cities-of-dickinson-friendswood-la-marque-league-city-lewisville-and ( 2009 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-07-00453-CV
Gilbert Limon and Martha Limon, Individually, and d/b/a Limon Hauling Co., Appellants
v.
J.T.B. Services, Inc., Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
NO. D-1-GN-00-000466, HONORABLE PETER M. LOWRY, JUDGE PRESIDING
MEMORANDUM OPINION
Appellants Gilbert Limon and Martha Limon, individually and d/b/a Limon Hauling
Co.,1 sued appellee J.T.B. Services, Inc. (“J.T.B.”) for breach of contract and fraud. J.T.B. filed a
motion for summary judgment, which the trial court granted. Limon Hauling appeals, arguing that
the trial court erred in granting J.T.B.’s motion for summary judgment and in denying Limon
Hauling’s counter-motion for summary judgment. Because we hold that J.T.B. established that it
was entitled to judgment as a matter of law, we affirm the order of the trial court.
BACKGROUND
J.T.B., a construction and demolition contractor, submitted a bid to the City of Austin
(“the City”) for demolition work at Remediation and Demolition Area 8 within Austin-Bergstrom
1
We will refer to the appellants collectively as “Limon Hauling,” except where it is
necessary to distinguish among individual appellants.
International Airport (“Area 8”). Prior to submitting its bid, J.T.B. solicited bids from subcontractors
for hauling debris from Area 8. Limon Hauling submitted a bid for the subcontract, and J.T.B. used
Limon Hauling’s bid when submitting its own bid to the City.
As part of its bid, J.T.B. was required to demonstrate compliance with the City’s
minority-owned and women-owned business enterprises procurement program.2 J.T.B. submitted
a DBE Goal Compliance Plan detailing what percentage of the work on the contract would be
subcontracted out to DBEs.3 J.T.B. listed Limon Hauling as the DBE subcontractor responsible for
“transportation and disposal of debris” at a price of $122,408, or 27.3% of the overall contract price.
J.T.B. was awarded the Area 8 project and signed a contract with the City on
February 26, 1999 (the “City contract”).4 On March 2, 1999, the director of the City’s Small and
Minority Business Resources Department sent a letter to Limon Hauling congratulating it on being
awarded a subcontract with J.T.B. J.T.B.’s Project Manager, Steve Traina, testified in his deposition
that J.T.B. also gave Limon Hauling verbal notice that Limon Hauling had been awarded the
subcontract. According to Limon Hauling, it informed J.T.B. that it could start the job immediately.
According to J.T.B., Limon Hauling said it did not have the necessary trucks and equipment to
perform the work. J.T.B. then hired Pulido & Sons Trucking (“Pulido”), who had also submitted
2
Minority-owned and women-owned businesses are also referred to as disadvantaged
business enterprises, or “DBEs.”
3
The DBE program, which is administered by the City’s Small and Minority Business
Resources Deartment, encourages DBE participation in City contracts by establishing a goal for the
percentage of work on any contract that will be completed by a DBE. See City of Austin, Small
& Minority Bus. Res. Dep’t, http://www.ci.austin.tx.us/smbr/default.htm (last visited Mar. 15, 2009);
Austin, Tex., Code of Ordinances § 2.9A-19 (2008) (creating procedure for establishing minimum
DBE participation levels for construction contracts).
4
The City signed the contract on March 6, 1999.
2
a bid but was not a DBE, to perform the hauling work for the Area 8 project.5 J.T.B. did not request
permission from the City to substitute Pulido for Limon Hauling, as required by city ordinance. See
Austin, Tex., Code of Ordinances § 2.9A-23 (2008) (governing post submission changes to DBE
compliance plan).
According to Limon Hauling, when J.T.B. did not contact it about starting the job,
Limon Hauling went to the airport job site and discovered that J.T.B. was using Pulido instead.
