BNM Ventures, LLC v. Shannon Green ( 2023 )

AFFIRMED in part; REVERSED and RENDERED in part; VACATED and
REMANDED and Opinion Filed June 16, 2023
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-22-00474-CV
BNM VENTURES, LLC, Appellant
V.
SHANNON GREEN, Appellee
On Appeal from the 95th District Court
Dallas County, Texas
Trial Court Cause No. DC-20-08630
MEMORANDUM OPINION
Before Justices Reichek, Nowell, and Garcia
Opinion by Justice Reichek
In this appeal following a bench trial, BNM Ventures, LLC challenges the
trial court’s judgment in favor of Shannon Green on his claim for breach of a
settlement agreement. BNM brings two issues generally asserting the evidence does
not support the trial court’s finding of breach or its award of damages. Because we
conclude Green failed to adduce any evidence at trial to show the cost-of-completion
damages he sought to recover were reasonable, we reverse the trial court’s award of
those damages and render judgment that Green recover no remedial damages.
Because the remaining damages are unchallenged, they are affirmed. We remand
the case to the trial court for a reassessment of attorney’s fees in light of this
disposition.
Background
BNM constructed a home and sold it to Green in April 2019. Several weeks
later, the area received substantial rainfall and the house flooded. Green hired
Lighthouse Engineering, L.L.C. to do a drainage inspection.
A report prepared by Lighthouse concluded there were several issues with the
water drainage on the property, including that the grading around the house did not
meet the minimum requirements of the International Residential Code (“IRC”).
Lighthouse drafted an engineering report recommending remediation measures and
attached a drawing outlining their recommendations.
On August 8, 2019, Green’s attorney sent Michael White, BNM’s managing
partner, a notice of construction defects pursuant to the Texas Residential
Construction Liability Act. Among the defects listed in the notice were that the
“driveway was improperly constructed and allows water to run toward the house,”
and the “final grade was improperly completed on the front and left sides of the
Property, which causes water to drain toward the house, rather than away from it.”
Following a mediation, Green and BNM entered into a settlement agreement in
which BNM agreed to,
Modify the driveway and grading per the Lighthouse
Engineering, LLC report attached as Exhibit “B.” Post-
completion inspection by an engineer will be performed at
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Shannon Green’s expense within 15 days from the date that
BNM notifies Mr. Green that repairs are believed to be complete;
if the post-completion inspection determines that the
modifications made by BNM did not conform to the
specifications set forth in Exhibit “B,” BNM will make further
modifications until those specifications are met.
In May 2020, White informed Green that BNM’s work was ready for
inspection. The Lighthouse engineer who drafted the original report determined the
repairs did not conform to the report’s specifications. White disputed the engineer’s
conclusion, particularly with respect to the driveway, stating the report was “very
ambiguous.” According to White, the report did not require the driveway to be
broken out and replaced to the extent Lighthouse now claimed was necessary. White
ceased work on the exterior of the house and said he wanted the parties’ attorneys to
resolve the conflict.
On June 1, Green’s attorney sent an email to BNM’s attorney stating that
Green would be “hiring another contractor to finish the exterior work that [BNM]
refuses to complete.” Two days later, Green sent a text message to White stating he
was not sure if White was “waiting on a deal” to complete the repairs, but he was
hiring another company to complete the work. Lighthouse issued an inspection
report the same day stating the work done by BNM was deficient in several ways
including, (1) the grading around the perimeter did not meet the minimum required
by the IRC, and (2) the driveway was not broken out and “swaled” as recommended
in the repair plan.
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On June 29, Green received a bid from Armadillo Fences, Decks and
Remodels stating the cost to make the necessary modifications to his property would
be $8,600. Payment by credit card would add an additional service charge of
$301.15. The estimate stated it was also “HIGHLY recommended” to have sod laid
on the property. Ten days later, Armadillo Fences provided Green with an estimate
of $4,288.05 to install 2,199 square feet of sod. Green hired Armadillo Fences and
the record shows the company completed the drainage work and laid sod. Green
paid the estimated amounts, including the credit card fee.
