Cox Paving of Tex., Inc. v. H.O. Salinas & Sons Paving, Inc.
| Decision Date | 12 October 2022 |
| Docket Number | 08-20-00164-CV |
| Parties | COX PAVING OF TEXAS, INC., Appellant/Cross-Appellee, v. H.O. SALINAS & SONS PAVING, INC., Appellee/Cross-Appellant. |
| Court | Texas Court of Appeals |
ATTORNEYS FOR APPELLANT: Marshall Bowen, Amanda G. Taylor, Butler Snow, LLP, 1400 Lavaca Street, Suite 1000, Austin, TX 78701.
ATTORNEY FOR APPELLEE: Samuel V. Houston, Houston Dunn, PLLC, 4040 Broadway Street, Suite 515, San Antonio, TX 78209.
Before Rodriguez, C.J., Palafox, and Alley, JJ.
Road construction is ubiquitous in Texas and sometimes ends in disputes between the contractors who do that work. That is what happened here. Following a jury trial, subcontractor H.O. Salinas & Sons Paving, Inc. (Hoss), obtained a substantial judgment against general contractor Cox Paving of Texas, Inc. (Cox). On appeal, Cox challenges: (1) the jury's liability findings in favor of Hoss under three theories of recovery—quantum meruit, breach of contract, and the Prompt Pay Act; (2) the trial court's imposition of attorney's fees, costs, and interest; (3) and the jury's finding against Cox on its breach-of-contract claim. Hoss cross-appeals, arguing that the trial court awarded Hoss insufficient attorney's fees, costs, and expenses. We affirm the portion of the trial court's judgment awarding Hoss damages under its breach-of-contract and Prompt Pay Act claims, but reverse and render the portion of the judgment awarding Hoss damages under its quantum meruit claim. Based on these holdings, we reverse the award of attorney's fees, costs, expenses, and charges to Hoss, with a remand for a new determination of those awards consistent with this opinion.
In 2014, Martin County (the County) received a grant from the Texas Department of Transportation (TXDOT) to repair the County's roads. Following the bidding process, the County selected Cox2 as the general contractor. Cox and the County executed a written agreement (the General Contract) that obligated Cox to repair approximately 40 roads covering some 90 miles. The General Contract required that the existing roadbed would be reworked such that the "[b]ase material on all roads shall have a minimum compacted thickness of 6 (six) inches." Cox, however, is in the "seal coat" business (the last phase of road construction) and does not perform road base preparation work. It disclosed that fact to the County before entering its bid. The County told Cox that it should still submit its bid and that Cox should employ a subcontractor to perform the base preparation work.
The General Contract also provided that The County was to provide the necessary caliche material to perform the repairs.
In February 2015, Cox solicited a subcontractor bid from Hoss for "base preparation" work. Before submitting a bid, Hoss's construction manager, Daniel Salinas, along with the project superintendent, John Clark, spent a day driving "at least" 75-80% of the roads. In March 2015, Hoss submitted its bid which included unit pricing for two tasks: (1) "scarify and reshape existing roadway (6") (25’ width)"; and (2) applying a temporary sealant (RC-250—a type of rapid cure asphalt) and a fine aggregate to the roadway. Based on the roads involved, the subcontract totaled just over $1.8 million dollars.
Hoss had some forewarning that the County would need to bring caliche to the worksite to ensure the roadbeds met the six-inch base thickness, albeit not to the extent actually required under the General Contract. Before signing its subcontract with Cox, Hoss attended a pre-construction meeting. At that meeting, the County Judge advised that most of the roads had a six-inch base. Another County employee informed Hoss that "some" of the roads did not have six inches of base and that "they would have to bring in caliche to get it up to that minimum thickness."3 The County assured Hoss that if there was not six inches of base, it would bring caliche out to the worksite.
Following that pre-construction meeting, Cox and Hoss entered a written subcontract (the Subcontract). The Subcontract provided that Hoss would "furnish all of the supervision, labor, equipment, services, supplies, permits, bonds, licenses and fees necessary" to complete the work it bid for, and specifically for scarifying and reshaping the existing roadway. The Subcontract also referenced the existence of the General Contract between Cox and the project owner. The Subcontract then recited Hoss's "agree[ment] to perform all of the obligations and responsibilities" of Cox under the General Contract "to the extent [they] cover or relate" to Hoss's work. Consistent with the County's promise to provide any needed caliche, the word "materials"—which would have otherwise been Hoss's obligation as a part of the Subcontract—was crossed out and initialed by the parties on the Subcontract.
