Taylor Elec. v. Armstrong Elec. Supply

Page 522

167 S.W.3d 522

TAYLOR ELECTRICAL SERVICES, INC., Appellant/Appellee, v. ARMSTRONG ELECTRICAL SUPPLY COMPANY, Appellee/Appellant.

No. 2-04-127-CV.

Court of Appeals of Texas, Fort Worth.

June 9, 2005.

COPYRIGHT MATERIAL OMITTED

Eric F. Dankesreiter, Flower Mound, for Taylor Electrical Services, Inc.

Matthews, Stein, Shiels, Pearce, Knott, Eden & Davis, L.L.P., Misti L. Beanland Dallas, for Armstrong Electrical Supply Company.

Panel B: LIVINGSTON, DAUPHINOT, and McCOY, JJ.

OPINION

TERRIE LIVINGSTON, Justice.

Both parties appeal from the judgment entered on the jury's verdict primarily in favor of Taylor Electrical Services, Inc. in its breach of contract, fraud, and Deceptive Trade Practices Act (DTPA) claims against Armstrong Electrical Supply Company. Taylor challenges the trial court's entry of an award for Armstrong's attorney's fees.

Armstrong raises sufficiency challenges to the evidence that supports the finding of fraud, the amount of damages the jury awarded, and the knowledge element on the fraudulent mechanic's and materialmen's liens claim. Armstrong also contends that the trial court erred by concluding that Taylor had standing to challenge the mechanic's and materialmen's liens under section 12.003 of the civil practice and remedies code. See TEX. CIV. PRAC. & REM.CODE ANN. § 12.003 (Vernon 2002). We reverse and render judgment for Taylor on Armstrong's attorney's fees claim but affirm the trial court's judgment in all other respects.

Fact Summary

Taylor is an electrical contractor that was working on replacing interior electrical fixtures in two of the Church of Jesus Christ of Latter Day Saints' churches in Denton County. One church was located at 3000 Old North Road in Denton, Texas (Denton Project), and the other was located at 1100 Stapleton in Flower Mound, Texas (Flower Mound Project).

Armstrong is a subcontractor of electrical supplies that Taylor had used for many years. Taylor, through its president Gary Taylor, had an eighteen-year relationship with its primary contact at Armstrong, David Nichol. Time was of the essence to the church, so Taylor included specific provisions in its suppliers' work orders requiring them to provide supplies by a certain time or liquidated penalties would be incurred. The purchase orders for the Denton Project and the Flower Mound Project each contained a specific on-site delivery date and included a clause that stated, "Delays of receipt will cause delays of completion. Liquidated damages apply to this contract." The on-site delivery date was June 8 for the Flower Mound Project and was June 13 for the Denton Project. Nichol determined both dates after Gary contacted him about the different projects. During these conversations, Gary had specifically told Nichol that timely delivery of supplies was critical. Armstrong failed to timely deliver all of the materials to either project.

When Armstrong failed to timely deliver all of the materials ordered, Taylor began working directly with one of Armstrong's principals, Doris Armstrong, who ultimately disputed the existence of delivery deadlines. Armstrong charged Taylor $46,600 on the Flower Mound Project and $19,650 on the Denton Project. Eventually, Taylor paid the invoices to Armstrong but deducted $6,110 as its liquidated damages due to Armstrong's late deliveries. Initially, Armstrong did not cash one of Taylor's checks for $7,732.99 for the Flower Mound Project or apply a credit to Taylor's outstanding account. Instead, Armstrong filed mechanic's and materialmen's liens against both of the church's properties for the full amounts Armstrong had billed to Taylor. Armstrong did not deposit the $7,732.99 check until after the liens were filed, on November 27, 2001. At the time of trial, Armstrong claimed that it was still owed $6,169.05.

Taylor told Armstrong that its contract with the church would be suspended if anyone filed liens on the church's property and that Taylor could be subjected to penalties according to its contract with the church. Taylor set forth the existence of the late penalty and the method of calculating it in the Scope of Work document that was supposed to be attached to the bid for each project. Although Gary admits that he did not attach the Scope of Work document to each bid, each bid states that it is subject to penalties for failure to meet delivery deadlines. Gary also testified that he and Nichol went over the delivery deadlines, guarantees, and penalties clause. Under Taylor's contract with the church, Taylor was obligated to defend and indemnify the church against any and all liens filed against church property. Toward that end, Taylor hired legal counsel to demand removal of the liens, but ultimately Taylor was forced to file suit to procure their removal and to sue to recover its other claimed damages for breach of contract, fraud, and deceptive trade practices.

