Schear Hampton Drywall, LLC v. Founders Commercial, LTD ( 2018 )

ACCEPTED
14-17-01010-CV
FOURTEENTH COURT OF APPEALS
HOUSTON, TEXAS
5/16/2018 4:34 PM
CHRISTOPHER PRINE
CLERK
No. 14-17-01010-CV
FILED IN
14th COURT OF APPEALS
IN THE FOURTEENTH COURT OF APPEALSHOUSTON, TEXAS
5/16/2018 4:34:40 PM
CHRISTOPHER A. PRINE
Clerk
SCHEAR HAMPTON DRYWALL, LLC,
Appellant,
V.
FOUNDERS COMMERCIAL, LTD,
Appellee.
On Appeal from the 61st Judicial District Court
Harris County, Texas
Cause No. 2015-22140
BRIEF OF APPELLANT
Jeffrey S. Lowenstein
Texas Bar No. 24007574
jlowenstein@bellnunnally.com
Bell Nunnally & Martin LLP
3232 McKinney Avenue, Suite 1400
Dallas, Texas 75204-2429
Telephone: (214) 740-1400
Telecopy: (214) 740-1499
COUNSEL FOR APPELLANT
CERTIFICATE OF PARTIES
The following is a complete list of all parties to the trial court’s judgment and
the names and addresses of all trial and appellate counsel.
APPELLANT SCHEAR HAMPTON DRYWALL, LLC
Represented at trial by: Represented in this appeal by:
Carl W. Thompson Jeffrey S. Lowenstein
The Law Office of Carl Thompson, PC Bell Nunnally & Martin LLP
2550 Gray Falls, Suite 200 3232 McKinney Avenue, Suite 1400
Houston, Texas 77077 Dallas, Texas 75204-2429
Keith Coulter
Coulter, P.C.
3306 Sul Ross Street
Houston, Texas 77098
APPELLEE FOUNDERS COMMERCIAL, LTD.
Represented at trial and this appeal by:
J. W. Beverly
Ferguson Braswell Fraser Kubasta PC
9 Greenway Plaza, Suite 500
Houston, Texas 77046
BRIEF OF APPELLANT PAGE ii
TABLE OF CONTENTS
PAGE
CERTIFICATE OF PARTIES .................................................................................. ii
TABLE OF AUTHORITIES .....................................................................................v
STATEMENT OF THE CASE .................................................................................. 1
ISSUES PRESENTED...............................................................................................1
STATEMENT OF FACTS ........................................................................................2
PROCEDURAL BACKGROUND ............................................................................ 4
SUMMARY OF ARGUMENT .................................................................................5
STANDARD OF REVIEW .......................................................................................6
ARGUMENT AND AUTHORITIES ........................................................................ 7
I. THE FINAL JUDGMENT FAILED TO FORECLOSE THE LIEN. ............ 7
II. THE EVIDENCE AND LAW DID NOT SUPPORT THE TRIAL
COURT REDUCING THE LIEN TO $21,678.32.......................................... 9
A. There was legally and factually insufficient evidence that Schear
Hampton was only owed $36,678.32 by CSI........................................ 9
B. Founders could not recover damages from Shear Hampton or an
offset of the lien amount as a matter of law. .......................................13
Schear Hampton and Founders were not in privity. ................. 15
Founders was not a third-party beneficiary of the
Subcontract................................................................................16
C. There was legally and factually insufficient evidence supporting
a $15,000 damages award and/or offset of the lien.............................20
III. THE TRIAL COURT’S DENIAL OF ATTORNEYS’ FEES TO
SCHEAR HAMPTON WAS CONTRARY TO LAW AND RELIED
ON THE IMPROPER PARTIAL INVALIDATION OF THE LIEN. ......... 21
BRIEF OF APPELLANT PAGE iii
PRAYER ..................................................................................................................23
CERTIFICATE OF COMPLIANCE .......................................................................24
CERTIFICATE OF SERVICE.................................................................................25
INDEX TO APPENDIX ..........................................................................................26
BRIEF OF APPELLANT PAGE iv
TABLE OF AUTHORITIES
Page(s)
Cases
B & C Constr. Co. Grain Handling Corp.,
521 S.W.2d 98 (Tex.Civ.App.—Amarillo 1975, no writ) ..................................14
Bass v. City of Dallas,
34 S.W.3d 1 (Tex.App.—Amarillo 2000, no pet.) .............................................15
BMC Software Belg., N.V. v. Marchand,
83 S.W.3d 789 (Tex. 2002)...................................................................................7
Cain v. Bain,
709 S.W.2d 175 (Tex. 1986) (per curiam) ........................................................... 6
Crawford Services, Inc. v. Skillman Intern. Firm, L.L.C.,
444 S.W.3d 265 (Tex. App.—Dallas 2014, pet. dism’d) .....................................8
First Nat’l Bank in Graham v. Sledge,
653 S.W.2d 283 (Tex. 1983) ................................................................................8
Fulgham v. Fischer,
349 S.W.3d 153 (Tex. App.—Dallas 2011, no pet.) ........................................6, 7
Hou–Tex, Inc. v. Landmark Graphics,
26 S.W.3d 103 (Tex.App.—Houston [14th Dist.] 2000, no pet.) ......................15
LAN/STV v. Martin K. Eby Const. Co., Inc.,
435 S.W.3d 234 (Tex. 2014) ..............................................................................15
Thomson v. Espey Huston & Associates, Inc.,
899 S.W.2d 415 (Tex. App.—Austin 1995, no writ) .............................13, 14, 15
Trans–Gulf Corp. v. Performance Aircraft Servs., Inc.,
82 S.W.3d 691 (Tex.App.—Eastland 2002, no pet.) ..........................................15
Zieben v. Platt,
786 S.W.2d 797 (Tex. App.—Houston [14th Dist.] 1990, no writ) ..................... 6
BRIEF OF APPELLANT PAGE v
Statutes
TEX. PROP. CODE § 53.024 .............................................................................9, 10, 19
TEX. PROP. CODE § 53.153 .......................................................................................16
TEX. PROP. CODE § 53.156 .................................................................................21, 22
TEX. PROP. CODE. § 53.160(b) .................................................................................19
TEX. PROP. CODE ANN. § 53.158 ................................................................................7
Texas Property Code Chapter 53 ...........................................................................5, 7
Other Authorities
Corbin on Contracts § 779D, at 46-47 (1951) ........................................................13
BRIEF OF APPELLANT PAGE vi
TO THE HONORABLE FOURTEENTH COURT OF APPEALS:
Appellant SCHEAR HAMPTON DRYWALL, LLC (“Schear Hampton”),
plaintiff in the proceedings below, appeals the Final Judgment signed on October 2,
2017 (the “Judgment”), following a bench trial in Cause No. 2015-22140, in the 61st
Judicial District Court of Harris County, Texas. CR 204.1
STATEMENT OF THE CASE
This case was filed by Schear Hampton to foreclose a statutory mechanic’s
and materialman’s lien for construction work it performed on property owned by
Appellee FOUNDERS COMMERCIAL, LTD (“Founders”). CR 5. The case was
tried to the bench. CR 204. The trial court signed the Judgment. App. A; CR 206.
The trial court issued Findings of Fact and Conclusions of Law. App. B; CR 212-
14. Schear Hampton appealed. CR 221.
ISSUES PRESENTED
1. Did trial court err in failing to foreclose Schear Hampton’s lien?
2. Did the trial court err in reducing and/or partially invalidating
Schear Hampton’s Lien?
1
“CR” refers to the consecutively-numbered pages in the Clerk’s Record. “RR” refers to the
Reporter’s Record. The Reporter’s Record consists of thirteen volumes. Volumes 2 through 6 are
transcripts of the bench trial. Volumes 7 through 11 are Plaintiff’s trial exhibits. Volumes 12 and
13 are Defendant’s trial exhibits. Each reference to the trial transcript includes the volume number
before “RR,” the page number after “RR,” and the lines upon which the referenced material
appears after the colon. Thus, a reference to volume two, page three, line four is “2 RR 3:4.” Each
reference to a trial exhibit includes the volume number before “RR” and either “PX” (Plaintiff’s
Exhibit) or “DX” (Defendant’s Exhibit) after “RR” followed by the exhibit number. Thus, a
reference to Plaintiff’s Exhibit 2 in volume 7 is “7 RR PX 2.”
BRIEF OF APPELLANT PAGE 1
3. Did the trial court err in denying Schear Hampton an award of
attorneys’ fees?
STATEMENT OF FACTS
1. On January 26, 2012, Founders, as owner, entered into a contract (the
Prime Contract”) with Construction Supervisors, Inc. (“CSI”), as general contractor,
for the construction of a facility in Houston, Harris County, Texas known as The
Abbey at Westminster Plaza (the “Abbey”). CR 209.
2. On or about January 10, 2014, CSI entered into a subcontract (the
“Subcontract”) with Schear Hampton to perform certain work, including the
application of stucco, which was part of CSI’s obligation to Founders pursuant to
the Prime Contract. App. C; CR 209.
3. The stucco work was initially to be performed by Target Masonry
(“Target”), but Target abandoned the project after it had completed less than half of
the work. Schear Hampton was hired to finish Target’s scope of work. 3 RR 106:12-
107:15.
4. The original Subcontract contemplated a turnkey solution from Schear
Hampton for a defined scope of work for a total of $235,000. App. C; 2 RR 67. As
work proceeded, it became apparent that CSI and/or Founders needed to broaden the
scope of Schear Hampton’s work due to CSI’s failure to provide essential equipment
for Schear Hampton’s work and as a result of Target’s shortcomings in its services.
7 RR PX 4-19; 2 RR 94:24-95:13, 96:4-7. Schear Hampton issued change orders and
BRIEF OF APPELLANT PAGE 2
work orders/field change orders for these added services. The approved additional
equipment and services totaled $155,967, bringing the total contract value to
$390,967.00. 7 RR PX 4-19; 2 RR 115:2-5; 11 RR PX 74.9.
5. The main Subcontract document was a standard form. App. C; 3 RR
113:22-25; 7 RR PX 2. The Subcontract was customized for the Schear
Hampton/CSI relationship through the addition of an “Additions to Contract”
addendum which was signed by CSI and Schear Hampton. The “Additions to
Contract” provided, in pertinent part, that:
“4. W.O. [write offs], extras, back charges, etc., only by G.C.
[CSI] & subcontractor [Schear Hampton] signed change order. . .
10. No 3rd party contingencies or contracts.
11. This is a complete contract. Those things typed or hand
written provisions shall control and be prevailing on all parties if
in conflict of this contract.”
App. C (last page); 3 RR 120:24-121:12.
6. Schear Hampton completed all work under the Subcontract, including
“punch list” items outlined by CSI. 2 CSI failed to pay the complete amounts due
under the Subcontract. The balance owed to Schear Hampton by CSI for work on
the Abbey performed by SHD is $152,173.60. 11 RR PX 74.9.
2
The trial court found that Shear Hampton failed to perform some of its work in accordance with
its obligations pursuant to the Subcontract and failed to complete certain punch list items in
accordance with the provisions of the Subcontract. CR 209-210. The trial court’s finding was not
supported by the evidence as demonstrated infra.
BRIEF OF APPELLANT PAGE 3
7. Schear Hampton, however, had no contract with Founders (App. C) and
there was no evidence of a change order authorizing back charges or write offs for
any alleged damage caused by Schear Hampton to the Abbey, which was required
by the addendum to the Subcontract. Id.
8. On or about January 30, 2015, Schear Hampton filed an Amended
Affidavit for Mechanic’s and Materialman’s Lien (the “Lien”) among the real
property records of Harris County, Texas, claiming a lien against the Abbey in the
amount of $152,173.60. CR 210.
PROCEDURAL BACKGROUND
Schear Hampton filed Plaintiff’s Original Petition on April 16, 2015. CR 2.
Founders answered and filed counterclaims on May 20, 2015. CR 9, 11. Founders
filed a third party petition against CSI on January 7, 2016. CR 17. A no-answer
default judgment was entered against CSI on March 14, 2016. CR 36. The claims
between Schear Hampton and Founders were presented at a bench trial from August
14 to 22, 2017. See RR volumes 2 through 6. Schear Hampton requested Findings
of Fact and Conclusions of Law on October 12, 2017. CR 207. The trial court
signed the Judgment on October 2, 2017 (CR 204) and Findings of Fact and
Conclusion of Law on October 26, 2017. CR 212. Schear Hampton filed its notice
of appeal on December 27, 2017. CR 221.
BRIEF OF APPELLANT PAGE 4
SUMMARY OF ARGUMENT
The Judgment incorrectly addressed the claims in the case as if it involved
cross-claims between two parties to a construction contract. There was no contract
between Schear Hampton and Founders. The sole proper claim between them was
Schear Hampton’s claim for foreclosure of its statutory lien. Chapter 53 of the Texas
Property Code dictates the available remedies under that statute: (1) foreclosure of
the lien, (2) calculation of the amount owed to the subcontractor, (3) calculation of
the amount recoverable against the owner, and (4) an award of equitable and just
attorneys’ fees.
The Judgment failed on all counts. It did not foreclose the lien. It
miscalculated the amount owed to Schear Hampton. It failed to address the amount
recoverable under the lien. And it failed to award equitable and just attorneys’ fees.
Further, the Judgment improperly awarded damages to Founders and partially
voided the lien based on those damages based on contract/negligence claims against
Schear Hampton by Founders, which were unavailable to Founders as a matter of
law.
Schear Hampton is entitled to judgment rendered in its favor foreclosing the
Lien at its full value of $152,173.60. Schear Hampton is also entitled to a renderd
judgment that Founders take nothing by its counterclaim. Remand is required to
BRIEF OF APPELLANT PAGE 5
allow the trial court to properly consider the just and equitable attorneys’ fees to
which Schear Hampton is entitled.
STANDARD OF REVIEW
In an appeal from a bench trial, the trial court's findings of fact have the same
weight as a jury verdict and are reviewed under the same legal and factual
sufficiency of the evidence standards used when determining if sufficient evidence
exists to support an answer to a jury question. Fulgham v. Fischer, 349 S.W.3d 153,
157 (Tex. App.—Dallas 2011, no pet.). When the appellate record contains a
reporter's record as it does in this case, findings of fact are not conclusive and are
binding only if supported by the evidence. Id. All evidence is examined and the
finding is set aside only if the evidence is so weak or the finding so against the great
weight and preponderance of the evidence that it is clearly wrong and unjust. Zieben
v. Platt, 786 S.W.2d 797, 799 (Tex. App.—Houston [14th Dist.] 1990, no writ); see
also Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam).
When an appellant challenges the legal sufficiency of an adverse finding, it
must demonstrate there is no evidence to support the adverse finding. Id. When
reviewing the record, the court of appeals determines whether any evidence supports
the challenged finding. Id. If more than a scintilla of evidence exists to support the
finding, the legal sufficiency challenge fails. Id.
