Foundation Assessment, Inc., D/B/A Engineering Design & Assessment, and Suraj K. Choudhury v. Suzanne O'Connor , 2014 Tex. App. LEXIS 2599 ( 2014 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00166-CV
FOUNDATION ASSESSMENT, APPELLANTS
INC., D/B/A ENGINEERING
DESIGN & ASSESSMENT, AND
SURAJ K. CHOUDHURY
V.
SUZANNE O’CONNOR APPELLEE
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FROM COUNTY COURT AT LAW NO. 2 OF TARRANT COUNTY
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OPINION
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I. INTRODUCTION
The primary issue we address in this interlocutory appeal is whether
appellants Foundation Assessment, Inc., d/b/a Engineering Design &
Assessment, and Suraj K. Choudhury waived their right to dismissal of the suit
brought against them by appellee Suzanne O’Connor by waiting almost two
years to move for dismissal. See Tex. Civ. Prac. & Rem. Code Ann. § 150.002(f)
(West 2011). Because we hold that they did not, we will reverse the trial court’s
order denying appellants’ motion to dismiss.
II. FACTUAL AND PROCEDURAL BACKGROUND
The facts giving rise to this case concern a rental property located in Fort
Worth and owned by O’Connor. She contracted with Perma Pier Foundation
Company to perform certain foundation repairs to the property. Under the
contract, Perma Pier agreed that initial and final engineering reports would be
performed on the property. O’Connor received the engineering reports from
Foundation Assessment’s owner and engineer, Choudhury. Both reports
indicated that someone with Foundation Assessment had personally visited and
evaluated O’Connor’s property. The initial report indicated that at Perma Pier’s
request, Foundation Assessment had performed an assessment of the
foundation of the property, including “site observations” and verification of the
plan of repair and procedure to be employed. The final report stated that
Foundation Assessment had “checked the works performed and [had] checked
the jacking.”
In April 2011, O’Connor sued Perma Pier and appellants, among others,
alleging breach of contract, negligence and gross negligence, fraud, breach of
express warranty, breach of implied warranty, violations of the deceptive trade
practices act, civil conspiracy, and violations of the occupations code. The bulk
of O’Connor’s claims do not allege actions by appellants although she names all
2
“Defendants” generally in all but one of her claims. Regarding appellants,
O’Connor specifically alleged claims for fraud and civil conspiracy based on their
allegedly making false statements in the engineering reports.1
Appellants timely filed an answer, and over the next twenty-two months,
the parties litigated the case. In February 2013, appellants moved to dismiss the
suit against them under civil practice and remedies code section 150.002
because O’Connor did not file a certificate of merit along with her original
petition.2 O’Connor filed a response and objections to the motion and,
alternatively, a motion for additional time to file a certificate of merit. After
conducting a hearing and receiving supplemental briefs from the parties, the trial
court denied appellants’ motion to dismiss.
1
O’Connor asserted that appellants could not have personally inspected
the property and Perma Pier’s work at the property, contrary to statements made
by appellants in their engineering reports. O’Connor alleged,
It is believed that all inspection reports by Choudhury related to the
Home are not based upon any personal inspection of the Home by
Choudhury, and thus cannot possibly be believed and do not meet
the requirements of any reputable engineer performing an
assessment and preparing an engineering report related to
foundation repairs. Additionally, the Engineering Reports cannot
reasonably be relied upon for any purpose. It is O’Connor’s belief
that all of the reports provided by Choudhury are fraudulent and
contain information that cannot possibly be based upon any
personal site review by Choudhury.
2
See Tex. Civ. Prac. & Rem. Code Ann. § 150.002.
3
III. STANDARD OF REVIEW
We review the trial court’s order denying a motion to dismiss under an
abuse of discretion standard. Murphy v. Gutierrez, 374 S.W.3d 627, 629–30
(Tex. App.—Fort Worth 2012, pet. filed) (citing Palladian Bldg. Co. v. Nortex
Found. Designs, Inc., 165 S.W.3d 430, 433 (Tex. App.—Fort Worth 2005, no
pet.)). To determine whether a trial court abused its discretion, we must decide
whether it acted without reference to any guiding rules or principles; in other
words, we must decide whether its act was arbitrary or unreasonable. Cire v.
Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). “Merely because a trial court
may decide a matter within its discretion in a different manner than an appellate
court would in a similar circumstance does not demonstrate that an abuse of
discretion has occurred.” Palladian Bldg. Co., 165 S.W.3d at 433.
