Opinion issued December 21,=20
=
2007
<=
BR>
In The
Court of=20
Appeals
For=20
The
First =
District of=20
Texas
NO.=20
01-06-00535-CV
TENNESSEE GAS=20
PIPELINE COMPANY, Appellant
V.
TECHNIP USA=20
CORPORATION AND TECHNIP, S.A., =
Appellees
* *=20
*
TECHNIP USA=20
CORPORATION AND TECHNIP, S.A.,=20
Appellants
V.
TENNESSEE GAS=20
PIPELINE COMPANY,=20
Appellee
On =
Appeal from the=20
165th District Court
Harris =
County,=20
Texas
Trial =
Court Cause=20
No. 2002-60134
MEMORANDUM=20
OPINION
<=
/SPAN>This=20
is a breach of contract dispute brought by Tennessee Gas Pipeline =
Company=20
(=E2=80=9CTGP=E2=80=9D) against Technip USA Corporation =
(=E2=80=9CTechnip USA=E2=80=9D) and its parent,=20
Technip S.A. (collectively, =E2=80=9CTechnip=E2=80=9D). TGP =
engaged Technip USA to=20
construct improvements along an interstate gas pipeline owned by =
TGP=20
pursuant to a =E2=80=9CLump Sum Turnkey, Engineering, Procurement =
and Construction=20
Contract=E2=80=9D (=E2=80=9CContract=E2=80=9D). After project =
delays occurred, TGP sued Technip to=20
recoup its additional expenses and for allegedly defective work. =
Technip=20
counterclaimed to recover sums owed under the Contract. A jury =
found that=20
Technip had breached the Contract and awarded delay damages and =
defective=20
work damages to TGP. Subsequently, on the motion of Technip, the =
trial=20
court limited the jury award to certain defective-work damages. =
Both TGP=20
and Technip have appealed. TGP seeks the total jury award; Technip =
seeks a=20
holding that TGP take nothing on its claims.
<=
/SPAN>In=20
its appeal, TGP contends that the trial court erred by denying its =
Motion=20
for Judgment and by granting Technip USA=E2=80=99s Motions for =
Summary Judgment=20
Regarding TGP=E2=80=99s damages, Technip=E2=80=99s Motion to =
Disregard the Jury Findings,=20
and Technip=E2=80=99s Motion for Entry of Judgment Notwithstanding =
the Verdict=20
because (1) the total damages awarded by the jury constitute =
=E2=80=9Cdirect=20
damages=E2=80=9D to which TGP is entitled as a matter of law; (2) =
the evidence is=20
legally sufficient to support the jury=E2=80=99s finding of =
damages; and (3)=20
Technip S.A. was required, pursuant to the guaranty it executed, =
to pay=20
all damages arising from Technip USA=E2=80=99s breach of the =
Contract without=20
limitation.
<=
/SPAN>In=20
its appeal, Technip contends that the trial court erroneously =
denied its=20
Motion for Judgment Notwithstanding the Verdict on TGP=E2=80=99s =
defective=20
workmanship claims because (1) such claims are barred by the =
exclusive=20
remedy provisions of the agreement; (2) the evidence is =
insufficient to=20
support the damages awarded on certain defective work claims; and =
(3) the=20
trial court improperly applied the stipulated retainage offset and =
improperly calculated interest and attorney=E2=80=99s =
fees.
<=
/SPAN>We=20
reverse and render, in part, and affirm as modified, in=20
part.
FACTS =
AND=20
PROCEDURAL HISTORY
<=
/SPAN>TGP=20
![3DFootnote](3D"")
owns and operates 14,200 miles of =
pipeline through=20
which it transports 6.4 billion cubic feet of gas each day from =
Texas to=20
the northeastern United States. Technip USA is an engineering and=20
construction contractor in the oil and gas industry. TGP and =
Technip=20
USA
have conducted business with one another =
since the=20
1960s.
<=
/SPAN>On=20
August 6, 1999, TGP contracted with Technip USA for the =
replacement and=20
upgrade of six compressors
on one of TGP=E2=80=99s main =
transmission lines, known as=20
the =E2=80=9CTGP 100 Line Horsepower Replacement Project=E2=80=9D =
(=E2=80=9CProject=E2=80=9D), for a =E2=80=9Clump=20
sum, fixed amount=E2=80=9D of $86,740,000 (=E2=80=9CContract =
Price=E2=80=9D).
Work on the Project commenced =
immediately. TGP=20
expected the Project to be completed within 17 months. Technip =
contends=20
that the schedule for completion was never formally finalized. =
Completion=20
of the Project took three years.
<=
/SPAN>The=20
Agreement
<=
/SPAN>The=20
progress and completion of the Project was formally governed by =
Article=20
5.2 of the Contract, which provides as follows, in pertinent part: =
Project=20
Schedule; Critical Path Schedule. [Technip USA] shall =
perform the=20
Work [its duties and obligations] in accordance with the schedule =
and=20
management plan set forth in Exhibit E (the =
=E2=80=9CProject =
Schedule=E2=80=9D). Within=20
twenty (20) days after the Effective Date, [Technip USA] shall =
submit, for=20
[TPG=E2=80=99s] review and approval, a critical path method =
(=E2=80=9CCPM=E2=80=9D) schedule which=20
conforms to the Project Schedule and which sets forth the timing =
of all=20
elements of the Work and the interrelationship of such elements.=20
It is undisputed that there was never a =
Project=20
Schedule =E2=80=9Cset forth in Exhibit E=E2=80=9D of the Contract, =
as contemplated by=20
Article 5.2.
<=
/SPAN>According=20
to TGP, contemporaneous with the formation of the Contract, a =
Project=20
Schedule was formulated and was circulated at a meeting involving =
both=20
parties. The Project Schedule specified that Technip USA would =
complete=20
the project within 17 months of execution of the Contract. In =
addition,=20
according to TGP, a CPM schedule was created, also specifying that =
Technip=20
USA would complete the Project within 17 months. TGP =
contends that=20
it remained in constant communication with Technip USA and that =
all=20
parties understood that the Project Schedule governed the project. =
In=20
addition, contends TGP, the Project Schedule was incorporated into =
the=20
Contract through Article 19.13, which provides that =E2=80=9C[a]ll =
Exhibits,=20
Schedules or other attachments referenced in this Agreement shall =
be=20
incorporated into this Agreement by such reference and shall be =
deemed to=20
be an integral part of this Agreement.=E2=80=9D
<=
/SPAN>Article=20
5.2A of the Contract also provides that =E2=80=9C[m]odifications =
to the critical=20
path of the Project Schedule shall only be made with the approval =
of=20
[TGP]=E2=80=9D and that =E2=80=9C[t]he Project Schedule shall be =
revised as required under=20
Section 6.5.=E2=80=9D Article 6.5 provides that =
=E2=80=9Cthe Project=20
Schedule may only be adjusted to the extent that [Technip USA] can =
demonstrate that the change impacted the critical path of the =
Work=E2=80=9D and=20
that Technip USA is required to attempt to accelerate the =
performance of=20
work to minimize the impact of any changes on the Project=20
Schedule.
<=
/SPAN>Pursuant=20
to Article 5.2C, if Technip USA failed to achieve =
=E2=80=9CSubstantial Completion=20
within sixty (60) days following that Station=E2=80=99s =
Substantial Completion=20
Date, then the provisions of Section 13.2 shall apply.=E2=80=9D =
Article 13.2 was a=20
liquidated damages provision that TGP agreed to remove from the =
Contract=20
in exchange for a $1.5 million decrease in the Contract Price. The =
balance=20
of Article 13 provides that =E2=80=9C[t]ime is of the essence in =
the performance=E2=80=9D=20
of the Contract and that Technip USA =E2=80=9Cguarantees that, =
subject to such=20
adjustments as may be provided hereunder, Substantial Completion =
shall=20
occur not later than the Substantial Completion Date on a=20
station-by-station basis.=E2=80=9D
<=
/SPAN>Attached=20
to the Contract is a parent guaranty executed by Technip S.A.,=20
guaranteeing the obligations of Technip USA under the Contract and =
agreeing to indemnify TGP against damages arising from a breach of =
the=20
Contract by Technip USA.
<=
/SPAN>The=20
Dispute
<=
/SPAN>During=20
the course of the Project, numerous delays occurred that each =
party=20
attributed to various causes=E2=80=94including issues with the =
components being=20
installed, issues involving the new technology or new applications =
of=20
technology being employed, delays in change orders, shortages of =
skilled=20
labor, and inclement weather. Ultimately, the Project was finished =
in=20
April of 2002=E2=80=94delays having ranged from six to twenty =
months in the=20
completion of five of the six compressor stations. Specifically, =
Stations=20
47, 54, 63, 87, and 110 are the subject of this =
dispute.
<=
/SPAN>Technip=20
USA requested an =E2=80=9Cequitable adjustment=E2=80=9D to the =
Contract Price based on=20
increased costs incurred as a result of the extended work periods. =
Subsequently, TGP sued Technip to recover its increased costs, =
alleging=20
that Technip USA=E2=80=99s delays constituted a breach of the=20
Contract.
<=
/SPAN>Technip=20
moved for summary judgment on the grounds that TGP=E2=80=99s =
claims for=20
|
1. Project delay =
costs,=20
sustained in the past |
|
2. Excess gas use =
differential=20
costs, sustained in the past |
|
3. Excess lube oil =
costs,=20
sustained in the past |
|
4. Excess labor costs, =
sustained=20
in the past |
|
5. Extra power at =
Station 63=20
costs, sustained in the past |
|
6. Backup generator =
costs,=20
sustained in the past |
|
7. Allowance for funds =
used=20
during construction, sustained in the =
past |
|
8. Premature =
energization costs=20
at Station 54, sustained in the=20
past |
constituted claims for incidental or =
consequential=20
damages and that such damages were specifically excluded under =
Article=20
19.1 of the Contract, as follows:
Consequential Damages: =
Notwithstanding any other provisions of this Agreement to the =
contrary, in=20
no event shall Owner or Contractor be liable to each other for any =
indirect, special, incidental or consequential loss or damage =
including,=20
but not limited to, loss of profits or revenue, loss of =
opportunity or use=20
incurred by either Party to the other, or like items of loss or =
damage;=20
and each Party hereby releases the other Party therefrom.=20
<=
/SPAN>In=20
addition, Technip contended that TGP=E2=80=99s workmanship claims=20
for
|
9. Realignment of =
compressor=20
costs |
|
10. Excessive blowdown costs, =
sustained in=20
the past |
|
11. Replacement and installation =
of operable=20
oil fill system and repair costs for air dryers, sustained =
in the=20
past |
|
12. Review =
=E2=80=9Cas-built=E2=80=9D drawings, to be=20
reasonably sustained in the=20
future |
were precluded because TGP failed to =
make written=20
warranty claims as required under the Contract. The trial court =
granted=20
Technip=E2=80=99s motion, in part, holding that claims =
1=E2=80=936, and 8 above were=20
barred and that TGP take nothing on those =
claims.
