Denco CS Corporation v. Body Bar, LLC

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
No. 06-14-00022-CV
DENCO CS CORPORATION, Appellant
V.
BODY BAR, LLC, Appellee
On Appeal from the 429th District Court
Collin County, Texas
Trial Court No. 429-01020-2013
Before Morriss, C.J., Carter and Moseley, JJ.
Opinion by Justice Moseley
OPINION
Body Bar, LLC, desired to open an upscale Pilates studio and juice bar in Plano, Texas. 1
Toward that aim, Body Bar entered into a lease for commercial property owned by Regency
Centers, L.P., the lease acknowledging that it would be Body Bar’s responsibility to construct the
studio within the demised space and providing that Regency would pay $25,000.00 of the cost of
doing so after the successful completion of the construction project. Body Bar had its plans and
specifications for the improvements drafted by an outside consultant and included those plans
and specifications in its advertisement for bids to accomplish the work. Denco CS Corporation
responded to the advertisement for bids and was awarded the contract for the improvements as
Body Bar’s contractor. On March 25, 2012, Denco and Body Bar entered into a contract to
complete the project.
Denco’s completion of the project was delayed, in part, due to the city’s determination
that portions of the plans and specifications for the project failed to meet the city’s health code.
In order to complete the project with as little delay as possible, Denco’s crewmen worked
overtime and on weekends, thereby increasing Denco’s cost for the project by $28,933.40.
Denco attempted to pass this cost along to Body Bar via an e-mail request for additional sums.
Believing that its contract with Denco did not obligate it to pay more on the contract due to
Denco’s decision to employ crewmen outside of normal business hours, Body Bar—which had
paid each contractually prescribed invoice Denco submitted—did not acquiesce to Denco’s
1
Originally appealed to the Fifth Court of Appeals in Dallas, this case was transferred to this Court by the Texas
Supreme Court pursuant to its docket equalization efforts. See TEX. GOV’T CODE ANN. § 73.001 (West 2013). We
follow the precedent of the Fifth Court of Appeals in deciding this case. See TEX. R. APP. P. 41.3.
2
request for additional sums. In response, Denco took the steps it felt were necessary to perfect
contractor’s liens under both the statutory scheme and the Texas constitutional contractor’s lien
on the property it had improved. These liens were supported by the affidavit of Denco’s Director
of Construction, Steven J. Smith, and stated, in part, that “the amount of $28,933.40 . . . remains
unpaid and is due and owing to [Denco] under its agreement with Body Bar.” 2
Some two months after Denco and Body Bar entered into the construction agreement,
Regency sold the premises to Bre Throne Preston Park, LLC, which purchased the property
subject to Body Bar’s lease and the obligations of the landlord thereunder—including the
responsibility of the lessor to reimburse Body Bar $25,000.00 of the cost of the improvements it
made to the property. When Bre Throne discovered the existence of the lien affidavits filed by
Denco, it withheld its reimbursement to Body Bar of the $25,000.00 specified in the lease
agreement. When Bre Throne refused to pay the reimbursement, Body Bar filed suit against
Denco.
In its suit seeking declaratory relief, Body Bar’s petition (1) set out the existence of the
contractual relationship into which it had entered with Denco; (2) alleged that Denco had
breached its contract with Body Bar by requesting additional sums not contemplated to be paid
by Body Bar under the contract; (3) requested the trial court to declare that the affidavits filed by
Denco did not effectuate liens on the improved property because (a) Denco failed to provide the
required statutory notice, (b) Denco failed to file its lien affidavits within the prescribed time,
and (c) the lien affidavits were ineffective to affix a lien on the property because Denco had no
2
See TEX. PROP. CODE ANN. § 53.021 (West Supp. 2014).
3
privity of contact with Bre Thorne, the owner of the realty; (4) alleged that Denco’s act in filing
fraudulent lien affidavits tortiously interfered with Body Bar’s lease with Bre Throne, causing
damages in the amount of the $25,000.00 reimbursement prescribed in the lease agreement; and
(5) sought to recover Body Bar’s attorney fees.
Denco responded by filing counterclaims of its own, these counterclaims seeking relief
for the alleged breach of contract, quantum meruit, unjust enrichment, and attorney fees, together
with the relief of allowing it to foreclose the mechanic’s liens it alleged that it held.
Body Bar filed a combination traditional and no-evidence motion for summary judgment.
After reviewing the summary judgment evidence, the trial court (1) ruled that neither the
constitutional mechanic’s lien nor the statutory mechanic’s lien alleged by Denco were valid and
that neither was subject to foreclosure; (2) determined that Denco had breached its contract with
Body Bar, that Denco was guilty of tortious interference with Body Bar’s contract with its lessor,
and that Denco was not entitled to recovery under its claim of quantum meruit or unjust
enrichment; 3 and (3) granted Body Bar recovery of $25,000.00 in damages, $16,451.00 in
attorney fees and $491.00 in costs. Denco appeals the trial court’s ruling.
In this case, we find that the summary judgment evidence (1) conclusively established
that the statutory and constitutional liens were invalid, (2) conclusively established that Body Bar
was entitled to summary judgment on all of Denco’s claims, (3) failed to conclusively establish
that Body Bar sustained damages as a result of Denco’s breach, and (4) failed to conclusively
establish tortious interference with the lease with Bre Thorne as a matter of law. In short, Body
3
See further discussion below.
