double-c-contracting-inc-appellantcross-appellee-v-gbc-harbour-lights ( 2011 )

NO. 12-10-00342-CV
IN THE COURT OF APPEALS
TWELFTH COURT OF APPEALS DISTRICT
TYLER, TEXAS
DOUBLE C CONTRACTING, INC., § APPEAL FROM THE 392ND
APPELLANT/CROSS-APPELLEE,
V.
§ JUDICIAL DISTRICT COURT
GBC HARBOUR LIGHTS MARINA,
LTD. and HARBOUR LIGHTS
VILLAS PHASE ONE, LTD.,
APPELLEES/CROSS-APPELLANTS § HENDERSON COUNTY, TEXAS
MEMORANDUM OPINION
Double C Contracting, Inc. sued GBC Harbour Lights Marina, Ltd., and Harbour Lights Villas
Phase One, Ltd., (collectively Harbour Lights) for breach of contract and foreclosure of a mechanic’s
and materialman’s lien. The jury found that Harbour Lights breached the contract, and the trial court
rendered judgment against Harbour Lights for $31,005.30, interest, and attorney’s fees. The trial court
denied Double C’s request to foreclose its mechanic’s and materialman’s lien. Double C raises one
issue challenging the trial court’s denial of the foreclosure of its lien. In two cross-issues, Harbour
Lights challenges the trial court’s denial of their motion for instructed verdict and the admission of
evidence regarding oral agreements or course of conduct to change contract terms. We reverse and
render.
BACKGROUND
Harbour Lights was developing a property on Cedar Creek Lake. The development required
sewer and water lines, and Harbour Lights requested that Double C submit a bid on the work. Double
C informed Harbour Lights that two methods exist for the installation of sewer and water lines: (1)
open cut and lay and (2) directional drilling. So long as problems do not arise with the open cut and
lay method, the directional drilling method is more costly. But, when working around water, the open
cut and lay method is more prone to problems, and can become even more costly than the directional
drilling method.
Harbour Lights contracted with Double C for the installation of the sewer and water lines and
chose to have Double C use the open cut and lay method. Double C agreed to install the sewer and
water lines for $143,675.50. However, the parties further agreed that Double C could charge
additional amounts for additional work requirements caused by complications with completing the
project.
Pursuant to the contract, Double C’s work was to be “substantially completed on or before
Sixty (60) working days following [Double C’s] receipt of written Notice to Proceed.” Although the
contract was signed in April, Double C did not begin work on the project until July. When laying the
sewer lines, Double C encountered problems, including some with water from the lake. Ultimately,
Double C failed to complete the work timely because of several factors: the increased difficulty of the
open cut and lay method near water, mistakes made by the engineers in charge of the project, the
location of the water main, and delay in completion of the lift station for the development.
On December 3, 2007, with ninety percent of the work complete and three more weeks of work
to go, Harbour Lights terminated its contract with Double C. At that time, Harbour Lights had paid
Double C more than $162,000.00. On December 10, 2007, Double C terminated the contract because
of Harbour Lights’ failure to pay. Double C requested that Harbour Lights make final payment for
Double C’s work in the amount of $31,005.30. Harbour Lights refused to pay the money Double C
claimed it was owed.
Harbour Lights then hired A&M Utility to finish the project. Harbour Lights paid A&M
$42,000.00, and A&M finished the project in mid-January 2008.
Because it still had not received payment from Harbour Lights by February 2008, Double C
prepared and filed a mechanic’s and materialman’s lien. Double C then sued Harbour Lights for
breach of contract, quantum meruit, and foreclosure of its mechanic’s and materialman’s lien. Harbour
Lights generally denied the allegations and alleged the affirmative defenses of payment and Double
C’s breach.
The matter proceeded to trial. During the trial, Double C abandoned its quantum meruit claim.
The jury found that Harbour Lights breached the contract, Double C did not breach the contract, and
Double C was damaged in the amount of $31,005.30. By agreement, the parties submitted the issue of
foreclosure of the mechanic’s and materialman’s lien to the court. The court denied the foreclosure.
This appeal followed.
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BREACH OF CONTRACT
In their first cross-issue, Harbour Lights argues that the trial court should have granted their
motion for instructed verdict on their affirmative defense of material breach by Double C. Harbour
Lights contends that Double C breached the contract by failing to perform the water and sewer
installation in sixty days as required by the contract. They argue this was a material breach because
time was of the essence.
