Cajun Constructors, Inc. v. Velasco Drainage District

Affirmed in Part, Reversed and Remanded in Part, and Majority and Dissenting
Opinions filed May 1, 2012.
In The
Fourteenth Court of Appeals
NO. 14-11-00004-CV
CAJUN CONSTRUCTORS, INC., Appellant
V.
VELASCO DRAINAGE DISTRICT, Appellee
On Appeal from the 412th Judicial District Court
Brazoria County, Texas
Trial Court Cause No. 61420
DISSENTING OPINION
The majority holds that the trial court erred in granting summary judgment in
favor of Velasco Drainage District on three of its four claims. Because I believe the trial
court properly granted summary judgment to Velasco on all four of Cajun Constructors,
Inc.’s claims, I respectfully dissent.
CONTRACTUAL NOTICE PROVISIONS
As excerpted in the Majority Opinion, see ante, at 2–3, the general provisions of
the contract at issue in this case contain three notice requirements. First, a party must
provide written notice stating the general nature of any claim or dispute no later than
thirty days after the start of the event giving rise to the claim to the Engineer and the
other party. Second, notice of the amount or extent of the claim or dispute with
supporting data must be delivered to the Engineer and other party within sixty days after
the start of the event, unless the Engineer provides additional time for the claimant to
submit additional or more accurate data in support of the claim or dispute. Finally, third,
after the Engineer renders a formal written decision regarding the claim or dispute, the
party who intends to appeal the Engineer’s decision must file a written notice of intent to
appeal to the Engineer and the other party within thirty days after the date of the
Engineer’s decision and institute a formal proceeding in a ―forum of competent
jurisdiction‖ within sixty days of the decision or substantial completion of the project.
It is undisputed in this case that Cajun failed to file any notice of intent to appeal
to either the Engineer or Velasco—i.e., that Cajun entirely failed to comply with the third
notice provision. The majority, however, determines that this notice provision is void
because it violates section 16.071(a) of the Texas Civil Practice and Remedies Code. I
respectfully disagree for the following reasons.
Subsection 16.071(a) of the Civil Practice and Remedies Code provides, ―A
contract stipulation that requires a claimant to give notice of a claim for damages as a
condition precedent to the right to sue on the contract is not valid unless the stipulation is
reasonable. A stipulation that requires notification within less than 90 days is void.‖
Tex. Civ. Prac. & Rem. Code Ann. § 16.071(a) (West 2012) (emphasis added).
First, because Cajun failed to assert that the contractual notice provisions are void
because of this provision in its summary-judgment response, I consider it only to the
extent that Velasco established its entitlement to judgment as a matter of law despite the
restrictions of this subsection. See Tex. R. Civ. P. 166a(c). Second, all three notice
provisions explicitly relate to claims for ―adjustment‖ in either contract price or time.
Even the third provision, which provides that either party must notify the Engineer and
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the other party if it intends to appeal the Engineer’s decision to a court of competent
jurisdiction, does not concern a claim for damages.
The purpose of all three notice provisions is to allow the contracting parties to
investigate and settle disputes regarding adjustments in contract time or price without
breaching the contract. If these notice provisions are followed, adjustments to contract
time or price may be made during the course of the project without either party having to
establish a breach of contract to recover damages. Cf. Am. Airlines Employees Fed.
Credit Union v. Martin, 29 S.W.3d 86, 97–98 (Tex. 2000) (noting that the unauthorized
transaction notice requirement of a bank’s deposit agreement was designed to allow for
investigation and recovery of funds so that the customer may not even have a claim for
damages). Thus, I disagree with the majority’s conclusion that this notice provision is
―effectively a requirement that notice be given before a claim for damages is alleged in
court.‖ See ante, at 19.
In short, a claim for an adjustment in contract price or time is clearly not a claim
for ―damages.‖ ―Damages‖ perforce implicates a contractual breach, while ―adjustment‖
contemplates an alteration consistent with performance of the contract terms. Cf. Martin,
29 S.W.3d at 97–98. (providing that section 16.071 does not apply to a notice provision
that is not a notice of a claim for damages when the purpose of the provision is to prevent
such a claim). Accordingly, I would conclude that subsection 16.071(a) does not apply to
void the third notice provision in the contract because this provision relates to claims for
adjustments, rather than claims for damages. Because Velasco established as a matter of
law that subsection 16.071(a) does not apply to these contract provisions and Cajun failed
to raise an issue of material fact, I would hold that Velasco was entitled to summary
judgment on all of Cajun’s claims.
ATTORNEY’S FEES
The majority summarily reverses and remands the attorney’s fee issues (Cajun’s
fourth and fifth issues) because it reverses and remands on other substantive issues.
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Because I would affirm the trial court’s summary judgment in favor of Velasco, I address
the merits of these issues.
Texas law prohibits recovery of attorney’s fees unless authorized by statute or
contract. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310 (Tex. 2006).
