Bannum, Inc. and Christopher Tovar D/B/A Tovar Construction Company v. Eugene Mees D/B/A Encore House ( 2014 )

In The
Court of Appeals
Seventh District of Texas at Amarillo
________________________
No. 07-12-00458-CV
________________________
BANNUM, INC. AND CHRISTOPHER TOVAR D/B/A
TOVAR CONSTRUCTION COMPANY, APPELLANTS
V.
EUGENE MEES D/B/A ENCORE HOUSE, APPELLEE
On Appeal from the 419th District Court
Travis County, Texas
Trial Court No. D-1-GN-07-002493, Honorable Lora J. Livingston, Presiding
June 24, 2014
MEMORANDUM OPINION
Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.
This case is all about betting on the come and the pitfalls inherent in doing that.
Bannum, Inc. contracted with Eugene Mees to buy the latter’s building. The contract
was contingent upon Bannum 1) winning a bid with the Bureau of Prisons (BOP) to
provide a half-way house for convicted individuals and 2) beginning the performance of
those services; that is, if either contingency failed to occur “for any reason, then [the]
contract [was rendered] null and void” by its very terms.
Mees’ building was intended to be used for that purpose if the BOP accepted
Bannum’s bid. Because the facility needed renovations, though, Bannum retained
Tovar Construction Company, and others, to make them. Construction of those
improvements (and the incurrence of debt related thereto) began before the BOP
accepted Bannum’s bid. And, though it was originally accepted, the BOP ultimately
terminated the agreement for various reasons. From that event arose this dispute.
Tovar wanted to get paid, even though the city “red tagged” or stopped him from
working due to the lack of a permit. Then Bannum and Mees sued each other for
breach of contract and other causes of action. Some were disposed of via summary
judgment. Others were tried. And, both Mees and Bannum felt aggrieved in some way
by what occurred while litigating below.
The issues before us are several. We address each in turn on our way to
reversing a summary judgment, in part, and affirming the remainder of the trial court’s
judgment.
Bannum’s Issues
a. Breach of Contract
Bannum’s first issue (with its three subparts) concerns the trial court’s decision to
grant Mees’ summary judgment upon Bannum’s breach of contract claim. Purportedly,
it erred. We overrule the issue and subparts.
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Bannum informs us that the BOP’s decision to cancel or terminate its contract
with Bannum rendered the contract between Bannun and Mees “null and void.” 1
Indeed, the contract provision itself states that “[i]n the event Bannum is not awarded a
Government contract for Community Sanction Center services to be located at this
property (or) Bannum cannot begin performance of a contract, if awarded, for any
reason, then this contract is null and void.” (Emphasis added). And, therein lies the
resolution to the issue before us.
Before one can sue another for breach of contract, there must first be a contract
susceptible to breach. An agreement rendered “null and void” is not such a contract
because a void contract never came into existence. See Elijah Ragira/Vip Lodging
Group, Inc. v. Vip Lodging Group, Inc., 301 S.W.3d 747, 754 (Tex. App.—El Paso 2009,
pet. denied) (stating that “to be entitled to specific enforcement of a contract, a party
must show that the contract in question is valid and enforceable” and “[b]ecause we find
that Ragira's failure to pay the review-period fees rendered the contracts null and void,
no contracts existed, and therefore, Ragira was not entitled to specific performance”).
In legal parlance, something that is void is something that never occurred. See Oles v.
Curl, 65 S.W.3d 129, 133 n.2 (Tex. App.—Amarillo 2001, no pet.). Furthermore, no one
disputes that Bannum could not begin performance of its agreement with the BOP
because the latter terminated it.
So, as both Bannum and Mees argued below and here when beneficial to them,
the contract was “null and void.” And, there never arose an agreement susceptible to
1
Examples of that appear in various passages within Bannum’s brief when arguing that “Bannum
and Tovar were in the process of obtaining building permits in order to complete the repairs . . . at the
time the BOP terminated Bannum’s contract for default, which rendered the contract null and void,”
“[b]ecause the contract was rendered null and void, Bannum could no longer enter the property and finish
the improvements and renovations,” and an “additional $40,794.57 had not been invoiced at the time the
contract was rendered null and void.” (Emphasis added).
