Pyramid Constructors, L.L.P. v. Sunbelt Controls, Inc. ( 2005 )

NO. 07-03-0443-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL A
FEBRUARY 28, 2005
______________________________
PYRAMID CONSTRUCTORS, L.L.P., APPELLANT
V.
SUNBELT CONTROLS, INC., APPELLEE
_________________________________
FROM THE 58TH DISTRICT COURT OF JEFFERSON COUNTY;
NO. A168566; HONORABLE JAMES MEHAFFY, JUDGE
_______________________________
Before JOHNSON, C.J., and REAVIS and CAMPBELL, JJ.
MEMORANDUM OPINION
Pyramid Constructors, L.L.P., appeals a summary judgment awarding money
damages to Sunbelt Controls, Inc., in a dispute over the terms of a written contract between
the parties. We will affirm the judgment.
Pyramid entered a contract with Port Neches-Groves Independent School District
(“PNG ISD”) to construct additions and improvements to Port Neches-Groves High School.
Pyramid contracted with Sunbelt to install the heating, ventilation and air-conditioning
portion of the work. The subcontract allowed Pyramid to withhold retainage from each
payment made to Sunbelt. Sunbelt completed its work under the subcontract in or about
January of 2000 and sent Pyramid a final bill for retainage, totaling $48,110.00.
Pyramid completed its work on the high school in May of 2000 and submitted an
invoice for accumulated retainage held by PNG ISD. Because of a dispute between
Pyramid and PNG ISD, the school district refused to release a portion of the retainage.
Pyramid, in turn, withheld a portion of the retainage due to all the project subcontractors
on a pro rata basis.1 Sunbelt filed suit against Pyramid to recover the balance due under
the subcontract. After Sunbelt filed a traditional motion for summary judgment, and
Pyramid responded, the trial court granted the motion without a hearing. The court ordered
Pyramid to pay $65,310.00, which included the amount of retainage due, interest and
attorney’s fees. It is this judgment Pyramid appeals.
In a separate action, Pyramid filed suit against PNG ISD over the unpaid retainage.
PNG ISD filed counterclaims, alleging construction defects. The counterclaims were settled
in mediation,2 leaving Pyramid’s claim for the unpaid retainage unresolved. Following the
1
Pyramid submitted an invoice for $610,371.50 in accumulated retainage. PNG ISD
paid $400,000.00 of that amount leaving a balance due of $210,371.50. The subcontractors
on the project were each paid a pro rata portion of the $400,000.00 received by Pyramid.
2
The mediation settlement agreement indicates Pyramid agreed to pay PNG ISD
$900,000 in settlement of the school district’s claims.
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mediated settlement, Pyramid renewed its demand on PNG ISD for payment. The record
before us does not reflect further activity in that suit.
We apply the well-established standards for reviewing a summary judgment. See
Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985). In Sunbelt’s motion
for summary judgment, it contended that it had completed all work required under its
subcontract with Pyramid, and was entitled to recover the remaining funds due under the
subcontract. It argued that the subcontract placed the risk of nonpayment by the school
district on Pyramid and not with the subcontractor.
Pyramid presents four points of error to support its contention that the trial court
erred in granting summary judgment in favor of Sunbelt, contending: (1) as a matter of law
it is not required to pay Sunbelt until Pyramid is paid the retainage by PNG ISD; (2) there
exist genuine issues of material fact as to whether Pyramid is yet indebted to Sunbelt; (3)
because Pyramid has found it necessary to sue PNG ISD to obtain the retainage, Pyramid
is entitled to subtract the attorney’s fees and expenses incurred in that suit from the amount
due Sunbelt; and (4) it is “manifestly unfair and unjust” to hold Pyramid responsible for PNG
ISD’s refusal to honor its contractual obligations. Because points one and two are closely
intertwined, they will be addressed together.