STANDARD OF REVIEW
A court properly instructs a verdict if no probative evidence raises a fact issue on the material
questions in the suit. Prudential Ins. Co. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000).
A defendant establishes a right to a directed verdict when a plaintiff fails to present evidence raising a
fact issue essential to the plaintiff’s right of recovery or when the plaintiff admits, or the evidence
conclusively establishes, a defense to the plaintiff’s cause of action. Id. Thus, an appeal from the
denial of a motion for directed verdict is essentially a legal sufficiency challenge. Lochinvar Corp. v.
Meyers, 930 S.W.2d 182, 187 (Tex. App.–Dallas 1996, no pet.). A directed verdict is warranted when
the evidence is such that no other verdict can be rendered and the moving party is entitled, as a matter
of law, to judgment. Willet v. Cole, 249 S.W.3d 585, 590 (Tex. App. – Waco 2008, no pet.).
When the party who had the burden of proof at trial attacks the legal sufficiency of an adverse
finding, that party must show that the evidence establishes, as a matter of law, all vital facts in support
of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). We credit favorable
evidence if a reasonable factfinder could and disregard evidence contrary to the finding unless a
reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex. 2005).
APPLICABLE LAW
An appellate court reviews a trial court’s construction of an unambiguous contract de novo.
MCI Telecomms. Corp. v. Tex. Utils. Elec. Co., 995 S.W.2d 647, 650 (Tex. 1999). In performing a de
novo review, we exercise our own judgment and redetermine each legal issue. Quick v. City of
Austin, 7 S.W.3d 109, 116 (Tex. 1999). When construing a written contract, courts ascertain the intent
of the parties as expressed in the instrument. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. CBI
Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995). Courts examine and consider the entire writing in an
effort to harmonize and give effect to all the provisions of the contract so that none will be rendered
meaningless. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). If there is no ambiguity in the
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instrument, its construction is a question of law for the court. See id. Interpretation of a contract
becomes a fact issue, to be resolved by extrinsic evidence, only when application of pertinent rules of
construction leaves a genuine uncertainty as to which of two meanings is proper. Id. at 393-94.
Failure to perform in a timely manner constitutes a material breach where time is of the essence
in the contract. TrueStar Petroleum Corp. v. Eagle Oil & Gas Co., 323 S.W.3d 316, 319 (Tex. App. –
Dallas 2010, no pet.). Timely performance is a material term if the contract expressly makes time of
the essence or if something in the nature and purpose of the contract and the surrounding
circumstances make it apparent that parties intended that time be of the essence. Id. Thus, when
parties intend that time is of the essence to a contract, a party is excused from further performance
when the other party fails to timely perform its obligations under the contract. Mustang Pipeline Co.
v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004).
TERMS OF THE CONTRACT
Harbour Lights and Double C contracted that time was of the essence for the work being
completed by Double C. Double C agreed to substantially complete the work on or before sixty
working days. Harbour Lights was to provide a written Notice to Proceed to begin the running of the
sixty day deadline. However, the parties further agreed that “in no event will the Contract Times
commence to run later than the sixtieth day after the day of Bid opening or the thirtieth day after the
Effective Date of the Agreement, whichever is earlier.” “Effective Date of the Agreement” is defined
in the contract as the date indicated in the agreement on which it becomes effective, but if no such date
is indicated, it means the date on which the agreement is signed and delivered by the last of the two
parties to sign and deliver.
The parties further contracted that the contract times could be changed only by a change order,
and any claim for an adjustment of the contract times required written notice. Double C could request
a change to the contract times based on delays beyond the control of Double C or delays caused by the
owner, engineer, other contractors, or utility owners.
TIMELINE AND APPLICATION
According to the testimony of the parties, Harbour Lights and Double C signed the contract on
April 2, 2007. However, the contract states that it is dated May 10, 2007. Thus, pursuant to the terms
of the contract, Double C’s sixty working day time period began to run on June 9, 2007, which is thirty
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days after May 10, 2007, the effective date of the contract. Reading “working day” to mean only
Monday through Friday, the sixty day time period ended on August 31, 2007.