4
Bar established its entitlement to summary judgment on its declaratory judgment and breach of
contract claim as a matter of law. However, while Body Bar proved that Bre Thorne withheld
reimbursement due to the invalid liens filed on the premises, Body Bar failed to prove that
Bre Thorne would not pay the reimbursement once the liens were invalidated. Thus, while Body
Bar demonstrated that it sustained some damage (including interest on the reimbursement had it
been timely paid), the amount of damages actually sustained in light of our opinion remains
speculative. 4
We further find (1) that Denco could not foreclose invalid liens, (2) that Denco failed to
raise a genuine issue of material fact demonstrating that Body Bar was contractually obligated to
pay the additional sums requested by Denco, and (3) that Denco’s equitable claims of unjust
enrichment and quantum meruit were precluded as a matter of law because the labor used to
complete the project was covered by the contract price. Because Denco failed to raise more than
a scintilla of evidence on any of its claims, the trial court’s no-evidence motion for summary
judgment was proper.
We affirm the trial court’s judgment in part, but reverse (1) the finding that Body Bar
established tortious interference as a matter of law, (2) the finding that Body Bar established
breach of contract as a matter of law, and (3) the award of $25,000.00 to Body Bar, and remand
these matters to the trial court for further proceedings consistent with this opinion.
4
We find that the amounts of attorney fees and costs were conclusively established by an affidavit filed by Body
Bar’s counsel.
5
I. Standard of Review
“We apply well-known standards in our review of traditional and no-evidence summary
judgment motions.” W. Fork Advisors, LLC v. SunGard Consulting Servs., LLC, No. 05-13-
01289-CV, 2014 WL 3827937, at *2 (Tex. App.—Dallas Aug. 5, 2014, no pet. h.) (citing Timpte
Indus., Inc. v. Gish, 286 S.W.3d 306, 310 (Tex. 2009); Nixon v. Mr. Prop. Mgmt. Co., 690
S.W.2d 546, 548 (Tex. 1985)). “With respect to a traditional motion for summary judgment, the
movant has the burden to demonstrate that no genuine issue of material fact exists and it is
entitled to judgment as a matter of law.” Id. (citing TEX. R. CIV. P. 166a(c); Nixon, 690 S.W.2d
at 548–49). “We review a no-evidence summary judgment under the same legal sufficiency
standard used to review a directed verdict.” Id. (citing TEX. R. CIV. P. 166a(i); Gish, 286 S.W.3d
at 310). “To defeat a no-evidence summary judgment, the nonmovant is required to produce
evidence that raises a genuine issue of material fact on each challenged element of its claim.” Id.
(citing Gish, 286 S.W.3d at 310; see TEX. R. CIV. P. 166a(i)). “Within the framework of these
standards, we review the trial court’s summary judgment de novo.” Id. (citing Travelers Ins. Co.
v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010)).
II. The Summary Judgment Evidence
Denco provided Body Bar with a proposed estimate, which (1) extensively detailed the
work Denco would complete on the project, (2) included Denco’s overhead, (3) in a document
titled “General Conditions,” included an estimate for “Lump Sum” “Labor Burden,” and ten
hours of “Miscellaneous Labor,” and (4) provided $123,841.81 as the total cost for the project.
When Denco won the bid, its bid proposal was incorporated into the contract with Body Bar.
6
The contract stated, “Only work explicitly listed in the Proposal is included. All other work is
excluded. [Body Bar] shall request any clarification needed regarding the scope of work
included in the Proposal.” The contract further explained, “Request for work in addition to the
Proposal may be completed, and, even without a signed Change Order, will result at an
additional cost to [Body Bar].” The contract also set forth the following payment schedule:
“Payment shall be made as follows: 30% After demo and underground plumb / 30% After wall
inspections / 30% Up building / Final 10% upon move in . . . .”
Denco began work on the project on June 11, 2012. According to the terms of the
contract’s payment schedule, Denco delivered Body Bar the first $37,152.54 invoice on June 25,
the second $44,493.29 invoice on July 25, and the third $24,768.37 invoice on August 28, 2012. 5
Body Bar paid each of these invoices in full.
Denco’s contract with Body Bar also stated, “Unless specified elsewhere in the Contract
Documents, liquidated damages for work not completed on time shall not exceed $100 per day.”
The projected opening date for the studio was August 4, 2012. On July 25, 2012, Emilie Shaulis,
Denco’s office manager, e-mailed a delay log to Alison Bradley, human resources manager for
Body Bar. The delay log indicated a 152-day delay and listed reasons for the delay that were
outside of Denco’s control. A July 27, 2012, e-mail from Denco informed Body Bar and its
design team that the “structure over juice bar,” exposed beams, and “ledgerstone accent band” in
the bathrooms failed the city’s health inspection because they could not easily be wiped clean.
On August 1, 2012, Denco’s President, Mark L. Boland, sent an e-mail to Body Bar’s design
5
Pursuant to an approved change order, Denco billed an additional $1,368.21 on August 1, and Body Bar paid the
amount on August 22, 2012.
