Dowtech Specialty Contractors, Inc. v. City of Nacogdoches and Aeromix Systems, Inc. ( 2015 )

ACCEPTED
12-15-00236-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
11/5/2015 5:03:53 PM
Pam Estes
CLERK
FILED IN
12th COURT OF APPEALS
TYLER, TEXAS
11/5/2015 5:03:53 PM
PAM ESTES
Clerk
Exhibit “A”
ACCEPTED
12-15-00236-CV
TWELFTH COURT OF APPEALS
TYLER, TEXAS
9/30/2015 3:17:18 PM
Pam Estes
CLERK
Cause No. C1228865
DOWTECH SPECIALTY § IN THE DISTRICT COURT
CONTRACTORS, INC., §
Plaintiff §
§
v. § OF NACOGDOCHES COUNTY
§ TEXAS
§
CITY OF NACOGDOCHES, TEXAS §
AND AEROMIX SYSTEMS, INC., §
Defendants § 145TH JUDICIAL DISTRICT
_____________________________________________
PLAINTIFF’S DESIGNATION OF ITEMS TO BE
INCLUDED IN CLERKS RECORD
_____________________________________________
TO: Jessica Hill
Deputy District Clerk of Nacogdoches County, Texas
101 W. Main, Suite 120
Nacogdoches, TX 75961
936-560-7740 – Tele
936-560-7839 – Fax
PLAINTIFF, DOWTECH SPECIALTY CONTRACTORS INC., is appealing this case to
the 12th Court of Appeals. The trial court signed the final judgment in this case on August 28.
Plaintiff filed a notice of appeal on September 16, 2015 and has made arrangements with the clerk
to pay the clerk’s fee. Plaintiff requests that the following documents be included in the clerk’s
record, as specified in Texas Rule of Appellate Procedure 34.5:
12/17/12 Plaintiff’s Original Petition
1/25/13 Plea to Jurisdiction, Original Answer, Counterclaim and Cross-Claim of
Defendant, City of Nacogdoches, Texas
1
7/2/14 Rule 11 Agreement
8/8/14 Plaintiff’s First Amended Petition
8/8/14 Notice of Revocation of Consent to Rule 11 Agreement
11/25/14 Plea to the Jurisdiction and Amended Answer of Defendants
12/1/14 Plea to Jurisdiction, First Amended Answer and Counterclaim of Defendant,
City of Nacogdoches, Texas
1/5/15 Plaintiff’s Answer to Counterclaims
1/30/15 Defendant’s Motion for Partial Summary Judgment
3/12/15 Plaintiff’s Supplemental First Amended Petition
(with attached Exhibits 1 – 15)
3/12/15 Plaintiff’s Motion to Strike Defendant’s First Amended Answer
(with attached Exhibits 1 – 9)
3/13/15 Plaintiff’s First Supplemental Petition
6/3/15 Defendant’s Supplemental Motion for Partial Summary Judgment
6/10/15 Plaintiff’s Motion for Partial Summary Judgment
6/10/15 Appendix to Plaintiff’s Motion for Partial Summary Judgment
(with attached Exhibits A – H)
6/23/15 Defendant’s Response to Plaintiff’s Motion for Partial Summary Judgment
6/24/15 Plaintiff’s Combined Response to Defendant’s Motion for Partial Summary
Judgment and Supplemental Motion for Partial Summary Judgment
6/24/15 Plaintiff’s Notice of Intent to Use Summary Judgment Evidence
6/24/15 Affidavit of Bob Click
6/24/15 Exhibits to Affidavit of Bob Click (Exhibit 1- 52 in Volumes 1, 2, and 3)
FOR THE CLERK’S CONVENIENCE A LIST OF THE 52 EXHIBITS TO
THE AFFIDAVIT OF BOB CLICK IS ATTACHED HERETO AS
“APPENDIX TO PLAINTIFF’S DESIGNATION”
6/24/15 Affidavit of Gerald Downing
6/24/15 Defendant’s Response to Request for Admissions of Plaintiff Dowtech
Specialty Contractors, Inc.
6/24/15 Defendant’s Response to Plaintiff’s Motion to Strike Defendant’s First
Amended Answer
2
6/30/15 Defendant’s Objections to Plaintiff’s Summary Judgment Evidence Presented
in Opposition to Defendant’s Motion for Partial Summary Judgment
7/2/15 Order Sustaining Defendant’s First Amended Plea to Jurisdiction
7/24/15 Plaintiff’s Demand for Jury Trial
8/7/15 Defendant’s Motion for Separate Trial
8/19/15 Plaintiff’s Response to Defendant’s Motion for Separate Trial
8/21/15 Plaintiff’s Notice of Intent to Use Summary Judgment Evidence
8/21/15 Second Affidavit of Bob Click
8/25/15 Defendant’s Motion to Strike Second Affidavit of Bob Click
8/25/15 Plaintiff’s Response to Defendant’s Objections to Summary Judgment
Evidence
8/28/15 Order on Defendant’s Motion for Separate Trial
8/28/15 Order Granting the Defendant’s Motion for Partial Summary Judgment
8/28/15 Order Denying Plaintiff’s Motion for Partial Summary Judgment
8/28/15 Order on Defendant’s Motion to Strike Second Affidavit of Bob Click
8/28/15 Order Ruling on the Defendant’s Objections to the Plaintiff’s Summary
Judgment Evidence (Plaintiff’s Motion)
9/16/15 Plaintiff’s Notice of Appeal, dated September 16, 2015
9/29/15 This Plaintiff’s Designation of Items to be Included in Clerks Record
Dated 9/29/15
IN ADDITION TO THE DATED ITEMS SET FORTH ABOVE, REQUEST IS ALSO MADE
FOR THE FOLLOWING ITEMS:
1. The court’s docket sheet.
2. The certified bill of costs.
3
Respectfully submitted,
LAW OFFICE OF BLAKE C. NORVELL
37 Cypress Point St.
Abilene, Texas 79606
325-695-1708 tel
325-695-1708 fax
/s/ Blake Norvell
By:
Blake C. Norvell
State Bar No. 24065828
ATTORNEY FOR PLAINTIFF
4
CERTIFICATE OF SERVICE
I certify that on this 29th day of September, 2015, a true copy of PLAINTIFF’S
DESIGNATION OF ITEMS TO BE INCLUDED IN CLERKS RECORD was forwarded to
counsel of record via electronic transmission:
THOMAS L. BELANGER
P.O. Box 631248
Nacogdoches, Texas 75963
tom@abal-law.com
/s/ Blake Norvell
___________________
BLAKE NORVELL
5
“APPENDIX TO PLAINTIFF’S DESIGNATION”
The Exhibits to the Affidavit of Bob Click which are requested to be in the record are:
1. Selected pages of the Standard Conditions of the construction contract made the basis
of this lawsuit.
2. Selected pages of the Special Conditions of the construction contract made the basis
of this lawsuit.
3. Selected pages of the Technical Specifications of the construction contract made the
basis of this lawsuit.
4. Drawings of the PROPOSED FLOATING BRUSH AERATORS/OXIDATION
DITCH dated July 2009 showing the original bridge mount position with the aerators
pushing on the swing arms
5. Electrical Expertise Inc. Letter dated October 22, 2009
6. Selected portions of Submittal No. 3 , including:
a. The submittal cover sheet
b. The submittal table of contents
c. The scope of supply document showing four 25 hp aerators with 20-foot
swing arms
d. Selected pages of the Installation, Operation, and Maintenance Manual for the
25-30 HP Aeromix (MONSOON) Paddlewheel Surface Splash Aerator
including pages showing features “pulling” a two post mooring and a four
post mooring with soft starts or VFDs
e. Selected Monsoon Drawings
f. The Aeromix Warranty for the Aerators
6
7. Selected pages of ECS House Industries, Inc.’s FLOATING BRUSH AERATOR
SPECIFICATIONS including a diagram illustrating proper mooring
8. Selected pages from Defendants Responses to Requests for Admissions in this case
showing that the Aeromix submittal showed a recommendation for the installation of
“soft start” mechanisms and that soft starts are gentle on the equipment (RFA# 94,
101, 103, 220, and 270).
9. A January 8, 2010 e-mail from Catalin Petrescu to Clint Carlile at Dowtech showing
the need for swing arms to be bolted to a “structure.”