BRIEF OF APPELLANT PAGE 6
Conclusions of law are reviewed de novo. See BMC Software Belg., N.V. v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002). This Court is not bound by the trial
court's legal conclusions, but the conclusions of law will be upheld on appeal if the
judgment can be sustained on any legal theory supported by the evidence. Fulgham,
349 S.W.3d at 157-58.
ARGUMENT AND AUTHORITIES
I. THE FINAL JUDGMENT FAILED TO FORECLOSE THE LIEN.
There was no privity of contract between Schear Hampton and Founders. CR
10. Schear Hampton’s remedy against Founders for the unpaid amounts on the
Subcontract with CSI, was a suit to foreclose its statutory lien. Founders sole basis
for its claims back against Schear Hampton were claims for breach and negligence.
CR 11-13. As discussed in more detail infra, Founders is not entitled to recover
under either theory as a matter of law. Founders remedies were limited to its claims
against CSI. Founders appropriately sued and obtained a default judgment against
CSI for the alleged construction related deficiencies. CR 25-38.
The issues properly before the trial court were the limited procedures and
remedies available under Chapter 53 of the Texas Property Code.
To enforce a mechanic's lien, the lienholder must file a lawsuit and obtain a
judgment from a court of competent jurisdiction foreclosing its statutory lien. TEX.
PROP. CODE ANN. § 53.158. To prevail on its claim, the lienholder must prove it
BRIEF OF APPELLANT PAGE 7
performed the labor or furnished the materials and the debt is valid. Crawford
Services, Inc. v. Skillman Intern. Firm, L.L.C., 444 S.W.3d 265, 268 (Tex. App.—
Dallas 2014, pet. dism'd). In addition, the statutory lienholder must establish it
substantially complied with the statutory requirements for perfecting a lien. Id.,
citing First Nat'l Bank in Graham v. Sledge, 653 S.W.2d 283, 285–86 (Tex.1983)
(statutory lienholder's rights “totally dependent on compliance with the statutes
authorizing the lien”). Pursuant to the statutory scheme, the trial court determines
whether the debt is valid and the lien is perfected. Crawford, 444 S.W.3d at 268
(recognizing that issues in foreclosure suit are whether debt and lien are valid).
Once the trial court determines that the lienholder has a valid debt and a
perfected mechanic's lien, it does not have discretion under Section 53.154 to deny
a judgment of foreclosure and order of sale of the property subject to the lien.
Crawford, 444 S.W.3d at 271.
Here the trial court found that the lien was valid and enforceable, but the
Judgment was incorrect as a matter of law because it failed to foreclose the lien. The
Judgment also incorrectly calculated the amount of the lien and assessed damages in
Founders’ favor. Those issues are addressed below. This Court should render
judgment foreclosing the lien.
BRIEF OF APPELLANT PAGE 8
II. THE EVIDENCE AND LAW DID NOT SUPPORT THE TRIAL
COURT REDUCING THE LIEN TO $21,678.32.
A. There was legally and factually insufficient evidence that Schear
Hampton was only owed $36,678.32 by CSI.
The amount of a lien claimed by a subcontractor may not exceed:
(1) an amount equal to the proportion of the total subcontract price that the
sum of the labor performed, materials furnished, materials specially
fabricated, reasonable overhead costs incurred, and proportionate profit
margin bears to the total subcontract price; minus
(2) the sum of previous payments received by the claimant on the
subcontract.
TEX. PROP. CODE §53.024.
The original amount owed under the Subcontract was $235,000. App. C, sec.
10. CSI requested and authorized a series of change orders and work tickets for
work beyond Schear Hampton’s original scope of work. 7 RR PX 4-19. After
applying the change orders and work tickets, the total amount owed under the
Subcontract was $390,967.00. 11 RR PX 74.9. And Schear Hampton presented
evidence that it earned 100% of the contract price. Id.; 3 RR 42:5-48:24, 50:17-25;
70:12-19, 152:2-23; 10 RR PX 68.
The payments received by Schear Hampton totaled $238,793.40. 11 RR PX
74.9. The payments to Schear Hampton were corroborated by substantial evidence.
Schear Hampton’s financial records showed all the payments it received from CSI
and established that the last payment it received was in August 2014. 8 RR PX 21
BRIEF OF APPELLANT PAGE 9
(first 4 entries under “Sales”). John Black, CSI’s president, confirmed CSI stopped
making payments to Schear Hampton in September 2014. 3 RR 142:6-15. Schear
Hampton’s financials showed that the total of the payments received by Schear
Hampton was $241,436.40. 8 RR PX 21
In November 2014, after the date CSI admits it had made its final payment to
Schear Hampton, Schear Hampton submitted a pay application to CSI showing it
had been paid a total of $238,793.40 as of November 2014 and that it was owed a
net of $152,173.60. 11 RR PX 74.9. There was no evidence or testimony that Schear
Hampton’s November 2014 Pay Application was inaccurate. And, because there
were no additional payments made to Schear Hampton, Plaintiff’s Exhibit 74.9
reflects the proper amount of the debt on the lien.
Nonetheless, the trial court found that “The Balance owed to [Shear Hampton]
by CSI for work on the The Abby performed by [Schear Hampton] is $36,678.32.”
CR 212 (¶3). The trial court failed to calculate the amount of the lien in accordance
with the lien statute. TEX. PROP. CODE §53.024. Specifically, the trial court did not
make a finding as to the amount of the Subcontract, how much of the Subcontract
was earned, or the total of payments to Schear Hampton. The trial court made no
finding as to how it calculated $36,678.32 as the amount owed.
The only information in the record where the trial court could have found the
amount it did award was in Defendant’s Exhibit 41 which showed payments to
BRIEF OF APPELLANT PAGE 10
Schear Hampton totaling $330,104.92 by April 15, 2015, resulting in a net owed to
Schear Hampton of $36,678.32. 13 RR DX 41. This was $92,000 more than Schear
Hampton was paid. There is simply no evidence of when, how, or by whom there
was an additional nearly $92,000 paid to Schear Hampton by CSI after November
2014 when Schear Hampton sent its last pay application (11 RR PX 74.9), CSI
admitted it made no payments to Schear Hampton after September 2014. 3 RR
142:6-15. And there was no evidence that Founders made any payments to Schear
Hampton.
Exhibit 41 is dated after Schear Hampton filed its lien and sent written demand
and was clearly created for the litigation by Founders. CR 19. Notably, Founder’s
third party petition against CSI, confirms the impossibility of Exhibit 41’s accuracy.
The following month, on December 15, 2014, Schear Hampton
provided notice of debt and an affidavit lien to CSI, The Abbey, and
Founders, claiming an unpaid balance of $152,173.60. On January 16,
2015, Schear Hampton filed an Affidavit for Mechanic’s and
Materialman’s Lien at Harris County Real Property Record No.
20150020430 claiming $152,173.60. And finally, on March 26, 2015,
Schear Hampton sent a written demand for payment of this claimed
debt to Founders and to CSI.
CR 19. These judicial admissions were filed 8 months after Schear Hampton filed
the lawsuit. Founders makes no reference to the alleged inaccuracy of the lien
amount or the inaccuracy of the unpaid balance. Further, even in its First Amended
Counterclaim against Schear Hampton, when requesting a reduction of the lien,
Founders makes no mention that there was a miscalculation of the amount claimed
BRIEF OF APPELLANT PAGE 11
in the lien. CR 50-54. There is also no testimony that Schear Hampton was paid
anything after August 2014.
Defendant’s Exhibit 41 was presented through John Black, the President 3 of
CSI. There was no foundation laid for the document or Mr. Black’s personal
knowledge of the information in the document. There was also no evidence of who
prepared the document, the accuracy of any of the information in the document, or
any other indicia to credit the document as accurate. There was certainly no evidence
that Defendant’s Exhibit 41 was prepared or submitted by Schear Hampton. 2 RR
108:18-109:7; 11 RR PX 74.1-74.9. Notably, Defendant’s Exhibit 41 does not have
an electronic signature of Schear Hampton’s owner, Jim Smith, which all other pay
applications submitted by Schear Hampton did have. Also, the details on the second
page of Defendant’s Exhibit 41 do not match the details on any other pay application
that Schear Hampton did prepare. Id.
Therefore, there is no evidence that Schear Hampton was paid $330,104.92.
Alternatively, the great weight of evidence does not support the trial court’s Finding
of Fact that Schear Hampton was only owed $36,678.32. Further, the trial court’s
conclusion of law that the lien was partially invalid as a result of that finding was
not supported by the evidence.
3
John Black is identified as the President of CSI on the Subcontract. 7 RR PX 3
BRIEF OF APPELLANT PAGE 12
B. Founders could not recover damages from Shear Hampton or an
offset of the lien amount as a matter of law.
In the construction context, a property owner is ordinarily not a third-party
beneficiary of a contract between the general contractor and a subcontractor.
Thomson v. Espey Huston & Associates, Inc., 899 S.W.2d 415, 419–20 (Tex. App.—
Austin 1995, no writ). The relationships between property owners, general
contractors, and subcontractors are well established under generally prevailing
contract principles. Id. A leading treatise on contract law explains:
Such contracts [between a principal building contractor and
subcontractors] are made to enable the principal contractor to perform;
and their performance by the subcontractor does not in itself discharge
the principal contractor's duty to the owner with whom he has
contracted. The installation of plumbing fixtures or the construction of
cement floors by a subcontractor is not a discharge of the principal
contractor's duty to the owner to deliver a finished building containing
those items; and if after their installation the undelivered building is
destroyed by fire, the principal contractor must replace them for the
owner, even though he must pay the subcontractor in full and has no
right that the latter shall replace them. It seems, therefore, that the
owner has no right against the subcontractor, in the absence of clear
words to the contrary. The owner is neither a creditor beneficiary nor a
donee beneficiary; the benefit that he receives from performance must
be regarded as merely incidental.
See id., citing Arthur L. Corbin, Corbin on Contracts § 779D, at 46–47 (1951).
This general rule is grounded in the respective interests of the property owner,
general contractor, and subcontractors. The contract between the property owner and
the general contractor gives the property owner the right to a finished building.
Subsequent contracts between the general contractor and subcontractors add nothing
BRIEF OF APPELLANT PAGE 13
to this entitlement; the owner is still entitled to the same building, regardless of the
means by which it is constructed. These same subcontracts, however, are vital to the
interests of the general contractor, who has assumed the obligation to deliver a
finished building. In most cases, subcontracts will be necessary to enable the general
contractor to deliver the building and avoid liability for breach of contract. This need,
rather than the interests of the property owner who is entitled to a finished building
both before and after the subcontract, is the primary motivation for subcontracting.
Thomson, 899 S.W.2d at 419.
For their part, subcontractors are selected by the general contractor. Usually,
it is the general contractor who assigns them tasks, negotiates and signs their
contracts, monitors their performance, and pays them on completion. If the
subcontractors' performance falls short of what the owner is entitled to, it is the
general contractor who has to make up the difference. From the subcontractors'
perspective, as well as the general contractor's, subcontracts are intended primarily
to benefit those parties rather than the property owner. Therefore, absent clear
evidence to the contrary, a property owner is not a third-party beneficiary of
a contract between the general contractor and a subcontractor. See id. at 420, citing
B & C Constr. Co. v. Grain Handling Corp., 521 S.W.2d 98, 101 (Tex.Civ.App.—
Amarillo 1975, no writ).
BRIEF OF APPELLANT PAGE 14
The economic loss rule has been applied to deny recovery of purely economic
losses in actions for negligent performance of services. LAN/STV v. Martin K. Eby
Const. Co., Inc., 435 S.W.3d 234 (Tex. 2014). That is, a plaintiff cannot maintain a
tort cause of action against a defendant when its damages are only for economic
losses caused by the failure to perform a contract. Bass v. City of Dallas, 34 S.W.3d
1, 8 (Tex.App.-Amarillo 2000, no pet.). So, “if a contractual duty is negligently
performed, causing only economic loss, only a breach of contract action may be
maintained, and an action in tort for negligence is precluded.” Id. “Economic loss”
has been defined as “ ‘damages for inadequate value, costs of repair and replacement
of the defective product, or consequent loss of profits—without any claim of
personal injury or damage to other property. . .’ ” Id. at 9
(quoting Thomson, 899 S.W.2d at 421). The economic loss rule not only applies to
bar claims against those in a direct contractual relationship but also applies to
preclude tort claims between parties who are not in privity. See id. at 8–9; Trans–
Gulf Corp. v. Performance Aircraft Servs., Inc., 82 S.W.3d 691, 695 (Tex.App.—
Eastland 2002, no pet.); Hou–Tex, Inc. v. Landmark Graphics, 26 S.W.3d 103, 106–
07 (Tex.App.—Houston [14th Dist.] 2000, no pet.).
Schear Hampton and Founders were not in privity.
It is undisputed here that there was no contract between Schear Hampton and
Founders, the owner. CR 50. Because there is no contractual privity between Schear
BRIEF OF APPELLANT PAGE 15
Hampton and Founders as outlined in the discussion above, the sole remedies
between them are limited to the lien statute. 4 Founders’ defenses under that statute
are limited to pursuing CSI (the general/original contractor) to make Founders
whole. TEX. PROP. CODE. § 53.153. The statute does not permit Founders to claim
damages against Schear Hampton. Founders appropriately pursued this remedy in
filing a third party petition against CSI. And, Founders obtained a default judgment
against CSI. CR 25-38.
Founders was not a third-party beneficiary of the
Subcontract.
The trial court found that:
4. [Shear Hampton] failed to perform some of its work in accordance
with its obligations pursuant to the Subcontract and failed to complete
certain punchlist items in accordance with the provisions of the
Subcontract.
5. [Shear Hampton] failed to exercise ordinary care in the performance
of some of its obligations pursuant to the Subcontract, which caused
damages to the Abbey.
6. Founders incurred damages in the amount of $15,000.00 as a result
of the conduct by [Shear Hampton] SHD set forth in Paragraphs 4 and
5 above.
CR 212-13.
4
The trial court found that Founders damages were a result of Schear Hampton’s failure to perform
under the Subcontract (CR 209-210) and Schear Hampton failed to exercise ordinary care in the
performance of its obligations under the Subcontract. CR 210. These findings fall squarely within
the economic loss rule because they all relate back to Schear Hampton’s performance under the
Subcontract.
BRIEF OF APPELLANT PAGE 16
The only agreement signed by Schear Hampton was the Subcontract with CSI.
Nothing in the Subcontract identifies Founders as a third party beneficiary and the
Addendum to the Subcontract expressly prohibits any claim by a non-party to the
agreement. Specifically, the Addendum states that:
“4. W.O. [write offs], extras, back charges, etc., only by G.C. [CSI] &
subcontractor [Schear Hampton] signed change order. . .
10. No 3rd party contingencies or contracts.
11. This is a complete contract. Those things typed or hand written
provisions shall control and be prevailing on all parties if in conflict of
this contract.”
App. C.
The sole claims pled by Founders against Schear Hampton to support the
$15,000 award of damages against Schear Hampton was Negligence and Breach of
Contract. CR 51-52. The trial court awarded $15,000 in damages based on its
findings that Schear Hampton “failed to perform some of its work in accordance
with its obligation pursuant to the Subcontract” and “Schear Hampton failed to
exercise ordinary care in the performance of some of its obligations pursuant to the
Subcontract.” CR 212-13.