Limon Hauling then filed a complaint with the City’s Small and Minority Business Resources
Department. On March 25, the City notified J.T.B. that the City contract would be terminated due
to J.T.B.’s failure to comply with the DBE compliance plan—by failing to submit a signed letter of
intent for each of its DBE subcontractors and by substituting Pulido for Limon Hauling—unless
J.T.B. cured the violations within seven days.6
After being admonished by the City, J.T.B. negotiated a written contract with Limon
Hauling for the “transportation of concrete, asphalt, structural & misc. steel, spoils, base materials,
5
Limon Hauling concedes that it did not own the necessary trucks, but contends that it
intended to rent the needed equipment or subcontract out the work. Martha Limon, Limon Hauling’s
owner, averred in an affidavit in response to J.T.B.’s motion for summary judgment that J.T.B. did
not even notify Limon Hauling what type of trucks were necessary to perform the work prior to
hiring Pulido.
6
Specifically, the City stated that J.T.B. had failed to:
(1) Submit signed and notarized letters of intent (LOI) between you and each of
your DBE Subcontractors within seven (7) business days upon notification
of status as certified low bidder, and
(2) Obtain consent of the DBE Liaison Officer and Director of the Small and
Minority Business Resources Department for changes to the DBE Goal
Complinace Plan, including substitutions or addition of DBE subcontractors,
prior to start of work. In particular, you substituted Pulido Trucking for G.
Limon Hauling without the prior approval of the City.
3
and general demolition debris” (“the Limon subcontract”). The Limon subcontract stated that Limon
Hauling would “serve as the sole transporter for, subcontract, off-site transportation associated with”
the Area 8 project. Limon Hauling was to be paid $57.50 per hour for trucking services, plus $10 per
load for recyclable materials not transported by Limon Hauling. J.T.B. and Limon Hauling signed
the Limon subcontract on March 30, 1999. The next day, they signed the Letter of Intent (LOI)
required by the City, which stated that:
The Prime Concessionaire [J.T.B.] and the DBE listed above [Limon Hauling]
hereby agree that upon the execution of a contract for the above-named project
between the Prime Concessionaire and the City of Austin, entering into a contract,
the DBE will perform the scope of work for the price indicated above.
The “price indicated above” was a lump sum of $122,400.00. The same day that Limon Hauling
signed the LOI, it signed a subcontract with Pulido (“the Pulido subcontract”), under which Pulido
would perform all of Limon Hauling’s duties under the Limon subcontract. Limon Hauling was to
pay Pulido $50.00 an hour.
In February of 2000, Limon Hauling filed suit against J.T.B. for breach of contract
and fraud and against Pulido for breach of contract, tortious interference with a contract, and fraud.7
Limon Hauling alleged that J.T.B. continued to use Pulido and pay them directly after signing the
Limon subcontract on March 30 and that it did not pay Limon Hauling all that it was owed under the
Limon subcontract. In July 2004, Pulido and J.T.B. both filed motions for summary judgment,
arguing that the only work that Pulido did for J.T.B. after March 31 was outside the scope of the
7
Limon Hauling also initially filed suit against the City and against National American
Insurance Company as the surety for J.T.B. The claims against these two defendants were dismissed
and are not at issue in this appeal.
4
Limon subcontract.8 Limon Hauling counter-claimed for summary judgment on its claims and
asserted a new theory of breach—that J.T.B. owed a contractual duty to Limon Hauling before the
Limon subcontract was signed and that J.T.B.’s initial hiring of Pulido was a breach of that duty.
After a hearing, the trial court granted Pulido’s motion for summary judgment in September 2004,
but failed to rule on J.T.B.’s motion. Almost a year later, in August 2005, the trial court
granted J.T.B.’s motion for summary judgment and denied Limon Hauling’s counter-motion for
summary judgment.9
Limon Hauling now appeals the trial court’s order granting summary judgment in
favor of J.T.B. and denying Limon Hauling’s motion for summary judgment. Limon Hauling
contends that J.T.B. failed to conclusively prove it was entitled to judgment as a matter of law.10
8
Pulido filed both traditional and no-evidence summary judgment motions. See Tex. R. Civ.
P. 166a(c), (i). J.T.B. filed a traditional summary judgment motion only. See id. 166a(c).
9
Limon Hauling states in its brief to this Court that the trial court’s “ruling failed to mention
or rule on Appellant’s Counter-Claim for Summary-Judgment which was heard the same day and
therefore did not dispose of all issues regarding the case.” However, the trial court’s order granting
summary judgment in favor of J.T.B. stated that “all claims asserted by plaintiffs against J.T.B.
