Danford Maintenance Service, Inc. v. the Dow Chemical Company, a Delaware Corporation ( 2013 )

Affirmed and Memorandum Opinion filed September 12, 2013.
In The
Fourteenth Court of Appeals
NO. 14-12-00507-CV
DANFORD MAINTENANCE SERVICE, INC., Appellant
V.
THE DOW CHEMICAL COMPANY, A DELAWARE CORPORATION,
Appellee
On Appeal from the 412th District Court
Brazoria County, Texas
Trial Court Cause No. 48875
MEMORANDUM OPINION
In eight issues, Danford Maintenance Service, Inc. contends the trial court
erred by granting summary judgment against Danford on its quantum-meruit and
breach-of-contract claims against The DOW Chemical Company, a Delaware
Corporation. We affirm.
I. BACKGROUND
DOW is a chemical company which maintains a facility in Freeport, Texas,
called “Texas Operations – TXO” (“Texas Operations”). Danford is a Texas
corporation which provides mowing, landscaping, and vegetation-control services.
In 1998, Dow and Danford entered into a five-year contract for Danford to provide
services at Texas Operations. The parties entered into a new five-year contract in
1999. Danford alleges that under the 1998 and 1999 contracts, it performed
herbicide services on at least 1600 acres at Texas Operations.
In 2002, DOW terminated Danford’s contract and began using another
service provider. In 2005, DOW entered into a new, three-year contract with
Danford to perform services at Texas Operations (“the 2005 Contract”). The 2005
Contract provided that Danford would perform certain “in-scope” services at a
fixed rate of $105,250 per month and certain “out-of-scope” services at fixed rates
on an as-requested basis. The 2005 Contract also included a provision stating,
“The non-aquatic herbicide application program at Dow consists of clear ground
spraying of an estimated 1000 acres of rock-covered terrain.” Danford alleges this
provision “understated the area requiring herbicides by at least 603 acres.”
According to Danford, it applied herbicides to over 1600 acres but was paid for
spraying 1000 acres. Danford asserts that it raised this issue several times with
DOW, but DOW responded the additional acreage was included within in-scope
services under the 2005 Contract.
In 2007, DOW terminated the 2005 Contract. Thereafter, Danford filed suit
alleging (1) DOW breached the 2005 Contract by failing to provide the requisite
notice before terminating the contract and (2) DOW owed Danford payment under
a quantum-meruit theory for herbicide services performed on the additional 600
acres. Danford later amended its petition to assert, as an alternative to the
2
quantum-meruit claim, that DOW breached the 2005 Contract by failing to pay
Danford for spraying the additional 600 acres because this work was included as
out-of-scope services.1
DOW moved for summary judgment on Danford’s claims. In its motion for
summary judgment pertaining to quantum meruit, DOW argued quantum meruit
based on Danford’s spraying the additional 600 acres is barred because the 2005
Contract unambiguously pertained to all herbicide services performed at Texas
Operations—not just to a specified amount of acreage. Danford responded by
noting the “estimated 1000 acres” provision and presenting parol evidence that
DOW and Danford negotiated for herbicide services for 1000 acres, not 1600
acres. The trial court sustained DOW’s parol-evidence objections to Danford’s
evidence and granted DOW’s quantum-meruit motion.
In its motion for summary judgment pertaining to breach of contract, DOW
argued no breach occurred because (1) Danford’s spraying the additional 600 acres
was in-scope services, for which Danford was paid in full, (2) Danford failed to
comply with a condition precedent requiring timely invoices for out-of-scope
services, and (3) Danford failed to comply with a condition precedent requiring
DOW’s pre-approval for out-of-scope services. The trial court granted the motion
without specifying its reasons.
Additionally, Danford moved for summary judgment on its breach-of-
contract claim regarding DOW’s alleged failure to provide sufficient notice before
terminating the 2005 Contract. The trial court granted Danford’s motion as to
DOW’s liability for failing to provide notice of termination.
1
Danford asserted other claims against DOW, all of which were disposed of by summary
judgment. On appeal, Danford does not raise any issue relative to these claims.
3
On April 16, 2012, the trial court resolved all remaining issues in a “FINAL
JUDGMENT,” which referenced and “made final” the court’s previous
interlocutory summary judgments and awarded Danford damages regarding
DOW’s breach of contract for failing to provide notice of termination. Danford
now appeals, challenging the trial court’s summary judgment relative to Danford’s
quantum-meruit and breach-of-contract claims based on herbicide services
pertaining to the additional 600 acres.2
II. SUMMARY JUDGMENT
A. Standard of Review and Standard of Contract Construction
We review summary judgments de novo. Joe v. Two Thirty Nine Joint
Venture, 145 S.W.3d 150, 156–57 (Tex. 2004). When the trial court grants
summary judgment without specifying on what grounds, we will affirm if any of
the independent grounds presented is meritorious. FM Props. Operating Co. v.