Founders had no standing to assert and was not entitled to bring a damages
claim against Schear Hampton for the alleged damages caused by Schear Hampton
to the Abbey. Founders was a stranger to the Subcontract. Further, nothing in the
Subcontract states that Founders is a third party beneficiary to the Subcontract. And
BRIEF OF APPELLANT PAGE 17
the Addendum to the Contract limits the circumstances of when Schear Hampton
will be responsible for a back charge or write off to circumstances when there is a
signed change order authorizing such back charge or write off. Additionally the
Addendum states that there are no “3rd party contingencies or contracts,” which is
an express rejection of 3rd party beneficiary status to anyone.
In its counterclaim, Founders cited to paragraphs 3.1, 10, 23, 32, and 35 of the
subcontract and claimed these provisions “expressly identified [Founders] as a third-
party beneficiary.” CR 52. With the exception of paragraph 32 relating to warranty,
each of the cited provisions expressly identify duties Schear Hampton owed
exclusively to CSI – 3.1 (“Subcontractor Work” - makes no reference to Founders),
10 (“Subcontract Sum and Payment” – identifies remedies available to Contractor
(CSI) in the event Schear Hampton’s work is defective or causes damages to other
work, but does not give any rights to Founders), 23 (“Clean-up” – requires Schear
Hampton to pay CSI if it does not clean up its work and CSI has to incur the cost of
clean-up, but does not create any obligation to Founders), 35 (“Default; Termination;
Termination for Convenience” – identifies the conditions under which CSI could
terminate the Subcontract).
The warranty provision (paragraph 32) is the sole provision in the Subcontract
where Schear Hampton purports to obligate itself directly to Founders. First, the
warranty provision is not enforceable by Founders because such enforcement
BRIEF OF APPELLANT PAGE 18
conflicts with the limitations to 3rd party rights in the Addendum, which expressly
trumps in the event of a conflict. Second, even if the warranty did apply, there was
no evidence Founders or CSI made a warranty claim or that Schear Hampton was
given the opportunity to perform the warrantable work. Further, even if the warranty
was breached, the sole remedy is reduction in the amounts owed Schear Hampton
by the actual cost of the warranty service funded by CSI. There is no evidence of
CSI’s out of pocket costs, if any.
Finally, regardless of the legal basis for an award of damages to Founders,
there was no basis in law to reduce the lien by the amount of the damages.
Section 53.024 of the Texas Property Code sets forth how the amount of a lien of a
subcontractor is to be calculated. There is no deduction in that provision for alleged
damages caused by the subcontractor to the project. Further, the Court’s conclusion
that the lien was partially invalid because of the deductions is not supported by the
statute or any other law. The validity of the lien is dictated by the lienholder’s strict
adherence to the procedural requirements of the statute. TEX. PROP. CODE. §
53.160(b) (detailing the grounds for objecting to the validity of a lien). None of
those issues were raised here. A counterclaim for damages or offset is not a statutory
basis for invalidating a lien. Therefore, the trial court’s conclusion of law that the
lien was partially invalid was erroneous as a matter of law.
BRIEF OF APPELLANT PAGE 19
C. There was legally and factually insufficient evidence supporting a
$15,000 damages award and/or offset of the lien.
Even if there were legal grounds to award Founders damages or an offset
against Schear Hampton, there is no evidence to support the award of $15,000.
CSI’s assistant superintendent (Randy L. Horst, Jr.) on the Abbey Project and
CSI’s president (John Black) testified that Schear Hampton completed its scope of
work and all punch list items that were identified for Schear Hampton. 3 RR 42:5-
48:24, 50:17-25; 70:12-19, 152:2-23; 10 RR PX 68.
Horst, as assistant superintendent on the Abbey Project, was responsible for
daily reports, daily communications with all the subcontractors, making sure they
follow through with all the given tasks, scheduling and performance and making
sure they were up to par, including Schear Hampton. 3 RR 43:5-20. Horst created
and oversaw completion of the punch list items identified in Plaintiff’s Exhibit 68.
3 RR 43:21-44:4; 10 RR PX 68. Therefore, CSI, the general contractor, the sole
party with a contractual relationship with Schear Hampton, admitted that Schear
Hampton completed its scope of work under the Subcontract to the satisfaction of
CSI, including the punch list items. If CSI admits that Schear Hampton fully
performed, it defies logic that Founders, as an alleged third-party beneficiary, could
claim Schear Hampton did not finish.
Further, there is no evidence that Schear Hampton caused any of the damages
claimed. Founders presented Dave Sherman (an offsite construction consultant that
BRIEF OF APPELLANT PAGE 20
represented Founders). Sherman claimed that there was a variety of issues with
stucco related work but there was no evidence of a causal link between the items
Sherman noted and Schear Hampton’s work. Sherman confirmed his testimony was
speculative and that he relied on contractors to oversee the work of subcontractors.
5 RR 38:10-18; 4 RR 145-46; 150:3-8. Sherman also admitted that some of the
defective work that he believed to be within Schear Hampton’s scope was actually
the work of Schear Hampton’s predecessor Target Masonry and that damages
associated with that work were part of the $70,000 he claimed Schear Hampton owed
Founders. 5 RR 48:15 – 49:4, 58:4-25.
Further there was no evidence of a change order authorizing a back charge
against Schear Hampton for $15,000, which is a requirement of the Subcontract. 7
RR PX 3. Therefore, Founders’ claim for the damages/back charge is prohibited as
a matter of law by the Subcontract.
III. THE TRIAL COURT’S DENIAL OF ATTORNEYS’ FEES TO
SCHEAR HAMPTON WAS CONTRARY TO LAW AND RELIED ON
THE IMPROPER PARTIAL INVALIDATION OF THE LIEN.
In any proceeding to foreclose, “the court shall award costs and reasonable
attorney's fees as are equitable and just.” TEX. PROP. CODE § 53.156. Although the
trial court found that CSI owed Schear Hampton more than $36,000 pursuant to the
Subcontract, the trial court found that “[n]either [Schear Hampton] nor Founders is
entitled, pursuant to the provisions of either the Texas Property Code or the Texas
BRIEF OF APPELLANT PAGE 21
Declaratory Judgments Act, to a recovery of attorney’s fees.” CR 214. 5 While the
declaratory judgments act states that fees “may” be awarded, the lien statute says
that the trial court “shall” award fees as are equitable and just. TEX. PROP. CODE §
53.156. The trial court did not state why it found that Schear Hampton was not
“entitled” to fees under the Property Code. If that was intended as a statement of the
law, then it was incorrect as a matter of law. Alternatively, if the trial court’s
intention was a discretionary finding that awarding any fees to Schear Hampton
would not be equitable and just, then the fees award should be remanded for
reconsideration after the Court corrects the errors outlined above.
5
It’s unclear how the trial court worked the Declaratory Judgments Act into its findings and
judgment, but that act is inapplicable to the calculation of a statutory lien.
BRIEF OF APPELLANT PAGE 22
PRAYER
WHEREFORE, Appellant Schear Hampton Drywall, LLC is entitled to
judgment rendered in its favor foreclosing the Lien at its full value of $152,173.60.
Schear Hampton is also entitled to a judgment rendered that Founders take nothing
by its counterclaim. Alternatively, the calculation of the amount of the lien should
be remanded for the trial court to consider the proper calculation of the lien under
the lien statute. Remand is also required to allow the trial court to properly consider
the just and equitable attorneys’ fees to which Schear Hampton Drywall, LLC is
entitled.
Respectfully submitted,
By: /s/Jeffrey S. Lowenstein
Jeffrey S. Lowenstein
Texas Bar No. 24007574
jlowenstein@bellnunnally.com
Bell Nunnally & Martin LLP
3232 McKinney Avenue, Suite 1400
Dallas, Texas 75204-2429
Telephone: (214) 740-1400
Telecopy: (214) 740-1499
COUNSEL FOR APPELLANT
BRIEF OF APPELLANT PAGE 23
CERTIFICATE OF COMPLIANCE
The undersigned hereby certifies that this document was produced on a
computer using Microsoft Word 2016. The document contains 4,307 words
according to the computer software’s word-count function, excluding the sections of
the document listed in Texas Rule of Appellate Procedure 9.4(i)(1).
/s/ Jeffrey S. Lowenstein
Jeffrey S. Lowenstein
BRIEF OF APPELLANT PAGE 24
CERTIFICATE OF SERVICE
The undersigned hereby certifies that a true and correct copy of the foregoing
was delivered to the following persons on May 16, 2018, through the
EFILE.TXCOURTS.GOV electronic filing system:
VIA EFILE.TXCOURTS.GOV
J. W. Beverly
Ferguson Braswell Fraser Kubasta PC
9 Greenway Plaza, Suite 500
Houston, Texas 77046
/s/ Jeffrey S. Lowenstein
Jeffrey S. Lowenstein
3903520_1.docx / 11297.1
BRIEF OF APPELLANT PAGE 25
INDEX TO APPENDIX
A. Final Judgment [CR 204]
B. Findings of Fact and Conclusions of Law [CR 212]
C. Construction Supervisors, Inc. Subcontract [7 RR PX 3]
D. TEXAS PROPERTY CODE SECTION 53.024, 53.153, 53.156, 53.158, AND
53.160(b)
BRIEF OF APPELLANT PAGE 26
9/12/2017 3:39:23 PM
Chris Daniel - District Clerk
Harris County
Envelope No: 19384343
By: KIRBY, TERESA A
Filed: 9/12/2017 3:39:23 PM
Pgs - 3
CAUSE NO. 2015-22140
8 BP
SCHEAR HAMPTON DRYWALL, LLC, § IN THE DISTRICT COURT OF 8A
Plaintiff , § CRLPZ
§ SALPZ
V. § HARRIS COUNTY, TEXAS
s£
FOUNDERS COMMERCIAL, LTD , . §
Defendant . § 61ST JUDICIAL DISTRICT
FINAL JUDGMENT
On August 14, 2017, this case was called for trial . Plaintiff , Schear Hampton Drywall ,
LLC, appeared and announced ready for trial . Defendant and Counterclaimant , Founders
Commercial, Ltd ., also appeared and announced ready for trial. Third -Party Defendant
Construction Supervisors, Inc., an interlocutory default judgment having been previously entered
against it , failed to appear for trial.
All matters in controversy, legal and factual, were submitted to the Court for its
determination, no jury having been requested . After hearing the evidence and arguments of
counsel, and considering applicable legal principles , the Court is of the opinion that
Plaintiffs lien Is partially valid in the amount of $38,678.32. The Court further finds that Defendant is entitled to
.. .;
u: ) recover $15,000 in damages ori its counterclaim against Plaintiff. Based on same, the Court is of the opinion that
' the following judgment should be entered, and if is therefore ORDERED, ADJUDGED and DECREED that:
1. Plaintiff Schear Hampton Dry wall, LLC recover judgment against Defendant
Founders Commercial, Ltd . in the amount of $21 ,678.32.
2. Defendant Founders Commercial, Ltd . recover a default judgment against third -
party Defendant Construction Supervisors , Inc. in the amount of $21,678.32.
3. Pursuant to the Texas Uniform Declaratory Judgments Act, the Court declares that
the lien filed of record by Plaintiff Schear Hampton Dry wall , LLC against the property known as
The Abbey at Westminster Plaza, located at 2855 Westminster Plaza Dr., Houston, Texas 77082,
204
is partially null and void and of no force and effect , to the extent it exceeds the amount of
$21,678.32 , This declaration of partial invalidity specifically includes the Affidavit for
Mechanic’ s and Materialman’ s Lien filed by Plaintiff Schear Hampton Dry wall , LLC on or about
January 16, 2015, with the Harris County Clerk’ s file number 20150020430 , and the Amended
Affidavit for Mechanic’ s and Materialman’ s Lien filed by Plaintiff Schear Hampton Drywall, LLC
on or about January 30, 2015, with the Harris County Clerk’ s file number 20150041298 ( the
"Liens” ).
4. If the judgment awarded to Schear Hampton Drywall, LLC is not paid when final,
then Schear Hampton Drywall, LLC may conduct a foreclosure sale in compliance with the
provisions of the Texas Property Code, with respect to the real property identified in the Liens.
5. Plaintiff Schear Hampton Drywall, LLC is further awarded pre-judgment interest
on the amount of $21,678.32 at 5% interest per annum from May 20, 2015 until paid .
2
205
4®dgme®Hs“ a#ifSffisd“ ,w&l¥ ,m¥am der
<* >
<*
&N
fees and
12. Each party shall bear its own costs of court incurred herein .
13. This judgment disposes of all claims asserted by the parties in this case.
DATED this day of , 2017 in Houston, Texas .
7
Signed: i
10/2/ 2017
JUDGE PRESIDING
n
\
206
10/24/2017 11:32 AM
Chris Daniel - District Clerk Harris County
Envelope No. 20265266
By: TERESA KIRBY
Filed: 10/24/2017 11:32 AM
CAUSE NO . 2015-22140
SCHEAR HAMPTON DRYWALL, LLC
v.
FOUNDERS COMMERCIAL, LTD.
§
§
§
§
§
FINDINGS OF FACT AND CONCLUSIONS OF LAW
IN THE DISTRICT COURT OF
HARRIS COUNTY, TEXAS
61st JUDICIAL DISTRICT ^ CXP
This case was tried to the Court by agreement of all parties. The Court makes the following
findings of fact and conclusions of law with respect to the claims asserted by the various parties
herein.
FINDINGS OF FACT
1. On January 26, 2012, Founders Commercial, Ltd. (“ Founders” ), as owner, entered
into a contract (the “ Prime Contract” ) with Construction Supervisors, Inc. (“ CSI” ), as general
contractor, for the construction of a facility in Houston, Harris County, Texas known as The Abbey
at Westminster Plaza (the “ Abbey” ) .
2. On or about January 10, 2014, CSI entered into a subcontract ( the “ Subcontract” )
with Schear Hampton Drywall, LLC (“ SHD” ) to perform certain work, including the application
of stucco, which was part of CSI’ s obligation to Founders pursuant to the Prime Contract.
3. The balance owed to SHD by CSI for work on The Abbey performed by SHD is
$36,678.32.
4. SHD failed to perform some of its work in accordance with its obligations pursuant
to the Subcontract and failed to complete certain punchlist items in accordance with the provisions
of the Subcontract.
RECORDER'S MEMORANDUM
This instrument is of poor quality
at the time of imaging
212
*
5. SHD failed to exercise ordinary care in the performance of some of its obligations
pursuant to the Subcontract, which caused damages to the Abbey. \
6. Founders incurred damages in the amount of $15,000.00 as a result of the conduct
by SHD set forth in Paragraphs 4 and 5 above.
7. On or about January 30, 2015, SHD filed an Amended Affidavit for Mechanic’ s
and Materialman’ s Lien (the “ Lien” ) among the real property records of Harris County, Texas,
claiming a lien against the Abbey in the amount of $152,173.60.
