D.S.A., Inc. v. Hillsboro Independent School Dist.

Citation975 S.W.2d 1
Decision Date23 April 1997
Docket NumberNo. 10-95-295-CV,10-95-295-CV
Parties128 Ed. Law Rep. 1314 D.S.A., INC., Appellant, v. HILLSBORO INDEPENDENT SCHOOL DISTRICT, Appellee.
CourtCourt of Appeals of Texas

Sidney H. Davis, Gregory R. Ave, Touchstone, Bernays, Johnston, Beall & Smith, L.L.P., Dallas, for appellant.

Patricia Hair, Kathleen Hopkins Alsina, Houston, for appellee.

Before DAVIS, C.J., and CUMMINGS and VANCE, JJ.

OPINION

CUMMINGS, Justice.

Hillsboro Independent School District (HISD) contracted with DSA, a construction management firm, to oversee the construction of an elementary school. Before the school was completed, HISD noticed serious problems with the structure of the building and the surrounding landscaping. HISD attributed these defects to DSA's failure to adequately perform its duties in the manner promised by DSA during the contract negotiations and in their written, finalized agreement. HISD eventually brought suit against DSA for breach of contract, negligent misrepresentation, and violations of the Deceptive Trade Practices Act. 1 See TEX.BUS. & COMM.CODE ANN. § 17.41-.63 (Vernon 1987 & Supp 1997). Trial was before a jury, which found against DSA on each of the three causes of action and awarded HISD $220,661 in actual and $170,000 in exemplary damages.

Through twenty-one points of error, DSA essentially complains of five grouped errors: first, that HISD's DTPA cause of action was barred by limitations; second, that the jury should have been charged on comparative negligence; third, that the evidence is insufficient to support the jury's finding of liability on each of HISD's three causes of action; fourth, that the evidence is insufficient to support the jury's finding of gross negligence; and fifth, that the evidence is insufficient to support the jury's finding on the amount of damages for the roof. We affirm the judgment as reformed.

I. FACTUAL BACKGROUND

To dispose of DSA's points of error, a more thorough rendition of the facts is necessary. In 1984 the voters in the Hillsboro Independent School District passed a bond election that authorized its school board to spend $2,050,000 for the construction of a new elementary school. However, all the bids received were at least $300,000 more than the amount of bonds approved for the construction, and the HISD school board, consequently, rejected each bid. In an effort to locate a more affordable means of seeing the school constructed, Maurice English, then superintendent of HISD, suggested to the board that they speak to DSA. The board members agreed, and a meeting was arranged.

At the meeting, DSA represented to the board members that it, as a construction management firm, was able to perform the same functions as a general contractor but for a much lower cost because construction managers charge flat rates for their projects and require the landowner to contract with any necessary trade contractors, whereas general contractors inflate their estimations of how much a project will cost to complete because they must allow for cost overruns by their own subcontractors. HISD accepted DSA's offer to manage construction of the school for $2,050,000, and the parties entered a formal, written agreement to that effect.

Upon completion of the project, HISD complained to DSA about three aspects of the construction: (1) a poorly-constructed foundation had allowed excess water to collect underneath the building, causing the ground to swell and damage the under-floor plumbing; (2) the roofing system that was installed was both inadequate for the weather conditions in Hill County and was not installed properly, both problems resulting in numerous leaks into the interior of the school; and (3) the land immediately surrounding the premises was improperly graded, causing rainwater to flow downward and into the school.

II. LIMITATIONS ON THE DTPA CLAIM

In its first point of error, DSA contends that HISD's DTPA allegations were barred by the statute of limitations. It asserts that HISD failed to file its DTPA claims within the two years allowed under the DTPA's statute of limitations and that, because HISD was aware of the injuries resulting from DSA's alleged misrepresentations to the district during the contract negotiations more than two years before filing suit, the discovery rule did not operate to toll the limitations period. In response, HISD concedes that it did not file suit within two years of DSA's alleged misrepresentations; however, it asserts that the limitations period was tolled by the discovery rule because no reasonable person or entity could have discovered, within two years before filing suit, that the three complained-of injuries were the result of DSA's common scheme to injure HISD.