Services, Inc., are denied . . . .” We will treat Limon Hauling’s arguments to this Court about why
the trial court should have acted on and granted its motion for summary judgment as an appeal of
the trial court’s denial of Limon Hauling’s motion for summary judgment.
10
Limon Hauling also suggests that the trial court acted improperly when it granted J.T.B.’s
motion for summary judgment, pointing to the length of time between the hearing on summary
judgment and the court’s ruling, the fact that the case was set on the jury docket before summary
judgment was granted, and the fact that counsel for J.T.B. sent a letter to the trial court requesting
a ruling on the motion which Limon Hauling’s counsel did not receive because J.T.B.’s counsel
mailed it to the wrong address. Limon Hauling does not cite to any authority to support its
contention that these facts support an inference of impropriety. See Tex. R. App. P. 38.1(i)
(requiring appellant’s briefs to include “appropriate citations to authorities and to the record”). We
do not believe these facts support such an inference, and we find nothing in the record to support
Limon Hauling’s allegation.
5
STANDARD OF REVIEW
When a defendant files a traditional motion for summary judgment, it must either:
(1) conclusively disprove at least one element of each of the plaintiff’s theories of recovery, or
(2) plead and conclusively establish each essential element of an affirmative defense, thereby
rebutting the plaintiff’s cause of action. See Tex. R. Civ. P. 166a; Centeq Realty, Inc. v. Siegler,
899 S.W.2d 195, 197 (Tex. 1995); Holmstrom v. Lee, 26 S.W.3d 526, 530 (Tex. App.—Austin 2000,
no pet.). If the defendant’s motion and summary-judgment proof facially establish the right to
judgment as a matter of law, the burden shifts to the non-movant plaintiff to raise a material fact
issue sufficient to defeat summary judgment. Centeq Realty, 899 S.W.2d 195 at 197; Holmstrom,
26 S.W.3d at 530. When a plaintiff files a summary judgment motion, it must conclusively
establish all elements of its cause of action. See Tex. R. Civ. P. 166a; Myrad Props. v. LaSalle Bank
Nat’l Ass’n, 252 S.W.3d 605, 615 (Tex. App.—Austin 2008, pet. granted); Hutson v. Tri-County
Props., LLC, 240 S.W.3d 484, 487 (Tex. App.—Fort Worth 2007, pet. denied). A matter is
conclusively established if reasonable minds could not differ as to the conclusion to be drawn from
the evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); Triton Oil & Gas
Corp. v. Marine Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex. 1982); Ling v. BDA&K Bus.
Servs., Inc., 261 S.W.3d 341, 345 (Tex. App.—Dallas 2008, no pet.).
Because the propriety of summary judgment is a matter of law, we review the trial
court’s decision de novo. Valance Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). We
take as true all evidence favorable to the non-movant and indulge every reasonable inference and
resolve any doubts in the non-movant’s favor. TX Far W., Ltd. v. Texas Invs. Mgmt., 127 S.W.3d
295, 301 (Tex. App.—Austin 2004, no pet.) (citing Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546,
6
548-49 (Tex. 1985)). When, as here, the trial court granted one party’s motion and denied the
other’s, “the reviewing court should determine all questions presented and render the judgment that
the court below should have rendered.” Id.
DISCUSSION
Breach of Contract
To recover on a breach of contract claim, Limon Hauling must show: (1) a valid
contract existed; (2) Limon Hauling performed or tendered performance; (3) J.T.B. breached the
contract; and (4) Limon Hauling sustained injury as a result of the breach. See New York Life Ins.
Co. v. Miller, 114 S.W.3d 114, 121 (Tex. App.—Austin 2003, no pet.). J.T.B. argued in its motion
for summary judgment that it could conclusively disprove the third element—that it breached the
contract.11 See Centeq Realty, 899 S.W.2d at 197 (defendant prevails on summary judgment by
conclusively disproving at least one essential element of cause of action). On appeal, Limon Hauling
alleges three different theories of breach—that J.T.B. breached the contract when it initially hired
Pulido after accepting the bid from Limon Hauling, when it continued to use Pulido after signing the
March 30 subcontract, and when it paid Limon Hauling less than the $122,400 listed in the LOI. We
examine each in turn.