8. SHD failed to prove that it was due the sum of $152,173.60 for work performed at
the Abbey. The evidence established that SHD was due the net sum of $21,678.32 for work
performed at the Abbey.
9. SHD’ s Lien claim is invalid to the extent it exceeds the sum of $21,678.32.
10. It would be neither equitable nor just for either Founders or SHD to recover
<
attorney’ s fees against the other party.
CONCLUSIONS OF LAW
11. The Subcontract constitutes a valid and binding contract between SHD and CSI, in
accordance with the written terms thereof.
12. The Lien against the Abbey is partially null and void and of no force and effect, to
the extent it exceeds the amount of $21,678.32.
13. After applying an offset in favor of Founders in the amount of $15,000, SHD is
entitled to a net recovery in the amount of $21,678.32, and a mechanic’s lien in such amount only.
14. In the event Founders does not pay SHD the principal amount due on the Judgment
when it becomes final, SHD may foreclose the Lien in accordance with applicable provisions of
the Texas Property Code.
2
213
15. Neither SHD nor Founders is entitled, pursuant to the provisions of either the Texas
Property Code or the Texas Declaratory Judgments Act, to a recovery of attorney’ s fees.
16. SHD is not entitled to recovery on its claim for quantum meruit.
17. CSI was duly served with Founders ’ third-party action against CSI, but defaulted
and failed to appeal- or answer, leading to the entry of an interlocutory default judgment.
18. By defaulting, CSI admitted all of the factual allegations set forth in such third-
party action.
19. Pursuant to the Prime Contract and applicable provision of the Texas Property
Code, CSI is responsible for indemnifying Founders for the net amount of $21,678.32 awarded to
SHD.
DATED the day of 0 C "Vpk>g v' ^
, 2017.
3
214
COMPLfffD
CONSTRUCTION SUPERVISORS, INC. SUBCONTRACT
Secti<>n 1 . . . JOB! 4237 CODE: 4 0 7
This Subcontract is made and entered jnto by and between the Contractor and Subcontractor listed below on the date
~s.et forth below.
The parties agree as frillOWl:i:
Contractor hlils entefr~ into a contract (the "Contract")· dated January 26, 2012 with Owner to perform certain labor
end furnish certain matetfals for the erection; C()nstructiori and completion ·of the Project In accordance with the pfans,
speciflcations, addenda, all applicable safety rules and r~ulaUons arid any general, special and supplementary
conditions of the Coottact, aU of whtch artil made part of sald Contract ui'ld all of which are now made part of this
Subcontract, said Contract, plans, specifications, addenda· and other documeiits set forth above being hereinafter
referred to as the "Contract Documents• ..
-CoNTRACioR: Construction Supervisors, Inc. M=E==A=R.,.H~A=!:M-PI-O~N!o!D
SUBCONTRACTOR: ===S=C,.. l.,,,N..,C..,;==
!!,!Rl,!!,yw...,,._A..,L..,L..,,
ADoRESs: 11111 Katy frwy,, #120. Houston, TX 77079 ADo~ss: 925 S Mason Rd,, #'(01. Katy, Texas 77450·38¾
TELEPHONE: (113} 667-0123 · Fax'713) 667~3064 T!LEPHONE: (832)449-3744 (fax: (832) 449-3734)
DATE: January 10, 2014 DESCIWTION: The Abbey at Westminster Plaza; Phase JI; Houston. Texas
OWNE~:Founders Commefcla!, Ltd., dba The-Abbey at Westminster P.laza, 61"'01 S. Broadway Aye, Tyler, TX · 76703.Joe Nur.ieim:4237
JOB ADDRESS; 2855 Westminster Plaza. Houston, Texas 77082
PLANS &si>'i:ci11c..T10Ns El(Tln..eo: The Abbey at Westminster Pina, Phas-e 11, Houston. Texas
PREPARED ev: Ted TrnJt Architect & Associates, Ltrf DATED: See Item Number 3.11
S~ction 2. Items # A, B, C, D, & E from Section 33 apply to this Subcontract, but the other item from Section 33(1)
does not apply.
Section 3.1 SLibcontracl Work: Subcontractor agrees to furnish all necessary sknled labor, materials, equipment,
supervision, services, supplies, and insurance for STUCCO. LABOR &· IIIIATERJAL, In strict ``orciance with the
Contract Documents and subject to the entire satisfaction and appr~val of tn~ Owner, Lender, Architect, Engineer and
Contractor or their authorized representatives (the "Subcontract Work") for the amount shown i.n Section 10 hereof.
Subcontractor shall, for· no additional compensation, furnish all necessary an_d at_tendant accessories incidentally
required for a complete instaflalion of the Subco~ct Work. · .
3.2. The Subcontract Work specifically includes, bu'fis not limited to:
a. Furnish all labor, tools, materials, ~ervlces and equipment, etc., required to fulfill this
Subconl~ In It~ ,otirety; per the pla"s and speclf't<:atlons and other ~ntraci Docum,mts~
b,: Clean up and removal to onliilte dumpster provided by General Contractor of all debris caused
by work cov~ -.inderthfs Subcontract, .
c. Complian~ with Sec:Uon 1A.OB (Shop drawings and ._submittals) of 'the specifications and
submittal of .alJ required data for approval.
d. All warranties, which begin on the date of substantlal completion as designated by the Owner,
as described In Section 32.
e. All pay applications-must be In Constri.ictlon, Supervisors; inc. main office by NOON every other
Wedm~sday. · ·
f. Specifi~tlorl Section SE - Furring ~md Lath.
g. Specifl~ion Section 9F - Plaster (Stucco).
h; Fµmlsh and Install Stucco in compliance with plans and specifications fot a complete turnkey
Jobt lnclUdlng but not limited to the following:
1. Includes an onslte superintendent.
2. All plaster accessions are galvanized.
3. All work Is based on Industry standards ,or mat~rlals, workmanship, and tolerances.
4. All subS.trate and prerequisite work to ~e complete and rea~y to receive this
subcontractors work.
5. Deduct $6 per square foot for stucco already completed.
6. Includes paper backed lath.
Federal ID: XX-XXXXXXX
Vendor: SCHEHA
SCHEAR HAMPJON DRVWALL INC,
P.aqe 1 of 13- Subcontr&et 1142:;t~
Founders 000241
7. All accessories to be:galvanlzed.
8. Based on the most current set of plans..
3.3 It is undel'$to~d and agreed that the Subcontract Work does not Include:
a. Sealants or caulking of any kind.
b. Site trash chute/dumpsters for any waste or trash separation requirements.
c. Control llnesJ elevation benchmark,& and scaffoiding to accomplish th{s subcontractors work
(provided by others).
d. Eiectric/power, water; and a~s (by others).
e. Shop drawlri:9$; sea(ants, backstop membrane; metal ceiling edges/stops. or vapor retarder of
any ,klhd,
f. Scaffolding (provfded arid Installed by others).
3.4. Subcontractor·shall provide Insurance certificates as shown In Section 16 of this Contract.
3.5. In addition to the foregoing insurance certificates; TEXAS WORKER'S COMPENSATION COMMISSION 85
FORM is enclosed for your 'signature, and must be returned With' your signed Subcontract
3.6. A copy of CONSTRUCTION SUPERVISORS INC SAFETY PROGRAM is included with, and becomes a part
of; this Subcontract. This SAFETY PROGRAM contains CONSTRUCTION .SUPERVISORS INC, DRUG AND
ALCOHOL POLICY, The Program Is accepted by the·Subcontractor and SUbconfracfor agr~ to adhere to it as a
minimum standard for this Project. ·
3]. This Subcontractor is fully responsible for loss and /or damage to his material and the Subcontract Work, from
whatever cause, pnor- .to installation, connection, and acceptance of same by 'Confractor, regardless of whatever
Builder's Risk Insurance may be in effect on the Project. Should the Subcontractor have a loss after instadatlon,
connection, and acceptance of work by Contractor, · the Subcontractor will bear and be responsible for losses·
occasioned by Whatever deductibles may apply lo whatever Builder's Risk Insurance may be in effect on the Project.
-3,8. Subcontractor shall irnmedlately, submit to Contractor's job siJperlrttehdent ln writing, the name, address and
home telephone number. of Subcontractot's designated project superintendent and of aii alternate contact to be used
during the absence bf the project superintendent.
3,9. Th~ attached schedl.Jle·c:,f values, once approved by Contractor, shall be u~ed as the.'basis of monthly payments
o .the Subcontractor. · It Is u·nderstood that thfs is not a unit prfce contract and lhe sthedule ofvalues has no bearing
ot
on ttie -~ctual values work p~rformed or to JJ,e performed. Please us8' the "Subcontractor Application tor Payment~
form each time you-submit a draw for paym~nt ·
youR DRAW Will NOT BE PROCESSED UNLESS II rs SUBMIU§Q ON THE ATTACHED FORM.
3.10. Please m'3il .application for paymeht for approval and/or payment to:.
· ·· Construction Supervisors, Inc., 11111 Katy Freeway, Suite 120~ Houston, Texas 77079~2114.
Federal ID:. 27·1321033 SCHEAR HAMPTON DRVWALL INC.
Vendor: SC HEHA P@e12 pf 13 - Subcontract #4237-§4
Founders 000243
3.11. Architectural & Civil Plans issued by the Architect: Issue for Permit dated 10/31/11 unless otherwise noted.
Sheets: Index; C1 & C2 dated 9/29/11; C3 dated 11/3/11; C4 dated 9/29/11; C5 & C6 dated 11/3/11; C7 dated
9/29/11; CB, C9, C10, & C11 dated 11/3/11; C12, C13, :C14, C15, C16, C17, 018, & C19 dated 9/29/11; L1.01, L1.02,
L1.0~. L1.04, L2,01 , L2.02, L.2.03, L2.04, L2.05, l2.06, L3.01, l3.02, L4 01, L4.02, _L4.03, .L4.0.4, l5.01, LS.02, L6.01,
& LS1 .01 dated 11/14/11; AO.O, ·AO.Oa, AO.Ob: A0.1 , Ao·.2, AO.a, A0.;3a, AO.ab, A0.4, A0.4a, A0.4b, A0.4c, A0.4d_, A0.5, .
.A1.0, A1.0a, A1 :1, A1.1ct, A1.1b, A1.2, A1.2a, A1 .2b, A1 .3: A1 .4, A1.5, A1.e. A1.7, A1 .8, A1.9, A2.1, A2.1a, A2.2,
A2.28, A2.3, A2.4, A.2.5, A2.6, A2.7, A2.8, A2.9. A2.1Q, A2.11, A3.1, A3.1a, A3.1b, A3.1c, A3.1d, A3:1e. A3,1f, A3.2,
A3.2a, A3.2b, A3.2c, A3..2d, A3.2e, A3.3, A3.3a, A3.3b, A3.3d, A3.3d, A3,3e, A3.4, A3.ita, A3.4b, A3.4c, A3.4d, A3.4e,
A3.5, A3.6,-A3.7,A3.8, A,3.9, A4.6, A4.1, A4.2; A4.3, M.4.A4.5_,_ &A4.6; A4.7 d;ated 4/27/07; A5.0, A5.1, AS:2, A5,3,
A.5.4, A6.0, A6.1, A10.1, A10.1a, A10,1b, A10.2, A10.2a, A10.2tr, A10.3, A11 .1, A11.2;_A11 .3, A11 4, A11.5, A11.6,
A12,1, A12.2, A12.2a, A12,3, A12.3a, A12.4, A12.5, A12.6, A12.7, A12.8, &A12.9; so.oo. s1 .00. S1 .01, S1.02, 51.03,
S1.10, $1.11, S1.12, 52.00, S2.01, S2.02, S2,03, S2.04, S2.05, $2.0_6, S3.10, -S3.10A, S3.10C, 83.100, $3.20,
S3.2<'.IA. S3.208, S3.if)C, S3.20D, S4.10, S4.10A, S4.10C, S4.100, S4.20, S4,20A, 84.208, S4.20C;· S4.20D; 54.30,
$4;30A, S4.308, S4.30C, S4'.30D, S5'.10, S5.1-0A, $5,10C, $5.10D., S5,20, S5.20A, SS.2013, $5.20C, 55,200, S6.10,
S6.10A, S6.-10B, S6.10C, 56.100, S7.01. S7,02, S7.03, S7.04, 57.05, ST.®, S7.07, .S7,:10, S7:11, S7.12, $7.13,
S7-14; $7:15, S7.16, $1.17, S7.18, 57..19, S7.20, S7.21, S8.00, S8°.10, S8."11 , S8;21, $8.21, sa.M, S8.31; S8.3?,
$8.40, S8.41, S8.42, S9.01, $9.02, S9:03, S9.04, $9.05, S9,06; $9.07. $9,08, sro,01. 510.02, SC1.01, SC1.02,
SC2.01, SC2.02, SC2.03, SC3.10, SC5.10, sca.10, MEP-01, MEP~2; MEP~3; M-1.0, M-,1;1, M-2;0, M.:2,1, M~2.2,
M~2.3, M-2.4, M-3.1, M-3.2, MP3;1, MP3.2, M-4;1.1, M-4.2.1, M-4.3.1 1 M-4.4.1, M-4.1.2, M-4.2.2, M-4.3.2, M-4.4,2, M-
4.1.3, M-4.2.3, M4:3:3, .M-4.4.3, M-4 ..1.4, M-4.2.4, M-4.3.4, M4.3.5, M-4.4.4, M-4.4.5, MP~4.1.1, MP-4.2.1, MP-4.3.1,
MP-4.4.1, M-5.0.0, M-5.0.1, M-5.0.2, M-5.1.0, M"'5.1.1, M-5.1.2, M-5.1.3; M-5.1.4, M-5.2:0, M-5.2.1, M-5,2.2, M-!t2.f
M-5.2A,·M-5.3.0, M-5.3.1, M-5.3.2, M-5.4.0, M-6.1 , E-1,0, 'E-1 .1, E.~.o. E-2.1, E-:2:2, e.:2:·3, ~-2.~. E-3.1.1, E-3.2.1, Ee.
3.1.2, E-3.2.2, E-4.1.1, E-4.2.1, E-4.3.1, E-4.4.1 , E-4.1.2, E-4.2.2, E-4.3.2, E--4.4.2, E-4.1 .3, E-4.2.3 E-4.3.3, E-4.4,3,
E-4.1.4, E-4.2.4, E-4.3.4, E-4.4.4, E-5.1, E~5.2, E-5.3, E-5.4,.E-5.5, E-5.6, E-5.7, E-5.8,.E-6.1, E-6.2, P-·1.0, p:..1,1, P-
2,0, P-2.1, P-2.2, P-'2.3, P-2,-4, P-3.U, P-3.1.2, P-3.1.3, P-3;2.1., P-4.U, P-4.2.1, P-4.3.1; P-4.4.1, P-4.1.2, p ..,1,;2.2,
P-4.3.2, P-4.4.2, .P-4;1.a, P~.2;3, P-4.3.3, P-4.4.3; P.-4.1 .4, P-4.2.4, P-•(3.4, P-4.4.4. PU-4.1.1, PU-4.3.1, PU-4.1.2,
PU-4.2 ..2, Pl,J-4.3.2, PU-4;4.2, PU-4.4.3, PU'-4..4.4, P-5.0, P-5.1, P-5.'2, P-5.3, P-5.4, P-5.5, P-5.6_, P,-5.7, P-5.8, P..:6.1,
& p.5;2 dated. 11/14/H;' FP1_, FP2, FP3, FP4, Ff'5, & FP6 dated 9113/11; K1, K2, K3, K..:1A, K-2A, & K-3A dated
9/20/11. Spe<:ificaticins·dated 10/J1/11. Addeni:lum #1 dated 12/07/11. Adderidum #2 dated 12115/11.