10. Selected pages from Defendants Responses to Requests for admissions in this case
showing
a. August 19, 2010 flexing of the swing arms (RFA # 125)
b. August 20, 2010 failure of the swing arms (RFA # 127, 128, and 129)
c. August 30, 2010 Engineer Mark Mann discovered for first time that the
aerators must be installed in a “pull” position (RFA #144)
d. September and October 2010 changes in the contract were made to require a
setup wherein the swing arms would be mounted to a mooring cable with the
aerators in the pull position (RFA # 160-166)
e. An October 11, 2010 letter signed by Mark Mann admitted that the aerators
had been installed in a “push” configuration (RFA #244)
11. Drawing sheet 4 A of 13 of the PROPOSED FLOATING BRUSH
AERATORS/OXIDATION DITCH made in the fall of 2010 (original dated July
2009) showing the swing arms in a tension/pull configuration on a cable mount and
showing the clockwise flow of water
7
12. August 30, 2010 e-mail from Josh Perfetti to Mark Mann regarding the requirement
of a “pulling” configuration and Mark Mann’s reply insisting on a push configuration
13. September 2, 2010 e-mail from Mark Mann to Dowtech enclosing drawings of a
cable and swing arm combination mount
14. Selected pages from Defendants Responses to Requests for admissions in this case
showing
a. On December 17, 2010 the aerators were again started up (RFA #181)
b. Upon the start up of the aerators after the cable mooring set up, the aerators
began to move around in the water and were again shut down (RFA # 184 and
185)
15. Six December 17, 2010 photographs of the aerators in the cable mooring
configuration showing lack of stability and sway when in operation
16. A January 6 2012 letter from Mark Mann to Steve Bartlett recommending rejection of
work and curiously omitting the initial August 19 and August 20 failure of the push
configuration of the swing arms.
17. A January 30, 2012 “Rejection of Work” letter from Rob Atherton to Gerald
Downing containing a warning about Civil and Criminal Penalties for installing
defective aerators
18. A March 21, 2012 e-mail from Charlie Self to Teresa Picot including an e-mail from
Mark Mann indicating the City will withhold payments pending resolution of the
“alignment issue”
19. A March 6, 2012 Demand Letter from Charles Self to Steve Bartlett requesting
payment and indicating Dowtech’s total compliance with the contract
8
20. A March 27, 2012 Correction letter amending the demand letter from Charles Self to
Steve Bartlett
21. An August 2, 2012 email from Buddy Harris to Dowtech and From Dowtech to
Buddy Harris
22. An August 2, 2012 string of emails from Charlie Self to Teresa Picot and from Doug
Reeves to a Gerald indicating the existence of too much torque and the
recommendation of soft start mechanisms and offering to install them for free
23. A copy of Plaintiff’s Original Petition filed December 17, 2012 in this case.
24. A May 28, 2013 e-mail from Charlie Self to Teresa requesting print of an May 23,
2012 email from Tom Belanger to Charlie Self with handwritten notes.
25. The July 2, 2013 Rule 11 Agreement in which the parties agree that the aerators will
be re-engineered and repaired and “re-installed”
26. A Drawing Revision dated August 16, 2013 showing a Tension Mount of the
Aerators.
27. A January 13, 2014 email from Doug Reeves to Dowtech and prior e-mails relating to
installation of the aerators.
28. A January 14, 2014 12:44 pm email from Doug Reeves to Dowtech relating to non-
use of mooring cable
29. A January 14, 2014 1:16 pm email from Doug Reeves to Dowtech relating to
inadequacy of mooring cables.
30. A January 14, 2014 1:28 pm email from Doug Reeves to Dowtech relating to
swingarm configuration
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31. A January 14, 2014 1:46 pm email from Doug Reeves to Dowtech relating to use of a
taught mooring cable and indicating that the City had requested they re-engineer the
aerators for use in the original bridge mount configuration.
32. Selected pages from Defendants Responses to Requests for Admissions in this case
showing the City admitted that Douge Reeves of Aeromix indicated that the city had
instructed Aeromix to re-design around the bridge mount configuration (RFA #208)
33. A January 14, 2014 2:40 pm email from Doug Reeves to Dowtech relating to non-
compression on bridge mount
34. A January 15, 2014 3:52 pm reply email from Doug Reeves to Dowtech and prior
January 15, 2014 3:48 pm e-mail from Dowtech to Doug Reeves relating to change of
proposed configuration
35. January 31, 2014 letter from Gerald Downing to Steve Bartlett, Thomas Belanger,
and Mark Mann
36. A February 14, 2014 11:17 am reply email from Doug Reeves to Dowtech and prior
February 14, 2014 11:15 am e-mail from Dowtech to Doug Reeves relating to the
Aeromix $1,000.00 payment required under the Rule 11 Agreement that Dowtech had
not received
37. A February 17, 2014 letter from Charles Self to Thomas Belanger regarding problems
with original push position and the need for soft starts and breach of Rule 11
agreement
38. A March 18, 2014 letter from myself, Bob Click, to Steve Bartlett and Mark Mann
relating to e-mails showing negligence of City
10
39. A March 19, 2014 letter from Steve Bartlett to Thomas Belanger recognizing that soft
starts were recommended but refusing to use soft starts and recognizing that a pull
configuration is required, but return to the “original position’
40. An April 2, 2014 1:42 pm reply email from Doug Reeves to Dowtech and prior April
2, 2014 1:42 pm email from Dowtech to Doug Reeves relating to the Aeromix
$1,000.00 payment required under the Rule 11 Agreement that Dowtech still had not
received
41. An April 4, 2014 email from Doug Reeves to Dowtech indicating that the failure to
use soft starts on the aerators is “irresponsible” and showing that the City instructed
them to re-engineer for the original bridge mount
42. An April 4, 2014 e-mail from Doug Reeves to me (Bob) relating to the recommended
use of soft starts and the City’s instruction to re-engineer for a bridge mount
configuration
43. An April 15, 2014 letter to Tom Belanger from Charles Self explaining breach of
Rule 11 and requesting compliance
44. A May 13, 2014 proposed amendment to the Rule 11 Agreement that purports to
waive the 90 day running requirement of the Rule 11, but still allows a 20 day delay
in payment and dismissal of claims
45. An undated “Construction Investigation Report” undertaken by me in March but
finalized on July 23, 2014
46. A July 25, 2014 letter from Charles Self to Tom Belanger relating to my investigative
Report.
47. The August 7, 2014 Notice of Revocation of the Rule 11 agreement
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48. The August 7, 2014 First Amended Petition indicating breach of the Rule 11 and
containing facts sworn to by Gerald Downing
49. The November 25, 2014 Plea to the Jurisdiction and Amended Answer of Defendants
50. The January 5, 2015 Answer to Counterclaims
51. The January 15, 2015 e-mail from Chad House to Dowtech regarding soft starts
required on all heavy-duty aerators
52. Plaintiff’s March 13, 2015 First Supplemental Petition
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Exhibit “B”
Filed 911612015 12;08:07 PM
Lorellii Cammack
District Clerk
Nacogdoches County, TX
JESSICA. H~LL
Cause No. C1228H65
DOWTECH SPECIALTY § IN THE DJSTIUCT COURT
CONTRACTORS, INC., §
Plaintiff' §
§
v. ~ OF NACOGDOCHES COUNTY
§ TEXAS
§
CITY OF NACOGDOCHES, TEXAS §
AND AEROMIX SYSTEMS, INC., §
Dejemlant.-, § 145·n• JUDICIAL DISTRICT
NOTICE OF APPEAL
Notice is hereby given that Plaintiff, Dowtech Specialty Contractors, Inc., appeals from the
following orders and all adverse interlocut01y rulings that mergt1d Lnto the judgment
I. Order Graming Defendant" s Motion fiJr Partiill S LLimn<'lry Judgment, dated August 28,
2015
2. Order on Defendant's l\-1otion fur Separate Trial, dated August 2 8, 2015
3. Order Denying Plaintiffs Motion for Pnrrial Summary Judgment, dated August 28"
2015
4_ Order on Defendant's Motion to Strike Second Affidavit of Bob Click, dated August
25, 2015
5. Order Ruling on lhc Dcfcndnnt's Objections to th~:: PlaintirFs Summary Judgment
Evidence (Piaintirrs Motion), dalcd Augtlst25, 2015
6. Order Sustaining Dci'Cndant's First Amt•nded Plea to Jurisdicrion, dated July 2, 2015.
Th~sc orders constitute a final judgment on Part One of lhe trial, as set forth in the first cited order
above, and dispose of all matter~ relating thereto in Cause No. C 1228865; in the 145th Judicial
1474
Distril:l Court of Nacogdoches County, T cxas. The Court o [Appeals will be the Twelfth Court of
Appeals. The trial court, cause number, and style of this case are shown in the caption above.
Plaintiff desires to appeal all portions of the judgment.
Respectfully ``ubmilted,
LAW OFFICE OF BLAKE C. NORVELL
37 Cypress Point SL
Abilene, Tcxns 79606
325-695-1708 tel
325-695-1708 fax
/s/ Blake Norvell
By:
Blake C. Norvell
State Bar No. 24065828
ATTORNEY FOR PLAINTIFF
?