11
On appeal, J.T.B. also argues that Limon Hauling presented no evidence on the damages
claim. However, J.T.B. did not file a no-evidence summary judgment motion with the trial court,
see Tex. R. Civ. P. 166a(i), and did not attempt to conclusively disprove damages below. Therefore,
we will only consider the grounds that J.T.B. raised in its summary judgment motion—that it could
conclusively disprove the breach element. Id. at 166a(c) (requiring summary judgment motions to
state the specific grounds on which judgment is sought and instructing appellate courts to only
consider issues “expressly presented to the trial court by written motion”).
7
Pre-March 31 Use of Pulido
J.T.B.’s motion for summary judgment rested on its contention that the only contract
in existence between itself and Limon Hauling was the Limon subcontract that was signed on
March 30, 1999. Indeed, J.T.B. contends that this is the only contract Limon Hauling pleaded and
that Limon Hauling’s only pleaded allegations of breach were related to J.T.B.’s payments to Pulido
for work performed after March 31. Limon Hauling, on the other hand, argues that it pleaded that
a contract existed as of February 26, 1999, and that J.T.B. breached this contract when it initially
hired Pulido to work on the Area 8 project. Limon Hauling contends that J.T.B.’s failure to address
these allegations in the motion for summary judgment means that J.T.B.’s motion must fail. See
Tex. R. Civ. P. 166a(c) (requiring a motion for summary judgment to “state the specific grounds
therefor”). The question presented, therefore, is whether Limon Hauling’s pleading can be read to
include a claim that J.T.B. breached by using Pulido prior to the signing of the March 30
Limon subcontract.
We construe the pleadings liberally in favor of Limon Hauling, the party against
whom summary judgment is sought. See TX Far W., 127 S.W.3d at 301 (courts should indulge every
reasonable inference in favor of non-movant); Suprise v. Decock, 84 S.W.3d 378, 380
(Tex. App.—Corpus Christi 2002, no pet.) (courts should liberally construe pleadings in favor of
party against whom summary judgment is sought); see also Roark v. Allen, 633 S.W.2d 804, 809
(Tex. 1982) (courts should construe pleadings liberally in favor of pleader). We look to the pleader’s
intent and uphold the pleading “even if some element of a cause of action has not been
specifically alleged. Every fact will be supplied that can reasonably be inferred from what is
specifically stated.” Roark, 633 S.W.2d at 809 (quoting Gulf, Colo. & Santa Fe Ry. Co. v. Bliss,
8
368 S.W.2d 594, 599 (Tex. 1963)); see also Rivero v. Blue Keel Funding, L.L.C., 127 S.W.3d 421,
424 (Tex. App.—Dallas 2004, no pet.). Nonetheless, pleadings must give reasonable notice of
the claims asserted. See Tex. R. Civ. P. 47(a); Smithkline Beecham Corp. v. Doe, 903 S.W.2d 347,
354 (Tex. 1995); Rivero v. Blue Keel Funding, L.L.C., 127 S.W.3d 421, 424 (Tex. App.—Dallas
2004, no pet.).
Limon Hauling’s second amended pleading, the live pleading at the time summary
judgment was granted, cannot reasonably be read to include an allegation that a contract existed
between Limon Hauling and J.T.B. before the Limon subcontract was signed on March 30 and that
J.T.B. breached this contract when it initially hired Pulido. In fact, Limon Hauling’s pleaded facts
specifically note that, “[o]nly after receiving the warning [from the City] did Defendant JTB agree
to sign a Letter of Intent and finalize a contract with Plaintiffs for them to handle all of the hauling
work on the airport project” (emphasis added). While Limon Hauling’s pleaded facts do mention
that J.T.B. initially hired Pulido, Limon Hauling does not refer to this hiring as a breach. In contrast,
Limon Hauling pleaded that, “[a]fter March 31, 1999, Defendant JTB knowingly and intentionally
violated the terms of the Letter of Intent, the Compliance Plan, the contract with the City of Austin,
the contract with Plaintiffs[,] and [the] City of Austin MBE/WBE procurement Program Rules by
utilizing and paying Defendant Pulido for hauling work on the airport project.” Furthermore, in the
section of the petition entitled “First Cause of Action: Breach of Contract Against Defendant JTB
and Claim on Performance and Payment Bond,” Limon Hauling only states that J.T.B. failed to pay
Limon Hauling the full amount due under the Limon subcontract.
