RCS Enterprises, LP and James Martin Montgomery v. Darrell G. Hilton and Debbie L. Hilton ( 2013 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00233-CV
RCS ENTERPRISES, LP AND APPELLANTS
JAMES MARTIN MONTGOMERY
V.
DARRELL G. HILTON AND DEBBIE APPELLEES
L. HILTON
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FROM THE 43RD DISTRICT COURT OF PARKER COUNTY
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MEMORANDUM OPINION 1
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Appellants RCS Enterprises, LP (RCS) and James Martin Montgomery
filed a motion to dismiss the lawsuit brought against them by Appellees Darrell G.
Hilton and Debbie L. Hilton. The trial court denied that motion, and RCS and
Montgomery now appeal. They alternately seek a writ of mandamus ordering the
trial court to not consider the Hiltons’ supplemental expert affidavit. Because we
1
See Tex. R. App. P. 47.4.
hold that the Hiltons were not required to file a certificate of merit with their claim,
we affirm the trial court’s order and deny the mandamus petition.
Background
On June 17, 2011, the Hiltons filed a petition to compel arbitration against
Nationwide Housing Systems LP and Oak Creek Homes LP (collectively Oak
Creek). The Hiltons alleged that they had entered into a purchase and sales
agreement with Oak Creek for a modular home to be constructed by Oak Creek
and that Oak Creek had, among other things, failed to remedy numerous
construction defects in the home. The Hiltons demanded arbitration in
accordance with the arbitration addendum to the sales contract.
Oak Creek filed a motion to designate Americo Housing, Inc. as a
responsible third party. The Hiltons then amended their petition to add Americo,
RCS, and Montgomery as defendants. 2 The Hiltons alleged that Oak Creek had
contracted with Americo to assume Oak Creek’s duties under the contract and
that Oak Creek had contracted with RCS to prepare the engineered foundation
plan for the home. The Hiltons alleged that RCS and Montgomery (RCS’s
president) had also acted as the third party inspection agency and third party
inspector (TPI) for the home and that they had breached their duties that they
owed to the Hiltons in that capacity.
2
Oak Creek and Americo are not involved in this appeal.
2
The Hiltons’ first amended petition did not include a certificate of merit.
The Hiltons filed their second amended petition a week later, attaching the
affidavit of engineer Tim Hogue.
Montgomery and RCS filed an original answer and a motion to dismiss
based on civil practice and remedies code section 150.002. 3 The Hiltons filed a
combined response and a motion for leave to file a supplemental affidavit. The
trial court signed an order denying the motion to dismiss and granting leave to file
a supporting affidavit. The Hiltons then filed a third amended petition along with
Hogue’s supporting affidavit. Montgomery and RCS now appeal the trial court’s
denial of their motion to dismiss and the court’s granting of leave for the Hiltons
to file a supporting affidavit.
Standard of Review
We review a trial court’s ruling on a motion to dismiss for an abuse of
discretion. 4 To determine whether a trial court abused its discretion, we must
decide whether the trial court acted without reference to any guiding rules or
principles; in other words, we must decide whether the act was arbitrary or
unreasonable. 5
3
Tex. Civ. Prac. & Rem. Code Ann. § 150.002 (West 2011).
4
Jernigan v. Langley, 195 S.W.3d 91, 93 (Tex. 2006); Palladian Bldg. Co.
v. Nortex Found. Designs, Inc., 165 S.W.3d 430, 433 (Tex. App.—Fort Worth
2005, no pet.).
5
Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004).
3
Statutory construction is a question of law, which we review de novo. 6
Once we determine the proper construction of a statute, we determine whether
the trial court abused its discretion in the manner in which it applied the statute to
the instant case. 7
Analysis
In their first issue, Montgomery and RCS argue that the trial court abused
its discretion when it denied their motion to dismiss because dismissal was
mandatory based on the Hiltons’ failure to timely file a certificate of merit.