<=
/SPAN>TGP=20
moved for a partial summary judgment =E2=80=9Con the liability =
portion of its=20
claim that Technip USA breached the Contract by failing to =
complete the=20
project according to the Project Schedule,=E2=80=9D which the =
trial court=20
denied.
<=
/SPAN>Subsequently,=20
on November 19, 2004, The Honorable Reece Rondon of the 334th =
District=20
Court of Harris County voluntarily recused himself. The case was=20
transferred to The Honorable Elizabeth Ray of the 165th District =
Court of=20
Harris County.
<=
/SPAN>The=20
case was tried to a jury beginning October 27, 2005. At a =
pre-trial=20
hearing, the trial court instructed the parties to place all =
of=20
their evidence concerning damages before the jury, that the jury =
would be=20
instructed to determine whether a breach occurred and, if so, to =
determine=20
the award of damages applicable without regard to whether such =
damages=20
were precluded under the Contract, and that the trial court would =
later=20
determine which damages were barred as a matter of law. =
<=
/SPAN>The=20
jury found that Technip USA breached the Contract by unreasonable =
delay=20
and awarded $18,468,361.73 in damages to TGP as =
follows:
|
1. Project delay =
costs,=20
sustained in the past |
$4,030,672.07 |
|
2. Excess gas use =
differential=20
costs, sustained in the past |
$4,617,717.00 |
|
3. Excess lube oil =
costs,=20
sustained in the past |
$ =
233,933.04 |
|
4. Excess labor costs, =
sustained=20
in the past |
$ =
950,560.94 |
|
5. Extra power at =
Station 63=20
costs, sustained in the past |
$ =
30,540.23 |
|
6. Backup generator =
costs,=20
sustained in the past |
$ =
34,871.69 |
|
7. Allowance for funds =
used=20
during construction, sustained in the =
past |
$6,427,535.70 |
|
8. Premature =
energization costs=20
at Station 54, sustained in the past |
$ =
452,368.13 |
|
9. Realignment of =
compressor=20
costs |
$ 964,170.02 =
|
|
10. Excessive blowdown costs, =
sustained in=20
the past |
$ =
14,160.00 |
|
11. Replacement and installation =
of operable=20
oil fill system and repair costs for air dryers, sustained =
in the=20
past |
$ 156,292.91 =
|
|
12. Review =
=E2=80=9Cas-built=E2=80=9D drawings, to be=20
reasonably sustained in the future |
$=20
555,540.00 |
In addition, the jury found that TGP did =
not=20
breach the Contract.
<=
/SPAN>Technip=20
moved to disregard the jury findings and for judgment =
notwithstanding the=20
verdict on the grounds that (1) TGP=E2=80=99s delay-related =
damages were barred by=20
the consequential damages provision of the Contract; (2) =
TGP=E2=80=99s=20
workmanship-related claims were barred by the warranty and =
exclusive=20
remedy provisions of the Contract; (3) there was no evidence of =
causation=20
as to TGP=E2=80=99s delay-related damages; and (4) there was no =
evidence that=20
Technip breached the Contract by unreasonably delaying beyond any =
deadline=20
fixed by the Contract. TGP moved for judgment on the verdict on =
the=20
grounds that its damages were =E2=80=9Cdirect damages=E2=80=9D =
caused solely by Technip=20
USA=E2=80=99s delay.
<=
/SPAN>The=20
trial court granted each motion in part. The trial court limited =
the jury=20
award to certain defective work claims=E2=80=94awarding TGP =
damages for=20
=E2=80=9CRealignment of compressor costs,=E2=80=9D =
=E2=80=9CReplacement and installation of=20
operable oil fill systems,=E2=80=9D and =E2=80=9CReview =
=E2=80=98as-built=E2=80=99 drawings.=E2=80=9D In addition,=20
the trial court awarded to TGP pre- and post-judgment interest =
and, as the=20
parties had stipulated, $1.1 million in attorney=E2=80=99s fees. =
The trial court=20
held that Technip was entitled to a credit against the judgment of =
the=20
$1,650,000 retainage held by TGP, =E2=80=9Cas stipulated by the =
parties.=E2=80=9D The=20
trial court held Technip S.A. jointly and severally liable as =
guarantor=20
for payment of the judgment.
<=
/SPAN>Technip=20
USA moved to modify the judgment and for a new trial, which were =
overruled=20
by operation of law. TGP and Technip have appealed. TGP seeks to =
recover=20
the entire jury award; Technip seeks a holding that TGP take =
nothing on=20
its claims.I. TGP=E2=80=99s =
AppealIn its=20
appeal, TGP contends that the trial court erred by denying its =
Motion for=20
Judgment and by granting Technip USA=E2=80=99s Motions for Summary =
Judgment=20
Regarding TGP=E2=80=99s damages, Technip=E2=80=99s Motion to =
Disregard the Jury Findings,=20
and Technip=E2=80=99s Motion for Entry of Judgment Notwithstanding =
the Verdict=20
because (1) the total damages awarded by the jury constitute =
=E2=80=9Cdirect=20
damages=E2=80=9D to which TGP is entitled as a matter of law; (2) =
the evidence is=20
legally sufficient to support the jury=E2=80=99s finding of =
damages; and (3)=20
Technip S.A. was required, pursuant to the guaranty it executed, =
to pay=20
all damages arising from Technip USA=E2=80=99s failure to perform =
under the=20
Contract.The Jury=20
Award
<=
/SPAN>In=20
its first issue, TGP contends that the trial court erred by =
granting=20
Technip=E2=80=99s Motion for Judgment Notwithstanding the Verdict =
because the=20
total damages awarded by the jury constituted =E2=80=9Cdirect =
damages=E2=80=9D to which=20
TGP is entitled as a matter of law.=20
TGP contends that it is entitled to recover the total =
damages=20
awarded by the jury because (A.) it is entitled, as a matter of =
Texas=20
contract law, to recover its =
=E2=80=9Cbenefit-of-the-bargain,=E2=80=9D namely, =E2=80=9Cto have=20
efficient compressors in place in seventeen months,=E2=80=9D and =
(B.) the plain=20
language of the Contract=E2=80=99s damages provision does not =
limit recovery for=20
=E2=80=9Cdirect damages.=E2=80=9D
Standard of=20
Review
<=
/SPAN>A=20
trial court may disregard a jury finding and enter a judgment=20
notwithstanding the verdict (=E2=80=9CJNOV=E2=80=9D) if the =
finding is immaterial or if=20
there is no evidence to support the finding. Tiller v. =
McClure, 121=20
S.W.3d 709, 713 (Tex. 2003); Spencer v. Eagle Star Ins. Co. of =
Am.,=20
876 S.W.2d 154, 157 (Tex. 1994); Williams v. Briscoe, 137 =
S.W.3d=20
120, 124 (Tex. App.=E2=80=94Houston [1st Dist.] 2004, no pet.). A =
question is=20
=E2=80=9Cimmaterial=E2=80=9D when it should not have been =
submitted to the jury, it calls=20
for a finding beyond the province of the jury, such as a question =
of law,=20
or when it was properly submitted but has been rendered immaterial =
by=20
other findings. Se. Pipe Line Co. v. Tichacek, 997 S.W.2d =
166, 172=20
(Tex. 1999); Spencer, 876 S.W.2d at 157.
A. Benefit=20
of the Bargain
<=
/SPAN>The=20
objective in awarding damages for a breach of contract is to =
provide just=20
compensation for the loss actually sustained by the complaining =
party.=20
Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex. 1991). =
Damages for=20
breach of contract protect three interests: a restitution =
interest, a=20
reliance interest, and an expectation interest. See =
O=E2=80=99Farrill=20
Avila v. Gonzalez, 974 S.W.2d 237, 247 (Tex. App.=E2=80=94San =
Antonio 1998,=20
pet. denied). The general measure of damages in a common-law =
breach of=20
contract claim is just compensation for the loss or damage =
actually=20
sustained, commonly referred to as the =
=E2=80=9Cbenefit-of-the-bargain.=E2=80=9D Bowen=20
v. Robinson, 227 S.W.3d 86, 96 (Tex. App.=E2=80=94Houston [1st =
Dist.] 2006,=20
pet. denied). The =E2=80=9Cbenefit-of-the-bargain=E2=80=9D measure =
represents the=20
difference between the value expected from the contract and the =
value=20
actually received by the non-breaching party. Frost =
Nat=E2=80=99l Bank v.=20
Heafner, 12 S.W.3d 104, 111 n.5 (Tex. App.=E2=80=94Houston =
[1st Dist.] 1999,=20
pet. denied). The proper measure of damages is a question of law =
for the=20
court, and the court=E2=80=99s charge should limit the =
jury=E2=80=99s consideration to=20
facts that are properly a part of the damages allowable. Allied =
Vista,=20
Inc. v. Holt, 987 S.W.2d 138, 141 (Tex. App.=E2=80=94Houston =
[14th Dist.]=20
1999, pet. denied).