City of Austin, 22 S.W.3d 868, 872–73 (Tex. 2000). We take as true all evidence
favorable to the nonmovant and indulge every reasonable inference and resolve
any doubts in the nonmovant’s favor. Joe, 145 S.W.3d at 157.
A party moving for traditional summary judgment must establish there is no
genuine issue of material fact and it is entitled to judgment as a matter of law. See
Tex. R. Civ. P. 166a(c); Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d
211, 215–16 (Tex. 2003). If the movant establishes a right to summary judgment,
the burden shifts to the nonmovant to present evidence raising a material fact issue.
See M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000)
(per curiam); Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995).
2
DOW initially filed a cross-appeal challenging the trial court’s judgment awarding
damages to Danford but later filed a motion to dismiss the cross-appeal, which we granted.
4
The issue of whether a contract is ambiguous is a question of law that we
review de novo. Bowden v. Phillips Petroleum Co., 247 S.W.3d 690, 705 (Tex.
2008). When interpreting a contract, our primary concern is to ascertain and give
effect to the written expression of the parties’ intent. Italian Cowboy Partners,
Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011). We must
examine and consider the entire writing in an effort to harmonize and give effect to
all provisions so that none will be rendered meaningless. Id. We give terms their
plain and ordinary meaning unless the contract indicates that the parties intended a
different meaning. Dynegy Midstream Servs., Ltd. P'ship. v. Apache Corp., 294
S.W.3d 164, 168 (Tex. 2009). We also bear in mind the particular business
activity to be served, and when possible and proper to do so, we avoid a
construction that is unreasonable, inequitable, and oppressive. Frost Nat’l Bank v.
L & F. Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005) (per curiam).
If a contract is worded so that it can be given a certain or definite meaning,
then the contract is unambiguous, and we will construe it as a matter of law. El
Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802, 806 (Tex. 2012).
If the contract is subject to more than one reasonable interpretation after applying
the pertinent rules of contract construction, then the contract is ambiguous and
there is a fact issue regarding the parties’ intent. Id. An ambiguity does not arise
simply because the parties advance conflicting interpretations of the contract; for
an ambiguity to exist, both interpretations must be reasonable. Wal-Mart Stores,
Inc. v. Sturges, 52 S.W.3d 711, 728 (Tex. 2001). If a contract is unambiguous, we
must enforce it as written without considering parol evidence. See David J. Sacks,
P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (per curiam).
5
B. Quantum Meruit
We begin with Danford’s second issue, in which it challenges the trial
court’s summary judgment pertaining to quantum meruit. The parties agree that,
as a general rule, a plaintiff cannot seek equitable recovery in quantum meruit for
valuable services rendered if an express contract covers those services. See Truly
v. Austin, 744 S.W.2d 934, 936 (Tex. 1988); Bluelinx Corp. v. Tex. Const. Sys.,
Inc., 363 S.W.3d 623, 627 (Tex. App.—Houston [14th Dist.] 2011, no pet.).3 The
rationale behind this rule is that parties should be bound by their express
agreements, and recovery under an equitable theory is generally inconsistent with
an express agreement which already addresses the matter. Dardas v. Fleming,
Hovenkamp & Grayson, P.C., 194 S.W.3d 603, 620–21 (Tex. App.—Houston
[14th Dist.] 2006, pet. denied).
Hence, if the 2005 Contract covered Danford’s herbicide services to the
alleged 600 additional acres, Danford may not recover in quantum meruit.
Danford contends the following provision of the 2005 Contract either
unambiguously provided that herbicide services applied to only 1000 acres or is
ambiguous on the issue and must be decided by the fact-finder: “The non-aquatic
herbicide application program at Dow consists of clear ground spraying of an
estimated 1000 acres of rock-covered terrain.” (emphasis added).4 In considering
3
The Truly court explained some exceptions to this general rule, none of which apply in
the present case. 744 S.W.2d at 936–37.
4
Danford also relies on the trial court’s “finding” in one of its orders that the 2005
Contract is ambiguous regarding the scope of herbicide services. However, because we
determine as a matter of law whether a contract is ambiguous, we do not defer to the trial court’s
ambiguity determination. See Bowden, 247 S.W.3d at 705; see also EOG Res., Inc. v. Hanson
Prod. Co., 94 S.W.3d 697, 701 (Tex. App.—San Antonio 2002, no pet.) (“The interpretation of
an unambiguous contract is a question of law and we are not required to defer to any
interpretation afforded by the trial court.”).
