Texas Judiciary Online - HTML Opinion

^{^[1]} Design disputed only $172,000 to = $180,000=20 of this amount.

^{^[2]} This figure reflects the = following=20 calculations:

$511,762.00

amount Cadence owed Design for = work=20 done

-=20 240,000.00

the amount Premier was=20 retaining

271,762.00

amount Cadence owed Design after = passing on=20 the Premier retainage

-=20 286,945.50

attorneys=3D fees Design owed = Cadence

$ =20 15,183.50

amount to Cadence after offset for = attorneys=3D = fees

^{^[3]} For clarity, we will refer to the = contract=20 between Premier and Cadence as Athe general contract,@ and the contract between Cadence and = Design as=20 the Asubcontract.@

^{^[4]} In addition to the core building, = Design=3Ds contract with Cadence included common = areas,=20 five garage levels, and a generator, for a total of=20 $1,722,795.

^{^[5]} Fred Haranda, Design=3Ds estimator for the Project, was the = most=20 frequently cited source of this information.

^{^[6]} This engineer testified he = understood the=20 cost savings would be $10,000 per foot. The $400,000 savings = would=20 therefore reflect a forty foot busway. Design=3Ds bill of materials, however, requested = a sixty=20 foot busway.

^{^[7]} Design kept $8,000 of the = $128,000=20 for overhead or additional costs incurred to help facilitate the=20 changes.

^{^[8]} Only $10,000 of this amount, for = the=20 security package, might have involved Design=3Ds work.

^{^[9]} This amount incorporates the = $300,000=20 busway credit.

^{^[10]} On appeal, Design does not = challenge the=20 trial court=3Ds failure to award this = amount.

^{^[11]} Cadence actually conceded = additional=20 changes amounting to $35,256, but, in their appellate briefs, both = parties=20 based their calculations on $35,250, so we will do the=20 same.

^{^[12]} The evidence reflects an = undisputed amount=20 of $3,588,797. In a letter to the court, however, Design = represented=20 this amount as $3,588,791, and that amount remained in the=20 court=3Ds calculations. To avoid even = further=20 confusion, we will refer to the paid amount as=20 $3,588,791.

^{^[13]} The Atotal completed and stored to = date@ on Cadence=3Ds application for payment was=20 $41,452,466Cthe same amount as on the application = for payment=20 accompanying its October 1, 2003, certification that all amounts = were due=20 and payable. The retainage, however, had increased from = $100,000 in=20 October 2003 to $240,000 in February 2004.

^{^[14]} See Tex. Prop. Code Ann. = '' 28.001B.010 (Vernon 2000). We shall refer = to these=20 sections as the Prompt Payment Act.

^{^[15]} On July 28, 2005, Design filed = its final=20 release of liens.

^{^[16]} The variation in the calculation = of the=20 award to Design rests on how one characterizes the $240,000 = Premier=20 withheld at Cadence=3Ds request.

^{^[17]} As Cadence observed in the trial = court,=20 AAs of today [November 11, 2005], these = two Parties=20 have incurred combined attorney fees exceeding $540,000 to fight = over . .=20 . $180,000.@

^{^[18]} Design presents the following = nine=20 arguments: (1) the trial court erred in failing to find = Cadence=20 violated the Prompt Payment Act by withholding $811,000 for, at = most, a=20 $540,000 dispute; (2) Design proved as a matter of law that = Cadence=20 breached the subcontract and owes Design $683,762; (3) the trial = court=20 abused its discretion in awarding Cadence its = attorneys=3D fees and in not awarding Design its=20 attorneys=3D fees; (4) no evidence supports the = trial=20 court=3Ds finding Design materially breached the = subcontract; (5) no evidence supports Cadence=3Ds credit against the undisputed amounts = owed under=20 the subcontract; (6) Design proved as a matter of law that Cadence = was=20 liable under the doctrine of substantial performance; (7) no = evidence=20 supports Cadence=3Ds waiver defense; (8) no evidence = supports=20 Cadence=3Ds estoppel defense; and (9) no evidence = supports=20 Cadence=3Ds unclean hands = defense.

^{^[19]} In its issues presented, Design = represents=20 that the only evidence established a credit of $120,000; in its = argument,=20 it represents the only evidence established a credit of = $128,000. =20 Although there was evidence showing the price of the installed = busway as=20 $36,892.17, there is no evidence regarding how much of = Design=3Ds original bid was attributable to the = current=20 limiting, high reactance busway originally specified. The = only=20 evidence of the reduction attributable to the busway change were=20 Rexel=3Ds memo to Design indicating a $128,000 = deduct and=20 a handwritten calculation on a core building recap. The = trial court=20 found these documents did not constitute credible proof of the = amount of=20 the credit.