DTPA claims are governed by a two-year statute of limitations that the Legislature has expressly provided may be tolled by the discovery rule. TEX.BUS. & COM.CODE ANN. § 17.565 (Vernon 1987); see Burns v. Thomas, 786 S.W.2d 266, 267 (Tex.1990). Section 17.565 of the Business Commerce Code reads as follows:

All actions brought under this subchapter must be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice. The period of limitation provided in this section may be extended for a period of 180 days if the plaintiff proves that failure timely to commence the action was caused by the defendant's knowingly engaging in conduct solely calculated to induce the plaintiff to refrain from or postpone the commencement of the action.

TEX.BUS. & COM.CODE ANN. § 17.565.

The essential facts are not in dispute. The contract was entered into on or about August 22, 1985. 2 The school was completed in the fall of 1987 and first occupied in September 1987. The original petition was filed on December 29, 1992. Roof-leaking was identified before the school opened in September 1987. Plumbing damage from the swollen ground underneath the building was first discovered in either September 1989 or around March 1990. The unsuitable draining of the land surrounding the school was first noticed in the fall of 1987.

The first three questions submitted to the jury were whether "[DSA] engage[d] in a false, misleading, or deceptive act or practice that was a producing cause of damages to Hillsboro Independent School District"; whether DSA "engage[d] in any unconscionable action or course of action that was a producing cause of damages to Hillsboro Independent School District"; and whether "the failure, if any, of [DSA] to comply with a warranty [was] a producing cause of damages to Hillsboro Independent School District." The jury answered each question in the affirmative. In question four the jury was asked, "By what date should Hillsboro Independent School District in the exercise of reasonable diligence, have discovered any of the acts you have found in answer to Question 1 or 2 or 3[?]" The jury returned the date of July 13, 1992, for each of the three questions.

The only evidence in the record relating to a date of July 13, 1992, was a letter from Johnny M. Tabor of Tabor & Associates, Inc., to Leon Murdoch, English's successor as superintendent of HISD, concerning the extent of the plumbing and foundation damage caused by swollen ground underneath the school and by the rainwater that had flowed down and collected around the building. HISD had previously contracted with Tabor & Associates to conduct a study of the construction problem with the school and advise the school district on what measures should be taken to repair the damage that had already occurred and to prevent any further damage from occurring. The letter constitutes the conclusions Tabor & Associates reached on the best solutions to remedy HISD's foundation and plumbing problems.

It is beyond question that if the limitations period was tolled until July 13, 1992, then HISD's December 29, 1992, original petition was timely. DSA, however, attacks the jury's finding, contending that the dates upon which HISD undisputedly became aware of the roofing, plumbing, and landscaping problems control for determining when the discovery rule ceased to operate and limitations began to run. Moreover, DSA asserts that since the latest date on which HISD became aware of the roofing and landscaping problems was in the fall of 1987, and the date the plumbing problems were discovered was around March of 1990, the two-year limitations period on the DTPA claims had long-since expired by the time HISD filed its December 1992 petition.

HISD takes a different tack in construing the proper meaning of these undisputed dates, contending that the dates HISD learned of the injuries which led to this suit are irrelevant in the determination of when the limitations period began to run. It asserts that the answer properly lies in determining when it discovered, or should have discovered, not the actual injuries but the misrepresentations by DSA concerning the nature of its role in the school's construction. And, because the actions of DSA were part of a pattern of negligence and misrepresentation, the dispositive date is the one HISD learned of the full extent of the pattern of alleged deceit. HISD maintains that the jury's finding of July 13, 1992, is unassailable because there is legally and factually sufficient evidence to support it.

Several of our sister courts of appeals have addressed a similar issue, and they are unanimous in holding that the limitations period under section 17.565 begins to run on the date the putative plaintiff either knew or should have known of the injury that provides the basis of his DTPA claim. See, e.g., Cornerstones Mun. Util. Dist. v. Monsanto Co., 889 S.W.2d 570, 576 (Tex.App.--Houston [14th Dist.] 1994, writ denied); Foreman v. Pettit Unlimited, Inc., 886 S.W.2d 409,...

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