Douglas H. Wheelock and Starscape Holdings, LLC v. Trim Electric, Inc

Opinion issued June 25, 2013.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-12-00475-CV
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DOUGLAS H. WHEELOCK AND STARSCAPE HOLDINGS, LLC,
Appellants
V.
TRIM ELECTRIC, INC, Appellee
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2010-39973
MEMORANDUM OPINION
In this appeal from a bench trial arising out of a construction dispute,
Douglas H. Wheelock and Starscape Holdings, LLC challenge the legal and factual
sufficiency of the evidence supporting the trial court’s judgment against them and
in favor of Trim Electric, Inc. We affirm.
Background
David and Kim Swartz hired Trim to do electrical work for the opening of a
wine bar and a cocktail bar in an area of downtown Houston known as “The
Pavillions.” Wheelock, who is Starscape’s principal member, invested in the bars.
The project fell apart when Swartz defaulted on the lease with The Pavillions.
Because it had not been paid for $47,093.68 in electrical improvements at the time
Swartz defaulted, Trim filed a lien on the property.
Wheelock wanted to complete the project through Starscape, but The
Pavillions would not allow Starscape to assume the property leases until Trim
released its lien. Wheelock reached an agreement with Trim’s owner, Joe Palumbo.
Palumbo agreed to release the lien if Starscape agreed to pay the amount owed to
Trim and Wheelock personally guaranteed Starscape’s obligations. Trim filed this
lawsuit when Starscape stopped making the payments due under the parties’
agreement, asserting claims for breach of contract, promissory estoppel, and
attorney’s fees. Wheelock and Starscape answered the lawsuit, and Starscape
counterclaimed for unjust enrichment and attorney’s fees on the ground that Trim
had been paid more than it was owed for the work actually performed.
Only two witnesses testified at trial: Palumbo and Wheelock. Palumbo
testified to the circumstances giving rise to Trim’s contract claim. Palumbo stated
that Wheelock delivered a written contract to Trim’s office, which Wheelock
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represented had been signed and notarized. A few days later, Palumbo noticed that
Wheelock had signed the personal guaranty but had not signed the agreement for
Starscape. Palumbo telephoned Wheelock, who was out of the country, and
inquired how to proceed. According to Palumbo, Wheelock instructed him to take
the agreement to Alan Michael, a man whom Wheelock had previously introduced
to Palumbo as being in charge of the project, for his signature on Starscape’s
behalf. Palumbo did as instructed.
At the bench trial, Trim offered a written agreement signed by (1) Palumbo
for Trim and (2) Michael for Starscape and (3) guaranteed by Wheelock in his
individual capacity. The agreement set forth Starscape’s obligation to pay Trim
“the sum of $47,093.68 for the electrical work already performed by Trim at the
property; $1128.00 for legal expenses and $6574.00 for work that will be
completed[.]” The agreement structured the payments as follows:
• $13,000 within five days of Starscape signing a new lease with The
Pavillions; and
• Twelve equal monthly installments of $3,482.97 due on the first day
of the month until the entire contract amount was paid.
Palumbo testified that Starscape made an initial payment of $13,500 and three
monthly payments. Starscape did not make any further payments under the
agreement for the work already performed, though it did pay Trim for additional
work performed pursuant to purchase orders signed by Michael.
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During his testimony, Wheelock disputed that he told Palumbo to have
Michael sign the agreement on Starscape’s behalf. According to Wheelock,
Michael was only a general contractor on the project and had no authority to bind
Starscape. And, although Wheelock acknowledged his promise that Starscape
would make Trim whole for the work performed for Swartz, he testified to
different agreement terms. Wheelock stated that he agreed to pay Trim out of the
tenant assessment money that would be released by The Pavillions upon
completion of the work at the properties. Any payments Starscape made to Trim
before the work was completed were made in good faith but were not contractually
obligated. The wine bar failed almost immediately after its opening, the tenant
assessment money was never released, and thus, according to Wheelock, Starscape
was not obligated to pay Trim any amount outstanding for the work already
performed. Starscape and Wheelock did not offer any alternative writing as
evidence of the agreement alleged by Wheelock.
