TSL Four Suns Construction, LLC v. Eagle Remediation Services, Inc., 11-13-00156-CV

Background

TSL contracted Eagle to remediate mold in four residential buildings; Eagle completed work and TSL paid $197,103 under the parties’ documents (purchase orders + General Services Agreement).
Later, the Texas Comptroller audited Eagle and determined the remediation services were taxable; Comptroller assessed $16,261 in sales tax for the project.
Eagle paid the Comptroller the assessed tax (to avoid penalties) and invoiced TSL $19,513.20 (tax + 20% markup) seeking reimbursement.
TSL refused to pay; Eagle sued for breach of contract, sworn account, and unjust enrichment; bench trial resulted in judgment for Eagle for the tax, markup, and costs.
On appeal TSL raised multiple issues: taxability of services, whether Eagle met conditions precedent / fully performed, applicability of the contract’s “not to exceed” cap, breach and damages calculation.

Issues

Issue	Plaintiff's Argument (Eagle)	Defendant's Argument (TSL)	Held
Whether services were taxable	Comptroller’s audit correctly found services taxable; Eagle followed assessment	Services were part of new residential construction and thus nontaxable under §151.0048(b)	Comptroller has exclusive interpretive jurisdiction; parties failed to exhaust administrative remedies; trial court followed Comptroller and issue not open on collateral attack — tax treated as applicable
Whether conditions precedent / full performance excused payment	Eagle: conditions precedent satisfied; payment due upon receipt of close‑out documents; Eagle invoiced after audit and requested payment	TSL: Eagle failed to provide close‑out documents within 30 days and therefore was excused from paying	Receipt is a condition but not time‑limited; Eagle breached timing but breach not material (TSL not deprived of benefit); TSL not excused from payment
Whether the contract’s "not to exceed" cap limits recovery (total $197,103)	Sales tax and markup are separate under the General Services Agreement and Fee Schedule; not‑to‑exceed applied to line items only	TSL: paid full $197,103 and cap bars any further charge	Contract language excludes taxes and permits from quoted rates; taxes and the 20% markup are separate — cap does not apply to tax/markup
Damages and proof of tax base	Eagle: Comptroller assessed tax based on sales price paid by TSL; Eagle need not reprove time/materials after TSL paid original invoice	TSL: Eagle failed to prove actual time/materials so court cannot calculate taxes	Court accepted Comptroller’s assessment on the sales price (amount TSL paid); trial court’s damages calculation upheld

Key Cases Cited

Catalina v. Blasdel, 881 S.W.2d 295 (Tex. 1994) (bench‑trial findings reviewed under jury sufficiency standards)
City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal and factual sufficiency review standards)
Cain v. Bain, 709 S.W.2d 175 (Tex. 1986) (factual‑sufficiency review standard)
BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (trial court conclusions of law reviewed de novo)
MAG‑T, L.P. v. Travis Cent. Appraisal Dist., 161 S.W.3d 617 (Tex. App.—Austin 2005) (administrative‑remedies/exhaustion principles)
Grounds v. Tolar Indep. Sch. Dist., 707 S.W.2d 889 (Tex. 1986) (limits on collateral attacks where administrative scheme provides exclusive remedies)
Dubai Petroleum Co. v. Kazi, 12 S.W.3d 71 (Tex. 2000) (abrogation discussed re: administrative law)
Centex Corp. v. Dalton, 840 S.W.2d 952 (Tex. 1992) (definition of condition precedent)
Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691 (Tex. 1994) (material breach factors and consequences)
Davis v. State, 904 S.W.2d 946 (Tex. App.—Austin 1995) (seller’s remedy to recover taxes paid to state from purchaser)
Reaves & Becker Co. v. Wilkes Co., 392 S.W.2d 379 (Tex. Civ. App.—Austin 1965) (seller may recover tax paid from purchaser)
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (contract construction — give effect to entire writing)