Limon Hauling’s second amended petition only gives fair notice that Limon Hauling
is alleging a breach of the subcontract signed on March 30. Because Limon Hauling did not plead
9
a contract or breach prior to that date, J.T.B. was not required to disprove an earlier, unplead breach
in order to prove that it was entitled to judgment as a matter of law. See Tex. R. Civ. P. 47(a);
Smithkline Beecham, 903 S.W.2d at 354.
Post-March 31 Use of Pulido
Limon Hauling alleges that J.T.B. continued to use Pulido after signing the Limon
subcontract, which made Limon Hauling the “sole transporter” of “concrete, asphalt, structural [and]
misc. steel, spoils, base materials, and general debris” from the Area 8 project. J.T.B. concedes that
if it continued to use Pulido and paid Pulido directly for hauling material from the Area 8 project
site, then it breached the contract. J.T.B. also acknowledges that it made approximately $33,700 in
payments to Pulido for work performed after March 31; however, J.T.B. contends that all of this
work was outside the scope of the Limon subcontract and therefore not a breach of that contract.12
Specifically, J.T.B. asserts that the payments it made to Pulido after March 31 were: reimbursement
for dump-site fees; reimbursement for payment to a third-party contractor who hauled hazardous
waste from the Area 8 project site; and hauling work that Pulido performed pursuant to a different
project. Limon Hauling does not contest J.T.B.’s characterization of the various payments; rather,
Limon Hauling contends that the disposal fee reimbursement and the hauling work were in fact
within the scope of the Limon subcontract.
According to J.T.B., $7,289 of the $33,700 that it paid Pulido was a reimbursement
for disposal fees that Pulido had to pay at the disposal site when Pulido dumped the debris it hauled
12
J.T.B. also paid Pulido $13,123.06 for the hauling work that Pulido performed before
March 31, for a total of $46,826.49.
10
under Pulido’s subcontract with Limon Hauling. In support of this contention, J.T.B. introduced
affidavits from Nellie Pulido, Pulido’s bookkeeper, and Jim Bulgier, J.T.B.’s president. J.T.B. also
introduced invoices that it received from Pulido which list $6,704 worth of disposal fee charges
incurred between April 27 and June 17, 1999, plus $585 in handling fees and finance charges.13
Limon Hauling contends that, because Pulido was Limon Hauling’s subcontractor,
any reimbursement for disposal fees should have flowed through Limon Hauling and that J.T.B.
breached the Limon subcontract when it made the payments directly to Pulido. J.T.B. counters that
the disposal fees were outside the scope of the Limon subcontract. The question presented,
therefore, is whether disposal fees are within the scope of the work as described in the Limon
subcontract:
Transportation of concrete, asphalt, structural & misc. steel, spoils, base materials, and
general demolition debris to locations as designated by contractor.
Vehicle type shall be trailer end-dump type capable of safely transporting 20-30 cubic
yards of materials as specified above.
Subcontractor is responsible for all fuel, road taxes, permits, maintenance, and repairs
for equipment required to perform this scope of work.
Courts enforce an unambiguous contract as written. See Tittizer v. Union Gas Corp., 171 S.W.3d
857, 860 (Tex. 2005); Evergreen Nat’l Indem. Co. v. Tan It All, Inc., 111 S.W.3d 669, 676
(Tex. App.—Austin 2003, no pet.) (“Only the terms of the contract should be consulted when
interpreting an unambiguous contract provision.”). The Limon subcontract unambiguously does not
13
Ms. Pulido averred in her affidavit that the Pulido invoices were true and accurate copies
and represented a true and accurate explanation of all payments Pulido received from J.T.B.
