State v. Buckner Const. Co.

• Decision Date: 05 December 1985
• Docket Number: No. A14-85-130CV,A14-85-130CV
• Citation: 704 S.W.2d 837
• Parties: STATE of Texas, Appellant, v. BUCKNER CONSTRUCTION COMPANY, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 837

704 S.W.2d 837

STATE of Texas, Appellant, v. BUCKNER CONSTRUCTION COMPANY, Appellee.

No. A14-85-130CV.

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

Dec. 5, 1985.

Rehearing Denied Jan. 16, 1986.

Delmar L. Cain, Asst. Atty. Gen., Austin, for appellant.

Robert S. Harrell, Roger Townsend, Houston, for appellee.

Before J. CURTISS BROWN, C.J., and SEARS and ELLIS, JJ.

OPINION

SEARS, Justice.

This is an appeal from a judgment for $840,000 entered against Appellant for claims made by Appellee in connection with its contract with Appellant to paint a number of bridges on state roads. Following Appellant's filing of its Motion to Appeal, Appellee filed a Motion for Penalty for Frivolous Appeal under TEX.R.CIV.P. 438. We affirm the judgment of the trial court and deny the Motion for Penalty for Frivolous Appeal.

Appellee, Buckner Construction Company (Appellee or Buckner), was low bidder on a project initiated by the State Department of Highways and Public Transportation (Appellant or State) to sandblast and paint twenty-eight bridges in Montgomery County for $404,800. At the same time, Buckner contracted for the same work on bridges in Brazoria County. That work is not the subject of this appeal. Buckner actually bid the job for another company, A-1 Painting and Sandblasting of Austin (A-1). Buckner signed the contract with the State on February 2, 1978 and then subcontracted the job with A-1 for a percentage of the contract price, as it had done with other subcontractors on numerous previous occasions. Ultimately four different subcontractors, at different times, worked on the bridges. As specified in the contract, the resident engineer for the state in Montgomery County was the final authority for the job. He then assigned an inspector to work at the job site. Four inspectors worked on this job at different times before its completion.

A-1 began work on the job in March of 1978 and, according to testimony for Buckner, began having trouble shortly thereafter when the State required a greater amount of sandblasting of the bridges prior to painting than A-1 believed was specified in the contract. Another immediate problem was that the paint the State required Buckner to purchase for the job was beyond its shelf life and had to be thinned excessively before it could be used, thereby requiring a greater amount of time and materials to mix and apply it. On three occasions, Buckner or the subcontractors returned the bad paint to a state warehouse and were supposedly given new paint; actually, some of it was also too old to be used. A-1 stopped work on the job in July 1978, citing financial difficulties caused by the bad paint and excessive sandblasting required by the job inspector. Buckner had made advances to A-1 prior to July hoping its problems could be resolved and the work continued. According to testimony from both A-1 and Buckner, morale was also a major problem, as the men on the job were unable to communicate with or get along with the state inspector.

Buckner filed a claim with the State for compensation of $26,586.58, the amount A-1 claimed it had to pay its employees for additional work days made necessary by the bad paint. Buckner also filed suit against A-1 for a monetary refund. That suit has not yet been tried, but at Buckner's request, has been maintained on the docket.

Highway Contracting (Highway) began working in August, 1978, as subcontractor on the job. The same complaints were forthcoming from Highway that had been made by A-1, and the friction accelerated between the second state inspector on the job, Damman, and Highway's supervisor and employees. They complained also that the inspector was not on the job during the hours they needed him to be there to inspect the sandblasting prior to final painting. Another inspector, Hineman, replaced Damman as inspector for several months in 1978; witnesses testified that they were able to communicate with him and that their work progressed more easily and more quickly. However, the state engineer did not agree with the inspection job performed by Hineman, and replaced him with the second inspector, Damman, who required that a significant amount of work finished under Hineman be sandblasted and painted again.