7
team stating, “A week ago I said we could complete in 3 weeks. That date will slip if materials
cannot be delivered and design issues resolved in timely fashion.” The studio was opened on or
about September 7, 2012, thirty-four days past the August 4 projected opening date.
On September 13, 2012, after Denco had completed the project, Shaulis sent the
following e-mail to Bradley:
As a result of the delays on the Body Bar, Plano, TX, Denco has suffered
financially. We are asking for you to review the attached documents and please
consider additional compensation.
. . . . As you can see the delays . . . only extend[ed] us 34 days past the original
opening date. In cost for General Conditions we have calculated for the 34 days
past the August 4, Opening Date. However our labor is much more extensive as
we had a crew of 4 men working over 8 hours a day and Saturdays and Sundays.
General Conditions for Days Past Original Schedule -$180.72 x34 days $6,144.48
. . . Normal hours -$17.00per Hr x 4men=$68.00hr@8hrs@34 days $18,496.00
Weekend and After Hours Labor -47 days @ 8hrs @ $11.42 hr $4,292.92
Total amount of additional monies from 34 days of Delays $28,933.40
If you have any questions at all, please do not hesitate to contact our office at your
convenience. Again please review the documentation and consider additional
compensation.
On September 17, 2012, Shaulis sent Denco’s final $32,848.44 invoice to Bradley with the
notation, “Per our earlier email. Here is the Final amount due, to Denco for the Body Bar, Plano,
TX. This will be [the] billing for remaining balance of all [Proposed Change Orders (PCO)] as
well as all new PCO’s as sent on Friday 9-14.” Later that day, Shaulis clarified, “The final
invoice did not include the delay claim amount of $28[,]933.40 that was also sent over late last
week. I[’]m hoping this amount is being considered.”
8
On October 3, 2012, Shaulis e-mailed Bradley to inquire about the “payment status of
[Denco’s] Final Billing and Status of any monies to be paid on [its] Delay Claim.” Bradley
responded, “The check is going out today for final billing.” On that date, Body Bar paid the final
invoice—including additional sums for PCO’s—in full. In total, Body Bar paid Denco
$140,630.85—$16,789.04 more than the amount included in the contract estimate.
Denco accepted and applied Body Bar’s final payment and produced documentation
showing that the account had a zero balance. On October 8, 2012, Shaulis thanked Bradley for
payment of the final invoice, but wrote, “We would like to inquire with respect, on our Delay
Claim that was sent on September 13, 2012. Our office worked diligently in order to keep the
project moving forward in spite of all the delays that were presented. Has any consideration of
additional funding been given?” On October 17, 2012, Smith again asked Bradley about the
delay cost and pleaded, “The cost of said delays was substantial in fact at this point our cost
exceeds the job income due to the delays out of our control. We are always thankful to be a part
of any Team but believe we deserve some help with these cost[s].” On November 5, 2012,
Smith pleaded with Body Bar’s majority shareholder, again reminding that the delays were the
result of “incomplete designs or designs that do not meet city requirement[s]” and suggesting, “I
say we pursue the claim and perhaps you will get paid with the Design Team errors and omission
insurance.”
On December 7, 2012, Smith executed a lien affidavit in which he swore that Denco had
furnished labor and materials for improvement to real property under an agreement with Body
Bar and that “$28,933.40 . . . remain[ed] unpaid and is due and owing to Claimant under its
9
agreement with Body Bar.” The lien affidavit and claim purporting to encumber the rental space
with a lien was filed with the Clerk of Collin County, Texas, on December 13, 2012, in order to
obtain both statutory and constitutional liens. Denco sent both Bre Thorne and Body Bar notice
of the filing of the lien affidavit on December 26, 2012. On January 16, 2013, Body Bar’s
counsel responded to Denco’s notice by arguing that the alleged liens were invalid because
(1) they were based, in part, on work performed in June 2012 and the statutory deadline for filing
liens expired in November 2012, 6 (2) Denco failed to provide Body Bar with notice of the lien as
required by the Texas Property Code, (3) the contract did not provide for delay damages, and
(4) Body Bar paid Denco in full for all invoices under the contract and all approved PCOs. 7
Denco did not take action to relieve the property of the cloud on the title cast by the lien
affidavits.
Body Bar sued Denco and, after adequate time for discovery, moved for summary
judgment. In addition to documents demonstrating the facts recited above, Body Bar submitted
Bradley’s affidavit as summary judgment evidence. Bradley’s affidavit swore (1) that Denco
never requested additional compensation for the delays until after the project was completed, 8
(2) that “Denco further told [me] that the amount Denco sought in payment application number
6
“[T]he person claiming the lien must file an affidavit with the county clerk of the county in which the property is
located . . . not later than the 15th day of the fourth calendar month after the day on which the indebtedness
accrues.” TEX. PROP. CODE ANN. § 53.052(a) (West 2007).
7
The letter also warned, “Further, if DENCO’s actions in filing these fraudulent liens have in any way damaged
Body Bar’s relationship with Premises owner Bre Thorne, Body Bar will seek full restitution of these damages from
DENCO.”
8
Bradley’s affidavit contains a minor discrepancy because it states both that “Denco completed work on the Project
on or about the 18th day of September 2012” and that “[o]n September 13, 2012, after completion of the Project,
Denco requested Body Bar to consider additional compensation.” However, e-mails from Shaulis establish that the
project was completed prior to submission of the final invoice.
