Vast Constr., LLC v. CTC Contractors, LLC

• Decision Date: 06 July 2017
• Docket Number: NO. 14-16-00005-CV.,14-16-00005-CV.
• Citation: 526 S.W.3d 709
• Parties: VAST CONSTRUCTION, LLC, Appellant v. CTC CONTRACTORS, LLC, Appellee
• Court: Texas Court of Appeals

526 S.W.3d 709

VAST CONSTRUCTION, LLC, Appellant

v.CTC CONTRACTORS, LLC, Appellee

NO. 14-16-00005-CV.

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

Opinion filed July 6, 2017

Andrew Bender, Murry B. Cohen, Houston, TX, for Appellant.

Jeffery T. Nobles, Chad Joseph Castille, Houston, TX, for Appellee.

Panel consists of Chief Justice Frost and Justices Brown and Jewell.

OPINION

Kevin Jewell, Justice

In this contract dispute between a general contractor, CTC Contractors, LLC, and a subcontractor, Vast Construction, LLC, appellant Vast challenges the judgment in favor of appellee CTC. The judgment is based on a jury finding that Vast failed to comply with the subcontract. First, Vast asserts that it is entitled to either (1) rendition of judgment in its favor because it established as a matter of law that it did not breach the contract, or (2) reversal of the judgment and remand for a new trial based on various evidentiary or charge-error issues. Second, Vast contends that it established, as a matter of law, that CTC violated the prompt payment to contractors and subcontractors provisions of the Texas Property Code. Third, Vast urges that the trial court reversibly erred by refusing to include a jury question on its Texas Construction Trust Fund Act claim. Fourth, Vast asserts that the trial court erred in awarding attorneys' fees to CTC under Texas Civil Practice and Remedies Code Chapter 38. Finally, Vast asserts that it was entitled to attorneys' fees under the prompt-payment provisions of the Texas Property Code.

We agree with Vast that the trial court erred by awarding attorneys' fees against it under Civil Practice and Remedies Code section 38.001 because that statute authorizes an award of reasonable attorneys' fees against only individuals and corporations, and Vast, a limited liability company, is neither an individual nor a corporation. We therefore modify the trial court's judgment to remove all portions awarding attorneys' fees to CTC. Rejecting Vast's other issues that we find dispositive, we affirm the judgment as modified.

Background

In December 2013, CTC became the general contractor for the construction of a Johnstone Supply store on property owned by Carroll Ventures, LLC in Houston, Texas. The construction site was located on the corner of North Shepherd Drive and Cornish Street. An integral part of the construction project was the expansion of Cornish Street to ease traffic flow and improve surrounding infrastructure (the "Cornish Street Project"). The Cornish Street Project included flood control measures, water and sewage work, installation of a fire sprinkler line, sidewalk construction, and widening of Cornish Street to allow truck access to the store.

CTC requested proposals to complete the Cornish Street Project. Vast submitted a written proposal to complete the Cornish Street Project for a total of $355,000. Vast's proposal covered furnishing "the equipment, labor[,] and materials needed to complete the scope of work listed." The proposal also excluded certain identified tasks, the most relevant of which for our purposes is "permits."

CTC and Vast signed a subcontractor agreement in February 2014 (the "Subcontract"). The scope of work attached to the Subcontract described the work to be completed on site as "concrete and asphalt paving, water, sewer [,] and storm sewer." This scope of work was to be completed by April 10, 2014. The Subcontract further included the following relevant provisions:

All work order additions and or omissions must be approved by Contractor. Subcontractor will accept all financial responsibility for any work performed by Subcontractor that is not covered in this agreement or that is not approved by Contractor.

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Subcontractor is required to meet all reasonable completion schedules set forth by the Contractor[;] therefore Subcontractor agrees to supply as many workers as need, or work as many hours as needed, to meet these completion schedules as well.

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CANCELLATION/TERMINATION. In the event that the "Scope of Work" is canceled [,] Subcontractor will be compensated for any work completed based on the breakdown of its bid. If the work completed is not covered in Subcontractor's bid then Contractor reserves the right to compensate Subcontractor based on a percentage scale of work completed up to the cancellation date. Contractor reserves the right to terminate this agreement at any date, with no further compensation, if Contractor determines that Subcontractor is not performing its obligations to fully meet this agreement, also Subcontractor agrees to reimburse Contractor for all cost[s] incurred by Contractor due to Subcontractor negligence.