Buckner was forced during the period Highway worked on the job to advance it large sums of money to continue the work. In approximately July of 1979, Highway pulled off the Montgomery County job to work exclusively in Brazoria County, citing its precarious financial situation caused by the frequent problems with the State. During the time Highway was on the job and the interim period before the company failed, employees of Buckner, Highway, and the State met on several occasions to discuss their problems. One of Buckner's officers admitted at one point that they might not have understood the specifications completely from the beginning but had decided to cooperate with the State and meet its greater expectations concerning the sandblasting. During the course of the work on the project Buckner subcontracted with C & J Painting Co., whose employee testified to the same kinds of problems the other contractors encountered concerning the sandblasting and inspections.

It is apparent from the record that Buckner and the subcontractors believed the lack of practical experience of all the state inspectors, but principally Damman, and that of the engineer, Holzwarth, contributed to their inability to agree on the contract specifications. The contract specified that all work on the bridges was to be accomplished under the supervision of the project engineer, who was to referee all disputes arising under the contract and to have the final decision concerning them. The contractor was obligated to renew or repair any defective part of the construction at its own expense.

For several months during two different time periods, no subcontractors worked on the Montgomery County job at all, though Buckner continued to seek work for itself and other subcontractors in other parts of the state. Highway Painting completely pulled off the job in December, 1979, owing Buckner approximately $950,000. Buckner released Highway from any claims against it, stating that the company was destroyed because of the unfair demands placed on it by the State. Some of Highway's employees became Buckner's employees and subsequently worked on the bridges. Buckner purchased from Highway some of the equipment Highway had bought to complete the job with money advanced it by Buckner.

The record reflects that the state engineer, Holzwarth, as well as the inspector, Damman, believed the subcontractors did not meet the stated specifications in their work and continued other practices such as failing to blow dust off a surface before painting it. Additionally the State cited instances of equipment breakdowns, manpower shortages, and inability to adequately communicate with the job supervisors. There was general agreement among Appellee's witnesses that following the removal of Mickey Damman for the second time, a fourth inspector, Nelson, was installed, and under him the work accelerated and conditions improved until the job was completed and accepted in October, 1980.

Buckner filed a second claim with the State on November 24, 1980 for compensation for additional working days. A Highway Commission Minute Order was issued May 20, 1981 awarding Buckner $26,586.58, the amount of its first claim for time delay experienced by A-1 subcontractors because of the bad paint. The State denied the remainder of the claim. However, the first amount was not paid until October 10, 1984, one week before trial. The State also paid at that time the retainage it had kept from Buckner during the job and a refund for the unused paint Buckner sold back to the State.

Buckner brought suit against the State for $1,190,625.24 in damages, $19,180.00 for penalties assessed against it, $7,249.30 for unpaid retainage, $3,828.36 for bad paint returned and the $26,586.58 for the first claim. The court entered judgment upon the jury's verdict that the resident engineer acted in an arbitrary and capricious manner in requiring a greater amount of sandblasting than was required in the specifications, in providing bad paint, and in maintaining inspectors on the job who were unsuitable for it. This conduct was based on his partiality, misconduct, and gross error. The jury awarded Appellee $840,000 compensation for damages suffered and found that Appellee had not waived its right to additional compensation by its own acts or omissions. The State filed a Supplemental Brief with this court following Appellee's Motion for Penalty for Frivolous Appeal. In it the State adds five additional points of error and responds to Appellee's motion.

Appellant presents ten grounds of error on appeal. In the first two points, it argues that the trial court erred in overruling its motion for an instructed verdict because there was no evidence or insufficient evidence that the engineer, Holzwarth, acted arbitrarily or capriciously in settling any dispute under the contract or based any decision on partiality, misconduct or gross error.

The standard of review for an insufficiency of the evidence complaint is whether the evidence supporting the finding is so weak or the evidence to the contrary so overwhelming that the finding is manifestly unjust; if it is, it should be set aside and a new trial ordered. The appellate court must review all of the evidence in the record to reach its decision. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965); In re King's Estate, 150 Tex. 662, 664, 244 S.W.2d 660, 661 (1951); J.M.R. v. A.M., 683 S.W.2d 552, 554 (Tex.App.--Fort Worth 1985, writ ref'd n.r.e.). It is the jury's function to determine the credibility of the witnesses and the weight to be given their testimony. Leyva v. Pacheco, 163 Tex. 638, 641, 358 S.W.2d 547, 549 (1962); Stine v. Stine, 590 S.W.2d 627, 630 (Tex.Civ.App.--Houston ...