531 S.W.3d 744
Tex. App.2016Background
- Dudley Construction (contractor) won two public water/sewer projects (Tabor Project and Reclaimed Water Project); ACT Pipe supplied pipe and fittings and invoiced higher prices for restrained-joint pipe but shipped slip-joint pipe.
- ACT originally quoted and ordered slip-joint pipe (lower price); after a rejected submittal ACT submitted prices for restrained-joint pipe (higher price) and later shipped the originally ordered slip-joint pipe because the manufacturer had not been re‑ordered.
- The City later approved use of the slip‑joint pipe with external restraints; Dudley signed a purchase order reflecting the lower prices but ACT claimed the parties had agreed to the higher prices.
- ACT sued on a sworn account, asserted a payment-bond claim under the McGregor Act (Tex. Gov’t Code ch. 2253), a Texas construction trust‑fund claim (Tex. Prop. Code ch. 162), and sought attorney’s fees; jury returned mixed and internally inconsistent answers.
- Trial court granted JNOV for ACT, awarding $124,483.90 (Tabor + Reclaimed amounts) and $131,823.99 in attorney fees; on appeal the court affirmed some parts, reversed others, and remanded several claims for further proceedings.
Issues
| Issue | Plaintiff's Argument (ACT) | Defendant's Argument (Dudley / Hartford) | Held |
|---|---|---|---|
| 1) Sworn‑account claim for Tabor Project — were prices "in accordance with the agreement"? | The higher prices (restrained-joint) reflected the parties’ agreement; jury’s contrary answer should be altered and JNOV entered for ACT. | The signed purchase order with lower prices raised a fact issue; jury properly found prices not in accordance with ACT’s asserted agreement. | Court: Reverse JNOV as to sworn-account for Tabor; jury’s finding for Dudley was supported — ACT takes nothing on that sworn‑account claim. |
| 2) Trust‑fund (misapplication) damages for Tabor Project — was $110,629.70 conclusively proven? | Trial court could substitute jury’s zero answer with the damages found elsewhere; trust‑fund recovery established. | Jury’s zero answer was supported; if not, damages were not conclusively proven and require remand. | Court: Fact issues remain; although some trust‑fund entitlement exists, the $110,629.70 figure was not conclusively proven — reverse and remand to determine amount. |
| 3) Payment‑bond (McGregor Act) claim for Tabor Project — was ACT’s bond notice sufficient and does a perfected bond claim alone create entitlement to payment? | Notices substantially complied and bond claim was perfected; judgment against Dudley and surety proper. | Notices were defective (entity name/address), and perfection alone does not create an independent entitlement to payment absent an underlying recoverable claim. | Court: Notices substantially complied so bond claim was perfected, but bond recovery depends on underlying entitlement (remand Tabor bond claim to resolve amount in light of trust‑fund outcome). |
| 4) Attorney fees — were fees recoverable and properly awarded/segregated? | Fees were uncontroverted and proven; award appropriate. | ACT did not prevail on all fee‑bearing claims, failed to segregate fees, and trial court omitted requested findings of fact/conclusions of law. | Court: Fee award reversed and remanded; entitlement and amount must be reassessed on remand (trial court failed to make findings and overlapping/remain issues). |
Key Cases Cited
- Double Diamond, Inc. v. Hilco Elec. Co-op., Inc., 127 S.W.3d 260 (Tex. App.—Waco 2003) (effect of verified sworn account and consequence of verified denial)
- Brooks v. Eaton Yale & Towne, Inc., 474 S.W.2d 321 (Tex. App.—Waco 1971) (elements of suit on sworn account)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standards for when damages are conclusively proven for substituting jury answers)
- United Fire & Cas. Co. v. Boring & Tunneling Co. of Am., 321 S.W.3d 24 (Tex. App.—Houston [1st Dist.] 2010) (McGregor Act notice/perfection and purpose of payment bonds)
- Capitol Indem. Corp. v. Kirby Rest. Equip. & Chem. Supply Co., 170 S.W.3d 144 (Tex. App.—San Antonio 2005) (substantial compliance standard for McGregor Act notices)
- Jackson v. Ewton, 411 S.W.2d 715 (Tex. 1967) (Rule 324 cross‑point requirement when JNOV is reversed; appellate disposition vs. remand)
- Dealers Elec. Supply Co. v. Scroggins Const. Co., 292 S.W.3d 650 (Tex. 2009) (McGregor Act is bond beneficiary’s remedy against bond but not the sole remedy against contractors)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (attorney‑fee segregation rule)