Southern Elec. Servs., Inc. v. City of Houston
| Decision Date | 18 August 2011 |
| Docket Number | No. 01–10–00649–CV.,01–10–00649–CV. |
| Citation | 355 S.W.3d 319 |
| Parties | SOUTHERN ELECTRICAL SERVICES, INC. as Assignee of the Morganti Group, Inc., Appellant, v. The CITY OF HOUSTON, Appellee. |
| Court | Texas Court of Appeals |
OPINION TEXT STARTS HERE
Anthony T. Gotz, Diane M. Guariglia, Marc A. Young, Cokinos, Bosien & Young, Houston, TX, for Appellant.
Malinda York Crouch, Sr. Assistant City Attorney, Houston, TX, for Appellee.
Panel consists of Chief Justice RADACK and BLAND.*
OPINION ON MOTION FOR REHEARING
In this government contract dispute, Southern Electrical Services, as assignee of the Morganti Group, Inc., (SES) sued the City of Houston for breach of contract and violation of the Prompt Payment Act. The trial court granted summary judgment in favor of the City. SES appeals, contending that the trial court erred in granting the City's summary judgment motion because: (1) a genuine issue of material fact exists as to whether the City is liable for breach of contract and interest owed under the Prompt Payment Act; (2) section 271.153 of the Texas Local Government Code does not bar SES's damages; and (3) the City failed to establish any of its affirmative defenses as a matter of law. On May 5, 2011, we issued an opinion affirming the judgment of the trial court. SES filed a motion for rehearing and a motion for en banc reconsideration. We grant the motion for rehearing, withdraw our opinion issued May 5, 2011, and issue this opinion in its stead. We overrule the motion for reconsideration en banc as moot.1 Our disposition is unchanged.
The City sought bids from companies to construct a new central concourse at the William P. Hobby Airport. Morganti bid to be a general contractor on the project. Morganti, in turn, requested bids from subcontractors to perform work on the project, and SES, as a subcontractor, prepared its bid for its portion of the project based on a “prevailing wage rate” scale that the City provided to the bidders in its bid documents. Both under the contract and by statute, the City required its contractors and subcontractors on the project to pay their employees at or above the local prevailing wage rate.2 See TEX. GOV'T CODE ANN. §§ 2258.001–.026 (West 2008). The City subsequently awarded SES and Morganti “lump sum” contracts to perform the work.
The contract between the City and Morganti provides in relevant part,
1.1 Contractor shall execute the Work in accordance with the Contract Documents, except to the extent specifically indicated in the Contract Documents to be the responsibility of others, or as otherwise provided herein.
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3.1 Subject to the terms and conditions of the Contract Documents, City shall pay Contractor in current funds for Contractor's performance of the Contract, the Contract Price of [$77,039,273.86].
Attached to and incorporated into the contract were additional “general conditions” and “supplementary conditions,” which provide, in relevant part:
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1.1.5 Contract: The Contract Documents form the Contract for Work. The Contract represents the entire and integrated agreement between parties and supersedes prior negotiations, representations or agreements, either written or oral. The Contract may be amended or modified only by a Modification....
1.1.6 Contract Documents: The Agreement between the City and Contractor, the portions of the Contractor's Bid attached to the Agreement, and any post-bid documentation submitted prior to the execution when attached to the Agreement ... the Conditions of the Contract, ... appropriate addenda ... and other documents as they are specifically enumerated in the Agreement, plus Modifications.
1.1.12 Modification: A Modification to the Contract Documents, issued after the Effective Date of the Agreement, is a Change Order, a Work Change Directive, or a written order for a minor change in the Work issued by the City Engineer.
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1.2 EXECUTION, CORRELATION AND INTENT
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1.2.2 Execution of the contract by the Contractor is conclusive that the Contractor has carefully examined the Contract Documents, visited the site of the Work, become familiar with local conditions under which the Work is to be performed, and fully informed itself as to conditions under which the Work is to be performed, and fully informed itself as to conditions and matters which can affect the Work or costs thereof....
