Sheldon L. Pollack Corp. v. Falcon Industries, Inc.

• Decision Date: 03 May 1990
• Docket Number: No. 13-89-043-CV,13-89-043-CV
• Citation: 794 S.W.2d 380
• Parties: SHELDON L. POLLACK CORPORATION, Appellant, v. FALCON INDUSTRIES, INC. and Insurance Company of North America, Appellees.
• Court: Texas Court of Appeals

Page 380

794 S.W.2d 380

SHELDON L. POLLACK CORPORATION, Appellant, v. FALCON INDUSTRIES, INC. and Insurance Company of North

America, Appellees.

No. 13-89-043-CV.

Court of Appeals of Texas,

Corpus Christi.

May 3, 1990.

Rehearing Overruled Aug. 31, 1990.

Robert G. Bailey, Houston, for appellant.

T. Kellis Dibrell, Robin V. Dwyer, Dibrell, Dotson, Dibrell & Dibrell, Lewin Plunkett, Thomas G. Kemmy, Plunkett, Gibson & Allen, San Antonio, for appellees.

Before NYE, C.J., and SEERDEN and BENAVIDES, JJ.

OPINION

SEERDEN, Justice.

Sheldon L. Pollack Corporation (Pollack) appeals from a final judgment against it in favor of Falcon Industries, Inc. (Falcon) and Insurance Company of North America (INA) in a construction contract case.

Pollack originally filed suit against Cap de Cinco, Inc., the owner of a hotel construction project in McAllen, Texas, of which Pollack was the general contractor, seeking to recover the unpaid portion of the contract price. Cap de Cinco counterclaimed, seeking damages for deficiencies in Pollack's work and for delays in completion of the project. Pollack filed a third-party action against Falcon, the pre-cast concrete subcontractor, and INA, Falcon's payment and performance bond surety, for indemnity. Falcon and INA counterclaimed against Pollack, seeking the unpaid portion of the subcontract price, and INA cross-claimed against Falcon seeking indemnity.

The jury found that Pollack had substantially completed its contract with the owner, was owed $1,271,655.22 and that $30,000 would be required to correct the deficiencies in Falcon's work. Following a bankruptcy filing by the owner, the trial court severed the claims of Falcon and INA against Pollack, and entered final judgment against Pollack and in favor of Falcon and INA for $224,000.00, of which $40,124.92 was awarded to INA.

By its first three points of error, Pollack argues that the trial court erred in awarding judgment in favor of Falcon because there was no evidence, or insufficient evidence, to support a finding of substantial performance on the part of Falcon. Additionally, appellant alleges that the trial court's action was error because Falcon failed to submit a question to the jury regarding substantial performance.

In determining the legal and factual sufficiency of the evidence, we follow the guidelines dictated by the Supreme Court in Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex.1986). A party that has substantially performed a building contract is entitled to recover the full contract price less the cost of remedying those defects which are remediable. Dobbins v. Redden, 785 S.W.2d 377 (1990); Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480, 481 (Tex.1984). In such cases, the party seeking to recover on the contract has the burden of proving that he substantially performed under the contract, the consideration due to him under the contract, and the cost of remedying the defects due to his errors or omissions. Vance, 677 S.W.2d at 483. At trial, Falcon produced a Certificate for Payment dated March 31, 1986, signed by Pollack, the architect, and the owner, which stated that all pre-cast work was 100% to 99.5% complete. Further, there was testimony elicited from Pollack and from Estil McCollum, president of the Sheldon Pollack Corporation, that the pre-cast concrete work was at least 95% completed.

The jury answered the following questions:

1) What sum of money is necessary to complete the project in question?

Answer: $188,835.45

2) What part, if any, of the amount found in answer to Question 1 do you find was necessary

(a) To complete Falcon-Esprenosa's part of the contract, exclusive of correcting deficiencies.

Answer: 0

(b) To correct Falcon-Esprenosa's deficiencies, if any

Answer: $30,000.00

3) Did Pollack substantially comply with the terms of the contract?

Answer: Yes

The questions submitted to the jury were based on the contract between Pollack and the owner, of which the jury found that $188,835.48 was necessary to complete. The jury also found that $144,000.00 was necessary to complete any deficiencies in the project. The jury then found that no cost was necessary to complete Falcon's part of the contract, and that $30,000.00 was necessary to correct any deficiencies in the project, which translates into a substantial performance by Falcon. Although neither of the phrases "substantial performance" or "substantial compliance" were used in the question to the jury, the effect of the answer is the same. A judgment should not be reversed because of the failure to submit other and various phases or different shades of the same question. Tex.R.Civ.P. 278 (Vernon 1990). We find that Falcon did not waive its recovery under a theory of substantial performance and that sufficient evidence existed in order to find that Falcon did substantially perform under the contract. Points of error one, two, and three are overruled.

In points of error four through six, appellant attacks the sufficiency of the evidence to support an award to Falcon and INA under the theory of quantum meruit. However, Falcon's pleading of quantum meruit was against the owner, Cap de Cinco. The jury found in questions 37 and 38 that the owner owed Falcon-Esprenosa $20,293.01 for its work. Since the portion of the case involving the owner was severed, the final judgment from which Pollack appeals does not reflect an award of quantum meruit. These points are overruled.

In points of error seven and eight, appellant argues that there was no evidence or insufficient evidence to show that a condition precedent to Falcon's right to recovery, that being payment by the owner to Pollack, had occurred or been satisfied. Pollack bases this argument on the following language of the contract between Pollack and Falcon:

2. Payment Schedule: Contractor will pay subcontractor the sum of $2,352,000.00 in installments as follows: lump sum of TWO MILLION THREE HUNDRED FIFTY-TWO THOUSAND AND NO/100 DOLLARS ($2,352,000.00) ninety percent on or about the 30th day of each month for work incorporated or materials suitably stored as acceptable to owner and contractor and for which payment has been made by owner or lender to contractor; ten percent to be paid following completion of the subcontractor's work and acceptance by owner and release to contractor of retainage.

Pollack argues that Falcon is required to prove the existence of each condition precedent before it is entitled to recover on it.

A condition precedent may be either a condition to the formation of a contract or an obligation to perform an existing agreement. Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex.1976); Gulf Constr. Co., Inc. v. Self, 676 S.W.2d 624, 627 (Tex.App.--Corpus Christi 1984, writ ref'd n.r.e.). Conditions precedent to an obligation to perform are those acts or events which occur subsequently to the making of the contract that must occur before there is a right to immediate performance and before there is a breach of contractual duty. Hohenberg Bros., 537 S.W.2d at 3.

In construing the meaning and intent of a contract, the court must look to the entire instrument and consider all of its provisions together. Citizens Nat'l Bank in Abilene v. Texas and Pacific Ry. Co., 136 Tex. 333, 150 S.W.2d 1003 (1941). However, when the intent of the parties is doubtful or when a condition would create an absurd or impossible result, courts should interpret agreements as creating covenants and not conditions. Hohenberg Bros., 537 S.W.2d at 3. Moreover, it is a rule of construction that a forfeiture, by finding a condition precedent, is to be avoided when another reasonable reading of the contract exists. Reilly v. Rangers Management, Inc., 727 S.W.2d 527, 530 (Tex.1987); Security State Bank v. Valley Wide Elec. Supply Co., 752 S.W.2d 661, 666 (Tex.App.--Corpus Christi 1988, writ denied).

In construction contract situations, the solvency of the owner is a credit...