Pyramid first argues that under the terms of the contract Sunbelt specifically
assumed the risk that PNG ISD would not pay Pyramid and as a result, Pyramid is not
required to pay Sunbelt until it receives payment from PNG ISD. Construction of an
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unambiguous contract3 is a matter of law for the court. Edwards v. Lone Star Gas Co., a
Div. of Enserch Corp., 782 S.W.2d 840, 841 (Tex. 1990); CU Lloyd’s of Tex. v. Hatfield, 126
S.W.3d 679, 684 (Tex.App.–Houston [14th Dist.] 2004, pet. denied). In construing the
terms of a written contract, the court’s primary concern is to ascertain the true intentions
of the parties as expressed in the instrument. J. M. Davidson, Inc. v. Webster, 128 S.W.3d
223, 229 (Tex. 2003); Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983). To do so, we
must consider the entire writing, seeking to harmonize and give effect to all its provisions
so that none are rendered meaningless. Davidson, 128 S.W.3d at 229.
The parties’ arguments focus on this language from the subcontract: “All payments
to Subcontractor [Sunbelt] shall be made by Pyramid solely out of funds actually received
by Pyramid from Owner [PNG ISD]. Subcontractor acknowledges that it is sharing to the
extent of payments to be made to Subcontractor in the risk that Owner may fail to make
one or more payments to Pyramid for all or a portion of Subcontractor’s work with the sole
exception that if Owner fails to pay Pyramid on account of default solely attributable to
Pyramid under that contract between Owner and Pyramid, and not partially due to an act
or omission of Subcontractor, then such payment shall be nevertheless due from Pyramid
to Subcontractor.”
Pyramid contends the contract’s “pay when paid” language specifically places on
Sunbelt the risk of PNG ISD’s refusal to pay the retainage, making Pyramid’s receipt of
3
A contract is not ambiguous if it can be given a definite or certain meaning as a
matter of law. Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587,
589 (Tex. 1996). Neither party contends the subcontract is ambiguous, and we agree it is
not.
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funds from the school district a condition precedent to its obligation to pay Sunbelt. It
relies on Sheldon L. Pollack Corp. v. Falcon Industries, Inc., 794 S.W.2d 380, 383-84
(Tex.App.–Corpus Christi 1990, writ denied) and Gulf Construction Co., Inc. v. Self, 676
S.W.2d 624, 628 (Tex.App.–Corpus Christi 1984, writ ref’d n.r.e.). Sunbelt, also relying on
Gulf Construction, contends the language does not create a condition precedent, but only
a covenant dealing with the terms of payment or manner of payment. We do not find it
necessary to determine if the provisions create a condition precedent or a covenant
because we find the contract’s language providing a “sole exception” to the “pay when paid”
provisions is applicable under the undisputed facts.
Pyramid argues the contract’s exception language cannot properly form the basis
for summary judgment for Sunbelt because no “default solely attributable to Pyramid” has
been shown. Pyramid reads the exception to require that Sunbelt establish Pyramid was
in default under its contract with PNG ISD to be entitled to payment. Because Sunbelt has
not shown (and cannot show, in Pyramid’s view) that PNG ISD has “legally valid reasons”
to withhold payment of the retainage, Sunbelt has not met the contract’s condition for
payment. Pyramid asserts the school district never had valid reasons for refusing to pay
the remaining retainage, and argues that any doubt about the invalidity of the district’s
reasons was removed when it released Pyramid from its claims following the mediation.4
4
Pyramid acknowledges that the parties agree on the reasons why the school district
did not pay Pyramid all the retainage. Pyramid explains that the school district’s only
excuses for not paying the entire amount of the retainage were that two warranty items
remained to be completed and a flooring contractor had not delivered a release of lien
document. The record reflects that neither of the warranty items involved Sunbelt.
Although the record contains references to other complaints later raised by the school
district, including a reference to mold in return air ducts in the school, we agree the record
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It insists that the school district’s simple refusal, without justification, to pay its debt is “the
exact risk” that Sunbelt assumed under the subcontract.
We agree with Sunbelt that Pyramid’s construction of the subcontract language,
requiring Sunbelt to prove, as a condition of its own entitlement to payment under these
circumstances, that Pyramid was in actual default under its contract with the school district,
is not a reasonable construction. Pyramid’s reading inserts into the contract a requirement
that the school district’s failure to pay Pyramid must have been justified because of
Pyramid’s default. The language contains no such requirement.5 The exception is invoked
if the school district “fails to pay Pyramid on account of default solely attributable to
Pyramid under that contract between [PNG ISD] and Pyramid, and not partially due to an
act or omission of [Sunbelt]” (emphasis added). The undisputed evidence is that the school
district failed to pay the remaining retainage to Pyramid because it contended there was
a failure of performance under its contract with Pyramid, and no act or omission of Sunbelt
was involved. Under the unambiguous language of the subcontract, on those facts,
payment was “nevertheless” due Sunbelt.