Certificate of Merit Statute
In suits “for damages arising out of the provision of professional services
by a licensed or registered professional,” the civil practice and remedies code
requires the plaintiff to provide an affidavit—called a “certificate of merit”—made
by a professional who holds the same professional license as the defendant. 8
For each theory of recovery on which the plaintiff is basing a claim for damages,
the affidavit “shall set forth specifically . . . the negligence, if any, or other action,
error, or omission of the . . . professional in providing the professional service.” 9
With respect to a claim against an engineer, if the statute applies, the plaintiff
6
Palladian Bldg., 165 S.W.3d at 436.
7
Id.
8
Tex. Civ. Prac. & Rem. Code Ann. § 150.002(a).
9
Id. § 150.002(b).
4
must file with the trial court the affidavit of a third-party registered licensed
professional engineer. 10 If the plaintiff does not file the affidavit in compliance
with the statute, the trial court must dismiss the claims against the defendant. 11
RCS and Montgomery argued below and assert on appeal that the Hiltons’
claims against them required the Hiltons to provide a certificate of merit and that
the Hiltons failed to file a certificate by the statutory deadline.
To What Professional Services Does Section 150.002 Apply?
Courts have held that the specific acts on which the claim is based do not
themselves have to constitute the provision of professional services in order for
the statute to apply. All that is required to make the statute applicable is that the
claim arose out of the provision of professional services. 12 If, in the course of
providing a professional service to which the statute is applicable, the defendant
committed some act that gave rise to the claim, the statute applies. 13
In their brief, RCS and Montgomery stated that the Hiltons had to file a
certificate of merit “because professional services were involved.” They argue
that the statute does not explicitly state that the defendant must be providing
engineering services for the statute to apply, but instead only requires that the
10
Id. at § 150.002(a).
11
Id. § 150.002(e).
12
See Dunham Eng’g, Inc. v. Sherwin-Williams Co., 404 S.W.3d 785, 793
(Tex. App.—Houston [14th Dist.] 2013, no pet.).
13
See id.
5
defendant be providing “professional services.” “Thus,” RCS and Montgomery
argue, “it is the providing of ‘professional services’ by the defendant that is the
focus of the . . . statute, not necessarily whether the defendant was engaged in
the ‘practice of engineering.’”
RCS and Montgomery then spend several pages of their brief discussing
the definition of “professional services” in other contexts, including in the context
of insurance policies covering the rendering of professional services 14 and in
various Texas statutory codes. 15 RCS and Montgomery acknowledge that cases
involving section 150.002 have looked at the definition of the practice of
engineering in the occupations code, but they contend that those cases “were
caught up in the debate about whether the [c]ertificate of [m]erit statute applied to
claims other than for negligence, and thus are limited by that discussion.”
We do not agree with RCS and Montgomery, however, that the
occupations code does not provide us with guidance as to what constitutes the
professional services to which the statute applies. We believe that to determine
what constitutes professional engineering services, the legislature’s decision
about what constitutes the practice of engineering provides the best guide.
14
See Utica Lloyd’s of Tex. v. Sitech Eng’g Corp., 38 S.W.3d 260, 263
(Tex. App.—Texarkana 2001, no pet.); Atlantic Lloyd’s Ins. Co. v. Susman
Godfrey, L.L.P., 982 S.W.2d 472, 477 (Tex. App.—Dallas 1998, pet. denied).
15
See Tex. Bus. Orgs. Code Ann. § 301.003(8) (West 2012); Tex. Health &
Safety Code Ann. § 12.0121(a) (West 2010); Tex. Gov’t Code Ann.
§ 2254.002(2)(A)–(B) (West 2008).
6
Referencing the occupations code ties the requirement of providing an affidavit of
a person with the same professional license as the defendant to the purpose of
the statute—to provide a basis for the trial court to determine whether the
plaintiff’s claim has any merit. 16 A third-party engineer would have no better
knowledge than the trial court about what was required for services that do not
fall within the practice of engineering, and an affidavit from an engineer in that
case would not help the trial court to determine whether the plaintiff’s claim has
any merit.