1475
Exhibit “C”
Exhibit “D”
Filed 6/24/2015 11:42:05 PM
Loretta Cammack
District Clerk
Nacogdoches County, TX
JESSICA HILL
Cause No. C1228865
DOWTECH SPECIALTY § IN THE DISTRICT COURT
CONTRACTORS, INC., §
Plaintiff §
§
v. § OF NACOGDOCHES COUNTY
§ TEXAS
§
CITY OF NACOGDOCHES, TEXAS §
AND AEROMIX SYSTEMS, INC., §
Defendants § 145TH JUDICIAL DISTRICT
PLAINTIFF'S COMBINED RESPONSE TO
DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT
AND
SUPPLEMENTAL MOTION FOR PARTIAL SUMMARY JUDGMENT
TO SAID HONORABLE COURT:
Plaintiff, Dowtech Specialty Contractors, Inc., (hereinafter “Dowtech”) files this
Combined Response to Defendant’s Motion for Partial Summary Judgment and Supplemental
Motion for Partial Summary Judgment and would show as follows:
INTRODUCTION AND SUMMARY
The plea to the jurisdiction is devoid of any case law or application. It is a bold, one
paragraph fabrication. See argument infra p. 31.
Defendant’s Summary Judgment Motions are short on both law and fact. They state
inapplicable, boilerplate propositions of law and then proceed to misconstrue the facts of this
case. Other than the plea to the jurisdiction all arguments in favor of partial summary
judgment depend entirely on the continued validity of the Rule 11 agreement.
The revocation demotes the Rule 11 Agreement to the rank of additional contract terms
over which the parties are now bickering. Defendant’s motions seem to ignore this fact and
1
repeatedly asserts the “Rule 11 Agreement” as though it carried some special gravitas. But, as
the Court stated in Woody v. Woody, 429 S.W.3d 792, 796 (Tex. App.—Houston [14th Dist.]
2014), reh'g overruled (May 8, 2014):
The problem with this contention is that if a party revokes its consent to a Rule
11 agreement at any time before judgment is rendered in the case, the agreement can no
longer simply be “approved” by the court; instead, the enforcement mechanism is
through a separate breach of contract action.
Id. at 796 (emphasis added). Given the basic rule above, the City has the burden of proving that
there is no material fact issue as to its breach of the Rule 11 Agreement.
Filed and submitted herewith are the affidavits of Dowtech’s President, Gerald
Downing and Bob Click, Dowtech’s investigator, along with 52 exhibits consisting mostly of
product specifications, contract drawings, and e-mail exchange between the parties. The
submission is replete with evidence of the City’s blatant breach of the Rule 11 Agreement.
First, in a continuing pattern of recalcitrance, the City interfered with Aeromix’s repair of
the aerators, by directing Aeromix to omit soft start apparatus, the lack of which caused the
initial installation to fail. Fixing the failure was the primary purpose of the Rule 11 Agreement.
Defendant presents no factual argument or evidence whatever relating the refusal to install
“soft starts.” For this simple reason alone, there is a fact issue for trial and the motion
should be denied ab initio. See argument infra p. 20.
Second, the City also breached the Rule 11 Agreement by directing Aeromix to design its
repairs for the original “push” and “bridge mount” configuration. Defendant’s own motions
admit this was contrary to the mounting required by the Rule 11 agreement.
Defendant’s only argument against this mass of evidence is a March 19, 2014 letter
cleverly written to try to cover-up the breach. Unfortunately, the March 19 letter is “as clear
as mud” and the fact issue of breach is alive and well. See argument infra p. 19.
2
STANDARD OF REVIEW
This court must take “as true all evidence favorable to” Dowtech, “indulging every
reasonable inference and resolving any doubts in” Dowtech’s favor. City of El Paso v. Heinrich,
284 S.W.3d 366, 378 (Tex. 2009). As will be shown, even under the strictest scrutiny, there are
multiple fact issues present with regard to the enforceability of the Rule 11 Agreement.
FACTUAL SUMMARY
Because of the sheer volume of evidence showing breach of the underlying contract, as
well as breach of the Rule 11 Agreement, a factual summary is necessarily inadequate. Thus,
plaintiff implores the Court to read the affidavits, and at a minimum, review documents
highlighted below.1
For ease of understanding, Dowtech has chosen to summarize the facts leading up to the
Rule 11 Agreement. This is done for two reasons. First, to assist the Court in understanding the
technical issues involved in the construction project and equipment. Second, to give the court a
context of the behaviors of the parties leading up to the Rule 11 Agreement. At the point in the
chronology where the Rule 11 Agreement is reached, this brief will contain both facts and
1
To the extent that the City objects to any of Dowtech’s summary judgement exhibits or testimony, the motion is
premature, as an adequate time for discovery has not passed. Even though such correspondence has been properly
authenticated pursuant to Tex. R. Ev. 901, Dowtech has not had the opportunity to cross examine witnesses about
the correspondence and contract documents involved and reduce the subject matter to testimonial form. Since most
of the statement contained in non-Dowtech documents are statements made by a party opponent, they are not
hearsay. So, despite the proper use of the evidence in summary judgment, any objection to Dowtech’s summary
evidence should be immediately followed by a ruling that the motion be denied until discovery is complete. Since
the matters contained in any correspondence or records from non-Dowtech entities and are currently unavailable by
affidavit, then if there is objection to use of the non-Dowtech generated correspondence, the court should continue
the hearing until the close of discovery. Texas Rule of Civil Procedure 166a (g) states:
When Affidavits Are Unavailable. Should it appear from the affidavits of a party opposing the motion
that he cannot for reasons stated present by affidavit facts essential to justify his opposition, the court may
refuse the application for judgment or may order a continuance to permit affidavits to be obtained or
depositions to be taken or discovery to be had or may make such other order as is just.
Tex. R. Civ. P. 166a (g).
3
argument. This is because the only significant points of contention in the City’s motions are: (1)
that there are no facts to support a breach of the Rule 11 Agreement, and (2) that all facts
necessary to the Rule 11 Agreement’s enforcement are incontrovertible. The facts are as
follows:
1. THE INITIAL CONTRACT: FIRM ANCHORAGES AND SOFT STARTS
A. DOWTECH WAS NOT RESPONSIBLE FOR THE DESIGN
Article 6.21 E. of the contract general provisions states clearly that Dowtech “shall not be
responsible for the adequacy of the performance or design criteria required by the Contract
Documents.” GENERAL PROVISIONS (Exhibit 1). More specifically, the technical specification
portion of the contract indicated that “The aerator and drive shall be installed as shown on the
drawings and in strict accordance with the manufactures instructions.” One look at Exhbit 4
removes all doubt as to who was responsible for putting the aerators in the original wrong
position. The initial drawings clearly show a “push” configuration with the aerator connected to
a swing arm which is connected to the bridge:
4
INITIAL CONTRACT DRAWING (Exhibit 4). An arrow on the drawing (shown in the zoom view
below) indicates the direction of the water flow, giving one a clear indication that the paddle
wheel is pushing on the 20 foot arm.
Id. As one can see, there is no room for variation. A push configuration on a 20 foot swing arm
connected to the bridge was the configuration mandated by the contract drawings. It is a
negligent configuration. Shown below is an Aeromix drawing indicating a more accurate
perspective view:
5
AEROMIX SWING ARM DRAWING (Exhibit 26). The drawing shows how the push configuration
might cause the swing arm to collapse, and even contains a warning in the lower left corner: “Do
not install so that the unit is pushing on the Arms or they could collapse.” The diagram also
shows that the water flow direction required for use is the exact opposite as the City’s
required contractual configuration. The side view shows clearly that a pushing force on the
swing arms would necessarily force the entire aerator downward into the water, increasing the
load on its paddles and causing the unit to “submarine.” It doesn’t take a rocket scientist to
figure out that installing the unit in a push configuration could cause problems. Regardless, that
is exactly what Dowtech was required to do by the City’s licensed engineers.
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B. THE SPECIFIED PRODUCT
Paragraph 8 of the special conditions portion of the contract sets forth the power of the
City to specify products to be used by name and brand “equivalent.” SPECIAL CONTRACT
CONDITIONS (Exhibit 2). The technical specifications for the “floating electric brush aerator”
specifically required Dowtech to use “Aeromix, Systems, ECS House Industries, or approved
equal” as the product type. FLOATING BRUSH SPECIFICATIONS (Exhibit 3).
With respect to this type of contract specification, Bob Click, a 60 year construction
contractor, testified: “In my experience this type language in a construction contract means that
the Engineer represents and claims to have superior knowledge of the designated material (in.
this case the Aeromix Systems and ECS House Industries 25 hp aerators). BOB CLICK
AFFIDAVIT, pp. 9-10, ¶ 5.
Exhibit 6 comprises the submittal documents supplied for approval to the City. It
includes the provision of “Four (4) 25HP MONSOON aerators” manufactured by Aeromix.
SCOPE OF SUPPLY (Exhibit 6c). The drawings for the 25 Horse Power Paddle Wheel aerator
show that a large amount of water will be contacted by the numerous paddles on the rotor. The
risk of bolts shearing because of these strong forces is indicated on the lower left of the drawing
shown below:
7
Again, it doesn’t take a rocket scientist to figure out that this machine will tend to move around
in the water if it is not firmly anchored.
1) Firm Anchoring is Required.
Included in the approved submittal was the Monsoon Installation, Operation, and
Maintenance Manual. The manual showed that the typical and suggested mooring arrangement
was to put the unit between two cables and four concrete filled posts. MONSOON MANUAL
(Exhibit 6d). This was never tried and never suggested by the City. Even the House
Industries aerator specifications require firm anchoring. See HOUSE SPECIFICATIONS (Exhibit 7).