11
include disposal fees. Therefore, J.T.B. conclusively proved that it did not breach the Limon
subcontract when it reimbursed Pulido for the disposal fees.
J.T.B. next notes that it paid Pulido $7,745 to haul materials from the airport to
“McMorris Ranch,” where J.T.B. was building a dam, and that this work was outside the scope of
the Limon subcontract. Because the Limon subcontract states that Limon Hauling “is to act as sole
transporter for, subcontract, off-site transportation associated with” the Area 8 project, in order to
conclusively prove that these payments were outside the scope of the Limon subcontract, J.T.B.
needed to conclusively prove that this hauling work was unrelated to the Area 8 project.
J.T.B. supported its claim that the McMorris Ranch job was outside the scope of the
Limon subcontract with the affidavit of Ms. Pulido who averred, “JTB also hired Pulido to transport
materials from the airport to a site where a dam was being built for McMorris. Pulido received
approximately $7,745.46 for its work on this job, which is completely unrelated to the Project.”14
Attached to Ms. Pulido’s affidavits were copies of Pulido’s invoices for this hauling work. One of
the invoices lists $6,435 in charges for a “haul off” for the “airport to dam job.” Another invoice
lists $320.46 in charges for hauling materials from “dam job to Texas Disposal Systems.” The
affidavit also included a spreadsheet which Ms. Pulido averred contained a true and accurate
explanation of all payments from J.T.B. to Pulido. This table includes the payments J.T.B. made to
Pulido for its hauling work prior to the signing of the Limon subcontract, the reimbursement for
dump fees, the payments to the third-party hazardous waste hauler, and the payments for the
14
J.T.B. also introduced the affidavit of Jim Bulgier, who averred, “JTB also hired Pulido
to transport materials from the airport to a site where a dam for McMorris [sic]. Pulido received
$7,745.46 for its work on the McMorris job. This work was outside the scope of the JTB Contract
with Limon.”
12
McMorris Ranch job, which are described as “not related to Bergstrom Area 8.” Taken together, this
evidence is sufficient to prove that the work that Pulido performed hauling materials to McMorris
Ranch was outside the scope of the Limon subcontract, which only covered the Area 8 project.
Next, J.T.B. asserts that $18,669 of the $33,700 in payments to Pulido were
reimbursements for payments Pulido made to a third-party contractor for hauling hazardous
materials. J.T.B. supported this assertion with affidavits by Jim Bulgier, J.T.B.’s president, and
Nellie Pulido, Pulido’s bookkeeper. The Limon subcontract does not list hazardous waste materials
among the material that Limon Hauling was to haul from Area 8. See Tittizer, 171 S.W.3d at 860
(unambiguous contract enforced as written); Evergreen Nat'l Indem. Co., 111 S.W.3d at 676 (same).
Limon Hauling did not contest J.T.B.’s evidence regarding this payment or argue that such a
payment would violate the Limon subcontract in the response to J.T.B.’s summary judgment motion
and does not do so on appeal. Therefore, J.T.B. conclusively proved that the payments for hazardous
waste disposal were outside the scope of the Limon subcontract.
Because J.T.B. presented sufficient evidence to show that all of its payments to Pulido
for work after March 31, 1999 were outside the scope of the Limon subcontract, the burden then
shifted to Limon Hauling to raise a material issue of fact with regard to the breach element. The only
evidence that Limon Hauling introduced in response was an affidavit by Martha Limon, the owner
of Limon Hauling. Regarding the dump fees, Ms. Limon averred that Pulido “was my subcontractor
and did not have authority to contract or bill J.T.B. for dump fees or any other fees.” As we
discussed above, we disagree with Ms. Limon’s legal conclusion about the scope of the Limon
subcontract, which does not include dump fees. See Mercer v. Daoran Corp., 676 S.W.2d 580, 583
(Tex. 1984) (“A legal conclusion in an affidavit is insufficient to raise an issue of fact in response
13
to a motion for summary judgment . . . .”); Higbie Roth Constr. Co. v. Houston Shell & Concrete,
1 S.W.3d 808, 812 (Tex. App.—Houston [1st Dist.] 1999, pet. denied) (while court must take all
factual allegations as true, it is not required to accept as true any legal conclusions stated in
pleadings). Regarding the payments for the McMorris Ranch job, Ms. Limon simply avers, “To the
best of my knowledge, there were not other projects for hauling.” This statement does not contradict
J.T.B.’s evidence—it could be true that there was another project unrelated to the Area 8 project and
that Ms. Limon was unaware of that project.
