Opinion=20
issued November 15, =
2007
In=20
The
Court of Appeals
For The
First District of =
Texas
NO. 01-05-00944-CV
__________
HP/MANAGEMENT=20
SERVICES, INC., Appellant
V.
GUARANTEED NURSING STAFF, =
L.L.C., Appellee
On Appeal from County Civil=20
Court at Law No. 2
Harris=20
County, Texas
Trial Court=20
Cause No.=20
781652
MEMORANDUM OPINION
<=
/SPAN>After=20
a bench trial, Guaranteed Nursing Staff, L.L.C. (=E2=80=9CGNS=E2=80=9D),=20
appellee, prevailed on its breach of contract claim against =
HP/Management Services, Inc. =
(=E2=80=9CHP=E2=80=9D),=20
appellant. In eight issues, HP=20
contends that the trial court erred in rendering judgment for GNS =
because=20
GNS did not file any pleadings against HP and the evidence is legally and =
factually=20
insufficient to establish that (1) a contract existed between GNS =
and=20
HP, (2) HP was responsible for any contractual =
obligation=20
incurred by Hermann Park =
Manor=20
relating to GNS, and (3) Michael Mileski was acting for or on =
behalf of=20
HP when he signed the =
agreement.=20
HP also appeals the award =
of=20
attorney=E2=80=99s fees. We =
reverse and=20
render judgment in favor of HP.
Background
<=
/SPAN>Hermann=20
Park Manor, a healthcare =
facility,=20
entered into a contract with GNS for GNS to provide temporary =
personnel=20
staffing for the facility. The contract, entitled =E2=80=9CSupplemental Staffing =
Agreement,=E2=80=9D was signed by Michael Mileski, =
as the=20
administrator of Hermann Park Manor,=20
and Helen Royston, as the marketing director of GNS. GNS was not =
fully=20
compensated for the services it provided under the contract, and =
it sued=20
the following parties for, among other things, breach of contract: =
HCCI-Houston,=20
Inc. d/b/a Hermann Park =
Manor, the=20
owner of Hermann Park =
Manor;=20
HP, the management company =
for=20
Hermann Park Manor; and =
Mileski, the=20
administrator of Hermann Park Manor.=20
GNS proceeded to trial against Mileski and HP. ![3DFootnote](3D"")
<=
/SPAN>At trial, Cynthia Champion, the owner of GNS, gave =
undisputed=20
testimony that, while she believed that Mileski =
had signed the Supplemental Staffing Agreement on =
behalf of=20
Hermann Park=20
Manor, she learned, after this suit =
had been=20
filed, that Mileski, in addition to being=20
Hermann Park Manor=E2=80=99s=20
administrator, was also=20
HP=E2=80=99s employee at the time=20
that he signed this contract. During Champion=E2=80=99s=20
testimony, the parties stipulated that GNS was owed $16,853.98 in=20
compensation for services that it provided under the=20
contract.
<=
/SPAN>The court also heard testimony from =
H.P.=E2=80=99s=20
president Douglas=20
Mittleider. Mittleider testified =
that HCCI owns=20
Hermann Park Manor. He also =
testified=20
that, pursuant to the Long Term Care Facility Management Agreement =
between=20
HP and HCCI,=20
HP is responsible for running the=20
day-to-day operations of =
Hermann Park Manor=20
on behalf of HCCI and for appointing =
an administrator to serve as the onsite =
manager of=20
Hermann Park Manor.=20
This agreement nevertheless specifies that HCCI=20
retains ownership and control over the =
management duties=20
and obligations of Hermann Park Manor.=20
<=
/SPAN>HP appointed=20
Mileski as the administrator of=20
Hermann Park Manor.=20
Mittleider testified that, although Mileski was an employee of =
HP, Mileski did not sign the Supplemental Staffing =
Agreement with GNS on behalf of HP. Mittleider testified that Mileski signed the Agreement on behalf of the =
facility and=20
its sole owner: Hermann Park Manor=20
and HCCI, respectively. Mittleider further testified that HP=20
(1) did not enter into the Supplemental Staffing Agreement with =
GNS, (2)=20
did not make any payments to GNS under this Agreement, and (3) did =
not=20
enter into any vendor contracts while it managed=20
Hermann Park=20
Manor. Mittleider testified that Mileski, as =
the=20
administrator of Hermann Park Manor,=20
decided which invoices under the =
Agreement with GNS were to be =
paid, and that HCCI, not HP would make these=20
payments. No evidence controverted =
Mittleider=E2=80=99s testimony that Hermann =
Park Manor was owned by and doing =
business as=20
HCCI or that the Long Term Care Facility Management=20
Agreement defined the =
relationship=20
between Mileski, HP, HCCI, and=20
Hermann Park =
Manor.