<=
/SPAN>Actual=20
damages are either =E2=80=9Cdirect=E2=80=9D or =
=E2=80=9Cconsequential.=E2=80=9D Arthur Andersen &=20
Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997). =
Direct=20
damages are those that flow naturally and necessarily from the =
breach.=20
Id. =E2=80=9CDirect damages compensate for the loss, =
damage, or injury that=20
is conclusively presumed to have been foreseen or contemplated by =
the=20
party as a consequence of his breach of contract or wrongful =
act.=E2=80=9D Id.=20
=E2=80=9CConsequential damages=E2=80=9D are those which result =
naturally, but not=20
necessarily, from the breach. Id. Consequential damages =
must be=20
foreseeable and must be directly traceable to the wrongful act and =
result=20
from it. Id.
<=
/SPAN>A=20
general measure of damages is subject to any agreement that the =
parties=20
might have made with respect to damages because parties to a =
contract are=20
free to limit or modify the remedies available in the event of a =
breach of=20
the contract. GT & MC, Inc. v. Tex. City Refining, =
Inc., 822=20
S.W.2d 252, 256 (Tex. App.=E2=80=94Houston [1st Dist.] 1991, writ =
denied); see=20
also Heafner, 12 S.W.3d at 110=E2=80=9311 (reversing =
award of=20
consequential damages when contract excluded liability for =
consequential=20
damages).
<=
/SPAN>Here,=20
the Contract reflects that TGP and Technip agreed to limit the =
remedies=20
available in the event of a breach of the Contract. Hence, =
TGP=E2=80=99s ability=20
to recover its full expectancy interest, or the full benefit of =
its=20
bargain, is subject to limitations. We consider the nature of the=20
contractual limitations and whether they apply to the damages at =
issue in=20
this case.
B. Contractu=
al=20
Limitations
<=
/SPAN>The=20
parties agreed at Article 19.1 of the Contract to limit the =
remedies=20
available, as follows:
Consequential Damages: =
Notwithstanding any other provisions of this Agreement to the =
contrary, in=20
no event shall Owner or Contractor be liable to each other for any =
indirect, special, incidental or consequential loss or damage =
including,=20
but not limited to, loss of profits or revenue, loss of =
opportunity or use=20
incurred by either Party to the other, or like items of loss or =
damage;=20
and each Party hereby releases the other Party therefrom.The =
parties do=20
not dispute that Article 19.1 precludes recovery for incidental or =
consequential damages. Rather, TGP contends that its claims =
constitute=20
=E2=80=9Cdirect damages=E2=80=9D and therefore are not precluded =
by Article 19.1. Technip=20
contends that all of TGP=E2=80=99s claims are for incidental, =
indirect, and=20
consequential damages and thus are barred by Article 19.1.=20
<=
/SPAN>It=20
is a basic premise of contract interpretation that unambiguous =
contracts=20
are construed as a matter of law. Coker v. Coker, 650 =
S.W.2d 391,=20
393=E2=80=9394 (Tex. 1983). The parties have stipulated that =
Article 19.1 is=20
unambiguous. When a contract is unambiguous, =E2=80=9Cthe court =
must enforce it as=20
written.=E2=80=9D Transcon. Gas Pipeline Corp. v. Texaco, =
Inc., 35 S.W.3d=20
658, 665 (Tex. App.=E2=80=94Houston [1st Dist.] 2000, pet. =
denied). In=20
construing the contract, we attempt to ascertain the =
parties=E2=80=99 true intent=20
=E2=80=9Cas expressed in the instrument.=E2=80=9D Nat=E2=80=99l =
Union Fire Ins. Co. v. CBI=20
Indus., 907 S.W.2d 517, 520 (Tex. 1995). We presume that the =
parties=20
intended for every clause to have some effect. Heritage Res., =
Inc. v.=20
NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). We give =
terms=20
their plain, ordinary and generally accepted meaning unless the =
instrument=20
shows that the parties used them in a technical or different =
sense.=20
Id.
<=
/SPAN>Here,=20
we apply these rules of construction to determine whether Article =
19.1=20
precludes TGP=E2=80=99s claims. By its plain language, Article =
19.1, entitled=20
=E2=80=9CConsequential Damages,=E2=80=9D provides that, without =
regard to any other=20
provision of the Contract, the parties agreed to release each from =
any=20
liability for any =E2=80=9Cindirect, special, incidental or =
consequential loss or=20
damage.=E2=80=9D The parties defined such damages within this =
provision as=20
including =E2=80=9Closs of profits or revenue, loss of opportunity =
or use=E2=80=9D and=20
=E2=80=9Clike items of loss or damage.=E2=80=9D
<=
/SPAN>TGP=20
contends that Article 19.1 has no bearing on its direct damages. =
TGP=20
contends that, to the degree its damages could be characterized as =
lost=20
profits or loss of use, Article 19.1 =E2=80=9Cexcludes only =
=E2=80=98lost profits=E2=80=99 and=20
=E2=80=98loss of use=E2=80=99 that also qualify as =
consequential=E2=80=9D and does not=20
preclude it from recovering its lost profits and loss of use that=20
constitute direct damages arising from Technip =
USA=E2=80=99s breach.=20
<=
/SPAN> Technip=20
contends that the language of Article 19.1 reflects that the =
parties =E2=80=9Cset=20
out general categories of damages that would be =
excluded=E2=80=94=E2=80=9Cindirect,=20
special, incidental and consequential=E2=80=94and then they set =
out a=20
non-exclusive list of damage claims that are specifically =
excluded=E2=80=94loss of=20
opportunity, loss of use, lost profits, lost revenue, and =
=E2=80=98like items of=20
loss or damage.=E2=80=99=E2=80=9D Technip contends that the =
parties defined damages for=20
loss of use, opportunity, and profits as being wholly within the=20
categories of =E2=80=9Cindirect, special, incidental or =
consequential damages.=E2=80=9D=20
Hence, contends Technip all claims for loss of use, =
opportunity, or=20
profits are necessarily barred under Article =
19.1.
<=
/SPAN>In=20
addition, Technip contends that the parties=E2=80=99 removal of =
the liquidated=20
damages provision (which specified damages for delay) demonstrates =
that=20
the parties did not intend to place the risk of lost use, =
opportunity, or=20
profits on Technip USA. Technip contends that the Contract, as =
drafted,=20
left TGP without a remedy for its delay claims, but that this was=20
negotiated up front and TGP enjoyed a $1.5 million decrease in the =
Contract price to assume the risks of delay. TGP contends that the =
removal=20
of the liquidated damages provision simply left TGP=E2=80=99s =
claims unliquidated,=20
not defunct.
&nbs=
p;In=20
attempting to harmonize Article 19.1 with the other terms of the =
Contract,=20
we note that Article 2.5 of the Contract indicates that Technip =
USA=20
assumed certain risks=E2=80=94including =E2=80=9Call risk related =
to and any right to=20
claim any adjustment in the Project Schedule or Contract Price for =
(i)=20
topography or soil conditions, (ii) availability of laborers and=20
Subcontractors, (iii) adequate availability and transportation of=20
Equipment, and (iv) and [sic] breakdown or other failure of =
Equipment=20
under the control of or provided by [Technip USA].=E2=80=9D In =
addition, pursuant=20
to Article 13, Technip USA guaranteed that Substantial Completion =
would=20
not be delayed beyond the =E2=80=9CSubstantial Completion Date on =
a=20
Station-by-station basis.=E2=80=9D Further, Article 19.2 provides, =
as follows, in=20
pertinent part:
19.2 Limitation of =
Liability. Except=20
for [Technip USA=E2=80=99s] liability arising out of or relating =
to Articles 12=20
(warranties), 13 (guarantee of timely completion), . . . , 5.2C=20
(Substantial Completion Date), . . . [Technip USA=E2=80=99s] =
liability arising out=20
of or relating to this [Contract] shall be limited to 50% of the =
Contract=20
Price, regardless of whether the liability arises out of contract, =
. . .=20
or any other legal or equitable theory.
&nbs=
p;Hence,=20
Technip USA agreed to assume certain risks and extended a =
guarantee with=20
regard to completion. In addition, subject to certain exceptions, =
the=20
parties agreed to cap at 50% of the Contract Price any liability =
of=20
Technip USA arising from violations of the provisions of the =
Contract,=20
regardless of the theory of liability. Notably, the exceptions =
include=20
liability concerning warranties and timely completion, which are =
not=20
capped.
&nbs=
p;Considering=20
the Contract as a whole, we conclude that Article 19.1, as =
written, does=20
not preclude any and all liability that arises from delay under =
the=20
Contract. Had all such liability been precluded at Article 19.1, =
Article=20
19.2 would be rendered meaningless. We conclude that Article 19.1, =
=E2=80=9CConsequential Damages,=E2=80=9D does not preclude the =
recovery of direct damages=20
involving loss of use, opportunity, or profits.
<=
/SPAN>We=20
next consider whether the specific claims at issue constitute =
claims for=20
direct or consequential damage:
1. =E2=80=9C<=
I>Project=20
delay costs=E2=80=9D
<=
/SPAN>TGP=20
contends that it is entitled to the jury award for its =
=E2=80=9Cproject delay=20
costs=E2=80=9D because the Project took longer to complete than =
agreed and TGP=20
incurred substantial expenses for the extended administration.=20
Specifically, TGP asserts that it incurred extended expenses for =
labor,=20
travel, environmental contractors, TGP inspectors, purchase and =
supply of=20
additional construction consumables, costs for hauling wastewater =
from the=20
site, and services and utilities. TGP contends that these expenses =
constitute =E2=80=9Cdirect damages=E2=80=9D because they naturally =
and necessarily flow=20
directly from the breach in that the expenses would not have been =
incurred=20
but for the breach of the Contract by Technip.
<=
/SPAN>Article=20
4 of the Contract, =E2=80=9COwner=E2=80=99s =
Responsibilities,=E2=80=9D provides that TGP is=20
required to provide: permits; construction and permanent power; =
incoming=20
high power transmission lines; storage and lay down areas at the =
Sites;=20
space at the Sites for construction trailers; water; potable =
water; fire=20
water; hydrotest media; and operation personnel for =
commissioning.=E2=80=9D Hence,=20
the parties clearly contemplated that TGP would incur these costs=20
throughout the Project and a breach of the Contract by delay =
naturally and=20
necessarily would cause these costs to be extended over a longer =
period of=20
time.