6
Danford’s argument, we interpret this provision within the context of the entire
2005 Contract.
1. The 2005 Contract
The 2005 Contract began with “ARTICLE I – STATEMENT OF
SERVICES” which included:
1.1 Description – As requested by DOW from time to time during
the term of this Agreement, [Danford] shall furnish landscaping,
mowing, and vegetation control services and competent labor and
supervision to perform related management of such in a workmanlike
manner, any or all services as described in Exhibit A,5 attached to and
made part of this Agreement, (herein called “Services”).
Article IV, governing costs of services, provided, “For the performance of
Services under this Contract, DOW shall pay [Danford] as shown in Exhibit B”
and stated that Exhibit B would set a fixed monthly rate for services (meaning in-
scope services) and rates for out-of-scope services. Article V, governing
invoicing, required Danford to submit monthly invoices on which in-scope and
out-of-scope charges were listed separately. Article VI, governing Danford’s
responsibilities, provided,
No Contractor Personnel are to be furnished and no Services are to be
performed under this Contract by [Danford] unless specifically
provided by this Agreement or unless otherwise expressly authorized
in writing by DOW. Mowing of areas not specified in the Site
Specifications or contained within this Contract shall not be done
unless prior written authorization is received from the Site Contract
Administrator.
The 2005 Contract included Exhibits A, B, and C. Exhibit A, entitled,
“Description of Services,” indicated that Danford is to provide a variety of
property-maintenance services, including:
5
Note that this provision states Exhibit A describes services.
7
Mowing
Landscaping
Bed maintenance of existing beds
Herbicide application
Vegetation control
Bed irrigation
Monitoring of irrigation system integrity
Pest control for plants and landscaping beds
[Danford] is to provide labor, equipment, tools, materials, and
supervision to prioritize, plan, and execute above services, as may be
required, in order to meet the Site Specifications detailed in Exhibit C
of this Agreement.6
(emphasis added). Danford was required “to furnish all herbicide chemicals
required for the site.” Additionally, Exhibit A included the following
“LOCATION OF SERVICES” provision:
Services under this Agreement are to be performed at the following:
Dow locations – Freeport, TX (referred to as Texas Operations
- TXO).
During the term of this Contract, the scope may be modified to add or
to delete specific DOW and DOW Affiliate sites/locations only as
may be specified in another Exhibit or Rider or per DOW’s prior
written approval.
In a “RESPONSIBILITIES” section, DOW agreed to provide assistance to
Danford “to define work areas” and “[m]eet annually with [Danford] on a per site
basis to develop the herbicide inventory and strategy for the next year.” Danford’s
responsibilities included the following:
6
Note that this provision states Exhibit C describes site specifications for the services.
8
Scheduling crews and equipment so as to control all vegetation in all
sites within scope at all times. [Danford] must be self-directed and
respond to vegetation outbreaks, as required.
Providing the Site Contract Administrator with a Bare Ground
Application Program and a Schedule for the site. This shall include a
list of herbicides to be used for the Calendar year and a schedule for
spraying the site, with a completion of first application of herbicides
by the end of the first week in April.
(emphasis added).
Section IV of Exhibit A pertains to “OUT OF SCOPE ITEMS” and provided
in relevant part,
‘Out of Scope Work’ is defined as work that requires specific
scheduling (outside of normal daily routine) of personnel and
equipment for a specific time period. Any Out of Scope Work must
be pre-approved by the Site Contract Administrator prior to
commencement.
The following items are to be considered as out of scope of this
Agreement, and, as such, DOW will incur additional charges, as stated
in Exhibit B, for the items listed below. Approval from the Site
Contract Administrator must be obtained by [Danford] prior to
furnishing these items.
Tree clearing
Palm tree trimming
New bed creation
Installation of new shrubs
Water hyacinth removal
Maintenance of in-ground irrigation systems
Wind and storm clean-up
Under Exhibit B, DOW agreed to pay Danford a fixed fee for in-scope
services of $1,263,000 per year ($105,250 per month). This provision also
contained the statement, “All services are considered to be within scope of the
9
Contract unless it is clearly specified as an out-of-scope item.” Next in Exhibit B
was an “OUT OF SCOPE SERVICES” fees chart, providing specific rates for
equipment and labor for out-of-scope services including, among other items,
Slope Mower
Spray Rig (500 Gallon)
Tractor and 15’ Mover
Tractor and 6’ Finish Mower
Tractor and 6’ Mower
Powered Hand Tool (e.g. . . . weed eater, back pack sprayer . . . )
Exhibit C—which, as we have noted in footnotes 5 and 6, was designated by
prior provisions as the exhibit describing site specifications for Danford’s
services—contained several scope-related charts. An “IN-SCOPE Work” chart
pertained to “[a]ll mowing, landscaping and vegetation control at the following
sites per provided maps” and listed fourteen specific sites.