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breach. Simply put, one cannot legally enforce rights under an agreement that never
was.
b. Negligent Misrepresentation or Concealment and Deceptive Trade Practice
Claims
Next, Bannum contends that the trial court erred in granting summary judgment
against his claims for negligent misrepresentation or concealment and deceptive trade
practice. We agree.
According to Bannum’s live pleading, Mees represented that the facility being
acquired was zoned to house an “unlimited” number of transitional or half-way house
residents when in fact it was not. Because of that misrepresentation, the BOP
ultimately cancelled its contract with Bannum. Mees sought to defeat the claims by
moving for summary judgment. Therein, he simply argued that “if [he] did not cause
Bannum damages, [he was] entitled to Summary Judgment as a matter of law.” He
then alleged that he did not not cause such damages because 1) Bannum failed to
purchase the facility on the closing date of June 4, 2006, 2) “the Contract and
Addendum I did not have any terms which extended any provision of the Contract past
its termination,” 3) in failing to purchase the property by June 4th, Bannum “completely
lost its ability to fulfill its contract with the BOP,” 4) “[a]t that point . . . it did not matter
whether Mees had misrepresented the zoning” since Bannum “could not fulfill the BOP
contract because it could not purchase the property,” 5) “[h]ad Bannum followed through
with the purchase prior to June 4, 2006, it might have suffered damages that could be
attributed to Mees,” and 6) Bannum “did not make the purchase which was the sole
cause of its damages.” Thereafter, the motion for summary judgment was granted.
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Yet, upon review of the record before us, we discover some evidence of record
indicating that through renegotiation or otherwise, Bannum retained a contractual right
to buy the property after June 4, 2006. Indeed, Mees acknowledged as much in its
motion for summary judgment when asserting that 1) after failing “to close on the
original contract . . . [Bannum] had to re-negotiate with Mees to re-obtain the right to
purchase” and 2) in “December, 2006, Bannum and Mees signed a document called a
second addendum to the Contract” which addendum “was to ‘re-state‘ the original
Contract and Addendum I and completion of the sale of the property.”
Consequently, we have evidence of record creating a material issue of fact upon
the very ground (i.e. causation) proffered by Mees as warranting summary judgment.
And, if there is some evidence illustrating that Bannum had a right to buy the facility
after June 4, 2006, then Mees failed to prove, as a matter of law, that 1) the right to buy
was lost on June 4th of that year and 2) it was the loss of that right on June 4th that
solely caused Bannum’s damages. See Amedisys, Inc. v. Kingwood Home Health
Care, LLC, 2014 WL 1875722, 2014 Tex. App. LEXIS 380 (Tex. May 9, 2013) (stating
that the burden to prove entitlement to a traditional summary judgment is that of the
movant); M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000)
(stating that the movant has the burden to prove its entitlement to summary judgment as
a matter of law); Browning v. Prostok, 165 S.W.3d 336, 344 (Tex. 2005) (stating that
when the record contains evidence creating a material issue of fact, the movant failed to
sustain its burden to prove entitlement to summary judgment as a matter of law).
As for Mees’ attempt to raise grounds unmentioned within his motion as a way to
support the trial court’s summary judgment decision, we must hold the effort as
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ineffectual. A summary judgment may be affirmed only upon the grounds uttered by the
movant in its motion. Shih v. Tamisiea, 306 S.W.3d 939, 946 (Tex. App.—Dallas 2010,
no pet.). So, our review is restricted to the latter, and we find them deficient. Of course,
Mees is free to proffer those and any other grounds it may care to via another summary
judgment motion after remand.
c. Failure to Allow Trial Amendment
Next, Bannum asserts that the trial court erred in denying it leave to file a trial
amendment. Via the amendment, it sought to pursue a claim for breach of contract.
The purported breach involved Mees failure to return $10,000 in earnest money per the
terms of the void contract. We overrule the issue.
The decision to permit or deny a trial amendment lies within the trial court’s
discretion. Robbins v. Payne, 55 S.W.3d 740, 745 (Tex. App.—Amarillo 2001, pet.
denied). As we previously noted, one cannot base a claim for breached contract upon a
contract that never existed. So, to the extent that the proposed trial amendment
involved a breach of contract claim arising under the void and, therefore, non-existent
sales contract at bar, the trial court did not abuse its discretion in denying Bannum’s
request.2
d. Directed Verdict of Mechanics/Materialman’s and Constitutional Liens
Next, Bannum argues that the trial court erred in directing verdicts upon its effort
to enforce a mechanics/materialman’s and constitutional liens. We again overrule the
issue.
