F & S Construction, Inc. v. Max Saidi and Elsa Saidi ( 2003 )

OPINION  

No. 04-02-00649-CV

  F&S CONSTRUCTION, INC.,

Appellant

v.

Max and Elsa SAIDI,

Appellee

From the 45th Judicial District Court, Bexar County, Texas

Trial Court No. 1998-CI-17052

Honorable Carol R. Haberman, Judge Presiding

Opinion by: Paul W. Green, Justice

Sitting: Alma L. López, Chief Justice

Catherine Stone, Justice

Paul W. Green, Justice

Delivered and Filed: December 24, 2003

AFFIRMED

This is a breach of construction contract case. Appellant F&S Construction, Inc. (F&S) filed suit against appellees Max and Elsa Saidi for amounts allegedly owed to it under a residential construction contract. The Saidis filed a counterclaim, alleging breach of contract, as well as violation of both the Deceptive Trade Practices Act (DTPA) and the Texas Residential Construction Liability Act (RCLA). ⁽¹⁾ A jury found in favor of the Saidis, and they were awarded over $170,000. F&S now appeals the trial court decision in four issues.

Background

On September 20, 1997, Max and Elsa Saidi executed a contract of construction with F&S Construction, Inc. to build their home. The Saidis were not pleased with the work done by F&S and, after attempting to remedy several problems with the construction, sent a letter to F&S, instructing the builders to stay away from their property.

On December 1, 1998, F&S filed suit to collect the monies owed to it under the contract. ⁽²⁾ The Saidis filed an answer, motion for partial declaratory judgment, and counterclaim on December 28, 1998. The counterclaim alleged breach of contract, listing four specific allegations, and Deceptive Trade Practices (DTPA) violations, and requested general and special damages in addition to attorneys' fees, interest, and court costs. On November 29, 1999, the Saidis filed their First Amended Answer and Counterclaim, adding a claim for common law fraud and additional damage allegations. On June 15, 2001, over two and a half years after the suit was initiated, F&S filed a Request for Inspection and Entry Upon Property to be given access to the Saidis' home. The construction company and its expert were subsequently allowed to inspect the property.

On May 3, 2002, approximately two weeks before trial, F&S filed a verified plea in abatement, alleging the Saidis had not complied with the Texas Residential Construction Liability Act (RCLA) because they had failed to provide reasonable specificity of the construction defects alleged in their counterclaim and failed to provide a reasonable opportunity to inspect the property. In turn, the Saidis filed a response and a controverting affidavit to the plea. Although a hearing on the plea was scheduled for May 10, 2002, there is neither a transcript of the hearing nor an order concerning the outcome of the hearing in the appellate record. Both parties, however, are in agreement as to the plea's denial. ⁽³⁾

Shortly after the hearing on the plea in abatement, F&S filed its First Amended Original Petition, seeking consequential damages, alleging quantum meruit and substantial performance, and generally rebutting all allegations made by the Saidis in their amended answer and counterclaim. In response, the Saidis filed their Second Amended Answer and Counterclaim, pleading the same four construction defects alleged in their original counterclaim in support of their breach, DTPA, and common law fraud claims, and adding fourteen construction defects in support of their request for damages. These were the live pleadings at the time of trial.

Following the trial, the jury found in favor of the Saidis, awarding them over $170,000 in damages, attorneys' fees, and interest. In four issues F&S now appeals the trial court's failure to grant its plea in abatement, as well as the judgment of the trial court.

Sufficiency of the Evidence

In its first and second issues, F&S claims the evidence is legally and factually insufficient to support the jury's findings that 1) the Saidis gave timely notice to F&S, describing in reasonable detail each construction defect and 2) the Saidis gave F&S reasonable opportunity to inspect their home.

Standard of Review

When reviewing the legal sufficiency of evidence, the Court must consider only the evidence which supports the district court's findings. Lewelling v. Lewelling, 796 S.W.2d 164, 166 (Tex. 1990). If there is more than a scintilla of evidence to support the finding, the no evidence challenge must fail. Id. When reviewing the factual sufficiency of the evidence supporting a finding, an appellate court must examine all of the evidence and may reverse the judgment of the trial court only if the challenged finding is so against the great weight and preponderance of the evidence as to be manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986).