After considering the evidence presented at trial and the arguments of
counsel, the trial court issued the following findings of fact and conclusions of law:
Findings of Fact
4. [Wheelock and Starscape] desired to assume the leasehold free
and clear of any liens, and entered into a valid contract with Trim. The
terms of the contract are that Doug Wheelock would be held
personally liable for the terms of the contract and that Starscape
would pay Trim the following amounts:
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a. $47,093.68 for electrical work already performed by
Trim at the property;
b. $1,128.00 for legal expenses; and
c. $6,574.00 for additional work to be performed on the
properties. This work was never performed.
5. In consideration, Trim would release [its] lien on the properties
upon receipt of an initial $13,000.00, as well as resume and complete
the remaining electrical work.
....
8. [Wheelock and Starscape] made payments under the contract
totaling $24,448.91.
....
10. [Trim] is due the remaining balance of $23,772.77 under the
terms of the contract.
11. [Trim] is not due any more money for work performed for
[Wheelock and Starscape] outside of the contract.
12. There is no evidence that [Starscape] or its principal officer
[Wheelock] communicated to [Trim] that they did not authorize Alan
Michael to sign the construction agreement with [Trim].
13. . . . [Wheelock and Starscape], jointly and severally, held out to
[Trim] that Alan Michael was an authorized agent to sign the
construction agreement with [Trim] on [Starscape’s] behalf.
14. There is sufficient evidence of [Starscape’s] and its principal
officer’s [Wheelock’s] knowledge, approval, and, thus, ratification of
Alan Michael’s signature on behalf of [Starscape] to the construction
contract with [Trim].
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15. . . . Alan Michael possessed actual authority and, in the
alternative, apparent authority to sign the parties’ agreement on behalf
of Douglas Wheelock and Starscape . . . .
16. . . . Wheelock signed a valid and enforceable unconditional
guaranty to pay [Trim] for the work and materials provided on behalf
of [Wheelock and Starscape] and is individually liable to [Trim] for
the sums of $23,772.77 under the parties’ contract and $0 for
additional work performed pursuant to change orders requested by
[Wheelock and Starscape] pursuant to the parties’ contract.
Conclusions of Law
8. [Trim] has provided sufficient evidence of entitlement to
recovery for claim for breach of contract.
....
18. The greater weight of the credible evidence establishes that
[Trim] and [Starscape] agreed that Trim would perform work and
valuable materials on behalf of Starscape in exchange for, and that
[Wheelock], individually provided an unconditional guaranty for the
payment of the sum of
a. $47,093.68 for electrical work already performed by
Trim at the properties;
b. $1,128.00 for legal expenses; and
c. $6,574.00 for additional work to be performed on the
properties.
These are the “essential terms” of the parties’ contract and such
contract does not fail for indefiniteness.
The trial court’s final judgment awards Trim $23,772.77 in damages, plus
attorney’s fees and costs, against Wheelock and Starscape, jointly and severally.
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Standard of Review
In an appeal from a bench trial, the trial court’s findings of fact have the
same weight as a jury’s verdict, and we review the legal and factual sufficiency of
the evidence supporting the findings by applying the same standards we use to
review a jury’s findings. Briggs Equip. Trust v. Harris Cnty. Appraisal Dist., 294
S.W.3d 667, 670 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). Findings of
fact are not conclusive if, as here, there is a complete reporter’s record. Id.
The test for legal sufficiency is “whether the evidence at trial would enable
reasonable and fair-minded people to reach the verdict under review.” City of
Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In making this determination,
we credit favorable evidence if a reasonable factfinder could, and we disregard
contrary evidence unless a reasonable factfinder could not. Id. So long as the
evidence falls within the zone of reasonable disagreement, we may not substitute
our judgment for that of the factfinder. Id. at 822. Although we consider the
evidence in the light most favorable to the challenged findings, indulging every
reasonable inference that supports them, we may not disregard evidence that
allows only one inference. Id.
In our factual-sufficiency review, we consider all the evidence supporting
and contradicting the challenged findings. Plas–Tex, Inc. v. U.S. Steel Corp., 772
S.W.2d 442, 445 (Tex. 1989); Quality Infusion Care, Inc. v. Health Care Serv.
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Corp., 224 S.W.3d 369, 378 (Tex. App.—Houston [1st Dist.] 2006, no pet.). We
will set aside the verdict only if the findings are so contrary to the overwhelming
weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d
175, 176 (Tex. 1986). In a bench trial, the trial court, as factfinder, is the sole judge
of the credibility of the witnesses and the weight given their testimony. See City of
Keller, 168 S.W.3d at 819; Sw. Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493
(Tex. App.―Houston [1st Dist.] 1992, writ denied).