10
four is the final amount Body Bar owed to Denco for the Project,” (3) that Body Bar never
agreed to pay the delay charges in writing or otherwise, (4) that Denco merely requested
payment of the delay claim and did not demand payment before filing the lien affidavits, (5) that
Denco never provided documentation demonstrating that Body Bar was obligated to pay the
delay claim, (6) that Body Bar paid all of Denco’s invoices and PCOs, and (7) that, as a result of
the liens, Bre Thorne informed Body Bar that it was withholding the $25,000.00 tenant
improvement allowance (reimbursement). Body Bar also submitted an attorney fees affidavit
that detailed its attorneys’ hourly rates and work completed, attached counsels’ billing records,
and concluded, “Body Bar has incurred a total of $16,451.00 in reasonable and necessary
attorneys’ fees in this matter, and $491.10 in costs.”
In response to Body Bar’s combination traditional and no-evidence summary judgment
motion, Denco attached Shaulis’ affidavit, which stated,
Additional work for this project was necessary due to multiple delays caused by
Body Bar, LLC and its representatives, resulting in additional work beyond the
scope of the original agreement to be completed by Denco, notice of these delays
and additional expenses were timely documented by Denco and communicated to
Body Bar, LLC both during the completion of this construction project and upon
completion of the project.[9]
Denco relied on the language in the contract stating, “Request for work in addition to the
Proposal may be completed, and, even without a signed Change Order, will result at an
additional cost to the Owner. It shall be the Owner’s responsibility to secure a written proposed
Change Order before requesting additional work.”
9
At the summary judgment hearing, Denco’s counsel stated that the delay claim was for “additional work hours that
were required to complete the project as per the contract.”
11
Based on this evidence, the trial court granted Body Bar’s traditional and no-evidence
motion for summary judgment.
III. Analysis of the Trial Court’s Entry of Summary Judgment
A. Denco’s Affidavits Were Not Effective to Create a Valid Mechanic’s Lien
Denco argues that Body Bar was not entitled to a declaratory judgment that the alleged
liens were invalid. In its motion for summary judgment, Body Bar argued that “Denco had no
legal right to place a lien on the fee interest of the landlord’s property” due to lack of privity of
contract with Bre Thorne. We agree.
Denco’s lien encumbered the following property: “PRESTON PARK VILLAGE, BLK
A, LOT 1R, 26305 ACRES, CITY OF PLANO . . . (1900 PRESTON RD., SUITE 269).” 10 At
the time that the liens were filed, the property was owned in fee by Bre Thorne. Texas law
recognizes two possible types of mechanic’s liens: (1) a constitutional lien and (2) a statutory
lien. TEX. CONST. art. XVI, § 37; TEX. PROP. CODE ANN. 53.001 (West 2007). “[A]
constitutional lien requires a person to be in privity of contract with the property owner.” 11
Trinity Drywall Sys., LLC v. Toka Gen. Contrs., Ltd., 416 S.W.3d 201, 209 (Tex. App.—El Paso
2013, pet. filed); see Gibson v. Bostick Roofing & Sheet Metal Co., 148 S.W.3d 482, 493 (Tex.
10
We assume that the lien encumbered only 1900 Preston Road, Suite 269, and not the entire acreage set forth in the
lien affidavit.
11
Article XVI, Section 37 of the Texas Constitution provides,
Mechanics, artisans and material men, of every class, shall have a lien upon the buildings and
articles made or repaired by them for the value of their labor done thereon, or material furnished
therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said
liens.
TEX. CONST. art. XVI, § 37.
12
App.—El Paso 2004, no pet.). The same privity of contract with the property owner is required
to establish a statutory lien that encumbers the owner’s property. See TEX. PROP. CODE ANN.
§ 53.021(a)(2) (West Supp. 2013) (A person has a statutory lien if “the person labors . . . or
furnishes the labor or materials under or by virtue of a contract with the owner or the owner’s
agent . . . .”); TEX. PROP. CODE ANN. § 53.001(7) (defining “Original Contractor” as “a person
contracting with an owner either directly or through the owner’s agent”).
Smith’s lien affidavit listed Bre Thorne as the owner of the property sought to be
encumbered. Yet, there is no evidence in the record establishing that either Regency (who was
the owner of the premises at the time the contract for improvements was entered) or Bre Thorne
(the subsequent owner) contracted with Denco or that Body Bar was the agent of either at the
time it entered into the contract for improvements or when Denco’s additional charges
supposedly accrued. “[W]here the contract for labor, materials or construction is not made with
the owner or his duly-authorized agent, a lien may not be fixed on his property.” Gibson, 148
S.W.3d at 494; see 2811 Assocs., Ltd. v. Metroplex Lighting & Elec., 765 S.W.2d 851, 853 (Tex.
App.—Dallas 1989, writ denied). The mechanic’s lien affidavit was not filed until after Regency
had sold to Bre Thorne.
Because there was no evidence that Denco was in privity of contract with the owner of
the premises, it was not entitled to a constitutional lien against Bre Thorne’s fee interest in the
property. “[I]f a lessee contracts for construction, the mechanic’s lien attaches only to the
leasehold interest, not to the fee interest of the lessor.” Diversified Mortg. Investor v. Lloyd D.