<=
/SPAN>We=20
conclude that these damages that resulted from the delay represent =
direct=20
damages because they clearly flow naturally and necessarily from =
the=20
breach. See Arthur Andersen & Co., 945 S.W.2d at 816. =
Because=20
TGP is expressly responsible for these costs under the Contract, =
it can be=20
conclusively presumed to have been foreseen or contemplated by =
Technip=20
that, as a consequence of its breach of the Contract by delay, TGP =
would=20
have to continue paying these ongoing costs. See id. TGP is =
not=20
precluded from receiving these damages under Article 19.1 of the=20
Contract.
2.=E2=80=934. Loss of=20
efficiency=E2=80=93excess gas, oil, and =
labor
<=
/SPAN>TGP=20
characterizes its claims for =E2=80=9Cexcess gas use,=E2=80=9D =
=E2=80=9Cexcess lube oil,=E2=80=9D and=20
=E2=80=9Cexcess labor cost=E2=80=9D as damages for =E2=80=9Closs =
of efficiency caused by the=20
delay=E2=80=9D and =E2=80=9Clost value.=E2=80=9D TGP compared the =
cost of gas and oil used in the=20
old compressors with what it anticipates it would have expended =
had the=20
new, more efficient compressors been timely installed. As to =
labor, TGP=20
compared the level of labor costs expended to run the old =
equipment during=20
the delay with the labor costs it anticipates it would have =
incurred once=20
the highly automated compressors were installed. TGP contends that =
these=20
claims represent direct damages because =E2=80=9Cthe entire reason =
for the Project=20
[was] to obtain the new compressors on a timely basis.=E2=80=9D =
<=
/SPAN>Technip=20
contends that TGP=E2=80=99s claims of lost efficiency constitute =
claims of=20
consequential =E2=80=9Closs of use=E2=80=9D damages and are =
precluded under Article 19.1.=20
We agree that the loss of anticipated savings on the projected =
efficiency=20
of the new compressor components is not a direct damage because it =
is too=20
remote to be =E2=80=9Cconclusively presumed to have been foreseen =
or contemplated=E2=80=9D=20
by Technip USA as a consequence of its breach. See Arthur =
Andersen=20
& Co., 945 S.W.2d at 816; Wade and Sons Inc. v. Am. =
Standard,=20
Inc., 127 S.W.3d 814, 823 (Tex. App.=E2=80=94San Antonio 2003, =
pet. denied).=20
5. =E2=80=9C=
Power=20
at Station 63=E2=80=9D
<=
/SPAN>TGP=20
contends that it is entitled to damages for providing extended =
=E2=80=9CPower at=20
Station 63=E2=80=9D separately from its =E2=80=9CProject delay =
costs=E2=80=9D above. As we=20
concluded in our analysis of the =E2=80=9CProject delay =
costs,=E2=80=9D because TGP is=20
expressly responsible for providing power under the Contract, it =
can be=20
conclusively presumed to have been foreseen or contemplated by =
Technip=20
that, as a consequence of its breach of the Contract by delay, TGP =
would=20
have to continue paying these ongoing costs. See id. We =
conclude=20
that these damages resulting from the delay also represent =
=E2=80=9Cdirect=20
damages=E2=80=9D because they clearly flow naturally and =
necessarily from the=20
breach. See Arthur Andersen & Co., 945 S.W.2d at 816. =
Hence,=20
these damages are likewise not precluded under the=20
Contract.
6. =20
Backup generator at Station 47
<=
/SPAN>TGP=20
contends that, pursuant to Article 3 of the Contract, Technip was =
required=20
to perform its work according to =E2=80=9CGood Engineering and =
Construction=20
Practices=E2=80=9D and to ensure that its work did not =
=E2=80=9Cunreasonably interfere=20
with the operation of the Facilities.=E2=80=9D In addition, TGP =
points to the=20
=E2=80=9CScope of Work=E2=80=9D that it contends the parties =
agreed on that stated that=20
=E2=80=9C[r]etirement of existing equipment shall not begin =
until the replacement horsepower is in =
service=20
without permission of the Company.=E2=80=9D TGP complains that =
Technip USA=20
dismantled an existing backup generator at Station 47 before the =
new=20
backup generator was fully functional. When a power outage =
occurred, TGP=20
was forced to rent a backup generator to ensure continuing =
operations and=20
to comply with regulations. TGP contends that it is entitled to =
recover=20
its costs.
<=
/SPAN>Technip=20
contends without discussion that this cost represents an indirect =
damage=20
=E2=80=9Cclearly ancillary to the progress of the =
Project.=E2=80=9D
<=
/SPAN>We=20
cannot conclude that a power outage and the necessity of a rented =
backup=20
generator could have been =E2=80=9Cconclusively presumed to have =
been foreseen or=20
contemplated=E2=80=9D by Technip USA at the time the Contract was =
formed =E2=80=9Cas a=20
consequence of [its] breach of contract or wrongful act.=E2=80=9D =
See Arthur=20
Andersen & Co., 945 S.W.2d at 816. Hence, we cannot =
conclude that the damages are =E2=80=9Cdirect.=E2=80=9D We =
conclude that the damages=20
resulted naturally, but not necessarily, from the breach. =
See id.=20
Hence, these damages are =E2=80=9Cconsequential.=E2=80=9D =
Because Article 19.1 of the=20
Contract precludes recovery for consequential damages, the trial =
court did=20
not err by excluding them.
7. Allowan=
ce=20
for funds used during construction
<=
/SPAN>TGP=20
contends that it paid for the project out of its own funds and =
that it is=20
entitled to damages for the interest that accrued =E2=80=9Con the =
total amount TGP=20
had invested in the Project during the delay period.=E2=80=9D =
Although this claim=20
does not involve any actual payment to a third party, TGP =
characterizes=20
this claim as a =E2=80=9Ca loss of borrowing power=E2=80=9D =
because it represents interest=20
TGP theoretically could have earned on its money=E2=80=94generally =
=E2=80=9Cranging from=20
five to six percent=E2=80=9D=E2=80=94had it invested the funds it =
spent on this project in=20
other investments during the delay period.
<=
/SPAN>=E2=80=9CInterest=20
is an element of damages suffered by the =E2=80=98loss of =
use=E2=80=99 of money.=E2=80=9D=20
Sherrill v. Phillips, 405 S.W.2d 627, 633 (Tex. Civ. =
App.=E2=80=94Austin=20
1966, writ ref=E2=80=99d n.r.e.); see Marrs and Smith =
P=E2=80=99ship v. D.K. Boyd Oil=20
and Gas Co., 223 S.W.3d 1, 24=E2=80=935 (Tex. App.=E2=80=94El =
Paso 2005, pet. denied)=20
(explaining that =E2=80=9Cinterest as interest (eo nomine) is =
compensation for the=20
use or detention of money=E2=80=9D and =E2=80=9Cinterest as =
damages is compensation for=20
lost use of money=E2=80=9D). Here, the record shows that Bert =
Pineda, TGP=E2=80=99s=20
project manager, testified that =E2=80=9Cthe imputed interest =
claim is a claim for=20
the loss of use of those funds.=E2=80=9D
<=
/SPAN>The=20
lost use of money represents an indirect loss to TGP because any =
return=20
that might be attributable to theoretical investments TGP might =
have made=20
falls outside its Contract with Technip. See Cont=E2=80=99l =
Holdings, Ltd. v.=20
Leahy, 132 S.W.3d 471, 475 (Tex. App.=E2=80=94Eastland, 2003, =
no pet.)=20
(explaining that profits lost on other contracts or relationships=20
resulting from the breach are =E2=80=9Cindirect=E2=80=9D or =
=E2=80=9Cconsequential damages=E2=80=9D).=20
Hence, TGP=E2=80=99s interest claim is a consequential =
=E2=80=9Closs of use=E2=80=9D claim that is=20
precluded by Article 19.1 of the Contract.
&=
nbsp; =20
8. Prematu=
re=20
energy costs at Station 54
<=
/SPAN>TGP=20
contends that it is entitled to damages for premature energy costs =
at=20
Station 54 because, asserts TGP, Technip prematurely requested =
permanent=20
electricity to Station 54. TGP contracted with the utility company =
to=20
bring in large transmission lines to get electricity to the new =
motors=20
being installed at the compressor stations. Pursuant to =
TGP=E2=80=99s contract=20
with the utility company, TGP was to pay for a specified amount of =
electric use to compensate the utility company for laying the =
transmission=20
lines. TGP was given a three-month grace period, after which time =
TGP=20
either had to begin the use of electricity at the anticipated =
demand rate=20
or to pay a penalty of 50% of the anticipated demand for each =
month it did=20
not use any electricity. TGP contends that Technip USA reported =
that it=20
was ready for electricity in April 2001 and that TGP had the power =
turned=20
on in May 2001, but that it was not until nine months later that =
Technip=20
commissioned the units and used the electricity. =
<=
/SPAN>We=20
conclude that the trial court did not err by excluding this claim =
from=20
TGP=E2=80=99s recovery. TGP has not directed us to any provision =
in the Contract=20
governing this claim. However, even if Technip=E2=80=99s conduct =
constituted a=20
breach of the Contract, we conclude that TGP=E2=80=99s damage is =
indirect or=20
consequential because it involves a relationship outside of the =
Contract=20
between TGP and Technip; namely, this claim involves a penalty TGP =
owes=20
under its contract with its utility company. See Leahy, 132 =
S.W.3d=20
at 475. As an incidental or consequential damage, it is barred by =
Article=20
19.1 and the trial court did not err by excluding =
it.
(Claim =
10.) Excessive=20
blowdown
&nbs=
p;TGP=20
contends that it is entitled to damages as a result of excessive =
blowdown.=20
TGP asserts that Technip failed to store certain components =
properly on=20
the job sites, which caused rust to form inside the mechanisms.=20
Subsequently, when gas was introduced into the new facilities, the =
seals=20
were damaged and certain elements were not tightened properly. TGP =
asserts=20
that it was forced to vent gas into the atmosphere and perform =
emergency=20
shutdowns that wasted its gas product. TGP contends that the =
vented gas=20
represents gas product that TGP was then not able to sell to its =
gas=20
customers. We construe TGP=E2=80=99s claim to be for lost=20
profits.