We review de novo a trial court’s conclusions of law, and uphold them on
appeal if the judgment can be sustained on any legal theory supported by the
evidence. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.
2002); In re Moers, 104 S.W.3d 609, 611 (Tex. App.―Houston [1st Dist.] 2003,
no pet.). An appellant may not challenge a trial court’s conclusions of law for lack
of factual sufficiency, but we review the legal conclusions drawn from the facts to
determine their correctness. BMC Software Belg., 83 S.W.3d at 794.
Findings and Conclusions
A. Trim’s breach of contract claim
1. Factually sufficient evidence supports the trial court’s findings on
the terms of the parties’ agreement
This is not a case in which one party asserts that an agreement fails for
indefiniteness; Starscape does not dispute the existence of an enforceable
agreement to pay Trim. Rather, in its first issue, Starscape asserts a number of
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reasons why the evidence is not factually sufficient to support the agreement terms
found by the trial court. Specifically, Starscape argues that the trial court could not
reasonably conclude that Starscape was obligated to pay Trim the amounts stated
in the written agreement―$47,093.68 for work already performed, $6574 for work
to be performed, and $1128 for the legal fees―because Wheelock did not sign the
agreement on behalf of Starscape, the agreement was not properly notarized, and
the payments actually made by Starscape did not match the payments stated in the
agreement. According to Starscape, the conflicting evidence regarding the terms of
the agreement could lead the trial court to only one conclusion: the agreement
entered by the parties was not the agreement alleged by Trim.
At trial, Trim offered a written agreement signed by Wheelock in his
individual capacity and by Michael on behalf of Starscape as evidence of
Starscape’s obligation to pay the amounts found by the trial court. Palumbo
testified that the written agreement admitted at trial was the same agreement
Wheelock delivered to Trim’s office, and that it was not until a couple days after
Wheelock delivered the contract that Palumbo realized the line designated for
Starscape’s signature was blank. Once he realized that Wheelock had not signed on
Starscape’s behalf, Palumbo telephoned Wheelock and then obtained Michael’s
signature for Starscape as instructed by Wheelock over the telephone.
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Wheelock’s testimony at trial conflicted with Palumbo’s testimony in part.
Although Wheelock agreed that he delivered a written agreement to Palumbo, he
disagreed that the agreement admitted into evidence at trial was the agreement he
delivered. The only page of the agreement that Wheelock recognized was the page
containing his signature under the personal guaranty, and that page does not set
forth Starscape’s payment obligations. Wheelock testified that another contract
existed wherein the parties agreed that Trim would be paid out of the tenant
assessment money released by the property owner upon completion of the work.
No writing memorializing the agreement alleged by Wheelock was offered at trial.
The resolution of Palumbo’s and Wheelock’s conflicting testimony
regarding the terms of the agreement was a matter for the trial court. See Sw. Bell
Media, 825 S.W.2d at 493. The trial court was free to believe all, some, or none of
Palumbo’s and Wheelock’s testimony. See id. From Palumbo’s testimony alone,
the trial court could reasonably conclude that the parties entered into the written
agreement offered by Trim, under which Trim would release its lien and
recommence work on the property in exchange for an initial lump sum and
subsequent monthly payments by Starscape as stated in the written agreement
admitted at trial. While Wheelock’s testimony is some evidence of a different
agreement weighing in Starscape’s favor, it does not render the trial court’s
findings clearly wrong or unjust. We therefore conclude that evidence of an
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agreement to pay Trim the amounts stated in the written agreement is factually
sufficient. Because there is no dispute that Wheelock did not sign that agreement
on behalf of Starscape, however, we turn to the issue of whether Michael had
authority to sign the agreement for Starscape.
2. Factually sufficient evidence supports the trial court’s finding that
Michael had apparent authority to bind Starscape
The trial court found that Michael possessed actual or apparent authority to
bind Starscape to the agreement with Trim. Wheelock challenges the factual
sufficiency of the evidence for both findings. Because we conclude that the finding
on Michael’s apparent authority is supported by the evidence, it is unnecessary for
us to review his actual authority. See BMC Software Belg., 83 S.W.3d at 794
(instructing that appellate court should sustain trial court’s judgment on any legal
theory supported by evidence).