^{^[20]} The trial court found, = ACadence McShane=3Ds affirmative defense of estoppel is=20 established. Cadence McShane substantially relied to its = detriment=20 on Design Electric=3Ds representations that the service = busway cost=20 $10,000 per linear foot and that Design Electric would return = savings of=20 at least $300,000 if the high reactance busway was = deleted.@

^{^[21]} Design cites Bocanegra v. = Aetna Life=20 Insurance. Co., for the proposition that, absent deception, = there can=20 be no estoppel. 605 S.W.2d 848, 851 (Tex. 1980). The = focus of=20 Bocanegra was the defense of election. In the = course of=20 distinguishing election from other equitable defenses, the court = stated,=20 A[e]quitable estoppel differs from = [election,=20 judicial estoppel, ratification, waiver, and satisfaction] because = it=20 requires some deception that is practiced upon a party who relies = upon it=20 to his prejudice.@ Id. The proposition was = not germane=20 to the decision, and no published case has cited Bocanegra = for this=20 proposition. In the cases cited in Bocanegra, the = courts=20 simply discuss the elements of equitable estoppel set forth = above. =20 See Barfield v. Howard M. Smith Co. of Amarillo, 426 S.W.2d = 834,=20 838 (Tex. 1968) (discussing elements and stating when real facts = were=20 known to person or were open for his convenient ascertainment, he = was not=20 justified in relying on representation pertaining thereto and = cannot=20 effectively say he was misled or deceived by such

representations); Concord Oil Co. v. = Alco Oil=20 & Gas Corp., 387 S.W.2d 635, 639 (Tex. 1965) (stating = essential=20 element of estoppel is party relying on estoppel must have acted = on it to=20 his prejudice and party seeking advantage estoppel must establish = that he=20 has been misled to his injury); Gulbenkian v. Penn, 151 = Tex. 412,=20 252 S.W.2d 929, 932 (1952) (listing elements). We therefore = conclude=20 deception is encompassed in the five elements of estoppel = discussed=20 above.

^{^[22]} The testimony was as = follows:

Q [counsel for Cadence]. = Sir,=20 isn=3Dt it true that you have a vague = recollection of=20 HarandaCMr. Haranda suggesting that Cadence = McShane trade=20 savings for lossesClosses on an Austin project for savings = on this=20 project?

A [Snider]. I do vaguely = recall a=20 small portion of a discussion that was made. I = don=3Dt remember who was there, but I do = recall some=20 comments being made.

^{^[23]} In addition to challenging this = finding,=20 Design challenges, among others, the following findings = related to=20 Cadence=3Ds defenses of failure of conditions = precedent and=20 good faith dispute: A26. Cadence McShane=3Ds withholding payment of money that may = otherwise=20 be due, is excused by each of Design Electric=3Ds failure [sic] to comply with material=20 obligations under the parties=3D agreement@; A29. Design Electric failed to comply = with these=20 agreements to provide documentation of the full credit for the = deletion of=20 the high reactance busway@; A30. Design Electric=3Ds failure [sic] to comply were material = breaches=20 of the contract@; A48. Cadence McShane=3Ds affirmative defense of failure of = conditions=20 precedent is established. Specifically Design Electric = failed to=20 provide all required contract documentation and to release its=20 liens.@

^{^[24]} $4,065,303 (final subcontract = amount after=20 deducting a 300,000 credit for the busway change) + $35,250 = (amount of=20 additional work Cadence conceded Design had completed) =3D=20 $4,100,553.

^{^[25]} In a footnote, Cadence observes,=20 AThe subcontract provides that = >as a condition precedent to any such = payment [by=20 Cadence to Design], like payment has been made by [Premier] to=20 [Cadence].=3D . . . Because Premier withheld $240,000 = from=20 Cadence, Design was not yet entitled to this sum.@ Premier withheld this amount = based on an=20 agreement between Premier and Cadence executed in February = 2004. In=20 October 2003, however, Cadence had requested a retainage of only = $100,000=20 from the final amount due and owing, and only $10,000 of that = $100,000=20 even arguably involved Design=3Ds work. Thus Cadence=3Ds, and not Design=3Ds, action made it impossible for the = condition in=20 question to occur. See Ebberts v. Carpenter Prod. = Co.,=20 256 S.W.2d 601, 618 (Tex. Civ. App.CBeaumont 1953, writ ref=3Dd n.r.e.) (stating, when =20 promissor=3Ds own act makes it impossible for = condition on=20 which promise depended to occur, the particular condition is = discharged=20 and promissor becomes absolutely bound to give promised=20 performance). We have found no authority that would allow a = general=20 contractor to subvert the Prompt Payment Act by agreement with the = owner=20 for additional retainage not warranted by a defect in the=20 subcontractor=3Ds work.