Federal ID: XX-XXXXXXX SCHEAR HAMPTON DRYWN,.L. INC,
·vendor: . SCHEHA Page 3 of 13-Syhcontracl #4237-64
Founders 000244
Section 4. Time ls of 1he essence of this .Subcontract. Subcontractor agrees to commence the Subcontract Work oh
'Contractors notice ·to proceed and to complete first that part of the Project wtlich the .Contractor must or desires
completed first, and Subcontractor shall keep up with the Contractor's progress schedule and agrees to-complete the
Subcontract Work within the original Contract time plus any extension o(Contract time allowed by the Owner.·The
Sub¢<>ntractor shall keep itself thoroughly informed as to the l)rogress of the job; begin work upon hotffication by the
Contractor and prosecute· the work contlm.iously ahd uninterruptedly with an possible speed. The Subcontractor, ·
however shall not be hefd responsible for any delays caused by the neglect of the Contractor. The Subcontractor
agrees to prosecute the Subcontract Work, and the several parts thereof at such times and in such order as the
Coritractot ccmsiders necessary to keep the same sufficiently In advance of the other parts of the building and to avoid
any delay i_n the completio~ of the construction as a Whole. Subcontractor is uncondiflonatly obligated to provide
.suffr<:ierrt matenals; equipment and. a labpr fotce consisting of' a sufficle.nt numbeF of f'.iroperly skilled workers to meet
the Project schedule then applialble to the Subcontr~l Work. CbntractQr has sole discretionary authority .to require
Su~contraetor to suppl~ment its labor force, order m:ertirpe, or oth43_rwise accelerate 'its p·ertormance. to 1he extent
deemed neeessaty by Contractor to ensure that 1he Subcontracl'Work progresses ln ac:c.ordance ·wl!h the Project
schedule. Th~ Subcontrac_tor shall reimburse the Contractor for any 1oss, dc)mage, or extra expense paid ,or Incurred
by the Contractor; including but not limited to fiquld13ted damages assessed ag~lnst contractor 1:,y Owner, Which are
due to Subcontractor's failure to del_iver any and all materials as required, or fo properiy perform any and all work in
keeping wit~ the progress of the Contractor's schedule, or to properly ~rform any term, covenant _or condition
contained in this Subcontract, or which is due to the br,;,~ch of any of the provisions of ~is Suooontract. It Is further
agreed that If the Subcontractor fails or refuses 1o proceed with the .Subcontract Work, ~s d!rected by the Contractor, or
fails to perform said Subcontract Work in accc;,rdance herewith; _in whole or in part, or taus fo perform any term,
covenant or condition contained in his Subcontract ihe Contractor may upon written notice to the Subconttaclor's last
known address take any steps he deems advisable to secure necessary labor or materials by contract or otl)etwlse.
and may take over au or ahy part of the Subcontractor's equ"ipment, materials, etc.,. and may prosecute _the
Subcontract Work to completion. In case the Contractor deems l his procedure necessary for proper conduct of lhe
Subcontract Work, all monies expended therefor shall be deducted from 1he .Subcontract Sum herein stated, ~na Jf
such expendifufes exceed the amountotherwise dlie to the Subcontractor hereunder1the Subcontractor agrees to pay
to the Contractor oh dem.and the full amount.of such excess, together with interest thereon at the rate of six percent
per annum, until paid,. and Contractor shall have the right to offset such amounts against payments then or thereafter
due Subcontractor undet this Subcontract-or ,any other agreement with Ctintractor,
Section 5. Taxes. The Subcontract Sum includes all taxes applicable to the Subcontract Work.
. .
Section s~ Applicable Laws and Codes. The Subcontract Work shall meet applicable local laws, ordinances;
regulations and code requirements and Subcontractor is entirely responsible for having included the cost of all
material, services, et:iliipment and labor to satisfy these laws, ordinances, regulations and code requirements wnether
shown on the Contract Documents·or nol.
Section 7. Execution of this Subcontract signifies acceptance ·of all provisions of this Subcontracl lncluding alt
Exhibits attached hereto. · ·
Section 8. Subcontractor is responsible t6 the job superintendent for scheduling of work and/or materl~ls, byt ~ny
directives received by this Subcontractor from the Contractors Home Office personnel shait govern in case of conflict
with the dlrections of the job superintendent · · ·
Section 9. Safety. Environmental. Governing Authorities:
(a} The Subcontractor shall comply with all Local, State, Federal, and/or any Governing Authority ordinances;
codes, regulations and laws pertaining to the project for the duration of the contract and warranty period.
Subcontractor understands that this contract may be terminated if any Governing Authority determines that any .breach
of applicable codes, ordhianees, regulations and la1NS· has occurred and/or has not been corrected to the satisfaction
of the Governing Authority.
(b) · Subcontractor will observe Contractor's basic safety policies and procedures and all applicable provisions
of lhe Occupational SafeJy and Health.Act of 1970 and the regulations thereto and shall assist in maintaining working .
cohditions wlilch are free of unsanitary, hazardous, or
dangerous conditions and shall assist In protecting the health
and safety of any laborer or mechanic employed in the pe_rformance of this conlract. Subcontractors performing work
that requires the presence of a compelent person {trenchlngtexcavallon, scaffolding,. etc.), shall provide and maintain
the appropriately trained competent person throughout the duration of the work. Subcontractor shall Indemnify; defend
and save harmless the Contractor and Owner from all liability and/or loss, without liml~ lncurred In whole or in part,
directly or tndlrectly, as a result of any breach of the obligations in this Section 9(a) by Subcontractor, its agents,
employees, matetialmen -and subcontractors. If any unsafe act oi' failure to adhere· to OSHA or any other applicable
FederaflD: 27·1321033 SCHl;AR HAMPTON DRVWALL, INC;
Vendor~ SCHEHA Page 4 of 13- Subcontract #4237-64
Founders 000245
law, code, regulation or ordinance by Subcontractor results in the assessment of a civil penalty .against Contractor,
Subcontractor shall reimburse Contractor the amount paid therefore by Contractor on demand of Contractor and
Contractor. shall have the right to offset such amounts against payments then or thereafter due Subcontractor under
this Subcontract or any other agreement with Contractor.
(c) No alcoholic beverages, non-prescription drugs, or unsafe practices will be allowed on the job site.
Subcontractor shall dlsrnl~ anyone participating in any of the above froin the job slte for the duration of the Project.
Only prescription drugs with a doctor's a:uthorlzatlori to perform consttuctlon activities will b~ allowed on the job site.
Violation of this provision Is a material breach of tflis. Subcontract. The use, possession, sale, transfer, purchase or
being under _the infh.1ehce ·of afoohoi, drugs or ~ny other illegal or unlawful su6stance by· Subcontractor or
Subcontractor's employees, or Subcontraqtor's sub:subcontractors and employees at any time. at the Job or while on ·
company business is. prohibited, .
(d) Subcontre.ctor understands the terms and conditions of the general National PolluU:int Disch~ge Elimination
System {NP0ES) permit or Texas Pollutanl Discharge EliminatiQn System (TPDES) permit, as applicable, or local
variants thereof that $l!thorizes stormwater di$charges 1as$9Clated with rndustrlal activity from the construction site.
Subcontractor shall comply wit/1 the Stormwater Prevention Plan for the Pto)ect and· shall Indemnify, defend and hold
Contractor hamiless of and from any and all claims asserted against c:;ontractor attributable to Subcontractor's acts or
omissions with regard to the Stormwater Prevention Plan or the NP.DES iiermit dr TPDES permit or Ip.cal variants
thereof. If any such act or om.issicm results in the a~ssrnent of a civil peh;alty against. Contracior, Subconlr~ctor shall
reimburse Contractor the amount paid 'therefor by Contractor OI} _demand of Contractor and Cont,aotor shall have the
right to offset such amounts against payments then or thereafter due Subcontractor under this Subcontract or any
other agreement with Contractor.
{e) Employment Eligibility Verification and Indemnification: Construction Supervisors, Inc, (hereinafter UCSI")
requires that suMonttactors providing services to CSI are in compliance with the Immigration Reform and Control Act
of 1986, as amended, and the regulations promulgated thereunder, and that only individuals lawfully auth_orized to
work In the United States are used to provide services to CSI by subcontracfors. Accordingly, Subcontractor
represents and warrants the following: (1) Subcontractor has complied, and shall at all times during the term of this
Contract Is In complete compliance, wlth all immigration laws; statutes, rules, and codes, Including, without limitation,
the Immigration Reform and Control. Act of 1986, as amended, and the Illegal Immigration Reform and immigrant
Responsibility Act of 1996; as amended, and any successor statutes thereto -and all orders and regulations
promulgated thereunder, Tncludlng, but hot llmitec:Uo, the prohibition against unrawful employment of unauthorized
alien$ as defined in 8 U.S.C. Section 1324a, and the prohibitions against unfair' immigration-related employment
practices a defined ,;:1t a u.s.c. Section 1324b (herelt"laftet t:ollective\y referred to as "11:lCA"). (2) Subcontractor
further represents and warrant$ that au emplc::>yees of SubCOntractor's business being used to provide services to CSI
were hired In ·compliance With IRCA and will CQritinue to be employed in compliance With IRCA (including, but not
limited fo, timely 1-9 verification and re-verification), and that each employee us~d by sub<;j)ntractbr to l)r:ovide services
to CSI Is authoriied to b.E! employed in'the Uhlled States ~nd will maintain such.employmenLaulharization for as long
as the employee ls performing servf~es for CSL (3) SubcontraQ.tot agrees and warrants that it has established
inlemal safeguards and reporting policies to ensure continued compliance with lmmjgratlon laws and.'to encourage Its
employees' to promptly_ report any su~pected violations y the Owner. proy1ded payment fqr samp has bean rnage by owner, contractor may req'uire
Subcontractor 10 furnis'1 evidence satfsfE!ctory to Contractor, In the form of sworn affidavits, if requested, th?t all claims
for labor, services, equipment and materials have been paid. If ~hall ~e a condition precedent to Contractor's
obligation lo make each pay.ment:(progress Or final) to Subcontractor hereundet 1t'fa1 the funds for such payment have
fil'Sl be:en paid by Owner ta Contractor. !tis the lnt_ent ·of the parties thafif. payment from th·e Owner for au or a l)Orlion
of the Subcontract Work Is never received by Contractor, .then Contractor wUI never have ·ans, obligation to pay the
Subcontractor fQr such portion of \he·Subcontract Work not paid r;,y Owner. S!Jbconfractor ha"s ~Pressly assomed the
risk of Owner nonpayment and the Subcontract Sum in this paragraph 10 reflects the ass_umption of lhat,risk,
Contracfor shall be entitled to wi1hhold payments (whether progress or final) from Subconfrat:ior under the Subcontract
to such extent as may be necessary, In Contractor's sole opinion, to protect the Coritractor aod/or Owner from loss on
account of, but not limited to1 the following; (i) defective wor~ not remedied; (ii) third-parfy claims filed or reasonable
evidence indicating the probabltity of the filing of such cll;llms; (iii) fE1llure of the Subcontractor :to make payments
properly and timely to lts·suppllers, materlalmen or subcontractors or for labor, services, materials or equipment, (fv)
evidence that the Subcontract Work ~nnot be completed for the unpaid balance of the Subcontract Sum, (vl damage
caused by Subcontractorto the Owner, Contractor or other subcontractor; (vi) evlclence that the Subcontract Work
cannot be completed within {he Project schedule; (vii) evidence that tne Subcontractor Is not able to provide adequate
assurance of future performance with regard to the performance of correctable warranty work requlred by the Contracl
Documents; or (Viii) any br~ach of a provision of this SLibcontraci.
Section 11. Flow Down; Subcontractor has read and is thoroughly familfar with the Contract Documents and agrees
to be bound to Contractor by the 1enns of said Contract Dociinie~s insofar as they relate ih any part or in any way to
the Subcontract Work undertaken herein and to assume towards Contractor in connection with the Subcontract Work,
all of the obligations and responsibHitieS' which Contractor by those documents assumes towards the Owner or anyone
else. The ·Subcontractor shall communicate about matters arising out of or relatin.9 to the Subcontract Work,, the
Contractor's work, fhe Contract Documents or this Subcontract only with the Contracior and not with -the OWner or the
Architect. In the event of a conflict between the terms of this Subcontn,ct and the ·other Coniract Documents, this
Subcontract shall contfo1. ·
Sedlon 12. Appllcations for Payment. Releases. Lien-Free Project
12.1 The Subcontractor shall submit to the Contractor's Home Office, requisition for payment, covering the value of
the Subcontract Wotk completed to the satisfaction of the Owner during that month in accordance with the approved
Schedule of va1ugs (Section 3,8. of the Subcontract) and Section 10 above. If said requisitions are not delivered by the
Subcontractor as per
Section. 3 and Section 10, payment maybe withheld for an additional 30 days.
12.2 The Subcontractor shall furnish the Ctmtractot with such partial releases and,waivers of lien, iri a form approved
by Contractor, from Subcontractt>t and its materialmen and ci'edit6rs as the Conttactor, may request from time to time
on labor and/or material and/or other claims, and filial releases and waivers of lien ~t the time of final payment on this
Subcontract.
1Z,3 The Subcontractor sh,all furnish, if requested by the Contractor, sworn affidavits from time to time, in accordance
with ihe form provided by the ·Contractor, which shall state -amounts due or to become du&, amounts paid, ·and any
other Information clearly to indicate the financial condition of the Subcontractor, insofar as it relates to labor, equipment
and material furnished, and to be furnished, u_nder this ~ubcontract, and the CQntractol may take i:;uch steps as it may
deern necessary to protect itseff agains1 any claims_.
. .
12.4 $ubcontractor agrees to ~um the Subcontract Work over to Contractor In good condition ~nd ·free and clear from
all ~laims, encumbrances and liens for labor, services, or materials, and should Subcontractor, dliiing the-progress of
said Work or at any tirne thereafter, faii to pay for all labor, services and materials used or purchas~ for use in
connection with the pro~ecution of said Work, Contractor may at its option and without notice to Subc:onlraclor, pay-all
such claims and charge the amounts thereof to Subcontractor and Contractor shall have the right to offset such
Federal ID: XX-XXXXXXX §CHEAR.HAMPTON DRVWALL. INC,
Vendor: SCHEHA page 6 of 13 -- Subcogtract 14237-64
Founders 000247
amounts against payments then or thereaftE!r due Subi:ontractdr under this Subcontract or any other agreement With
Contr.,idor. In the eve.ni suit is filed by any pel'$on, firm or corporation asserting s claim or lieh for labor, services or
materials 1,1sed or purchased for use in the Work covered by this Subcontract, Subeontraotorwm, at Its own cost.and
expef!S8, incfudJng counsel fees, defend .$uch suit and pay any jl,Jdgem!,lnt rendered ther¢hi, Subcontractor; for lts~lf•.