The next chart, “OUT OF SCOPE Work,” provided,
Fence building/mending-Barb wire fencing & gates, fence line
clearing
Water Hyacinths: Removal and Herbicide Spraying
Environmental Issues
Brush Clearing
Tree Clearing
Addition of new properties
Maintenance of all in-ground irrigation systems
Palm Tree Trimming: Trim every other year to every third year as
required to approximately 5 to 7 branches on top of trees.
10
Thereafter is a chart entitled “Weed Control Guidelines,” which provided,
Weeds visible to the Plant populace are unacceptable in Texas
Operations. All areas covered by rock and in crevices between
concrete slabs and buildings shall be kept clear of grass and weeds
with herbicides. Property owners should contact the Site Contract
Administrator to communicate a weed control problem in their area.
Weeds will be controlled through five different functions under the
same Contractor as described below[.]
The chart then listed the five functions, each with its own explanation: (1) “Large
Tractor Mowing,” (2) “Lawn Service,” (3) “Manicure Mowing,” (4)
“Landscaping,” and (5) “Herbicide Application.” The explanation for “Herbicide
Application” was as follows:
Our herbicide application program is a clear-ground program. All
areas covered by rock will be kept clear of grass and weeds with
herbicides. Areas not covered with rock should not be sprayed due to
prevent erosion [sic]. Weeds in these areas will be dealt with by one
of the mowing or landscaping programs above. Weeds are not
acceptable. Contact the Site Contract Administrator with any weed
problem.
(emphasis added).
The next chart in Exhibit C was entitled “In-Scope Herbicide Application
Program” and forms the basis of Danford’s argument:
In-Scope Herbicide Application Program
Herbicide Application Program Scope
The non-aquatic herbicide application program at Dow
consists of clear ground spraying of an estimated 1000 acres of
rock-covered terrain. This includes all Security Fence around
Plants A, B, Oyster Creek, and Salt Dome Operations.
This includes road shoulders, above ground OSBL Pipe ways,
parking area, rail road tracks, ditches, well head pads, valve
settings, and process areas inside Plants A, B, OCD, Interplant
11
and Salt Dome Operations plant sites and some of the enjoining
properties.
All clear ground areas shall be treated once yearly with an
application of herbicide and then as required for maintaining a
clear ground. (warranty work)
(emphasis added). The chart also included provisions detailing when Danford
should apply herbicides, the type of herbicides to be applied, and that an annual
October meeting would be held between the parties to discuss the impending
year’s “Bare Ground Application” strategy. Several additional charts followed,
pertaining to mowing, landscaping, weed control, and other related services at
various locations.
2. Analysis
Based on the above-described provisions, we conclude a reasonable
interpretation of the 2005 Contract is that the parties intended for Exhibit C to
specify the scope of in-scope herbicide services: as noted in footnotes 5 and 6, a
trail of provisions pointed to Exhibit C as the exhibit which described site
specifications for Danford’s services. Danford contends the “estimated 1000
acres” provision in Exhibit C limited in-scope herbicide services to approximately
1000 acres. We reiterate that a provision cannot be read in isolation but must be
considered in the context of the whole contract. See In re Ford Motor Co., 211
S.W.3d 295, 298 (Tex. 2006); see also Italian Cowboy, 341 S.W.3d at 333 (“[W]e
must 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.” (citation omitted)).
As expressed above, the “IN-SCOPE Work” chart in Exhibit C pertained to
“[a]ll mowing, landscaping and vegetation control at the following sites per
provided maps” and listed fourteen specific sites. Additionally, the “Weed Control
12
Guidelines” chart in Exhibit C provided, “All areas covered by rock and in
crevices between concrete slabs and buildings shall be kept clear of grass and
weeds with herbicides,” and “Our herbicide application program is a clear-ground
program. . . . Weeds are not acceptable.” In light of these clear, strongly-worded
provisions, it would be unreasonable to construe the “estimated 1000 acres”
provision as limiting the scope of herbicide application relative to the fourteen sites
listed in the “IN-SCOPE Work” chart. The only reasonable construction of the
“estimated 1000 acres” provision is as an estimate of the amount of rock-covered
terrain rather than a contractual limitation.7 Our holding should not be interpreted
to mean that use of imprecise modifiers such as “estimated” or “approximately”
automatically indicates a contractual provision is not intended to have limiting
effect.8 However, construing the 2005 Contract as a whole, we conclude the
“estimated 1000 acres” provision cannot reasonably be interpreted as limiting the
scope of in-scope herbicide application to 1000 acres.