<=
/SPAN>Lost=20
profits can take the form of direct or consequential damages. =
Id.=20
Profits lost on the breached contract itself are classified as =
=E2=80=9Cdirect=20
damages.=E2=80=9D Id.; Hedley Feedlot, Inc. v. Weatherly =
Trust, 855=20
S.W.2d 826, 834 (Tex. App.=E2=80=94Amarillo 1993, no writ) =
(holding lost profits=20
from breach of cattle purchase contract to be direct damage). If a =
party=E2=80=99s=20
expectation of profit is incidental to the performance of the =
contract,=20
the loss of that expectancy is consequential. Naegeli Transp. =
v. Gulf=20
Electroquip Inc., 853 S.W.2d 737, 739 (Tex. =
App.=E2=80=94Houston [14th Dist.]=20
1993, writ denied) (holding profits lost as result of inability to =
use=20
electricity transformer not delivered in breach of contract to be=20
consequential damage).
<=
/SPAN>Here,=20
TGP=E2=80=99s expectation of profit through the sale of gas to its =
customers is=20
incidental to the performance of TGP=E2=80=99s Contract with =
Technip USA=20
concerning the installation of new equipment. We conclude that =
excessive=20
blowdown damages are incidental or consequential and, as such, the =
trial=20
court did not err by excluding this damage claim. =
<=
/SPAN>In=20
sum, we conclude that all of TGP=E2=80=99s challenged damages =
under this issue=20
were precluded under the terms of the Contract, as a matter of =
law,=20
except those damages awarded for =E2=80=9CProject delay =
costs=E2=80=9D and =E2=80=9CPower=20
at Station 63.=E2=80=9D Thus, the question of damages on all but =
these two claims=20
should not have been submitted to the jury and the trial court did =
not err=20
in disregarding the jury=E2=80=99s findings of damages on these =
claims. See=20
Tichacek, 997 S.W.2d at 172.
<=
/SPAN>Accordingly,=20
we sustain TGP=E2=80=99s first issue insofar as it concerns =
TGP=E2=80=99s claims for=20
=E2=80=9CProject delay costs=E2=80=9D and =E2=80=9CPower at =
Station 63.=E2=80=9D We overrule TGP=E2=80=99s first=20
issue in all other respects.
Sufficiency of the=20
Evidence Supporting the Damages
<=
/SPAN>In=20
its second issue, TGP contends that the trial court erred by =
limiting the=20
jury award because there was legally sufficient evidence to =
support the=20
jury findings of damages. We consider only those categories of =
damages=20
that we determined above are not precluded under the terms of the=20
Contract=E2=80=94those remaining damages are for =E2=80=9CProject =
delay costs=E2=80=9D and for=20
=E2=80=9CPower at Station 63.=E2=80=9D
<=
/SPAN>We=20
review a JNOV under a legal sufficiency standard, viewing the =
evidence and=20
inferences in the light most favorable to the jury=E2=80=99s =
finding. City of=20
Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005) =
(stating that=20
=E2=80=9Cthe test for legal sufficiency should be the same for =
summary judgments,=20
directed verdicts, judgments notwithstanding the verdict, and =
appellate=20
no-evidence review=E2=80=9D). We will sustain the granting of a =
JNOV based on =E2=80=9Cno=20
evidence=E2=80=9D when the record discloses one of the following: =
(1) a complete=20
absence of evidence of a vital fact; (2) the trial court is barred =
by the=20
rules of law or evidence from giving weight to the only evidence =
offered=20
to prove a vital fact; (3) the evidence offered to prove a vital =
fact is=20
not more than a scintilla; or (4) the evidence establishes =
conclusively=20
the opposite of a vital fact. Id. at 810; Tiller, =
121 S.W.3d=20
at 713 (trial court may grant JNOV if there is not evidence to =
support=20
jury finding on issue necessary to liability). More than a =
scintilla of=20
evidence exists if the evidence supporting the finding =
=E2=80=9Crises to a level=20
that would enable reasonable and fair-minded people to differ in =
their=20
conclusions.=E2=80=9D Burroughs Wellcome Co. v. Crye, 907 =
S.W.2d 497, 499=20
(Tex. 1995). With regard to damages awards, the granting of a JNOV =
is=20
proper if there is no evidence to support the jury=E2=80=99s =
damages finding and=20
if the evidence establishes the trial court=E2=80=99s damage award =
as a matter of=20
law. Cont=E2=80=99l Coffee Prods. Co. v. Cazarez, 937 =
S.W.2d 444, 450 (Tex.=20
1996).
<=
/SPAN>TGP=20
contends that =E2=80=9C[i]t was not incumbent on TGP to prove what =
=E2=80=98caused=E2=80=99 the=20
delay or prove that Technip USA was culpable in the =
delay=E2=80=9D; rather, that=20
=E2=80=9Cthe delay by itself was a breach of contract and caused =
substantial=20
damage.=E2=80=9D We disagree that TGP bears no burden to prove =
causation. Recovery=20
under a breach of contract claim requires proof of four elements: =
(1) the=20
existence of a valid contract, (2) performance or tendered =
peformance by=20
the plaintiff, (3) breach of the contract by the defendant, and =
(4)=20
damages sustained by the plaintiff as a result of the breach. =
Crowder=20
v. Sheirman, 186 S.W.3d 116, 118=E2=80=9319 (Tex. =
App.=E2=80=94Houston [1st Dist.]=20
2005, no pet.).
<=
/SPAN>TGP=20
contends that the record is replete with evidence supporting the =
jury=E2=80=99s=20
award of damages for project delay costs and for power at Station =
63.=20
<=
/SPAN>The=20
record shows that TGP submitted evidence of its project delay =
damages in=20
the form of a chart summary of the expenses it incurred by station =
for=20
each category of costs during the delay or schedule =
=E2=80=9Cslip.=E2=80=9D In addition,=20
to support the chart summary, TGP submitted a breakdown of =
expenses per=20
station, listing individual payments made on particular dates =
within each=20
category of expenses.
<=
/SPAN>In=20
addition, Winston Johnson, El Paso=E2=80=99s Senior Vice President =
of Engineering,=20
testified that he met with Technip USA in July 2000 regarding =
Technip USA=20
being behind schedule. Concrete at Station 47 had been poured =
incorrectly=20
by Technip USA and had to be redone. Johnson testified that he met =
with=20
Technip USA again in November 2000 and discussed the lack of =
progress.=20
Johnson testified that Technip USA never asked for schedule =
adjustments or=20
submitted change orders regarding the schedule. Johnson also =
testified=20
that Stations 47, 63, and 87 all had =E2=80=9Csignificant changes =
to the scope of=20
work=E2=80=9D by TGP. However, Johnson also testified that the =
project involved=20
state-of-the-art technology and that TGP=E2=80=99s engineers =
concluded that there=20
were issues with the design of the new units, namely, vibration =
problems=20
and alignment issues.
<=
/SPAN>Dewey=20
McLain, Vice President of Construction for Technip, testified that =
the=20
engineering was not on schedule, which he attributed, in part, to =
delays=20
in the document flow between Technip USA and Wartsila (the =
manufacturer of=20
the components).
<=
/SPAN>William=20
Ellison, Vice President of Engineered Product Sales for CSI (third =
party=20
that assembles the compressors on skids), testified that the =
Project=20
involved cutting-edge technology and that there were a number of =
change=20
orders. Ellison testified that there were problems with vibration =
in the=20
units. Ellison testified that his company was forced to cease work =
internally on some occasions because it would receive requests or=20
instructions to change scope without written authorization or =
assurances=20
that CSI would be paid for the changes.
<=
/SPAN>Mike=20
Hanson, an engineering and construction consultant testifying on =
behalf of=20
TGP, testified that Technip USA installed equipment improperly and =
wiring=20
had to be redone. Hanson also testified that certain components =
were not=20
stored properly, which caused rust problems and subsequent leaks, =
and that=20
Technip USA was at fault because it was in charge of the work site =
and=20
storing the machines. Hanson also testified that some of the =
delays that=20
occurred were not the fault of Technip USA and that he did not do =
a=20
critical path analysis to determine whether any certain delay was=20
attributable to Technip USA or to TGP.
<=
/SPAN>Bert=20
Pineda, TGP=E2=80=99s project manager for the Project, testified =
that Technip USA=20
was 100 percent at fault for the delay. Pineda testified that he =
met with=20
Technip USA personnel to determine the cause of the delays. =
Technip USA=20
had labor problems at Station 63. There were commissioning =
problems at=20
Stations 47, 63, and 87 that were attributable to Technip USA =
having=20
improperly stored the engines. Rust formed in the engines, which =
caused=20
broken seals and leaks in water pumps. Pineda testified that there =
were=20
delays at TGP in approving change orders, but that this was =
attributable=20
to Technip USA=E2=80=99s submission of orders that contained =
errors in the=20
structure and pricing.
<=
/SPAN>Pineda=20
also testified regarding his methodology to determine the delay =
damages.=20
Pineda testified that he added up all of the time between what was =
apparently the first day after the date of demobilization and the =
date of=20
actual substantial completion, and then attributed 100% of the =
delay in=20
this period to Technip USA. Pineda testified that he did not =
determine if,=20
within each delay period, Technip USA actually caused the delay. =
Pineda=20
stated that he did not identify whether any of the issues he =
believed=20
Technip USA did wrong were associated with any particular period =
of delay.=20
Pineda testified, for instance, that there were permitting delays =
as=20
Stations 47, 63, and 87, but that these delays were not taken into =
account. Pineda also testified that there were numerous alignment =
issues,=20
but that delays attributable to modifications were not taken into =
account.=20
Pineda testified that he did not consider what percentage of the =
delay=20
issues were attributable to TGP and what percentage could be =
attributed to=20
Technip USA.
