Nicolas Barzoukas v. Foundation Design, Ltd and Larry Smith

Motion for Rehearing Overruled; Majority Opinion and Concurring and Dissenting
Opinion of February 2, 2012 Withdrawn; Affirmed in Part and Reversed and
Remanded in Part; Substitute Majority Opinion and Substitute Concurring and
Dissenting Opinion filed March 1, 2012.
In The
Fourteenth Court of Appeals
___________________
NO. 14-10-00505-CV
___________________
NICOLAS BARZOUKAS, Appellant
V.
FOUNDATION DESIGN, LTD. AND LARRY SMITH, Appellees
On Appeal from the 269th District Court
Harris County, Texas
Trial Court Cause No. 2007-39932
SUBSTITUTE MAJORITY OPINION
We overrule the motion for rehearing, withdraw our opinion dated February 2,
2012, and issue the following substitute opinion.
Nicolas Barzoukas sued Foundation Design, Ltd. and engineer Larry Smith for
damages in connection with alleged defects in the foundation of Barzoukas’s house. The
trial court granted a no-evidence summary judgment on all claims asserted against
Foundation Design and Smith. We affirm in part and reverse and remand in part.
BACKGROUND
Heights Development, Ltd. contracted with Barzoukas in September 2005 to build a
house for him. Barzoukas sued Heights Development, Foundation Design, Smith, and
numerous other defendants who participated in the construction of his house, contending
that it is riddled with problems. Smith is the engineer of record for the house’s foundation
design.
The plans and specifications originally called for 15-foot piers to support the
foundation. After construction began, Smith signed a letter addressed to Heights
Development changing the plans and specifications to allow for 12-foot piers —
supposedly because “hard clay stone was encountered” while drilling holes for the piers.
Barzoukas says the given justification for shallower piers was false and Smith knew or
should have known it was false. According to Barzoukas, general contractor Heights
Development used this letter to persuade the City of Houston to allow continuation of
construction after an inspector initially rejected the foundation because the piers were too
shallow. Barzoukas asserts that the city has never approved the house’s foundation.
Barzoukas’s expert engineer opines that Smith violated the professional standard of care
by approving the pier depth change.
Expert reports indicate that the piers are deficient because they are too shallow; they
are not located properly under the house; they are crooked; and they do not make proper
contact with the framing I-beams used to support the house. The estimated cost of
repairing the foundation by adding ten new piers is $25,000.
Barzoukas eventually settled with all defendants except for Foundation Design,
Smith, and another defendant who filed for bankruptcy. As to Foundation Design and
Smith, Barzoukas asserted claims for negligence, negligent misrepresentation, fraud,
2
fraudulent inducement, conspiracy, and exemplary damages in connection with the
foundation.
Foundation Design and Smith filed a no-evidence motion for summary judgment on
all claims asserted against them. The trial court granted the motion without specifying the
basis for its ruling. The court later granted Barzoukas’s motion to sever his claims against
Foundation Design and Smith. Barzoukas now appeals and contends that summary
judgment is not warranted.
STANDARD OF REVIEW
In a no-evidence motion for summary judgment, the movant must specifically
identify the elements for which there is no evidence. Walker v. Thomasson Lumber Co.,
203 S.W.3d 470, 473–74 (Tex. App.—Houston [14th Dist.] 2006, no pet.). The trial court
must grant the motion unless the respondent presents evidence raising a genuine issue of
material fact. Tex. R. Civ. P. 166a(i). However, the respondent is “‘not required to
marshal its proof; its response need only point out evidence that raises a fact issue on the
challenged elements.’” Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008) (quoting
Tex. R. Civ. P. 166a(i) cmt. (1997)).
We review a summary judgment de novo and must take as true all evidence
favorable to the nonmovant and draw every reasonable inference and resolve all doubts in
favor of the nonmovant. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005); Mendoza v. Fiesta Mart, Inc., 276 S.W.3d 653, 655 (Tex. App.—Houston [14th
Dist.] 2008, pet. denied). When a trial court does not specify the grounds for granting
summary judgment, we must affirm the judgment if any summary judgment ground is
meritorious. See Star–Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995).