―Reasonable‖ attorney’s fees are available to a prevailing party on a breach of contract
claim. Tex. Civ. Prac. & Rem. Code Ann. § 38.001(8). Courts of appeal review an
award of attorney’s fees on the basis of breach of contract for an abuse of discretion.
E.g., Llanes v. Davila, 133 S.W.3d 635, 640 (Tex. App.—Corpus Christi 2003, pet.
denied) (citing Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 881 (Tex. 1990)
(per curiam)). The test for an abuse of discretion is whether the trial court’s decision is
arbitrary or unreasonable. Id. (citing Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223,
226 (Tex. 1991)).
If any attorney’s fees relate solely to claims for which fees are not recoverable, a
claimant must segregate recoverable from unrecoverable fees. Tony Gullo Motors I, 212
S.W.3d at 313. ―Intertwined facts do not make all attorney’s fees recoverable; it is only
when discrete legal services advance both a recoverable and unrecoverable claim that
they are so intertwined that they need not be segregated.‖ Id. at 313–14.
In its fourth and fifth issues, Cajun challenges the award of attorney’s fees to
Velasco. Specifically, in its fourth issue, it asserts that the jury should not have been
given a question on the award of attorney’s fees at all because Velasco did not recover
damages; rather, Velasco retained the liquidated damages authorized by the contract by
not paying Cajun the full contract price. However, Cajun did not challenge the award of
attorney’s fees on this basis in the trial court. It neither contended in its summary-
judgment response that Velasco was not entitled to attorney’s fees, nor challenged
attorney’s fees on this basis in the jury trial on fees. The only challenge it made to the
submission of the attorney’s fee question to the jury was that Velasco had not submitted
legally or factually sufficient evidence to support the submission:
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We would object to the submission of the issue of attorneys’ fees because
while the admitted failure to segregate attorneys’ fees on the part of the
Plaintiff, they have not submitted legally sufficient or factually sufficient
evidence to support this submission. So we will object to the submission of
Question 1 on that basis and further move for an instructed verdict of a take
nothing recovery on attorney fees at this time.
This objection does not comport with its complaint on appeal. See Lundy v. Masson, 260
S.W.3d 482, 507 (Tex. App.—Houston [14th Dist.] 2008, pet. denied) (citing State Dep’t
of Highways & Pub. Transp. v. Payne, 838 S.W.2d 234, 241 (Tex. 1992)). Accordingly,
this issue has not been preserved for review, and I would overrule it. See id.; Tex. R.
App. P. 33.1(a)
In its fifth issue, Cajun asserts that Velasco was not entitled to recover attorney’s
fees because it failed to segregate the fees. The reporter’s record reflects that Cajun
proposed a jury instruction on the issue of segregation of attorney’s fees and objected to
the submission of a question without such segregation: ―Your Honor, Cajun has
proposed, if I may approach, an instruction to the jury on the issue of segregation. We
would object to the submission of a question without segregation and we would submit
Cajun’s proposed instruction to mitigate the issue of failure to segregate.‖ The trial court
refused the requested instruction.
Here, all the claims at issue before the jury involved Velasco’s successful breach-
of-contract counterclaim. Cajun’s claims and Velasco’s counterclaim depended upon the
same essential facts, using the same documents and witnesses, and Velasco had to defeat
Cajun’s claims ―before it could recover.‖ See Tony Gullo Motors I, 212 S.W.3d at 314.
Even Velasco’s defense to Cajun’s quantum meruit claim was premised on the existence
of the contract. Cajun’s quantum meruit claim arose out of the same transactions as its
contract-based claims and required the same proof as those claims. Hence, the legal work
performed by Velasco’s attorneys advanced both the prosecution of its breach-of-contract
counterclaim and the defense of Cajun’s claims, including Cajun’s quantum meruit claim.
The legal work performed by Velasco’s attorneys advanced both recoverable and
nonrecoverable claims. See id. at 313–14; cf. 7979 Airport Garage, L.L.C. v. Dollar Rent
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a Car Sys., Inc., 245 S.W.3d 488, 507–09 (Tex. App.—Houston [14th Dist.] 2007, pet.
denied) (concluding that fees incurred in defending against counterclaims did not have to
be segregated from those incurred in prosecuting breach-of-contract claim because claims
and counterclaims depended on same essential facts, relied on same documents and
witnesses, and appellee had to defeat appellant’s claims before it could recover). Under
these circumstances, I would conclude that Velasco was not required to segregate its
attorney’s fees. I would overrule Cajun’s fifth and final issue.
CONCLUSION
I would affirm the trial court’s summary judgment in favor of Velasco. I would
further affirm the jury’s award of attorney’s fees. Accordingly, I respectfully dissent.
/s/ Adele Hedges
Chief Justice
Panel consists of Chief Justice Hedges and Justices Christopher and Jamison. (Jamison,
J., majority).
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