Hoss began performing under the Subcontract in April 2015. It soon became apparent that many more miles of the County's roads lacked a minimum six-inch caliche base than Hoss had contemplated. Hoss informed Cox about the need for additional caliche, who in turn informed the County. The County began providing the caliche, but the pace of Hoss's work was slowed because the County's dump trucks did not provide enough caliche. And after two weeks, the County's trucks stopped dropping off caliche at the worksites altogether. Cox responded by hiring third-party trucking companies to haul in more caliche. The County paid Cox for that associated expense.
Hoss kept working in this fashion from May to December 2015. By September 2015, however, Hoss brought up with Cox receiving compensation for its extra work. In October, Hoss made Cox aware of extra equipment it needed to process and spread caliche. Cox first told Hoss that it would try and work with the County to obtain extra compensation. But at some point, Cox informed Hoss that it would not intercede with the County to obtain more funds for the extra work.
Effective December 31, 2015, Hoss and Cox mutually agreed to terminate the Subcontract for convenience. At the time of termination, Hoss had worked on about 40% of the roads, (or 43 of the 89 miles covered by the Subcontract). Hoss submitted 21 pay applications for the work it did under the contract. Most of the invoices were paid. Hoss contended, however, that Cox did not pay, or improperly reduced the amount due, on four other invoices (Applications Nos. 16, 18, 20, 21). Hoss calculated that $90,147.38 was due it under the Subcontract.
Cox hired a new subcontractor to complete the project. Cox ultimately claimed it expended $513,611.45 in out-of-pocket expenses because Hoss left the job-site. Conversely, Hoss, claimed it had an oral agreement to be compensated for the extra-work caused by the need to add so much caliche into the roadbed. In April 2016 it made a written claim for $572,123.55 for that additional compensation. It based that figure on its calculation of 628.5 hours of extra work at a rate of $910.30 per hour.
When Cox did not pay this amount, Hoss sued Cox for: (1) breach of contract to recover the amounts due under the Subcontract; (2) quantum meruit to recover amounts due for the extra work; (3) violations of the Prompt Pay Act; and (4) fraud. Hoss also sought to recover attorney's fees. In response, Cox counterclaimed for: (1) breach of contract over the quality of Hoss's work; (2) breach of warranty based on Hoss's failure to perform its obligations under the Subcontract; (3) violations of the Deceptive Trade Practices Act; and (4) fraud. Cox subsequently abandoned its DTPA and fraud claims.
The issues at trial largely revolved around whether Cox or Hoss breached any material term of the Subcontract, and if both did so, who breached first, and whether any breaches were excused. Hoss pointed to its unpaid invoices for the work that it did. Cox countered that Hoss's work was defective and many roads needed repair before Cox could apply the final seal coat. More particularly, it claimed Hoss failed to properly apply the RC-250 seal coat, failed to leave enough crown on the road, and failed to maintain an acceptable moisture level on the roads where it worked. Based on these failures, Cox claimed that the roads left stretches of roads with potholing and streaking. It also contended that Hoss's conduct significantly delayed the project.
In response to those assertions, Hoss defended its performance by noting that Cox never complained about the quality of its work until Hoss made a claim for the extra work. It also argued that any failure of the roadbeds resulted from Cox not timely putting down the final seal coating. Hoss contended that its application of an RC-250 seal coat was only meant to protect the roadbed for several months until the final coating would be applied by Cox, and Cox's failure to timely apply the final seal coating left the roadbeds unprotected from damage by traffic.
The jury returned a verdict favorable to Hoss on its breach of contract, quantum meruit, and Prompt Payments Act claims. The jury found that neither Cox's breach of the contract, nor its failure to pay the amounts invoiced promptly, were excused. The jury failed to find that Cox committed fraud. As for damages, the jury assessed: (1) $81,897.10 in damages against Cox for breach of contract; and (2) $300,000.00 in quantum meruit damages for the reasonable value of the extra work performed. The parties had agreed that the issues of attorney's fees and any penalty interest under the Prompt Payment Act would be resolved by the trial court at the end of the case....
To continue reading
Request your trial