Accordingly, on December 3, 2007, when Harbour Lights terminated the contract, Double C
was already in breach for failure to timely perform.1 See TrueStar Petroleum Corp., 323 S.W.3d at
319. Double C clearly had worked more than sixty days on the project but had failed to substantially
complete the project. At trial, Double C estimated that it still had three more weeks of work to
substantially complete the project. However, Double C failed to present any writing extending the
deadline for it to complete the work. Thus, Harbour Lights proved as a matter of law that Double C
was in material breach of the contract when Harbour Lights terminated the contract. See id.Double C argues that the record is silent as to when, if ever, Harbour Lights provided a written
Notice to Proceed. We agree, but under the terms of the contract, this fact is of no consequence. If
Harbour Lights failed to provide a written Notice to Proceed, the deadline began to run thirty days after
the effective date of the agreement. Further, Double C argues that Harbour Lights never told Double C
that the work needed to be completed within sixty working days. Whether Harbour Lights verbally
relayed this information to Double C is immaterial because the contract specifically included the sixty
working day deadline.
Double C also argues that it presented evidence demonstrating that it was entitled to an
extension of the time deadline under the contract. Again, we agree, but under the terms of the contract,
Double C was required to make any request for an extension of time in writing. Double C presented
no evidence of any such writing. Further, even if Double C had made a written request for an
extension of time, the evidence it presented at trial does not show that Double C would have been
entitled to extend the deadline to December 3, 2007, the date that Harbour Lights finally terminated the
contract.
Finally, Double C argues that the parties’ course of conduct indicated they had extended
Double C’s time to complete the work beyond the deadline imposed by the contract. Double C
contends that evidence of the modification is not barred in this case because the trial court instructed
the jury, without objection by Harbour Lights, that “[f]ailure to comply with a term in an agreement is
excused if the parties agreed that a new term would take its place. A new term may be implied by a
course of dealing between the parties.”
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Double C presented testimony that it did not begin work on the project until the first of July. But by the
contract’s terms, Double C’s sixty day time period began on June 9. We note that even if the sixty days began running on
July 25, 2007, the date that Double C sent its first invoice to Harbour Lights, the deadline for completion of construction
expired on October 16, 2007.
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Legal sufficiency is measured against the trial court’s charge when given without objection,
even when the charge’s statement of law is incorrect. See Wal Mart Stores, Inc. v. Sturges, 52 S.W.3d
711, 715 (Tex. 2001). Assuming the above quoted portion of the charge was incorrect, a jury
instruction does not supplant the evidence. The record shows that Double C remained at work, and
Harbour Lights continued to pay Double C, for several months after the deadline expired. Double C
received its last payment from Harbour Lights on November 29, 2007. And, as previously stated,
Harbour Lights did not terminate the contract until December 3, 2007. However, there was no
evidence that Harbour Lights and Double C agreed to a new deadline. Instead, the evidence shows that
Harbour Lights wanted the sewer and water line project completed as soon as possible. And the
evidence shows that Harbour Lights stopped paying Double C in November and terminated its contract
with Double C in December. These two factors militate against any modification of the contract.
Thus, even considering the legal sufficiency of the evidence in light of the trial court’s charge, the
evidence is legally sufficient to support a finding that Double C committed a material breach of the
contract prior to Harbour Lights’ refusal to pay.
Harbour Lights proved as a matter of law that Double C was in breach of the contract when
Harbour Lights terminated the contract on December 3, 2007. See TrueStar Petroleum Corp., 323
S.W.3d at 319. Consequently, Harbour Lights was entitled to a directed verdict, and the trial court
erred in ruling to the contrary. See Prudential Ins. Co., 29 S.W.3d at 77. We sustain Harbour Lights’
first cross-issue. Because Harbour Lights’ first cross-issue is dispositive, we need not reach its second
cross-issue or Double C’s issue. See TEX. R. APP. P. 47.1.
DISPOSITION
Having sustained Harbour Lights’ first cross-issue and determined that it is dispositive, we
reverse the judgment of the trial court and render judgment that Double C take nothing from Harbour
Lights.
BRIAN HOYLE
Justice
Opinion delivered July 29, 2011.
Panel consisted of Worthen, C.J., Griffith, J. and Hoyle, J.
(PUBLISH)
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