Sage Street Associates v. Northdale Const. Co.

• Decision Date: 25 April 1991
• Docket Number: No. B14-90-0311-CV,B14-90-0311-CV
• Citation: 809 S.W.2d 775
• Parties: SAGE STREET ASSOCIATES, 3525 Sage Street Associates, and Marvin B. Myers, Appellants, v. NORTHDALE CONSTRUCTION COMPANY, Federal Insurance Company, and Federal Deposit Insurance Company, as receiver of NBC Bank-Houston, N.A., successor-in-interest to NBC Bank-Heights, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 775

809 S.W.2d 775

SAGE STREET ASSOCIATES, 3525 Sage Street Associates, and Marvin B. Myers, Appellants, v. NORTHDALE CONSTRUCTION COMPANY, Federal Insurance Company and Federal Deposit Insurance Company, as receiver of NBC Bank-Houston, N.A. successor-in-interest to NBC Bank-Heights, Appellees.

No. B14-90-0311-CV.

Court of Appeals of Texas Houston (14th Dist.).

April 25, 1991.

Rehearing Overruled June 13, 1991.

David T. Harvin, Betty R. Owens, Gregory N. Jones, Houston, for appellants.

William Coats, Yocel Alonso, W. James Kronzer, Leslie C. Taylor, Geoffrey H. Bracken, David M. Gunn, Houston, for appellees.

Before PAUL PRESSLER, JUNELL and ELLIS, JJ.

OPINION

PAUL PRESSLER, Justice.

Appellant (Sage) and appellee (Northdale) brought separate actions against each other under a construction contract. The two actions were consolidated. A jury found that Sage had wrongfully terminated Northdale, that Northdale did not breach its agreement with Sage, and that Federal Insurance Company, Northdale's bonding agent, did not fail to perform its obligations under the performance bond. The court awarded Northdale $2,491,110 plus six percent prejudgment interest. The judgment is modified to reflect a ten percent prejudgment interest rate and the remainder of the judgment is affirmed.

Sage, as owner, and Northdale Construction, as contractor, entered into a contract to build a multi-floor apartment building. The agreement provided, in part, as follows:

4. PRICE AND PAYMENT Notwithstanding anything to the contrary contained in this document, or in any other document signed by the parties, either before or after the date of this document, except for changes in the Work requested by the Owner or Supervising Architect, which are approved by Mortgagee and HUD and except as provided in any amendment pursuant to Paragraph 12, Owner shall pay Contractor for the Work an amount equal to the smaller of THIRTEEN MILLION FIVE HUNDRED THIRTY-FIVE THOUSAND AND NO/100 DOLLARS ($13,535,000.00) as adjusted pursuant to Exhibit C, or the amount of Work cost certified to HUD and approved by HUD with regard to the Project.

Anything to the contrary contained herein or in the cost plus construction contract FHA Form 2442A notwithsatnding, it is specifically agreed that the Contractor and its affiliates shall be entitled to and shall receive from the Owner the following profit and overhead, totaling SEVEN HUNDRED AND SIXTY THOUSAND DOLLARS ($760,000.00), without regard to costs whether actual or certified, approved, or disapproved, as follows:

(i) the Contractor shall receive an overhead allowance of TWO HUNDRED AND SIXTY ONE THOUSAND ONE HUNDRED AND FIFTY NINE DOLLARS ($261,159.00), to be drawn over the construction period, pro rata; and

(ii) an aggregate of FOUR HUNDRED AND NINETY EIGHT THOUSAND EIGHT HUNDRED AND FORTY ONE DOLLARS ($498,841.00) shall be included in the categories of profit and overhead in subcontracts with affiliates of the Contractor for concrete and carpentry work.

To obtain a guarantee from the United States Department of Housing and Urban Development, Sage and Northdale executed a contract entitled, "Construction Contract--Cost Plus." That contract provided, in pertinent part,

A. (1) Subject to the provisions hereinafter set out, the Owner shall pay to the Contractor for the performance of this Contract the following items in cash:

(a) The actual cost of construction as defined in Article 10 below; plus

(b) A fee of $ NONE

In no event, however, shall the total cash payable pursuant to this paragraph (1) exceed Thirteen Million Five Hundred and Thirty-Five Thousand Dollars ($13,535,000.00)

(2) In addition to any cash fee provided for in paragraph (1) Owner shall pay to the Contractor by means other than cash, the following: NONE

After completing a portion of the construction, Northdale left the project and sued, claiming Sage breached the contract by failing to make installment payments and payment for change orders. Federal Insurance refused to pay on the bond, claiming that Sage breached the contract, and thus it was not liable. Sage alleged that Northdale breached the contract by abandoning the project and by performing substandard work.

In nine points of error, Sage claims the evidence is legally and factually insufficient to support the jury's findings. Sage's points of error can be broken down into two issues: (1) which party breached the contract? and (2) what are the damages resulting from the breach?

A contractor is excused from performance where the owner refuses to permit him to proceed, fails to provide the required means to complete the contract, or fails to make payments provided by the contract, including installment payments. Fischer v. Richard Gill Co., 253 S.W.2d 915, 917-18 (Tex.Civ.App.--San Antonio 1952, writ ref'd).

Neither party contends that the contracts were ambiguous. Thus it was the duty of the court to construe the contracts as a matter of law. R & P Enterprises v. LaGuarta, Gavrel & Kirk, 596 S.W.2d 517, 518 (Tex.1980). In LaGuarta, the supreme court stated:

In the interpretation of contracts the primary concern of courts is to ascertain and to give effect to the intentions of the parties as expressed in the instrument. To achieve this object the Court will examine and consider the entire instrument so that none of the provisions will be rendered meaningless. If a written instrument is so worded that a court may properly give it a certain or definite legal meaning or interpretation, it is not ambiguous.

The...