For that same reason, and construing the statute as a whole, section
150.002 does not apply generally to all claims of any kind against a defendant
holding one of the professional licenses included within section 150.002. If a
defendant happens to be a licensed engineer and provided some sort of service
to the plaintiff, but not a professional engineering service, then a claim that arises
out of the defendant’s performance of that service does not fall within the
statute’s application. 17 For example, an engineer who has a side business of
16
See Morrison Seifert Murphy, Inc. v. Zion, 384 S.W.3d 421, 425 (Tex.
App.—Dallas 2012, 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.”) (quoting Criterium–Farrell Eng’rs v. Owens, 248 S.W.3d 395, 399 (Tex.
App.—Beaumont 2008, no pet.).
17
See, e.g., Carter & Burgess, Inc. v. Sardari, 355 S.W.3d 804, 809 (Tex.
App.—Houston [1st Dist.] 2011, no pet.) (deferring to the legislature’s definition of
the practice of architecture in the occupations code “to define the scope of
professional services provided by an architectural firm for purposes of
determining whether a certificate of merit is required”); TDIndustries, Inc. v.
Rivera, 339 S.W.3d 749, 755–56 (Tex. App.—Houston [1st Dist.] 2011, no pet.)
7
mowing lawns could be sued for an act done in the course of providing those
lawn care services, and no certificate of merit would need to be provided. In this
case, if the Hiltons’ claim against RCS and Montgomery did not arise out of RCS
and Montgomery’s provision of engineering services, then the statute does not
apply. But if RCS and Montgomery acted as a TPI in the course of providing
professional engineering services, the statute does apply, even if acting as a TPI
would not, in and of itself, constitute the practice of engineering. We therefore
determine whether work as a TPI constitutes the practice of engineering, and, if
not, whether it was in this case done as part of the provision of engineering
services.
Do the Services Allegedly Provided Fall Within Section 150.002?
RCS and Montgomery argue that their alleged activities fall within
application of section 150.002. In their live pleadings at the time that the trial
court overruled the motion to dismiss and RCS and Montgomery filed their notice
of appeal, the Hiltons alleged that RCS was a TPI agency, that Montgomery was
a TPI employed by RCS, and that RCS and Montgomery owed duties to the
Hiltons by virtue of Montgomery’s role as the TPI. They alleged that RCS and
Montgomery assumed duties under rules promulgated by the Texas Department
(holding that claims against an engineering firm did not require a certificate of
merit because they did not implicate an engineer’s specialized knowledge or
judgment).
8
of Licensing and Regulation (TDLR), which regulates the construction and
installation of modular homes like the one purchased by the Hiltons.
The Hiltons asserted that at the times relevant to this case, the TDLR rules
required inspections of modular homes constructed outside of a municipality to
be made by a TPI. The rules required the TPI (1) to inspect the foundation
construction and verify if the foundation was being constructed in accordance
with the foundation plans for the home and (2) to post a deviation notice if the
TPI discovered that construction did not conform to the plans. The rules further
required the TPI to file original reports for its inspections with the TDLR. The
Hiltons alleged that RCS and Montgomery breached their duties in that they
failed to inspect, verify, and report that the construction did not conform to the
plans. They further allegedly breached their duties by failing to post any
deviation notice, failing to make any TPI site inspection report, and failing to file
any written report with the TDLR for any site inspection of the foundation.
The Hiltons also alleged that Montgomery made false representations to
Americo about an alternative plan for the foundation’s footings that it could use
while still satisfying the foundation plan’s requirements. They alleged that RCS’s
and Montgomery’s conduct constituted fraud and fraudulent concealment or
alternatively negligence or gross negligence.
In their response to the motion to dismiss, the Hiltons asserted that they
alleged claims against Montgomery for acts done in his capacity as a TPI in
February 2009, and against RCS for vicarious liability for Montgomery’s acts.
9
They again asserted that TDLR rules do not require a TPI to be a licensed
engineer or require any education, training, or experience in engineering
sciences. They contended that “due to concerns of limitations defenses,” they
“promptly joined [RCS and Montgomery] . . . shortly after discovering their being
the TPI. Though [the Hiltons] believed no certificate of merit was necessary, out
of precaution [they] obtained the supporting affidavit of Tim Hogue, P.E.” and
attached it to the second amended petition.