7
DOW also provided a non-binding, imprecise example in the “SAFETY” article of the
2005 Contract, which stated, “In general, pipelines right-of-ways are non-hazardous and meter
stations are hazardous areas. DOW representatives will define safe work permit requirements
during the course of work.” Clearly, because of the modifier “in general,” the parties were not
agreeing that all pipelines right-of-ways were non-hazardous and all meter stations were
hazardous. Instead, DOW was explaining a general circumstance for Danford’s benefit but not
something for which DOW was contractually bound. The parties’ use of the modifier
“estimated” to describe “1000 acres” is analogous.
8
Construing instruments with materially different language from the 2005 Agreement,
several courts have held such modifiers had a reasonable limiting effect. See, e.g., Caviness
Packing Co., Inc. v. Corbett, 587 S.W.2d 543, 546 & n.3 (Tex. Civ. App.—Amarillo 1979, writ
ref’d n.r.e.) (“[U]se of the term ‘approximately’ in specifying the weights gives some latitude in
that [cattle] could weigh slightly more or less than 300 to 325 pounds, but a difference of 100
pounds in a steer of the size in question exceeds the permissible ambient of the approximation.”);
Syring-Workman, Inc. v. Colbert, 532 S.W.2d 708, 710 (Tex. Civ. App.—San Antonio 1976,
writ ref’d n.r.e.) (“Clearly ‘approximately’ contemplates the possibility of a reasonable variance
between the stated figure and the final cost.”); Lindsey v. Gamble, 359 S.W.2d 520, 522 (Tex.
Civ. App.—Amarillo 1962, writ ref’d n.r.e.) (concluding clause in couple’s will—“In the event
that our deaths should occur simultaneously, or approximately so”—not triggered because their
respective deaths occurred 72 days apart, which “cannot be said to have occurred at
approximately the same time within the meaning of the will”).
13
However, neither party presented evidence regarding whether the 600 acres
about which Danford complains were included within any of the fourteen sites. If
the 600 acres were located outside the fourteen sites, it is clear from Exhibit C that
herbicide application to this acreage was not within the ambit of in-scope herbicide
application. Nonetheless, even if Danford’s herbicide application to the 600 acres
was not in-scope, Danford’s quantum-meruit claim would fail if these services
were included under the out-of-scope provisions.
As noted above, Exhibits A and C provided that out-of-scope services
included services such as fence maintenance, water hyacinth control,
environmental issues, tree and brush clearing, and “[a]ddition of new properties.”
These out-of-scope provisions did not explicitly mention mowing or herbicide
application. However, “[a]ddition of new properties” is broad enough to cover
situations in which DOW instructs Danford to provide mowing, landscaping, or
weed-control services to areas outside the fourteen sites specified in the “IN-
SCOPE Work” chart in Exhibit C. The out-of-scope rates chart in Exhibit B
included rates for “Spray Rig (500 gallon),” back pack sprayer, lawn mowers, and
weed eater, and hourly wage rates for workers. Hence, the parties clearly
anticipated there might be situations in which DOW would request Danford to
provide mowing or weed-control services beyond the range of in-scope services.
The parties agreed to rates for these out-of-scope services, thus avoiding the need
for further negotiations should such services become necessary. Accordingly, the
parties intended that any non-in-scope herbicide services would be covered by the
2005 Contract as out-of-scope services.
We recognize that the out-of-scope rates chart does not include rates for
herbicide chemicals. However, this does not establish that the parties intended for
herbicide application to be excluded from out-of-scope services. In the in-scope
14
services provision of Exhibit A, the parties agreed, “[Danford] is to furnish all
herbicide chemicals required for the site.” Moreover, in the out-of-scope services
provision of Exhibit A, the parties agreed, “Unit rates [listed in Exhibit B] are to
include labor, equipment, travel time, and anything else that may be required to
perform the stated activity or task.” These provisions indicate that Danford would
supply chemicals at its own expense whenever performing herbicide application
under the 2005 Contract—even if out-of-scope.
In sum, we conclude the parties unambiguously intended for all mowing,
weed-eating, and vegetation-control services (including herbicide services) to be
covered by the 2005 Contract as either in-scope services or out-of-scope services.
