Light v. Thoma

GINGER LIGHT AND JUSTIN LIGHT, APPELLANTS v. MIKE THOMA, APPELLEE

No. 07-20-00311-CV

Court of Appeals Seventh District of Texas at Amarillo

June 14, 2021

On Appeal from the 99th District Court Lubbock County, Texas

Trial Court No. 2019-534,943, Honorable William C. Sowder, Presiding

MEMORANDUM OPINION

Before QUINN, C.J., and PARKER and DOSS, JJ.

Appellants, Ginger and Justin Light, appeal the trial court's judgment awarding damages to appellee Mike Thoma in the parties' residential construction contract dispute. On appeal, the Lights challenge the sufficiency of the evidence to support the damages awarded to Thoma, the trial court's finding that the Lights materially breached first, and the trial court's adverse finding that Thoma did not fraudulently file a mechanic's and materialman's lien against the property. We affirm.

Background

In August 2018, the Lights and Thoma entered into a fixed price construction contract. Through it, Thoma agreed to build the couple's home for $364,354. The fixed price would be paid to Thoma through periodic draws when certain milestones or phases of the construction were substantially completed.

Thoma proposed a draw request form and utilized it in draw requests 1 through 5. Each were emailed to and approved by the Lights without complaint. Each was also paid by the Lights. They totaled $224,423.02.

Also included in the Light-Thoma contract was a procedure for change orders. They came into play when the Lights made revisions or additional requests that were not included in the original agreement.

By February 5, 2019, Thoma submitted Draw Request #6 and demand for payment on certain change orders. The Lights refused to pay either. They questioned the detail or purported lack thereof in the draw request and maintained that they had paid for certain items included in it. They communicated an offer to modify the contract, which offer Thoma refused. That, coupled with their failure to resolve their differences, resulted in Thoma forwarding them a default notice, calling off subcontractors, and ceasing work on the project. He also sued the Lights for breach of contract, contending that they failed to pay the draw request and change orders as required by their agreement. The Lights counterclaimed for breach of contract and fraudulently filing a mechanic's and materialman's lien. The Lights contend that Thoma failed to comply with the agreement's draw request procedure and failed to provide the quality and grade of workmanship and materials as agreed upon in the contract.

Thoma sought damages in the form of the amount he was "in the hole" at that point in the project. As he explained, the arrangement with the lender in this type of agreement was to pay a certain percentage of the fixed price upon the builder's substantial completion of certain phases or "milestones" of the project. Its effect was to have the contractor cover the construction expenses incurred in reaching that milestone. As Thoma explained, he was either even or in the hole on a project until it approached completion. Only as the project reached completion would he begin to realize a profit. When Draw #6 was submitted, he had expended $249,767 and been paid only $224,423.02 toward the fixed price. His lost profit also approximated $49,953.

Trial was to the bench. It was tasked with determining which of the two parties breached first and concluded that the Lights did. That breach occurred when they refused to pay the submitted draw request and change order. Damages of $24,750 were then awarded to Thoma. They generally encompassed the difference between his expenditures and the draws paid by the Lights. In turn, the claims asserted by the Lights were denied.

Standards of Review

The standard of review is well-settled and need not be reiterated. It is adequately explained in Tex. Outfitters Ltd., LLC v. Nicholson, 572 S.W.3d 647 (Tex. 2019), City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005), and Cain v. Bain, 709 S.W.2d 175 (Tex. 1986) (per curiam).

Sufficiency of Evidence Concerning Breach

We first address whether Thoma materially breached the contract. In that regard, the Lights posit:

this Court should reverse the district court's decision and find that Thoma's refusal was a material breach. Because he never actually provided a compliant draw request, the Lights' obligation was never triggered. In the alternative, if Thoma's performance was not material, then the Lights' performance under the same provision should not be material either. Moreover, even if this Court were to disagree and find that Thoma's compliance was not material, this Court should still reverse because the undisputed evidence shows that Thoma breached the Contract—whether material or not. As a result, the Lights were entitled to seek their damages against Thoma and at the least, offset Thoma's damages.

We overrule the issue and begin by assessing the sufficiency of the evidence underlying the trial court's pertinent fact finding. The latter consisted of the court stating: "Thoma did not commit a material breach of the Contract; the defects of Thoma's performance of which the Lights complained did not seriously impair the purposes underlying the Contract." Those defects consisted of his failure to include information specified within paragraph 5(C) of the contract in his 6th draw request. The paragraph said, among other things, that "each draw shall reflect the construction costs and any compensation to the Builder for the time and effort expended in connection with this transaction" and "[t]he Draw Request shall include the name and address of each person who subcontracted directly with Builder and who Builder intends to pay from the requested funds." Such was omitted from the sixth request, just as it was from the prior five. Yet, the Lights paid the prior five in short order and without demanding compliance with 5(C).

Materiality is an issue "to be determined by the trier of facts." Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 436 (Tex. 2017) (per curiam). In making the determination, the Texas Supreme Court outlined a number of nonexclusive considerations that are "significant in determining whether a failure to perform is material":

(a) the extent to which the injured party will be deprived of the benefit which he reasonably expected;

(b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;

(c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture;

(d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of the circumstances including any reasonable assurances; [and]

(e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.

Id. at 436-37 (Tex. 2017) (quoting Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 199 (Tex. 2004) (per curiam)). Regarding the first, it seems that the less the nonbreaching party is deprived of the expected benefit of the contract, the less material the breach. Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 693 (Tex. 1994). And, here, the importance of the expected benefit allegedly denied the Lights (i.e., being denied information about the subcontractor being paid by the draw) is best illustrated by the Lights response to its omission. They had been denied it five previous times, and their response to those denials consisted of paying the requests without complaint. As we have oft said, "actions speak louder than words." In re State, 572 S.W.3d 264, 276 (Tex. App.—Amarillo 2018, orig. proceeding) (Quinn, C.J., concurring) (op. on reh'g); In re Marriage of McMahen, No. 07-13-00172-CV, 2014 Tex. App. LEXIS 6154, at *8 (Tex. App.—Amarillo June 6, 2014, no pet.) (mem. op.). The response exhibited by the Lights to Thoma's prior defaults reveals an intent to assign minimal importance to the aspects of 5(C) in dispute. To that we also add the evidence about the type of construction contract they signed. It was one of "fixed price." Being of that ilk, industry norm madepayment of a draw dependent upon the stage of completion, as opposed to which subcontractor was getting paid what sum. So, according to Thoma, his expenditures were irrelevant in the draw request process and to the Lights' obligation to pay them. That, in turn, is some evidence indicating the omission did not violate standards of good faith and fair dealing in the home construction trade.

Next, no one cited us to evidence addressing whether the Lights could be adequately compensated for Thoma's failure to provide the omitted data. However, the Lights argue they could not since, without the information, "they would never know whether the correct goods were installed, unless they were to have another party examine the goods or somehow obtain the invoices from the third party." Yet, Thoma told the trial court that he normally provided his clients the information in question if they asked for it. So too did he attest to providing the Lights with the name and contact information of the subcontractors he used. This is some evidence that the Lights always had the means to obtain the information they belatedly deemed important and with which to safeguard against injury arising from the installation of defective or noncompliant materials. Yet, they apparently did not ask for it until after 1) paying five prior draw requests and 2) animosities developed on both sides resulting in mutual intransigence.

We remind the parties that the standard of review does not allow us to reweigh the evidence and select who to believe and who should win. Our task at bar is twofold. We first assess whether evidence supports the trial court's decision when viewing the record in a light favorable to that decision. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). Then, we assess whether...