<=
/SPAN>We=20
conclude that this evidence constitutes more than a scintilla =
because it=20
=E2=80=9Crises to a level that would enable reasonable and =
fair-minded people to=20
differ in their conclusions.=E2=80=9D Crye, 907 S.W.2d at =
499. We hold=20
that, having reviewed all of the evidence in the light most =
favorable to=20
the jury=E2=80=99s finding, the trial court=E2=80=99s granting of =
a JNOV as to the damages=20
was improper because there is evidence to support the =
jury=E2=80=99s damages=20
finding. See Wilson, 168 S.W.3d at 807; =
Cazarez, 937=20
S.W.2d at 450.
<=
/SPAN>Accordingly,=20
we sustain TGP=E2=80=99s second issue insofar as it relates to its =
damages for=20
=E2=80=9CProject delay costs=E2=80=9D and =E2=80=9CPower at =
Station 63.=E2=80=9D We overrule TGP=E2=80=99s second=20
issue in all other respects.
Parent =
Guaranty
<=
/SPAN>In=20
its third issue, TGP contends that the trial court erred by =
limiting the=20
jury award because Technip S.A. was required, pursuant to the =
guaranty it=20
executed (=E2=80=9CGuaranty=E2=80=9D), to pay all of TGP=E2=80=99s =
damages arising from Technip=20
USA=E2=80=99s breach of the Contract.
<=
/SPAN>A=20
guarantor=E2=80=99s liability is measured by the =
principal=E2=80=99s liability unless a=20
more extensive or more limited liability is expressly provided for =
in the=20
guaranty. W. Bank-Downtown v. Carline, 757 S.W.2d 111, 113 =
(Tex.=20
App.=E2=80=94Houston [1st Dist.] 1988, writ denied). To determine =
the extent of=20
the guarantor=E2=80=99s liability, we look to the language of the =
guaranty=20
agreement. Id. If the guaranty agreement is so =
worded that=20
it can be given a certain or definite legal meaning or =
interpretation, it=20
is not ambiguous, and we construe the contract as a matter of law. =
Id.=20
at 114. If uncertainty exists as to the meaning of the =
guaranty=20
contract, and if two reasonable interpretations may be made, we =
apply the=20
construction most favorable to the guarantor. Coker, 650 =
S.W.2d at=20
394 n.1 (explaining that =E2=80=9Cguarantor is entitled to have =
his agreement=20
strictly construed so that it is limited to his undertakings, and =
it will=20
not be extended by construction or implication=E2=80=9D); =
Clarke v.=20
Walker-Kurth Lumber Co., 689 S.W.2d 275, 278 (Tex. =
App.=E2=80=94Houston [1st=20
Dist.] 1985, writ ref=E2=80=99d n.r.e.).
<=
/SPAN>Here,=20
the Guaranty provides as follows, in pertinent =
part:
1. GUARANTY=20
a. On the terms and subject to the =
conditions=20
contained herein, [Technip S.A.] hereby irrevocably and =
unconditionally=20
guarantees, to and for the benefit of [TGP], the performance of =
all=20
[Technip USA=E2=80=99s] obligations contained in the [Contract] in =
accordance with=20
the terms hereof. . . .
b. If, for any reason, [Technip USA] =
shall fail or=20
be unable to duly, punctually, or fully perform the Guaranteed =
Obligations=20
or commits any breach thereof, then upon [TGP=E2=80=99s] request =
to that effect,=20
[Technip S.A.] shall forthwith perform or shall cause a third =
party=20
acceptable to [TGP] to perform such obligations and shall =
indemnify and=20
keep indemnified [TGP] against any loss, damages, costs and =
expenses=20
arising from the said failure or breach for which [Technip USA] =
may be=20
liable in accordance with the [Contract], as if it was the primary =
obligor. c.[Technip S.A.=E2=80=99s] obligations =
and liability=20
under this Guaranty shall in no event exceed [Technip =
USA=E2=80=99s] obligations=20
and liability under the [Contract].
<=
/SPAN>2.=20
OBLIGATIONS
[Technip S.A.] agrees that the =
obligations of=20
[Techip S.A.] set forth in this Guaranty shall be absolute and=20
unconditional, shall not be subject to any counterclaim,=20
set-off-deduction, . . . reduction, or defense (other than full =
and strict=20
compliance by [Technip S.A.] with its obligations hereunder) based =
upon=20
any claim [Technip S.A.] may have against [Technip USA] . . .=20
.
<=
/SPAN>The=20
trial court held Technip S.A. jointly and severally liable as a =
guarantor=20
for payment of the judgment. The parties do not dispute that =
Technip S.A.=20
is liable to TGP under the Guaranty; rather, the parties dispute =
the=20
extent of that liability.
<=
/SPAN>TGP=20
contends that the Guaranty required Technip S.A. to =E2=80=9Ckeep =
TGP whole for=20
any breach of the Contract by Technip USA=E2=80=9D and that the =
=E2=80=9Cevidence=20
conclusively established that Technip failed to do so.=E2=80=9D =
Specifically, to=20
support its position, TGP directs us to paragraph 1b of the =
Guaranty which=20
provides that =E2=80=9C[i]f, for any reason, [Technip USA] shall =
fail or be unable=20
to duly, punctually, or fully perform the Guaranteed Obligations =
or=20
commits any breach thereof=E2=80=9D Technip S.A. is required to =
=E2=80=9Cindemnify and=20
keep indemnified [TGP] against any loss, damages, costs and =
expenses=20
arising from the said failure or breach for which [Technip USA] =
may be=20
liable in accordance with the [Contract].=E2=80=9D TGP contends =
that, according to=20
the terms of the Guaranty, Technip S.A. must reimburse TGP for any =
loss,=20
damages, or costs arising from Technip USA=E2=80=99s =
breach.
<=
/SPAN>Technip=20
contends that Technip S.A. is liable to the same degree that =
Technip USA=20
is liable and no more. Technip contends, and we agree, that the =
Guaranty=20
clearly provides that =E2=80=9C[Technip S.A.=E2=80=99s] =
obligations and liability under=20
this Guaranty shall in no event exceed [Technip USA=E2=80=99s] =
obligations and=20
liability under the [Contract].=E2=80=9D This language means that =
Technip S.A. is=20
not liable to TGP beyond the level of liability imposed on Technip =
USA.=20
See Carline, 757 S.W.2d at 113=E2=80=9314. =
<=
/SPAN>TGP=20
contends that Technip=E2=80=99s focus on this language =
=E2=80=9Cignores the rules of=20
contract construction, which require a court to read the agreement =
in its=20
entirety and to harmonize its provisions.=E2=80=9D TGP points us =
to paragraph 1a,=20
which states that: =E2=80=9C[Technip S.A.] hereby irrevocably and =
unconditionally=20
guarantees, to and for the benefit of [TGP], the performance of =
all=20
[Technip USA=E2=80=99s] obligations contained in the =
[Contract].=E2=80=9D=20
<=
/SPAN>Reading=20
paragraph 1a in its entirety, as we must, we note that TGP omits=20
significant language from this provision, emphasized as=20
follows:
On the terms and subject to the =
conditions=20
contained herein, [Technip S.A.] hereby irrevocably and=20
unconditionally guarantees, to and for the benefit of [TGP], the=20
performance of all [Technip USA=E2=80=99s] obligations contained =
in the [Contract]=20
in accordance with the terms hereof. . .
(Emphasis added.) By its plain language, =
Technip=20
S.A.=E2=80=99s guarantee of Technip USA=E2=80=99s obligations is =
subject to the terms and=20
conditions contained in the Guaranty. As noted above, those terms =
include=20
that =E2=80=9C[Technip S.A.=E2=80=99s] obligations and liability =
under this Guaranty shall=20
in no event exceed [Technip USA=E2=80=99s] obligations and =
liability under the=20
[Contract].=E2=80=9D
<=
/SPAN>In=20
addition, TGP contends that it is entitled to a judgment against =
Technip=20
S.A. for the total jury award because the Guaranty prohibits =
Technip S.A.=20
from claiming any set-off or defense. TGP contends that, pursuant =
to the=20
express terms of paragraph 2, Technip S.A.=E2=80=99s obligations =
are not =E2=80=9Csubject=20
to any counterclaim, set-off-deduction, . . . reduction or =
defense=E2=80=9D and=20
therefore Technip S.A. cannot apply any reduction to the jury =
award for=20
the retainage at issue and cannot apply the consequential damages =
defense=20
asserted by Technip USA.
<=
/SPAN>A=20
closer reading of paragraph 2 indicates that Technip =
S.A.=E2=80=99s obligations=20
under the Contract are =E2=80=9Cnot subject to any counterclaim,=20
set-off-deduction, . . . reduction, or defense (other than full =
and strict=20
compliance by [Technip S.A.] with its obligations hereunder) =
based upon=20
any claim the Guarantor [Technip S.A.] may have against Contractor =
[Technip USA].=E2=80=9D (Emphasis added.) Thus, Technip S.A. =
is precluded from=20
claiming that any set-off, reduction, or defense Technip S.A. =
might have=20
against Technip USA reduces its liability to TGP. There are =
not any=20
claims at issue between Technip USA and Technip S.A. in this=20
case.
<=
/SPAN>Finally,=20
TGP contends that the Contract required Technip USA to obtain a =
guaranty=20
from its parent, Technip S.A., that was to be in the form of =
Exhibit =E2=80=9CT=E2=80=9D=20
to the Contract. TGP contends that the guaranty was to have =
=E2=80=9Cno limitation=20
of liability.=E2=80=9D TGP contends that, because Technip USA =
failed to execute a=20
guaranty in the form of Exhibit =E2=80=9CT,=E2=80=9D and instead =
executed a different form=20
of guaranty, TGP was prevented from receiving the benefit of the =
=E2=80=9Cintended=20
Technip guaranty, and TGP is entitled to recover that benefit from =
Technip=20
USA.=E2=80=9D We must enforce a contract as written, not as one =
party contends=20
that, in hindsight, it intended for to have been written. See =
CBI=20
Indus., Inc., 907 S.W.2d at 520 (ascertaining intent of =
parties =E2=80=9Cas=20
expressed in the instrument=E2=80=9D); Texaco, Inc., 35 =
S.W.3d at 665=20
(enforcing unambiguous contract as written).