The parties did not intend for there to be situations in which Danford performed
extra-contractual mowing, weed-eating, and vegetation-control services at Texas
Operations. Therefore, Danford’s provision of herbicide services to the additional
600 acres was covered by an express contract and does not support equitable
recovery in quantum meruit. See Truly, 744 S.W.2d at 936. The trial court
properly granted summary judgment against Danford on its quantum-meruit claim.
We overrule Danford’s second issue.9
In its third issue, Danford argues the trial court erred by sustaining DOW’s
objections to Danford’s parol evidence demonstrating that the parties did not
intend for herbicide services to the additional 600 acres to be covered by the 2005
Contract. However, because these services were unambiguously covered under the
2005 Contract, Danford’s parol evidence to the contrary varies the terms of the
2005 Contract and thus may not be considered. Houston Exploration Co. v.
Wellington Underwriting Agencies, Ltd., 352 S.W.3d 462, 469 (Tex. 2011) (“The
9
We also overrule that portion of Danford’s first issue in which Danford broadly
contends the trial court erred by “entering final judgment on its prior interlocutory order[]”
pertaining to quantum meruit.
15
[parol-evidence] rule does not prohibit consideration of surrounding circumstances
that inform, rather than vary from or contradict, the contract text.”); see also
Anglo-Dutch Petroleum Int’l, Inc. v. Greenberg Penden, P.C., 352 S.W.3d 445,
452 (Tex. 2011) (“Given our conclusion that the agreement was not ambiguous,
this evidence [of surrounding circumstances] is of limited relevance. It cannot be
used to show the parties’ motives or intentions apart from the Fee Agreement; it
can only provide the context in which the agreement was reached.”); Frontier
Logistics, L.P. v. Nat’l Prop. Holdings, L.P., --- S.W.3d ---, No. 14-11-00357-CV,
2013 WL 1683603, at *6 (Tex. App.—Houston [14th Dist.] Apr. 18, 2013, no pet.
h.) (“The Plank Parties also rely upon parol evidence regarding the negotiating and
drafting of the Settlement Agreement. But, to the extent that this parol evidence
contradicts the plain meaning of the Settlement Agreement, this evidence is
incompetent to change the agreement’s unambiguous language.”). We overrule
Danford’s third issue.
C. Breach of Contract
In its fourth issue, Danford generally contends the trial court erred by
granting summary judgment in favor of DOW on Danford’s claim that DOW
breached the 2005 Contract by refusing to pay for Danford’s out-of-scope
herbicide application to the additional 600 acres. Because the summary-judgment
evidence does not reflect whether Danford’s herbicide application to the additional
600 acres came within the fourteen in-scope sites (and thus were unambiguously
in-scope services) or did not come within these sites (and thus were
unambiguously out-of-scope services), we must address Danford’s issues regarding
its breach-of-contract claim.
In its motion for summary judgment, DOW argued that, even if Danford’s
herbicide services to the 600 additional acres were considered to be contractual
16
out-of-scope services, Danford is barred from recovering payment for these
services because it failed to comply with the condition precedent specified in
Article V of the 2005 Contract:
In the event that [Danford] determines that services were provided to
DOW under this agreement but were not invoiced, DOW agrees to
discuss and address the payment for these services provided [Danford]
has brought them to DOW’s attention within six months of the
services being provided. DOW will not pay for any uninvoiced
services that were performed if [Danford] does not invoice DOW
within this six-month timeframe.
1. Prior Material Breach Argument Waived
In its sixth issue, Danford contends it was excused from complying with
Article V because DOW committed a prior breach by terminating the 2005
Contract without proper notice. However, Danford waived this affirmative defense
by failing to raise it in response to DOW’s motion. See McLernon v. Dynegy,
Inc., 347 S.W.3d 315, 323–24 (Tex. App.—Houston [14th Dist.] 2011, no pet.) (“If
the defendant wishes to assert an affirmative defense to defeat summary judgment
on the plaintiff’s claim, he must urge the defense in his response and present
sufficient evidence to create a fact issue on each element.”); City of The Colony v.
N. Tex. Mun. Water Dist., 272 S.W.3d 699, 746 (Tex. App.—Fort Worth 2008, pet.
dism’d) (explaining prior material breach is an affirmative defense). We overrule
Danford’s sixth issue.
2. No Waiver of Condition Precedent
In its seventh issue, Danford asserts three reasons why DOW waived its
right to insist on compliance with Article V. DOW argues Danford was not
allowed to raise waiver because Danford did not plead waiver in its live petition.
However, DOW did not object on the basis of lack of pleadings when Danford
asserted waiver in its response to DOW’s motion for summary judgment. Thus,
17
Danford’s waiver argument was “tried by consent.” See Via Net v. TIG Ins. Co.,
211 S.W.3d 310, 313 (Tex. 2006) (holding parties tried by consent unpleaded
discovery rule in summary-judgment proceeding because movant did not object
when nonmovant raised discovery rule in its response).
