Dowtech Specialty Contractors, Inc. v. City of Weinert

630 S.W.3d 206

DOWTECH SPECIALTY CONTRACTORS, INC., Appellant

v.CITY OF WEINERT, Texas, Appellee

No. 11-18-00246-CV

Court of Appeals of Texas, Eastland.

Opinion filed September 25, 2020

Grant Miller, Darrell Moore, Abilene, for Appellee.

Blake C. Norvell, for Appellant.

Panel consists of: Bailey, C.J., Stretcher, J., and Wright, S.C.J.¹

KEITH STRETCHER, JUSTICE

Appellant, Dowtech Specialty Contractors, Inc., sued Appellee, the City of Weinert, Texas, for breach of contract after the City refused to pay Dowtech's final payment request on a contract for the construction of improvements to the City's pump station. Dowtech sought to recover both the unpaid balance on the contract and the charges for work outside the original scope of the contract. The City filed counterclaims for breach of contract and for breach of warranty and requested either liquidated damages under the contract or, alternatively, the costs to complete the unfinished work as well as its "repair expenses."

After a bench trial, the trial court ordered the City to pay Dowtech $2,052.50 for the additional work that Dowtech performed and denied Dowtech's request for the contract balance and for interest, the City's request for damages, and both Dowtech's and the City's request for attorney's fees. In three issues, Dowtech contends that the trial court erred when it determined (1) that Dowtech was not entitled to recover on its claim for the contract balance, (2) that a change order that reduced the amount of the contract was valid, and (3) that Dowtech was not entitled to recover attorney's fees. We affirm the trial court's judgment.

Background

The City's water supply is a combination of well water and water obtained from the North Central Texas Municipal Water Authority (the NCTMWA). Because the nitrates in the well water were in excess of regulatory limits, the well water needed to be treated before it was distributed. To allow it to treat the well water, the City decided to construct improvements to its pump station to separate the well water system from the NCTMWA system and to "pressurize" the water distribution system. The City ultimately obtained a total of $296,587 in grants for the project from the Texas Department of Agriculture, the Texas Water Development Board, and the Haskell County Water Supply District No. 1.

The City hired Chester Theodore Carthel, a civil engineer, to assist on the project. Carthel prepared the plans, the technical specifications, and the bid package. The bid form set out a number of "line items" for different parts of the project. The bid was the total of the costs for each line item.

The bid form contained a line item for "NCTWMA [sic] controls & communication allowance." According to Carthel, this line item was for Supervisory Control and Data Acquisition (SCADA) work that would allow the NCTMWA to open and close the valve on its supply line. MGM Controls, LLC was selected to do this work.

On June 4, 2015, in Addendum No. 1 to the bid documents,² Carthel provided to the bidders an e-mail from MGM Controls that "outlin[ed] the scope of work for the $20,000 NCTWA [sic] instrumentation line item." In the e-mail, Leland Godbee, the vice president of MGM Controls, stated that MGM Controls' work was related to the "control valve" and the "Tank pressure transmitter." MGM Controls would also provide "modifications to NCTWMA [sic] programs" and a maximum of four hours of training on "troubleshooting and normal operation." The cost for MGM Controls' work was $20,800. Attached to Addendum No. 1 was a bid form with $20,000 entered for the NCTMWA controls and communication allowance line item.

On June 5, 2015, in Addendum No. 2 to the bid documents, Carthel provided the bidders with a revised bid form for the project. Carthel specifically noted that the "NCTMWA instrumentation allowance was adjusted to $21,000.00 to better match the estimate from MGM Controls of $20,800."

On June 23, 2015, in Addendum No. 4 to the bid documents, Carthel noted that the "Process & Instrumentation Diagram" had been revised. The revised diagram depicted a valve in the NCTMWA line with an M in a square above it. Next to the valve was the notation "NCTMWA control/comm. panel."

Carthel also attached a revised bid form to be used for the project. Carthel specifically noted that line items had been added for "distribution/well line separation work" and for "Control Systems" and that the "Pumps" line item had been modified "to remove pump controls and have unit price for each pump."