The need for firm anchoring was discussed early on. In a January 8, 2010 e-mail, the
engineering manager for Aeromix indicated that the swing arms should be “bolted” or “pinned”
to a “structure.” SWING ARM SYSTEM E-MAIL (Exhibit 9).
8
2) Soft Starts are Specified
The Monsoon Manual was bold and clear with a warning triangle:
MONSOON MANUAL p. 6 (Exhibit 6d). Variable Frequency Drives or “Soft Starters” are common
in electrical engineering applications whenever a motor is pushing a significant load. The City
admitted that the warning shown above was given. They also admitted that soft starts were
“gentle” on the equipment. See REQUEST FOR ADMISSIONS RESPONSES (Exhibit 8) (Nos. 94 and
102). In an incredulous response, the City admitted the warning shown above was in the
Manual, but that it was “not clearly shown.” REQUEST FOR ADMISSIONS RESPONSES (Exhibit
8) (No. 270).
C. COMPLETE LACK OF DUE DILIGENCE AND NEGLIGENT ENGINEERING
1) Failure to Incorporate Soft Starts
Despite the warning label, the City admitted that “Soft start devices were not included on
the engineering plans” because they “were never considered to be a necessary part of the
installation by our engineer.” This admission is contained in a March 19, 2014 letter from Steve
Bartlett, the City engineer to one of the attorneys on the case drafted AFTER the Rule 11
Agreement was made. It was a letter basically explaining that the City was not going to abide by
Aeromix repair recommendations. In the letter, the City engineer admitted his prior ignorance
and stated that “…we now understand that the operations manual identified the use of soft start
devices for Aeromix motors over 20 Hp…” See MARCH 19 CITY RESPONSE LETTER (Exhibit 39).
It is very apparent that the City gave no thought to the matter and did not even review the
manual submitted. Furthermore, the City appears to have farmed out its review of the electrical
requirements to a third party. ELECTRICAL EXPERTISE INC. LETTER (Exhibit 5). Had the City
9
engineers’ office looked at House Aerator specifications, they would have found that House
recommended the use of soft starts on all such aerators above 15 horse power. EMAIL FROM
CHAD HOUSE (Exhibit 50). The City did not see the warning in the supplied manual. The City
did not give any thought to the matter of soft starts. The result was that the Contract documents
did not contain a requirement for soft starts.
2) Failure to consider push v. pull
As shown in the initial contract drawings, the City had no concept of the problem that the
“push” configuration would cause. This is despite the City engineers presumed attendance at
basic physics courses in high school and college.
2. THE FIRST FAILURE: THE PUSH CONFIGURATION COLAPSES.
The first startup was on August 5, 2010. REJECTION OF WORK LETTER (Exhibit 16). It
was done with the system in the “push” configuration. Id. Within 2 weeks the swing arms began
to flex. REQUEST FOR ADMISSIONS RESPONSES (Exhibit 10a) (No. 125). On the 15th day, the
swing arms failed. REQUEST FOR ADMISSIONS RESPONSES (Exhibit 10b) (Nos. 127, 128, and
129). At that time Mark Mann, the City’s project engineer, “discovered” for the first time that
the swing arms must be place in the pull position (tension) and not in the push positions
(compression). REQUEST FOR ADMISSIONS RESPONSES (Exhibit 10c) (No. 144).
Despite the revelation, engineer Mann was recalcitrant and resistant to design change,
even when presented with alternative by Aeromix. In an e-mail dated August 30, 2010, engineer
Mann replied to a proposed alternative with the following: “The new aerator can only be
installed in the locations as shown on the contract drawings with the units pushing (compression)
on the arms because the existing equipment prevents any other location.” AUGUST 30, 2010
EMAIL EXCHANGE (Exhibit 12).
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3. FIRST BREACH: THE REWORK WITHOUT PAY
In the months of September and October of 2010 Mr. Mann, began unilaterally dictating
changes in Dowtech’s work requirements. A propose contract modification was e-mailed to
Dowtech on September 2, relocating the aerators to a position with the swing arms reversed in
direction and pulling on a steel cable stretched across the water between two steel posts.
REQUEST FOR ADMISSIONS RESPONSES (Exhibit 10d) (No. 160).
REVISE CONTRACT DRAWING (Exhibit 11). See also SEPTEMBER 2 E-MAIL FROM MANN TO
DOWNING WITH DRAWING (Exhibit 13). This was drastically different from the original
structural connection to the bridge that had been recommended. It was also not consistent with
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the only other recommended use of cables for mooring, which did not include the cables being
attached to a 20 foot long swing arm:
MONSOON MANUAL p. 4 (Exhibit 6d). A simple 5th grade lesson on the power of leverage would
teach that a 20 foot-long swing arm, extending to a single cable, will exert significantly more
lateral stresses on the cables than the 0 foot long attachment method shown above.
The changes continued. Mann sent Dowtech and e-mail on September 7 changing the
post size from 4 inches to 8 inches in diameter. REQUEST FOR ADMISSIONS RESPONSES (Exhibit
10d) (No. 162). The City understood that the changes would require paying Dowtech more
money, as the work was different and additional from that required in the original contract. On
September 16, Dowtech informed Mann that the contract modification would cost $41,746.00.
In October, with notice to the City, Mann sent a letter to Dowtech demanding they proceed.
REQUEST FOR ADMISSIONS RESPONSES (Exhibit 10d) (Nos. 165 and 166). That same month,
Mann admitted that the prior failed installation was a “push” configuration. REQUEST FOR
ADMISSIONS RESPONSES (Exhibit 10d) (No. 244). Dowtech was never paid for its work in
performing the construction of the modification. DOWNING AFFIDAVIT, ¶ 9.
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In forcing the new design on Dowtech, the City breached the technical specifications of
the contract. Part 4 subpart O of the specifications for the floating brush aerator states clearly
that the “Anchoring system shall hold the aerator firmly in position. FLOATING BRUSH
SPECIFICATIONS (Exhibit 3). Experience proved the breach when the new mooring system also
failed.
4. THE SECOND FAILURE: SWAYING CABLES AND MULTIPLE HARD STARTS
After a December 17 startup attempt, the 20 foot-long swing arm began to sway and
“move around in the water.” REQUEST FOR ADMISSIONS RESPONSES (Exhibits 14a and 14 b) (No.
181, 184 and 185). This was predictable when the 20 foot arms were attached to a flexible cable.
Photographs of the substandard cable-swing arm connection show the failure:
See PHOTOGRAPHS OF DECEMBER 17 STARTUP (Exhibit 15). The photograph shows the angular
swaying of the units which create a risk of sidewall collision and damage to the aerator. As a
result, the cheap fix of “sway cables” was also installed to minimize the risk of side wall
13
collision. REJECTION OF WORK LETTER (Exhibit 16). Over the course of an entire year the
second-rate system was tried. From August to December 2010 there were a number of
“Revisions to unit mounting arrangements.” Id. Dowtech completed its work in doing so and
was never paid. DOWNING AFFIDAVIT ¶¶ 8 and 9.
5. AN ENTIRE YEAR OF ABUSE
“The newly repositioned aerators never operated successfully from December 17, 2010
through December 2011. DOWNING AFFIDAVIT ¶ 9. A letter from the engineers chronicles the
numerous incidents which no doubt required a shut down and a hard restart of the aerators:
REJECTION OF WORK LETTER (Exhibit 16). Recommendations were made in this letter to claim
that the ultimate failure was the result of “defective” aerators or work rather than the failure to
14
properly mount the unit and/or the failure to employ soft starts. Id.
6. THE SECOND BREACH: THE PHONY DEFECT CLAIM
On January 30, 2012 Gerald Downing received an astonishing letter from the City. The
letter asserted a contractual rejection of work and claimed defect. REJECTION OF WORK NOTICE
(Exhibit 17). The letter demanded “removal and replacement of the aerators with approved
alternative aerators” as though the problem was with the aerators. Id. In fact, “they had been
damaged by the abuse of constant repositioning and hard starting.” DOWNING AFFIDAVIT ¶
12 (emphasis added). This was a clear attempt to cover-up the ineptitude of the City’s engineers
in specifying a “push” configuration with hard starts when a “pull” configuration with soft starts
is the recommended configuration. Id. This would cost Dowtech an estimated $175,000. Id.
The demand was absurd, given the refusal to use recommended soft starts, the backwards
mounting configuration, and the year of abuse.
The City’s Motion even uses the word “defect” deceptively. On page 2 of the original
motion the City cites the notice of revocation saying there were “defects” in the aerators.
ORIGINAL MOTION p. 2 ¶ 7. That is false. The cited paragraph of the Notice of Revocation uses
the word “issues” not defects. NOTICE OF REVOCATION ¶ 2 (Exhibit 47).
