City of Port Isabel v. Shiba, 13-96-623-CV

• Decision Date: 09 July 1998
• Docket Number: No. 13-96-623-CV,13-96-623-CV
• Parties: The CITY OF PORT ISABEL, Appellant, v. Tom SHIBA, Appellee.
• Court: Texas Court of Appeals

Page 856

976 S.W.2d 856

The CITY OF PORT ISABEL, Appellant, v. Tom SHIBA, Appellee.

No. 13-96-623-CV.

Court of Appeals of Texas,

Corpus Christi.

July 9, 1998.

Rehearing Overruled Sept. 10, 1998.

Richard S. Hoffman, Hoffman & Goza, Rene E. Decoss, Rene B. Gonzalez, Brownsville, for Appellant.

R. W. Armstrong, R. W. Armstrong & Associates, Brownsville, Russell H. McMains, Law Offices of Russell H. McMains, Corpus Christi, for Appellee.

Before DORSEY, HINOJOSA and RODRIGUEZ, JJ.

OPINION ON MOTION FOR REHEARING

RODRIGUEZ, Justice.

We overrule appellant's motion for rehearing, withdraw our opinion dated April 30, 1998, and substitute the following opinion in its place.

Appellant/Cross-Appellee, the City of Port Isabel ("the City"), challenges the jury's verdict awarding Tom Shiba $441,804 in damages and $110,000 in attorney's fees claiming the evidence was both legally and factually insufficient to support the verdict, the verdict contained a fatal conflict, and the evidence was legally insufficient to support an award of attorney's fees.

Appellee/Cross-Appellant, Tom Shiba, appeals the trial courts refusal to award him prejudgment interest and its failure to enter a single judgment. ¹ We affirm as reformed.

This dispute arose out of a contract between the City and Shiba executed on July 29, 1987. The contract provided that the City would loan Shiba $210,000 for the development of a project to be known as the Fish House Landing. The loan proceeds were to originate from the Texas Department of Community Affairs ("TDCA") and pass through the City in accordance with a separate agreement.

The City disbursed $170,000 of the loan proceeds to Shiba in December 1987. In February 1988, Shiba made a request for the final $40,000 of the $210,000. Due to delays, the money was not forwarded from TDCA to the City until September 1988. By that time, Shiba had abandoned the project. The City brought suit against Shiba for breach of contract to recover the $170,000 already disbursed to him. Shiba counter-claimed, asserting the City breached the contract by failing to loan the funds in accordance with the loan agreement. The jury found that both parties breached the contract. The City was awarded $170,000, and Shiba was awarded $441,804 in damages and $110,000 in attorney's fees. Both parties appealed.

In its first point of error, the City claims there is legally insufficient evidence it breached the contract with Shiba. Specifically, the City asserts that because the contract expressly states the loan "shall be disbursed in increments as set out in Exhibit 'A' " and Exhibit A was not admitted into evidence, there was no evidence the City had a duty to disburse the final loan payment of $40,000.

In reviewing a no evidence or legal insufficiency of the evidence point, we consider only the evidence that tends to support the jury's verdict and disregard all evidence and inferences to the contrary. Responsive Terminal Sys. Inc. v. Boy Scouts of Am., 774 S.W.2d 666, 668 (Tex.1989). If there is more than a scintilla of evidence supporting the jury's finding, the legal sufficiency challenge must fail. Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987). If the evidence provides a rational basis for reasonable minds to differ as to the existence of a vital fact, then there is some evidence or more than a scintilla. Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex.1983). However, if the evidence is so weak as to create a mere surmise or suspicion of its existence, then the evidence is no more than a scintilla, and therefore, no evidence. Id.

While we agree there is no evidence the City had a duty to disburse the funds absent the disbursement schedule, the inquiry does not stop there. Under the doctrine of incorporation by reference, where one contract refers to another contract or instrument, the second document may properly constitute part of the original contract. Owen v. Hendricks, 433 S.W.2d 164, 166-67 (Tex.1968); MTrust Corp. N.A. v. LJH Corp., 837 S.W.2d 250, 253-54 (Tex.App.--Fort Worth 1992, writ denied); Milam Dev. Corp. v. 7*7*0*1* Wurzbach Tower Council of Co-Owners, Inc., 789 S.W.2d 942, 945 (Tex.App.--San Antonio 1990, writ denied). Additionally, it is well-established in Texas jurisprudence that "[a]ccompanying every contract is a common-law duty to perform with care, skill, reasonable expedience and faithfulness the thing agreed to be done, and a negligent failure to observe any of these conditions is a tort as well as a breach of contract." Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508, 510 (1947); Bowman v. Charter Gen. Agency, Inc., 799 S.W.2d 377, 380 (Tex.App.--Corpus Christi 1990, writ denied). Therefore, the relevant inquiry in ascertaining whether the City breached its contract with Shiba is: (1) did the Shiba/City contract incorporate by reference the TDCA/City contract, and (2) did the City fail to perform with "care, skill, reasonable expedience and faithfulness" what it promised to do.