3
ANALYSIS
In a single issue, Barzoukas contends that the trial court erred by granting summary
judgment in favor of Foundation Design and Smith.
The parties’ appellate briefing focuses primarily on whether Barzoukas’s
negligence and negligent misrepresentation claims are foreclosed under the economic loss
rule. In addition to their reliance on the economic loss rule as a bar to recovery,
Foundation Design and Smith contend that summary judgment is warranted because
Barzoukas failed to proffer competent evidence establishing that their conduct proximately
caused damages. Foundation Design and Smith also contend that Smith’s letter does not
give rise to viable claims for fraud and fraudulent inducement. We address these
contentions in turn.1
I. Economic Loss Rule
A. Overview
Applying the economic loss rule in this case presents two challenges.
The first challenge arises because the economic loss rule’s legal boundaries are not
entirely settled.
The second challenge arises because the relevant summary judgment pleadings in
this record include neither (1) the contract between homeowner Barzoukas and general
1
Barzoukas does not challenge the portion of the trial court’s judgment pertaining
to his claims for conspiracy and exemplary damages. Thus, we affirm the judgment to the
extent it pertains to those claims.
4
contractor Heights Development; nor (2) the purported subcontract between Heights
Development and engineer Smith — or, possibly, between Heights Development and
Foundation Design or some other entity related in some way to Smith. A portion of what
appears to be the Barzoukas-Heights Development contract appears elsewhere in the
record.2 But even if we were to consider evidence outside of the summary judgment
pleadings related to Foundation Design and Smith, little is gained because this portion of
the contract is incomplete. The purported subcontract is entirely missing. These gaps
make it more difficult to evaluate application of the economic loss rule.
The difficulty is compounded by an awkward procedural posture. This case
presents as an appeal from an order granting a no-evidence motion for summary judgment.
Texas Rule of Civil Procedure 166a(i) authorizes summary judgment when “there is no
evidence of one or more essential elements of a claim or defense on which an adverse party
would have the burden of proof at trial.” Tex. R. Civ. P. 166a(i). Such a motion “must
state the elements as to which there is no evidence” and the trial court must grant the
motion “unless the respondent produces summary judgment evidence raising a genuine
issue of material fact.” Id.
2
A portion of a “New Home Contract” identifying Heights Development as the
“Seller” and Barzoukas as the “Buyer” was attached to Plaintiff’s Response to Heights
Defendants’ Motion for Summary Judgment as to the Measure of Damages. This is
identified as a form contract “Promulgated By The Texas Real Estate Commission” and
bears the name “Karen Derr & Associates Realty” across the top. This copy is not signed
by Barzoukas or a representative of Heights Development, although it appears to have
Barzoukas’s initials at the bottom of pages one through seven. Paragraph 7.B. of this
document is entitled “Construction Documents” and states: “Seller shall complete all
improvements to the Property with due diligence in accordance with the Construction
Documents.” In turn, the “Construction Documents” are defined to include plans,
specifications, and change orders; the document recites that the “Construction Documents
have been signed by the parties and are incorporated into this contract by reference.” The
“Construction Documents” themselves do not appear in the record.
5
Significant hammering and bending is required to fit the appellate argument of
Foundation Design and Smith — which invokes the economic loss rule in asserting that “as
a matter of law no cause of action for negligence or negligent representation runs in favor
of appellant with respect to appellees as subcontractors” — within Rule 166a(i).
Determining whether “the moving party is entitled to judgment as a matter of law on the
issues expressly set out in the motion” is an inquiry under Rule 166a(c)’s traditional
summary judgment standard, with its attendant burdens on the movant. See Tex. R. Civ.
P. 166a(c); see also KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d
746, 748 (Tex. 1999).
Proper placement of the summary judgment burden helps to determine how gaps in
evidence regarding the Barzoukas-Heights Development contract and the purported
subcontract affect the analysis on appeal. But no argument regarding the operative
summary judgment standard has been raised in the trial court or on appeal. Therefore,
despite an imperfect fit between the arguments on appeal and the summary judgment
mechanism the appellees invoked in the trial court, the economic loss rule’s applicability in
this case must be analyzed in “no evidence” terms under Rule 166a(i).