<=
/SPAN>We=20
conclude that the trial court did not err in limiting Technip =
S.A.=E2=80=99s=20
liability as guarantor to the liability imposed on Technip USA.=20
<=
/SPAN>Accordingly,=20
TGP=E2=80=99s third issue is overruled.
II. =
Technip=E2=80=99s=20
Appeal
<=
/SPAN>In=20
its appeal, Technip contends that the trial court erroneously =
denied its=20
Motion for Judgment Notwithstanding the Verdict on the issue of =
TGP=E2=80=99s=20
workmanship-related damages because (1) such claims are barred by =
the=20
exclusive remedy provisions of the agreement; (2) the evidence is=20
insufficient to support the damages awarded on the realignment and =
as-built drawings claims; and (3) the trial court improperly =
applied the=20
stipulated retainage offset and improperly calculated interest and =
attorney=E2=80=99s fees.
Defective Work=20
Claims
<=
/SPAN>In=20
its first issue, Technip contends that the trial court erroneously =
denied=20
its Motion for Judgment Notwithstanding the Verdict on the issue =
of TGP=E2=80=99s=20
workmanship-related damages because such claims are barred by the=20
exclusive remedy provisions of the agreement. Specifically, the =
trial=20
court granted damages to TGP as awarded by the jury on the =
following=20
workmanship-related claims: =E2=80=9CRealignment of compressor=20
costs,=E2=80=9D =E2=80=9CReplacement and installation of operable =
oil fill systems,=E2=80=9D and=20
=E2=80=9CReview of =E2=80=98as-built=E2=80=99 =
drawings.=E2=80=9D Technip contends that there is no=20
evidence that TGP gave notice of the alleged defects to Technip =
USA, as=20
required under the Contract.
<=
/SPAN>We=20
review the denial of this portion of Technip=E2=80=99s Motion for =
Judgment=20
Notwithstanding the Verdict under a legal sufficiency standard. =
See=20
Brown v. Bank of Galveston, 963 S.W.2d 511, 513 (Tex. 1998); =
CDB=20
Software, Inc. v. Kroll, 992 S.W.2d 31, 35 (Tex. =
App.=E2=80=94Houston [1st=20
Dist.] 1998, pet. denied). A JNOV should be entered on =E2=80=9Cno =
evidence=E2=80=9D when=20
the evidence offered to prove a vital fact is no more than a =
scintilla.=20
Wilson, 168 S.W.3d at 823. We view the evidence and =
inferences in=20
the light most favorable to the jury=E2=80=99s finding. Id. =
at 807. With=20
regard to damages awards, the granting of a JNOV is proper if =
there is no=20
evidence to support the jury=E2=80=99s damages finding and if the =
evidence=20
establishes the trial court=E2=80=99s damage award as a matter of =
law.=20
Cazarez, 937 S.W.2d at 450.
<=
/SPAN>Article=20
12.3 of the Contract, Warranty of Defects, provides as follows, in =
pertinent part:
<=
/SPAN>C. Remedy. Owner shall =
provide=20
notice to [Technip USA] of the discovery or any Defective Work as =
soon as=20
practicable after such discovery.
<=
/SPAN>D. Repair by Owner. If, =
after=20
notification of a breach of warranty under Section 12.3.C., =
[Technip USA]=20
delays in commencing, continuing or completing curative action, =
then=20
[TGP], by written notice to [Technip USA], may correct such =
Defect(s) in=20
accordance with this Agreement, and [Technip USA] shall be liable =
for all=20
reasonable direct costs, charges and expenses incurred by [TGP] in =
connection with such repair or replacement and shall pay to [TGP] =
an=20
amount equal to such costs, charges and expenses upon receipt of =
an=20
invoice from [TGP].Article 12.5 of the Contract provides that =
[t]he=20
warranties provided under this [Contract] are the sole and =
exclusive=20
warranties provided by [Technip USA]. No other warranties, express =
or=20
implied, are provided by [Technip USA] hereunder. Owner=E2=80=99s =
remedies are=20
limited to those described herein.Hence, Article 12.3C requires =
TGP to=20
give notice to Technip USA of any defective work. Article 12.3D =
requires=20
that, after such notice, if Technip USA fails to cure the defect, =
TGP must=20
give written notice that it will correct the defect and Technip =
USA will=20
then be liable for such costs.
<=
/SPAN>Technip=20
contends that there is no evidence that TGP provided notice of the =
defects=20
at issue, that TGP gave Technip USA a chance to cure the defects, =
or that=20
TGP gave written notice that it would repair the defects at =
Technip USA=E2=80=99s=20
expense. Technip contends TGP did not avail itself of the warranty =
provision in the Contract, which was its exclusive remedy.=20
<=
/SPAN>As=20
a threshold matter, TGP asserts that Technip waived this issue on =
appeal=20
because it failed to plead lack of notice as an affirmative =
defense. Texas=20
Rule of Civil Procedure 94 requires the affirmative pleading of =
certain=20
specified defenses and of =E2=80=9Cany other matter constituting =
an avoidance or=20
affirmative defense.=E2=80=9D Tex. R. Civ.=20
P. 94. Generally, if an affirmative defense is not pleaded =
or tried=20
by consent, it is waived. Tacon Mech. Contractors, Inc. v. =
Grant Sheet=20
Metal, Inc., 889 S.W.2d 666, 671 (Tex. App.=E2=80=94Houston =
[14th Dist.] 1994,=20
writ denied). A general denial is insufficient because it fails to =
place=20
the plaintiff on notice that defendant intends to bring in =
evidence of an=20
independent reason why plaintiff is barred from recovery, even if =
the=20
plaintiff proves the elements of his cause of action.=20
Id.
<=
/SPAN>Here,=20
lack of notice required under the Contract is not an affirmative =
defense=20
because it does not provide an independent reason to find against =
TGP.=20
Rather, it goes directly to TGP=E2=80=99s cause of action. =
Performance of any=20
condition precedent is an essential element of a =
plaintiff=E2=80=99s breach of=20
contract case. See Assoc. Indem. Corp. v. CAT Contracting, =
Inc.,=20
964 S.W.2d 276, 283 (Tex. 1998). Here, TGP was required to plead =
that it=20
performed all conditions precedent, which then gave rise to =
Technip=E2=80=99s=20
burden to specifically deny the performance of all conditions=20
precedent.
<=
/SPAN>The=20
record shows that, in its answer, Technip =E2=80=9Cspecifically =
denied that TGP=20
satisfied the conditions precedent for its claims, including =
adherence to=20
the contractual procedures for asserting warranty-type claims =
relating to=20
alleged defects.=E2=80=9D As Technip contends, this plea was =
verified pursuant to=20
Rule 93(12), which addresses whether =E2=80=9Cnotice and proof of =
loss or claim=20
for damage has not been given as alleged.=E2=80=9D See =
Tex. R. Civ. P. 93(12). =
We=20
conclude that Technip did not waive this issue on this basis.=20
<=
/SPAN>The=20
record shows that lack of notice and exclusive remedy were raised =
in the=20
trial court through the testimony of Pineda, who stated, without,=20
objection, that no formal written notice of the alleged defects =
was given=20
by TGP. Technip also expressly raised these matters in a motion =
for=20
summary judgment. Hence, as Technip contends, these matters were =
tried by=20
consent. See Tex. =
R. Civ.=20
P. 67; Roark v. Stallworth Oil & Gas, 813 S.W.2d =
492,=20
495 (Tex. 1991).
<=
/SPAN>TGP=20
first contends that it was not required to give written notice of =
defects=20
under the Contract, contending that Article 12.2 and not Article =
12.3=20
governs this issue. We disagree.
<=
/SPAN>Article=20
12.2 concerns the =E2=80=9COwner=E2=80=99s Right to =
Inspect=E2=80=9D the work and provides that=20
=E2=80=9C[i]f, in the judgment of the Owner, any Work is =
Defective, then=20
Contractor shall, at its own expense, promptly repair or replace =
the=20
Defective Work.=E2=80=9D Article 12.3, as laid out above, directly =
concerns=20
=E2=80=9CWarranty of Defects=E2=80=9D and governs the remedies. =
Article 12.5 states that=20
these warranties are =E2=80=9Cthe sole and exclusive warranties =
provided by the=20
Contractor.=E2=80=9D Articles 12.3 and 12.5 clearly govern the =
defective work=20
claims at issue. Article 12.2 governs only TGP=E2=80=99s right to =
inspect the=20
ongoing work.
<=
/SPAN>Second,=20
TGP contends that it gave written notice of the defective work. On =
the=20
realignment claim, TPG directs us to an email concerning a =
suggested way=20
to rectify the alignment; a letter from CSI to Technip USA =
concerning=20
measures taken to realign the skids; and punch lists from Station =
47 and=20
87. As to the oil fill systems, TGP directs us to what appear to =
be=20
internal emails concerning the issue. As to the =E2=80=9Cas =
built=E2=80=9D drawings, TPG=20
direct us to the testimony of Pineda, who stated that he =
=E2=80=9Cbelieve[d] there=20
was a letter sent to Technip=E2=80=9D on this claim. These items =
do not constitute=20
evidence that TGP gave notice of defects to Technip USA pursuant =
to the=20
warranty provision in the Contract or that, after Technip USA =
failed to=20
take curative action, TGP submitted written notice that it would =
repair=20
the defects at the expense of Technip USA.
<=
/SPAN>TGP=20
does not direct us to, and we do not find, any evidence in the =
record that=20
TGP provided written notice of its defective work claims, as is =
required=20
under the Contract. We conclude that Technip conclusively proved =
it is=20
entitled to the JNOV on these claims. See Wilson, 168 =
S.W.3d at 823=20
(JNOV should be entered on =E2=80=9Cno evidence=E2=80=9D when =
evidence offered to prove=20
vital fact is no more than scintilla).