<=
/SPAN>The=20
Long Term Care Facility =
Management=20
Agreement between HCCI and HP was=20
entered into evidence. Under the terms of this Agreement, =
HP was required to get permission, in =
writing, from=20
HCCI to contract with any third party on =
behalf of=20
HCCI involving a value in excess of =
$10,000. The=20
Agreement also provided that HP would=20
indemnify HCCI if HP=20
breached the Agreement. The Agreement provides in pertinent part=20
that:
1.03 Management of =
Facility. During the term of this Agreement,=20
[HP] shall on behalf of=20
[HCCI] manage all aspects of the operation =
of=20
[Hermann Park Manor], =
including, but=20
not limited to, staffing, accounting, billing, collections, =
setting of=20
rates and charges and general administration. In connection =
therewith,=20
[HP] (either directly or =
through=20
supervision of employees of [Hermann Park Manor]) shall: =
<=
/SPAN> <=
/SPAN>.=20
. .
<=
/SPAN>(j)=20
Negotiate=20
and enter into in the name of and on behalf of [HCCI] such=20
agreements, contracts and orders as it may deem necessary or =
advisable,=20
for the furnishing of services, concessions and supplies for the =
operation=20
and maintenance of [Hermann Park=20
Manor]; provided, however, that [HCCI] must=20
approve, in writing, any agreement, contract or order, which has a =
term=20
greater than one (1) year or which requires annual payments of =
more than=20
$10,000.
<=
/SPAN> <=
/SPAN>.=20
. .
<=
/SPAN>5.09 Costs and Expenses:=20
Indemnity
<=
/SPAN>.=20
. .
<=
/SPAN>(b) [HP] agrees to indemnify and hold =
[HCCI] and its=20
officers, directors, agents and employees harmless from and =
against all=20
losses, claims, damages or other liabilities, including without =
limit,=20
reasonable attorneys fees and the costs and expenses incurred in=20
connection therewith, arising out of or relating to the willful=20
misconduct, breach of contract or gross negligence of =
[HP], in performing its duties under this=20
Agreement.
Mittleider testified that he did not =
believe=20
HP had received written =
approval from=20
HCCI to bind HCCI to the=20
agreement with GNS, which was valued in excess of $10,000.=20
<=
/SPAN>After=20
the close of evidence, the trial court made the following findings =
of fact=20
and conclusions of law:
Findings of =
Fact
1. On=20
December 26, =
2001, Defendant, Michael Mileski, an =
employee of=20
HP Management Services and=20
Administrator of Hermann Park Manor,=20
executed a written contract with Plaintiff Guaranteed Nursing Staff to =
provide=20
temporary personnel staffing for their local facility. =
Prior to executing the agreement, =
Defendants=20
failed to properly disclose that the company could not or would =
not=20
willingly pay for the services rendered under the contract, within =
the=20
terms of the agreement. Specifically, prior to entering into the=20
agreement, Defendants concealed the material fact that their =
business was=20
operating under budget constraints and that they would not make =
timely=20
payments pursuant to their contractual =
obligations.