2
While extra-contractual causes of action may have been available through which pursuit of the
$10,000 earnest money payment was possible, they were not mentioned in Bannum’s request for a trial
amendment.
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1. Statutory Lien
The purported mechanics/materialman’s lien belonged to Tovar Construction, the
company that worked on the facility after Bannum and Mees entered into the contract to
convey the property but before the sale actually closed. The company was retained by
Bannum to perform the improvements. In settling its dispute about payment with
Bannam, Tovar assigned the purported lien to Bannum, which lien Bannum sought to
enforce against Mees. Though the claim underwent trial, the jury did not dispose of it.
Rather, the trial court ended the matter by granting Mees’ request for a directed verdict.
Bannum contends that the trial court erred in doing so since evidence purportedly
existed illustrating that it contracted for the services as agent of Mees. We overrule the
issue.
A mechanic's lien attaches only to the interest of the person contracting for
construction. Diversified Mortg. Investors v. Blaylock General Contr., Inc., 576 S.W.2d
794, 805 (Tex. 1978); Roberts v. Driskill Holdings, Inc., No. 03-99-000532-CV, 2000 WL
301195, 2000 Tex. App. LEXIS 1832, at *6 (Tex. App.—Austin March 23, 2000, no
pet). Because the evidence of record illustrates that Tovar contracted with Bannum, not
Mees, Bannum attempts to satisfy the Diversified rule by arguing that it was Mees’
agent. This argument has many faults, though.
First, an agent acts solely for the benefit of the principal in all matters connected
with the agency. Nat’l Plan Adm’rs., Inc. v. Nat’l Health Ins. Co., 235 S.W.3d 695, 700
(Tex. 2007). Here, the supposed agency involved the improvement of property that
Bannum intended to buy from Mees. Bannum, not Mees, intended to buy the property
so that it, not Mees, could enter into an economic arrangement with the BOP. We have
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been cited to no evidence of record in any way suggesting that Mees was a party to the
economic arrangement with the BOP. Nor did we find any. Rather, Bannum was
pursuing its own interests when contracting with Tovar, and that hardly evinces the
existence of an agency relationship.
Second, given that an agent purports to act for his principal, it logically follows
that there must be some evidence suggesting that the principal agreed to be bound by
the contract executed on its behalf by the supposed agent. To the extent that the
contract at issue here involves constructing improvements upon property Bannun
sought to buy, there should be some evidence that Mees agreed to pay or otherwise be
obligated for those improvements if an agency relationship existed. Yet, we are cited to
and found no evidence in anyway indicating that before, during, or after Tovar began
improving the property Mees agreed with Bannun to ultimately be obligated for the
improvements to the property.
Third, and most importantly, agency arises from an expressed or implied
agreement between the supposed agent and principal whereby the former agrees to be
subject to the directives and authority of the latter. Reliant Energy Services, Inc. v.
Cotton Valley Compression, L.L.C., 336 S.W.3d 764, 782-83 (Tex. App.—Houston [1st
Dist.] 2011, no pet.). Again, we are cited to and found no evidence illustrating the
presence of such an agreement between Bannum and Mees when it came to improving
the facility Bannum sought to buy. And, that Mees made the facility available to Tovar
so that the work could be done does not fill the void. That simply showed that Mees
sought to help Bannum pursue Bannum’s interests viz the acquisition of the building
and the performance of the BOP contract.
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The argument that, from the viewpoint of Tovar, Bannum had apparent authority
to act for Mees fairs no better. Apparent authority “is based on estoppel, arising ‘either
from a principal knowingly permitting an agent to hold [himself] out as having authority
or by a principal's actions which lack such ordinary care as to clothe an agent with the
indicia of authority, thus leading a reasonably prudent person to believe that the agent
has the authority [he] purports to exercise.’” Gaines v. Kelly, 235 S.W.3d 179, 182-83
(Tex. 2007). Furthermore, it is the acts of the principal that control, not those of the
agent. Id. And, since those acts must be of the ilk to dupe the complainant into
believing that the supposed agent is actually acting for the principal, it would seem
logical to see if Tovar even thought he was actually contracting with Mees.