Blaylock Gen. Contractor, Inc., 576 S.W.2d 794, 805 (Tex. 1978); see Bannum, Inc. v. Mees,
13
No. 07-12-00458-CV, 2014 WL 2918436, at **3–4 (Tex. App.—Amarillo Jun. 24, 2014, no pet.
h.) (mem. op.); Terraces at Cedar Hill, L.L.C. v. Gartex Masonry & Supply, Inc., No. 05-10-
00226-CV, 2011 WL 1050852, at *2 (Tex. App.—Dallas Mar. 24, 2011, pet. denied) (mem. op.).
Thus, the affidavit laying claim to statutory and constitutional mechanic’s liens—which were not
limited to Body Bar’s leasehold interest—did not validly encumber the property. 12 Because the
liens were not perfected, Denco was not entitled to foreclosure.
B. Summary Judgment on Denco’s Breach of Contract Claims Was Proper
“The elements of a breach of contract claim are (1) the existence of a valid contract,
(2) the plaintiff’s performance or tendered performance, (3) the defendant’s breach of the
contract, and (4) damages as a result of the breach.” Jespersen v. Sweetwater Ranch Apartments,
390 S.W.3d 644, 658 (Tex. App.—Dallas 2012, no pet.). Body Bar argues that it conclusively
established compliance with its obligations under the contract and that Denco breached the
contract by attempting to charge more than the contractual amount.
12
Body Bar argues that Denco failed to meet statutory requirements to perfect the lien. “A person who files an
affidavit must send a copy of the affidavit by registered or certified mail to the owner or reputed owner . . . not later
than the fifth day after the date the affidavit is filed with the county clerk.” TEX. PROP. CODE ANN. § 53.055(a)
(West 2007). “A party must comply with chapter 53 to perfect a lien under the statute.” Addison Urban Dev.
Partners, LLC v. Alan Ritchey Materials Co., LC, No. 05-13-00122-CV, 2014 WL 2946019, at *4 (Tex. App.—
Dallas July 1, 2014, no pet. h.) (citing Morrell Masonry Supply, Inc. v. Lupe’s Shenandoah Reserve, LLC, 363
S.W.3d 901 (Tex. App.—Beaumont 2012, no pet.); TEX. PROP. CODE ANN. § 53.051). Here, Denco admitted that it
failed to comply with Section 53.055(a). However, substantial compliance with Chapter 53 is sufficient, and
“[c]ases interpreting the mechanic’s and materialman’s lien statutes counsel against invalidating a lien on a purely
technical basis.” Id. (citing Ready Cable, Inc. v. RJP S. Comfort Homes, Inc., 295 S.W.3d 763, 765 (Tex. App.—
Austin 2009, no pet.)).
14
The question of whether Body Bar tendered full performance under the contract requires
contract interpretation. In this case, neither party argues that the contract is ambiguous. 13 The
bid proposal included the following work: demolition, foundations/slabs/piers, masonry/brick–
ledger stone veneer, structural steel, finish carpentry/millwork/trim carpentry, doors/frames,
finish hardware, glazing/storefront, drywall/framing, ceilings, flooring, tape/bed/paint, fire
extinguishers, HVAC/controls, plumbing, electrical, furnishings (installation only), granite tops,
custom ceiling over bar, restroom makeover, replace restroom sink, temporary protection, small
tools and miscellaneous expense, dumpster fees, final clean and make ready, and insurance. 14
Denco’s contract with Body Bar incorporated its $123,841.81 bid, specifically including all work
required to complete the proposal, and the only provision it made for per-diem damages for
delays was a fee that Denco would be assessed if it did not complete the project within a
specified time. 15 The proposal’s General Conditions section specifically set forth a lump sum
cost for the total labor burden, and a cost for ten additional hours of miscellaneous labor. By its
plain terms, the contract included all of the labor required to complete the proposal.
The delay logs demonstrate that the overtime labor was expended on completing work
included in the proposal. As an example, the table below lists the reason for the delay included
in the delay log, along with the work to be completed by Denco under the terms of the proposal:
13
“If a contract is worded such that it can be given a certain or definite legal meaning, we construe the contract as a
matter of law.” Am. Bd. of Obstetrics & Gynecology, Inc. v. Yoonessi, 286 S.W.3d 624, 628 (Tex. App.—Dallas
2009, pet. denied).
14
The proposal also incorporated the cost of the following items for five weeks: truck and gas allowance, temporary
phone, temporary data, project manager, project administrator, project superintendent.
15
The contract provided for per-diem liquidated damages in case Denco failed to complete the project on time.
Perhaps Denco chose to hire overtime workers to complete the project to avoid assessment of a substantial amount
of liquidated damages.