Although areas of uncertainty exist under case law addressing the economic loss
rule in Texas, at least one thing is clear: Details matter.
It matters who contracted with whom to do what. It matters what the contracts say;
what they cover; and what they do not cover. It matters what kind of damages are
requested. It matters whether the requested damages are attributed to activities covered
by the contracts. It matters whether and how multiple parties in a chain of contracts
allocated among themselves the risk that participants in the chain would perform
deficiently, along with the obligation to pay for deficient performance. It matters what
kinds of claims are asserted and against whom they are asserted.
6
The details are largely missing here. The parties agree that a contract existed
between Barzoukas and Heights Development regarding the construction of Barzoukas’s
house. They agree that a subcontract existed in relation to the house’s foundation. They
also agree that Heights Development was a party to the purported subcontract, and
Barzoukas was not. Much of the rest is guesswork.
This is the backdrop against which we must analyze the economic loss rule’s
potential applicability when Barzoukas attempts to sue an engineer for professional
negligence and negligent misrepresentation in connection with foundation problems in the
house Heights Development contracted to build for him. Barzoukas does not contend that
the original plans and specifications calling for 15-foot piers are deficient. Instead, his
claims rest on a letter signed by Smith after construction was underway; this letter is
characterized as “an addendum to the plans and specifications” by which Smith approved
reducing the foundation’s pier depth from 15 feet to 12 feet.
Determining whether the economic loss rule applies here to foreclose Barzoukas’s
negligence and negligent misrepresentation claims against Foundation Design and Smith
involves a two-step analysis focusing on (1) identifying the governing legal standards, and
(2) applying those standards to the record in this case. We now turn to this analysis.
B. Legal Standards Governing the Economic Loss Rule in Texas
The Texas Supreme Court’s most recent discussion of the economic loss rule
appears in Sharyland Water Supply Corp. v. City of Alton, No. 09-0223, 2011 WL 5042023
(Tex. Oct. 21, 2011).
In broad terms, this doctrine addresses efforts to use negligence and product liability
claims as vehicles for recovery of economic losses. See id. at *5-*7. Sharyland
7
emphasizes that shorthand references to “the” economic loss rule in the singular can be
“something of a misnomer” because this term actually encompasses multiple concepts
addressing efforts to recover particular economic losses in particular situations. Id. at *5.
Sharyland goes on to describe the circumstances under which application of the
economic loss rule is settled under Texas law, and those under which it is unsettled. Id. at
*6-*9.
• The economic loss rule forecloses strict liability claims based on a defective
product that damages only itself but not other property. Id. at *6 (citing Signal
Oil & Gas Co. v. Universal Oil Prods., 572 S.W.2d 320, 325-26 (Tex. 1978);
Mid Continent Aircraft Corp. v. Curry Cnty. Spraying Serv., Inc., 572 S.W.2d
308, 312-13 (Tex. 1978); and Nobility Homes of Tex., Inc. v. Shivers, 557
S.W.2d 77, 81-2 (Tex. 1977)).
• The economic loss rule also forecloses a negligence claim predicated on a duty
created under a contract to which the plaintiff is a party when tort damages are
sought for an injury consisting only of economic loss to the subject of the
contract. Sharyland, 2011 WL 5042023 at *7 (citing Sw. Bell Tel. Co. v.
DeLanney, 809 S.W.2d 493, 495 (Tex. 1991); and Jim Walter Homes, Inc. v.
Reed, 711 S.W.2d 617, 618 (Tex. 1986)).
• In these two contexts, economic losses are more appropriately addressed
through statutory warranty actions or common law breach of contract suits
instead of tort claims. Sharyland, 2011 WL 5042023 at *7.
• “We . . . declined to extend DeLanney to a fraudulent inducement claim, even
when the claimant suffered only economic losses to the subject of a contract.”
8
Id. (citing Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc.,
960 S.W.2d 41, 46 (Tex. 1998)).
• The economic loss rule “‘applies when losses from an occurrence arise from
failure of a product and the damage or loss is limited to the product itself.’”