Waiver is the intentional relinquishment of a known right or intentional
conduct inconsistent with claiming that right. Sun Exploration & Prod. Co. v.
Benton, 728 S.W.2d 35, 37 (Tex. 1987). Waiver of a condition precedent may be
inferred from a party’s conduct. Id. The failure to satisfy a condition precedent
may be waived by the failure to insist on performance. See Ames v. Great S. Bank,
672 S.W.2d 447, 449 (Tex. 1984); Kennedy v. McMullen, 39 S.W.2d 168, 174
(Tex. Civ. App.—Beaumont 1931, writ ref’d). Additionally, when the obligation
of a party to a contract depends upon a certain condition being performed, and the
fulfillment of the condition is prevented by the act of the other party, the condition
is considered fulfilled. Dorsett v. Cross, 106 S.W.3d 213, 217 (Tex. App.—
Houston [1st Dist.] 2003, pet. denied). Although waiver is generally a question of
fact, it may become a question of law where the facts and circumstances are
admitted or clearly established. Straus v. Kirby Court Corp., 909 S.W.2d 105,
108 (Tex. App.—Houston [14th Dist.] 1995, writ denied).
First, Danford argues DOW waived its right to demand compliance with
Article V by persistently maintaining in its pleadings, motions, and interrogatory
responses that Danford’s herbicide services to the 600 additional acres were in-
scope services and failing to insist Danford submit the required invoices. Danford
notes that DOW did not allege Danford’s failure to comply with Article V until its
sixth amended answer, over three years into the litigation. Danford also points out
that it sent an interrogatory request asking DOW,
18
If you contend [Danford] did not comply with all terms of the
Contract, please identify the Contract provision, the manner in which
you contend [Danford] did not comply with the Contract provision,
the date and the time of the alleged non-compliance.
DOW responded that Danford did not comply with provisions regarding Danford’s
workers and badging requirements—DOW did not refer to Article V or any notice
or invoicing requirements. Danford additionally presented summary-judgment
evidence that DOW insisted Danford’s herbicide services to the 600 additional
acres were not out-of-scope services.
We disagree that the foregoing factors raise a fact issue on whether DOW
failed to insist on compliance with Article V. DOW’s position that the
complained-of services were in-scope does not support directly or inferentially that
DOW was waiving its right to insist on compliance with the invoicing condition
precedent for the services if they were out-of-scope. We also note that Danford did
not allege a breach-of-contract claim based on the herbicide application to the
additional 600 acres being out-of-scope services until it filed a fifth amended
petition in August 2010—almost two years after it filed its original petition. Until
that time, Danford’s only claim regarding these services was its quantum-meruit
claim, which DOW contended failed because the services were in-scope.
Furthermore, DOW responded to the interrogatory in September 2009, almost a
year before Danford alleged a breach-of-contract claim for which Article V was
relevant.
Second and similarly, Danford contends DOW, by continually asserting that
herbicide services to the 600 acres were in-scope services, acted in a manner
inconsistent with a belief that DOW needed to submit invoices for the additional
services. We reject this argument because DOW’s asserted belief that the services
were in-scope does not infer DOW was waiving the invoicing condition precedent
19
required if the services were out-of-scope: these are mutually exclusive concepts.
Danford’s argument might gain more traction if DOW had asserted the herbicide
services to the 600 acres were out-of-scope services and, through its words or
conduct, led Danford to believe compliance with the invoicing requirements was
unnecessary. However, DOW’s insistence that the complained-of services were
in-scope services is simply not conduct inconsistent with the invoicing
requirement.
Third, Danford contends that DOW’s “belligerent insistence that the In-
Scope provision of the contract covered the additional acreage effectively
prevented Danford from seeking payment under the contract.” In support of this
argument, Danford presented deposition testimony of Danford’s president, who
testified he would discuss maps with DOW at monthly meetings and at some point
was told DOW did not want to discuss expanding the maps to cover additional
areas Danford claimed it was servicing. Danford’s president also testified his
friend, the DOW employee who mapped the sites, stated that DOW told the
employee, “[D]on’t talk about it [the amount of acreage] anymore if you want to
stay out here.” Furthermore, in an affidavit, Danford’s president averred,
2. During our 2005 contract with Dow I brought up the extra acreage
that we were treating with herbicides at Dow’s request to Dow at our
monthly progress meetings within a month or two if [sic] us
encountering the extra acreage on our spraying efforts. These
meetings were initially held with Bruce Broadway and later with Gary
Waldrep. I continued to bring this issue up to Dow at nearly every
monthly progress meeting through October 2007 and at other times
during the contract.