Texas Residential Construction Liability Act

Every issue raised by F&S deals with the applicable provisions of the Texas Residential Construction Liability Act (RCLA). Tex. Prop. Code Ann. § 27.001 et seq. (Vernon 2000). The RCLA applies to "any action to recover damages resulting from a construction defect, except a claim for personal injury, survival, or wrongful death or for damage to goods. Id. § 27.002(a); Homes v. Alwattari, 33 S.W.3d 376, 381-82 (Tex. App.--Fort Worth 2000, pet. denied). The statute defines a construction defect as "a matter concerning the design, construction, or repair of a new residence." Tex. Prop. Code Ann. § 27.001(2) (Vernon 2000). In enacting the RCLA, the legislature specifically provided that the statute would prevail "to the extent of conflict between this chapter and any other law, including the Deceptive Trade Practices-Consumer Protection Act." Id. § 27.002(b); Homes, 33 S.W.3d at 382. Thus, a claim, such as the one here, that exists solely by virtue of alleged construction defects falls exclusively within the purview of the RCLA. In re Kimball Hill Homes Tex., Inc., 969 S.W.2d 522, 526 (Tex. App.--Houston [14th Dist.] 1998, no pet.).

Under the RCLA, a claimant seeking damages arising from a construction defect must give the contractor written notice of the defect sixty days before filing suit. Tex. Prop. Code Ann. § 27.004(a)(Vernon 2000); Homes, 33 S.W.3d at 382. Under subsection ©), however, notice is not required when a complaint regarding a construction defect is asserted as a counterclaim. Id. § 27.004©). In lieu of the statutory written notice, the counterclaim must specify in reasonable detail each construction defect that is the subject of the complaint. Id. Neither applicable statutory language nor case law provides a clear definition of exactly what language constitutes reasonable detail. The purpose of the notice requirement is to encourage pre-suit negotiations to avoid the expense of litigation. In re Kimball Hill, 969 S.W.2d at 525.

In addition to the notice requirement, the contractor must be given (1) reasonable opportunity to inspect and have inspected the property that is the subject of the complaint and (2) the opportunity to make a reasonable offer of settlement, including an agreement by the contractor to repair or have repaired any construction defect described in the counterclaim and a description, in reasonable detail, of the kind of repairs which will be made. Tex. Prop. Code Ann. § 27.004©) (Vernon 2000). Both the inspection and the offer must be made within 60 days of the service of the counterclaim. Id. Notice Analysis The record shows that the Saidis' original counterclaim contained four specific allegations of failure "to meet the applicable standards for construction within the industry" and failure "to obtain proper design, materials, and workmanship." Specifically, the Saidis alleged problems with 1) the air conditioning for the residence, 2) the stucco on the residence, 3) the bidding for woodworking, cabinetry, and flooring, and 4) the failure to manage and direct the construction of the residence to conform with construction plans agreed to by both parties.

Following F&S's plea in abatement, the Saidis filed controverting affidavits and a second amended counterclaim which set out, in further detail, the construction defects complained of. Specifically, the Saidis included the four original construction defects and added fourteen detailed complaints under their request for damages. Among other complaints, these alleged defects included failure to build a level slab which required the additional work in order to lay tile and carpet, failure to install the proper plumbing and electrical fixtures which required replacement, failure to secure the house while working on the residence, and failure to timely install and pay for the roof.

F&S correctly contends this is a case of first impression because no other Texas case has directly dealt with the RCLA notice requirement in the context of a counterclaim. The notice issue was submitted to the jury, which found in favor of the Saidis. Examining the record with regard to the Saidis' counterclaim, the four construction defects alleged in the original counterclaim address the problems which are the underlying basis for the Saidis' suit with enough specificity to place F&S on notice of their alleged breaches. Because there is more than a scintilla of evidence to support the jury's findings and because those findings were not so against the great weight and preponderance of the evidence as to be manifestly unjust, we find the jury's decisions regarding the RCLA notice to be both legally and factually sufficient. F&S's first issue is overruled.

Reasonable Opportunity Analysis

As to the reasonable opportunity to inspect the property, as stated above, F&S filed its request for inspection and entry upon property on June 15, 2001. Although the Saidis had not allowed F&S to come onto the property from August of 1998, their testimony at trial indicates that, following the filing of the request to inspect, they permitted the construction company to come onto their land and inspect the residence with its own expert. Although the inspection did not take place until over two years after the counterclaim had been filed, there is no evidence that F&S was prohibited from inspecting the property after it filed its request.