Carthel instructed the bidders that "Specification Section 13400 – Instrumentation and Control" should be replaced with a revised section that was attached to Addendum No. 4. The revised Section 13400 contained the "requirements, procedures, and equipment specifications for furnishing and installing a complete and operational control system and accessories." The revised Section 13400 also provided that "[n]ot every component necessary for a complete and operational system had been specified " and that it was the "Contractor's responsibility to provide and furnish ALL items necessary to monitor the systems specified, control the systems necessary, and communicate with the necessary components. "

The revised Section 13400 set out "System Loop Descriptions" to generally describe the "operational intent of the control loops." For the "Service Pump Loop," which controlled three service pumps, both the line pressure and the level in the ground storage tank were required to be transmitted to the pump control panel. When the line pressure reached a preset level, the pump control panel would start the lead pump. When the line pressure dropped to a preset level, the pump control panel would start the lag pump. When the line pressure reached "the high pressure," the pump control panel would turn off all the pumps. The pump control panel would also turn the pumps off or on based on the level in the ground storage tank.

The revised Section 13400 specified that the pump control panel was required to indicate the status of each pump, the line pressure level, and the pump run time; to record the pump run time and the line pressure; to communicate with the "Well Communication System to start or stop the wells based on the ground storage tank level"; and to have audible and visual alarms for high or low level in the ground storage tank and for high or low pressure in the water distribution system. It also contained specifications for (1) a "level indicating transmitter" on the ground storage tank; (2) a "Well Communication System" that required a FreeWave FGR2 series, or equivalent, radio, an antenna, "wiring and other components for a complete spread spectrum radio communication system to the existing wells," and "a Yagi style directional antennae [sic] mounted on the pump station building to communicate with the existing well antennae"; (3) an autodialer alarm; and (4) audible and visual alarms on the exterior of the pump station.

Finally, in Addendum No. 5 to the bid documents, Carthel instructed the bidders to "add another FreeWave FGR2 radio receiver/transmitter to receive signals from the pump station to start and stop the wells." The radio was "to be installed by the Contractor at the existing Weinert well field" to an existing antenna.

Dowtech and L. Howard Construction, Inc. submitted bids on the project. On July 10, 2015, MGM Controls agreed to do the "NCTMWA SCADA work" for $15,000. Both Dowtech's and L. Howard's bids were adjusted to reflect the reduction in the NCTMWA controls and communication allowance as well as the removal of certain line items related to improvements to the restroom at the pump station. Dowtech's adjusted bid was $309,247.75, and L. Howard's adjusted bid was $341,812.83. Over $34,500 of the discrepancy between the two bids was in the line item for control systems. Dowtech bid $5,220 for the control systems line item while L. Howard bid $39,750. The City awarded the contract to Dowtech on July 16, 2015.

At a pre-construction meeting on August 21, 2015, the parties discussed that Dowtech's bid exceeded the amount of the grants that the City had received. The City informed Dowtech that, in order to decrease the amount of the contract, the City intended to issue a change order that reduced the size of the pump house. At the pre-construction meeting, Dowtech did not object to the reduced contract amount.

Dowtech and the City executed the contract on September 30, 2015. On October 29, 2015, Carthel certified to the Texas Water Development Board that the City had sufficient funds to pay the contract price of $309,247.75. In November 2015, Carthel issued Change Order No. 1 that reduced the size of the pump house and lowered the contract price to $293,751.35. Although the change order contained an acceptance block for Dowtech, Dowtech did not sign Change Order No. 1.

On January 12, 2016, Clint Carlile, Dowtech's foreman, sent a request for information to Carthel about the valve in the NCTMWA line. Carlile specifically asked if the valve was "motor controlled" and noted that, if the valve was "motor controlled," he needed specifications for the valve. Carlile also asked if the valve was "included in the NCTMWA line item." In an e-mail on January 20, 2016, Carlile noted that he had not received a response to the request for information. On January 25, 2016, Carlile informed Carthel that, because he had not received a response to the request for information, he had released the order for a gate valve that was not motor operated.

Dowtech submitted pay requests as it performed work on the contract. Carthel was required to approve the pay requests and then submit the requests to the funding agencies. Dowtech did not receive regular payments and, at some point, threatened to stop work on the project. From January 19, 2016, through September 2, 2016, the City issued four checks to Dowtech in a total amount of $233,872.28.

On May 3, 2016, Carthel issued Change Order No. 2 that required...