Vance v. My Apartment Steak House of San Antonio, Inc.

VANCE, John H. D/B/A Co., Petitioner,

Construction

MY APARTMENT STEAK HOUSE OF ANTONIO, INC., Respondent.

SAN

No. C-2623.

Supreme Court of Texas.

May prevented by

that he was Steak House completing from contract. Steak against House then filed a cross-claim seeking $43,488.75 Vance the sum of for and defective construction failure to com- plete stipulated by the contract. It was all parties en- that Interiors was Consolidated Antonio, Rogers, peti- David W. for San claim, on its titled to recover and it is not tioner. appeal. party to this Davis, Antonio, E. Charles San re- evidence, of all At the conclusion the trial spondent. granted court motions for instructed ver- against dict Vance and both Steak House BARROW, Justice. Only on the filed cross-actions each. Vance, appeal by This is an H. John perfected appeal. Vance an The court Company Vance d/b/a Construction appeals after concluding affirmed that (Vance) from a take-nothing judgment ren- to Vance had failed the cost of reme- against Apartment his suit My dered dying or necessary omissions (Steak Antonio, House Steak of San Inc. building make the conform to the contract. House) to recover on a construction con- outset, At we shall restate the well- appeals The court of tract. affirmed. We Texas rules concerning established the judgments reverse of the lower courts building measure in a contract and remand the cause to court. the trial as dispute such this. We first note that 1978, In March of Vance into a entered both Steak House Vance and are construction contract with House Steak have breached their contract. They both whereby agreed to construct a res- via have filed affirmative claims for relief 10,1978 completed by taurant to be August Moreover, their cross-actions. the evidence payment $116,000. return Vari- substantially per- indicates that Vance did delays ous occurred for which each form and that all the contract of the build- Finally, September blames other. on ing defects remediable. were 1978, 25, Steak House notified Vance the was contract terminated and de- thereafter substantially aWhen contractor has nied him access to property for further performed building he is enti undisputed work. contract that the full tled to recover contract less fully performed not was the res- although remedying the cost of those defects that completed. taurant had been substantially remediable. are $20,000 The sum was Steak withheld 848, (Tex. 270 S.W. Comm’n price. House from the contract 1925, holding approved); Dietz Memo App. subcontractor, Bldg. rial Co. v. Texas Steel One Consolidated Interior Inc., Systems, 1979,. paid, brought was not it S.W.2d — Waco Sims, n.r.e.); Perryman suit Vance and Steak writ ref’d seeking House to recover sum of (Tex.Civ.App. Tyler $2,484. n.r.e.); Vance answered and filed a cross- writ Corbin 3A A. ref’d § (1964 seeking Steak to re- Contracts Supp. action House 334-37 $8,298 1984); Perillo, remaining cover sum of due and Contracts J. Calamari & J. Guittard, 11-22, (2d 1977); under owing original contract. at 412 ed. contract Building Damages petition, Vance Contracts: Resti conceded that the tution, fully urged (1969).1 performed, had not been but 32 Tex.B.J. settings proper that 1. There numerous factual contract cases. measure of building in the arise context of a construction any allowance as well as offsets must be deter- disput, imply contract and we do not that the generally facts of the See mined case. building apply rules set forth herein will all correctly House also has a claim for Atkinson court stated the doctrine perform of substantial damages under Texas law. The measure merely equitable ance doctrine that damages for an owner when the contrac adopted was to allow a contractor who has alleged to of a construc tor is be breach substantially completed a construction con completing tion contract is the cost of tract to sue the on contract rather than that are job remedying or of those defects relegated being to his cause of action for only part If of the contract remediable. not, quantum meruit. The doctrine does contractor, paid the then price has been to however, permit the contractor to recover cred the amount of the owner’s is provided the full consideration for in the payments the of his ited balance definition, By contract. this doctrine rec Turner, Braden, unpaid. still & Collie ognizes totally that the contractor has not Brookhollow, Inc., 160, Inc. v. 642 S.W.2d bargain fulfilled his under the contract—he (Tex.1982); Fuess, 164 v. Allert & Graves Nonetheless, in he is to is breach. allowed 614, 869, (1912); 870 3A Tex. S.W. recovery sue on the but his 1089, A. on Corbin Contracts remedying decreased the cost of those (1964 Supp.1984); & 485-92 & J. Calamari responsible. he is “To defects which § 14-29, (1977); Perillo, at 560 J. Contracts recovery without allow full deductions Guittard, Building Damages Contracts: compensation for some defects is to award Restitution, 91, and 32 Tex.B.J. 118-20 thing contractor not done.” Id. at has] [the (1969). recovery The formulae of we have in the The court Atkinson announced comprise damage ele just set forth the following measuring compensa- “for rule ments of the contractor’s and the owner’s tion or ... to the contractor accepted causes of action. is a well and the owner:” postulate of the common that a civil law performance, the cases of substantial litigant an affirmative claim who asserts by the contractor is amount recoverable persuade the burden to for relief has price, the contract less the reasonable finder of fact of the existence of each ele remedying the defects or omis- cost of Grieger his cause of action. v. ment of make the way sions in such a as to 85, Vega, 153 Tex. 271 S.W.2d 89-90 This building conform to the contract. Albright Long, S.W.2d allowed deduction measures 1969, writ). no part the owner for failure on — Amarillo Therefore, alleged facts enti when Vance speci- fully comply contractor to with tling him to recover for his fications. allegations denied and his were a con- The court concluded that when Id.