“An agent acting within the scope of his apparent authority binds the
principal as if the principal itself had taken the action.” Expro Americas, LLC v.
Sanguine Gas Exploration, LLC, 351 S.W.3d 915, 924 (Tex. App.—Houston [14th
Dist.] 2011, pet. filed). A third party’s “good faith” belief that one person is the
agent of another is not sufficient to demonstrate the person’s authority to bind the
principal. Reliant Energy Servs., Inc. v. Cotton Valley Compression, L.L.C., 336
S.W.3d 764, 783 (Tex. App.—Houston [1st Dist.] 2011, no pet.). Instead, the
principal must communicate to the third party or take some action indicating that
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the person is authorized to act as an agent. Gaines v. Kelly, 235 S.W.3d 179, 182
(Tex. 2007). The principal’s “acts” include participation, knowledge, or
acquiescence. Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 672 (Tex. 1998). A
party seeking to recover under an apparent-authority theory must show (1) the
principal had full knowledge of all material facts at the time of the conduct alleged
to be the basis for the agent’s apparent authority and (2) harm resulting from
justifiable reliance on the principal’s words or conduct. Reliant Energy Servs., 336
S.W.3d at 784. Accordingly, to determine Michael’s apparent authority to bind
Starscape, we examine Wheelock’s conduct and the reasonableness of Trim’s
assumptions regarding Michael’s authority.
The trial court could conclude from the evidence that Wheelock’s actions
resulted in Palumbo’s reasonable belief that Michael had authority to bind
Starscape. Palumbo testified that Wheelock introduced Michael as the man
“heading up” the project at a meeting in Palumbo’s office before the agreement
was signed. Wheelock could not recall whether he made clear to Palumbo during
their initial introduction or at any other time that Michael was only a general
contractor and not Starscape’s agent. When Palumbo noticed the agreement
Wheelock later delivered did not include a signature on behalf of Starscape,
Palumbo telephoned Wheelock. Wheelock, who was out of the country, told
Palumbo that Michael should sign the agreement for Starscape. In accordance with
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that instruction from Wheelock, Palumbo took the agreement to Michael and
witnessed his signature. The written agreement contains Michael’s signature with
the handwritten notation “for Doug Wheelock” on the blank designated for
Starscape. Although Michael’s signature on the written agreement is different than
his signature on the purchase orders, Palumbo testified that Michael signed the
agreement using his full name and signed the purchase order using his initials only.
Neither party called Michael as a witness at trial. Starscape made the initial
payment provided for in the agreement and three monthly installments thereafter;
in exchange, Trim released its lien on the bar properties.
Although Wheelock’s testimony that Michael did not have authority to bind
Starscape is some evidence weighing in Starscape’s favor, that testimony does not
render the trial court’s finding that Michael had apparent authority to sign
agreement with Trim on Starscape’s behalf so contrary to the overwhelming
weight of the evidence as to be clearly wrong or unjust. We conclude that the
evidence is factually sufficient to support the trial court’s agency finding.
We overrule the first issue. 1
1
Because we hold that Michael had apparent authority to bind Starscape to the
agreement with Trim, we do not reach Starscape’s second issue challenging the
trial court’s finding that Starscape ratified the agreement. See Reliant Energy
Servs., Inc. v. Cotton Valley Compression, L.L.C., 336 S.W.3d 764, 783 (Tex.
App.—Houston [1st Dist.] 2011, no pet.) (noting that apparent authority and
ratification are alternative theories under which principal may be liable for agent’s
acts).
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3. The damages award must be sustained
In the fourth issue, Starscape argues that the trial court erred in finding that
Trim was due $23,772.77 under the parties’ agreement because the evidence
established that “a majority of the alleged damages . . . existed prior to Starscape’s
involvement” and the value of the work Trim performed at Starscape’s request was
only $5916. Starscape accurately states the evidence, but that evidence does not
render the trial court’s finding that Trim was owed $23,772.77 erroneous. We have
already sustained the trial court’s findings regarding the terms of the parties’
agreement, and Starscape does not contend on appeal that the Trim is not entitled
to $23,772.77 under the agreement found by the trial court.