“Dowtech, as the general contractor, strictly followed the contract documents and
instructions of the City of Nacogdoches’ engineers. The engineers were solely responsible for
design. Dowtech was a construction contractor.” DOWNING AFFIDAVIT ¶ 11. Dowtech did
“everything the engineers” told them to do “with speed, precision, and accuracy.” Id. The
phony claim of defective work was clearly a breach.
Numerous ovations were made by Dowtech to resolve the dispute amicably. But it just
seemed the City was wanting to pick a fight. In December of 2011, in response to a request for
payment, Mark Mann sent an e-mail to Dowtech indicating that it would withhold payment until
15
the “alignment issue” was resolved. See DECEMBER 5, 2011 E-MAIL (Exhibit 18). In the same
message, Mann virtually admits that the problem is not actually with Dowtech’s work,
because he “would like to avoid moving this into a warranty issue.” Id. Aeromix’s product
warranty had been assigned to the City some time before. See AEROMIX WARRANTY
(Exhibit 6f).
The behavior of the City was indeed bizarre at this point. Despite Aeromix promising to
provide a fix and offering to do it for free, the City did not respond to the offer. DEMAND
LETTER (Exhibit 19). The City wanted to cover up the ineptitude of its engineers in failing to
incorporate soft starts. This became evident when Dowtech received a communication from
Doug Reeves, the construction and service manager of Aeromix. Around August 2012, Mr.
Reeves e-mailed Gerald Downing to offer a free installation of “soft starts” on the units. FREE
SOFT STARTS OFFER (Exhibit 22). The e-mail confirmed the diagnoses that Dowtech already
knew, the multiple incidents of bolt sheering and gearbox failure were due to “far too much
torque on the Monsoon gearbox and shaft during startup of the units.” Id. Despite this, the City
simply would not budge.
7. THE LAWSUIT
This lawsuit was brought out of frustration. ORIGINAL PETITION (Exhibit 23). The
lawsuit set forth the numerous additional work demands made by the City and makes claim for
relief on a number of theories. Id.
8. THE THIRD BREACH: DEFYING THE TERMS OF THE RULE 11 AGREEMENT
Negotiations ensued. See E-MAIL AND NOTES FOR SETTLEMENT (Exhibit 24). The
negotiations culminated in the disputed Rule 11 Agreement on July 2, 2013. See RULE 11
AGREEMENT (Exhibit 25). The Rule 11 Agreement is short and simple. That is one of its
problems. Without much detail, it required the repair of the aerators by Aeromix and the
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reinstallation of the aerators by Dowtech. The Rule 11 Agreement provided payment to
Dowtech only if, after the repair and re-installation, the aerators ran trouble free for 90
days. Id. Thus, Dowtech had a significant interest in making sure the repair and reinstallation
included the recommended fixes. Any party sabotaging the fixes would potentially be in breach.
As soon as the agreement was executed, the parties began to communicate about how the repair
and re-install was to be accomplished.
A. THE CITY’S BREACH OF RE-INSTALL REQUIREMENT
1) The common meaning of “re-install” is “to put back from where it came”
Based on the common and ordinary meaning of “re-install,” Dowtech expected to simply
put the aerators back on the cable from where they were removed. Consistent with this, one
month into the process, Aeromix generated a new drawing of the swing arm configuration as a
result of its communications with the City. It contained a clear warning about the hazards of the
push configuration. AEROMIX SWING ARM DRAWING (Exhibit 26) (shown supra p. 6).
2) The City ignores the intended meaning and directs a breach
Regardless of the clear meaning of “reinstall,” a series of inconsistent communications
began to occur. On January 14, 2014 at 12:44 pm, Doug Reeves indicated that the units had
been designed to “attach to the bridge mounts as originally designed. No more need for
mooring cable.” JANUARY 14, 2014 12:44 PM EMAIL FROM REEVES TO DOWTECH (Exhibit 28)
(emphasis added). When questioned about the existing aerators on the other side of the bridge
(which would prevent a proper bridge mount) Mr. Reeves again responded “we were asked to
make the original design work and the original bridge mount work for the customer. A
Mooring line stretched across the ditch is not an adequate way to secure the unit.” JANUARY 14,
2014 1:16 PM EMAIL FROM REEVES TO DOWTECH (Exhibit 29) (emphasis added). The exchange
continues with a comment that the “original location” was the basis of the “redesign.”
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JANUARY 14, 2014 1:28 PM EMAIL FROM REEVES TO DOWTECH (Exhibit 230) (emphasis added).
The colloquy between Dowtech and Aeromix continued because of what appeared to be an
outlandish demand by the City. In discussing the use of the cable (from which the aerators were
removed) Mr. Reeves makes if perfectly clear that the City had ordered him to design for
mounting on the bridge. He state that use of the cable “is however a change in what we designed
around. We were asked to make the existing bridge mount system work with the new swing
arms.” JANUARY 14, 2014 1:48 PM EMAIL FROM REEVES TO DOWTECH (Exhibit 31) (emphasis
added). Even the City admits that such communications mean “the four Aeromix 25 hp aerators
have been redesigned/re-manufactured for installation into the original location with the swing
arms attached to the bridge, at the request of Defendant Nacogdoches.” REQUEST FOR
ADMISSIONS RESPONSES (Exhibit 32) (No. 208) (emphasis added). The fact that such a
configuration was destined to fail again was not lost on Aeromix. See JANUARY 14, 2014 2:40
PM EMAIL FROM REEVES TO DOWTECH (Exhibit 33).
3) The bad faith refusal to communicate
Confusion and silence soon ensued. The next day, when Dowtech told Aeromix that the
city had again changed its mind. Mr. Reeves made it clear that a site visit had been the clear
source of his understanding that the City wanted the bridge mount. See JANUARY 15, 2014
EMAIL FROM REEVES TO DOWTECH (Exhibit 34). In an evident act of bad faith, the City failed
to respond to multiple formal requests for clarification. This is a breach of the Rule 11
Agreement all by itself.
On January 13 and email was sent to the city requesting clarification. CLICK
CLARIFICATION LETTER ¶ 1 (Exhibit 38). The e-mail was ignored. Id. Again on January 14, a
similar email was sent. Id. That e-mail was ignored. Id. On January 21, 2014 a request for
clarification was sent. SELF CLARIFICATION LETTER ¶2 (Ehibit 37). This letter was ignored.
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Id. Ten days later, on January 31, 2014 Gerald Downing sent a formal and lengthy letter,
quoting the numerous e-mails discussed above and requesting that the City provide “written
instructions for re-installation.” DOWNING RE-INSTALL LETTER (Exhibit 35). This letter was
ignored. Two weeks later Dowtech’s attorney made a similar demand, expressing great
frustration. SELF CLARIFICATION LETTER (Ehibit 37). This letter was ignored. Finally, Bob
Click wrote a scathing letter to the City listing the events of complete non-response. CLICK
CLARIFICATION LETTER ¶ 1 (Exhibit 38). This final letter also set forth the negligence of the City
in engineering the backward mount and refusal to employ soft starts. CLICK CLARIFICATION
LETTER (Exhibit 38).
4) The amazing March 19 Letter
Finally, more than two months after Dowtech began asking for a response, the City sent a
letter on March 19, 2014 which purported to answer the concern of the Rule 11 Agreement
breaches. See MARCH 19 CITY RESPONSE LETTER (Exhibit 39). According to the City, this
amazing piece of prose, (no doubt lawyered over two months of radio silence) is somehow
“uncontroverted” evidence that the lengthy stream of emails in January mean the opposite of
what they clearly say. It is on the basis of this letter that they claim the “re-install” breach is
negated. At the top of page 3 of its Supplemental Motion, the City selectively quotes from the
letter. The City quotes the letter’s use of “final” but they try to explain away that the letter
cleverly used “final” interchangeably with “original.” In an astoundingly weak argument the
City claims it is “clear from the context” that the word “original” means “final.” Wow! A
more reasonable interpretation of the letter is that over two months of deliberation, the City
decided to try and “finesse” its way out by mixing the two terms.
In another attempt at linguistic hop-scotch, the City cites to an April 15, letter written by
Dowtech’s counsel, Charles Self. The City then claims that the April 15 letter admits to their
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interpretation of the March 19 Letter. They neglect to inform the Court that in the same
paragraph in which they claim that the admission lies, Mr. Self clearly elucidates that “There is
a conflict in the City’s instructions.” BREACH OF RULE 11 AGREEMENT NOTICE LETTER,
p. 3, ¶ 4 (Exhibit 43) (emphasis added). That is the true context of the March 19 letter. It is at
best confusing, and most likely a calculated attempt to muddle the pre-existing evidence of
breach. It certainly cannot negate any breach, because it left Dowtech without an answer and
unable to act as to the “re-install.” It is likely, regardless of what approach Dowtech would have
taken, that had the aerators failed again, that the City would have asserted a “different”
interpretation of the letter and blamed Dowtech for the failure once again. Dowtech had no
choice but to revoke the Rule 11 Agreement and press on with this action.
There is nothing conclusive about either the March 19 letter or the April 15 letter.
Therefore, the motions for summary judgment fail.