2. From=20
December 26, =
2001 until on or about April 22, 2002, Plaintiff=20
provided supplemental staffing services to the Defendant under the =
executed agreement which provided for payment within 30 days after =
receipt=20
of the invoice. Clause =
5(c),=20
Compensation and =
Payment, provides =E2=80=9CAll amounts due to the Agency =
are due within (30)=20
days from receipt of invoice. Facility will send all payments to =
the=20
address printed on the Agency invoice.=E2=80=9D Defendants requested and =
accepted the temporary=20
personnel services of the Plaintiff=20
for their healthcare facility and became bound to pay Plaintiff its designated charges, which =
were=20
reasonable and customary for such services.
3. The=20
account accurately sets forth the services, the dates of services, =
the=20
hours and prices for the services that the Plaintiff provided Defendant. The =
account=20
represents the record of the transactions that Plaintiff systematically keeps in the =
ordinary=20
course of business. Defendants have refused to make full payment =
for=20
services rendered and the principal balance due Plaintiff on the account is $16,853.98 =
after=20
allowing for all just and lawful offsets, payments and=20
credits.
4. Subsequent=20
to the execution of the contract, Defendants have failed to =
perform the=20
terms of the contract without legitimate legal excuse. Defendants =
have=20
failed to pay Plaintiff for =
services=20
rendered.
5. As=20
a result of the Defendants=E2=80=99 conduct,=20
Plaintiff found it =
necessary to=20
employ attorneys. Plaintiff =
also=20
properly presented its breach of contract claim such that=20
attorneys=E2=80=99 fees are =
recoverable.=20
Thus, in addition to the damages suffered by Plaintiff, Guaranteed Nursing Staff,=20
L.L.C. has a right to be =
reimbursed=20
reasonable attorneys=E2=80=99 fees as=20
permitted by law. Although the Court=20
heard no evidence of the reasonableness or amount of =
attorneys=E2=80=99 fees incurred by Plaintiff, the Court takes judicial notice that =
Plaintiff=E2=80=99s=20
attorneys have expended time and effort prosecuting this case and =
that a=20
reasonable fee for the services is =
$5,000.00.
Conclusions of =
Law
1. The=20
Court finds Plaintiff has non-suited all claims asserted against =
HP/Hermann Park., Inc. and are hereby dismissed =
with=20
prejudice to re-riling.=20
[sic]
2. The=20
Court finds that =
Plaintiff take nothing by its suit =
against=20
Defendant Michael Mileski and that Michael Mileski recover his =
court costs=20
from Plaintiff.
3. The=20
Court finds that =
Plaintiff recover judgment from =
Defendant=20
HP Management Service, =
Inc., on its=20
cause of action for breach of contract only and shall recover the =
sum of=20
$16,853.98, together with post-judgment interest at the annual rate of =
6% until=20
paid.
4. Plaintiff recover prejudgment interest =
on the=20
judgment at thed [sic] annual rate of 6% from May 2, 2002=20
to the date of judgment in the sum of =
$3,167.57.
5. The=20
Court finds Plaintiff recover its attorney fees from =
HP Management Service, =
Inc., in the=20
amount of $5,000.
6. The=20
Court finds that all of =
Plaintiffs court costs be taxed against =
Defendant=20
HP Management Service,=20
Inc.
7. The=20
Court finds its judgment is final and disposes of all claims and =
all=20
parties and that relief not expressly given is denied and that the =
parties=20
are allowed such writs and processes as may be necessary in the =
collection=20
or enforcement of this judgment.
The trial court =
awarded GNS=20
$16,853.98 in addition to interest and attorney=E2=80=99s =
fees.
HP as a Named=20
Defendant
&=
nbsp; &n=
bsp; In=20
issue one, HP contends that =
the trial=20
court erred in rendering judgment for GNS because GNS did not file =
any=20
pleadings against HP. =
Specifically,=20
HP alleges that =
=E2=80=9Cthere were no pleadings on file =
with the trial=20
court wherein GNS named [HP] as a=20
Defendant or asserted any claim against [HP].=E2=80=9D=20
HP further argues that =
=E2=80=9Cthere were no pleadings in the =
trial court=20
wherein GNS asserted a breach of contract claim against =
[HP].=E2=80=9D We=20
disagree.