IV. DISMISSAL UNDER SECTION 150.002 WAS REQUIRED
In their sole issue, appellants argue that the trial court abused its discretion
by denying their motion to dismiss. They contend that because O’Connor never
filed a certificate of merit, the trial court was statutorily required to dismiss the suit
against them. O’Connor responds that appellants waived their right to dismissal
by litigating the case for almost two years before filing their motion to dismiss,
that section 150.002 does not require a certificate of merit to be filed in this case,
and that appellants are barred from seeking dismissal based on the doctrine of
laches.
4
A. The Certificate of Merit Statute; No Waiver of Dismissal Right
Section 150.002, entitled “Certificate of Merit,” provides:
In any action or arbitration proceeding for damages arising out of
the provision of professional services by a licensed or registered
professional, the plaintiff shall be required to file with the complaint
an affidavit of a third-party licensed architect, licensed professional
engineer, registered landscape architect, or registered professional
land surveyor who:
(1) is competent to testify;
(2) holds the same professional license or registration as the
defendant; and
(3) is knowledgeable in the area of practice of the defendant and
offers testimony based on the person’s:
(A) knowledge;
(B) skill;
(C) experience;
(D) education;
(E) training; and
(F) practice.
Tex. Civ. Prac. & Rem. Code Ann. § 150.002(a). By requiring a plaintiff to file a
certificate of merit with her original petition,3 section 150.002 deters meritless
claims and brings them quickly to an end. CTL Thompson Tex., LLC v. Starwood
Homeowner’s Ass’n, 390 S.W.3d 299, 301 (Tex. 2013); Criterium-Farrell Eng’rs
3
The statute requires a plaintiff to file a certificate of merit along with the
“complaint,” but we read this to mean the plaintiff’s petition. See Palladian Bldg.
Co., 165 S.W.3d at 431 n.2.
5
v. Owens, 248 S.W.3d 395, 399 (Tex. App.—Beaumont 2008, no pet.) (“[T]he
purpose of the certificate of merit is to provide a basis for the trial court to
conclude that the plaintiff’s claims have merit.”); see also House Comm. on Civil
Practices, Bill Analysis, Tex. H.B. 4, 78th Leg., C.S. (2003) (“In summary, [House
Bill 4, including section 150.002] provides for a various corrective measure that
will help . . . reduce the costs of litigation . . . [and] addresses many of the root
causes of the current situation: non-meritorious lawsuits.”).
If a certificate of merit does not accompany the petition, a trial court must
grant dismissal on a defendant’s motion. Tex. Civ. Prac. & Rem. Code Ann.
§ 150.002(e). The statute does not impose a deadline by which a defendant
must file its motion to dismiss. See id. § 150.002. Several intermediate
appellate courts have held that a defendant’s delay in moving for dismissal does
not, alone, strip the defendant of the right to dismissal. See Pro Plus, Inc. v.
Crosstex Energy Servs., L.P., 388 S.W.3d 689, 703 (Tex. App.—Houston [1st
Dist.] 2012, pet. granted); Ustanik v. Nortex Found. Designs, Inc., 320 S.W.3d
409, 414 (Tex. App.—Waco 2010, pet. denied); DLB Architects, P.C. v. Weaver,
305 S.W.3d 407, 411 (Tex. App.—Dallas 2010, pet. denied). But courts have
recognized that a defendant can waive its right to dismissal in some instances.
Murphy, 374 S.W.3d at 631 (discussing cases that indicate a defendant’s
dismissal right can be waived).
Waiver is “an intentional relinquishment of a known right or intentional
conduct inconsistent with claiming that right.” See Jernigan v. Langley, 111
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S.W.3d 153, 156 (Tex. 2003) (quoting Sun Exploration & Prod. Co. v. Benton,
728 S.W.2d 35, 37 (Tex. 1987)); Palladian Bldg. Co., 165 S.W.3d at 434. Waiver
is ordinarily a question of fact but becomes a question of law when the facts are
admitted or clearly established. See Jernigan, 111 S.W.3d at 156–57; Palladian
Bldg. Co., 165 S.W.3d at 434. Because waiver is largely based on intent, there
can be no waiver of a right unless a litigant says or does something inconsistent
with an intent to rely on such right. See Jernigan, 111 S.W.3d at 156; Palladian
Bldg. Co., 165 S.W.3d at 434. Thus, silence by a litigant traditionally does not
constitute waiver, but waiver can be established if “the defendant’s silence or
inaction shows an intent to yield the right to dismissal.” Jernigan, 111 S.W.3d at
157.