B. THE CITY’S BREACH OF THE REPAIR REQUIREMENT – REFUSING SOFT STARTS
The evidence of this breach is independent of the evidence establishing the “re-install”
breach. Therefore, the City bears the burden of conclusively negating the evidence of this breach
as well. If they fail to do so, the Motions for Summary Judgment also must fail. Unfortunately
for the City, its motions simply ignore this breach, basically admitting that it occurred. In
the 26 pages of briefing filed, the City mentions “soft starts” only once on page 9 of its original
Motion. The only argument about the refusal to allow soft starts is that the breach is cured by the
city’s offer to amend the Rule 11 Agreement which will be debunked infra at p. 22.
The admittedly uncontroverted evidence establishes the soft start breach. Pursuant to its
repair authority under the Rule 11 Agreement, Aeromix redesigned the gear boxes to
accommodate the soft start devices and told Dowtech to install them that way. JANUARY 13,
2014 9:02 AM EMAIL FROM REEVES TO DOWTECH (Exhibit 27). This is consistent with the
20
intentions of all signatories. In the March 19 letter, the City indicates that it contemplated that
the replacement aerators would be “improved” versions.
The chronology above indicates that all parties were on notice that the lack of soft starts
was a major factor in the failure of the aerators. They were recommended in the installation
manual by a conspicuous warning. They were admittedly gentler on the apparatus, and there was
no apparent downside to using them. Around August 2012, Mr. Reeves e-mailed Gerald
Downing and confirmed that the multiple incidents of bolt sheering and gearbox failure were due
to “far too much torque on the Monsoon gearbox and shaft during startup of the units.” FREE
SOFT STARTS OFFER (Exhibit 22). Despite this, the City simply would not budge. As this Court
may recall, Aeromix promised to provide the soft start fix for free but the city never responded.
DEMAND LETTER (Exhibit 19). Aeromix informed Dowtech that failure to employ soft starts
would be “irresponsible.” SOFT START RECOMMENDATION EMAIL (Exhibit 41). The breach of
the Rule 11 Agreement in this regard is a continuation of a pattern of conduct which breached
the original contract.
Despite its alleged benefit to the City, the March 19 letter is proof of soft start breach. In
the letter the City admits negligence by not even knowing about the need for soft starts. See
MARCH 19 CITY RESPONSE LETTER (Exhibit 39) (“we now understand”). Despite the
contemplation that Aeromix would improve the aerators and the understanding that Aeromix
would pay for soft start apparatus, the City recalcitrantly stated: “…we do not intend to provide
soft start devices at this time.” Id. The City received multiple admonitions about it being
“irresponsible” to omit soft starts. This included a detailed explanation in a letter in which
counsel notified the city that “the Rule 11 Agreement has been breached” by the refusal it
incorporate soft starts. BREACH OF RULE 11 AGREEMENT NOTICE LETTER, p. 4 ¶3 (Exhibit 43).
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9. THE UNACCEPTED AMENDMENT TO THE RULE 11 AGREEMENT
Another alleged summary judgment saving document is the misrepresented May 13, 2014
proposed amendment to the Rule 11 Agreement. The City asserts that this document is simply a
letter in which “the City agreed to waive” the 90 day continuous operation payment condition.
ORIGINAL MOTION p. 3. It is not a “waiver of the requirement” as claimed by the City. See
SUPPLEMENTAL MOTION p. 10. It is not a letter. It is not a waiver instrument. It is a
proposed contract amendment with mutual promises. See PROPOSED RULE 11 AMENDMENT
(Exhibit 44). In order to induce Dowtech into accepting the City’s refusal to install soft starts
(tacitly admitted as a breach), the City waived the 90 days only in exchange for allowing
payment “within twenty days after reinstallation and start-up.” Id. (item number 3). This is
NO WAIVER. Dowtech would be taking a substantial risk of non-payment if they agreed to
wait 20 days after installation without soft starts or proper mooring. Gerald Downing stated in
his affidavit that “It was our belief that since the aerators were improperly mounted per the city’s
instructions, they would likely fail before the expiration of 20 days.” DOWNING AFFIDAVIT ¶ 17.
The City cites Mr. Belanger’s Affidavit and states on page 9 of its original motion that
“the City agreed to pay the Plaintiff in full after re-installation and start up of the aerators.”
ORIGINAL MOTION p. 9. This is simply false. There is an undisputed option to pay within 20
days. Item number 3 of the proposed amendment reads: “The City will pay Dowtech the sum of
$75,355.45 within twenty days after reinstallation and start-up of the repaired aerators.”
PROPOSED RULE 11 AMENDMENT (Exhibit 44) (item 3) (emphasis added). This is even admitted
at the top of page 4 of the original motion: “…within 20 days after….” ORIGINAL MOTION p. 4.
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A. THE PROPOSED AMENDMENT HAS NO EFFECT ON THE SOFT START BREACH
No argument has been made whatsoever that the City did not breach by refusing the
installation of soft starts. The summary judgment evidence is undisputed that the soft starts
constituted a breach of the Rule 11. See part 8 B supra. The City admits this when they argue
against the soft start breach with a singular argument. On page 9 of its original motion, in a
block quote, the City cites the Notice of Revocation, and argues that the sole reason for the
revocation was that without the soft starts, “there is little chance for the aeration units to operate
continuously for 90 days.” ORIGINAL MOTION p. 9. They then argue that the supposed 90
waiver eliminated the soft start risk to Dowtech.
But, since the “waiver” does not exist, and the 90 days risk is simply shortened to 20
days, Dowtech still has a valid reason to revoke the Rule 11 Agreement. Merely shortening the
time to pay does not cure the breach. The motion for summary judgment must be denied for
this reason alone.
B. THE PROPOSED AMENDMENT HAS NO EFFECT ON THE “REINSTALL” BREACH
The city makes the same argument as above with respect to the breach of requiring the
aerators to be installed in their original position. They claim that the supposed 90 day payment
waiting period “waiver” renders the risk of an improper mount non-existent. See ORIGINAL
MOTION p. 10. Since the “waiver” is not existent, and since there is still a risk that a push
configuration could cause the system to fail in 20 days or less, there is still risk of being harmed
by the breach. This argument should be summarily dismissed.
C. THE PROPOSED AMENDMENT SIMPLY PROVES THAT THE RULE 11 WAS AMBIGUOUS
The City also represented that the Proposed Amendment simply “notified Dowtech to
install the aerators in the same configuration as they were last installed.” See SUPPLEMENTAL
MOTION p. 9. Again such a reading belies the fact that the amendment requires other
23
concessions in exchange for agreeing to allow the installation in the last configuration. It is a
contract proposal. See PROPOSED RULE 11 AMENDMENT (Exhibit 44).
More importantly, one must wonder why such language is included to supposedly satisfy
Dowtech and “amend” the Rule 11 Agreement. If the Rule 11 Agreement was not vague, as
to configuration of the re-install, then the “amendment” of it would be unnecessary.
10. THE AEROMIX BREACH
Aeromix also breached the Rule 11 Agreement when it was late on its payment to
Dowtech of a $1000.00 contribution for shipping costs. See EMAIL PROMISING PAYMENT
(Exhibit 36) and EMAIL PROVING MONEY OWED (Exhibit 40). Such a breach allows Dowtech to
seek rescission as to Aeromix and casts further doubt on the validity of the agreement as a whole
because Dowtech is the only party not in breach.
11. THE LAWFUL REVOCATION OF THE RULE 11 AGREEMENT
As a result of the inexplicable recalcitrance of the City in refusing to incorporate soft
starts and demanding a compression arrangement, Gerald Downing directed Bob Click to
conduct a thorough investigation. Mr. Click’s report has multiple findings and is quite thorough.
See CONSTRUCTION INVESTIGATION REPORT (Exhibit 45). Among other things, the investigation
found that the City had “not acted in good faith. Id. (finding #40). The report calculated more
than $365,000.00 in damages due to the breaches. Id. (finding #45). Each and every finding in
the report has been adopted by Mr. Click in his affidavit as testimony. CLICK AFFIDAVIT ¶ 7.
The report was forwarded to Dowtech’s counsel for review and resulted in a final letter
attempting to resolve the matter prior to revocation and suit. See PRE-REVOCATION SETTLEMENT
LETTER (Exhibit 46).
Finally, Dowtech was out of options. Though it stood willing to install the aerators with
24
soft starts and in the pulling (cable mounted) position, the City simply refused to sanction the
soft starts and created a morass of confusion and conflict as to the re-install configuration.
So, on August 8, 2014, Dowtech filed with this Court a formal revocation of the Rule 11
Agreement. See NOTICE OF REVOCATION OF CONSENT TO RULE 11 AGREEMENT (Exhibit 47).
The revocation was based on both the soft start breach and the re-installation breach. Id.
The validity of the revocation has not been negated by summary judgment evidence.
The two clear breaches relating the soft starts and the reinstall configuration are both support by
ample evidence. Moreover, the soft start breach defeats the motion by itself because it was
simply neglected by the City in its motions. The Court should deny the City’s motions on the
presentation of facts alone. However, a number of other legal and technical arguments also
weight in favor of denial.
