Capital One, National Association v. Carter & Burgess, Inc. ( 2011 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-10-00025-CV
CAPITAL ONE, NATIONAL APPELLANT
ASSOCIATION
V.
CARTER & BURGESS, INC. APPELLEE
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FROM THE 153RD DISTRICT COURT OF TARRANT COUNTY
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OPINION
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I. INTRODUCTION
In two issues, Appellant Capital One, National Association (CONA)
appeals the trial court‘s order granting Appellee Carter & Burgess, Inc.‘s (C&B)
motion to dismiss for failure to file a civil practice and remedies code section
150.002 certificate of merit. We will affirm.
II. FACTUAL AND PROCEDURAL BACKGROUND
CONA filed its original petition against C&B and New America
Georgetown, LLC in July 2009. CONA alleged that it had entered into a lease
agreement with New America for CONA to construct a bank branch on a piece of
property located in Georgetown and that C&B had entered into a ―Professional
Services Agreement‖ with CONA‘s architect, Levinson & Associates, ―to provide
professional engineering and surveying services for [CONA] in connection with
[CONA‘s] development of‖ the property. Because the lease agreement obligated
New America to bring water, sanitary sewer, and storm sewer lines to the
boundary of the property, New America was responsible for acquiring five
wastewater easements from neighboring properties. According to CONA,
although New America ultimately obtained only four of the five wastewater
easements, it informed C&B that it had acquired all five easements, and Chris
Weigand, a ―C&B representative,‖ represented to CONA that all five easements
had been obtained. Relying on New America‘s and Weigand‘s alleged
misrepresentations regarding the acquisition of the fifth easement, CONA
allowed the period during which it had the right to terminate the lease agreement
to expire and signed a ―Tenant Estoppel Certificate‖ in favor of the subsequent
owner of the property, the Williams Family Trust. CONA alleged that it
terminated the lease agreement after learning that only four of the five
easements had been obtained, and arbitration apparently ensued between
CONA and the Trust.
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CONA alleged claims in its first amended petition against C&B for
negligent misrepresentation, statutory fraud, and aiding and abetting fraud. C&B
filed a motion to dismiss CONA‘s suit pursuant to civil practice and remedies
code section 150.002(a), arguing that each of CONA‘s claims should be
dismissed because it was required but failed to file a certificate of merit. After the
case was transferred from Travis County to Tarrant County, the trial court
granted C&B‘s motion to dismiss and later denied CONA‘s motion for new trial
and motion for reconsideration. This appeal followed.
III. STANDARD OF REVIEW
We review a trial court‘s ruling on a motion to dismiss a case for failure to
comply with section 150.002 for an abuse of discretion. TDIndustries, Inc. v.
Citicorp N. Am., Inc., No. 02-10-00030-CV, 2011 WL 1331501, at *2 (Tex. App.—
Fort Worth Apr. 7, 2011, no pet. h.); Curtis & Windham Architects, Inc. v.
Williams, 315 S.W.3d 102, 106 (Tex. App.—Houston [1st Dist.] 2010, no pet.). A
trial court abuses its discretion when its ruling is arbitrary, unreasonable, or
without reference to any guiding rules or legal principles. Downer v. Aquamarine
Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985), cert. denied, 476 U.S.
1159 (1986).
If resolution of the issue requires us to construe statutory language, we
review using a de novo standard. Palladian Bldg. Co., Inc. v. Nortex Foundation
Designs, Inc., 165 S.W.3d 430, 436 (Tex. App.—Fort Worth 2005, no pet.). In
construing a statute, our primary objective is to determine and give effect to the
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legislature‘s intent. Tex. Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex.
2002). Once we determine the proper construction of the statute, we determine
whether the trial court abused its discretion in the manner in which it applied the
statute to the instant case. Palladian Bldg. Co., 165 S.W.3d at 436.
IV. CERTIFICATE OF MERIT
Both CONA and C&B agree that the versions of sections 150.001 and
150.002 as amended in 2005 apply to the issues presented in this appeal.
Former section 150.002(a) stated in relevant part as follows:
(a) In any action . . . for damages arising out of the provision of
professional services by a licensed or registered professional, the
plaintiff shall be required to file with the complaint an affidavit of a
third-party . . . licensed professional engineer competent to testify,
. . . which affidavit shall set forth specifically at least one negligent
act, error, or omission claimed to exist and the factual basis for each
such claim.
See Act of May 12, 2005, 79th Leg., R.S., ch. 189, § 2, 2005 Tex. Gen. Laws
348, 348 and Act of May 18, 2005, 79th Leg., R.S., ch. 208, § 2, 2005 Tex. Gen.