<=
/SPAN>Accordingly,=20
we sustain Technip=E2=80=99s first issue. We do not reach its =
second issue, that=20
the evidence was insufficient to support the jury=E2=80=99s =
damages findings on=20
these claims. Interest and =
Attorney=E2=80=99s=20
Fees
<=
/SPAN>In=20
its third issue, Technip contends that the trial court improperly =
(1)=20
applied the stipulated retainage offset, (2) calculated interest, =
and (3)=20
applied attorney=E2=80=99s fees.
1. Stipula=
ted=20
retainage offset
<=
/SPAN>Over=20
the course of the Project, TGP withheld a ten percent retainage =
from its=20
progress payments. The record shows that, at trial, the parties =
stipulated=20
that =E2=80=9Cthe amount of the retainage at issue between the =
parties will be=20
$1,650,000.=E2=80=9D In addition, the parties stipulated that =
=E2=80=9Cshould TGP prevail=20
in this case and be awarded damages that this $1,650,000 retainage =
amount=20
would be an offset against their damage award.=E2=80=9D =
<=
/SPAN>On=20
appeal, Technip contends that the trial court erred by failing to =
provide=20
=E2=80=9Cfor prejudgment interest on [the retainage] at the rate =
specified in=20
section 7.7 of the [Contract] for late payments.=E2=80=9D The =
stipulation is a=20
binding contract between the parties and the court. Houston =
Lighting=20
& Power Co. v. City of Wharton, 101 S.W.3d 633, 641 (Tex.=20
App.=E2=80=94Houston [1st Dist.] 2003, pet. denied). A stipulation =
is conclusive=20
on the issue, and the parties are estopped from claiming =
otherwise.=20
Id. Hence, having stipulated to the amount of the retainage =
at=20
trial, Technip cannot be heard to complain of that amount on =
appeal.=20
<=
/SPAN>In=20
addition, Technip contends that the trial court erred by failing =
to=20
subtract the stipulated retainage prior to calculating prejudgment =
interest on the judgment. We agree. The judgment reflects that =
damages and=20
interest were calculated, and then $1,650,000 retainage was =
subtracted.=20
The retainage should be subtracted from the principal amount of =
the=20
judgment prior to the calculation of pre-judgment interest. See =
Pringle=20
v. Moon, 158 S.W.3d 607, 611 (Tex. App.=E2=80=94Fort Worth =
2005, no pet.)=20
(applying offset to damage award prior to calculation of =
pre-judgment=20
interest).
2. Interes=
t
<=
/SPAN>Technip=20
contends that the trial court erred by awarding pre-judgment =
interest on=20
the defective workmanship damages because these damages constitute =
future=20
damages. Having determined that the trial court erred by denying =
Technip=E2=80=99s=20
motion for judgment notwithstanding the verdict as to =
TGP=E2=80=99s claims of=20
=E2=80=9CRealignment of=20
compressor costs,=E2=80=9D =E2=80=9CReplacement and installation =
of operable oil fill=20
systems,=E2=80=9D and =E2=80=9CReview of =
=E2=80=98as-built=E2=80=99 drawings,=E2=80=9D and thereby=20
determining that TGP take nothing on these claims, we do not reach =
the=20
issue of whether the interest on these claims constitutes interest =
on=20
future damages.
<=
/SPAN>As=20
to TGP=E2=80=99s remaining claims, Technip contends that the trial =
court generally=20
applied an incorrect rate of interest in its judgment. =
Specifically,=20
Technip contends that the trial court erred by calculating =
pre-judgment=20
interest at a rate of nine percent, which is the rate of interest =
provided=20
in the Contract that is applicable only to any late payments made =
to=20
Technip by TGP under the Contract. Technip contends that the nine =
percent=20
rate does not apply to pre-judgment interest, nor does the =
Contract=20
provide for any specific rate in the event of a breach. Technip =
contends=20
that when the interest rate is not specified in a contract, =
pre-judgment=20
interest should be calculated based on the statutory rate provided =
in=20
Texas Finance Code section 304.003(c)(1). See Tex. Fin. Code Ann. =
304.003(c)(1)=20
(Vernon Supp. 2007).
<=
/SPAN>There=20
are two legal sources for an award of pre-judgment interest: (1) =
common=20
law equitable principles and (2) an enabling statute. Johnson =
&=20
Higgins, Inc. v. Kenneco Energy, 962 S.W.2d 507, 528 (Tex. =
1998).=20
However, in Johnson, the Texas Supreme Court harmonized the =
common=20
law pre-judgment interest accrual scheme with that under the =
Finance Code.=20
Id. The court held that pre-judgment interest is calculated =
as=20
simple interest and is based on the post-judgment interest rate =
applicable=20
at the time of the judgment. Id. at 532; Tex. Fin. Code Ann. =
=C2=A7 304.103.=20
<=
/SPAN>When=20
the interest rate is not specified in a contract, pre-judgment =
interest=20
should be calculated based on the statutory rate provided in Texas =
Finance=20
Code section 304.003. See Tex. Fin. Code Ann. =
304.003;=20
ExxonMobil Corp. v. Valence Op. Co., 174 S.W.3d 303, 319 =
(Tex.=20
App.=E2=80=94Houston [1st Dist.] 2005, pet. denied) (applying =
section 304.003 in=20
breach of contract claim). Although section 304.003 expressly =
applies to=20
post-judgment rates, pre-judgment interest is computed at =
the same=20
statutory rate. See Tips. v. Hartland Developers, Inc., 961 =
S.W.2d=20
618, 624 (Tex. App.=E2=80=94San Antonio 1998, no =
pet.).
<=
/SPAN>Here,=20
the record shows that the Contract provides for interest on any =
late=20
payments due under the Contract from TGP (as the annual prime plus =
two=20
percent), but it does not provide for any rate of interest on =
damages=20
resulting from a breach of the Contract by either party. Because =
an=20
applicable interest rate is not specified in the Contract, =
pre-judgment=20
interest is calculated based on the statutory rate provided in =
Texas=20
Finance Code section 304.003. See Tex. Fin. Code Ann. =
304.003;=20
ExxonMobil Corp., 174 S.W.3d at 319.
<=
/SPAN>Section=20
304.003(b) provides that =E2=80=9C[o]n the 15th day of each month, =
the consumer=20
credit commissioner shall determine the postjudgment interest rate =
to be=20
applied to a money judgment rendered during the succeeding =
calendar=20
month.=E2=80=9D Tex. Fin. =
Code Ann.=20
304.003(c)(1). Section 304.003(c)(1) provides that, with =
exceptions not=20
applicable here, =E2=80=9Cthe postjudgment interest rate is the =
prime rate as=20
published by the Board of Governors of the Federal Reserve System =
on the=20
date of computation.=E2=80=9D Id. =C2=A7 304.003(c)(1). =
That rate is published=20
in the Texas Register by the Secretary of State. Id. =C2=A7 =
304.004.=20
This court may take judicial notice of the correct, published rate =
on=20
appeal. Office of Pub. Util. Counsel v. Pub. Util. =
Comm=E2=80=99n of Tex.,=20
878 S.W.2d 598, 600 (Tex. 1994).
<=
/SPAN>Here,=20
when the trial court entered its final judgment on May 18, 2006, =
the=20
judgment interest rate as determined by the consumer credit =
commissioner=20
was 7.75 percent. See Judgment Rate Summary,=20
http://www.occc.state.tx.us/pages/int_rates/
Index.html (last=20
visited Nov. 15, 2007). Thus, the trial court=E2=80=99s judgment =
should have=20
reflected pre-judgment interest at the rate of 7.75 percent, =
rather than 9=20
percent.
&nbs=
p;Accordingly,=20
we sustain Technip=E2=80=99s third issue as it concerns the =
pre-judgment interest=20
rate stated in the judgment.
3. Atto=
rney=E2=80=99s=20
fees
&nbs=
p; As=20
to attorney=E2=80=99s fees, Technip contends that, although the =
parties stipulated=20
to $1.1 million as reasonable attorney=E2=80=99s fees for the =
prevailing party, if=20
TGP=E2=80=99s recovery is reduced in this appeal, the =
attorney=E2=80=99s fees should=20
likewise be reduced. As TGP contends, the stipulation is a=20
binding contract between the =
parties=20
and the court. City of Wharton, 101 S.W.3d at 641. A =
stipulation is=20
conclusive on the issue, and the parties are estopped from =
claiming=20
otherwise. Id.
<=
/SPAN>Accordingly,=20
we overrule Technip=E2=80=99s third issue as it concerns =
attorney=E2=80=99s=20
fees.
CONCLUSIONWe conclude that the trial court erred by =
granting=20
judgment notwithstanding the verdict on TGP=E2=80=99s claims for =
=E2=80=9CProject delay=20
costs=E2=80=9D and =E2=80=9CPower at Station 63.=E2=80=9D We =
reverse the trial court=E2=80=99s judgment as=20
to these claims and render judgment that TGP is entitled to the =
principal=20
damages awarded by the jury on these claims. We modify the =
judgment to=20
reflect that the $1,650,000 retainage is subtracted from the =
principal=20
amount of the judgment prior to the calculation of pre-judgment =
interest.=20
In addition, we modify that portion of the trial court=E2=80=99s =
judgment awarding=20
pre-judgment interest at the rate of 9% per year to an award of=20
pre-judgment interest at the rate of 7.75% per year. See =
Tex. R. App. P. 43.2(b). =
Further,=20
we conclude that the trial court erred by denying =
Technip=E2=80=99s motion for=20
judgment notwithstanding the verdict on TGP=E2=80=99s claims for =
=E2=80=9CRealignment of compressor=20
costs,=E2=80=9D =E2=80=9CReplacement and installation of operable =
oil fill systems,=E2=80=9D and=20
=E2=80=9CReview of =E2=80=98as-built=E2=80=99 =
drawings.=E2=80=9D We reverse the trial court=E2=80=99s=20
judgment as to these claims and render judgment that TGP take =
nothing on=20
these claims.
&nbs=
p;The=20
trial court=E2=80=99s judgment is affirmed in all other respects.=20
&nbs=
p; =
; =
&=
nbsp; &n=
bsp; Laura=20
Carter Higley
&nbs=
p; =
; =
&=
nbsp; &n=
bsp; Justice
Panel =
consists of=20
Justices Taft, Hanks, and Higley. |