LEGAL AND TECHNICAL ARGUMENT
1. ORIGINAL MOTION FOR SUMMARY JUDGMENT
A. THERE IS REALLY ONLY ONE SUMMARY JUDGMENT ISSUE: BREACH OF THE RULE 11
AGREEMENT
On page 6 of the Original Motion, the city starts to get to the point of its argument. It
lists 3 issues. But on close examination they all rely on the validity of the Rule 11 Agreement.
Issues 1 and 2 are both predicated on the effectiveness of the Rule 11 agreement as a defense.
Issue 1 asks whether Dowtech waived the right to additional damages by signing the Rule 11
Agreement. Underlying this issue is the validity of the Agreement itself. Issue 2 asks a similar
question about Dowtech’s waiver of attorney’s fees by way the Agreement. Again it is
predicated on the validity of the Rule 11 Agreement. Issue 3 is simply whether Dowtech
breached the Rule 11 Agreement by way of an invalid revocation. Again, if the revocation is
valid, then the validity of the Rule 11 is the predicate.
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The City’s Original Motion then proceeds to take up Jurisdiction out of order. See
ORIGINAL MOTION p. 6. The jurisdiction argument is address separately in this response.
On page 7 of the Original Motion the City gets back on track and discusses the
“Enforceability of Rule 11 Agreement.” ORIGINAL MOTION p. 7 (emphasis added). Again this
restates the predicate of the three issues listed earlier. On page 8 through 12 of the Original
motion it is argued that the Rule 11 Agreement is established as a matter of law and that the
City’s claim against Dowtech for breach of the Rule 11 Agreement is established as a matter of
law. All issues stated in the Original Motion (except for jurisdiction) are predicated on the
enforceability of the Rule 11 Agreement. The motion, albeit disorganized, is correct about its
summation of the issues.
At the bottom of page 8 the City states: “Therefore, this Motion hinges on one question:
Does the uncontroverted evidence conclusively negate Dowtech’s excuse for revocation of
the Rule 11 Agreement?” Original Motion, pp. 8-9. This is a correct statement of the one
dispositive issue presented. And it has been soundly answered in the negative by the summary
judgment evidence. The Rule 11 Agreement was breached by the City with respect to the soft
starts and the reinstallation.
B. THERE IS AMPLE EVIDENCE OF THE CITY’S BREACH OF THE RULE 11 AGREEMENT.
On page 10 of the original motion the City cites Landrum v. Devenport, 616 S.W.2d 359
(Tex. Civ. App.—Texarkana 1981, no writ) for the proposition that:
The essential elements of a suit for breach of contract are (1) the existence of a valid
contract; (2) that the plaintiff performed or tendered performance; (3) the defendant
breached the agreement; and (4) the plaintiff was damaged as a result of the breach.
Id. at 361. Here the application of fact to law is simple: (1) The Rule 11 was a valid contract; (2)
Dowtech tendered performance by repeatedly indicating they were ready, willing and able to
install the aerators in the position from which they were removed so long as they were equipped
26
with soft starts as repaired by Aeromix (see e.g. NOTICE OF REVOCATION ¶ 9, saying Dowtech
“continues to stand ready and willing to comply”); (3) the City breached the agreement (see
FACTUAL SUMMARY, part 8, supra, and supporting exhibits); and (4) Dowtech was damaged as a
result of the breach (see, e.g., CONSTRUCTION INVESTIGATION REPORT, finding nos. 44-53).
Under basic contract law, there is a fact issue as to the validity of the Rule 11
Agreement. Summary Judgment should be denied.
2. SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT
A. SUPPLEMENTAL FACTS
The facts recited in the beginning of the Supplemental Motion are basically the same
facts which were controverted in FACTUAL SUMMARY, part 8, supra. The have all been
overwhelmingly controverted above.
B. SUMMARY JUDGMENT
It should be noted from the outset that the claims and avoidances listed in plaintiff’s
supplemental petition are not simply plead as to the Rule 11 Agreement. These claims are plead
as to the entire contract and the initial wrongful conduct, breaches, negligence and fraud which
were committed in 2009, 2010, 2011, 2012, and 2013 and up to date of the Rule 11 Agreement.
Therefore, so long as the Rule 11 agreement can be invalidated on ONE basis of breach, then
ALL of the claims and avoidance below survive as to the base contract made the basis of the
original suit. .
1) Breach of Contract
In this argument, the City cites a boiler-plate case for the boiler-plate proposition that a
breach must be material. Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d
195, 198 (Tex. 2004). The City then waxes on about the position of the re-install and the effect
of the May 13,, 2014 letter in a repeat of arguments already defeated above. Both alleged
27
breaches were highly material in that they created a significant risk that the aerators would not
run for 90 days straight without failing. There is ample summary judgment evidence of this.
Next the City cites another boilerplate proposition: “If the alleged breach of contract did
not cause the plaintiff's damages, then there can be no recovery for breach of contract.”
Clearview Properties, L.P. v. Prop. Texas SC One Corp., 287 S.W.3d 132, 139 (Tex. App.—
Houston [14th Dist.] 2009, pet. denied). Dowtech was damaged as a result of the breach (see,
e.g., CONSTRUCTION INVESTIGATION REPORT, finding nos. 44-53). The motion should be denied.
2) Rescission for Material Breach
It is axiomatic that most contract actions seek both damages and rescission. If the court
needs to consider them in the alternative, so be it. The City’s cites Heffington v. Hellums, 212
S.W.2d 245, 249 (Tex. Civ. App.—Austin 1948) (writ refused NRE) for the general rule that the
equitable relief of rescission is not available if an action for damages is sufficient. The citation is
ludicrous. In the argument above the City took the position that Dowtech did not have an action
in damages. The Court can wait and hear the evidence at trial and submit the appropriate issues
with the jury charge.
3) Rescission for Mutual Mistake
This argument is simply a rehash of the City’s position that the May 13, 2014 letter and
the April 15, 2014 letter have some nugatory effect on the morass of confusion created by the
City. The City instructed Aeromix repeatedly to install the aerators in the “original bridge
mount” position. As shown above, the referenced letters are not the magic pixie dust of sudden
clarity. This cause of action is supported by ample summary judgment evidence as shown
above.
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4) Rescission for Fraud
This is another rehash of the evidence under a similar theoretical backdrop. Without
mentioning that the argument is not based on a notice or letter, they pretend it is and cite
“Exhibit B to Defendant’s Motion, Para 2.” That document is actually the discredited proposed
amendment to the Rule 11 Agreement. It can be relied on for nothing to disprove fraud. In fact,
the cleverly worded March 19, 2014 letter combined with the slick presentation of the suggested
amendment, show a cleverly orchestrated cover-up of and attempt to mislead Dowtech to install
the aerators, and then take the blame again in the likely event of a fourth failure.
To suggest there is no substantial injury if the contract is not rescinded is contrary to the
evidence. If forced to install pursuant to the Rule 11 Agreement and in light of the City’s
conduct, the aerators will likely fail and Dowtech will not get paid. Again this is a rehash.
5) Ambiguity
There is a large bucket full of evidence that the Rule 11 is ambiguous. The entire string
of e-mails in January of 2014 can be understood by any reasonable person to show that no-one
knew what “re-install” meant. Simply remember the astoundingly weak argument made about
the March 19 letter when the City claimed it was “clear from the context” of the letter that the
word “original” means “final.” SUPPLEMENTAL MOTION p. 3. This cause of action clearly
survives the Motions.
6) Unconscionability
There was absolutely NO REASON for the City to refuse the use of soft starts. It was
described by Aeromix as “irresponsible.” SOFT START RECOMMENDATION EMAIL (Exhibit 41).
The likelihood of failure upon reinstallation without soft starts was very high. The 90 day period
nearly insured the death of the aerators. Under the circumstances forced by the City’s
unexplained recalcitrance, the Rule 11 was “grossly” one-sided.
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7) Ineffective Assistance of Counsel
Dowtech concedes this argument and consents to the Court granting summary judgment
as to this cause of action.
8) Declaratory Relief
The City concedes that there argument on this claim is merely a “piggy back ride” on
other arguments. Since Dowtech has provided ample summary judgment evidence to support the
other defenses and avoidances, along with its claim for breach, this claim survives summary
judgment.
9) Unclean Hands
While the City complains that Dowtech supplies no case law to support the application of
this theory to the case, the City engages in the same sin. Not one case citation is given to support
the claim that unclean hands is not available here. If the Court can trust the theoretical mind of
the City’s counsel without case law, the Court should put equal trust in Dowtech’s counsel and
deny the motion pending more evidence and argument.
10) Engineer’s Negiligence
There is ample summary judgment evidence of engineer’s negligence. With respect to
the execution of the Rule 11 Agreement, it is clear that there was a repeated effort to require
Aeromix to configure the aerators for the “bridge-mount” and “push” position. Even though the
City engineers knew long beforehand that such a configuration would lead to failure and
proximately cause all parties damage. Moreover, if it is “reckless” to insist on hard starts for the
aerators, it is certainly negligent.