This court first addressed the issue of waiver in relation to section
150.002’s dismissal right in Palladian Bldg. Co., where we held that the
defendant did not waive its right to dismissal by filing an original and amended
answer before moving to dismiss. See 165 S.W.3d at 434–35. Since Palladian
Bldg. Co., only five intermediate appellate courts have directly addressed the
issue. See Pro Plus, Inc., 388 S.W.3d at 703–06; Murphy, 374 S.W.3d at 633–
36; Ustanik, 320 S.W.3d at 413–14; DLB Architects, P.C., 305 S.W.3d at 411;
Landreth v. Las Brisas Council of Co-Owners, Inc., 285 S.W.3d 492, 501 (Tex.
App.—Corpus Christi 2009, no pet.).4 In Murphy, this court held that the
4
The Texas Supreme Court granted review in the most recent intermediate
appellate court decision, Pro Plus, Inc., on April 19, 2013. See 388 S.W.3d at
7
defendant waived his right to dismissal by substantially invoking the judicial
process; the defendant participated extensively in discovery, sought affirmative
relief in the form of traditional and no-evidence summary judgment motions,
participated in court-ordered mediation after obtaining partial summary judgment
in his favor, and did not assert his dismissal right for three and one-half years
before seeking it just five days before trial was scheduled. See 374 S.W.3d at
633–36. In the remaining four cases, the appellate courts held that the
defendants did not waive their dismissal right. See Pro Plus, Inc., 388 S.W.3d at
703–06 (finding no waiver where defendant participated in discovery, agreed to
extend discovery and expert-designation deadlines, and delayed in filing motion
to dismiss until after two-year statute of limitations ran on plaintiff’s negligence
claim); Ustanik, 320 S.W.3d at 413–14 (finding no waiver where defendants
participated in discovery, filed motions for summary judgment, and waited more
than two years before filing motion to dismiss); DLB Architects, P.C., 305 S.W.3d
at 411 (holding that defendants did not waive dismissal right by waiting fifteen
months before filing motion to dismiss when no evidence showed intent to waive
right); Landreth, 285 S.W.3d at 501 (holding that defendant did not waive
dismissal right by participating in discovery, taking depositions, and filing motion
for summary judgment because statute does not contain filing deadline and no
evidence showed defendant intended to waive dismissal right).
689. And a petition for review is currently pending at the supreme court in
Murphy. See 374 S.W.3d at 627.
8
Here, O’Connor filed her original petition in April 2011. In her petition, she
alleged that appellants provided fraudulent engineering reports. In response,
appellants filed an answer in which they generally denied the allegations. In
February 2012, O’Connor filed an amended petition, which did not include any
substantive changes. Appellants responded by filing an answer in which they
generally denied the claims and asserted affirmative defenses.
During the next twenty-two months, appellants conducted little to no
affirmative discovery; they responded to requests for disclosure that O’Connor
included with her original petition, participated in a deposition of O’Connor
noticed by Perma Pier,5 and amended their responses to O’Connor’s requests for
disclosure to add information regarding a potential testifying expert. Appellants
also agreed to a scheduling order, to extend the deadline to designate expert
witnesses, and to reset the trial date. Appellants moved to dismiss the case
against them almost two years after O’Connor brought suit, one month before the
first trial setting.
The present case is more like those cases in which waiver was not found
than Murphy. Appellants did not extensively participate in discovery, they did not
seek affirmative relief in the trial court, and they did not participate in court-
5
The deposition was hosted at the office of appellants’ counsel. Appellants
note that the deposition was taken at their offices in Dallas as a professional
courtesy because counsel for Perma Pier is from San Antonio. The record does
not contain the deposition transcript, but the index to the deposition shows that
counsel for Perma Pier conducted the majority of the questioning and that
appellants cross-examined O’Connor.
9
ordered mediation. Cf. Murphy, 374 S.W.3d at 635. Appellants took no actions
inconsistent with an intent to rely on their dismissal right, other than waiting
almost two years to file a motion to dismiss. See Jernigan, 111 S.W.3d at 156–
157; Palladian Bldg. Co., 165 S.W.3d at 434; DLB Architects, P.C., 305 S.W.3d
at 411.
Appellants’ twenty-two-month delay in filing the motion to dismiss does not,
without more, strip them of their dismissal right under section 150.002. See Pro
Plus, Inc., 388 S.W.3d at 703; Ustanik, 320 S.W.3d at 414; DLB Architects, P.C.,
305 S.W.3d at 411. Although this appears contrary to the purpose of the
certificate of merit statute—which is to deter and quickly end non-meritorious
claims—when interpreting statutory construction, we must “first and foremost”
look to the words of the statute to give effect to the legislature’s intent. See CTL
Thompson Tex., 390 S.W.3d at 301; Lexington Ins. Co. v. Strayhorn, 209 S.W.3d
83, 85 (Tex. 2006); see also State v. Shumake, 199 S.W.3d 279, 284 (Tex. 2006)
(explaining that our primary objective in statutory construction is to give effect to
the legislature’s intent). We presume that every word of a statute was used for a
purpose and that every omitted word was purposefully not chosen. TGS-NOPEC
Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011). The legislature
has imposed deadlines on some statutory dismissal rights, but it did not provide a
deadline for filing a motion to dismiss under section 150.002. Compare Tex. Civ.