House, placed position in was Vance per- recovery a substantial tractor seeks on having prove every to fact essential to theory he has the burden formance Lamb, case. Shell Chemical Co. remedying the prove the reasonable cost of (Tex.1973). cross-plaintiff con- defects. Because the any on present failed to evidence tractor primary contention raised action, damage element of its cause should re-examine the is that this Court that it was not enti- held Commission Bros., 270 holding in Atkinson v. Jackson tled to recover. and shift the burden S.W. building defects to and com- remedying recognize that some courts the cost We instances, placing argue even when in favor of the owner all mentators defects on proving for relief. the cost of asserting a claim burden of contractor instances; however, we arguments for in all After consideration of the the owner underly- have concluded that the rationale change, we decline to over- law does not ing change our such rule Atkinson. (1969). tution, Guittard, Damages Building Resti- 32 Tex.B.J. 91 Cntracts: justify proposal. suggest- One reason but one conclusion under the available evi- placing proof upon is, ed for dence. That there must be no evidence owner is the owner is in a better regarding to raise a fact issue the cost of position to know of the existence and ex- remedying the defects in Steak House’s remedying tent of defects and the cost of review, building. In our we must consider such may defects. While this be true in light all of the evidence most favor- instances, some the Texas Rules of Civil Vance, disregarding contrary able to all Procedure contain various tools which a evidence inferences. See Williams may require contractor the owner to define Bennett, (Tex.1980). alleged and enumerate the in a defects replete record of this case is with building. See Tex.R.Civ.P. 166b-169. Fur- testimony concerning and other evidence ther, right the contractor obtain the repairing the cost of premises purpose enter the owner’s for the by with, begin have been left Vance. To inspecting observing of what defects Bare, part-owner who Robert was a 166b(2)(c). present. Tex.R.Civ.P. House, manager of Steak testified that he Therefore, we refuse to conclude that a $20,000 price retained of the contract lack justifies changing of access or control $116,000. amount, Of that Bare estimated the rule. Atkinson $14,000 $15,000 paid that he had to to sub- point, On a related urged it has been that for work done repairs contractors or for the owner a defense establish to the building. Bare later stated that the contractor’s cause simply by of action rais- paid suppliers total amount to and subcon- ing a concerning fact issue a defect not $13,549.41; addition, in tractors was Bare by addressed Again, contractor. our $2,000 spent around for maintenance and discovery rules of permit party to limit repair work. opponent his to certain facts and defenses. $8,298. by lien filed Vance was for See Tex.R.Civ.P. 166b-169. Under these rules, figure a contractor Vance he would be allowed to testified that derived this require the owner to set by deducting forth his list of the amount of bills he Thereafter, defects. the contractor having paid $11,702— was aware of Bare — may forego any undisputed discussion of $20,000 from the withheld from Vance simply by defects at trial proffering the $8,298 Bare. The claimed includ- interrogatories discovery or other into evi- $2,484 upon by ed the owed and sued bill to effectively preclude dence. This will Thus, Consolidated. Vance’s net claim was raising owner from an issue on a defect not $5,814. A third witness on cost of previously disclosed to the contractor. repairs expert was called Steak House, Bernie Fuller. He testified that he today We holding reaffirm the in Atkin- repairing estimated the cost of the defects Therefore, breaching son. when a contrac- $12,684. not, in building Fuller was brings tor to suit recover for his substan- however, specific to itemize the able mat- performance alleges tial and the owner re- gave ters that to rise this total. construction, in mediable defects required contractor is that he did testimony concerning Bare’s the amounts substantially perform, the consideration paid by suppliers him to workmen and was contract, due him under the and the cost of competent repairs. evidence of the cost of remedying the defects due to his errors or Likewise, jury the estimate related omissions. by Bernie Fuller constituted some evidence repairing as to the the defects in cost We must now decide whether the Finally, testimony the structure. appeals affirming in court of was correct jury sufficient to directing the trial Vance was enable court’s action verdict concerning in favor of House A confront and resolve issue Vance. remedying in the defendant is entitled to a directed verdict the cost of only building. when reasonable minds could reach manship

