B. R. Brick and Masonry, Inc. v. Michael Phillips

Affirmed as Modified and Memorandum Opinion filed November 20, 2003

Affirmed as Modified and Memorandum Opinion filed November 20, 2003.

In The

Fourteenth Court of Appeals

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NO. 14-02-01144-CV

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B.R. BRICK AND MASONRY, INC., Appellant

V.

MICHAEL PHILLIPS, Appellee

On Appeal from  127th District Court

                                                           Harris County, Texas                      

Trial Court Cause No. 99-14159

M E M O R A N D U M   O P I N I O N

            B.R. Brick and Masonry, Inc. and Michael Phillips both appeal from a judgment favoring the former in its indemnity action against the latter. After a jury trial, the trial court awarded Brick $310,000 in damages, plus attorney’s fees.  Because all dispositive issues are clearly settled in law, we issue this memorandum opinion.[1]

            A general contractor hired Brick to apply the stucco wall system during construction of an apartment complex.  Brick subcontracted with Phillips to provide the labor.  When the complex suffered damage from water leaks, the owner[2] filed suit against the general contractor, Brick, and others; Brick filed a third-party action against Phillips. Shortly before trial, the owner settled its claims for $1.6 million, of which Brick paid $312,000.  Phillips (who was never sued by anyone except Brick) did not contribute anything to the settlement.

            Brick then proceeded to trial on its indemnity action against Phillips. A jury found Brick was entitled to indemnity from Phillips, and that its settlement payment to the owner was reasonable, made in good faith, and based on its potential liability.[3]  The trial court assessed damages in favor of Brick in the amount of its entire settlement with the owner.  On the only damage question submitted to the jury, the jury awarded only $12,000 for attorney’s fees through trial, and nothing for any appeals.

            Both parties challenge the fee award; in his cross-appeal, Phillips also challenges several underlying rulings on which that award is based. Because the fee dispute must stand or fall based on the underlying claims, we address Phillips’ points first.

Limitations

            In his first issue, Phillips asserts the trial court erred in denying his motion for summary judgment asserting that limitations barred any claim against him, as the project was completed more than four years before Brick sued him.  Assuming error was preserved, we hold Brick’s indemnity action was timely. 

            Limitations may have barred suit by the owner against Phillips four years after completion, but the owner did not sue Phillips.  By contrast, Brick’s indemnity action against him did not accrue “until all of the indemnitee’s liabilities become fixed and certain.”[4]  As is often the case, Brick filed suit before it paid the claim,[5] but limitations did not begin running until it did so.  As this occurred only a matter of weeks before trial, Brick’s indemnity action was not time-barred.  Phillips’ first issue is overruled.

Proper Party, Presentment, and Express Negligence

In his second issue, Phillips contends the trial court erred in denying another motion for summary judgment, in which he asserted first that he was not a proper party after the owner’s negligence claims against Brick were dismissed.[6]  Again assuming Phillips preserved error,[7] the action submitted to the jury was on Brick’s contractual claim against him for indemnity.  Nothing in the dismissal of the negligence action barred that claim; indeed, even if the owner’s entire suit had been dismissed, Brick still would have been entitled to indemnity for the fees it incurred defending against those claims.[8] 

            Also under this issue, Phillips contends the owner’s failure to present claims to Brick should have barred those claims, and thus any need for him to indemnify Brick.  The jurors rejected this claim—when they found Brick had potential liability, they necessarily found the owner’s claims were not completely barred.  Having reviewed the only document on which Phillips apparently relies for this objection, we cannot hold as a matter of law that presentment was a condition precedent and thus an absolute bar to the owner’s claims against Brick.

            Finally under this issue, Phillips contends the express negligence rule prevents any indemnity for damages due in part to Brick’s negligence.[9]  By the time of settlement, the trial court had dismissed the owner’s negligence claims, leaving only warranty claims.  This Court has previously held the express negligence rule inapplicable to “non-negligence” claims.[10]  Accordingly, all the arguments raised in Phillips’ second issue are overruled.

Indemnity for Settlement

            In his third issue, Phillips contends the trial court erred in denying his motion for directed verdict.  First, he simply incorporates his limitations arguments; for the reasons discussed above, we overrule them. 

            Second, in this issue and the following one, he contends his written contract with Brick did not include an agreement to indemnify Brick for settlement payments (as opposed to a judgment).  Assuming again he preserved this issue for appeal,[11] the contract specifically provided:

[Phillips] agrees to hold [Brick] free and harmless of any and all claims against [Brick] due to or claimed as arising from any work by or responsibility of [Phillips] in whole or in part and shall fully defend and indemnify [Brick] for every claim which may arise.