J.T.B. facially proved that its payments to Pulido for work performed after March 31
were outside the scope of the Limon subcontract. Limon Hauling failed to raise a material fact issue
sufficient to defeat summary judgment. Therefore, we hold that J.T.B. conclusively proved that it
was entitled to judgment as a matter of law regarding the breach cause of action that was based on
J.T.B.’s post-March 31 use of Pulido.
Payment Dispute
J.T.B. paid Limon Hauling $57.50 per hour, for a total of $61,583.75. Limon Hauling
alleges that J.T.B. was contractually bound to pay Limon Hauling at least $122,400—the lump sum
contained in the LOI that was signed on March 31, 1999. J.T.B. counters that there was no minimum
lump sum promised in the Limon subcontract that was signed on March 30, 1999, and that therefore
J.T.B. only owes Limon Hauling for the amount of work actually performed. The question for this
Court is whether the lump sum contained in the LOI is binding and therefore supercedes the payment
provision of the Limon subcontract. We hold that the LOI is not binding and does not supercede the
Limon subcontract.
14
In construing a contract, our primary purpose is to enforce the parties’ intent as it can
objectively be determined from the language of the contract. See SAS Inst., Inc. v. Breitenfeld,
167 S.W.3d 840, 841 (Tex. 2005); GTE Sw., Inc. v. Public Util. Comm’n of Tex., 102 S.W.3d 282,
294 (Tex. App.—Austin 2003, pet. dism’d). The LOI provides that J.T.B. and Limon Hauling “upon
the execution of a contract between [J.T.B.] and the City of Austin, entering into a contract, [Limon
Hauling] will perform the scope of work for the price indicated above.” The LOI lists the “Proposed
Contract Amount” as $122,400, the “Type of Agreement” as “Lump Sum” and the “Description of
work to be performed under Subcontract with DBE” as “Transportation of Construction Debris.”
The language of the LOI—asking for the “Proposed Contract Amount” and referencing the
subcontract—indicates that the LOI contemplated a more formal subcontract that would set out the
parties’ obligations in more detail. (emphasis added.) The language of the Limon subcontract, on
the other hand, evidences an intent to be a final and complete expression of the agreement between
Limon Hauling and J.T.B. The Limon subcontract contains a detailed description of each party’s
duties and obligations. It describes the type of materials that will be transported and the type and
number of vehicles required, provides the procedure for notifying Limon Hauling what services will
be needed each day, and establishes the deadline for J.T.B. to make payments—all of which is absent
from the LOI.
Furthermore, when we consider the circumstances surrounding the contract, see GTE
Sw., 102 S.W.3d at 295, we see further evidence that the parties did not intend for the LOI to
supercede the written contract. The LOI was executed pursuant to the City’s DBE program
requirements. The City requires its prime contractors to execute LOIs with each of its DBE
subcontractors and then file the LOI with the City. The LOIs confirm that the general contractor will
15
in fact use the DBEs designated in the DBE compliance plan. Generally, LOIs are signed before the
more formal contract is negotiated, and are not intended to bind the parties after a more definite and
final contract is negotiated. See Kelly v. Rio Grande Computerland Group, 128 S.W.3d 759, 767
(Tex. App.—El Paso 2004, no pet.) (noting that terms of letter of intent were not enforceable to
extent superceded by language in subsequent contracts). The chronology in this case is different
from the norm; the parties had already negotiated and signed a formal performance-based
subcontract—which specified that Limon Hauling would be paid per load and when payment was
due—before they signed the LOI. Nevertheless, it is clear from the face of the LOI—which contains
a “proposed contract amount” for both the City contract and the Limon subcontract and references
the “Disadvantaged Business Enterprise Program”—that it was not an agreement to supercede the
previously existing subcontract. Rather, the purpose of the LOI was to fulfill J.T.B.’s obligations
under the City’s DBE program. Indeed, the City’s letter to J.T.B. warned that J.T.B. had to file an
LOI in order to keep its contract with the City. Limon Hauling argues that the LOI must supercede
the Limon subcontract because J.T.B. included the larger, flat fee in its DBE compliance plan in
order to reach the DBE percentage goal for the project. However, the Limon subcontract does not
contain a requirement that J.T.B. fulfill its obligations under the DBE compliance plan; J.T.B.’s duty
to comply with the DBE compliance plan is owed to the City under the City contract, not to
Limon Hauling.
