599 S.W.3d 618
Tex. App.2020Background
- Riverdale (Residences LP and its general partner Residences LLC) contracted with Nations Construction; Nations subcontracted Dixie to install carpet and flooring.
- Nations fell behind on payments; Riverdale instructed Nations (via its president Czapski) to solicit subcontractors to accept a 20% reduction in exchange for prompt payment and lien releases.
- Riverdale signed an escrow agreement and funded an escrow account listing Dixie for $114,318.40 (80% of $142,898); Nations/Riverdale caused a check to be issued to Dixie after Dixie delivered its lien release.
- After another subcontractor reneged and filed a lien, Riverdale directed the escrow agent to void Dixie’s check; Dixie received no escrow payment and sued for breach of contract, conversion, fraud, and quantum meruit.
- On remand from a prior appeal (which vacated a fraud-based judgment), the jury found for Dixie on contract and tort theories; the trial court initially awarded contract damages and attorney’s fees but then granted JNOV and rendered a take-nothing judgment; this appeal reverses that JNOV and renders judgment for Dixie for $114,318.40.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether agency (Czapski’s authority) had to be pleaded/submitted separately or could be a deemed element of contract formation under Rule 279 | Agency is an element of contract formation, was put at issue by pleadings and evidence, and may be deemed where the jury answered the contract question and no party objected | No pleading, no jury question, and no requested finding on agency so no basis to bind Riverdale | Agency is a component of contract formation; because Riverdale did not object or request an agency submission and evidence supports agency, a Rule 279 deemed finding is proper and supports the contract verdict |
| Whether JNOV vacating the jury’s contract verdict was proper (legal sufficiency) | Evidence (escrow agreement, Riverdale’s communications and signatures, Stapleton/Akin testimony) more than a scintilla supports formation and breach | Insufficient evidence that Riverdale authorized Czapski to make the offer; verdict unsupported | JNOV improperly entered; legal-sufficiency review sustains the jury’s contract-formation and breach findings and judgment is rendered for Dixie |
| Whether Dixie can recover attorney’s fees under Tex. Civ. Prac. & Rem. Code § 38.001 from Riverdale (LP/LLC) | Fees awarded by trial court; plaintiff argues fees recoverable | Section 38.001 applies to individuals and corporations, not to limited partnerships or LLCs; Riverdale preserved the issue | § 38.001 does not authorize fee awards against an LP or LLC; Dixie may not recover attorney’s fees from Riverdale |
| Whether conversion claim is barred by the economic-loss rule or otherwise supports tort recovery | Conversion claim supported by jury finding; damages include lost escrow funds and possibly exemplary damages | The loss was the bargained-for contract benefit; the conversion claim sounds in contract and economic-loss rule bars tort recovery | Conversion claim sounds in contract (deprivation of bargained-for payment); economic-loss rule precludes recovery in tort for those economic losses |
Key Cases Cited
- Tiller v. McLure, 121 S.W.3d 709 (legal-sufficiency/JNOV standard)
- City of Keller v. Wilson, 168 S.W.3d 802 (framework for reviewing legal sufficiency of the evidence)
- Frerking v. Southern Cty. Mut. Ins. Co., 467 S.W.2d 672 (agency can be a component element of a ground of recovery and omitted elements may be deemed)
- Bombardier Aerospace Corp. v. SPEP Aircraft Holdings, LLC, 572 S.W.3d 213 (parties may consent to charge as submitted; appellate review measured by charge language)
- Seger v. Yorkshire Insur. Co. Ltd., 503 S.W.3d 388 (sufficiency of evidence for unobjected-to charge measured by charge language)
- Chapman Custom Homes, Inc. v. Dall. Plumbing Co., 445 S.W.3d 716 (economic-loss rule analysis and when tort duties are independent of contract)
- Gaines v. Kelly, 235 S.W.3d 179 (apparent authority standard)
- Baptist Mem'l Hosp. Sys. v. Simpson, 969 S.W.2d 945 (elements of apparent authority/estoppel)