According to the record before us, Tovar testified that 1) “Bannum hired me to
perform some work,” 2) “I knew Bannum was going to purchase the building and was
renovating it,” 3) Bannum was “going to purchase it from Mees,” 4) Tovar showed Mees
the floor plan of what was being done because Mees was “curious,” 5) Tovar presented
the invoices to Bannum for payment, 6) Bannum sent him checks in payment of the
invoices (which checks were drawn on Bannum’s account), 7) Tovar submitted the
renovation proposal to Bannum, 8) after the work stopped, Mees contacted Tovar about
the cost of finishing the work, 9) Tovar eventually sued Mees who was “someone [he]
didn't have a deal with,” 10) he “did have a deal with Bannum” who “didn't pay” him, 11)
Tovar answered “[n]o, I did not” when asked “[a]nd you never once had a deal with Mr.
Mees?,” 12) when asked “ . . . you certainly never told Mr. Mees, I'm coming in and I'm
going to charge you,” Tovar answered “No,” 13) when asked “ . . . you expected, and
that's an important word in this case, that Bannum would pay you, right,” he answered
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“Correct,” 14) when asked “ . . . you never heard from Bannum that they expected that
Mr. Mees would pay you,” Tovar answered “No,” 15) when asked “ . . . you never heard
from Mr. Mees that he expected that you were doing this work and would be charged to
him,” Tovar answered “No,” 16) when asked “ . . . you only had a deal with Bannum and
you only sent these invoices that we saw to Bannum, right,” Tovar answered “Yes,
ma'am,” and 17) when asked whether Mees’ granting Tovar access to the property to
perform the work could be construed as indicating that Mees expected to pay him, he
said “no.” These very words of Tovar illustrate an utter absence of a belief, reasonable
or otherwise, on the part of Tovar that Mees was the party with whom he contracted to
provide the services. And, without such a belief, one can hardly argue that the conduct
of Mees led Tovar to believe that Bannum was acting for or was otherwise binding
Mees.
Nor did we find evidence of acts on the part of Mees which could reasonably
suggest that Bannum had the authority to bind Mees or was acting on Mees’ behalf.
Bannum simply refers us to evidence of Mees facilitating Tovar’s entry into the areas
being renovated as the requisite proof. Yet, again, Tovar himself testified that such
could not be construed as indicating Mees was liable for payment, and we agree.
The trial court did not err in granting a directed verdict on the matter of a statutory
lien. No evidence of record existed from which a fact finder could reasonably infer that
Tovar contracted with Mees, and without that evidence the limitation imposed by
Diversified Mortgage went unsatisfied. See Gomer v. Davis, 419 S.W.3d 470, 475 (Tex.
App.—Houston [1st Dist.] 2013, no pet.) (citing the standard applicable when reviewing a
directed verdict).
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2. Constitutional Lien
Next, Bannum contends that it “furnished thousands of dollars in improvements
and renovations upon Mees’ property pursuant to its agreements with Mees . . . who
clearly authorized Bannum to enter the facility to make improvements and renovations.”
Therefore, it should be “allowed to enforce its constitutional lien for payment.” We
overrule the issue.
Article 16, section 37 of the Texas Constitution provides that: “[m]echanics,
artisans and material men, of every class, shall have a lien upon the buildings and
articles made or repaired by them for the value of their labor done thereon, or material
furnished therefor; and the Legislature shall provide by law for the speedy and efficient
enforcement of said liens.” TEX. CONST. art. 16, § 37. Bannum considered himself a
“materialman” since he contracted with Tovar and others to perform the renovation
services and paid them for providing the services and materials needed to undertake
the renovations. And, therein lies the problem. A materialman is someone “‘who does
not follow the business of building or contracting to build homes for others, but who
manufactures, purchases[,] or keeps for sale materials which enter into buildings and
who sells or furnishes such material without performing any work or labor installing or
putting them in place.’” Huddleston v. Nislar, 72 S.W.2d 959, 962 (Tex. Civ. App.—
Amarillo 1934, writ ref’d); accord Reddix v. Eaton Corp., 662 S.W.2d 720, 724 (Tex.
