Mason Construction, Inc. v. Kevin Robertson D/B/A Bayou Drilling ( 2004 )

In The Court of Appeals

Ninth District of Texas at Beaumont

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NO. 09-03-360 CV ____________________

MASON CONSTRUCTION, INC., Appellant

V.

KEVIN ROBERTSON D/B/A BAYOU DRILLING, Appellee

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On Appeal from the County Court at Law No. 1 Jefferson County, Texas Trial Court Cause No. 88758

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MEMORANDUM OPINION  

Kevin Robertson d/b/a Bayou Drilling, appellee, received a contract from Mason Construction, Inc., appellant, to drill under-reams at Goodyear Tire & Rubber Company. After experiencing various problems at the job site, Bayou removed its rigs and sued Mason, alleging Mason breached the contract. The jury found Mason failed to comply with the agreement and Mason's failure was not excused. The jury awarded Bayou damages in the amount of $50,688.75, the difference between the agreed price and the costs Bayou would have incurred in completing the contract. Mason argues the trial court erred in not submitting requested instructions on the affirmative defenses of waiver and payment, and argues the evidence was insufficient to support the damages award. We hold the evidence was legally sufficient to support the damages, but the trial court erred in refusing to submit the waiver instruction. The judgment is reversed and the case is remanded for a new trial.

The Dispute

Mason asked Bayou to submit a bid for drilling under-reams at Goodyear Tire and Rubber Company's Specialty Polymers Project. Mason requested Bayou break its bid down into cost per hole. Bayou submitted a "flat bid" of $100,080.00 to Mason. Bayou's bid listed prices per hole for drilling the various-sized holes called for by Goodyear's plans. Bayou's bid provided that, as long as drilling was completed within the 83-day time frame, no "stand-by" time would be charged for delays.

Mason awarded the contract to Bayou. The contract incorporated Bayou's bid letter by reference, and the bid letter was also attached to the contract as an exhibit. The contract described the work as drilling under-reams based upon Bayou's bid of unit prices per hole. Section 3 of the contract provided that Bayou would be paid every two weeks on work completed, and the remainder of the contract price would be paid to Bayou upon final completion of the work. Section 4, which is at the heart of this dispute, provided as follows:

The Contractor [Mason] reserves the right to make changes in materials to be furnished or work to be performed under this Subcontract, or additions thereto or omissions therefrom, upon written order to the Subcontractor [Bayou].

Any additions or reductions to be made to or from the amount of the contract price resulting from changes in work or materials furnished shall be agreed upon in writing by the parties hereto, such agreement not being valid unless signed by an officer of the Contractor. In case of disagreement between the parties hereto as to additions or reductions the same shall be determined by the Architect or Engineer by certificate in writing. No addition or reduction in contract price shall be binding upon the Contractor unless agreed upon in writing or determined by the Architect or Engineer as hereinbefore provided for.

On Bayou's first day at the site, the various locations Mason wanted Bayou to drill were marked with flags, and Bayou was instructed that the marked spots were to be drilled with 36-inch shafts with 66-inch bells. Bayou drilled two holes, and then waited for concrete to arrive before belling the holes. Belling could not be done until concrete arrived because, if the holes were not filled with concrete, they would fill with water and collapse. After five or six holes were drilled, belled, and filled with concrete, Mason told Bayou that the holes should have had larger bells. Robertson testified the bells were drilled incorrectly because the holes were marked incorrectly and he was given improper instructions. Robertson stated he had correctly followed the instructions he was given regarding bell size. Architects and engineers called to the site decided the holes should be re-drilled, so Bayou drilled three additional shafts.

Later that day, Bayou began experiencing problems with bell sizes larger than 72 inches. Because of the condition of the ground, the holes would not stay intact long enough to be belled and poured. Goodyear's architects and engineers were again called to the site, and they decided to increase the shaft size to 48 inches, since a smaller ratio between shaft size and bell size reduced the likelihood of collapse. Bayou did not have the necessary equipment to drill and bell a 48-inch shaft, so Robertson subcontracted the work to Batten Drilling.

When Bayou arrived at the site the next day, there were flags in the ground, but there were no notations on them as to what size holes should be drilled. Robertson consulted Craig Atkins, the site superintendent for Mason and Bayou's direct supervisor, and Atkins told him to drill 36 piers for a pipe rack. The holes were to be 24-inch shafts with 48-inch bells. After Bayou had drilled about 24 holes, its work was stopped by a Mason representative, who said the holes should have been 30-inch holes with 60-inch bells. Mason then began using a backhoe to fill the holes with dirt. At that time, Whatley, a representative of Goodyear, approached Robertson and asked what was happening. Robertson told Whatley "apparently, the information didn't make it across the street about us making sure these holes are marked," and "They're wasting my time and spending your money." Atkins heard the conversation. After Whatley walked away, Atkins grabbed Robertson's coveralls and told Robertson not to mention money or Mason's mistakes, and not to talk to the customer. Robertson stated he then ascertained the correct hole size from either the inspector or Atkins and returned to drilling.