BNM filed this suit seeking a declaratory judgment that the settlement
agreement did not require more construction than was required by “the plain
language and plain meaning” of the original Lighthouse engineering report. BNM
asked the court to specifically declare that BNM’s interpretation of the report’s
specifications for the driveway was correct. BNM stated there was a justiciable
controversy because Green indicated his intention to recover the additional costs of
having the repairs performed “pursuant to his own interpretation of the Lighthouse
report.” Green brought a counterclaim for breach of contract asserting that BNM
refused to make the changes necessary for its work to conform to the original
engineering report’s specifications. BNM moved for, and was granted, an order of
mediation. No settlement resulted.
A trial was conducted before the court without a jury. White testified he
believed the work performed by BNM was consistent with the engineering report
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prepared by Lighthouse. White further testified BNM did not refuse to finish the
drainage work, but had merely paused the work to allow the attorneys for both sides
to resolve the issue of what the Lighthouse report required. White conceded the
grading around the house did not meet the minimum slope required by the IRC, but
stated the code provides exceptions to that requirement. White did not ask
Lighthouse whether reliance on an exception would be permitted.
Michael Gandy, owner of Lighthouse, testified the engineering report clearly
required the driveway to be broken out and rebuilt to divert water away from the
house and meet code requirements. The work done by BNM, according to Gandy,
was insufficient to resolve the property’s drainage issues. Gandy stated he could
find no record of anyone from BNM contacting his office to get clarification or
resolve any ambiguities in the report. He further stated there was nothing about the
property that would cause it to fall under an exception to the IRC’s grading
requirement.
Green testified he hired Armadillo Fences only after BNM walked off the job.
He stated he was concerned the house was not safe while the work was left undone.
After he sent the text to White saying he was going to hire someone else, White
never responded that BNM was willing and able to make the modifications
Lighthouse said were needed for the work to meet the report’s specifications. Green
agreed that the settlement agreement did not require BNM to install sod.
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George Francey, a general contractor with Armadillo Fences, testified he
generated the estimate of $8,600 for the drainage work based on the original
Lighthouse report, the inspection report, and a site inspection he performed of the
property. Francey said he believed the $4,288 sod installation was necessary to keep
the dirt used to regrade the property from washing away. Francey agreed that the
type of sod he used was more expensive than Bermuda grass. But, he opined the
work he performed was “reasonable and necessary to keep the water from coming
into the house.” When questioned about what portions of the total amounts charged
were for labor and what portions were for materials, Francey stated he did not know.
Neither the estimate nor the invoice for the drainage work contained a breakdown of
costs.
After hearing the evidence, the trial court denied BNM’s request for a
declaratory judgment and ruled in favor of Green on his claim for breach of contract.
The court specifically found that BNM breached the settlement agreement by failing
to correct the deficiencies cited by Lighthouse following its inspection. As damages,
the judgment awarded Green the amounts he paid Armadillo Fences for the drainage
work and sod as well as the expenses he incurred mediating both his original
construction liability claim and the dispute over the settlement agreement in this
case. BNM brought this appeal.
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Analysis
I. Evidence of Breach
In its first issue, BNM contends the evidence does not support the trial court’s
conclusion that BNM breached the settlement agreement.1 BNM argues the
evidence shows instead that Green fired BNM before it was given a chance to
complete the repairs in accordance with Lighthouse’s instructions. In reviewing a
legal sufficiency challenge to the evidence, we credit evidence that supports the
verdict if a reasonable factfinder could have done so and disregard contrary evidence
unless a reasonable factfinder could not have done so. Akin, Gump, Strauss, Hauer
& Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 115
(Tex.2009); City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). We consider
all the evidence in the light most favorable to the prevailing party and indulge every
reasonable inference in that party’s favor. St. Joseph Hosp. v. Wolff, 94 S.W.3d 513,
520–21 (Tex. 2003). The evidence is legally sufficient if “more than a scintilla of
evidence exists.” Browning–Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex. 1993).
More than a scintilla of evidence exists if the evidence furnishes some reasonable
basis for differing conclusions by reasonable minds about a vital fact’s existence.
