Guniganti v. C & S Components Co.

• Decision Date: 19 May 2015
• Docket Number: NO. 14–14–00224–CV,14–14–00224–CV
• Citation: 467 S.W.3d 661
• Parties: Prabhakar Guniganti, Individually, the Guniganti Children's 1999 Trust, and Triple PG Sand Development, LLC, Appellants v. C & S Components Company, Ltd., Appellee
• Court: Texas Court of Appeals

467 S.W.3d 661

Prabhakar Guniganti, Individually, the Guniganti Children's 1999 Trust, and Triple PG Sand Development, LLC, Appellants

v.C & S Components Company, Ltd., Appellee

NO. 14–14–00224–CV

Court of Appeals of Texas, Houston (14th Dist.).

Opinion filed May 19, 2015

Rehearing En Banc Overruled August 13, 2015

JoAnn Storey, Houston, TX, for appellant.

Dylan Benjamen Russell, Houston, TX, for appellee.

Panel consists of Chief Justice Frost and Justices Jamison and Busby.

OPINION

Martha Hill Jamison, Justice

This lawsuit stems from the sale of sand processing plant components by appellee C & S Components Company, Ltd. to appellant Triple PG Sand Development, LLC. The plant was constructed on property owned by appellant The Guniganti Children's 1999 Trust. Appellant Prabhakar Guniganti created the 1999 Trust and founded and owns Triple PG. C & S sued Triple PG and Guniganti for, among other things, breach of contract for failing to pay the total due on the components. C & S also obtained a mechanic's lien against the property owned by the 1999 Trust. Appellants counterclaimed for, among other things, negligent misrepresentation and filing of a fraudulent lien. Before the case was submitted to the jury, the trial court determined as a matter of law that the parties entered into a modification of the original sales contract and that Triple PG and Guniganti breached the agreement as so modified. The jury then found damages for the breach of contract of $312,345.78, found C & S did not make negligent misrepresentations or file a fraudulent lien, and found the reasonable and necessary amount of attorney's fees for C & S. The trial court rendered judgment favoring C & S, including damages and attorney's fees as found by the jury, but did not provide for either foreclosure or discharge of the lien.

In four issues, appellants contend that (1) the trial court erred in determining as a matter of law that the parties entered into a modification of the original sales contract; (2) the trial court erred in failing to state in the judgment that C & S was not entitled to a lien; (3) the jury's failure to find that the lien was fraudulent was against the great weight and preponderance of the evidence; and (4) in the event the judgment for breach of contract is reversed, the award of attorney's fees to C & S should also be reversed. We modify the judgment in response to appellants' second issue and affirm the judgment as so modified.

I. Background

Guniganti and his wife created the 1999 Trust, transferred a 495–acre parcel of land to the trust, and named Day a Puskoor, Guniganti's brother-in-law, as trustee. Hallett Materials operated a sand processing plant on the property for around ten years. When the contract between Hallett and the trust expired in 2010, Guniganti and Puskoor agreed that they did not need to bring in a third-party to run a sand processing plant on the property. Guniganti founded Triple PG in February 2011 for the purpose of constructing and running a new sand plant. C & S, owned by Danny Kautz and his wife, sells components for sand processing plants. When an employee of Triple PG, Mark Burnett, requested a quote from C & S for sand plant components, Kautz responded with a detailed proposal on June 1, 2011. Although no formal contract was ever signed by the parties, it is undisputed that the June 1 proposal, admitted into evidence as Plaintiff's Exhibit 1, became the original contract between C & S, Triple PG, and Guniganti. The total contract price stated in the proposal was $1,217,959.¹

C & S received the first payment of $365,387.70 on June 8, 2011 and within a few weeks began delivering components. C & S received a second payment in the same amount on August 4, 2011 and delivered the majority of the ordered components by November 2011. The components were manufactured by Classifying Flotation Systems (CFS) and a local fabricator. In mid-September 2011, Burnett notified Kautz of problems with welding work on some of the components. On February 21, 2012, Kautz, Burnett, Guniganti, and two manufacturer representatives met to discuss the issues with the components. Guniganti's daughter, Prathima Guniganti, who owned her own consulting firm and had been managing the payroll and billing for Triple PG, also attended the meeting. Kautz and the Gunigantis thereafter exchanged emails concerning credits to be given for some of the components.