As matter of law, the contract unambiguously provided indemnity for all claims, settled or otherwise.[12]  Accordingly, Phillip’s third and fourth issues are overruled.

Duplicative Issues

            In his fifth issue, Phillips contends the court erred in denying his motion for new trial.  For argument, he merely refers to his first four issues.  For the reasons stated above, we overrule Phillip’s fifth issue.

            In his seventh issue, Phillips contends the trial court erred in awarding any attorney’s fees for appeal, as the trial court’s indemnity finding was wrong.  For the reasons stated above, we overrule Phillip’s seventh issue. 

Attorney’s Fees

            In his sixth issue, Phillips contends the trial court should have awarded Brick no fees, as it did not segregate those spent defending against the owner’s claims from those spent prosecuting the cross-claim against Phillips.[13]  At trial, Phillips argued Brick was entitled only to the latter, and thus only to fees incurred after settling with the owner and turning solely to the cross-claim.  Brick’s expert admitted the latter fees were only about $12,000.  Although the trial court rejected this argument, the jury’s $12,000 answer for trial fees shows the jurors accepted it. 

            But the parties’ contract required Phillips to defend as well as indemnify Brick for any claims arising from Phillips’ work.  Thus, Phillips was contractually bound to pay reasonable fees incurred in defending Brick, not just those incurred in settling or in prosecuting the indemnity action thereafter.  Because Brick was entitled to both, segregation was not required. Accordingly, we overrule Phillips’ sixth issue.

            In its cross-appeal, Brick contends the trial court should have disregarded the jurors’ answers and awarded fees for both defending and prosecuting the claims herein.  As stated above, we agree this is what the indemnity contract required.  According to the uncontradicted testimony of its expert, a reasonable fee for Brick’s attorneys was $312,700.11 for trial, $40,000 on appeal to this court, and $30,000 for appeal to the Supreme Court.  As this testimony was clear, direct and positive, and free from the only contradictory argument raised by Phillips, we agree.[14]  Thus, we modify the judgment to include them.

            The judgment of the trial court, as modified, is affirmed.

/s/        Scott Brister

                                                                                    Chief Justice

Judgment rendered and Memorandum Opinion filed November 20, 2003.

Panel consists of Chief Justice Brister and Justices Anderson and Seymore.

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[1] See Tex. R. App. P. 47.4.

[2] The successor owner of the complex who brought suit was EQR­­-Watson General Partnership.

[3] See Amerada Hess Corp. v. Wood Group Prod. Tech., 30 S.W.3d 5, 11 (Tex. App.—Houston [14th Dist.] 2000, pet. denied).

[4] Ingersoll-Rand Co. v. Valero Energy Corp., 997 S.W.2d 203, 210 (Tex. 1999).

[5] See id. at 209 (noting such claims may be brought prior to accrual in the interest of judicial economy).

[6] Phillips contends joinder of him as a responsible third party in tort was no longer proper in the absence of the negligence claim.  See Tex. Civ. Prac. & Rem. Code §§ 33.002, 33.004.

[7] Neither Phillips’ alleged summary judgment motion nor the order appears in the record.

[8] See, e.g., Chesapeake Operating, Inc. v. Nabors Drilling USA, Inc., 94 S.W.3d 163, 167 (Tex. App.—Houston [14th Dist.] 2002, no pet.) (holding driller found not negligent in accident was still entitled to attorney’s fees incurred based on contractual indemnity).

[9] See generally Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d 705, 708 (Tex. 1987) (“The express negligence doctrine provides that parties seeking to indemnify the indemnitee from the consequences of its own negligence must express that intent in specific terms.”).

[10] See DDD Energy, Inc. v. Veritas DGC Land, Inc., 60 S.W.3d 880, 885 (Tex. App.—Houston [14th Dist.] 2001, no pet.).

[11] It is not included in Phillips’s motion for directed verdict, motion for new trial, or objection to the charge, and there appears to be no other motion he made that the trial court denied.

[12] Cf. Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 416 (Tex. 2000) (holding insurer’s duty to indemnify insured for amounts he was “legally obligated to pay” extended to settlement, but only up to policy limits).

[13] Phillips does not challenge the trial court’s JNOV award to Brick of $5,000 for appeals at each level. 

[14] See, e.g., Ragsdale v. Progressive Voters League, 801 S.W.2d 880, 882 (Tex. 1990).