Litton Loan Servicing, L.P. v. Manning, 366 S.W.3d 837, 840 (Tex. App.—Dallas
1
Although the issue asserted in BNM’s brief is that the trial court abused its discretion in finding BNM
in breach, we liberally construe the argument to challenge the sufficiency of the evidence supporting the
finding. TEX. R. APP. P. 38.9.
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2012, pet. denied). The final test for legal sufficiency must always be whether the
evidence at trial would enable reasonable and fair-minded people to reach the verdict
under review. Del Lago Partners, Inc. v. Smith, 307 S.W.3d 762, 770 (Tex. 2010).
To evaluate a factual sufficiency challenge, we consider and weigh all the
evidence. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (per curiam).
We can set aside a verdict only if the evidence is so weak or the finding is so against
the great weight and preponderance of the evidence that it is clearly wrong and
unjust. Id. We must not substitute our judgment for that of the factfinder and should
remain cognizant that the factfinder is the sole judge of witness credibility. Golden
Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).
BNM does not dispute on appeal that the work it performed on Green’s house
failed to meet the specifications of the Lighthouse report. Instead, BNM contends
only that it was prevented from completing its performance under the settlement
agreement because Green hired another contractor. Prevention of performance is an
affirmative defense that must be pleaded or else it is waived. Orr v. Broussard, 565
S.W.3d 415, 422 (Tex. App.—Houston [14th Dist.] 2018, no pet.). In addition, the
party asserting prevention of performance must obtain findings of fact on that issue.
Id. In this case, BNM did neither.
Even assuming the issue was preserved for our review, we conclude the
evidence supports the trial court’s finding that BNM breached the agreement. To
show that its performance was prevented, BNM needed to show it made an attempt
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to complete performance and performance was refused. See Dorsett v. Cross, 106
S.W.3d 213, 217-18 (Tex. App.—Houston [1st Dist.] 2003, pet. denied). There is
no evidence in the record that BNM ever offered or attempted to make the
modifications Lighthouse determined were necessary to bring BNM’s work into
compliance with the engineering report made the basis of the settlement agreement.
Indeed, BNM consistently asserted, both before and through trial of this case, that
the work it did met the report’s specifications and no modifications were required.
Although BNM may have believed its work met the specifications of the report, it
agreed to make whatever modifications an inspection deemed necessary, and it
refused to do so. The initial refusal to do any further work until the parties’ lawyers
“worked it out” occurred before Green informed BNM it was hiring another
contractor. Accordingly, we conclude the evidence is sufficient to support the trial
court’s finding of breach. We resolve BNM’s first issue against it.
II. Evidence of Completion Cost Damages
In its second issue, BNM contends the evidence does not support the trial
court’s award of damages. BNM argues Green failed to submit any evidence to
show the amount he paid Armadillo Fences was reasonable. 2 We agree.
2
Again, the issue asserted in BNM’s brief is that the trial court “abused its discretion in
awarding damages without adequate proof.” We construe the argument to challenge the legal
sufficiency of the evidence to support the implied finding that the damages sought by Green were
reasonable and necessary. TEX. R. APP. P. 38.9; see also Vickery v. Comm’n for Lawyer Discipline,
5 S.W.3d 241, 258 (Tex. App.—Houston [14th Dist.] 1999, pet. denied) (appellant may challenge
implied findings for legal and factual sufficiency).
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“The party seeking to recover the cost of completion in a breach of contract
case has the burden to prove that the damages sought are reasonable and necessary.”
Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 200 (Tex.
2004). To establish reasonableness, a party must show more than simply “the nature
of the injuries, the character of and need for the services rendered, and the amounts
charged therefore.” McGinty v. Hennen, 372 S.W.3d 625, 627 (Tex. 2012) (quoting
Dallas Ry. & Terminal Co. v. Gossett, 294 S.W.2d 377, 383 (Tex. 1956). There
must be some other evidence showing that the amounts charged are reasonable. Id.In this case, there was no evidence presented to show that the amount charged
by Armadillo Fences was reasonable for the work performed. Although Francey
stated the work done was reasonable and necessary to resolve Green’s drainage
problems, he offered no testimony to justify the price charged for the work. The
only testimony concerning cost showed the sod Armadillo Fences chose to install
was the more expensive option. Furthermore, Green conceded the sod was outside
the scope of the work specified in the Lighthouse report. Without testimony
regarding the reasonableness of the amounts charged to complete the work
contracted for, the evidence is insufficient to support the award. Id.; see also GHP
Nail Systems, LLC v. Benelux Cosmetics B.V., 651 S.W.3d 574, 584-85 (Tex. App.—
Houston [14th Dist.] 2022, no pet.); Perry Homes v. Alwattari, 33 S.W.3d 376, 385
(Tex. App.—Fort Worth 2000, pet. denied) (evidence repairs were necessary without
evidence expenses were reasonable insufficient to support award of repair damages).