^{^[26]} We count at least eight = occurrences of=20 Acondition[s] precedent@ in the four-page body of the=20 subcontract.

^{^[27]} On appeal, to establish it = pleaded release=20 of lien as a condition precedent, Cadence relies on its = invalid bond=20 claim. In that claim for declaratory judgment, Cadence = alleged,=20 ADesign Electric filed liens and = affidavits to=20 collect on a payment bond issued by Safeco. Design Electric = failed=20 to properly perfect the claims per statute. Defendants seek = a=20 declaration that the bond claims are invalid . . . .@

^{^[28]} Accordingly, TA Operating = Corp. v. Solar=20 Applications Engineering, Inc., 191 S.W.3d 173, (Tex.=20 App.CSan Antonio 2005, pet. granted), is=20 distinguishable from the present case.

^{^[29]} Design does not challenge the = trial=20 court=3Ds finding Premier Towers withheld the = $240,000=20 Aas a result of liens filed by Design = Electric and=20 the credit dispute.@

^{^[30]} In addition to requesting we = calculate=20 interest on $271,762, Design requests the interest accrue from = February 8,=20 2004. Under Property Code section 28.002(b), Cadence was = required to=20 pay Design not later than the seventh day after Cadence received=20 Premier=3Ds payment. Tex. Prop. Code Ann. = ' 28.002(b) (Vernon 2000). Given = that Premier=20 paid Cadence on March 24, 2004, then Cadence=3Ds final payment to Design was due no = later than=20 March 31, 2004, and interest would begin to accrue the = following=20 day, April 1, 2004. See Tex. Prop. Code Ann. = ' 28.004(a) (Vernon 2000). = Design=3Ds request that interest accrue beginning = February=20 8, 2004 is without basis in fact or law.

^{^[31]} Design points to the trial=20 court=3Ds finding Cadence owed Design $511,762 = after=20 applying the $300,000 credit for the busway changeCa finding at odds with the trial = court=3Ds findings against Design on its claims = and in=20 favor of Cadence on its defenses.

^{^[32]} As we discussed above, the = provision=20 regarding the release of liens did not apply to Design=3Ds liens against the = property.

^{^[33]} In its breach of contract = argument, Design=20 argues Cadence owes it $683,762. This amount assumes a = busway credit=20 of $128,000. We have held Design is estopped from claiming a = busway=20 credit of less than $300,000, a credit reflected in the trial=20 court=3Ds award of $511,762 to = Design.

^{^[34]} In Steubner Realty 19, Ltd., = v. Cravens=20 Road 88, Ltd., this court concluded the doctrine of unclean = hands was=20 available to counter an estoppel defense raised in an action at = law. =20 817 S.W.2d 160, 165 (Tex. App.CHouston [14th Dist.] 1991, no=20 writ).

^{^[35]} This figure is based on = Cadence=3Ds concession of additional work valued = at $35,250,=20 rather than Design=3Ds contention of additional work valued = at $=20 43,947. The trial court=3Ds award incorporated Cadence=3Ds value, and Design does not contest = this amount=20 on appeal.

^{^[36]} Cadence contends = Design=3Ds entitlement to a portion of retained = funds was=20 not an award of damages for purposes of determining who was the = prevailing=20 party. In support it cites Criton Corp. v. Highlands Ins. = Co., 809 S.W.2d 355 (Tex. App.CHouston [14th Dist.] 1991, writ = denied)); and=20 Davis Masonry, Inc. v. B‑F‑W Construction Co., = 622 S.W.2d 144 (Tex.=20 Civ. App.CWaco 1981, no writ). In both of = those cases,=20 the trial court found the subcontractor had breached the contract = and the=20 general contractor was entitled to an amount necessary to complete = the=20 work. See Criton Corp., 809 S.W.2d at 357; Davis = Masonry,=20 622 S.W.2d at 146. Any retained amount due the = subcontractor was=20 reduced by the amount due the general contractor for its = reasonable=20 expenses to complete the work. In Criton Corp., this = court=20 observed, AWhere a general contractor recovers the = amount=20 necessary to complete the contract less the amount the general = contractor=20 retains, the general contractor is the prevailing party entitled = to=20 attorneys=3D fees.@ 809 S.W.2d at 357. = Criton and=20 Davis Masonry do not support Cadence=3Ds contention.

^{^[37]} As we previously noted, = Design=3Ds request that interest accrue beginning = February=20 8, 2004 is without basis in fact or law. See n.30, = supra.

^* Senior Justice = Richard H.=20 Edelman sitting by=20 assignment.