Laws 369, 370 (amended 2009) (current version at Tex. Civ. Prac. & Rem. Code
Ann. § 150.002(a) (Vernon 2011)). Former section 150.001(1) defined ―licensed
or registered professional,‖ stating in relevant part that a ―‗[l]icensed or registered
professional‘ means a . . . licensed professional engineer, or any firm in which
such licensed professional practices . . . .‖ See Act of May 12, 2005, 79th Leg.,
R.S., ch. 189, § 1, 2005 Tex. Gen. Laws 348, 348 and Act of May 18, 2005, 79th
Leg., R.S., ch. 208, § 2, 2005 Tex. Gen. Laws 369, 370 (amended 2009) (current
version at Tex. Civ. Prac. & Rem. Code Ann. § 150.001(1) (Vernon 2011)).
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Section 150.002‘s certificate of merit requirement is compulsory; the statute
mandates dismissal of any claims for which a certificate is required but not
produced. TDIndustries, 2011 WL 1331501, at *3.
To guide our determination whether an action for damages arises ―out of
the provision of professional services by a licensed [professional engineer],‖ both
CONA and C&B direct us to the occupations code‘s definition of the ―practice of
engineering.‖ See id. (citing occupations code); Ashkar Eng’g Corp. v. Gulf
Chem. & Metallurgical Corp., No. 01-09-00855-CV, 2010 WL 376076, at *9 (Tex.
App.—Houston [1st Dist.] Feb. 4, 2010, no pet.) (mem. op.) (same). The
occupations code defines the ―practice of engineering‖ as ―the performance of
. . . 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.‖ Tex. Occ. Code Ann. § 1001.003(b)
(Vernon Supp. 2010). The ―practice of engineering‖ includes ―any other
professional service necessary for the planning, progress, or completion of an
engineering service.‖ Id. § 1001.003(c)(12).
V. PROFESSIONAL SERVICES AND LICENSED ENGINEER
In its first issue, CONA argues that the trial court abused its discretion by
granting C&B‘s motion to dismiss because the negligent misrepresentations of
which CONA complains—―[d]iscussions surrounding a land easement and
recording the same in the real property records‖ or the ―misrepresentation of
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facts surrounding the procurement of the five easements‖—(1) do not arise out of
the provision of C&B‘s professional services and (2) were performed by an
unlicensed intern, not a licensed professional engineer.
CONA does not dispute that C&B entered into an agreement with CONA‘s
architect to provide professional engineering services in connection with CONA‘s
development of the property, nor is there any indication in the record that C&B
had any duties or responsibilities in addition to those outlined in its agreement
with CONA‘s architect. The professional services agreement states that the
―scope of [C&B‘s] services‖ is ―[a]s described in attached scope letter.‖ The
attached letter identifies the following ―professional engineering and surveying
services‖ to be performed by C&B: ―Surveys,‖ ―Preliminary Plat,‖ ―Final Plat,‖
―Construction Documents,‖ 1 and ―Construction Phase Services.‖ As C&B points
out, the only reason that CONA would have to rely upon Weigand‘s alleged false
representations regarding the procurement of all five easements was because
the statements were made as part of C&B‘s performing a professional service
necessary for the planning, progress, or completion of C&B‘s engineering
services—an activity that expressly constitutes ―the practice of engineering‖
under the occupations code. See id. Accordingly, we hold that the trial court did
not abuse its discretion by concluding that CONA‘s claim against C&B for
1
This includes ―Erosion and Sedimentation Control Plans,‖ ―Grading and
Drainage Plans,‖ ―Utility Plans,‖ ―Landscape Plans,‖ a ―Site Plan/Dimensional
Control Plan,‖ a ―Traffic Control Plan,‖ a ―Site Lighting Plan,‖ and ―Construction
details.‖
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negligent misrepresentation is one for damages arising out of the provision of
professional services, as contemplated by civil practice and remedies code
section 150.002(a). We overrule this part of CONA‘s first issue.
CONA further argues that it did not have to file a certificate of merit
because Weigand was not a ―licensed or registered professional‖ as defined by
section 150.001(1). The record demonstrates that CONA sued C&B but did not
sue Weigand, C&B‘s unlicensed intern. CONA thus seeks to hold C&B
responsible for Weigand‘s alleged misrepresentations made in the course and
scope of his employment with C&B. Therefore, CONA cannot seek to impose
liability upon C&B—a firm indisputably hired to provide professional engineering
services—for a tort allegedly committed by Weigand but also successfully argue
that the misrepresentation claim against C&B does not implicate section
150.002(a)‘s requirement that professional services be provided by a ―licensed or
registered professional‖ because the claim is premised upon Weigand‘s actions.
We cannot conclude that the legislature intended for section 150.002(a) to be
circumvented in such a way. Accordingly, we hold that the trial court did not
abuse its discretion by concluding that the acts of which CONA complains were
performed by a licensed or registered professional. We overrule the remainder
of CONA‘s first issue.