No party disputed in the pleadings and motions filed in the trial court that
RCS was retained to provide a foundation plan for the Hiltons’ home, that
Montgomery created the foundation plan on behalf of RCS, or that the act of
creating an engineered foundation plan falls within the practice of engineering.
The parties do dispute, however, whether Montgomery’s work as the TPI for the
Hiltons’ home was done in the context of providing a professional engineering
service.
The Hiltons are correct that under Texas regulations, a TPI does not need
to be an engineer. In fact, a TPI does not need a college degree of any kind. 18 A
TPI agency must be managed by a licensed professional, but that professional
may be either an engineer or an architect. 19 Yet the TPI, who need not have an
18
See 16 Tex. Admin. Code § 70.23(c)(3); cf. Tex. Occ. Code Ann.
§ 1001.302 (West 2012) (requiring an applicant for an engineering license to
have graduated from an approved engineering curriculum or approved related
science curriculum at an institution of higher learning).
19
16 Tex. Admin. Code § 70.23(c).
10
engineering degree and does not need to be supervised by an engineer and can
work for an agency that is not managed by an engineer, is responsible for
inspecting the structure to determine if it meets the engineered foundation
plans. 20
Occupations code section 1001.003(c) includes a list of activities that are
included within the practice of engineering. 21 Professional engineering services
are being provided when they implicate a professional engineer’s education,
training, and experience in applying special knowledge or judgment. 22
Specifically, the statute provides:
(b) In this chapter, “practice of engineering” means the
performance of or an offer or attempt to perform any public or private
service or creative work, the adequate performance of which
requires engineering education, training, and experience in applying
special knowledge or judgment of the mathematical, physical, or
engineering sciences to that service or creative work.
(c) The practice of engineering includes:
....
(9) engineering for review of the construction or
installation of engineered works to monitor compliance
with drawings or specifications;
. . . . [or]
20
16 Tex. Admin. Code § 70.73.
21
Tex. Occ. Code Ann. § 1001.003(c) (West 2012).
22
See Bruington Eng’g Ltd. v. Pedernal Energy L.L.C., 403 S.W.3d 523,
529 (Tex. App.—San Antonio 2013, no pet.); Rivera, 339 S.W.3d at 754.
11
(12) any other professional service necessary for
the planning, progress, or completion of an engineering
service. 23
RCS and Montgomery argue that their actions fit within the types of
activities included in subsection (c)(9) and (c)(12). Specifically, they argue that
the Hiltons’ allegations that Montgomery failed to report whether construction of
the foundation complied with the foundation plans fits within the “monitor
compliance with drawings or specifications” language in (c)(9). But RCS and
Montgomery ignore the rest of (c)(9), which begins with the word “engineering”:
“engineering for review of the construction or installation of engineered works to
monitor compliance with drawings or specifications.” 24 We have already stated
that a TPI, who need not be an engineer or supervised by an engineer, inspects
foundations for compliance with foundation plans. If inspecting a foundation to
see if it complies with a foundation plan necessarily implicated an engineer’s
training, education, and experience, TPI regulations would require TPIs to be
engineers. They do not. Thus, merely inspecting a foundation does not involve
an engineer’s specialized education, training, and experience, and is therefore
not the practice of engineering. To constitute engineering, it must involve the use
of an engineer’s education, training, and experience in applying special
knowledge or judgment.
23
Tex. Occ. Code Ann. § 1001.003(b), (c) (emphasis added).
24
Id. § 1001.003(c)(9) (emphasis added).
12
RCS and Montgomery also argue that the acts alleged by the Hiltons fall
within (c)(12) because they involve the provision of professional services. But
what kind of professional services? Subsection (c)(12) includes within the
practice of engineering any professional service necessary for the completion of
an engineering service. 25 Thus, the application of (c)(12) presupposes the
provision an engineering service—a service that implicates an engineer’s
education, training, or experience. The application of (c)(12) is not limited to
those activities that need an engineer to perform them, but to be included, an
activity has to be one that is necessary for the planning, progress, or completion
of a service that involves the practice of engineering—in other words, one for
which an engineer is required. If there is no engineering service being provided,
then (c)(12) does not apply.