.its successors and assigns, does hereby further expressly subordinates ahy and all claim of lien, _ lien _pr right to li~n for
labor performed or materials furnished by it hereunder which II may·now or at any time .hereafter have or J:ie entftled to
assert against Contractor, Owner.or the Project In any manner connected wlth Qr p_ :rlslng_'out of his furnishing of labor
and materials for the performance of lhat portion of the IJYork covered by this Sub~onlract or otherwise, whether any
such cf aim of lien, lien or right to lien be contractual or ~rise under the provisions of any staMe or law whatever of the
in
state which the Work is to be performed, to any lien or deed of trust of any Lender for tl)e Project
12.5 The Subcontractor agrees that monies teceived for the performance of this Subcon_
tract ·shall be applied fo the
cost of performing the Subcontract Work and said monies shall not be diverted to satlsfy other Qbligalions of the
Subcontractor.
Section 13. The Subcontractor shall indemnify; defend and hold harmless the Owner and Contractor against all
costs or claims for transportation, freight and express, on men, materials and equipment to and/or from the job, and
for all other incidental expenses I.n connection with the Subcontract Work, and to prepay the transportation charges on
all materials, etc., shipped.
Section _14. Prpvailing Wage. The .Subcontractor shall pay the scale of wages prescribed_ in the Contract, or the
scale 'prescribe cf by law in case the Contract provides no such scale. If the Subcontractor shall faQ in any respect _to
perform the covenants ciQntained in this section, the Contractor shall have the option to tennlnate Utis Subcori!ract
forthwith. If the Sobcoritractor's.failuhi to pay the scale of wages prescribed in the Contract with the scale prescribed
by law results in the ~sessment of any charges, penalties or fines against Contractor, Subcontractor shall reimburse
Contractor the amount paid therefor by Contract6r on demand of Contractor; and Contractor shall have the right to
offset such amounts against payments then or ther'eafter due Subcontractor under this Subcontract or any other
agreement with Contractor. ·
Section .15. Changes. Contractor ·may require changes In, deviations from, additrons to, and omissions from, tt)e
Subcontract Work, and the Subcontract Sum shall be adjusted accordingly. Before proceeding with any change,
deviation, addition or ortiisskm, the Subcontractor wm 'first obtain written authorization ·from the Contractor, which
authorization will state the amount, lf-ahy, by Which the Subeontract Sum will be adjusted. The Subcontractor shall
have no dealings wllh the owner, or his authorized representatives In regard to changes, extras or omissions In.
cofinecticm with the Subcontract Wotk, but · shall deal only. with the Contractor. Contractor;s written order for
chan'ges, deviations, additions or omissions to the Subcontract Work sbail ha an express condition precedent
to Subcontraetor's right', If any; to receive payment for any such change, deviation, addition or omission.
Subcontractor's right to payment.for changes, deviations, additions or omissions .is furthe.r subject to the· cond.itions In
Section 10 of the Subcontract. ·
Section 1ft Insurance. Siee Exhibit "A", incorporated herein (ully by reference, for in~lirance. tequiremerits,
Section 17. Appl~ble Jaws, taxes and permits.
{a) Subcontractor shall comply with all fedei-at, state and municipal laws, codes, reguiatlons and ordinances
effective wliere the Subcontract Worn is to ~ performed, and shall pay all taxes and contributions imposed or
required by any1aw for any employment insurance, pensions, old age retirement funds; or simHar purposes, In respect
lo the Subcontract Work and the employees of Subcontra~tor in the performance of said Subcontract Work.
(b) Subcontractor accepts exclusive liability for all taxes and contributions required of the Contractor or
Subcontractor by the Federal Social Security Act .and the unemployment compensation law. Qr any similar law of A:lny
state, in respect to the employees of Subcontractor. In the performance of the Subcomract Work and agrees to furnish
Contractor with suitable written evidence that Subcontractor has been authorized to accept su~h llabllityi if
Subcontractor fails to furnish such evidence prior to beginning of said Subcontract Work, Contractor may; at its option,
pay or reserve for payment said taxes and contributions and deduct the amount so paid or reserved from payments
or
due thereafter to become due to Subcontractor. Subcontractor agrees to protect and hold harmless ·Contractor
against all liability in respect to said employees undet ahy of said laws.
(c) Subcontractor shall secure and pay for any and all permits and licenses required for the prosecution of the
Subcontract Worl< covered by this contract
Section 18. The Subcontractor shall route all equipment and materials to be used in the e)(ecufion of this
Subcontract as designated by the Contractor, providing the transportation cosis are not increased by so doing. It is
Federal ID: XX-XXXXXXX SCHEAR HAMf'ION DBVWALL, INC.
Vendor: SCHEHA .eage 7 of 13 - Subcontract #4237-64
Founders 000249
expressly agreed that the carrier so designated shall be the agent of the Subcontractor and not the agent of the
Contractor.
Section 19. Assignmeot. It is expressly understood and agreed that the Subcontractor's ·responsibjlities · and
obligations in the Subcontract are nondelegable personal services ~rid ~hat the Subcontractor shall not sublet, as$ign
or transfer this Subcontract or any part thereof, Including any monies due or to become due lo Subcontractor ·
hereunder, without Contractor's prior written consent. Contractor may t:ondliionally assign this·Subcontract to Owner
or any Project Lender.
S.ectlon 20. Prot8ctlon of Work. The Subcontractor shall effectually secure and protect its materfats and 1N0rl<, and
shall bear and be tlable for all loss and/or damage or any kind In connection therewith at any time prior to the final
completion and acceptar)oe thereo1, unless said loss or damage Is caused by direct: negligence of the Contractor and
subject to the provisions of Section Z4 hereof, to the extent they apply. The Subcontractor shall relm-burse the
Conlractor orf demarid fur any breakage or other damage to other work or materials occasioned by the Subcontractor
in the execution of this Subcontract.
Section 21. If the Subcontractor -deems that surfaces or work to -which the Subcontract Work is to be applied or
to
affixed is unsatisfactory or unsuitable, written notification of said condition shall be given the Contractor, otherwise
Subcontractor shall have no claim for extra compensation or non.,responsibility in connection therewith; ·
Section 22. Temporary Services, Utilities, Use of Equipment. When needed ·by it, Subcontractor shall furnish the
following facilities for Its own use, or pay its pro-rata share o1 same for the entire construction period: temporary
toilets, Jqb sheds, storage and warehouse space, temporary water, power, heat, gas and telephone , drinking water,
scaffolding, barricades, night watchman, shoring and underpinning, vertical transportation, hoisting equipment. and
any other service ot facjljty applicable to his particular scope of work. If Subcontractor uses any equipment owned or
rented by Contractor, Subcontractor shall indem'tilfy, defend and hold haTTl'lless Contractor of and from any and all
liability for claims which may result from ·Subamtractors use of such equipment. This shall Include relmburs~ment by
Subcontractor for l.oss· or damage to the equipment itself. Subcontractor shall addltlonally ensure that any employee
assigned to operate such eq~ipment s"an be fully trained in the safety a'nd proper' opetatton of the equipment.
Sectlon.23. Clean-Up. The SL!bcOl'ltractor shall c1ean lip and remove from the sUe as directed by the Contractor, all
rubbish and debris resulting.from tlie Subcontract Wor1c It shall als-o clean up to. the satisfaction of the Owner,
Architect and Contractor, all dirt, grease, marks, etc., from walls, ceilings, floors, fixtures, etc., deposited or placed
the~n as a result of the Subcontract Work. If the Subcontractor refuses or fails to perform this cleaning as directed
by the Con~tor, the Contractor st1aiJ t,ave the right and power to proceed with said cleaning, and the-Subcontractor
will on demand r~p.ay to tha Contractor the a·ctual cost of sald labor plus. a per~ntage of suctt cost to caver
supervision, lnsur$Tlce, overhead, etc.
Section 24; Builder's Risk insurance: Oeciuctibtes: It is understood arid ;agreed It has been the practice of lhe
Contractor to carry Builder's Risk Fite Insurance In the amount '.of his eslltnate Qf {ull Insurance to Insurable value,
Including -subcontracts. To the extent' that -suchjnsyrance js carried by the Contractor under· the Contract; the
ctor will h~ve an interest in the Insurance policy; however, the provisloris of this Section do not require the
Subct>ritr!;!_
Contractor to carry any insurance whatso~ver for the benefit of the Sub:.c,ontractcir. Subcontraclpr assumes the
responsibility to determine whether Builder's Risk lnsuran~ is in force, its limits and deductibles. Subcont111ctor is
fully responsibie for loss and damage to its _property on the site; Including tools..and equipment, and sflall · take
necessary preqautlons to prevent vanclalism, theft, burglary, pilferage and unexplained disapp~arance Qf property.
Any Insurance covering Subcontra¢tor's or its sut>-;subcontracto~· property shall b.e Subcontractor's and its sub-
subcontractors' sole an.;! complete m~ns of recovery for aoy suet) loss. To the extent any loss Is not covered by said
insurance or is subject to any deductible or co-insurance, Sub·contractor shall not be reimbursed for same. Should
Subcontractor or its sut>-;subcontractors choose to self-Insure this. risk, it Is expressiy agreed that Subcontractor hereby
waives, and shall -0ause its sub-subcontractors to waive, any ctalm for damage or loss to said pr~perty In favor of
Owner and Contractor. Subcontrador·shall bear all deductibles with respect to the Subcontract Work rn connection
with any Builder's Risk Insurance. In the event the Contractor procures BuUi;ler's Risk Insurance, and only In such
event, the Subcontractor agrees ·to submit immediately,, for the purpose of determining yalues under the insurance
coverage, a complete breakdown of the Subcontract Sum shoWing materials; labor, expend~ble tools, supplies or any
other thing or article of value, the cost of which is included in ihe Subcontract Sum stated ih 1hfs Subcontract
Section 25. Shop Drawings: Submlttals:. Subcontractor shall submit to Contractor with such pron,ptness as to cause
no delay In the Subcontract Work or In the work of Confractor or any other sub90ntractor all shop or setting drawfngs,
material submittals, samples, mock-ups, product data and schedules re·quired for the Subcontract Work (collectively
Federal ID: XX-XXXXXXX SCHEAR HAMPTON DRVWALL, INC,
Vendor: SCHEHA Rage 8 of 13 - Subcontract #4237-!H
Founders 000250
referred to in this section as "Submittals) and Contractor shall pass upon such Submittals. with reasonable
promptness, making desired corrections, including, but not limited tq, corrections relating to design and artistic effect,
Contractor's, Owner's, Architect's or Engineer's approval of such ·submlttals shall not, however, relieve Subcontractor
from responsibility for deviations frorii the Contract Documents, unless Suboonlfactor has in writing called Contractol"s
attention 1o such deviations at the lime of the submission of such Submittals to Contractor, and secured Contractor's
written approval to any such deviations, nor shall Contractor•s, Owner's, or Architect's or Engineer's approval of any
such Submlttals, relieve Sllbcontractor from responsibility for efi'Ors in such Submittals. Subcontractor will be required
to submit ~ minimum of (6) copies of all shop drawings. By submitting SUbmittals, the Subcontractor represents that
the Subcontractor has determined and ve'rified materials, field measurements a'nd field construction criteria related
thereto and has checked and cOcirdinated the information contained within such St.ibmittals with the requirements of
fhe Work and of the Contract Documents. All transportation costs on samples and drawings furn!Shed by the
Sullcontractor shall be pald by Subcontractor.
Section 26. Project 'Close~oot.. The .Subcontractor shall furnish all guaranties, bonds1 training, O&M manuals,
operating instructions,. etc., as required by the Contract Documents with respect to the Subcontract Work as a
cdndition preceden~ to Final Payment Subcontractor shall fully complete to the owner's·and Contractor"s satisfaction
~II punchlist work within thirty (30) days of Substantial Completion or such lesser· time as may be required 'by the
Contract Documents.
Sectlon 27. Dispute Resolution. If at any time any controversy shall arise between the Contractor and the
Subcontractor arising out Of or reratlng to the Subcontract Work or the Subcontract, and which the parties hereto do
not promptly adjust and determine, or which the owner or his authorized representatives cannot decide to the
satisfaction of both parties herelo, then the written orders of the Contractor shall be foflowed and Subcontractor shall
co'ntin.ue with the $ubconttact Work and sa1~ controversy shall be decided' by binding arbitration pursuant to the
Constructio11 Industry R~!es or the American Arbitration As$ociation then in effect at the end of the work, and before
flnal -settlement is made t:!etween lhe Conttactor and Subcontractor and the parties agree to be bound by any award
granted iherein. Any such ;:iward may !)e enforted In a court of competent' jurisdiction. Th1:1 parties agree that the
Subcontract shall be governed by the laws of the State of i ex~s and that venue for any controversy arising hereunder
shall He In Harris Co1,,nty, Texas. Subcontractor consents to be joined Jn any ~rbitr:ation proceecHr'lg qetween Owner
and Contractor that, in whole or in part, arises out of or relates to the Subcontract ot th~ Subcontract Work.. Provided,
however, ihat if any lawsuit or lawsµits between the -OWner and Contractor or the Contractor and any third party
involve, arise 011t of or relate to the Subcontract Work or th~ Subcontract, and the Contract db~s not provide for
arbitration or there 'is no arbitration agreement between Contractor and such third party, Subcontractor agrees that the
foregoing arbitration_ agreement shall not be enforcett and that Contractor may Join SuDContractor 1n the said lawsuit or
lawsuits.
