Chilton Ins. Co. v. Pate & Pate Enterprises, Inc.

• Decision Date: 11 September 1996
• Docket Number: No. 04-94-00028-CV,04-94-00028-CV
• Citation: 930 S.W.2d 877
• Parties: CHILTON INSURANCE COMPANY, Appellant, v. PATE & PATE ENTERPRISES, INC. and Mid-Continent Casualty Company, Appellees.
• Court: Texas Court of Appeals

Page 877

930 S.W.2d 877

CHILTON INSURANCE COMPANY, Appellant, v. PATE & PATE ENTERPRISES, INC. and Mid-Continent Casualty Company, Appellees.

No. 04-94-00028-CV.

Court of Appeals of Texas San Antonio.

Sept. 11, 1996.

Rehearing Overruled Sept. 11, 1996.

SecondRehearing Overruled Oct. 2, 1996.

Keith A. Langley, Robert M. Fitzgerald, Langley & Branch, P.C., Dallas, Andrew L. Kerr, Zachary B. Aoki, Jenkins & Gilchrist, Groce, Locke & Hebdon, P.C., San Antonio, for appellant.

Ricardo G. Cedillo, Susan G. Lozano, Davis, Adami & Cedillo, Inc., David Lopez, Associate Professional of Law, St. Mary's Law School, San Antonio, for appellees.

Before CHAPA, C.J., and STONE and GREEN, JJ.

GREEN, Justice.

Both the appellant's and the appellee's motions for rehearing are denied. The original opinion of the Court issued March 20, 1996 is withdrawn and the following is substituted in its place.

This is a construction case. A subcontractor on a public works project appeals from a judgment rendered against it in favor of the general contractor. The subcontractor claims that it is entitled to a net money judgment against the general contractor based upon a judicially admitted credit for work done in an amount exceeding the amount of damages the jury found that the subcontractor caused to the general contractor. The general contractor denies that it made the alleged judicial admission, but counters that if it did, the subcontractor's breach of contract bars its right of recovery. We hold that because it treated the contract as continuing in spite of the subcontractor's breach, the general contractor was deprived of its excuse for non-performance. The subcontractor was therefore entitled to the legal benefits of the judicially admitted credit. Accordingly, we affirm in part, reverse and render in part, and reverse and remand in part.

Pate & Pate Enterprises, Inc. ("Pate") was the general contractor for the construction of a storm drainage and street project ("the Project") for the City of San Antonio ("the City"). Pursuant to the state McGregor Act, ¹ Pate, as principal, was required to provide a payment bond to the City to secure payment to those who furnished labor and materials on the job. Mid-Continent Casualty Company ("Mid-Continent") acted as surety on the bond. Caliber Construction, Inc. ("Caliber") was one of the subcontractors on the job. Caliber was required under its subcontract with Pate to provide payment and performance bonds. Chilton Insurance Company ("Chilton") was the surety on Caliber's performance bond. When Caliber defaulted and was unable to complete performance of its obligation under the subcontract, Chilton was called upon to honor its bond. Chilton thereupon entered into a "Takeover Agreement" with Pate whereby Chilton agreed to complete the work as provided in the Caliber subcontract, and Pate agreed to pay Chilton in accordance with the terms of the subcontract.

Because of delays and other problems allegedly caused by Chilton's performance, Pate withheld payments to Chilton even though Chilton continued to perform and even though Pate received progress payments from the City based upon Chilton's continuing work on the Project. When the Project was completed, Pate acknowledged that Chilton was entitled to a credit in the amount of $593,026.96 because of its work, but claimed that Pate had been damaged because of Chilton's poor performance and demanded reimbursement for the damages.

Chilton filed suit, claiming damages for breach of contract, and further asserted quantum meruit and McGregor Act theories of recovery. Pate counterclaimed, seeking recovery of its damages due to Chilton's alleged breach of contract, and additionally asserted claims for breach of warranty and for violation of the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"). ² Chilton's quantum meruit claim was thrown out prior to trial, by summary judgment; the remaining claims were tried to a jury.

JUDICIAL ADMISSION

In its first point of error, Chilton contends that the trial court erred in denying Chilton a judgment because Pate and Mid-Continent (sometimes jointly referred to hereafter as appellees) judicially admitted liability and damages to Chilton in the amount of $593,026.96. Chilton contends that this amount exceeded the amount of Pate's damages as found by the jury and, thus, Chilton is entitled to a judgment against appellees for the excess. See TEX.R.CIV.P. 302.

