D2 Excavating, Incorporated v. Thompson Thrift Con, 19-40745

Background

Thompson Thrift was GC for an apartment project; D2 Excavating was hired as subcontractor for site grading/excavation for $630,000.
Contract incorporated Thompson’s standard terms, including D2’s representation that it had inspected the site and would not seek price adjustments for failing to do so; contract described the site as a “balanced site.”
D2 used Thompson’s topo survey and software modelling to conclude the site was balanced; after work began, excavation produced substantially more spoil requiring off‑site export.
Thompson orally promised to pay for the unanticipated exporting and to issue a written change order after work was complete, but never issued a change order or paid; D2 stopped work at 98.6% completion and sued.
The district court awarded D2 $81,068 for unpaid contract work, $257,588.53 for excess excavation, interest under the Texas prompt‑pay statute, and attorneys’ fees; the Fifth Circuit reviewed contract interpretation and equitable‑remedy issues.

Issues

Issue	Plaintiff's Argument (D2)	Defendant's Argument (Thompson)	Held
Whether D2 can recover beyond the contract price for removal of unanticipated excess soil	D2 argues Thompson should pay extra because site was not balanced and Thompson promised to pay for export work	Thompson argues the contract placed on D2 the risk of site conditions and fixed the price	Court: Vacated/excluded excess‑soil breach‑of‑contract award—contract placed the risk on D2, so no extra contract recovery
Whether oral promise/change order to pay for exporting was enforceable (consideration)	D2 contends Thompson’s oral promise to pay after work created a contract modification	Thompson contends no valid modification occurred—no new consideration and it never issued a written change order	Court: Oral change order invalid for lack of new consideration (D2 was already contractually obligated to perform the work)
Whether quantum meruit allows recovery for the excess excavation	D2 seeks quasi‑contract recovery for work allegedly outside the contract	Thompson argues work was within contract scope so equitable recovery is barred	Court: Quantum meruit unavailable because work fell within the contract and D2 substantially performed; equitable recovery cannot exceed contract price
Whether D2 breached and whether Thompson’s counterclaim offsets unpaid sum; applicability of prompt‑pay interest and lien remedies	D2 argues its cessation was excused by Thompson’s mismanagement and prior breach; seeks unpaid contract balance plus prompt‑pay remedies	Thompson argues D2 breached by stopping work and owes completion costs	Court: Affirmed $81,068 award to D2; district court’s finding that Thompson’s mismanagement excused D2’s stoppage was not clearly erroneous; prompt‑pay interest and lien relief remain for the affirmed contractual recovery

Key Cases Cited

Lyda Swinerton Builders, Inc. v. Okla. Sur. Co., 903 F.3d 435 (5th Cir. 2018) (standard of review for mixed fact‑law issues and contract interpretation)
Interstate Contracting Corp. v. City of Dallas, 407 F.3d 708 (5th Cir. 2005) (contractor bears risk only if contract shifts it to owner; plans/specs can allocate risk)
El Paso Field Servs., L.P. v. MasTec N. Am., Inc., 389 S.W.3d 802 (Tex. 2012) (party who contracts to do work for a fixed price generally cannot claim extra for unforeseen difficulties)
Dall./Fort Worth Int’l Airport Bd. v. INET Airport Sys., Inc., 819 F.3d 245 (5th Cir. 2016) (need for clear contractual allocation of risk and mutual assent for change orders)
Lonergan v. San Antonio Loan & Tr. Co., 104 S.W. 1061 (Tex. 1907) (default rule: performing party bears risk of greater difficulty unless contract shifts risk)
Black Lake Pipe Line Co. v. Union Constr. Co., 538 S.W.2d 80 (Tex. 1976) (quantum meruit limited to services not covered by contract)
Murray v. Crest Constr., Inc., 900 S.W.2d 342 (Tex. 1995) (partial performance exception allowing quasi‑contract recovery when contractor cannot recover under an express contract)
Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39 (Tex. 1992) (quantum meruit is an implied promise to pay for benefits conferred)