Section 28. INDEMNIFICATION. TO THE FULLEST EXTENT.PERMITTED BY I.AW, THE SUBCONTRACTOR, EJCi>RESSLY
AGREES TO DEFEND (AT THE SUBCONTRACTOR'S EXP1ENSE AND WITH LEGAL COUNSEL ACCEPTABLE TO THE
CONTRACTOR), lt.lDEMNIFY AND HOLD HARMLESS OWNER, CONTRACTOR, ARCHITECT, ARCHITECT'S
CON$ULTANTS, ENGINEER, CONSTRUCTION MANAGER, LENDER AND ANY ``R PARTY WHICH CONTRACTOR HAS
AGREED TO INDEMNIFY AS NAMED OR REFERENCED IN THE PROJECT CONTRACT DOCUMENTS MADE A PART OF
THIS SUBCONTRACT AND THEIR RESPEC11VE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS,
SUC'CESSORS, AFFILIATES AND ASSIGNS (HEREINAFTER COLLECTIVELY THE !<.JNDEMNIFIED PARTIESn) FROM AND
AGAINST ANY AND AU CLAIMS, SUITS, LOSSES, CAUSES OF ACTION, DAMAGES, UABILITtES, flNES, PENALTIES
A.ND EXPENSES OF AJ.rf KIND WHATSOEVER INCLUDING wniioOT LIMITATION, ARBITRATION OR COURT COSTS AND
ATTORNEYS FEES, FOR ANY INJURIES TO ANY PERSON {INCLUDING RESULTING DEATH) OR. ANY AND Au. DAMAGES
TO PROPERTY INCLUDING LOSS OF USE THEREOF, ARISING OUT OF, OCCASIONED, CONTRIBUlED TO OR IN ANY
WAY CAUSED OR ALLEGED TO ARISE OUT OF,. BE OCCASIONED,. CONTRIBUTED TO OR IN .ANY WAY CAUSED, IN
WHOLE OR IN PART, BY THE ACTS OR NEGLIGENCE OF SUBCONTRACTOR, ITS EMPLOYEES, AGENTS,
REPRESENTATIVES, SUBCONTRACTORS OR SUPPLIERS OR THEIR AGENTS OR EMPLOYEES OR ANYONE ELSE FOR
WHOSE ACTS THEY MAY BE LIABLE, OR IN ANY WAY ARISING OUT OF, CONNECTED WITH OR INCIDENT TO OR,
ALLEGED. TO ARISE OUT OF; BE CQNNECTED WITI:f OR INCIPENT TO THE PERFORMANCE OF THE WORK COVEm:D
BY THIS suacONTRACT BY WHOMEVER PERFORMED. REGARDLESS OF WHETHER SUCH INJURY; DEATtl OR
DAMAGE IS CAUSED JN WHOLE OR IN PART BY ANY NEGLIGE'Ni' ACT OR OMISSION OF ANY ONE OR MORE OF THE
"INDEMNIFIED PARTIES", THEIR OFFICERS, AGENTS AND EMPLOYEES; SUCH OSUGATIONS SHALL NOT EIE .
CONSTRUED TO NEGATE, ABRIDGE, OR REDUCE OTHER RIGHTS OR OBLIGATIONS OF INPEMNITY WHICH WOULD
OTHERWl~E EXIST AS TO A PARTY OR PERSON DESCRIBED iN THIS PARAGRAPl-t,
The defense and indemnification obligations under this Subcontract shall not be restrictecl in any way by any limitation on
the amourit or type of damages, compensation or benefits payable by or for the Subcontractor under workers'
compensation act, disabUity benefit act, or other employee benefit act and shall extend to and include any actions brought
Federal ID: XX-XXXXXXX SCHEAR HAMPTON DRYWALL INC,
Vendor: SCHEHA Pag@ Qgf13- SubcQntraqt #4237-64
Founders 000251
by or in the name of any employee of the Subcontractor or of any thlrd party to whom the Subcontractor may subcontract
a part or all of the Subcontract Work.
The defense and indemnification obligations under this Subcontract are not intended to and shall not require ·
Subcontractor to indemnify or hold· ·harmless a (egistered architect, licensed engineer or -an agent, servant or .
employee of ·a reglslered architect or llcensecl. engineer from liability for damage that is (1) caused by or results from:
{a) defects In plans, designs or speclflcatlons prepared, approved or used by the architect or engrneer; or (b} the.
negligence of the arcl111ect 6r engineer In the tendlllon or conduct pf professional dutle:; called for or arlslng out of the
construction contract and the plans, designs or specificatioris that are a part of the construction contract: and {2)
arjs1:1s from personal irijtlry or death, property injury; or any other expense that arises from personal injury, death or
property injury. · · · · ·
These in9ernnl(Y obligations sliaiJ surviVe termination of this $Oboontrac,.
S~l.on 29. The Subcontra~or shall not place on the Project any eq'l.iipmenl. of Which 1t ls not sole owner unless it
obtains 'Written permissron from the contractor.
Se:ctlon 3.0. Antl-dlscrlmfnation,
(a) The Sut)c()ntractor, in performing the Subcontract' work, shall not dlscrlmlnate ·against any employees or
applicants for employment because of race, creed, color, national origin, or sex.
(b) The Subcontractor agrees that the provlsfons bf subseption (a) above will .also be Inserted In an of ns
subcontr:acts. For the purpose of this section, a . H.subcontract" Is' defined as any contract entered Into by the
subcontractor with any individual, partliershlp, associat101n, corpO{Qtl90, estate or trust, or other business enterprise or
other legal entity, for a specific part·of !he wor.k to be p~rformed ln·connection wlfu the $Upplles or services furnished
~noer !his Subcontract;.provided, however, that a contract for the furnishing of standard or commercial artrcles or raw
m~ttirials shall not be considered as a subcontract.
Section 31. Delays. .
(a) Contractor shal.1not be liable to Subcontr:::tctor for any delay, ~indrance or Interference 10 the Subeontract
Work resuiting from th.e act, negligence or default of the Owner or the Architecl, orby reason of fire or other casualty,
or 9n accounl of riots, strikes or other combined action of the workmen or other:$, or·on account of any acts of Goc;I or
any other cause beyond Contractor's control or on a~eo.unt of any. circumstances caused or coritribt.it¢d to by this
Subconiractor. . . .. .
. {b) Should Contractor delay; hinder or interfere with the Subcontract Work, then and In such event Contraptor
shall owe Subcontractor therefor only an extension of time for completton equal, to th~ delay caused,, and lhen only If
written claim Is made toContractor within forty-eJght (48) hours from the beginning of ths delay, hindrance or
interference. Subcontractor shall not be en fitted lo· any claim for damages or Increased costs occasioned by any suoh
delay. · ·
S.C:ti<>n 32. Warranty. S_ubcontractor warrants to the Owner; the Architect and the Conb1lctor that all materials and
and that all Sub~ntract We>tk shail be of good quality,
equipment furnished shall be new unless otherwise specified, _
free from 'faults and defect$ and in conformance with the Cpntract Documeofs'. Subcontractor :Sharf at its sole qost,
ins-pect the SubcontractWorl<' in place upon the request by Ownl:lr, Architect or Coi:itractor to investigate any alleged .
defect in the Subcontract WorJ< and shall promptly rep(a~ defective materials, workmanship and equipment and re-
execute. defective. work as required of the Contractor under the' Contract Documents. If within l'.>ne (1) year from the
date of substantial completion of lhe Project, or such longer period of time as may be prescribed by law or by the
lenns of any applicable speclal warranty required by the Contract Docu01ents, any of the Subcontract Work Is found to
be defective or not in accordance with the Contract Documents, Subcontractor shall, at Its sole cost, correct it and any
otiier work affected thereby promptly after receipt of a written notice from the Contractor Io do so. Thfs one year time
period for correction by Subcontractor is in addition to, and not in lieu of; all warranties that exist at common law or by
statute. These warranty obUgatlons shall survive the termination of the Subcontract. In the event Subcontractor fails .
to perform duririg said warranty period, Contractor may, at its discretion, use other means to provide the warranty
service and mied Subcontraet Work and/or services snd unfurnished materials or for any intimgible, impact or similarly
described costs, damages or expenses and under rio circumstances ·shall th·e total sum paid to or received by
Subcontractor under ttils ·subcontract exceed thE! Subcontract Sum.
{c) Contractor's exercise of its rights of termination hereunder shall be hi addition to and .not in lieu of any
other remedies oi ·nghts of Contractor under this Subcontract ·or at law. In the event this Subcontract is termhiated for
cause or for convenience, Subcontracto'r agrees to assign to Contractor or others;. Subcontractor's rights under any
purchas¢ order or subcontraqt related to the Subcontract Work.
(d) it Is recognized that: if an order for relief Is entered on behalf of ~ubcontractor pursuant to Title 7 or
Titte; 11 of the United S~tes Bankruptcy Code~ if another similar or<1er is' entered under any other Oeb1or relief l~ws, if
Subcontractqr makes a General Assignment for the. peliefitof its Creditors, if a Recelver i~ appointed for the benefit of
its Creditors, or if a Receiver is :appointed on a~punt of its insolvency. any such event ~utq impair or frustrate
Subcontractor's pe~ormance of this Subcontract. · Aocordlngly, it Is agreed that upon the QCcl!rtence of any such
even~ Contractor shafl be entitled to request of Subcoritractor or its successor-In-interest adequate assurance of
f1.,1ture perfonnanoe in accordan·ce with ihe terms and conditions of the Subconb'act. Failure to comply wtth s_µch
request within ten (10) days of the delivery of the request shall entitle Contractor to terminate the Subcontract ano to
the rights set forth above- in Section 35(a) hereof. !nail events, abserit r~eipt of adeq1Jate assu~nce of performance
and actual perfomiance In accordance therewith, Contractor shall be entitled to proceed with the Work with Its own
forces or with other subcontractors, atSubcontractor's expense.·
Section 36~ Lle[hfree Profect; Indemnity from Liens and Claims, Patents. S!Jbcontracior shall defend, indemnny and
si;ive harmiess Contractor E!nd Owner from .. any and all la.borer's, materialm~n'.s ~nd mechanic's liens upon the
property and premises <;>n Which' the Subeontractor Work ls being performed that arise _out of suq~ work, and shall.
keep such property free and clear of all liens, clatms and en~mbrances. arising out of the perforrnanc~ of 1hls:
Subcontract Subcontractor -shall defend, indemnify and save hannless Contractor a_nd Its surety from any cla'lms or
causes of action asserted against Contractor's surety bonds issued in connection with the Project Subcontractor shall
defend, indemnify and save harmless Contractor and Owner fr-om any claims or suits for Infringement of patents or
violation of patent rights by Subcontractor. If Subcontraetor fails to do any of the ioregoing, Contractor may deduct
from sums then or thereafter due Subcontractor under this Subcontract or other agreement with Contractor such
amounts as Contractor may deem appropriate to defend, indemnify and save hamiless Contractor and- Owner from
such liens, claim, encumbrances and suits. ·
Sectlon 37. Cutting and Patching .. Subcontractor shall do all cutting, fitting, patching, digging and back filling of the
Subcontract Work undertaken herein that may be required to make Its several parts come together properly and fil 'it to
receive or be received by work of Contractor or any other subcontractor shown upon, or reasonably Implied by, the
Contract Documents for the completed structure.. Any cost caused by defective or ilf,.fimed work of Subcontractor shall
be bome hy Subcontractor. Subcontractor .shall not endanger any work by cutting, excavating or otherwise altering the
Subcontract Work undertaken herein and shail not cut or alter the work of Contractor or any other subcontractor save
with the prior written consent of Contractor.
Section 38. Independent Contractor. Subcontractor shall be an independent contractor under this Subcontrac~ and
shall assume all of the rights, obligations, and llabilltres applicable to it as such an independent ·contractor hereunder.
Subcontractor Is. responsible for the means, methods, and details of the Subcontract Wcirk.
Section 39, No payment made under this Subcontract shall be construed 1o be an acceptance by Contractor or
Owner of defective work, Improper materlals or work thal does not conform lo the Contract Documents.
Section 40. Maintenance of Records: Audit. Subcontractor shall keep and ·maintain full and detailed records and
accounts of all materials, equipment and labor furnished, delivered, fabricated, used, consumed andfor incorporated
into the Subcontract Work. Contractor shall be given complete and convenient access to all of Subcontracto(s
records, books, correspondence, instructions. drawings, receipts, vouchers, memoranda and similar documents and
data relating to the Subcontract and the Subcontract Work. Subcontractor shall maintain and preserve all such
records and documents for a period 1>f three (3) years after final payment hereunder and shall make such records and
documents, avallable to Contractor at :any time Within this three-year period.
Section 41. Inspection of Site. Subcontractor represents that it has examined all of the Contract Documents which
relate to the Subcontract Work and is,fully acquainted with all of the physical conditions surrounding the
job site (as
that. term may be defined 1n the Contract) insofar as the same affects or relates io the performance .of the Subcon_ iract
Work, and has made all necessary investigations essential to the full understanding of any and all difficulties that may
Federal ID; XX-XXXXXXX SCHEA(tHANPICN PBYWAlzL. INC,
Vendor: SCHEHA Paw; 12 at 13 - Subcontract #4237::§4
Founders 000254
be encountered In the performance of the Subcontract Work. Subcontractor assumes any and all risks incident to any
variance between ihe actual physical conditions at the Job site affecHng the Subcontract Work and those set out in the
Contract Documents. · ·
Section 42. Notice. All notices to Contractor due under the Subcontract shall be addressed to Contractor at Its
offices as appears on the first page hereof. All notices 1D be given Subcontractor shall be addressed to Subcontractor
at the ¢rice of SUbcontractor as appears on the first page hereof.· Notices may be delivered by U.S. Mail, hand
delivery or facsimfle. It Is understood and agreed that the effective date of any such notice shall be: (i} two (2) days
after the date the notice is posted with the U.S. Mail, (Ji} the date of hand delivery, or (iii) the date fhe facsimile is
transmitted, but any notice by facslmlle shall be deemed to be given on the foltowing calendar day if sent after 5:00
p.m.
Section 43. Seyerabilily. The provisions of this Subcontract shall be applied and Interpreted In a manner consistent
with each other so as to carry out the purposes and intent of the parties, but if for any reason any provision or part
thereof is unenforceable or invalid, such provisions or parts thereof shall be deemed severed from this Subcontract
and the remaining provisions .shall be carried out with the same force and effect as if the severed provision or part
thereof had not been part of this Subcontract.
Section 44. Headings. The headings of the paragraphs sre included solely for the convenience of reference and if
there is any conflict between the hea~lngs an~ the text of thl~ Subcontract, the text of this Subcontract shall con"trol.
Sectlon 45. Non~Waiver. The wavier of any breach hereof shall not constitute a waiver of any subsequent breach by
the same or other provision hereof. Failure by the Contractor in any instance to insist upon observance or
performance by Subcontractor shall not be deemed a waiver by Contractor of any such observance or performance.
No waiver wttl be binding upon Contractor unless In writing and then Will be for the particular Instance only. Payment of
any sum by Contractor to Subcontractor with knowledge of any breach or default will not be deemed any waiver ~f
such breach ~r any other breach.
Section 46. Entire Agreement. This Subcontract and the Contract Documents insofar as they relate in any part or
any way to· the Subcontract Work, constitute the entire agreement between parties hereto, and . it is expressly
understood and agreed that there are no oral or written agreements or promises by and between said parties except
as aforesaid and that any additions thereto. or changes therein shall be in wrlUng.
NOTE: . Subcontractor must file proof of Jnsurance with Contractor prior to starting work and as a
conditfon precedent to payment. All invoices must be signed "AP~ROVED" by Job superintendent prior to
submission for payment. ·
· IN WITNESS WHEREOF, the parties hereto have · executed this agreement for themselves, their heirs,
executors, successors, administrators and assigns, on the day and year first above written.
. .
SUBCONTRACTOR: CONTRACTOR:
Federal 10: XX-XXXXXXX SCHJ;AB HAMPTON Qft)'WALL, INC
Vendor: SCHEHA Paae 13 of le - Subpoptract #4237-64
Founders 000255
Scheat Hampton Drywall, Inc.