15
Reason for Delay Provided in Delay Log Proposal Work Item Impacted
Permit Delay All
Custom Glass Doors Delay Doors/Frames
AC Unit Delay HVAC/Controls
Juice Bar Ceiling, Not per City Code Finish Carpentry/Millwork/Trim
Carpentry
Interior Dimensions Drywall/Framing; Finish Carpentry/
Millwork/Trim Carpentry
Quarry Tile Discontinued Flooring
Granite Cambria Torquay is Millwork
Backordered
Candle Niche, Trim Out and Placement Millwork
Air Conditioning into Reception Area HVAC/Controls
Receipt of New Stone for Walls Flooring, Painting
Finish Hardware for Custom Glass Finish Hardware
Door
Receipt of New Stone for Walls Flooring, Painting
Denco’s response relies on a contract clause which states, “Request for work in addition
to the Proposal may be completed, and, even without a signed Change Order, will result at an
additional cost to [Body Bar]. It shall be [Body Bar’s]’s responsibility to secure a written
proposed Charge Order before requesting additional work.” Denco argues that this clause
applies because Shaulis’ affidavit “provide[s] evidence that there was additional work required to
be completed by [Denco] outside of the scope of the contract.” 16 Shaulis’ affidavit stated,
Additional work for this project was necessary due to multiple delays caused by
Body Bar, LLC and its representatives, resulting in additional work beyond the
scope of the original agreement to be completed by Denco, notice of these delays
and additional expenses were timely documented by Denco and communicated to
Body Bar, LLC both during the completion of this construction project and upon
completion of the project.
16
We do not believe Denco is truly arguing that the work completed by its laborers was outside the scope of the
contract. If that was so, Denco’s evidence was insufficient to raise a genuine issue of material fact on its claim for
breach of contract. Rather, we believe Denco argues that additional work required was outside the scope of the bid
proposal incorporated into the contract and that the contract provided a procedure by which Body Bar could be
charged for additional work.
16
First, Shaulis’ statement that the work completed by the laborers constituted “additional
work beyond the scope of the original agreement” is unfounded and incorrect. Body Bar
objected to Shaulis’ affidavit at trial, claiming it is conclusory, and Body Bar reasserts that
complaint on appeal. 17 “Conclusory statements in affidavits are not proper summary judgment
evidence if there are no facts to support the conclusions.” James L. Gang & Assocs., Inc. v.
Abbott Labs., Inc., 198 S.W.3d 434, 439 (Tex. App.—Dallas 2006, no pet.); see E.I. Du Pont
De Nemours & Co. v. Shell Oil Co., 259 S.W.3d 800, 809 (Tex. App.—Houston [1st Dist.] 2007,
pet. denied) (affidavit is conclusory when it expresses inference without stating underlying facts
supporting inference). Because it does not raise fact issues, a conclusory affidavit is incompetent
evidence that, as a matter of law, does not support a summary judgment. Ryland Grp., Inc. v.
Hood, 924 S.W.2d 120, 122 (Tex. 1996) (per curiam) (conclusory affidavits “are not credible,
nor susceptible to being readily controverted”); see Anderson v. Snider, 808 S.W.2d 54, 55 (Tex.
1991) (per curiam) (op. on reh’g). Without referencing the type of work completed during the
overtime labor, Shaulis classified the work as “additional work” that was not contemplated by
the bid proposal. Shaulis made this statement even though (1) the delay logs establish that the
delay only impacted Denco’s ability to proceed with labor on items included in the proposal, and
(2) the record is devoid of evidence showing that the laborers who worked overtime completed
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Body Bar did not secure a ruling on this objection. However, “conclusory statements in affidavits are errors of
substance and not form, and such defect is not waived on appeal by failure to object in the trial court, or as in this
case, to obtain a ruling on the objection.” Clarendon Nat’l Ins. Co. v. Thompson, 199 S.W.3d 482, 490 n.7 (Tex.
App.—Houston [1st Dist.] 2006, no pet.) (citing Ramirez v. Transcon. Ins. Co., 881 S.W.2d 818, 829 (Tex. App.—
Houston [14th Dist.] 1994, writ denied)); see Strother v. City of Rockwall, 358 S.W.3d 462, 469 (Tex. App.—Dallas
2012, no pet.) (citing Thompson v. Curtis, 127 S.W.3d 446, 450 (Tex. App.—Dallas 2004, no pet.).
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work that was not contemplated by the bid proposal. Because Shaulis’ conclusion was not
supported by fact, we find this portion of Shaulis’ affidavit conclusory.
Second, the contract clause upon which Denco relies only allowed Denco to charge an
additional cost for “work in addition to the [p]roposal” that had been requested by Body Bar.
Shaulis’ affidavit stated only that additional work was necessary, not that additional work was
requested by Body Bar. Further, there is no other evidence that Body Bar requested additional
work outside of the scope of the bid proposal. Thus, the clause upon which Denco relies to
support its interpretation of the contract is inapplicable.
Here, the summary judgment evidence conclusively established that all of the delay labor
cost was included in the contract price. The evidence established that (1) while Body Bar was
consistently informed about the project delays and reasons for the delay, Denco did not notify
Body Bar that it was paying laborers overtime to speed up the project and did not seek payment
for work completed by the laborers until after the project was completed; (2) Denco merely
asked Body Bar to consider the damage claim and did not represent that Body Bar was required
to pay the claim under the contract until after the lien affidavit was filed; (3) Denco excluded the
delay claim from the last invoice; (4) Shaulis affirmed that the bid included all labor, and
revealed that Denco underestimated the labor cost when she wrote, “In cost for General
Conditions we have calculated for the 34 days past the August 4, Opening Date;” (5) Denco
described its last invoice to Body Bar as the final invoice containing the “Final amount due, to
Denco for the Body Bar” project; (6) Shaulis e-mailed Bradley and expressed her “hope” that the
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delay amount was being considered; (7) Denco applied the final payment and produced
documentation demonstrating that the Body Bar account had a zero balance.
