =
he=20
wouldn=3Dt work any=20
more unless we paid him the additional amount.@ =20
When Stoll was examined by appellants=3D =
attorney,=20
Stoll admitted he told appellants Alltec could not continue unless =
additional payments were made to the subcontractors. Stoll =
also=20
admitted his company could not comply with the contract, and it =
was=20
necessary for appellants, Stoll, and Duran to make some other =
arrangements=20
for the job to be completed. In addition, Stoll=3Ds lawyer=20
admitted in his closing argument that Stoll breached the =
contract. =20
Stoll=3Ds lawyer=20
stated the following:
[W]e =
didn=3Dt come in here to =
say that=20
Bob didn=3Dt breach the =
contract. =20
We=3Dre not saying =
that. We=20
told you that he ran into financial difficulties that had nothing =
to do=20
with the Casarezes and nothing to do with him. It was beyond =
his=20
control. And the minute he saw that happening, he =
didn=3Dt try to hide =
it. He=20
didn=3Dt try to do things =
to alter=20
budgets. He went straight to Mr. Casarez and said look,=20
I=3Dve got a problem =
here. =20
I don=3Dt have any =
money. The=20
money that you put inside my account that should have gone to one =
of my=20
subcontractors isn=3Dt=20
=
there. &=
nbsp;=20
Also, the=20
jury found Alltec failed to comply with the construction contract, =
and=20
this finding is not challenged on appeal. =
The record=20
not only establishes Alltec breached the contract but it also =
establishes=20
Alltec=3Ds breach=20
occurred before appellants=3D =
alleged=20
breach. During trial, Rueben testified he sent the =
termination=20
letter after Stoll informed him he could not go forward with the=20
contract. In addition, Stoll admitted in cross-examination =
at the=20
time he received the termination letter from appellants he had =
already=20
informed appellants of his inability to finish the=20
job. Next, we must =
determine=20
whether Alltec=3Ds breach=20
was material. Pursuant to Mustang Pipeline, we =
consider the=20
circumstances listed in the Restatement and cited by the supreme =
court=20
that are significant in determining whether a failure to perform =
is=20
material. See Mustang Pipeline, 134 S.W.3d at 199;=20
Hooker, 2005 WL =
2675018, at=20
*8. The=20
Restatement lists the following factors:
(a) =20
the extent to which the injured party will be deprived of the =
benefit=20
which he reasonably expected;
(b) =20
the extent to which the injured party can be adequately =
compensated for=20
the part of that benefit of which he will be deprived;
(c) =20
the extent to which the party failing to perform or to offer to =
perform=20
will suffer forfeiture;
(d) =20
the likelihood that the party failing to perform or to offer to =
perform=20
will cure his failure, taking account of the circumstances =
including any=20
reasonable assurances;
(e) =20
the extent to which the behavior of the party failing to perform =
or to=20
offer to perform comports with standards of good faith and fair=20
dealing.
Mustang=20
Pipeline,=20
134 S.W.3d at 199; Hooker, 2005 WL 2675018, at *8;=20
Restatement
(Second)=20
of Contracts ' =
241=20
(1981). The Restatement also sets forth factors significant =
in=20
determining whether a party=3Ds duties=20
are discharged under a contract due to the other party=3Ds material=20
breach:
(1) =20
the extent to which it reasonably appears to the injured party =
that delay=20
may prevent or hinder him in making reasonable substitute=20
arrangements;
(2) =20
the extent to which the agreement provides for performance without =
delay,=20
but a material failure to perform or to offer to perform on a =
stated day=20
does not of itself discharge the other party=3Ds remaining duties =
unless the=20
circumstances including the language of the agreement, indicate =
that=20
performance or an offer to perform by that day is important.=20
Mustang=20
Pipeline, 134=20
S.W.3d at 199; Hooker, 2005 WL 2675018, at *8B9;=20
Restatement (Second) of Contracts ' =
242=20
(1981).