A judicial admission occurs when an assertion of fact is conclusively established in live pleadings, making the introduction of other pleadings or evidence unnecessary. Houston First Am. Sav. v. Musick, 650 S.W.2d 764, 767 (Tex.1983). A true judicial admission is a formal waiver of proof usually found in pleadings or the stipulations of the parties. Mendoza v. Fidelity & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex.1980). "The vital feature of a judicial admission is its conclusiveness on the party making it. It not only relieves his adversary from making proof of the fact admitted but also bars the party himself from disputing it." Gevinson v. Manhattan Constr. Co. of Okla., 449 S.W.2d 458, 466 (Tex.1969).

The alleged judicial admission here occurs in appellees' live trial pleadings, where it is alleged that:

As a proximate result of both Caliber's conduct before its default and Chilton's actions after Caliber's default, Pate and Mid-Continent have suffered actual and consequential damages of at least $1,707,020.60. Pate and Mid-Continent would otherwise owe approximately $593,026.96 in funds which would have been paid to Chilton, but for Caliber's and Chilton's actions herein set forth. Pate and Mid-Continent acknowledge a credit on Chilton's account in the sum of $593,026.96 against the actual damages owed by Chilton to Pate and Mid-Continent. (italics supplied).

Taken in context with the entire pleading, the statement clearly, deliberately, and unequivocally concedes that appellees owe Chilton the amount of $593,026.96. There is no possibility of mistake. See United States Fidelity & Guar. Co. v. Carr, 242 S.W.2d 224, 229 (Tex.Civ.App.--San Antonio 1951, writ ref'd). Indeed, the character of the statement as a judicial admission was specifically mentioned during trial--the attorney for Chilton read the statement to the jury from appellees' pleadings without objection. ³ Moreover, during the charge conference, the matter was again discussed and it was reiterated that Chilton was entitled to credit for $593,026.96. ⁴

Appellees argue strenuously that the statement in their pleading is not conclusive and does not rise to the level of a judicial admission. Pate contends the acknowledgement of the amount due Chilton is solely recognition of a credit on Chilton's account against the amount of damages due Pate from Chilton, and nothing more. Pate insists the alleged admission must be read in the context of the remainder of the pleading and, when this is done, it is clear that the concession applies only in the event that appellees prevail on their claims. Pate's argument is unconvincing. It is not within the purview of a party to limit the purpose for which they admit facts. The fact is admitted or it is not. Characterizing the monies owed as a credit against damages owed by Chilton to Pate does not transfigure Pate's statement in their live pleadings, and open court, into something other than what it was--a "judicial admission."

Appellees contend there is no liability finding in favor of Chilton and, thus, the "admission" is immaterial. However, by its very nature, a judicial admission relieves the adverse party of the burden of having to prove what has been admitted. Gevinson 449 S.W.2d at 466. We hold that the statement in appellees' pleading is clear and unequivocal and has the effect of relieving Chilton of having to prove appellees' liability and, consequently, Pate's admission has established Chilton's right to recover on its claim in, at least, the amount of $593,026.96.

Based on the foregoing, it was unnecessary to submit jury questions one through four because the issue of Pate's liability had been conclusively established by Pate's own admission. See Dobbins v. Redden, 759 S.W.2d 477, 480 (Tex.App.--San Antonio 1988), aff'd as modified, 785 S.W.2d 377 (Tex.1990). The answers to the first four jury questions will be disregarded to the degree they are contrary to a fact established as a matter of law--Pate is liable to Chilton. See Long v. Tascosa Nat'l Bank of Amarillo, 678 S.W.2d 699, 705 (Tex.App.--Amarillo 1984, no writ). Chilton's point of error number one is sustained.

DISREGARDING JURY ANSWERS

Chilton's second point of error complains the trial court erred by disregarding the jury's answer to question number six ⁵ wherein the jury responded that Chilton was entitled to recover a total of $614,157.58 under the Mid-Continent payment bond against Mid-Continent and Pate. Pate counters that the answer to question six was immaterial in view of the jury's other answers excusing Pate's non-performance due to Chilton's breach. However, as noted earlier, Pate's liability has been established as a matter of law by its own judicial admission. Therefore, whether the jury believes Pate's non-performance was excused is of no consequence, and the answer to the question establishing the amount to which Chilton is entitled, common-sensically, cannot be immaterial.

Pate argues, and we agree, that the McGregor Act does not create an independent entitlement to receive payment. ⁶ See TEX.GOV'T CODE ANN. § 2253.001 et seq. (Vernon Supp.1996). However, we do not agree with Pate's seeming assertion that acceptance of Chilton's contention--the answer to question six should not have been ignored--would somehow enable claimants, such as Chilton, to receive payment under a McGregor Act bond by simply complying with the notice requirements mandated in the Act. Chilton is not, as Pate argues, seeking payment solely based on...