AdvanTech Constr. Sys. v. Michalson Builders, Inc.

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ADVANTECH CONSTRUCTION SYSTEMS, LLC AND LUIS G. HIGAREDA, Appellants v. MICHALSON BUILDERS, INC. AND MICHAEL CZAPSKI, Appellees

No. 14-21-00159-CV

Court of Appeals of Texas, Fourteenth District

January 24, 2023

On Appeal from the County Civil Court at Law No. 4 Harris County, Texas Trial Court Cause No. 1089883

Panel consists of Chief Justice Christopher and Justices Bourliot and Spain.

MEMORANDUM OPINION

Frances Bourliot, Justice

In this construction dispute between a general contractor and a subcontractor, the subcontractor challenges the sufficiency of the evidence in support of a judgment in the general contractor's favor after a bench trial. The claims at issue in this appeal are the general contractor's fraudulent lien and breach of contract claims and the subcontractor's counterclaims and third-party claims for breach of contract and misapplication of construction trust funds. For the reasons below, we affirm in part reverse the trial court's award of attorney's fees and remand to the trial court for further proceedings limited to reconsideration of attorney's fees.

Background

Woods Edge Equity, LLC hired Michalson Builders, Inc. to build a house on piers. Michalson was the general contractor for this residential construction project, and Michaelson hired AdvanTech Construction Systems, LLC, to construct the foundation. To form the foundation of this suspended structure, steel I-beams would be placed on top of the piers and then foam panels, structural steel rebar, and forms would be used to hold the concrete in place while it was being poured.

Michalson began drilling into the ground for piers and then discovered that the title company had failed to identify an easement on the property. Because of this omission, the previously planned slab design would encroach into the easement. The slab design had to be modified to be moved outside the easement. This modification also resulted in pier and beam locations being changed. AdvanTech created several sets of revised plans pursuant to the changes. These changes in plans delayed the project by several months.

Michalson and AdvanTech's relationship was rife with disputes. Michalson complained that AdvanTech did not adequately staff the project, resulting in delays, and that the workers did not have appropriate tools and materials. Some of the panels were lost or damaged due to a flood, but there was a dispute as to how many panels were affected. Michalson agreed to two change orders to cover the changes to the project and replace missing panels.

Finally Michalson and AdvanTech had a dispute about implementing a requested change to the height of the slab. This final dispute culminated in AdvanTech leaving the job. Michalson then sent a 24-hour notice asking AdvanTech to "man the project with an adequate amount of skilled workmen" and warning that "[f]ailure to do so will result in Michalson" hiring another crew. AdvanTech did not return to the jobsite, and Michalson hired another crew to finish the job.

Advantech's general manager, Luis Higareda, recorded a mechanic's lien against the property, which included incorrect amounts owed and other incorrect information. AdvanTech released that lien approximately one year later but recorded an affidavit from Higareda claiming a "constitutional lien." Higareda attested that Michalson was "believed to be a 'sham contractor' as that term is known in Texas law and is, therefore, listed as a reputed owner."

Michalson brought claims against AdvanTech and Higareda for fraudulent lien, breach of oral contract, fraud, negligent misrepresentation, negligence, and negligent hiring. AdvanTech and Higareda brought counterclaims against Michalson and third-party claims against Woods Edge and Michael Czapski, president of Michalson, for breach of contract, under the prompt payment act, to foreclose lien, and for misapplication of construction trust funds.^[1]

AdvanTech, Higareda, and Woods Edge signed a settlement agreement releasing their claims against each other. AdvanTech then recorded a release of its "lien claim" against the property "as well as any other lien rights belonging to . . . AdvanTech . . . relating to or arising from the work it performed." AdvanTech also moved to dismiss its claims against Woods Edge, which the trial court granted.