Sharyland, 2011 WL 5042023 at *7 (quoting Equistar Chems., L.P. v.
Dresser-Rand Co., 240 S.W.3d 864, 867 (Tex. 2007)).
• The economic loss rule applies in some circumstances involving parties who are
not in privity — such as those involving a remote manufacturer and a consumer
in the defective product context. Sharyland, 2011 WL 5042023 at *7.
• “[W]e have never held that [the economic loss rule] . . . precludes recovery
completely between contractual strangers in a case not involving a defective
product . . . .” Id.
• The supreme court rejects a formulation of the economic loss rule that “says you
can never recover economic damages for a tort claim.” Id. at *8.
• The economic loss rule is not a general rule of tort law; instead, it is a rule in
negligence and strict product liability cases. Id.
• Merely because the object of the negligent performance “was the subject of a
contract does not mean that a contractual stranger is necessarily barred from
suing a contracting party for breach of an independent duty.” Id. “If that were
the case, a party could avoid tort liability to the world simply by entering into a
contract with one party.” Id.
9
• “The economic loss rule does not swallow all claims between contractual and
commercial strangers.” Id.
• The supreme court has not yet decided “whether purely economic losses may
ever be recovered in negligence or strict liability cases.” Id.
Based on these precepts, the supreme court rejected reliance on the economic loss rule to
foreclose Sharyland’s claim against a plumbing contractor alleged to have damaged
Sharyland’s water system by negligently installing an adjacent sewer system under a
separate contract to which Sharyland was not a party. Id. at *9.
Neither Sharyland’s Water Supply Agreement with the city nor the city’s separate
contract with a plumbing contractor defeated Sharyland’s negligence claim against the
plumbing contractor. Sharyland asserted this negligence claim against the contractor
seeking to recover the cost of relocating or encasing its water lines to prevent
contamination from the improperly installed sewer lines. Id. Based in part on the
existence of these damages, the supreme court concluded as follows: “We disagree that
the economic loss rule bars Sharyland’s recovery in this case.” Id.
In so holding, the supreme court disclaimed any intent to address circumstances in
construction cases involving “parties in a contractual chain who have had the opportunity
to allocate risk, unlike the situation faced by Sharyland.” Id. “While it is impossible to
analyze all the situations in which an economic loss rule may apply, it does not govern
here.” Id. “The rule cannot apply to parties without even remote contractual privity,
merely because one of those parties had a construction contract with a third party, and
when the contracting party causes a loss unrelated to its contract.” Id.
10
With the partial guidance provided in Sharyland, this court must determine whether
to accept Foundation Design’s and Smith’s invitation and hold that the economic loss rule
forecloses Barzoukas’s negligence and negligent misrepresentation claims predicated on
the letter signed by Smith.
C. Applying the Economic Loss Rule
Foundation Design and Smith assert that “economic losses alleged by homeowners
falling within the subject matter of their contract with the homebuilder preclude tort
claims, including negligence and negligent misrepresentation, against subcontractors
under the economic loss doctrine.” They rely heavily on Pugh v. Gen. Terrazzo Supplies,
Inc., 243 S.W.3d 84 (Tex. App.—Houston [1st Dist.] 2007, pet. denied), to support this
proposition.
Foundation Design and Smith also contend that Barzoukas’s negligence and
negligent misrepresentation claims involve parties in a contractual chain who already have
allocated the risk of deficient performance. They assert that applying the economic loss
rule here is necessary to preserve the agreed-upon risk allocations among the parties who
built Barzoukas’s house.
The arguments proffered by Foundation Design and Smith fail for two reasons.
First, Foundation Design and Smith misplace their reliance on Pugh. That case
addressed claims for negligence, strict liability, and breach of implied warranties brought
by homeowners against General Terrazzo, the manufacturer of an “exterior insulated
finishing system” used in constructing their house. Pugh, 243 S.W.3d at 86-7. The
homeowners alleged that General Terrazzo’s exterior finishing product was defective
because it allowed moisture penetration that damaged the house’s frame and interior. Id.
