STR Constructors Ltd. and Arch Insurance Company v. Newman Tile, Inc.
395 S.W.3d 383
| Tex. App. | 2013Background
- STR Constructors hired by Northeast Independent School District to renovate a middle school kitchen; NTI won as low bidder and became subcontractor.
- Disputes arose over epoxy grout; STR asserted epoxy grout was required, NTI claimed bid excluded it; NTI installed epoxy grout under protest and submitted change orders STR did not pay.
- District inspection found kitchen tile work unacceptable; STR terminated NTI for cause and NTI sued for breach and quantum meruit.
- STR contends NTI breached first by defective work; district and architect testimony showed project fell behind schedule attributed to STR; NTI completed substantial portions before termination.
- Contract provided pay-when-paid structure; STR paid some NTI applications but claimed lack of district payment absolved further obligation; STR also argued waiver and noncompliance with documentation.
- Jury found STR breached first and NTI recoverable damages; court held substantial performance not required due to first breach; quantum meruit recovery affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did STR breach the contract and breach first? | STR argues NTI breached first and termination was proper. | NTI contends STR’s termination was improper and tantamount to breach. | STR breached first; termination without cause. |
| Was STR required to pay NTI for work performed after termination? | STR paid only some applications; district payment controls pay obligations; waived conditions. | NTI’s payment claims arise under contract despite district nonpayment; STR cannot withhold all payments. | Evidence supports material breach by STR and failure to pay. |
| Can NTI recover damages despite STR's breach first and no substantial performance finding? | NTI seeks contract damages; substantial performance not required when first breach by STR. | Argues against damages without substantial performance finding. | NTI may recover damages; substantial performance not required here. |
| Whether NTI can recover in quantum meruit despite an express contract covering the work? | NTI performed additional work benefitting STR; STR retained value; quantum meruit allowed. | Existence of express contract bars quantum meruit for covered services. | Quantum meruit recovery permissible. |
| Are NTI’s attorney’s fees recoverable under Chapter 38? | NTI prevailed on breach and damages; fees permitted. | If damages are reduced, recalculate fees on remand; otherwise contested. | Fees award upheld; alternative remand not needed. |
Key Cases Cited
- Dobbins v. Redden, 785 S.W.2d 377 (Tex. 1990) (damages generally barred on breach; exceptions apply)
- Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195 (Tex. 2004) (material breach factors for determining enforceability)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (standard for legal-sufficiency review; 'more than a scintilla')
- Tips v. Hartland Developers, Inc., 961 S.W.2d 618 (Tex. App. San Antonio 1998) (substantial performance doctrine in contract damages)
- Truly v. Austin, 744 S.W.2d 934 (Tex. 1988) (quantum meruit recovery when benefits conferred and unjust enrichment exists)