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IN RE: USA PROMLITE TECHNOLOGY INC, Debtor.
ENVIRO-LITE SOLUTIONS INC, Plaintiff,
v.
EDINBURG CONSOLIDATED ISD, Defendant.
Nos. 18-36893, 19-7003
United States Bankruptcy Court, S.D. Texas, McAllen Division
April 25, 2023
CHAPTER 7
MEMORANDUM OPINION
Eduardo V. Rodriguez, Chief United States Bankruptcy Judge
The instant dispute between the parties arises out of alleged damages incurred by Edinburg Consolidated, ISD in connection with materials installed and electrical services performed at sev-eral schools within Edinburg Consolidated ISD's jurisdiction. Enviro-Lite Solutions, Inc. pre-sented a proposal to Edinburg Consolidated ISD for a dimmable LED light retrofit of the existing fluorescent lighting troffers at various schools that would allow dimmable LED lights and dimmers to be installed. Based on the proposal, Edinburg Consolidated ISD entered into a lighting instal-lation and management contract with Enviro-Lite Solutions, Inc. Enviro-Lite Solutions, Inc., in turn, verbally subcontracted with E-Con. Group, LLC, which in turn verbally subcontracted with First Class Electrical Services, LLC to perform work in the schools pursuant to the lighting instal-lation and management contract. The contract included installing fixtures necessary to take ad-vantage of new LED lighting technology and installing dimmer switches at five elementary schools. The crux of the controversy revolves around alleged damages sustained at the schools in
connection with malfunctions of the LED lights and dimmers. Because of the alleged malfunc-tions, litigation ensued. E-Con. Group, LLC later settled with Edinburg Consolidated, ISD and is no longer a named defendant in this proceeding. On the eve of trial, Enviro-Lite Solutions, Inc. and Edinburg Consolidated ISD also settled all claims against each other. At trial, Edinburg Con-solidated ISD substantially narrowed the claims asserted against USA Promlite Technology, Inc. and First Class Electrical Services, LLC.
The Court conducted a five day trial in this adversary proceeding that commenced on Jan-uary 17, 2023 and ended on January 23, 2023. As set forth more fully below, the Court finds that Edinburg Consolidated ISD's breach of contract claim against USA Promlite Technology, Inc. is denied. The Court also finds that each of Edinburg Consolidated ISD's five remaining claims against First Class Electrical Services, LLC for general negligence, gross negligence, negligence per se, negligent failure to warn or instruct, and negligent retention, supervision, and training are all denied.
I. Background
A. Procedural History
1. On December 6, 2018, USA Promlite Technology, Inc. ("Promlite" or "Debtor") filed a small-business chapter 11 petition ("Bankruptcy Case").[1]
2. Promlite is a Texas corporation that was engaged[2] in the business of lighting installation and management services.[3]
3. On April 12, 2019, the Court granted Promlite's motion to convert the Bankruptcy Case to one under chapter 7.[4]
4. On February 11, 2019, Enviro-Lite Solutions, Inc. ("Enviro-Lite") and First Class Electrical Services, LLC ("First Class") removed a state district court action in the 370th Judicial District, Hidalgo County, Texas to this Court styled as, "C-5241-16-G, Enviro-Lite Solu-tions, et al v. Edinburg Consolidated Independent School District v. USA Promlite Technol-ogy, Inc., First Class Electrical Services, LLC and E-Con Group, LLC", thus commencing the instant adversary proceeding ("Adversary Proceeding").[5]
5. On November 15, 2019, Edinburg Consolidated ISD ("ECISD") filed its, "Edinburg CISD's Third Amended Complaint"[6] ("ECISD's Complaint") alleging various state law causes of action against Promlite and Enviro-Lite for (1) breach of contract, (2) breach of express warranty, (3) breach of implied warranty of merchantability, (4) breach of implied warranty of fitness, (5) breach of implied warranty of good and workmanlike services, (6) negligent misrepresentation and fraud, and against Promlite, Enviro-Lite, and First Class for (7) gen-eral negligence, (8) negligent failure to warn or instruct, (9) negligent failure to recall, (10) negligent retention, supervision, and training, (11) products liability, (12) gross negligence, and against Promlite, Enviro-Lite, First Class, and E-Con Group, LLC ("E-Con") for (13) negligence per se and (14) violations of §§ 17.46(b)(1)-(7), (14), (24) of the Texas Business and Commerce Code.[7]
6. Also on November 15, 2019, Enviro-Lite filed its, "Plaintiff & Counter-Defendant Enviro-Lite Solutions, LLC's Fourth Amended Complaint"[8] ("Enviro-Lite's Complaint") alleging various state law causes of action against ECISD for (1) breach of contract, (2) promissory estoppel, (3) negligent misrepresentation, (4) common law fraud, (5) and declaratory relief.[9]
7. On December 17, 2019, five documents were filed with this Court:
a. Enviro-Lite filed its "Counter-Defendant Enviro-Lite Solutions, LLC's Answer to Counterclaimant ECISD's Third Amended Complaint (DOC. #78) & Counterclaim for Indemnity"[10] ("Enviro-Lite's Answer") asserting a counterclaim against ECISD under § 17.555 of the Texas Business & Commerce Code
b. ECISD filed its, "Edinburg CISD's Answer to Enviro-Lite Solutions, LLC's Fourth Amended Complaint"[11] ("ECISD's Answer").