11
Pugh addressed only claims asserted against the product manufacturer. The
homeowners dismissed their claims against the masonry subcontractor who applied the
exterior finish manufactured by General Terrazzo. Id. at 87 n.2. They obtained a default
judgment against the general contractor. Id. Neither the general contractor nor the
masonry subcontractor was a party to the appeal. Id.
As this procedural history makes clear, Pugh applied existing economic loss rule
principles governing negligence and strict liability claims by consumers against the remote
manufacturer of a defective product. Id. at 90-95; see also Sharyland Water Supply
Corp., 2011 WL 5042023 at *6-*7. Pugh did not analyze the viability of claims asserted
against a general contractor or a subcontractor. Pugh, 243 S.W.3d at 87 n.2 & 90-95.
Pugh concluded that the economic loss rule foreclosed the homeowners’ negligence and
strict liability claims against product manufacturer General Terrazzo — even in the
absence of privity between them — because “there was no personal injury or damage to
other property that would have permitted the Pughs to assert a tort claim that would be
excepted from the economic loss doctrine.” Id. at 94 (citing Am. Eagle Ins. Co. v. United
Techs. Corp., 48 F.3d 142, 145 (5th Cir. 1995), Hininger v. Case Corp., 23 F.3d 124, 127
(5th Cir. 1994), and Murray v. Ford Motor Co., 97 S.W.3d 888, 891 (Tex. App.—Dallas
2003, no pet.)).
In contrast to Pugh, Barzoukas does not aim his negligence and negligent
misrepresentation claims at the remote manufacturer of an allegedly defective product.
Barzoukas’s claims involve Smith’s asserted professional negligence in connection with
approval of foundation piers that are shorter than the depth called for by the original plans
and specifications. Thus, we must address a different question that was left open in
Sharyland by addressing whether — in the particular home construction circumstances
presented here — the economic loss rule “precludes recovery completely between
12
contractual strangers in a case not involving a defective product . . . .” See Sharyland
Water Supply Corp., 2011 WL 5042023 at *6-7. Pugh does not answer this question.
Second, Foundation Design’s and Smith’s arguments fail because they rely on
unwarranted assumptions. Foundation Design and Smith assume the existence of (1) a
contractual chain that begins with Barzoukas and ends with Smith; and (2) risk allocations
within this chain that need protection from the disruptive effects of a freestanding
negligence claim by the homeowner against a subcontractor. Neither assumption is
warranted on this record.
The first assumption is unwarranted because it is not clear who contracted with
whom to do what. Heights Development contracted to build a house for Barzoukas.
Smith is portrayed as a subcontractor, but his exact role is not clear on this record.
The most detailed evidence concerning Smith’s role comes from the Affidavit of
Kirby Meyer, P.E., who states: “Larry F. Smith, a Professional Engineer, State of Texas
License #43095 is the engineer of record for the design of the foundation of this structure.”
The affidavit also states: “It’s my understanding that Larry Smith may have done such
work individually or under different entities.” Plaintiff’s Seventh Amended Petition filed
on April 15, 2010 lists the following as defendants: Foundation Design, LTD d/b/a Larry
Smith Engineering; Larry Smith Engineering a/k/a Larry Smith, PC, a Texas professional
corporation; Larry Smith, PC, a Texas professional corporation; and Larry Smith
individually. The letter itself is typed on letterhead reading “Larry Smith Engineering”
and is signed by Larry F. Smith above a signature block that reads, “Larry F. Smith, P.E.
Registered Professional Engineer.” The letter does not reference “Foundation Design,
Ltd.”
13
This evidence falls short of establishing that Barzoukas’s claims against Foundation
Design and Smith are foreclosed “as a matter of law” because those claims are subsumed
by a contractual chain in which the risk of Smith’s deficient performance already has been
addressed. We do not know from the four corners of the summary judgment pleadings
how the Heights Development-Barzoukas contract addressed changes to plans and
specifications once construction had begun. The existence, terms and scope of any
subcontract involving the foundation design are unresolved on this record. So too is the
identity of the parties to the purported subcontract. Also unresolved is whether the
asserted subcontract encompasses Smith’s post-design conduct in approving a change in
pier depth after construction was underway.
