Ramirez Co., Inc. v. Housing Authority of City of Houston

• Decision Date: 24 August 1989
• Docket Number: No. C14-88-273-CV,C14-88-273-CV
• Parties: The RAMIREZ COMPANY, INC., Appellant, v. The HOUSING AUTHORITY OF the CITY OF HOUSTON, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 167

777 S.W.2d 167

The RAMIREZ COMPANY, INC., Appellant, v. The HOUSING AUTHORITY OF the CITY OF HOUSTON, Appellee.

No. C14-88-273-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Aug. 24, 1989.

Rehearing Denied Sept. 21, 1989.

Macon D. Strother, Houston, for appellant.

Roger Rider, Houston, for appellee.

Before PAUL PRESSLER, CANNON and ELLIS, JJ.

OPINION

ELLIS, Justice.

Appellant, The Ramirez Company, Inc., appeals from a summary judgment in favor of appellee, the Housing Authority of the City of Houston, regarding appellant's contract and quantum meruit claims for work done at two projects known as the Westbury site and the Emnora Site. ¹ TEX.R.CIV.P. 166a (Vernon 1976 & Supp.1989). We reverse and remand with regard to appellant's claims regarding the Westbury Site and affirm the summary judgment with regard to the Emnora Site.

The facts of this case are as follows: In May 1981, appellee invited developers to submit bid proposals for the design, development and construction of an 105 unit low income housing project owned and selected by appellee ("Westbury Site") and an 80 unit low income housing project to be selected by the selected developer ("Emnora Site"). The projects were to be completed on a turnkey basis. ² Pursuant to the turnkey method of development, the chosen developer is paid upon final construction under a Contract of Sale. Further, no obligation arises for payment of a developer's preconstruction work until the parties execute a Contract of Sale.

Once a developer is selected for a project, the developer is given three options under which to proceed: the basic, the modified, or the accelerated method of turnkey development. ³ According to the affidavit of appellee's employee, Julia Land, when a developer chooses the basic turnkey method, the parties enter into a preliminary contract of sale. Under the preliminary contract, appellee agrees to purchase the developer's working drawings and development site even if a Contract of Sale is never effectuated. However, a developer foregoes the protection of the preliminary contract of sale if he chooses the modified or accelerated turnkey method.

WESTBURY SITE

Appellant submitted a proposal for the turnkey construction of the Westbury Site and was subsequently notified by appellee on August 24, 1981 that it had been tentatively selected. On October 2, 1981, appellant met with appellee and HUD at a development conference. Therein, appellant was informed of all the necessary actions to be taken before execution of the Annual Contributions Contract ("ACC") between HUD and appellee and the Contract of Sale between appellant and appellee. ⁴

Appellant commenced work upon the preliminary plans and working drawings necessary to begin construction upon the Westbury project. On September 10, 1982, appellee informed appellant that the Contract of Sale for the Westbury Site would be executed after HUD approved the ACC, HUD approved the development plans for the project, and appellant provided appellee with evidence of financing. On September 20, 1982, appellant informed appellee that it was experiencing difficulty in obtaining financing but expected financing offers within two weeks. On September 24, appellee responded that HUD had abated preparation of the ACC until appellant produced proof of financing. Appellee established October 4, 1982 as the deadline for submitting the requested proof. On October 11, appellee's committee voted to terminate appellant as the developer for the Westbury Site. Appellee still owns the Westbury Site and is currently working with HUD towards the development of an elderly housing project on the site.

EMNORA SITE

Appellant also submitted a proposal for the turnkey construction of the Emnora Site and was subsequently notified by appellee on January 13, 1982 that its bid proposal was tentatively selected. On January 25, appellant met with appellee and HUD for a development conference. The parties discussed the necessary actions for the execution of the ACC and the Contract of Sale. Appellant chose a non basic turnkey method of development for the Emnora Site. ⁵

Appellant commenced work upon the preliminary plans and working drawings necessary for construction upon the Emnora site. However, on September 8, 1982, appellant informed appellee that it had decided to relinquish control of the Emnora site and not proceed with the proposed turnkey development thereon. Appellant's decision to forfeit the development of the Emnora site was made before the parties executed the Contract of Sale. As a result, appellant never sold the site to appellee nor were any housing units constructed upon the site. Appellee subsequently lost earmarked HUD funding for the contemplated project.