The summary judgment evidence further established that Body Bar fully paid all of the
invoices submitted by Denco in accord with the contract. Because we have determined (1) that
the cost for overtime labor was included in the contract price, (2) that the contract price was paid
in full, and (3) that no evidence shows that Body Bar otherwise agreed to pay additional sums for
the overtime labor, we find that Body Bar established its full performance under the contract as a
matter of law and that Denco failed to raise a genuine issue of material fact that Body Bar
breached the contract.
Because Denco failed to raise a genuine issue of material fact on its breach of contract
claim, the trial court’s ruling on the no-evidence motion for summary judgment was also proper.
C. Body Bar Did Not Establish Damages Resulting from Denco’s Breach
The summary judgment movant has the burden of establishing its right to summary
judgment by conclusively proving all elements of its cause of action as a matter of law. Rhone-
Poulenc, Inc. v. Steel, 997 S.W.3d 217, 223 (Tex. 1999). As our discussion in the previous
section shows, Body Bar established as a matter of law the existence of a valid contract, Body
Bar’s performance of the contract, and Denco’s breach of the contract by seeking to charge
additional amounts to which it was not entitled. However, although Body Bar established that
Denco breached its contract, it has not shown that it was damaged by that breach, an essential
element of its cause of action.
19
First, it is undisputed that Body Bar never paid Denco the additional amounts it sought.
Therefore, even though Denco may have technically breached the contract by seeking amounts to
which it was not entitled, Body Bar did not suffer damages as a result of this breach. See
Pegasus Energy Grp., Inc. v. Cheyenne Petroleum Co., 3 S.W.3d 112, 127 (Tex. App.—Corpus
Christi 1999, pet. denied).
Body Bar also alleged that it was damaged as a result of Denco’s filing of the lien
affidavits. As we have seen, the filing of the lien affidavits was wrongful and placed a cloud on
the title of the owner of the real estate. However, this did not directly injure Body Bar. Body
Bar relied on Bradley’s affidavit to establish that Body Bar incurred damages as a result of
Denco’s breach in the form of Bre Thorne’s withholding of the tenant improvement allowance or
reimbursement. The affidavit stated,
The landlord for the Premises previously notified Body Bar that it was
withholding the tenant improvement allowance due and owing to Body Bar
pursuant to the lease for the Premises due to the lien on the Premises filed by
Denco. The amount of the tenant improvement allowance that the landlord
refused to pay Body [B]ar is $25,000.00.
So, Body Bar is claiming damages related to its landlord’s withholding payment under an
unrelated contract. Clearly, these damages, if any, are only indirectly related to the wrongful
filing of the lien affidavit, but not to Denco’s breach of contract. It was only after Body Bar’s
landlord, the owner of the real estate, withheld payment because of the lien that Body Bar
suffered any damage. This damage, however, was only indirectly the result of Denco’s actions.
Further, Body Bar has not pointed to any provision in the contract that this filing
allegedly breached. Since Body Bar has not shown that Denco’s filing of the lien affidavits was
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a breach of its contract, it cannot rely on this action to support any breach of contract damages.
Therefore, since Body Bar has not established as a matter of law that Denco’s breach caused it
any damages, it was not entitled to summary judgment on its breach of contract claims.
D. Body Bar Was Not Entitled to an Award of Damages
At the summary judgment hearing, Denco argued that because Body Bar’s pleadings
indicated that Bre Thorne would pay the reimbursement in the event that the liens were removed,
an order requiring Denco to pay the $25,000.00 “would result in a double . . . resolution or a
windfall.” In response, Body Bar admitted,
Your Honor, real briefly regarding the $25,000 claim, that’s not anywhere.
There’s no evidence of that fact. There’s no personal knowledge of that fact.
The landlord has told us we’re not going to get the [$]25,000, and at this
point, a year later, we do not know whether they’re going to give it to us or not.
Certainly, we do not want a double recovery.
Because (1) Bradley’s affidavit stated that Bre Thorne was withholding the
reimbursement due to the liens, (2) the liens were properly declared invalid, and (3) the summary
judgment evidence fails to establish whether Bre Thorne will continue to refuse to pay
reimbursement once the liens are lifted, we find that Body Bar did not show entitlement to the
$25,000.00 awarded to it in the trial court’s summary judgment as a matter of law. Accordingly,
we reverse the trial court’s award of $25,000.00 to Body Bar and remand the issue of damages to
the trial court for further proceedings.
E. Tortious Interference Was Not Conclusively Established
The elements of tortious interference with contractual relations are “(1) the existence of a
contract subject to interference, (2) the act of interference was willful and intentional, (3) such
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intentional act was a proximate cause of plaintiff's damage and (4) actual damage or loss
occurred.” Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 939 (Tex. 1991); see
Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 926 (Tex. 1993).