The second assumption is unwarranted as well. Perhaps Smith or an entity related
to him agreed to indemnify Heights Development for damages arising from Smith’s
negligent performance of foundation-related engineering activities. Perhaps not.
Perhaps other risk allocation mechanisms exist. Perhaps not. At this juncture, any
discussion of risk allocation among entities involved in the construction of Barzoukas’s
house is speculation based on a threadbare record.
Mindful that this case comes to us as an appeal from an order granting a no-evidence
summary judgment under Rule 166a(i), we conclude that reversal is warranted because
Meyer’s affidavit and Smith’s letter raise material fact issues with respect to the
mechanism for and effect of design changes during construction under the Heights
Development-Barzoukas contract; the identities of the parties to any subcontract
concerning the foundation; the scope of work to be performed under such a subcontract;
whether the piers are 12 feet deep; whether Smith’s approval of changing the pier depth
from 15 feet to 12 feet was within the scope of any subcontract concerning the foundation;
and whether changing the pier depth caused a loss unrelated to a subcontract covering
14
foundation plans and specifications. See Sharyland Water Supply Corp., 2011 WL
5042023 at *9 (“The [economic loss] rule cannot apply to parties without even remote
contractual privity, merely because one of those parties had a construction contract with a
third party, and when the contracting party causes a loss unrelated to its contract.”); see
also Goose Creek Consol. Indep. Sch. Dist. v. Jarrar’s Plumbing, Inc., 74 S.W.3d 486, 495
(Tex. App.—Texarkana 2002, pet. denied) (“[T]he injury Goose Creek alleged, the
invasion of sewage and sewer gas into the school buildings, constitutes an injury to
property that was not the subject matter of the contract, that portion of the contract Goose
Creek had with Lewis for which Lewis contracted with Jarrar’s Plumbing, namely the
plumbing.”); Thomson v. Espey Huston & Assocs., Inc., 899 S.W.2d 415, 421-22 (Tex.
App.—Austin 1995, no writ) (“In contrast, Espey’s alleged negligence in performing the
Scope of Services Contract may give rise to a tort cause of action. Thomson alleges that
Espey’s negligence in designing the drainage system and testing soil quality has caused
damage to other parts of the apartment complex.”).
Pointing to the existence of a contract between Heights Development and
Barzoukas, or to the existence of a subcontract, is the beginning of the analysis — not the
end.
Sharyland demonstrates that the mere presence of contracts in the general vicinity
of a construction dispute does not justify indiscriminate invocation of the economic loss
rule. See Sharyland Water Supply Corp., 2011 WL 5042023 at *8-*9. The economic
loss rule’s reach depends on specific circumstances. See id. These circumstances may
include risk allocations in a chain of contracts that affect whether negligence claims
seeking particular damages against particular parties are viable in connection with a
construction dispute in particular circumstances. See id. at *9. No such allocations have
been identified here.
15
On this record, Foundation Design and Smith cannot obtain summary judgment on
grounds that the economic loss rule forecloses Barzoukas’s negligence and negligent
misrepresentation claims against them “as a matter of law.”
II. Causation and Damages
As alternative grounds for affirmance, Foundation Design and Smith argue that
summary judgment on negligence and negligent misrepresentation is warranted because
Barzoukas failed to proffer competent evidence establishing causation and damages in
connection with the foundation.
Foundation Design and Smith contend on appeal that Barzoukas failed to proffer
competent evidence because (1) the report of his damages expert Richard Roy was not
properly authenticated; (2) Roy relies in part on another report, which also is not
authenticated; (3) Barzoukas failed to supplement his responses to another defendant’s
requests for disclosures under Texas Rule of Civil Procedure 194 to identify the amount
and method of calculating economic damages; (4) Roy’s opinion is unreliable because his
qualifications to proffer expert damages testimony are not established as required under
Texas Rule of Evidence 702; and (5) Roy’s $25,000 estimate for repairing the foundation is
conclusory because he fails to allocate that amount among repairs required to address the
short piers referenced in Smith’s letter and other foundation problems that are not
attributed to Smith.