&=
nbsp; &n=
bsp; The=20
appellate record includes a copy of GNS=E2=80=99s third amended petition in =
which it names=20
HP as a defendant. Within =
the=20
petition, GNS alleges that it suffered damages when the defendants =
breached the contract by failing to perform the terms of the =
contract and=20
failing to pay GNS for services rendered. HP did not specially except to the third =
amended=20
petition. In addition, the record contains a Rule 11 Agreement =
from=20
HP=E2=80=99s attorney wherein he agreed to =
accept service on=20
behalf of HP.
&=
nbsp; &n=
bsp; We=20
overrule issue one.
Breach of Contract
&=
nbsp; &n=
bsp; In=20
issues two through six, HP =
asserts=20
that the evidence is legally and factually insufficient to =
establish that=20
(1) a contract existed between GNS and HP, (2) HP was=20
responsible for any contractual obligation incurred by Hermann=20
Park Manor relating to GNS, =
and (3)=20
Mileski was acting for or on behalf of HP when he signed the agreement. In =
issues seven=20
and eight, HP asserts that =
there is=20
no evidence to support an award of damages in this case for breach =
of=20
contract. The crux of HP=E2=80=99s argument is that the evidence =
is legally and=20
factually insufficient to show that Mileski was acting as an agent =
of=20
HP and had the authority to =
bind=20
HP to vendor contracts when =
he signed=20
the Supplemental Staffing Agreement. Accordingly, HP argues that the trial court erred in =
finding=20
HP liable for breaching the =
agreement=20
and for the payment of damages under the court=E2=80=99s conclusions of law three and =
four. We agree.=20
Standard of =
Review
&=
nbsp; &n=
bsp; We=20
review de novo a trial court=E2=80=99s=20
conclusions of law and uphold them on appeal if the judgment can =
be=20
sustained on any legal theory supported by the evidence.=20
BMC Software=20
Belgium v. Marchand N.V., 83 S.W.3d 789, 794 =
(Tex. 2002);=20
In re Moers, 104 S.W.3d 609, 611 (Tex.=20
App.=E2=80=94Houston [1st=20
Dist.] 2003, no pet.). An appellant may not challenge a trial=20
court=E2=80=99s conclusions =
of law for lack=20
of factual sufficiency, but we review the legal conclusions drawn =
from the=20
facts to determine their correctness. BMC, 83 S.W.3d at 794. If the reviewing =
court finds=20
that a conclusion of law is erroneous but that the trial court =
rendered=20
the proper judgment, the erroneous conclusion of law does not =
require=20
reversal. Id. =
When=20
performing a de novo review, we exercise our own judgment and=20
redetermine each legal =
issue.=20
Quick v. City=20
of Austin, 7 S.W.3d 109, 116 (Tex.=20
1998).
&=
nbsp; &n=
bsp; In=20
this case, the undisputed facts establish that =
Mileski did=20
not have actual authority to bind HP=20
to the Supplemental Staffing Agreement as HP=E2=80=99s agent,=20
nor did HP ratify such =
conduct on its=20
behalf by Mileski. As reflected on the signature blocks provided =
on the=20
Agreement, Mileski signed the Agreement as the =E2=80=9Cadministrator of Herman =
Park Manor,=E2=80=9D=20
not on behalf of HP. =
Accordingly, the=20
trial court erred in its legal conclusions that HP was liable for breach of the contract =
and for=20
the payment of damages to GNS.
Agency =
Relationship
&=
nbsp; &n=
bsp; It=20
is undisputed that GNS did not learn that Mileski was an =
HP employee until shortly after this suit =
was=20
filed. An undisclosed principal is liable for the contracts of its =
agent=20
only if the agent acted =
with the=20
principal=E2=80=99s actual authority in making =
the contract for the=20
principal or the principal ratified the =
contract.