Prac. & Rem. Code Ann. § 150.002, with id. § 27.003(b) (West Supp. 2013)
(providing a statutory sixty-day deadline to file a motion to dismiss in an anti-
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SLAPP case), and id. § 74.351(a) (West Supp. 2013) (requiring that a health-
care-liability-claims defendant file objections to the sufficiency of a plaintiff’s
expert report within twenty-one days after service). Applying the rules of
statutory construction to the certificate of merit statute, we must presume that the
legislature meant what it said, and we cannot imply waiver based only on delay
when the legislature did not provide a deadline for filing a motion to dismiss
under section 150.002. See TGS-NOPEC Geophysical Co., 340 S.W.3d at 439.
Given the state of the law at this point in time and applying strict statutory
construction to section 150.002, we are constrained to hold based on the facts
presented here that appellants did not waive their right to seek dismissal based
on O’Connor’s failure to file a certificate of merit in this case.
B. Section 150.002 Applies to O’Connor’s Claims Against Appellants
O’Connor also asserts, as an alternative basis to uphold the trial court’s
order denying appellants’ motion to dismiss, that section 150.002 does not
require a certificate of merit to be filed in her suit against appellants. According
to O’Connor, because section 150.002 applies only to actions “arising out of the
provision of professional services,” Tex. Civ. Prac. & Rem. Code Ann.
§ 150.002(a), it does not apply to her claims alleging that appellants “did not
perform the actions they claim to have performed [a personal site inspection of
the property] via their purported inspection reports.”
Section 150.002 requires a certificate of merit in any action for damages
arising out of the provision of professional services by a licensed professional
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engineer. Id. § 150.001(1) (West 2011), § 150.002(a). When determining
whether an action arises out of the provision of professional services, the issue is
not whether the alleged tortious acts constituted the provision of professional
services, but rather whether the tort claims arise out of the provision of
professional services. Dunham Eng’g, Inc. v. Sherwin-Williams Co., 404 S.W.3d
785, 793 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (citing Pelco Constr.,
Inc. v. Dannenbaum Eng’g Corp., 404 S.W.3d 48, 54–55 (Tex. App.—Houston
[1st Dist.] 2013, no pet.)). In other words, section 150.002 “does not require the
specific acts creating the claim for the tort also constitute the provision of
professional services” but instead “the acts creating the claim must ‘aris[e] out of
the provision of professional services.’” Pelco Constr., Inc., 404 S.W.3d at 54–
55. And the statute requires that the certificate of merit
set forth specifically for each theory of recovery for which damages
are sought, the negligence, if any, or other action, error, or omission
of the licensed [professional engineer] in providing the professional
service, including any error or omission in providing advice,
judgment, opinion, or a similar professional skill claimed to exist and
the factual basis for each such claim.
Tex. Civ. Prac. & Rem. Code Ann. § 150.002(b) (emphasis added). Thus, the
certificate of merit must state any action or omission in providing the professional
service.
Here, appellants provided initial and final engineering reports. The parties
do not dispute that appellants qualify as “licensed professional engineer[s]” under
the certificate of merit statute. See id. § 150.001(1) (defining a “licensed or
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registered professional” to include a licensed professional engineer and any firm
in which the licensed professional practices as a licensed professional). Nor do
the parties dispute that the services appellants agreed to provide in this case—
providing initial and final engineering reports—constitute the provision of
professional services. See id. § 150.002(a); Tex. Occ. Code Ann. §
1001.003(b)–(c) (West 2012) (defining the practice of engineering). O’Connor
alleged that appellants falsely claimed in their reports that they had personally
inspected the house and alleged that the reports “are not based upon any
personal inspection of the Home by Choudhury, and thus cannot possibly be
believed and do not meet the requirements of any reputable engineer performing
an assessment and preparing an engineering report related to foundation
repairs.”