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REMEDIES. In addition to any and all other rights a party may have available according to law, if a party defaults by failing to substantially perform any provision, term or condition of this Contract (including without limitation the failure to make a monetary payment when due), the other party may terminate the Contract by providing written notice to the defaulting party. This notice shall describe with sufficient detail the nature of the default. The party receiving such notice shall have 10 working days from the effective date of such notice to cure the default(s). Unless waived by the party providing notice, the failure to cure the default(s) within such time period shall result in the automatic termination of this Contract.

ENTIRE AGREEMENT. This Contract contains the entire agreement of the parties, and there are no other promises or conditions in any other agreement whether oral or written concerning the subject matter of this Contract. This Contract supersedes any prior written or oral agreement between the parties.

The Subcontract was silent concerning which party was obligated to secure permits necessary to complete the scope of work. However, Vast applied for and obtained an excavation permit, a sidewalk impairment permit, and a storm water line system permit from the City of Houston. One other permit—a lane closure permit—also was critical to completing the Cornish Street Project. Vast began processing the lane closure permit with the City around February 18, 2014. Securing the permit required a traffic control plan, which the City of Houston had approved in November of 2013.¹ Although the City initially denied the lane closure permit,² the City, CTC, and CSF personnel continued to communicate about adjusting the traffic control plan to secure approval.

Vast submitted a bill to CTC on February 19 for $38,400 for "mobilization costs." CTC submitted a payment application that included this invoice (among others) to Carroll Ventures for payment on February 25. CTC received Carroll Ventures's payment on this application on March 14, but CTC did not remit any funds to Vast.

Meanwhile, Vast began "pulling people off" the Cornish Street Project in late February. On March 13, 2014, while discussions still were underway among the City, CTC, and CSF regarding the lane closure permit, Vast contacted the City of Houston and cancelled its maintenance bond and all the permits it had obtained previously. All work on the Cornish Street Project came to a halt that day.

Vast's work stoppage is undisputed in the record. CTC's president, Josh Crescenzi, testified that Vast abandoned work on the Cornish Street Project because Vast desired to pursue more profitable endeavors. The record does not indicate that Vast contended it abandoned the project because CTC was in breach. And, there is no evidence that Vast invoked the Subcontract's notice-of-default and termination procedures before Vast stopped work on the project on March 13.

On March 23, CTC notified Vast that Vast was in default on the Subcontract for Vast's alleged: (1) failure to prosecute work on the Cornish Street Project in accordance with the Subcontract documents and schedule; (2) failure to strictly comply with all provisions of the Subcontract; and (3) delay, interference, or stoppage of CTC's operations or of any other subcontractor work.

CTC requested bids from replacement subcontractors for the Cornish Street Project shortly after Vast revoked the permits. After receiving multiple proposals, CTC selected A&M Contractors to finish the Cornish Street Project and entered into a contract with A&M on April 1, for a total cost of $446,900. CTC's contract with A&M expressly provided that A&M was responsible for obtaining the necessary permits. The contract also required A&M to obtain a performance bond, which Vast had not been required to obtain.

On April 14, Vast notified CTC that CTC was in default for CTC's failure to secure required permits necessary for Vast to commence work; failure to timely provide plans; failure to secure approval of a traffic detour plan; failure to pay Vast's February invoice; and refusal to hold necessary performance meetings. In the notice, Vast alleged that it had "attempted to assist CTC" by: (1) securing permits it was not obligated to secure because of CTC's inability to obtain them; (2) sending workers to mobilize and prepare the site at CTC's request; (3) working at the site for two weeks at CTC's request; (4) providing CTC sufficient time to acquire approval of the traffic control plan, which CTC was unable to accomplish; (5) negotiating with CenterPoint Energy regarding relocation of electrical poles, which Vast was not obligated to do; and (6) offering to meet with CTC to negotiate timeline changes that "had become necessary due to delays caused by CTC."

On April 17, 2014, CTC sued Vast for breach of contract, seeking the difference between Vast's Subcontract amount and the amount CTC paid to have the Cornish Street Project completed. CTC paid A&M approximately $477,000, and paid other subcontractors over $60,000, to complete the Cornish Street Project. CTC alleged that Vast failed to timely prosecute its work, failed to strictly comply with the Subcontract, "delayed, interfered and/or stopped CTC's operations," and "abandoned the project."...