Foundation Design and Smith objected to Barzoukas’s evidence on these grounds in
the trial court. These objections are contained in “Defendants Foundation Design, Ltd.
d/b/a Larry Smith Engineering and Larry Smith’s Reply to Plaintiff’s Response to
Defendants’ No Evidence Motion for Summary Judgment” filed on May 4, 2010. The
16
record contains no indication that the trial court ruled on these objections. The summary
judgment order itself does not address evidentiary objections.
We do not presume that an order granting summary judgment also overrules
objections to summary judgment evidence. Seidner v. Citibank (S.D.) N.A., 201 S.W.3d
332, 335 n.2 (Tex. App.—Houston [14th Dist.] 2006, pet. denied). The absence of a
ruling on objections (1) and (2) regarding authentication forecloses consideration of those
challenges on appeal. Commint Technical Servs., Inc. v. Quickel, 314 S.W.3d 646, 651
(Tex. App.—Houston [14th Dist.] 2010, no pet.) (absence of ruling on objection to form
challenging propriety of authentication forecloses consideration on appeal) (citing
Hou-Tex, Inc. v. Landmark Graphics, 26 S.W.3d 103, 112 (Tex. App.—Houston [14th
Dist.] 2000, no pet.)). Even assuming for argument’s sake that Foundation Design and
Smith validly can invoke Barzoukas’s asserted failure to answer another defendant’s
discovery inquiry as a basis for objecting, the absence of a ruling likewise forecloses
consideration of objection (3). An express ruling also is required on objections that an
expert opinion is unreliable. See Pink v. Goodyear Tire & Rubber Co., 324 S.W.3d 290,
301 (Tex. App.—Beaumont 2010, pet. dism’d).3
3
Appellees contend on rehearing that this holding with respect to objections to the
reliability of an expert opinion conflicts with Praytor v. Ford Motor Co., 97 S.W.3d 237,
242 (Tex. App.—Houston [14th Dist.] 2002, no pet.). We disagree because the
circumstances in Praytor are distinguishable. The trial court granted summary judgment
after Ford filed a no-evidence motion for summary judgment on grounds that Praytor
lacked evidence of a causal link between her respiratory problems and the deployment of
an air bag in her car during an accident. Id. at 240. Praytor responded by attaching
affidavits from two experts. Id. Ford objected to the affidavits under Texas Rule of
Evidence 702. The trial court granted summary judgment in favor of Ford and expressly
stated, “Plaintiff has not produced legally competent evidence regarding causation, an
essential element of her case.” Id. This court stated as follows on appeal: “The trial
court, in holding that Praytor had failed to present ‘legally competent evidence,’
effectively concluded that the expert testimony was either inadmissible or insufficient.”
17
In contrast to the circumstances listed above, an objection that expert testimony is
too conclusory to support or defeat summary judgment is not waived by the failure to
obtain a ruling in the trial court. Gen. Star Indem. Co. v. Gulf Coast Marine Assocs., Inc.,
252 S.W.3d 450, 457 n.6 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (citing
Wadewitz v. Montgomery, 951 S.W.2d 464, 466 (Tex. 1997)). “An expert opinion is
considered conclusory if it is essentially a ‘conclusion without any explanation.’” Pink,
324 S.W.3d at 296-97 (quoting Arkoma Basin Exploration Co. v. FMF Assocs. 1990-A,
Ltd., 249 S.W.3d, 389 (Tex. 2008)).
Roy’s report states that “[t]he damages in this case are primarily based upon the
complaints made in the Givens Report dated April 20, 2007 and the construction defects
that have been identified in the case records.” The Givens Report states that “the off grade
concrete pier and wood beams foundation is found to have experienced differential
movement of concern as evident by the significant unevenness in the floor elevation.” It
also states that “[a] number of the concrete piers are tilted out of plumb to an excess
amount.” The Givens Report further states that “[t]ilting of foundation support piers can
be caused by a number of conditions” including “inadequate consideration for the design of
the piers . . . .”