Here, the contract between the City and Shiba specifically stated the funds were being made available to Shiba pursuant to the TDCA/City contract and it expressly incorporated that document in article XI. ² The TDCA/City contract required the City to submit quarterly progress reports "no later than the twentieth (20th) day of the month after the end of each quarter of the contract period...." The record reflects the contract funds were suspended because the City failed to properly submit the quarterly reports. Additionally, evidence suggests the City failed to properly submit the request to the TDCA for the $40,000 and did not correct the problem for several months. This is some evidence tending to show the City breached the contract with the TDCA and, thereby, breached its contract with Shiba. Also, the evidence suggests the City breached its common-law duty to perform what it promised to do--facilitate and coordinate the activities between Shiba and the TDCA such that the funds promised would be made available. Therefore, we hold this is more than a scintilla of evidence supporting the jury's verdict.

Point of error one is overruled.

In point of error three, the City argues there was legally insufficient evidence to support the damages awarded by the jury.

When the damages issue is submitted to the jury in broad-form, as it was in the instant case, it is difficult to ascertain with certainty what amount of the award is attributable to each element considered. Greater Houston Transp. Co. v. Zrubeck, 850 S.W.2d 579, 589 (Tex.App.--Corpus Christi 1993, writ denied). Thus, a meaningful review of the damages question is also difficult. The only effective way a defendant may challenge a multi-element damages award on appeal is to "address each and every element and show that not a single element is supported by sufficient evidence." Id. If one element is supported by the evidence, the damages award must be affirmed. Id.

Here, while the City challenges some components of the damages award, it did not attack "each and every element." Additionally, the record reflects that Shiba suffered damages both before and after the contract was signed ³ including construction expenses, loss of land, and foregone earnings; which we find are supported by the of evidence. Because the City failed to challenge "each and every element" of the damages award and at least one element is supported by the evidence, we affirm the jury's determination of damages. Point of error three is overruled.

The City, in its second point of error, asserts there is factually insufficient evidence to support the jury's verdict. The Shiba/City contract stated the loan funds would not be disbursed, "unless funds for such purpose are made available by the Texas Department of Community Affairs." Emphasizing this provision of the contract, the City argues Shiba could only prevail if he could show funds were made available but not disbursed by the City. We disagree.

When considering a challenge to the factual sufficiency of the evidence, we review the entire record and set aside the verdict only if it is so against the overwhelming weight of the evidence that it is manifestly unjust and clearly wrong. Plas-Tex, Inc. v. United States Steel Corp., 772 S.W.2d 442, 445 (Tex.1989); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965).

The evidence presented at trial was, inter alia, that Shiba requested the final $40,000 from the City in February 1988. The City submitted the request to the TDCA on February 18, 1988. On that same day, the TDCA requested a refund of $65,000 of the original $170,000, because according to the original documentation, that portion was not used for its designated purpose. Thereafter, a letter dated February 23, 1988 indicated the TDCA was delaying funding because:

(13) Contractor [the City] did not initially provide TCDP's Accounting office or Community Development, Finance Division with the required back-up documentation for this drawdown (over $100,000.00; over 25% of any approved budget category; and/or over 50% of the total contract amount).

(14) Contractor [the City] did not submit documentation with its initial payment request regarding the meeting of Special Conditions (Sections 20, 21, or 22 of TCDP Contract). ⁴

...

(16) Contract funds are suspended because of non-submission of Quarterly Reports for the 3rd Quarter, and 4th Quarter.

(17) Other reason(s): No [sic] engineering documentation, and renovation plans have also not been received for over 4 months as requested.

In April 1988, the TDCA, the City, and Shiba met to discuss the $65,000 issue, which was apparently resolved shortly thereafter. Subsequently, Shiba abandoned the project and defaulted on his loan with the City. The City finally received the $40,000 in September of 1988.

It is the trier of fact who judges the credibility of the witnesses and the weight to be given their testimony, and it may resolve or reconcile conflicts in the...