3. I also brought this to Oscar Greak’s attention several times in
2006 and continued my requests in 2007. Oscar was in charge of the
Managed Services Group that handled our contract until Kathy Krupp
took over late in 2007. Oscar attended several of the monthly
progress meetings.
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4. Dow refused to acknowledge that we were treating more than
1,000 acres with herbicides and insisted that the extra work we were
performing was not out of scope services. They certainly would not
have paid any invoices submitted for these services.
Danford contends DOW waived the invoicing requirement of Article V by
insisting that the subject herbicide services were not out-of-scope services, thus
preventing Danford from submitting invoices for out-of-scope services. In support
of its position, Danford cites Donaldson v. Digital General System, 168 S.W.3d
909 (Tex. App.—Dallas 2005, pet. denied).
In Donaldson, plaintiff’s contract with his former employer contained a
provision requiring plaintiff to provide written notice in order to exercise his stock
options. Id. at 912, 915. Several months after his employment terminated,
plaintiff inquired about his stock options with employer’s stock administrator. Id.
The administrator informed plaintiff that employer’s records indicated he had no
active stock options. Id. The administrator referred the matter to employer’s
CEO, who advised plaintiff his options had terminated. Id. at 916. Plaintiff never
filed written notice to exercise stock options, but argued employer waived the
notice requirement by informing him he had no options. Id. The Dallas Court of
Appeals disagreed, holding nothing employer’s personnel told plaintiff excused his
burden to file written notice or prevented him from doing so. Id.
Similarly, DOW’s insistence that the 600 acres were within in-scope
services in no way prevented Danford from submitting invoices for the services.10
Accordingly, we overrule Danford’s seventh issue, having rejected all three
subparts of the issue.
10
Danford further argues that requiring it to submit invoices would have been futile and
harmful to Danford’s relationship with DOW. However, Danford waived this argument by
failing to cite any supporting authority. See Tex. R. App. P. 38.1(i); I–10 Colony, Inc. v. Chao
Kuan Lee, 393 S.W.3d 467, 479 (Tex. App.—Houston [14th Dist.] 2012, pet. denied).
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3. DOW Specifically Denied Performance of Condition Precedent
Finally, in its eighth issue, Danford argues DOW is precluded from relying
on Article V because DOW failed to file a verified denial pursuant to Texas Rule
of Civil Procedure 93(12), alleging that Danford did not comply with the notice
requirements of Article V.11
Under Rule 93(12),
A pleading setting up any of the following matters, unless the truth of
such matters appear of record, shall be verified by affidavit.
...
That notice and proof of loss or claim for damages has not been given
as alleged. Unless such plea is filed such notice and proof shall be
presumed and no evidence to the contrary shall be admitted. A denial
of such notice or such proof shall be made specifically and with
particularity.
Tex. R. Civ. P. 93(12). Thus, if a defendant denies a plaintiff’s allegation that the
plaintiff gave notice and proof of loss or claim for damages, the defendant must
file a verified denial. See Anchor Cas. Co. v. Bowers, 393 S.W.2d 168, 170 (Tex.
1965) (“[W]here a proof of loss is concerned, and there is a denial of such proof of
loss, such denial ‘shall be made specifically and with particularity’” (quoting
former version of Rule 93(12)).
However, DOW did not urge that Danford failed to provide a compliant
proof of loss—DOW argued Danford failed to comply with Article V’s invoicing
requirement. The invoicing requirement of Article V is not a condition for “notice
11
We liberally construe Danford’s appellate brief as containing the following argument:
because Danford generally averred all conditions precedent had been performed or had occurred
and DOW failed to specifically deny that Danford had complied with Article V, under Texas
Rule of Civil Procedure 54, Danford was not required to prove that it complied with Article V.
However, Danford waived this argument by failing to raise it in the trial court. See Priddy v.
Rawson, 282 S.W.3d 588, 597 (Tex. App.—Houston [14th Dist.] 2009, pet. denied).
22
and proof of loss or claim for damages.” Instead, it is a requirement that Danford
bill DOW within a certain time frame for sums Danford claims are due. We hold
Rule 93(12) is inapplicable in this situation. We overrule Danford’s eighth and
final issue.12
III. CONCLUSION
We affirm the trial court’s judgment.
/s/ John Donovan
Justice
Panel consists of Justices Frost, McCally, and Donovan.
12
We also overrule that portion of Danford’s first issue in which Danford broadly
contends the trial court erred by “entering final judgment on its prior interlocutory order[]”
pertaining to breach of contract.
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