The remaining claims were tried to the bench, which included (1) Michalson's fraudulent lien claims against AdvanTech and Higareda and breach of contract claim against AdvanTech, and (2) AdvanTech's counterclaims and third-party claims against Michalson for breach of contract and against Czapski for misapplication of construction trust funds. After trial, the trial court rendered judgment in Michalson and Czapski's favor and awarded Michalson actual damages, attorney's fees, costs, and pre- and postjudgment interest. The trial court signed findings of fact and conclusions of law, finding, in relevant part, that (1) AdvanTech and Higareda intentionally filed false mechanic's liens, and (2) Michalson and AdvanTech had an oral contract, which AdvanTech breached.

Discussion

In four issues, AdvanTech and Higareda challenge the sufficiency of the evidence in support of the trial court's (1) award of attorney's fees against AdvanTech and Higareda on Michalson's lien removal claims, (2) award of contract damages to Michalson, (3) denial of contract damages to AdvanTech, and (4) failure to hold Czapski liable for misapplication of construction trust funds. AdvanTech and Higareda also challenge the trial court's jurisdiction over Michalson's lien removal claims.

We defer to a trial court's findings of fact after a bench trial when the findings are supported by the record and review conclusions of law de novo. Sw. Elec. Power Co. v Lynch, 595 S.W.3d 678, 683 (Tex. 2020). In reviewing the trial court's decision for legal sufficiency of the evidence, we use the same standards applied in reviewing the evidence supporting a jury's finding. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994); Schear Hampton Drywall, LLC v. Founders Commercial, Ltd., 586 S.W.3d 80, 85 (Tex. App.-Houston [14th Dist.] 2019, no pet.). Our legal sufficiency review requires us to review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it, crediting favorable evidence if a reasonable factfinder could and disregarding contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 822, 827 (Tex. 2005).

We sustain a legal sufficiency or "no evidence" challenge only when (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex. 2003); Schear Hampton Drywall, 586 S.W.3d at 85. A party attacking the legal sufficiency of an adverse finding on an issue on which it had the burden of proof must show that the evidence conclusively establishes all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). When a party challenges the legal sufficiency of the evidence on a finding on which it did not bear the burden of proof, the party must show that no evidence supports the finding. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 215 (Tex. 2011); Schear Hampton Drywall, 586 S.W.3d at 86.

In reviewing factual sufficiency, we examine the entire record, considering both the evidence in favor of and contrary to the challenged findings. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998); Schear Hampton Drywall, 586 S.W.3d at 86. When a party attacks the factual sufficiency of an adverse finding on which it bore the burden of proof, it must establish that the finding is against the great weight and preponderance of the evidence. Dow Chem. Co., 46 S.W.3d at 242; Schear Hampton Drywall, 586 S.W.3d at 86. When a party challenges the factual sufficiency of the evidence supporting a finding on which it did not have the burden of proof, we may set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Mar. Overseas Corp., 971 S.W.2d at 407; Schear Hampton Drywall, 586 S.W.3d at 86. If we determine the evidence is factually insufficient, we must detail the evidence relevant to the issue and state in what regard the contrary evidence greatly outweighs the evidence supporting the trial court's judgment; we need not do so when affirming the judgment. Gonzalez v. McAllen Med. Ctr., Inc., 195 S.W.3d 680, 681 (Tex. 2006); Schear Hampton Drywall, 586 S.W.3d at 86.

We apply these standards mindful that the factfinder is the sole judge of the credibility of the witnesses and the weight to be given to their testimony, and we indulge every reasonable inference in support of the factfinder's findings. See City of Keller, 168 S.W.3d at 819, 822; Schear Hampton Drywall, 586 S.W.3d at 86. When, as here, there is a complete reporter's record of the trial, the trial court's findings of fact will not be disturbed on appeal if there is any evidence of probative force to support them. See Barrientos v. Nava, 94 S.W.3d 270, 288 (Tex. App.- Houston [14th Dist.] 2002, no pet.). Likewise, incorrect conclusions of law will not require reversal if the controlling facts support a correct legal theory. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). We turn to the issues presented.

I. Attorney's Fees

In their first issue, AdvanTech and...