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3.6.1 Contractor shall comply with the governing statutes providing for labor classification of wage scales, as stipulated in Document 00800–Supplementary Conditions, for each craft or type of laborer, worker, or mechanic.
3.6.1.1 Prevailing wage rates applicable to the Work shall be as stated in the Agreement, and as bound by in the Project Manual.
3.6.1.2 The prevailing wage rates applicable to the Work shall be Document 00812–Wage Scale/Engineering/FAA, as bound in the Project Manual. Documents 00811 and 00813 shall not apply.
3.6.2 Each week the Contractor shall submit to the City Affirmative Action and Contract Compliance Division, certified copies of payrolls showing classification and wages paid by the Contractor and all Subcontractors for each employee working on the Project for any day included in the Contract.
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5.3 CONTRACTOR RESPONSIBILITY FOR SUBCONTRACTORS
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5.3.2 By written agreement, Contractor shall require each Subcontractor, to the extent of the work to be performed by the Subcontractor, to be bound to the Contractor by the terms of the Contract Documents....
Document 00812 is an addendum to the contract, showing a scale of wage rates to be paid to different types of employees. Document 00812 states that employers should use the wage rates as the minimum wage for their employees, and the rates do not prohibit payment of higher wages. SES's subcontract expressly incorporated the contract between the City and Morganti.
After SES entered into the subcontract, the City amended its minimum prevailing wage scales and certified the higher wage scales, reflected in Document 00813. The 00813 rates similarly do not prohibit a contractor's payment of higher wages to his employees. After a dispute arose about the switch, in a letter sent to Morganti, the City wrote that it would reimburse the Hobby Airport contractors and subcontractors for variances between the 00812 rate and the 00813 rate. In response to the letter, Morganti requested the difference between the rates on behalf of itself and its subcontractors, including SES. The City denied the claim. It took the position that the switch to the 00813 rate did not harm Morganti and SES because none of their employees received a wage increase due to the switch. SES's president admitted that SES did not change the rates it paid its employees on account of any communications from the City. SES timely completed its performance under the contract and received payment.
SES, as an assignee of Morganti, filed this breach-of-contract suit against the City, alleging that in providing incorrect wage scales in the contract documents, the City breached the contract.3 In its seventh amended petition, SES alleges that both the 00812 rate and the 00813 rate are incorrect wage scales. SES seeks the difference in the wages under the incorrectly certified wage scales provided in the documents and the correct prevailing wage scale plus prompt payment of interest. Both parties moved for summary judgment in the trial court. The trial court denied SES's motion and granted the City's motion.
We review de novo the trial court's ruling on a motion for summary judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009). A court must grant a traditional motion for summary judgment if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law on the issues expressly set out in the motion or in an answer or in any other response. See TEX.R. CIV. P. 166a(c). We review the evidence presented by the summary judgment record in a light most favorable to the party against whom the summary judgment was rendered, crediting evidence favorable to that party if reasonable jurors could and disregarding contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez, 206 S.W.3d 572, 582 (Tex.2006) (citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005)). When both sides move for summary judgment, and the trial court grants one motion and denies the other, the reviewing court considers both sides' summary judgment evidence and determines all issues presented. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005).
Where the trial court does not specify the grounds for its summary judgment, the party challenging the order must show that each of the independent arguments alleged in the motion is insufficient to support the order. Hudiburg Chevrolet, Inc. v. Gen. Motors Corp., 114 S.W.3d 680, 684 (Tex.App.-Dallas 2003), modified, 199 S.W.3d 249 (Tex.2006); Williams v. City of Dallas, 53 S.W.3d 780, 784 (Tex.App.-Dallas 2001, no pet.). The reviewing court must affirm the summary judgment if any of the theories presented to the trial court and preserved for appellate review are meritorious. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003).
SES contends that the trial court erred in denying its summary judgment motion and granting the City's motion because, at the least, a fact issue exists as to whether the City is liable under the contract. The City responds that SES's breach of contract claim fails as a matter of law because its alleged breach did not cause damage to SES.
To prevail on a claim for breach of contract, the plaintiff must establish the following elements: (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach of the contract by the defendant; and (4) damages...
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