Robertson testified that the new work should have been included in a change order because the larger holes called for bigger machinery, more work, and required Bayou to pay Batten for labor and lodging. Bayou was also operating two of its own trucks. Bayou's expert witness, Arceneaux, testified that the new work should have been memorialized in writing, and it was not appropriate for Mason to expect Bayou to continue working without a change order.

On the second or third day of work, Mason hired another drilling company, Trak, to work at the site. Robertson testified that Mason had hands helping Trak by moving dirt, had an inspector with Trak at all times, and always had one to three concrete trucks working with Trak, but did not give Bayou the same assistance.

Robertson testified the problems with dirt not being moved out of the way and concrete not arriving on time continued. To guarantee that Bayou would receive payment, Robertson spoke with Gilbert Andrus, Mason's project manager, and requested that the changes to the contract be memorialized in writing. He later sent Andrus a letter containing the same request. Mason did not sign a change order. Andrus testified that, although the contract required change orders to be in writing, "it was not followed in this strictest letter of the contract." Bayou continued working and invoicing Mason. Andrus denied ever receiving Bayou's request for a change order.

Robertson testified that, at some point, Andrus instructed him not to come to the site because of the confrontation which had occurred between Atkins and Robertson. After a few days, Robertson confronted Andrus about the lack of a written contract. Robertson testified Andrus' response was "Well, son, things change." After this meeting, Robertson pulled Bayou's trucks off the job site, and sent a letter to Andrus, which stated Mason had breached the contract and demanded payment of the balance due. Batten continued on the job. Bayou invoiced Mason for Batten's work, and Mason paid the invoices.

Legal Sufficiency of Bayou's Evidence

Mason contends Bayou's evidence of damages was legally insufficient. ⁽¹⁾ Because this issue, if sustained, would require rendition of judgment in Mason's favor, we will address it first. See Horrocks v. Texas Dep't of Transp., 852 S.W.2d 498, 499 (Tex. 1993) (citing National Life & Accident Ins. Co. v. Blagg, 438 S.W.2d 905, 909 (Tex. 1969)).   

When an appellant attacks the legal sufficiency of an adverse finding on an issue for which it does not have the burden of proof, it must demonstrate that there is no evidence to support the adverse finding. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). In reviewing a no evidence point, we consider only the evidence and inferences that tend to support the finding and disregard all contrary evidence and inferences. See Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). If there is more than a scintilla of evidence to support the finding, the evidence is legally sufficient. See Browning-Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex. 1993).

A jury may award only those damages which fairly and reasonably compensate the plaintiff for the injury. Saenz v. Fidelity & Guar. Ins. Underwriters, 925 S.W.2d 607, 614 (Tex. 1996). Damages which are too remote, too uncertain, or purely conjectural are not recoverable. Arther Anderson & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 816 (Tex. 1997). A plaintiff must show the amount of lost profits by competent evidence with reasonable certainty. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 505 (Tex. 2001); Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994). "[O]pinions or estimates of lost profits must be based on objective facts, figures, or data from which the amount of lost profits may be ascertained." Capital Metro. Transp. Authority/Cent. of Tennesee Ry. and Navigation Co., Inc. v. Central of Tennessee Ry. & Navigation Co., Inc., 114 S.W.3d 573, 579 (Tex. App.--Austin 2003, no pet.) (citing Szczepanik, 883 S.W.2d at 649).

Robertson calculated Bayou's lost profits by deducting the cost of performance from the contract price. He deducted anticipated labor costs of $18,592.00, based upon 83 eight-hour days, $1,155 for insurance procurement, and $8,300 for fuel costs, which yielded a net anticipated profit of $72,033.00. Robertson then subtracted the $11,591.25 Mason had already paid Bayou for its work, for a total of $60,441.75 in net lost profits. According to Robertson, if the contract had taken less than 83 days to complete, Bayou's profit would have been larger because of the labor costs it would have saved. Robertson testified that Bayou typically made 50-75% profit on its drilling jobs.

Robertson testified Bayou's invoices for Batten's work under the subcontract were paid in the amounts of $18,750 and $12,325. Robertson also stated he did not include the costs of workers' compensation, FICA, equipment maintenance, depreciation, insurance on equipment, or office overhead in the calculation of Bayou's labor costs. Bayou did not charge Mason for standby time because the contract provided standby time would not be charged as long as work was completed within 83 days.