c. First Class filed its, "First Class Electrical Services, LLC's Answer to Edinburg CISD's Third Amended Complaint (DOC #78) and Counterclaim for Indemnity Pursuant to the DTPA"[12] ("First Class's Answer") asserting a counterclaim against ECISD under § 17.555 of the Texas Business & Commerce Code.
d. E-Con filed its, "E-Con Group, LLC's Answer to Edinburg CISD's Third Amended Complaint (DOC #78) and Counterclaim Against Edinburg CISD"[13] ("E-Con's An-swer") asserting a counterclaim against ECISD under § 17.555 of the Texas Business & Commerce Code.
e. Promlite filed its, "Debtor and Third-Party Defendant USA Promlite Technology, Inc.'s Answer to Counterclaimant ECISD's Third Amended Complaint (DOC. #78) & Counterclaim for Indemnity"[14] ("Promlite's Answer") asserting a counterclaim against ECISD under § 17.555 of the Texas Business & Commerce Code.
8. On July 30, 2020, this Court entered an order ("Summary Judgment Order") that, inter alia, granted ECISD's motion for summary judgment as to liability on its breach of contract claim against Enviro-Lite with damages still to be determined at trial.[15]
9. On September 29, 2021, E-Con and ECISD released all claims against each other in this Adversary Proceeding pursuant to a certain settlement agreement ("E-Con Settlement")[16]and this Court entered an order on September 30, 2021, dismissing E-Con from this Adver-sary Proceeding.[17]
10. On November 19, 2021, ECISD, Promlite, Enviro-Lite, and First Class filed their, "Joint Pretrial Order"[18] ("Joint Pre-Trial Stipulation") detailing various agreed and disputed issues of law and fact in this Adversary Proceeding.
11. On January 17, 2023, Enviro-Lite and ECISD jointly announced on the record that a set-tlement agreement had been reached that would release all claims between Enviro-Lite and ECISD in this Adversary Proceeding ("Enviro-Lite Settlement").[19]
12. On January 17, 2023, ECISD filed its, "Defendant and Counterclaimant ECISD's Notice of Stipulations"[20] ("January 17, 2023 Stipulation") that provided certain agreed stipulations between Promlite and ECISD concerning ratification as it pertains to ECISD's breach of contract claim against Promlite. ECISD initially refers to their claim against Promlite as a "ratification claim" but counsel for ECISD later clarifies on the record that it is referring to ECISD's breach of contract claim ("January 19, 2023 Claim Clarification").[21] Promlite and ECISD further stipulated in the January 17 Stipulation that damages would be $10,000 if ECISD is successful on its breach of contract claim.[22] Also on January 17, 2023, counsel for ECISD stipulated on the record that this Court was not to consider any evidence pre-sented at trial in determining ECISD's breach of contract claim against Promlite, and that
the Court should only consider the stipulations in the Joint Pre-Trial Stipulation and the January 17 Stipulation ("January 17, 2023 Oral Stipulation").[23] On January 20, 2023, ECISD filed, pursuant to this Court's request for clarification, its, "Defendant and Counter-claimant ECISD and Debtor Promlite's Notice of Stipulations"[24] ("January 20, 2023 Stipu-lation" and together with the January 17, 2023 Stipulation, January 19, 2023 Claim Clarifi-cation, and the January 17, 2023 Oral Stipulation, the "Promlite Stipulation") clarifying that Promlite and ECISD were abandoning all claims against each other except for ECISD's breach of contract claim against Promlite based on ratification.
13. This Court conducted a five day trial commencing on January 17, 2023, and concluding on January 23, 2023.
14. On January 20, 2023, this Court ordered First Class and ECISD to submit post-trial briefing in lieu of closing arguments due no later than March 1, 2023.[25] On January 25, 2023, this Court extended the post-trial briefing deadline to April 15, 2023.[26]
15. On April 15, 2023, First Class filed its, "First Class' Post Trial Brief"[27] ("First Class' Post-Trial Brief").
16. Also on April 15, 2023, ECISD filed its, "ECISD's Closing Argument"[28] ("ECISD's Post-Trial Brief").
B. Findings of Fact
This Court makes the following findings of fact and conclusions of law pursuant to Federal Rule of Bankruptcy Procedure 7052, incorporating Federal Rules of Civil Procedure 52 and 9014. To the extent that any finding of fact constitutes a conclusion of law, it is adopted as such. To the extent that any conclusion of law constitutes a finding of fact, it is adopted as such. This Court made certain oral findings and conclusions on the record. This...