We overrule the fourth issue.2
B. Wheelock’s guaranty
In the third issue, Wheelock argues that the trial court erred in concluding
that he was individually liable for the $23,772.77 owed to Trim under the parties’
agreement because he signed a “valid and enforceable” guaranty. “[A] promise by
one person to answer for the debt, default, or miscarriage of another” must be in
writing. TEX. BUS. & COM. CODE ANN. § 26.01(a), (b) (West 2012). The writing
2
Starscape’s fourth issue includes an alternative argument that Trim’s promissory
estoppel claim cannot support the damages awarded by the trial court. The trial
court, however, did not make any findings or conclusions on Trim’s promissory
estoppel claim; the basis for the trial court’s judgment was Trim’s contract claim.
Accordingly, we do not consider Starscape’s alternative argument.
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must be complete within itself in every material detail, and must contain all of the
essential elements of the agreement. See Cohen v. McCutchin, 565 S.W.2d 230,
232 (Tex. 1978). “The essential terms of a guaranty agreement are (1) the parties
involved, (2) a manifestation of intent to guaranty the obligation, and (3) a
description of the obligation being guaranteed.” Material P’ships, Inc. v. Ventura,
102 S.W.3d 252, 261 (Tex. App.—Houston [14th Dist.] 2003, pet. denied); see
also Park Creek Assocs., Ltd. v. Walker, 754 S.W.2d 426, 429 (Tex. App.—Dallas
1988, writ denied); Garza v. Evans, No. 01-11-00666-CV, 2012 WL 1893731, at
*5 (Tex. App.—Houston [1st Dist.] May 24, 2012, no pet.) (mem. op.).
In this case, Trim’s and Starscape’s payment and performance obligations
and Wheelock’s guaranty are stated in the same three-page document. Immediately
after Trim’s and Starscape’s signatures on the agreement is a section entitled
“Personal Guaranty.” That section provides:
Guarantor, Doug Wheelock, individually hereby agrees to absolutely
and unconditionally guarantee the payment obligations of Starscape,
LLC under the foregoing Agreement. . . . In the event of a default by
Starscape under the foregoing Agreement, Guarantor waives any right
to require Trim (a) proceed against Starscape or pursue any rights or
remedies against Starscape with respect to the above Agreement, or
(b) pursue any other remedy whatsoever in [ ] Trim’s power.
Wheelock signed the guaranty in his individual capacity, indicating his intent to
guaranty Starscape’s obligations under the agreement with Trim. Although the
guaranty does not specifically name Trim as the creditor or set forth the obligation
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guaranteed, it repeatedly references the “foregoing Agreement” between Trim and
Starscape. The agreement states the amount Starscape owes and when it is owed.
Construed as a whole, the document demonstrates the essential terms of a guaranty
agreement. See Material P’ships, 102 S.W.3d at 261. We therefore hold that the
trial court did not err in concluding that the guaranty was enforceable and that
Wheelock was individually liable for Starscape’s payment obligations.
We overrule the third issue.
C. Starscape’s claims for unjust enrichment and attorney’s fees
In the fifth and sixth issues, Starscape contends the trial court erred by
refusing to find that Trim was unjustly enriched and to award Starscape damages
and attorney’s fees. The trial court’s findings of fact and conclusions of law,
however, do not address Starscape’s unjust enrichment claim or its request for
attorney’s fees. When a trial court’s findings do not address a ground of recovery,
the party relying on that ground must request additional findings in proper form or
else any complaint about the unmentioned ground is waived. See TEX. R. CIV. P.
298; Briggs Equip. Trust, 294 S.W.3d at 674 (holding that plaintiff waived claim
for tax liability reduction under alternative method of calculation by failing to
request additional findings and conclusions). The record does not indicate that
Starscape requested additional findings of fact or conclusions of law on its claims
for unjust enrichment and attorney’s fees. Consequently, Starscape has waived its
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contention that the trial court erred by failing to award damages and attorney’s fees
on the unjust enrichment claim.
We overrule the fifth and sixth issues.
Conclusion
Having concluded that the evidence is sufficient to support each of the
challenged fact findings and that the trial court did not err in concluding that
Wheelock personally guaranteed Starscape’s payment obligations, we affirm the
judgment of the trial court.
Harvey Brown
Justice
Panel consists of Justices Jennings, Brown, and Huddle.
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