On February 28, Kautz sent an email to Prathima, stating “[s]ee the attached, I think this is what you are looking for. If you need anything else, please call.” Prathima responded a day later and copied Guniganti and his wife, stating to Kautz, “Thank you for making the revisions to the invoice to reflect the adjustments from our discussion. I have included Dr[.] and Mrs [.] Guniganti so they have the correct invoice for their records and payment.” Attached to the emails was a C & S invoice showing a total contract price of $1,061,572 (a reduction from the original price of $1,217,959) and a balance due of $294,530.74. An additional invoice attached to the emails shows freight charges of $30,068.04 for a total balance due of $324,598.78. The email string and attached invoices were admitted into evidence as Plaintiff's Exhibit 21.

At trial, Kautz testified that additional credits should be applied against the invoice amount, leaving a final balance due of $312,345.78, the exact figure awarded by the jury. Kautz thereafter sent a series of emails requesting payment, but when the requests went unanswered, C & S filed the present lawsuit as well as the mechanic's lien against the 1999 Trust's property. Appellants thereafter filed their counterclaims, and after certain causes of action were dismissed in summary judgment proceedings, the case proceeded to a jury trial principally on allegations that Triple PG and Guniganti breached the contract and C & S made negligent misrepresentations and filed a fraudulent lien.

As mentioned above, before submitting the case to the jury, the trial court determined as a matter of law that the email string and attached invoices admitted as Exhibit 21 constituted a modification of the parties' original sales contract and that Triple PG and Guniganti breached the agreement as modified. The jury then found damages for the breach of contract of $312,345.78, found C & S did not make negligent misrepresentations or file a fraudulent hen, and found the reasonable and necessary amount of attorney's fees for C & S. Relative to the validity of the lien, the jury also answered “no” to inquiries regarding whether Triple PG or Guniganti effectively controlled the 1999 Tmst. The trial court rendered judgment awarding C & S $312,345.78 plus attorney's fees but did not provide for foreclosure or discharge of the hen. The judgment also contains a Mother Hubbard clause ordering that “[a]ll relief not expressly granted herein be, and the same is, denied to the party seeking same.”

II. Modification of Contract

In their first issue, appellants contend that the trial court erred in determining as a matter of law that the parties entered into a modification of the original sales contract. The parties agree that as a sale of goods, the transaction was governed by the Texas Uniform Commercial Code (UCC). Tex. Bus. & Com.Code §§ 2.101 –725; Howard Indus., Inc. v. Crown Cork & Seal Co., LLC, 403 S.W.3d 347, 349 (Tex. App.–Houston [1st Dist.] 2013, no pet.). UCC section 2.209 governs modification of contracts that fall within the chapter. Tex. Bus. & Com.Code § 2.209. Appellants focus their arguments on subsection 2.209(c), which provides that “[t]he requirements of the statute of frauds section of this chapter (Section 2.201) must be satisfied if the contract as modified is within its provisions.” Appellants specifically assert that the alleged modification, Exhibit 21, did not meet the requirements of the UCC statute of frauds, section 2.201, including any of the exceptions to its requirements contained therein. According to appellants, the trial court erred in withdrawing the modification question from the jury because a question of fact remains.

Under most circumstances, in order to obtain reversal on appeal, an appellant must establish that it preserved its complaint by making it in the trial court, error in fact occurred, and such error probably caused the rendition of an improper judgment or probably prevented the appellant from properly presenting the case to the court of appeals. See Tex.R.App. P. 33.1(a) (requiring preservation), 44.1(a) (prohibiting reversal in the absence of harm). As to appellants' statute of frauds argument, C & S contends (1) appellants failed to preserve the issue below, (2) the court's determination was correct that modification was established as a matter of law, and (3) even if the court's ruling was in error, appellants have not demonstrated that they were harmed by the ruling. Without stating a position on the first two contentions, we turn to the question of whether appellants have demonstrated the court's ruling probably caused the rendition of an improper judgment or probably prevented the appellant from properly presenting the case on appeal. See Tex.R.App. P. 44.1(a).

The harmless error rule applies to all errors. G & H Towing Co. v. Magee, 347 S.W.3d 293, 297 (Tex.2011) (citing Lorusso v. Members Mut. Ins. Co., 603 S.W.2d 818, 819–20 (Tex.1980) ). “The rule recognizes that a litigant is not entitled to a perfect trial for, indeed, few trials are perfect.”Lorusso, 603 S.W.2d at 819. Thus, the rule “establishes a sound and common sense policy of not reversing a judgment unless the error or errors can be said to have contributed in a substantial way to bring about the adverse judgment.” Id. at 819–20. It is the complaining party's burden to show harm on appeal. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 667 (Tex.2009) ; see also Mullendore v. Muehlstein, 441 S.W.3d 426, 430 (Tex.App.–El Paso 2014, pet. abated) (stating in connection with harm...