App.—San Antonio 1983 writ ref’d n.r.e.) (stating the same). Bannum neither
manufactured, bought, kept for sale, sold or furnished materials. Instead, it hired or
engaged independent contractors to renovate the property, and they acquired the
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materials from third parties. And, once installed, Bannum paid, in part, those
contractors for the work and materials they provided.
As said by Mees, “[h]iring contractors is not the same as purchasing and selling
materials to be used on job sites.” It is the ownership of the material at the time it is
incorporated into the building that makes one a materialman, and the debt created by
such appropriation is that which the Constitution intended to secure by the constitutional
lien. First Nat’l Bank v. Lyon-Gray Lumber Co., 194 S.W. 1146, 1150 (Tex. Civ. App.—
Texarkana), aff’d, 110 Tex. 162, 217 S.W. 133 (Tex. 1919). We are cited to and find no
evidence that Bannum owned the materials at the time they were incorporated into the
facility.
e. Factual Insufficiency
Bannum finally contends that factually insufficient evidence supports the jury’s
decision to deny its claims sounding in quantum meruit and unjust enrichment. We
overrule the issue.
Regarding quantum meruit, the jury was asked:
One party [Tovar] performs compensable work if (a) valuable services are
rendered or materials furnished, (b) for the person sought to be charged
[Mees], (c) which services and materials were accepted by the person
sought to be charged, used and enjoyed by him, (d) under such
circumstances as reasonably notified the person sought to be charged
that the party in performing such services was expecting to be paid by the
person sought to be charged.
It answered “No.” As previously mentioned, there is ample evidence that Tovar did not
perform compensable work while expecting payment from Mees. Rather, he expected
payment from Bannum. Given the applicable standard of review, see Smith v. East,
411 S.W.3d 519, 529 (Tex. App.—Austin 2013, pet. denied) (stating that a finding lacks
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the support of factually sufficient evidence when the overwhelming weight of the entire
evidence shows it to be manifestly wrong or unjust), we cannot say that the finding was
manifestly wrong or unjust when weighed against all the evidence of record.
Next, and assuming arguendo that the trial court properly submitted to the jury an
issue on unjust enrichment, see City of Harker Heights, Tex. v. Sun Meadows Land,
Ltd., 830 S.W.2d 313, 317 (Tex. App.—Austin 1992, no writ) (indicating that unjust
enrichment is not a stand-alone cause of action), we again conclude that the jury’s
answer was neither manifestly wrong or unjust.
The jury was told that a “person is unjustly enriched when he has obtained a
benefit from another by fraud, duress, or the taking of an undue advantage against the
fundamental principles of justice or equity and good conscience, or has passively
received a benefit that would be unconscionable to retain.” The record contains
evidence that renovations were made to the property. Other evidence indicates that
those renovations were far from complete when Tovar stopped working, that the
property was unfit for use by Mees, that the sidewalk was torn up, that walls had been
removed, that flooring was removed, that all plumbing and toilets had been removed
from bathrooms, that there was a large hole left in the concrete “in the back wing,” that
the facility “was pretty well a mess,” that it was not habitable, and that Mees expended
from $80,000 to $100,000 to repair it. So, the jury had before it ample evidence upon
which to conclude that Mees did not receive a benefit that would be unconscionable to
retain when Tovar ceased his work.
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Mees’ Cross–Issue—Attorney’s Fees
Mees argues that the trial court erred in denying him attorney’s fees. He
purportedly was entitled to same per paragraph 16 of the sales contract he executed
with Bannum. The contract in question is the same instrument that everyone
contended, at some time or another, was “null and void.” Given our resolution of
Bannum’s first issue, the determination that the instrument was rendered “null and void”
by its own terms, and the inability to enforce a contract or part thereof that never existed
due to the legal fiction of being void, we overrule the issue.
Accordingly, we reverse that portion of the summary judgment denying Bannum
recovery upon its claims of negligent misrepresentation and deceptive trade practice
and remand that aspect of the cause to the trial court. In all other things, the judgment
of the trial court is affirmed.
Brian Quinn
Chief Justice
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