Issues Presented

In Armstrong's first two points in its appeal, it challenges the sufficiency of the evidence to support the jury's liability and damages award of $13,262 on Taylor's fraud claim. It does not challenge the jury's findings of either liability or damages on Taylor's breach of contract claim. In Armstrong's third point, it challenges the jury's finding that it filed the mechanic's and materialmen's liens with knowledge that it was asserting a fraudulent lien. In its fourth point, Armstrong contends that Taylor lacked standing to bring a fraudulent lien or fraudulent claim cause of action under section 12.003 of the civil practice and remedies code. See TEX. CIV. PRAC. & REM.CODE ANN. § 12.003.

Taylor's sole point in its appeal attacks the propriety of the award of Armstrong's attorney's fees of $57,567.50 because Taylor never denied that Armstrong was entitled to the unpaid outstanding balance on the supplies that it provided. Additionally, Taylor points out that the jury's findings were primarily in its favor, thereby creating only an offset to the award in Taylor's favor. Taylor argues that an offset awarded to a defendant does not make it a "successful party" to support the attorney's fees award under section 38.001 of the civil practice and remedies code. See id. § 38.001 (Vernon 1997).

Sufficiency of Evidence — Fraud

To prevail in a cause of action for fraud, one must provide sufficient evidence of the elements of fraud, which are (1) a material misrepresentation was made; (2) it was false; (3) when the representation was made, the speaker knew it was false or the statement was recklessly asserted without any knowledge of its truth; (4) the speaker made the false representation with the intent that it be acted on by the other party; (5) the other party acted in reliance on the misrepresentation; and (6) the party suffered injury as a result. See DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990) (op. on reh'g), cert. denied, 498 U.S. 1048, 111 S.Ct. 755, 112 L.Ed.2d 775; Trenholm v. Ratcliff, 646 S.W.2d 927, 930 (Tex.1983); Kajima Int'l, Inc. v. Formosa Plastics Corp., USA, 15 S.W.3d 289, 292 (Tex.App.-Corpus Christi 2000, pet. denied).

A brief should concisely state all issues or points presented for review. TEX.R.APP. P. 38.1; Bankhead v. Maddox, 135 S.W.3d 162, 163 (Tex.App.-Tyler 2004, no pet.). Unless a brief flagrantly violates the briefing rules, we will address those issues that are fairly included. TEX.R.APP. P. 38.1(e), 38.9; White v. State, 50 S.W.3d 31, 45 (Tex.App.-Waco 2001, pet. ref'd). "An issue presented in an appellant's brief is sufficient if it directs the attention of the appellate court to the error about which complaint is made." Bankhead, 135 S.W.3d at 163; Maida v. Fire Ins. Exch., 990 S.W.2d 836, 839 (Tex.App.-Fort Worth 1999, no pet.).

Armstrong challenges the sufficiency of the evidence to show that there was ever a promise to make deliveries of the materials by any specific time or to show that Armstrong knew at the time any such representation was made that Armstrong had no intention of delivering the materials by a date certain. Armstrong says that Taylor produced "no evidence" of and failed to introduce "more than a scintilla of evidence" on either of these two elements. Although Armstrong never clearly asserts whether it is making a legal or a factual sufficiency challenge, we interpret the use of this language as attacking the legal sufficiency of the evidence to support the jury's findings. See Tex. Mexican Ry. Co. v. Bouchet, 963 S.W.2d 52, 54 (Tex.1998).

In determining a "no evidence" point, we are to consider only the evidence and inferences that tend to support the finding of the disputed fact and disregard all evidence and inferences to the contrary. Bradford v. Vento, 48 S.W.3d 749, 754 (Tex.2001); Cont'l Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex.1996); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). Anything more than a scintilla of evidence is legally sufficient to support the finding. Cont'l Coffee, 937 S.W.2d at 450; Leitch v. Hornsby, 935 S.W.2d 114, 118 (Tex.1996). More than a scintilla of evidence exists if the evidence furnishes some reasonable basis for differing conclusions by reasonable minds about the existence of a vital fact. Rocor Int'l, Inc. v. Nat'l Union Fire Ins. Co., 77 S.W.3d 253, 262 (Tex.2002).

A "no evidence" point may only be sustained 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 a vital fact. Uniroyal Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex.1998), cert. denied, 526 U.S. 1040, 119 S.Ct. 1336, 143 L.Ed.2d 500 (1999).

Armstrong challenges the evidence to support two elements of Taylor's fraud claim: that a false statement was made and that it was made with...