Roy goes on to state as follows in his report:
Id. at 242. The circumstances here are distinguishable from Praytor because the summary
judgment order at issue in this case contains no comparable statement expressly addressing
the competency of expert evidence proffered to establish causation. The trial court’s
order in this case recites as follows: “After considering the moving and opposition
papers, arguments of counsel, and all other matter presented to the Court, the Court is of
the opinion that Defendant’s Motion is MERITORIOUS and should, in all things, be
GRANTED.” In contrast to the express language at issue in Praytor, this recitation
cannot be construed as an effective holding that the proffered expert testimony “was either
inadmissible or insufficient.” See id.
18
The foundation suffers from several factors. The first is the fact that several
of the drilled piers are not intal[l]ed vertical as designed. Also the piers
were drilled 12 feet deep instead of the 15 feet required by the design.
Finally the framing I-beams placed above the drilled piers do not make
proper contact with all of the piers because some of the piers are not located
where they were designed to be.
I have estimated what it would cost to repair the foundation problems, if in
fact the foundation can ever be brought up to its designed capacity. The
repair would require the placement of approximately 10 new piers and the
added frame work to connect the new piers to the existing foundation. I
estimate that this work could be done for about $25,000.00
We reject Foundation Design’s and Smith’s contention that Roy’s expert damage evidence
is conclusory with respect to necessary foundation repairs. Roy’s estimate adequately
links the stated cost to the installation of additional piers to address differential movement
attributed to interrelated foundation problems.
III. Fraud and Fraudulent Inducement
Barzoukas contends that the trial court erred by granting summary judgment on his
fraud and fraudulent-inducement claims because he presented evidence raising a fact issue
on each element of these claims.
When pursuing claims for fraud and fraudulent inducement, a plaintiff must
establish that the defendant made a material misrepresentation. See Amouri v. Sw. Toyota,
Inc., 20 S.W.3d 165, 168 (Tex. App.—Texarkana 2000, pet. denied). Barzoukas’s fraud
claims are based on the allegation that, in a letter addressed to Heights Development, Smith
misrepresented that hard clay stone impeded the piers from being set at the required
15-foot depth and intended for Barzoukas and the City of Houston to rely upon this
misrepresentation.
The letter, which was addressed only to Heights Development, contains the
following statements:
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At your request, an engineer from our firm has reviewed the information
provided regarding the pier drilling operations at the above referenced
residence. A representative of your firm notified us that during the drilling
operations, clay was encountered. The foundation design (see LSE Job
Number 2005-1038) specifies the piers to be 12” in diameter, to extend 15
feet below grade and to be reinforced with one #5 bar. We were notified
that hard clay stone was encountered at approximately 12’-0”. Due to the
presence of hard clay stone, the pier depth shallowed to 12’-0” with the
reinforcement remaining at one #5 bar. This letter is to serve as an
addendum to the plans and specifications with the changes noted above. If
any pier holes cave, due to the presence of the clay, our office should be
contacted for further recommendation.
We trust this is the information, which you require. If you have any
questions regarding this, please feel free to contact us.
Barzoukas argues that Smith, as the foundation engineer for the project, was presenting the
information in the letter as fact because he was authorizing a material reduction in pier
depth. Barzoukas also contends that the letter was used by Heights Development to
obtain city approval for the pier reduction.
Regardless of whether Smith intended that this letter would be submitted to the city,
nothing in the letter supports an inference that Smith represented hard clay stone was
discovered at twelve feet. Smith merely acknowledged that Heights Development made
such a representation, and Smith approved a shallower pier depth based on this
information. Barzoukas did not present evidence supporting an inference that Smith or
Foundation Design made a purposeful misrepresentation. Accordingly, the trial court did
not err by granting summary judgment in favor of Smith and Foundation Design on
Barzoukas’s fraud and fraudulent inducement claims. We overrule the portion of
Barzoukas’s sole issue as it pertains to his claims for fraud and fraudulent inducement.
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CONCLUSION
We affirm the trial court’s summary judgment with respect to fraud, fraudulent
inducement, conspiracy, and exemplary damages. We reverse the trial court’s summary
judgment with respect to negligence and negligent misrepresentation, and remand for
proceedings consistent with this opinion.
/s/ William J. Boyce
Justice
Panel consists of Chief Justice Hedges and Justices Seymore and Boyce. (Seymore, J.
concurring and dissenting).
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