We hold that the payment provisions in the Limon subcontract control; therefore, as
a matter of law, J.T.B. did not commit a breach of contract by paying the hourly rate in the
subcontract rather than the flat fee in the LOI.
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J.T.B. conclusively disproved the breach element as asserted in Limon Hauling’s
second amended petition. Therefore, the trial court’s order granting summary judgment in favor of
J.T.B. as to the breach of contract claim and denying Limon Hauling’s counter-motion for summary
judgment as to the same claim was proper; we overrule this issue on appeal.
Fraud
To recover on the fraud claim, Limon Hauling must show (1) that J.T.B. made a
material representation of fact (2) that was false, (3) knowing or with reckless disregard to whether
it was false, (4) with the intention that Limon Hauling rely on the representation, and (5) that Limon
Hauling relied upon the representation (6) to its detriment. See Green Int’l, Inc. v. Solis, 951 S.W.2d
384, 390 (Tex. 1997). J.T.B. argued in its motion for summary judgment that it could conclusively
disprove the second element, because it could conclusively prove that the representation
Limon Hauling cites was not false.15 See Centeq Realty, 899 S.W.2d at 197 (defendant prevails on
summary judgment by conclusively disproving at least one essential element of cause of action).
In its petition, Limon Hauling alleged that J.T.B. falsely told Limon Hauling it was
to act as the “sole transporter” for the Area 8 project, knowing “this was a false statement since
[J.T.B] was already using Defendant Pulido on the project and continued to use him after signing
15
On appeal, J.T.B. also argues that Limon Hauling did not present evidence that the “sole
transporter” representation was material (the third element), that J.T.B. intended Limon Hauling to
rely on the representation (the fourth element), or that Limon Hauling relied on the representation
(the fifth element). However, J.T.B. did not file a no-evidence summary judgment motion with the
trial court, see Tex. R. Civ. P. 166a(i), and did not attempt to conclusively disprove the third, fourth,
or fifth elements below. Therefore, we will only consider the grounds that J.T.B. raised in its
summary judgment motion—that it could conclusively disprove that the representation was false.
Id. at 166a(c) (requiring summary judgment motions to state the specific grounds on which judgment
is sought and instructing appellate courts to only consider issues “expressly presented to the
trial court by written motion”).
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a contract with Plaintiffs.” The “sole transporter” language is contained in the March 30 subcontract.
J.T.B. argues that Limon Hauling did in fact act as the sole transporter for the Area 8 project after
the Limon subcontract was signed and therefore the representation was not false.
J.T.B.’s argument and its evidentiary support is the same as that which it used to
disprove the post-March 31 breach claims: the affidavit by Ms. Pulido, the invoices, and the
spreadsheet. As discussed above, this evidence is sufficient to prove that the payments to Pulido
were outside the scope of the Limon subcontract, and Limon Hauling did not present any evidence
in response that would raise a material question of fact regarding this element. Therefore, we hold
that J.T.B. conclusively disproved that the material statement of fact was false. The trial court did
not err in granting J.T.B.’s motion for summary judgment as to the fraud claim and denying Limon
Hauling’s counter-motion on the same claim; we overrule this issue on appeal.
CONCLUSION
We hold that the trial court did not err in granting J.T.B.’s motion for summary
judgment and denying Limon Hauling’s counter-motion for summary judgment. We affirm the order
of the trial court.
___________________________________________
Diane M. Henson, Justice
Before Justices Patterson, Waldrop and Henson
Affirmed
Filed: April 30, 2009
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