the Port of Houston Authority of Harris County, Texas v. Zachry Construction Corporation
377 S.W.3d 841
Tex. App.2012Background
- Za-chry contracted with the Port to construct a 1,660-foot wharf using a dry, frozen-wall method; contract allowed an extension of time as sole remedy for delays
- Zachry used a frozen cutoff wall design (frozen COW) but the Port required R&R responses and could require design changes; later Zachry abandoned the freeze wall and proceeded in the wet
- Change Order 4 extended Milestone A and final completion dates; the dispute centers on whether Zachry’s delay was caused by the Port’s actions and whether delay damages are recoverable
- Zachry sued for R&R damages due to changes and for liquidated-damages withholding (and offset for defective dredging). The Port counterclaimed for attorney’s fees; the jury awarded Zachry substantial damages, which the trial court then partially offset or denied in parts.
- The appellate court sustained the Port’s no-damages-for-delay clause, held that release agreements excused some liquidated damages, and awarded the Port recovery of attorney’s fees, reversing the trial judgment in part and rendering for the Port.
- Zachry’s cross-appeal challenged the fender offset and the dredging result, which the court also denied in part; the final posture awards the Port attorney’s fees and renders for Zachry nothing on certain claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the no-damages-for-delay clause bars R&R delay damages | Zachry argues common-law exceptions apply to delay damages | Port contends clause bars any delay damages regardless of Port conduct | Clause precludes R&R delay damages; no common-law exceptions prevail |
| Whether liquidated-damages withholding was legally excused by release | Zachry contends releases do not release liquidated-damages claims | Port asserts releases unambiguously discharged those claims | Zachry released or discharged $2.205 million; dredging offset similarly barred; Port liable for fees as determined |
| Attorney’s fees entitlement and allocation | Zachry contests fee award as excessive and improperly supported | Port asserts fees were reasonable/necessary and properly segregated | Port entitled to specified fees for R&R and withholding claims; judgment reversed in part to render for Port on fees |
| Whether the $970,000 Fender offset was supported by the record | Zachry argues insufficient proof of breach and causation | Port contends evidence supports breach and offset | Evidence legally and factually sufficient to support offset; cross-appeal denied |
Key Cases Cited
- R.F. Ball Constr. Co. v. City of Houston, 570 S.W.2d 75 (Tex.App.-Houston [14th Dist.] 1978) (no-damages-for-delay exceptions recognized and applied to determine intent)
- Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 938 (Tex.1991) (release must specifically mention the claim to be released; releases construed narrowly)
- Knutson v. Morton Foods, Inc., 603 S.W.2d 805 (Tex.1980) (parol evidence and release interpretation considerations)
- Green International, Inc. v. Solis, 951 S.W.2d 384 (Tex.1997) (no-damages-for-delay clause; exceptions not clearly established in Texas)
- In re Serv. Corp. Int’l, 355 S.W.3d 655 (Tex.2011) (contract interpretation; ascertain intent by reading entire writing)
- City of Houston v. RF Ball Constr. Co., 570 S.W.2d 75 (Tex.Civ.App.-Houston [14th Dist.] 1978) (basis for delay damages when contractor proves delay and Port at fault)
- Tex. State Bd. of Med. Examiners v. Birenbaum, 891 S.W.2d 338 (Tex.App.-Austin 1995) (contractual damages limits and policy considerations)
- Aetna Cas. & Sur. Co. v. Marshall, 699 S.W.2d 896 (Tex.App.-Houston [1st Dist.] 1985) (necessity of reasonable charges; adopts contract interpretation principles)