Subcontract #4237-64
Additions to Contract
· 1. Agreed upon schedule.
2. Rfght to piece work & subcontractor will maintain 1-9 forms.
3. Right to stop work for fack of payment or unsafe conditions. .
4. w.o., extras, back charges, etc., onry by G.C. & subcontractor signed change order.
S. Waivers upon payment or conditional waivers as per Texas stat_ue.
6. Submittal approval is acceptance of product application/substitµtion as long as substitution
Is clearly identified in submittals.
7. Insurance umbrella is {excess} $2,000,000.00, insurance as attached.
8. Payment guaranteed by the 30th of the month following billing.
9. Retention is 5% on labor and material and paid with 30 days of scope completion, and the
following 5% to be paid when General Contractor gets paid.
10. No 3 rd party contingencies or contracts.
. 11. This Is a comp!ete contract. Those things typed or hand written provisions shall control and
be prevailing on all parties if in conflict of this contract.
12. Subcontractor Is not responsible for others damaging work, rnaterial, or equipment.
SCHEAR HAMPTON DRY'WALL, INC. CONSTRUCTION SUPl:RVISORS, INC.
~?J ~ C - i a
Jim Smith, Partner
.
• i
Founders 000242
PROPERTY CODE CHAPTER 53. MECHANICS,CONTRACTOR'S,OR MATERIAL...Page 1 of61
PROPERTY CODE
TITLE 5. EXEMPT PROPERTY AND LIENS
SUBTITLE B. LIENS
CHAPTER 53. MECHANIC'S, CONTRACTOR'S, OR MATERIALMAN'S LIEN
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 53.001. DEFINITIONS. In this chapter:
(1) "Contract price" means the cost to the owner for any
part of construction or repair performed under an original contract.
(2) "Improvement" includes:
(A) abutting sidewalks and streets and utilities in or
on those sidewalks and streets;
(B) clearing, grubbing, draining, or fencing of land;
(C) wells, cisterns, tanks, reservoirs, or artificial
lakes or pools made for supplying or storing water;
(D) pumps, siphons, and windmills or other machinery or
apparatuses used for raising water for stock, domestic use, or
irrigation; and
(E) planting orchard trees, grubbing out orchards and
replacing trees, and pruning of orchard trees.
(3) "Labor" means labor used in the direct prosecution of
the work.
(4) "Material" means all or part of:
(A) the material, machinery, fixtures, or tools
incorporated into the work, consumed in the direct prosecution of the
work, or ordered and delivered for incorporation or consumption;
(B) rent at a reasonable rate and actual running
repairs at a reasonable cost for construction equipment used or
reasonably required and delivered for use in the direct prosecution
of the work at the site of the construction or repair; or
(C) power, water, fuel, and lubricants consumed or
ordered and delivered for consumption in the direct prosecution of
the work.
(5) "Mechanic's lien" means the lien provided by this
chapter.
http://www.statutes.legis.state.tx.us/Docs/PR/htm/PR.53.htm 5/16/2018
PROPERTY CODE CHAPTER 53. MECHANICS,CONTRACTOR'S,OR MATERIAL...Page 5 of61
reclaimed from overflow, or the railroad and all of its properties,
and to each lot of land necessarily connected or reclaimed.
(b) The lien does not extend to abutting sidewalks, streets,
and utilities that are public property.
(c) A lien against land in a city, town, or village extends to
each lot on which the house, building, or improvement is situated or
on which the labor was performed.
(d) A lien against land not in a city, town, or village extends
to not more than 50 acres on which the house, building, or
improvement is situated or on which the labor was performed.
Acts 1983, 68th Leg., p. 3536, ch. 576, Sec. 1, eff. Jan. 1, 1984.
Sec. 53.023. PAYMENT SECURED BY LIEN. The lien secures payment
for:
(1) the labor done or material furnished for the
construction or repair;
(2) the specially fabricated material, even if the material
has not been delivered or incorporated into the construction or
repair, less its fair salvage value; or
(3) the preparation of a plan or plat by an architect,
engineer, or surveyor in accordance with Section 53.021(c).
Acts 1983, 68th Leg., p. 3536, ch. 576, Sec. 1, eff. Jan. 1, 1984.
Amended by Acts 1995, 74th Leg., ch. 851, Sec. 2, eff. Sept. 1, 1995.
Sec. 53.024. LIMITATION ON SUBCONTRACTOR'S LIEN. The amount of
a lien claimed by a subcontractor may not exceed:
(1) an amount equal to the proportion of the total
subcontract price that the sum of the labor performed, materials
furnished, materials specially fabricated, reasonable overhead costs
incurred, and proportionate profit margin bears to the total
subcontract price; minus
(2) the sum of previous payments received by the claimant
on the subcontract.
Acts 1983, 68th Leg., p. 3536, ch. 576, Sec. 1, eff. Jan. 1, 1984.
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PROPERTY CODE CHAPTER 53. MECHANICS,CONTRACTOR'S,OR MATERI... Page 24 of61
loss it suffers or incurs. That priority does not excuse the surety
from paying any obligations that it may have under its payment bonds.
Acts 1983, 68th Leg., p. 3548, ch. 576, Sec. 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 20, eff. Sept. 1,
1989.
Sec. 53.152. RELEASE OF CLAIM OR LIEN. (a) When a debt for
labor or materials is satisfied or paid by collected funds, the
person who furnished the labor or materials shall, not later than the
10th day after the date of receipt of a written request, furnish to
the requesting person a release of the indebtedness and any lien
claimed, to the extent of the indebtedness paid. An owner, the
original contractor, or any person making the payment may request the
release.
(b) A release of lien must be in a form that would permit it to
be filed of record.
Acts 1983, 68th Leg., p. 3548, ch. 576, Sec. 1, eff. Jan. 1, 1984.
Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 21, eff. Sept. 1,
1989.
Sec. 53.153. DEFENSE OF ACTIONS. (a) If an affidavit claiming
a mechanic's lien is filed by a person other than the original
contractor, the original contractor shall defend at his own expense a
suit brought on the claim.
(b) If the suit results in judgment on the lien against the
owner or the owner's property, the owner is entitled to deduct the
amount of the judgment and costs from any amount due the original
contractor. If the owner has settled with the original contractor in
full, the owner is entitled to recover from the original contractor
any amount paid for which the original contractor was originally
liable.
Acts 1983, 68th Leg., p. 3548, ch. 576, Sec. 1, eff. Jan. 1, 1984.
Sec. 53.154. FORECLOSURE. A mechanic's lien may be foreclosed
only on judgment of a court of competent jurisdiction foreclosing the
lien and ordering the sale of the property subject to the lien.
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Acts 1983, 68th Leg., p. 3549, ch. 576, Sec. 1, eff. Jan. 1, 1984.
Sec. 53.155. TRANSFER OF PROPERTY SOLD. If the house,
building, improvement, or any piece of railroad property is sold
separately, the officer making the sale shall place the purchaser in
possession. The purchaser is entitled to a reasonable time after the
date of purchase within which to remove the purchased property.
Acts 1983, 68th Leg., p. 3549, ch. 576, Sec. 1, eff. Jan. ,1, 1984.
Sec. 53.156. COSTS AND ATTORNEY'S FEES. In any proceeding to
foreclose a lien or to enforce a claim against a bond issued under
Subchapter H, I, or J or in any proceeding to declare that any lien
or claim is invalid or unenforceable in whole or in part, the court
shall award costs and reasonable attorney's fees as are equitable and
just. With respect to a lien or claim arising out of a residential
construction contract, the court is not required to order the
property owner to pay costs and attorney's fees under this section.
Added by Acts 1984, 68th Leg., 2nd C.S., ch. 18, Sec. 4(a), eff. Oct.
2, 1984. Amended by Acts 1989, 71st Leg., ch. 1138, Sec. 22, eff.
Sept. 1, 1989.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 51 (S.B. 539), Sec. 1, eff.
September 1, 2011.
Sec. 53.157. DISCHARGE OF LIEN. A mechanic's lien or affidavit
claiming a mechanic's lien filed under Section 53.052 may be
discharged of record by:
(1) recording a lien release signed by the claimant under
Section 53.152;
(2) failing to institute suit to foreclose the lien in the
county in which the property is located within the period prescribed
by Section 53.158, 53.175, or 53.208;
(3) recording the original or certified copy of a final
judgment or decree of a court of competent jurisdiction providing for
the discharge;
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(4) filing the bond and notice in compliance with
Subchapter H;
(5) filing the bond in compliance with Subchapter I; or
(6) recording a certified copy of the order removing the
lien under Section 53.160 and a certificate from the clerk of the
court that states that no bond or deposit as described by Section
53.161 was filed by the claimant within 30 days after the date the
order was entered.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 23, eff. Sept. 1, 1989.
Amended by Acts 1997, 75th Leg., ch. 526, Sec. 15, eff. Sept. 1,
1997.
Sec. 53.158. PERIOD FOR BRINGING SUIT TO FORECLOSE LIEN. (a)
Except as provided by Subsection (b), suit must be brought to
foreclose the lien within two years after the last day a claimant may
file the lien affidavit under Section 53.052 or within one year after
completion, termination, or abandonment of the work under the
original contract under which the lien is claimed, whichever is
later.
(b) For a claim arising from a residential construction
project, suit must be brought to foreclose the lien within one year
after the last day a claimant may file a lien affidavit under
Section 53.052 or within one year after completion, termination, or
abandonment of the work under the original contract under which the
lien is claimed, whichever is later.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 23, eff. Sept. 1, 1989.
Amended by Acts 1997, 75th Leg., ch. 526, Sec. 16, eff. Sept. 1,
1997; Acts 1999, 76th Leg., ch. 889, Sec. 4, eff. Sept. 1, 1999.
Sec. 53.159. OBLIGATION TO FURNISH INFORMATION. (a) An owner,
on written request, shall furnish the following information within a
reasonable time, but not later than the 10th day after the date the
request is received, to any person furnishing labor or materials for
the project:
(1) a description of the real property being improved
legally sufficient to identify it;
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(d) Not later than the 30th day after the date a written
request is received from the owner, the contractor under whom a claim
of lien or under whom a bond is made, or a surety on a bond on which
a claim is made, a claimant for a lien or under a bond shall furnish
to the requesting person a copy of any applicable written agreement,
purchase order, or contract and any billing, statement, or payment
request of the claimant reflecting the amount claimed and the work
performed by the claimant for which the claim is made. If requested,
the claimant shall provide the estimated amount due for each calendar
month in which the claimant has performed labor or furnished
materials.
(e) If a person from whom information is requested does not
have a direct contractual relationship on the project with the person
requesting the information, the person from whom information is
requested, other than a claimant requested to furnish information
under Subsection (d), may require payment of the actual costs, not to
exceed $25, in furnishing the requested information.
(f) A person, other than a claimant requested to furnish
information under Subsection (d), who fails to furnish information as
required by this section is liable to the requesting person for that
person's reasonable and necessary costs incurred in procuring the
requested information.
(g) Expired.
Added by Acts 1989, 71st Leg., ch. 1138, Sec. 23, eff. Sept. 1, 1989.
Amended by;
Acts 2011, 82nd Leg., R.S., Ch. 499 (H.B. 1390), Sec. 7, eff.
September 1, 2011.
Sec. 53.160. SUMMARY MOTION TO REMOVE INVALID OR UNENFORCEABLE
LIEN. (a) In a suit brought to foreclose a lien or to declare a
claim or lien invalid or unenforceable, a party objecting to the
validity or enforceability of the claim or lien may file a motion to
remove the claim or lien. The motion must be verified and state the
legal and factual basis for objecting to the validity or
enforceability of the claim or lien. The motion may be accompanied
by supporting affidavits.
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(b) The grounds for objecting to the validity or enforceability
of the claim or lien for purposes of the motion are limited to the
following:
(1) notice of claim was not furnished to the owner or
original contractor as required by Section 53.056, 53.057, 53.058,
53.252, or 53.253;
(2) an affidavit claiming a lien failed to comply with
Section 53.054 or was not filed as required by Section 53.052;
(3) notice of the filed affidavit was not furnished to the
owner or original contractor as required by Section 53.055;
(4) the deadlines for perfecting a lien claim for retainage
under this chapter have expired and the owner complied with the
requirements of Section 53.101 and paid the retainage and all other
funds owed to the original contractor before:
(A) the claimant perfected the lien claim; and
(B) the owner received a notice of the claim as
required by this chapter;
(5) all funds subject to the notice of a claim to the owner
and a notice regarding the retainage have been deposited in the
registry of the court and the owner has no additional liability to
the claimant;
(6) when the lien affidavit was filed on homestead
property:
(A) no contract was executed or filed as required by
Section 53.254;
(B) the affidavit claiming a lien failed to contain the
notice as required by Section 53.254; or
(C) the notice of the claim failed to include the
statement required by Section 53.254; and
(7) the claimant executed a valid and enforceable waiver or
release of the claim or lien claimed in the affidavit.
(c) The claimant is not required to file a response. The
claimant and any other party that has appeared in the proceeding must
be notified by at least 21 days before the date of the hearing on the
motion. A motion may not be heard before the 21st day after the date
the claimant answers or appears in the proceeding.
(d) At the hearing on the motion, the burden is on:
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(1) the claimant to prove that the notice of claim and
affidavit of lien were furnished to the owner and original contractor
as required by this chapter; and
(2) the movant to establish that the lien should be removed
for any other ground authorized by this section.
(e) The court shall promptly determine a motion to remove a
claim or lien under this section. If the court determines that the
movant is not entitled to remove the lien, the court shall enter an
order denying the motion. If the court determines that the movant is
entitled to remove the lien, the court shall enter an order removing
the lien claimed in the lien affidavit. A party to the proceeding^
may not file an interlocutory appeal from the court's order.
(f) Any admissible evidence offered at the hearing may be
admitted in the trial of the case. The court's order under
Subsection (e) is not admissible as evidence in determining the
validity and enforceability of the claim or lien.
Added by Acts 1997, 75th Leg., oh. 526, Sec. 17, eff. Sept. 1, 1997.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 499 (H.B. 1390), Sec. 8, eff.
September 1, 2011.
Sec. 53.161. BOND REQUIREMENTS AFTER ORDER TO REMOVE. (a) In
the order removing a lien, the court shall set the amount of security
that the claimant may provide in order to stay the removal of the
claim or lien. The sum must be an amount that the court determines
is a reasonable estimate of the costs and attorney's fees the movant
is likely to incur in the proceeding to determine the validity or
enforceability of the lien. The sum may not exceed the amount of the
lien claim.
(b) The court shall stay the order removing the lien if the
claimant files a bond or a deposit in lieu of a bond in the amount
set in the order with the clerk of the court not later than the 30th
day after the date the order is entered by the court unless, for good
cause, the court orders a later date for filing the bond or the
deposit in lieu of a bond. If the court fails to set the amount of
the security required, the amount required is the amount of the lien
claim.
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