Because there is more than a scintilla of evidence to support the jury's finding that the Saidis met the reasonable opportunity to inspect requirement of the RCLA and because this finding is not so against the great weight and preponderance of the evidence as to be manifestly unjust, we overrule F&S's second issue.

Plea in Abatement In issue three, F&S contends the Saidis failed to comply with the necessary provisions of the Residential Construction Liability Act Therefore, argues F&S, the counterclaim should have been abated. We review a trial court's action on a plea in abatement for abuse of discretion. Dolenz v. Cont'l Nat'l Bank of Fort Worth, 620 S.W.2d 572, 575 (Tex. 1981).

On May 3, 2002, F&S filed special exceptions to the Saidis' amended answer and counterclaim and a verified plea in abatement alleging a lack of reasonable specificity in the counterclaim. Specifically, the plea in abatement alleged that the Saidis did not a) specify each construction defect in reasonable detail in their counter claim or b) give F&S reasonable opportunity to inspect the property. The Saidis filed a timely affidavit and response controverting the plea. Their original counterclaim alleged four construction defects. The record is devoid of any evidentiary record of a hearing on the plea in abatement or of an order disposing of the plea.

Under Section 27.004(d) of the Property Code, a suit is automatically abated without the order of the court on the 11th day after the date a plea in abatement is filed if: (1) the plea is verified and alleges that the person against whom the suit is pending did not receive the written notice or was not given a reasonable opportunity to inspect the property and (2) the plea is not controverted by an affidavit filed by the claimant before the 11th day after the date on which the plea is filed. Tex. Prop. Code Ann. § 27.004(d)(Vernon 2000).

As stated above, we find the evidence to show that F&S was given both proper notice and the opportunity to inspect the property in question as required under the statute. In addition, the record shows that the Saidis timely filed a response to the plea along with controverting affidavits, thus circumventing an automatic abatement. Moreover, based on the evidence in the record regarding the RCLA prerequisites, it does not appear as though the trial court abused its discretion in denying F&S's plea in abatement. Accordingly, we overrule F&S's third issue.

Reasonable Opportunity to Repair

In its fourth and final issue, F&S argues the Saidis failed to provide the construction company with a reasonable opportunity to repair the defects in the residence, thereby preventing F&S from mitigating its damages as prescribed by the RCLA. As stated above, under subsections 27.004(b) and (c), a contractor may, within the 60 days following service of the suit, make a written offer of settlement to the claimant. Tex. Prop. Code Ann. § 27.004(b), (c)(Vernon 2000). The offer may include an agreement by the contractor to repair or to have repaired any construction defect described in the notice and describing in reasonable detail the kind of repairs which will be made. Id.

The record indicates that F&S never made such a settlement offer to the Saidis other than to say that it wanted to complete its work on the house. Under subsection 27.004(g), the effect of a contractor's failure to make a reasonable settlement offer is that the contractor loses the benefit of all limitations on damages and defenses to liability provided for in section 27.004, including both the limitation of subsection 27.004(h) on the types of damages recoverable by a homeowner and the limitation of subsection 27.004(I) on the amount of damages recoverable by a homeowner. Homes, 33 S.W.3d at 384. Likewise, F&S's failure to make a reasonable settlement offer resulted in the loss of all limitations on damages and all defenses to liability provided for by the statute. We overrule F&S's fourth issue.

The judgment of the trial court is affirmed.

Paul W. Green, Justice

1. Although the Saidis did not specifically plead the RCLA in their counterclaim, failure to plead the RCLA does not preclude its application where the underlying nature of the claim is clearly within the purview of the statute.

See In re Kimball Hill Homes Texas, Inc., 969 S.W.2d 522, 526 (Tex. App.--Houston [14th Dist.] 1998, no pet.).

2.

F&S's suit also requested prejudgment and postjudgment interest, attorneys' fees, a judgment regarding the existence of its mechanic's and materialman's lien on the property, an order foreclosing on the lien, an order of sale and writ of possession, and any additional costs of court.

3.

In addition, F&S reargued the plea in abatement in the middle of the trial on the merits, addressing only the notice issue. The court, while acknowledging the importance of the issue of notice, ruled that the trial would proceed at that time, overruling the plea in abatement.