The record contains testimony from appellee's witnesses which disagrees with the testimony of Bayou's witnesses, and attempts to explain or mitigate Bayou's evidence of damages. However, the jury was free as factfinder to believe Bayou's witnesses and disbelieve other witnesses. The jury found damages of $50,688.75, rather than Bayou's figure of $60,441.75, which suggests the jury considered costs Bayou had omitted in calculating its damages. As an appellate court, we must consider only the evidence supporting the finding and disregard contrary evidence and inferences. Catalina, 881 S.W.2d at 297. Because there is more than a scintilla of evidence to support the jury's finding of damages, appellant's third issue is overruled.

Mason's Requested Instruction on Waiver

Mason argues the trial court erred in failing to submit its requested instruction on waiver. The standard of review for alleged error in the jury charge is abuse of discretion. Steak & Ale of Tex., Inc. v. Borneman, 62 S.W.3d 898, 904 (Tex. App.--Fort Worth 2001, no pet). The discretion afforded the trial court in submitting instructions is not absolute. "The court shall submit the questions, instructions and definitions in the form provided by Rule 277, which are raised by the written pleadings and the evidence." Tex. R. Civ. P. 278; see Union Pac. R.R. Co. v. Williams, 85 S.W.3d 162, 166 (Tex. 2002). Litigants are entitled to have controlling fact issues submitted to the jury. Triplex Communications, Inc. v. Riley, 900 S.W.2d 716, 718 (Tex. 1995); see also Bel-Ton Elec. Serv. v. Pickle, 915 S.W.2d 480, 481 (Tex. 1996).

For an instruction to be proper, it must: (1) assist the jury, (2) accurately state the law, and (3) be supported by the pleadings and evidence. Borneman, 62 S.W.3d at 904-05 (citing Tex. R. Civ. P. 277 and 278). When evaluating whether a party is entitled to a jury instruction, the appellate court must examine the record for evidence supporting submission of the instruction, and ignore evidence to the contrary. Sims v. Washex Mach. Corp., 932 S.W.2d 559, 561 (Tex. App.--Houston [1^st Dist.] 1995, no writ) (citing Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex. 1992)).

Question 2 of the charge was as follows: "Was the failure of Mason Construction, Inc. to comply excused?" The court included the following instruction with Question 2: "Failure to comply by Mason is excused by Bayou Drilling's previous failure, if any, to comply with a material obligation of the same agreement." Mason requested the following instruction on waiver: "Failure to comply by Mason is excused if compliance is waived by Bayou. Waiver is an intentional surrender of a known right or intentional conduct inconsistent with claiming the right." See generally United States Fidelity & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971). The trial court refused Mason's waiver instruction, and Mason objected. Mason had pled waiver. At trial, the jury heard evidence that, although Mason never granted Robertson's request for a written change order, Bayou continued on the job and hired a subcontractor to do the drilling it lacked the equipment to perform. In fact, Andrus denied receiving a request for a change order. Because Mason's requested instruction on waiver was supported by both pleadings and evidence and was a controlling fact issue, the trial court erred in denying the instruction.

We must next determine whether the omission of the instruction requires a new trial. Error in the jury charge is reversible only if it probably caused the rendition of an improper judgment or prevented the appellant from properly presenting the case on appeal. Tex. R. App. P. 44.1(a); Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718, 723 (Tex. 2003). To determine harm, the appellate court must consider the entire record, including the parties' pleadings, the evidence, and the charge. See Timberwalk Apts., Partners, Inc. v. Cain, 972 S.W.2d 749, 756 (Tex. 1998). When the error in the jury charge relates to a contested controlling fact issue, an erroneous instruction will likely require a new trial. See Southwestern Bell Tel. Co. v. John Carlo Tex., Inc., 843 S.W.2d 470, 472 (Tex. 1992); Smith-Hamm, Inc. v. Equipment Connection, 946 S.W.2d 458, 463-64 (Tex. App.-- Houston [14^th Dist.) 1997, no writ).   

The omission of the waiver instruction, and the inclusion of a single instruction on prior breach, misinformed the jury; the instruction, in effect, says prior breach by Bayou was the only way Mason's breach would be excused. Whether Bayou waived compliance after Mason's breach was not submitted to the jury. We are not persuaded by Bayou's argument that, because Mason's counsel argued waiver in his summation, any error was harmless. The question of whether Bayou waived the requirement that change orders be in writing was key to determining Mason's liability for that noncompliance. Asking the jury to resolve that controlling fact issue without a proper instruction was error. Appellant's first issue is sustained.

Because we hold the refusal of the instruction on waiver requires a new trial, we need not address Mason's factual sufficiency issue or the trial court's refusal of Mason's requested instruction on payment.

The judgment is reversed, and this cause is remanded for a new trial.

REVERSED AND REMANDED.

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DAVID GAULTNEY

Submitted on April 29, 2004

Opinion Delivered October 7, 2004

Before McKeithen, C.J., Burgess and Gaultney, JJ.

1. Mason did not object to the trial court's submission of Question 3 (the measure of damages), and does not contend that calculating Bayou's damages as lost profits was erroneous.