Remember, these claims also relate to the original case and should not be dismissed
because it is impossible for the City to conclusively negate the evidence presented in FACTUAL
SUMMARY, part 8, supra.
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11) Consideration
This is a red hearing and a non-issue. Failure of consideration is not plead as a claim or
an avoidance. The City simply seized on a one-line comment in the pleadings and assumed it
was a cause of action. The Court should neither grant nor deny the motion as to this claim
because it is not made.
PLEA TO THE JURISDICTION
The City’s plea to the Jurisdiction is one paragraph long, and cites no authority other than
Texas Government Code §271.152, the general waiver of sovereign immunity. It means
virtually nothing. The City baldly asserts that Dowtech is not entitled to recover any amount in
excess of $75,355.45 because of the doctrine of sovereign immunity. Sovereign immunity does
not so limit Dowtech’s recovery. The law expressly allows for a Plaintiff to recover the balance
owed under the contract, the amount owed for additional work required to carry out the contract,
reasonable and necessary attorney fees, and interest. Furthermore, an allegation by the City that
the damages asserted by Dowtech are not recoverable under Tex. Loc. Gov’t Code §271 is not a
proper basis for granting a plea to the jurisdiction. Lastly, since the City asserted a counterclaim
against Dowtech in the First Amended Petition for monetary relief, it has waived its sovereign
immunity and is now subject to common law claims that would normally be precluded to off-set
the City’s counterclaim.
Texas allows breach of contract actions against local governmental entities, such as the
City. See generally Tex. Loc. Gov’t Code §271.153. Importantly, a wide array of damages are
recoverable against local governmental entities for breach of contract.
First, a Plaintiff in a breach of contract action against a city is entitled to recover the
balance owed by the local governmental entity under the contract as it may have been
31
amended, including any amount owed as compensation for the increased cost to perform the
work as a direct result of delay or acceleration caused by the local governmental entity. Tex.
Loc. Gov’t Code §271.153(a)(1); Sharyland Water Sup. v. City of Alton, 354 S.W.3d 407 (Tex.
2011).
Second, a Plaintiff in a breach of contract action against a city is entitled to recover the
amount owed for change orders or additional work required to carry out the contract. Tex.
Loc. Gov’t Code §271.153(a)(2); Learners Online, Inc. v. Dallas ISD, 333 S.W.3d 636,642
(Tex.App. – Dallas 2009, no pet.); City of Houston v. Southern Elec. Servs., 273 S.W.3d 739,
744 (Tex.App – Houston [1st Dist.] 2008, pet. denied); Zachry Construction Corp. v. Port of
Houston Authority, ___S.W.3d ___ (Tex. 2014).
Third, a Plaintiff in a breach of contract action against a city is entitled to recover
reasonable and necessary attorney fees that are equitable and just. Tex. Loc. Gov’t Code
§271.153(a)(3). The recovery of reasonable and necessary attorney fees is permitted for contract
executed on or after June 19, 2009. City of San Antonio v. Lower Colo. River Auth., 369 S.W.3d
231 (Tex.App. – Austin 2011, n.p.h.); Acts 2009, 81st R.S., ch. 1266 sec 8, eff. June 19, 2009.
Fourth, a Plaintiff in a breach of contract action against a city is entitled to recover
interest as allowed by law, including interest as calculated under Texas Government Code
chapter 2251. Tex. Loc. Gov’t Code §271.153(a)(4); Learner Online, 333 S.W.3d at 642; Port
Neches-Groves ISDS v. Pyramid Constructors, L.L.P., 281 S.W.3d 142, 150 (Tex.App. –
Beaumont 2009, pet. denied); Southern Elec. Servs., 273 SW.3d at 744.
In this case, Dowtech is seeking breach of contract damages that include the balance
owed under the contract, the amount owed for additional work required to carry out the contract,
reasonable and necessary attorney fees that are equitable and just, and interest as allowed by law.
32
For example, Dowtech alleges that “[t]hroughout the period after August 5, 2010 Defendant
Nacogdoches flagrantly materially breached the contract with Dowtech ordering and demanding
that work be performed to cover-up the engineering negligence. Dowtech was never paid for the
additional work.” These are all damages that Dowtech is allowed to recover under the law,
notwithstanding the doctrine of sovereign immunity.
Furthermore, an allegation that the damages are not recoverable because of the doctrine
of sovereign immunity is not a proper basis for granting the plea to the jurisdiction. Lower Colo.
River Auth, supra; City of Mesquite v. PKG Contracting, Inc. 263 S.W.3d 444,448(Tex.App –
Dallas 2008, pet. denied).
In a breach of contract action under Tex. Loc. Gov’t Code §271, if the governmental
entity countersues a plaintiff for monetary relief, such as filing a counterclaim, the plaintiff often
is permitted to recover contract damages that would not otherwise be recoverable under chapter
271 to offset the counterclaim of the governmental unit. City of San Antonio v. KGME, Inc., 340
S.W.3d 870, 877 (Tex.App. – San Antonio 2011, no pet.) (holding that after a city countersued
plaintiff for breach of contract, plaintiff was permitted to seek common-law damages, including
consequential, incidental, and compensatory damages, to offset the city’s claim; City of Irving v.
Inform Constr., Inc., 201 S.W.3d 693, 694 (Tex. 2006); Water Sup. v. City of Alton, 354, supra.
Since the City filed a counterclaim, Dowtech is now permitted to seek common-law damages,
including consequential, incidental, and compensatory damages, to offset the city’s claim. The
City has waived its sovereign immunity.
CONCLUSION
The City’s motions for summary judgment, even when combined, assert basically one
argument: that the Rule 11 Agreement is conclusively valid. This admitted underpinning fails in
33
the face of an overabundance of summary judgment evidence. The City’s recalcitrant refusal to
accept the one fix that was needed (soft starts) was a breach of the Rule 11 Agreement. The
City’s blatant direction of Aeromix to configure the aerators for the bridge-mount configuration
was also a breach. The motions should be denied, except where conceded.
Respectfully submitted,
LAW OFFICE OF BLAKE C. NORVELL
37 Cypress Point St.
Abilene, Texas 79606
325-695-1708 tel
325-695-1708 fax
/s/ Blake Norvell
By:
Blake C. Norvell
State Bar No. 24065828
ATTORNEY FOR PLAINTIFF
CERTIFICATE OF SERVICE
I certify that on this 24th day of June, 2015, a true copy of Plaintiff’s Response To
Defendant’s Motion For Partial Summary Judgment was forwarded to counsel of record via
electronic transmission:
THOMAS L. BELANGER
P.O. Box 631248
Nacogdoches, Texas 75963
tom@abal-law.com
/s/ Blake Norvell
___________________
BLAKE NORVELL
34
Exhibit “E”
Filed 6/24/2015 4:50:53 PM
Loretta Cammack
District Clerk
Nacogdoches County, TX
JESSICA HILL
Cause No. C1228865
DOWTECH SPECIALTY § IN THE DISTRICT COURT
CONTRACTORS, INC., §
Plaintiff §
§
v. § OF NACOGDOCHES COUNTY,
§ TEXAS
§
CITY OF NACOGDOCHES, TEXAS §
AND AEROMIX SYSTEMS, INC., §
Defendants § 145TH JUDICIAL DISTRICT
PLAINTIFF’S NOTICE OF INTENT TO USE SUMMARY JUDGMENT EVIDENCE
Under Texas Rule of Civil Procedure 166a, notice is hereby given that Dowtech Specialty
Contractors, Inc. intends to use as summary judgment evidence the following items which are
filed herewith:
1. The Affidavit of Bob Click
2. The Exhibits to the Affidavit of Bob Click
3. The Affidavit of Gerald Downing
4. Defendant’s Response to Requests for Admissions of Plaintiff Dowtech Specialty
Contractors, Inc.
Respectfully submitted,
LAW OFFICE OF BLAKE C. NORVELL
37 Cypress Point St.
Abilene, Texas 79606
325-695-1708 tel
325-695-1708 fax
/s/ Blake Norvell
By:
Blake C. Norvell
State Bar No. 24065828
ATTORNEY FOR PLAINTIFF
____________________
Notice of SJ Evidence
Page 1 of 2
CERTIFICATE OF SERVICE
I certify that on this 24 day of June, 2015, a true copy of Plaintiff’s Motion For Partial
Summary Judgment was forwarded to counsel of record via electronic transmission:
THOMAS L. BELANGER
P.O. Box 631248
Nacogdoches, Texas 75963
tom@abal-law.com
/s/ Blake Norvell
___________________
BLAKE NORVELL
____________________
Notice of SJ Evidence
Page 2 of 2
Exhibit “F”
JESSICA HILL
Exhibit “G”
JESSICA HILL
Exhibit “H”
JESSICA HILL
Exhibit “I”
JESSICA HILL
Exhibit “J”
JESSICA HILL
Exhibit “K”
JESSICA HILL