In October 1983, appellant filed suit against appellee claiming breach of contract and/or quantum meruit for work performed at the Westbury and Emnora Sites. In March 1985, appellee filed a motion for summary judgment which was granted by the trial court over two years later on December 22, 1987. On appeal, the standards for reviewing a motion for summary judgment are as follows:

1. The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law.

2. In deciding whether there is a disputed material fact issue, precluding summary judgment, evidence favorable to the non-movant will be taken as true.

3. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in favor of the non-movant.

Nixon v. Mr. Property Management, 690 S.W.2d 546 (Tex.1985); City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex.1979).

WESTBURY SITE CONTRACT CLAIM

Appellee contends that appellant failed to meet two conditions precedent to be entitled to seek recovery under the written Contract of Sale. The first contingency was appellant's compliance with appellee's requested proof of financing so that HUD would execute the ACC. The second contingency was the execution of the Contract of Sale itself. According to appellant's president, Mr. Ramirez, appellant had fulfilled these and all necessary conditions to be entitled to the executed Contract of Sale. However, appellee had "improperly procured" the Westbury Site, causing public litigation, and as a result, appellant lost its lender's financing commitment. ⁶ Ramirez suggests that the timing of the litigation and the problem with its lender's commitment caused appellee to unilaterally impose the financing requirement. Ramirez contends that appellant, nevertheless, did comply with such imposed unilateral condition. ⁷ Appellant also provided exhibit "A" which contains a resolution by appellee's committee. Pursuant to appellee's resolution, appellee approved appellant as the site developer and, subject to HUD's execution of the ACC, authorized the instant parties' execution of the Contract of Sale. Resolving all doubts in favor of appellant, it appears that appellee had already authorized the Contract of Sale and all that remained was the execution of the ACC upon appellant's proof of financing. Appellant produced sufficient evidence to demonstrate that a material fact issue exists as to whether it was entitled to the contemplated Contract of Sale ⁸ Frank B. Hall & Co., Inc. v. Buck, 678 S.W.2d 612, 629 (Tex.App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.); Industrial Disposal Supply Co., Inc. v. Perryman Bros. Trash Service, Inc., 664 S.W.2d 756, 765 (Tex.App.--San Antonio 1983, writ ref'd n.r.e.); 17 C.J.S., Contracts, § 49 p. 695 (1963). See also U.S. v. Purcell Envelope Co., 249 U.S. 313, 39 S.Ct. 300, 63 L.Ed. 620 (1919). But see, Gordin v. Shuler, 704 S.W.2d 403, 407 (Tex.App.--Dallas 1985, writ ref'd n.r.e.). Appellee failed to sustain its burden to show its entitlement to summary judgment on appellant's Westbury Site contract claim. ⁹

WESTBURY SITE QUANTUM MERUIT

Appellee also contends that appellant is precluded from recovery under quantum meruit because appellant expressly agreed to bear the cost of its preconstruction work until the Contract of Sale was executed. Because a material fact issue exists as to whether appellant was entitled to the benefit of the Contract of Sale "but for" its wrongful termination, appellant may also be entitled to elect recovery under quantum meruit. Kleiner v. Eubank, 358 S.W.2d 902, 905 (Tex.Civ.App.--Austin 1962, writ ref'd n.r.e.). See also, Davidson v. Clearman, 391 S.W.2d 48, 51 (Tex.1965); Kittyhawk Landing Apartments III v. Anglin Const. Co., 737 S.W.2d 90, 92 (Tex.App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.); University State Bank v. Gifford-Hill Concrete Corp., 431 S.W.2d 561, 574 (Tex.Civ.App.--Fort Worth 1968, writ ref'd n.r.e.); 13 Am.Jur.2d, Building and Construction Contracts § 105, p. 99 (1964); 66 Am.Jur.2d, Restitution and Implied Contracts § 73, p. 1018 (1973).

Appellee next asserts that there can be no recovery in quantum meruit because it has not used the fruits of appellant's work. Mr. Ramirez's affidavit states that appellant performed such work at appellee's request and that appellee has used appellant's work. See e.g. Triland Inv. Group v. Tiseo Paving Co., 748 S.W.2d 282, 284 (Tex.App.--Dallas 1988, no writ). Importantly, appellee's own affidavits state that appellee still owns the Westbury site and is currently planning another housing project on that site. That appellee has not yet used appellant's work does not support appellee's subjective determination that appellee received no benefit. Accord, Beaumont Enterprise & Journal v. Smith, 687 S.W.2d 729 (Tex.1985). Under traditional teachings of quantum meruit, a worker is entitled to be reasonably compensated for his services performed at the time such work was performed at the recipient's request. Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d 80 (1976). The reasonableness of such compensation and the value to the recipient, if any,...