Denco argues that Body Bar failed to introduce any evidence demonstrating that Denco
knew of relevant lease terms or that Denco willfully and intentionally interfered with the lease
agreement. We agree. See Sw. Bell Tel. Co. v. John Carlo Tex., Inc., 843 S.W.2d 470, 472 (Tex.
1992) (question is whether defendant desired to interfere with contract or believed interference
was substantially certain to result from actions). Body Bar’s lease agreement with Bre Thorne is
not included in the summary judgment record. Rather, the relevant terms of the lease are set
forth in Bradley’s affidavit, but Bradley makes no mention of whether these lease terms were
communicated to Denco. Thus, nothing in the record established willful and intentional
interference with the lease agreement. Accordingly, the trial court’s summary judgment on this
ground was improper and is reversed.
F. Denco Was Not Entitled to Equitable Relief
As a threshold issue, Denco argues that the trial court erred in resolving its claim for
quantum meruit because Body Bar’s motion for summary judgment failed to address the claim.
Under the heading “Quantum Meruit/Unjust Enrichment,” Denco pled,
Defendant provided materials and labor for the construction project the subject of
this suit. Plaintiff received a benefit, in the form of the labor and materials
provided by defendant, which improved the structures and increased the value of
this property. To date defendant has not received full payment for the labor and
materials provided on this project. Plaintiff received a benefit from defendant’s
labor and materials and it is unjust for them to retain this benefit without
providing just compensation to Defendant for their labor and materials provided.
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Defendant is entitled to restitution for the value of the benefit Plaintiff received
through Defendant’s labor and materials provided for this project.[18]
A party may recover under the unjust enrichment theory when one person has obtained a
benefit from another by fraud, duress, or the taking of an undue advantage. Heldenfels Bros.,
Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992). Denco’s pleading does not allege,
and Body Bar argued that there was no evidence demonstrating, that Body Bar benefited by
fraud, duress, or the taking of unfair advantage. Body Bar’s initial summary judgment motion,
however, did not specifically mention quantum meruit—“an equitable theory of recovery . . .
based on an implied agreement to pay for benefits received.” Id. (citing Vortt Exploration Co. v.
Chevron U.S.A., Inc., 787 S.W.2d 942, 944 (Tex. 1990)). 19 It appears that despite its third
counter-claim heading, Denco’s petition only asserted quantum meruit, whereas Body Bar’s
initial no evidence motion addressed only unjust enrichment. However, Body Bar filed a sur-
reply prior to the summary judgment hearing arguing that Denco’s “quantum meruit claims
fail[ed]” as a matter of law.
In any event, aside from certain exceptions not relevant here, a plaintiff who seeks to
recover the reasonable value of services rendered or materials supplied will be permitted to
recover in quantum meruit or unjust enrichment only when there is no express contract covering
those services or materials. Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 683–84 (Tex.
18
The trial court granted Body Bar’s no-evidence motion on “Denco’s [claim] for quantum meruit/unjust
enrichment.”
19
“To recover under the doctrine of quantum meruit, a plaintiff must establish that: 1) valuable services and/or
materials were furnished, 2) to the party sought to be charged, 3) which were accepted by the party sought to be
charged, and 4) under such circumstances as reasonably notified the recipient that the plaintiff, in performing,
expected to be paid by the recipient.” Heldenfels Bros., 832 S.W.2d at 41 (citing Vortt Exploration, 832 S.W.2d at
944).
23
2000); Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988) (citing Black Lake Pipeline v. Union
Construction Co., 538 S.W.2d 80, 86 (Tex. 1976), overruled on other grounds by Sterner v.
Marathon Oil Co., 767 S.W.2d 686 (Tex.1989); Woodard v. Sw. States, Inc., 384 S.W.2d 674,
675 (Tex. 1964)). “That is because parties should be bound by their express agreements. When
a valid agreement already addresses the matter, recovery under an equitable theory is generally
inconsistent with the express agreement.” Fortune Prod., 52 S.W.3d at 684. Thus, as is the case
here, “when a party claims that it is owed more than the payments called for under a contract,
there can be no recovery for unjust enrichment [or quantum meruit] ‘“if the same subject is
covered by [the] express contract.”’” Id. (quoting TransAm. Natural Gas Corp. v. Finkelstein,
933 S.W.2d 591, 600 (Tex. App.—San Antonio 1996, writ denied) (quoting Lone Star Steel Co.
v. Scott, 759 S.W.2d 144, 154 (Tex. App.—Texarkana 1988, writ denied))).
Because we determined that Body Bar’s contract with Denco included all sums for labor
required to complete the proposal and that the overtime workers labored on items expressly
included in the proposal, we find that Denco’s equitable claims were barred as a matter of law.
Thus, the trial court’s entry of a ruling on the no-evidence summary judgment on Denco’s quasi-
contractual claims was proper.
IV. Conclusion
We affirm the trial court’s summary judgment (1) granting Body Bar’s declaratory
judgment claim and (2) disposing of all of Denco’s claims. We reverse the portion of the trial
court’s summary judgment (1) finding that Body Bar established tortious interference as a matter
of law, (2) granting Body Bar’s breach of contract claim, and (3) awarding $25,000.00 to Body
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Bar and remand these matters to the trial court for further proceedings consistent with this
opinion.
Bailey C. Moseley
Justice
Date Submitted: August 22, 2014
Date Decided: September 26, 2014
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