See=20
Latch v. Gratty,=20
Inc., 107 S.W.3d 543, =
546=20
(Tex. 2003).
&=
nbsp; &n=
bsp; Assuming,=20
without deciding, that Mileski was HP=E2=80=99s agent by virtue of his =
status as an=20
HP employee, the evidence =
is legally=20
insufficient to conclude that Mileski had actual authority from HP =
to bind=20
it to the Supplemental Staffing Agreement. =E2=80=9CActual=20
authority=E2=80=9D is based =
on manifestations=20
of consent by the alleged principal to the alleged agent, and such =
authority can be conferred either expressly or by implication.=20
See Intermedics, Inc. v. =
Grady, 683 S.W.2d 842, =
847 (Tex.=20
App.=E2=80=94Houston [1st =
Dist.] 1984, writ=20
ref=E2=80=99d n.r.e.). =
Express authority=20
exists where the principal has made it clear to the agent that he =
wants=20
the act under scrutiny to be done. City of San Antonio v. =
Aguilar, 670 S.W.2d 681, 683 (Tex. =
App.=E2=80=94San Antonio=20
1984, writ dism=E2=80=99d). =
Implied authority exists =
when=20
appearances justify a finding that the principal authorized the=20
agent=E2=80=99s act; in =
other words, there is=20
circumstantial evidence of actual authority. Id. at=20
683=E2=80=9384. =
Implied actual authority exists only as =
an adjunct=20
to express actual authority, because implied authority is that =
which is=20
proper, usual, and necessary to the exercise of the authority that =
the=20
principal expressly delegates. Behring Int=E2=80=99l, Inc. v.=20
Greater Houston Bank,=20
662 S.W.2d 642, 649 =
(Tex.=20
App.=E2=80=94Houston [1st Dist.] 1983, writ =
dism=E2=80=99d by=20
agr.); Employers Cas. Co. v.=20
Winslow, 356 S.W.2d =
160, 168=20
(Tex. Civ. App.=E2=80=94El=20
Paso 1962, writ =
ref=E2=80=99d=20
n.r.e.).
=
&=
nbsp; &n=
bsp;In this case, there is no evidence of =
express or=20
implied actual authority for Mileski to sign the Supplemental =
Staffing=20
Agreement on behalf of HP and bind HP to the terms of this =
contract.=20
Mittleider, the president of HP, testified that Mileski executed the Supplemental =
Staffing=20
Agreement on behalf of HCCI, the owner of the facility, not =
HP. Furthermore, it is undisputed that=20
HCCI is doing business as Herman =
Park Manor and the Agreement expressly =
bears=20
Mileski=E2=80=99s signature =
in his capacity=20
as the administrator of Hermann Park=20
Manor, not as an employee of HP.=20
There is also no evidence of what=20
authority Mileski had to =
bind=20
HP to any contracts =
with vendors who did business with Hermann Park=20
Manor, which was owned by=20
HCCI. It is=20
undisputed that Mileski =
never entered=20
into any vendor contracts on behalf of HP while HP=20
managed Hermann Park Manor, =
and=20
HP never paid any of the =
invoices=20
from GNS under the Supplemental Staffing Agreement: only =
Hermann Park=20
Manor=E2=80=99s =
owner, =
HCCI, paid them. =
&=
nbsp; &n=
bsp; Nevertheless,=20
GNS argues that because (1) Mileski was an HP employee at the time he signed the =
Supplemental=20
Staffing Agreement; (2) =
GNS was directed to make its billing =
inquiries=20
through HP, as =
administrator of the=20
facility; (3) Mileski made the decision as to which bills to =
submit to=20
HCCI, as owner, for payment, and =
HP forwarded payments for GNS=E2=80=99s invoices from HCCI to GNS;=20
and (4)=20
HP and HCCI are=20
located in the same city in Georgia, there is |