By its second point of error, Pyramid contends there is a genuine issue of material
fact whether Pyramid was in default under its contract with PNG ISD. Since, as we read
is undisputed concerning the reasons PNG ISD gave for withholding the remaining
retainage.
5
We may not, under the guise of contract construction, add to the language of the
contract. See American Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003);
Eland Energy, Inc. v. Seagull Energy E & P, Inc., 135 S.W.3d 122, 125 (Tex.App.–Houston
[14th Dist.] 2004, pet. filed).
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the subcontract, Pyramid’s actual default under its contract with the school district is not a
condition of Sunbelt’s entitlement to payment from Pyramid, whether Pyramid was in
default is not a material fact. Pyramid’s first and second points are overruled.
In Pyramid’s third point of error it argues that it is entitled to subtract from the
judgment given Sunbelt its proportionate part of the attorney’s fees and expenses Pyramid
incurs in its suit against PNG ISD. Pyramid refers generally to Chapter 2251 of the
Government Code, which allows for recovery of attorney’s fees against a school district in
certain circumstances, and argues we should reverse the summary judgment and this case
should be abated until the conclusion of the Pyramid-PNG ISD suit, when Sunbelt’s share
of Pyramid’s “unrecovered” cost of obtaining the retainage can be determined.
Pyramid does not contend that any provision of the subcontract authorizes the court
to charge Sunbelt with the attorney’s fees Pyramid incurs in another suit. Compare
Interstate Contracting Corp. v. City of Dallas, 135 S.W.3d 605 (Tex. 2004) (recognizing
“pass-through” claims asserted by a contractor for the benefit of a subcontractor as valid
in Texas). Through our disposition of Pyramid’s first two points, we effectively have
determined that Pyramid’s liability to Sunbelt for the remaining amount due under their
subcontract is, on the facts presented, independent of PNG ISD’s liability to Pyramid for the
retainage. Chapter 38 of the Civil Practice & Remedies Code permits recovery of
reasonable attorney’s fees in a claim based on an oral or written contract. Tex. Civ. Prac.
& Rem. Code Ann. § 38.001(8) (Vernon 1997). Chapter 38 provides no basis for
Pyramid’s point of error because the statute does not authorize recovery of attorney’s fees
by a defendant who only defends against a contract claim and presents no contract claim
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of its own, Energen Resources MAQ, Inc. v. Dalbosco, 23 S.W.3d 551, 558
(Tex.App.–Houston [1st Dist.] 2000, pet. denied), and because Pyramid did not prevail on
a cause of action in this proceeding, Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex.
1997). Case law refers to exceptions, based on equitable considerations, to the general
rule that attorney’s fees are recoverable only when authorized by contract or statute. See,
e.g., Qwest Communications Int’l, Inc. v. A T & T Corp., 114 S.W.3d 15, 32-33
(Tex.App.–Austin 2003, pet. filed). We do not find those exceptions applicable to this case.
Perceiving no basis for reversal of the trial court’s judgment because of its failure to take
into account Pyramid’s attorney’s fees in its suit against PNG ISD, we overrule Pyramid’s
third point.
Pyramid’s fourth point of error presents the contention that putting responsibility on
Pyramid for PNG ISD’s refusal to honor its contract obligations is manifestly unfair and
unjust. We are unable to find in the summary judgment record that such a contention was
presented to the trial court. We may not consider as grounds for reversal of a summary
judgment issues not expressly presented to the trial court by written motion, answer or
other response. Tex. R. Civ. P. 166a(c); Casso v. Brand, 776 S.W.2d 551, 553 (Tex. 1989)
(all theories in support of a summary judgment, as well as all opposing issues, must be
presented in writing to the trial court). Moreover, our conclusion that Pyramid undertook
in the subcontract an obligation to pay Sunbelt despite Pyramid’s dispute with PNG ISD
would require us also to conclude it is neither unfair nor unjust that Pyramid perform that
obligation. The fourth point is overruled.
Accordingly the judgment of the trial court is affirmed.
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James T. Campbell
Justice
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