The record=20
establishes Alltec=3Ds breach=20
was material. Appellants reasonably expected Alltec to =
produce a=20
livable house by July 1, 2003. Appellants were deprived of =
that=20
benefit when Alltec refused to complete the project under the =
original=20
financial terms. According to the contract, Alltec was to =
achieve=20
Asubstantial=20
completion@ =
of the=20
work not later than July 1, 2003. The parties defined =
substantial=20
completion as Athe stage=20
in the progress of the Work when the Work or designated portion =
thereof is=20
sufficiently complete in accordance with the Contract Documents so =
that=20
the Owner can occupy or utilize the Work for its intended =
use.@ =
By May=20
2003, the project was already over one month behind =
schedule. =20
Sometime at the end of May or beginning of June 2003, Alltec =
informed=20
appellants his business was in financial trouble and he could not =
complete=20
the project without an additional payment of $28,000. =
Appellants=20
refused to pay the additional money, and Alltec stopped =
work. At the=20
point Alltec stopped work, the house was unusable and =
unlivable. =20
Alltec never achieved substantial completion. In fact, =
because=20
appellants were unable to find another general contractor who was =
willing=20
to do the work for the amount left in appellants=3D =
contract=20
and to warrant the work, the completion date of July 1, 2003 was =
not=20
met. Despite Stoll=3Ds offer to=20
stay on the project as a consultant, Alltec neglected to cure its =
failure=20
to perform. Furthermore, Alltec=3Ds behavior=20
did not comport with standards of good faith and fair dealing by =
demanding=20
more money than the contract required and refusing to go forward =
with the=20
project unless appellants made extracontractual payments. =20
The record=20
conclusively establishes Alltec never achieved substantial=20
completion. Other courts in Texas have held that if there is =
a=20
material breach of a contract, that contract has not been =
substantially=20
performed. Hooker, 2005 WL 2675018, at *10 (citing=20
Cont=3Dl Dredging=20
v. De-Kaizered, 120=20
S.W.3d 380, 394 (Tex. App.CTexarkana=20
2003, pet. denied); Patel v. Ambassador Drycleaning & =
Laundry=20
Co., 86 S.W.3d 304, 309 (Tex. App.CEastland=20
2002, no pet.)). Therefore, the converse should apply; that =
is, if a=20
party fails to substantially perform, its breach of the contract =
is=20
material. Hooker, 2005 WL 2675018, at *10; see =
49=20
David R. Dow & Craig Smyser, Texas Practice: Contract =
Law=20
' =
9.3=20
(2005).
Based on=20
the facts before us, we find there is no room for ordinary minds =
to differ=20
as to the conclusion to be drawn. See Triton Oil & =
Gas Corp.=20
v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 =
(Tex.=20
1982). Accordingly, we hold Alltec committed a material =
breach as a=20
matter of law; as a result, appellants were thereafter discharged =
from=20
their duties under the contract. See Mustang =
Pipeline, 134=20
S.W.3d at 200; Hooker, 2005 WL 2675018, at *10. If an =
issue=20
is conclusively established as a matter of law, the question =
should not be=20
submitted to the jury. See T.O. Stanley Boot Co. v. Bank =
of El=20
Paso, 847 S.W.2d 218, 223 (Tex. 1992). Accordingly, it =
was an=20
abuse of discretion for the trial court to submit the question to =
the=20
jury.
Next, we=20
must determine whether the error in the jury charge was =
harmful. =20
Appellants argue this error provided the basis for the improper =
take=20
nothing judgment entered against them. We agree.=20
In this=20
case, the jury=3Ds finding=20
in Question 5(a) that Alltec breached the contract, rendered the=20
submission of Question 5(b), which focused on whether appellants =
breached=20
the contract, immaterial. See Alvarado, 897 S.W.2d at =
752B53=20
(finding the jury=3Ds=20
assignment of zero negligence to the City rendered the following =
questions=20
regarding appellant=3Ds=20
negligence immaterial). As discussed above, once it was =
determined=20
Alltec breached the contract, appellants breach was irrelevant =
because=20
they were excused. See id. However, we find the =
error=20
harmful because submission of the question regarding=20
appellants=3D =
breach of=20
the contract confused or misled the jury. In considering the =
probable effect on the minds of the jury, we have determined that=20
submission of the question misled the jury into thinking=20
appellants=3D =
breach of=20
the contract vitiated their entitlement to damages. =
Therefore, we=20
find the error probably caused the rendition of an improper take =
nothing=20
judgment against appellants. Accordingly, we reverse the =
take=20
nothing judgment against appellants and remand for a new =
trial. =20
See Mustang Pipeline, 134 S.W.3d at 200 (implying harmful =
error by=20
reversing the trial court=3Ds=20
judgment); Hooker, 2005 WL 2675018, at *10 (implying =
harmful error=20
by reversing the trial court=3Ds=20
judgment).
Because we=20
find the submission of Question 5(b) was harmful error, requiring =
remand=20
for a new trial, we need not address appellants=3D =
remaining=20
issues.
Conclusion
We reverse and render judgment that =
appellants did=20
not breach the contract as a matter of law. We also reverse =
that=20
portion of the judgment awarding appellants zero damages and no=20
attorney=3Ds fees. We affirm the judgment of =
the trial=20
court in all other respects. We remand the cause for =
consideration=20
of the issues of appellants=3D damages and attorney=3Ds fees. See Tex. R. App. P. =
44.1(b).=20
/s/ =20
John S. Anderson
Justice
Judgment=20
rendered and Memorandum Opinion filed November 6, 2007.
Panel=20
consists of Chief Justice Hedges and Justices Anderson and =
Seymore. =20
Appellants also mention in their =
brief the=20
trial court should not have overruled Appellants=3D motion for directed verdict on =
Alltec=3Ds breach of contract claim and should =
have=20
disregarded the jury=3Ds answer when asked to do so in=20
Appellants=3D post-verdict motions. Since these =
claims=20
can properly be reviewed under a similar analysis, we will not =
address=20
them=20
specifically. |