VI. STATUTORY FRAUD AND AIDING AND ABETTING FRAUD
In its second issue, CONA argues that even if section 150.002 applies to
its negligent misrepresentation claim, the trial court abused its discretion by
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dismissing CONA‘s claims for statutory fraud and aiding and abetting fraud
because a certificate of merit is not required for non-negligence causes of actions
against a licensed professional engineer. This court has previously held that the
version of section 150.002(a) in effect before its 2009 amendment does not apply
in a suit other than one for negligence arising out of the provision of professional
services, and we decline to revisit that holding here.2 See Parker Cnty.
Veterinary Clinic, Inc. v. GSBS Batenhorst, Inc., No. 02-08-00380-CV, 2009 WL
3938051, at *3 (Tex. App.—Fort Worth Nov. 19, 2009, no pet.) (mem. op.); see
also Curtis & Windham Architects, Inc., 315 S.W.3d at 108 (holding same);
Kniestedt v. Sw. Sound and Elect., Inc., 281 S.W.3d 452, 455 (Tex. App.—San
Antonio 2007, no pet.) (same). Therefore, we agree with CONA that a certificate
of merit is not required for its statutory fraud and aiding and abetting fraud claims
to the extent that those are claims other than ones for negligence. See Parker
Cnty., 2009 WL 3938051, at *3. C&B disputes that CONA‘s fraud-related claims
are non-negligence claims, arguing that ―the essence of [CONA]‘s claims [is] that
it was injured by a lapse in professional judgment, which is akin to a negligence
claim regardless of the nomenclature used to describe the claims,‖ and that
2
C&B attempts to distinguish Parker County from this case, arguing that
the holding in that case was limited to ―claims for breach of contract.‖ We did not
so hold. We held that section 150.002(a) ―does not apply in a suit other than one
for negligence arising out of the provision of professional services.‖ Parker Cnty.,
2009 WL 3938051, at *3 (emphasis added). A suit ―other than one for
negligence‖ includes, but is certainly not limited to, a claim for breach of contract.
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CONA‘s claims ―are nothing more than artfully plead claims of negligent
misrepresentation.‖ We agree with C&B.
We are not bound by the labels used by CONA. Id. We look to CONA‘s
pleadings to determine if its statutory fraud and aiding and abetting fraud claims
are in fact non-negligence claims. Id.; see Ashkar Eng’g Corp., 2010 WL
376076, at *8–10.
The basis of CONA‘s claim against C&B for negligent misrepresentation is
that it suffered injury proximately caused by C&B‘s false representation that all
five wastewater easements had been obtained and delivered for recording.
CONA alleged as part of that claim that the misrepresentation ―was supplied for
the guidance of [CONA].‖ Regarding CONA‘s statutory fraud claim, it alleged
that C&B made a false statement of fact that was made for the purpose of
inducing CONA to enter into a contract and that CONA relied on the false
representation, incurring an injury. Regarding CONA‘s aiding and abetting fraud
claim, CONA alleged that C&B provided substantial assistance to New America
in accomplishing the fraud by misrepresenting that all five wastewater easements
had been signed and recorded.
Considering CONA‘s claims and factual allegations against C&B, it is
evident that CONA is complaining only of an injury that was caused by C&B‘s
alleged false representation about procuring all five wastewater easements and
that the allegations underlying CONA‘s negligent misrepresentation, statutory
fraud, and aiding and abetting fraud claims all implicate the same negligence-
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based conduct. Therefore, although labeled as non-negligence claims, CONA‘s
claims for statutory fraud and aiding and abetting fraud are not claims other than
ones for negligence. Instead, they are recharacterized claims for negligence
arising out of the provision of professional services by a licensed or registered
professional and, thus, are subject to civil practice and remedies code section
150.002‘s certificate of merit requirement. Compare CH2M Hill Trigon, Inc. v. J7
Contractors, Inc., No. 10-10-00058-CV, 2010 WL 3619898, at *7–9 (Tex. App.—
Waco Sept. 15, 2010, no pet.) (mem. op.) (holding that claims of tortious
interference and fraud constituted claims of professional negligence and, thus,
required certificate of merit because underlying complaint was that appellee was
injured by appellant‘s failing to disclose information and providing inaccurate
information) with Curtis, 315 S.W.3d at 107–08 (holding that claims of breach of
fiduciary duty, fraud, deceptive trade practices, and unjust enrichment did not
require certificate of merit because gist of claims was that appellant had engaged
in pervasive and systemic overbilling) and Parker Cnty., 2009 WL 3938051, at *3
(holding that trial court erred by dismissing breach of contract claim because
appellee made promises to perform specific acts in contract, the breach of which
would give rise to a breach of contract action). Accordingly, we hold that the trial
court did not abuse its discretion by dismissing CONA‘s claims for statutory fraud
and aiding and abetting fraud. We overrule CONA‘s second issue.
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VII. CONCLUSION
Having overruled CONA‘s two issues, we affirm the trial court‘s order
granting C&B‘s motion to dismiss.
BILL MEIER
JUSTICE
PANEL: GARDNER, MEIER, and GABRIEL, JJ.
DELIVERED: May 19, 2011
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