Given that work as TPI does not require any of the specialized knowledge
of an engineer, the acts alleged by the Hiltons do not fall within the practice of
engineering because they do not implicate an engineer’s specialized education,
training, and experience. And there was no allegation that Montgomery acted as
the TPI as part of the provision of engineering services. Inspection of a
foundation can be done as part of the provision of an engineering service, in
which case the act would fall within the practice of engineering. But the Hiltons
did not allege that RCS acting as the TPI was done in the course of RCS
25
Id. § 1001.003(c)(12).
13
providing engineering services. The only allegations on the matter were that
after the home was constructed, Oak Creek caused RCS to act as the TPI. The
petition does not contain allegations of facts related to the performance of
services by RCS and Montgomery that implicate an engineer’s education,
training, and experience in applying special knowledge or judgment. From this
record, we cannot conclude that the trial court abused its discretion by
concluding that Montgomery did not inspect the foundation while performing
professional engineering services.
This case is distinguishable from Capital One v. Carter & Burgess, Inc. 26
In that case, the defendant firm was hired to provide professional engineering
services, and the claims were based on the plaintiff’s reliance on allegedly false
representations made as part of the defendant’s performance of the professional
engineering services for which the firm had been hired. 27 The claim therefore
arose from that firm’s provision of professional engineering services. 28
This case is also distinguishable from TDIndustries, Inc. v. Citicorp North
America, Inc. 29 In that case, we determined that the acts by TDI alleged in the
26
344 S.W.3d 477, 480 (Tex. App.—Fort Worth 2011, no pet.).
27
Id. at 481.
28
Id.
29
378 S.W.3d 1 (Tex. App.—Fort Worth 2011, no pet.).
14
petition fit within the definition of the practice of engineering. 30 We also stated
(as we do in this case) that “a claim for damages asserted against a professional
engineer arises out of the provision of professional services (and thus requires a
certificate of merit) if the claim implicates the engineer’s education, training, and
experience in applying special knowledge or judgment” and that “if a plaintiff’s
claim for damages does not implicate the special knowledge and training of the
subject professional, it cannot be a claim for damages arising out of the provision
of professional services.” 31 And in that case, the plaintiff alleged that TDI had
installed complex machinery and equipment and then failed to properly test it. 32
We held that the “negligence claim implicated TDI’s engineering education,
training, and experience because it was premised on TDI’s knowledge of the
installation and testing of complex machinery and equipment.” 33 Here, the claims
alleged do not implicate Montgomery’s engineering education, training, or
experience.
This case is more like Rivera. 34 In that case, an engineering firm was hired
to provide management services for the convention center at which the plaintiff
30
Id. at 6.
31
Id. at 5.
32
Id. at 2.
33
Id. at 6.
34
339 S.W.3d at 749.
15
was injured. 35 The plaintiff was injured by a freight elevator operated by one of
the firm’s employees, who did not hold an engineering license. The fact that the
defendant was an engineering firm and was providing services of some kind was
not dispositive. The court of appeals concluded that the claims alleged did not
implicate an engineer’s specialized knowledge or judgment so as to arise out of
the provision of professional engineering services. 36
Likewise, we conclude that the fact that Montgomery is an engineer and
was hired to provide a service is not dispositive to the issue. Montgomery was
not hired to provide an engineering service out of which the claims against him
and RCS arose. Accordingly, the Hiltons did not need to provide a certificate of
merit. We overrule RCS and Montgomery’s first issue. We therefore need not
reach their second issue challenging the adequacy of the certificate of merit.
Conclusion
Having overruled RCS and Montgomery’s first issue, which is dispositive,
we affirm the trial court’s order denying the motion to dismiss.
35
Id. at 751.
36
Id. at 755–56.
16
LEE ANN DAUPHINOT
JUSTICE
PANEL: LIVINGSTON, C.J.; DAUPHINOT and GARDNER, JJ.
DELIVERED: December 19, 2013
17