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Green argues the words “reasonable” and “necessary” need not be used so
long as there is sufficient evidence for the trier of fact to conclude the costs were
reasonable. See CCC Grp., Inc. v. S. Cent. Cement, Ltd., 450 S.W.3d 191, 200 (Tex.
App.—Houston [1st Dist.] 2014, no pet.). But, Francey testified only as to the scope
of the work performed and the total amount paid. Mere proof of amounts charged
or paid does not demonstrate reasonableness. Ebby Halliday Real Estate, Inc. v.
Murnan, 916 S.W.2d 585, 589 (Tex. App.—Fort Worth 1996, writ denied). While
in some cases evidence concerning the process of how costs were calculated will be
sufficient to support the reasonableness of the ultimate price, no such evidence was
submitted here. See McGinty, 372 S.W.3d at 628.
Green additionally argues BNM failed to preserve this issue by not raising it
in the trial court. In a civil nonjury case, a complaint regarding the legal or factual
sufficiency of the evidence—including a complaint challenging the damages found
by the trial court—may be raised for the first time on appeal. TEX. R. APP. P. 33.1(d).
We resolve BNM’s second issue in its favor.
III. Conclusion
BNM does not challenge the trial court’s award to Green of the expenses he
incurred in connection with the mediation of his original claim under the Texas
Residential Construction Liability Act and the mediation of the claims in this case.
We recognize that mediation expenses are generally considered costs of suit.
However, in this case, the mediation of Green’s original construction liability claim
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occurred before this suit was filed. Because the trial court did not order the
mediation of the construction liability claim, the expenses of that mediation were
necessarily awarded as damages rather than court costs. See TEX. CIV. PRAC. & REM.
CODE ANN. § 154.054; Spears v. Huber, No. 07-11-0193-CV, 2012 WL 933780, at
*4 (Tex. App.—Amarillo 2012, no pet.) (court may award expenses of mediation it
ordered as court costs). The significant reduction in the amount of damages awarded
to Green compels us to give the trial court an opportunity to reconsider its assessment
of attorney’s fees. See Young v. Qualls, 223 S.W.3d 312, 314 (Tex. 2007) (per
curiam). Accordingly, we reverse the trial court’s award of completion costs and
render judgment that Green recover no remedial damages. We further vacate the
award of attorney’s fees and remand this case to the trial court for a redetermination
of reasonable and necessary fees to be awarded. We affirm the trial court’s judgment
in all other respects.
/Amanda L. Reichek/
AMANDA L. REICHEK
JUSTICE
220474F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
BNM VENTURES, LLC, Appellant On Appeal from the 95th District
Court, Dallas County, Texas
No. 05-22-00474-CV V. Trial Court Cause No. DC-20-08630.
Opinion delivered by Justice
SHANNON GREEN, Appellee Reichek. Justices Nowell and Garcia
participating.
In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED in part, REVERSED AND RENDERED in part, and
VACATED AND REMANDED in part. We REVERSE that portion of the trial
court's judgment awarding SHANNON GREEN $13,351.73 and RENDER
judgment that he take nothing by his claim for remedial damages. We further
VACATE the portion of the trial court’s judgment awarding SHANNON GREEN
his attorney’s fees. In all other respects, the trial court's judgment is AFFIRMED.
We REMAND this cause to the trial court for further proceedings consistent with
this opinion.
It is ORDERED that each party bear its own costs of this appeal.
Judgment entered this 16th day of June 2023.
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