To determine whether section 150.002 applies to require a certificate of
merit, the question is not whether the alleged acts and omissions of appellants—
fraudulently stating in the engineering reports that the foundation assessments
were based, in part, on an inspection of the site—constitute the provision of the
professional services. The question is whether appellants’ act of providing
engineering reports constituted the provision of professional services. The
alleged acts, omissions, and misrepresentations of appellants were made as part
of their providing initial and final engineering reports and, consequently, arose
out of the provision of professional services. See Dunham Eng’g, Inc., 404
S.W.3d at 793; see also Pelco Constr., Inc., 404 S.W.3d at 56 (holding certificate
13
of merit required where plaintiff alleged that engineer defendant made
misrepresentations at pre-bid conference while explaining project to plaintiff and
during oversight of construction); Capital One v. Carter & Burgess, Inc., 344
S.W.3d 477, 480–81 (Tex. App.—Fort Worth 2011, no pet.) (holding that alleged
false misrepresentations regarding procurement of easement were made as part
of defendant’s performance of professional services). Thus, section 150.002
applies to O’Connor’s claims against appellants.6
C. Laches Does Not Apply
O’Connor also asserts that the trial court did not abuse its discretion by
denying appellants’ motion to dismiss because the doctrine of laches precludes
appellants’ right to seek dismissal under the certificate of merit statute.
Laches is an affirmative defense akin to estoppel. City of Fort Worth v.
Johnson, 388 S.W.2d 400, 403 (Tex. 1964); see Tex. R. Civ. P. 94. The two
essential elements of laches are (1) an unreasonable delay by one having legal
or equitable rights in asserting those rights, and (2) a good faith change of
position by another to her detriment because of the delay. Johnson, 388 S.W.2d
at 403; see also Caldwell v. Barnes, 975 S.W.2d 535, 538 (Tex. 1998); Ustanik,
320 S.W.3d at 414.
6
O’Connor also alleges in her brief that section 150.002 does not apply
because she did not seek damages from appellants. But O’Connor’s amended
petition asserts multiple causes of action against all “Defendants,” including
appellees, and specifically names appellees in her causes of action for fraud and
civil conspiracy; she sought damages for all causes of action and generally
prayed for damages from all “Defendants.”
14
We will assume, without deciding, that O’Connor may use the affirmative
defense of laches to prevent the dismissal of her suit. She had the burden to
prove unreasonable delay by appellants in asserting their dismissal right and also
that her position had, in good faith, been changed because of the delay. See
Johnson, 388 S.W.2d at 403. O’Connor made arguments in her response to the
motion to dismiss alleging that she had suffered prejudice, but she did not show
that she detrimentally changed her position in reliance on appellants’ delay in
asserting their dismissal right.7 See Culver v. Pickens, 142 Tex. 87, 91, 176
S.W.2d 167, 170–71 (1943); Trammel’s Lubbock Bail Bonds v. Lubbock Cnty.,
60 S.W.3d 145, 150 (Tex. App.—Amarillo 2001) (“[O]ne invoking laches must
demonstrate that his ability to pursue a right or defense has been impaired
because of the delay.”), rev’d in part on other grounds, 80 S.W.3d 580 (Tex.
2002). Thus, O’Connor has not satisfied her burden to prove laches. See Tex.
R. Civ. P. 94; Am. Petrofina, Inc. v. Allen, 887 S.W.2d 829, 830 (Tex. 1994)
(requiring that party present evidence to support affirmative defense).
7
For example, O’Connor alleged generally that because the discovery
period ended prior to appellants’ moving to dismiss, she was prevented from
conducting additional discovery “necessitated by the position of Appellants
relative to § 150.002,” and that she “would have made other decisions and
pursued other avenues had Appellants timely exercised whatever right to
dismissal they now claim.” She did not elaborate on or provide any evidence of
what discovery she was prevented from conducting or what “other decisions” and
“other avenues” she would have made and pursued.
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D. Denial of Motion to Dismiss Was an Abuse of Discretion
Having held that appellants did not waive their right to dismissal under
section 150.002, that section 150.002 requires a certificate of merit to be filed in
this case, and that the doctrine of laches does not bar appellants’ right to
dismissal, we hold that the trial court abused its discretion by denying appellants’
motion to dismiss. We sustain appellants’ sole issue.
V. CONCLUSION
Having sustained appellants’ sole issue, we reverse the trial court’s order
denying appellants’ motion to dismiss and remand the case to the trial court for
entry of an order granting appellants’ motion after it determines whether the
dismissal should be with or without prejudice. See Tex. Civ. Prac. & Rem. Code
Ann. § 150.002(e).
/s/ Sue Walker
SUE WALKER
JUSTICE
PANEL: DAUPHINOT, WALKER, and MCCOY, JJ.
DELIVERED: March 6, 2014
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