There was a substantial conflict and material used in the construc- building. jury tion of the found that regard with to the exact cost evidence Bros, Moreover, substantially complied Jackson had repairs. Vance’s and Bare’s with the contract and had built the house in testimony inwas conflict on what items plans specifica- accordance with the were “extras” and what items were called agreed upon. The tions trial court award- the contract. These inconsistencies Bros, recovery ed Jackson for the full not, however, negate and conflicts do amount owed on the contract. question. injured existence of a fact If an produced has the best evidence avail appeal, complained On that the able, and if it is sufficient to afford a Bros, awarding trial court erred in Jackson loss, determining reasonable basis for jury, the full contract because the recovery Bros, he is not to be denied a because although it found had Jackson sub damage incapa the exact amount of the contract, stantially complied with the also Coast Invest ble of ascertainment. Gulf found several defects the construction. Rothman, Corp. ment 506 S.W.2d 1924), 259 S.W. 280 — Austin City see also San Au (Tex.1974); part, rev’d and remanded in S.W. 848 Co., gustine Roy W. Green (Tex.Comm’n App.1925, holding approved). (Tex.Civ.App. Tyler writ appeals The court of civil held that since Bros, n.r.e.). ref’d substantially complied had with the their the in this We hold that evidence equivalent performance deemed to full question record is sufficient to raise a of purposes of suit on the contract. The court remedying the defects fact as to the cost of Bros, fully reasoned that since Jackson had building. jury in House’s should performed purposes of suit on the con permitted have been to determine what re tract, to recover the contract it was entitled any, if sub pairs, were necessitated the proof pleading and in the absence of building practices of Vance. The standard the Atkinsons showing what of facts appeals affirming in the trial court of erred reasonably cover the cost of amount would in court’s directed verdict this cause. fulfill remedying any defects so as to the judgments of the lower courts’ are contract. 259 at 285. terms of the S.W. reversed and the cause is remanded for a appeals The commission of reversed the trial on the merits. holding appeals court of civil of the held: ROBERTSON, in opinion concurs with being appear from the made to KILGARLIN, JJ., WALLACE and which proof pleadings and the there was join. compliance plans not a full with the Bros, ROBERTSON, Justice, concurring. specifications, Jackson could not invoking equi- the recover at all without majority. the I concur in the result of perform- table doctrine of substantial history the procedural The facts and ance. therefore think the burden We and Atkinson v. Jackson case at bar to furnish the evidence to was on them 848, (Tex.Comm’n App.1925, hold- 270 S.W. allow- properly measure the deductions Atkinson, In ing approved) are similar. defects and necessary remedy able brought by company a lumber suit was omissions. Bros, builder, against and the approved 270 at 851. This court S.W. owner, Atkinson, for the balance due on appeals. 270 holding of the commission furnished for the con- lumber and materials S.W. at residence. Jack- struction of the Atkinson Bros, majority, 677 S.W.2d at As stated against Atkin- filed a cross-action son this court major issue before on the construction son for the balance due continue to follow sought Texas should response, In Atkinson whether contract. placing the burden of rule of in the work- for various defects

485 party dam own a proof of the measure of a defendant’s his such ages party bringing party on the suit on a sub exactly case allows each to recover stantially complete contract. construction that to which he is entitled under the con- cases, In nonsubstantial tract. general rule Texas is that independent action a con prov asserting a claim has the burden of of a construction con tractor for breach evidence, ing, by preponderance of the tract, proof is on the owner every necessary element to sustain existence, to establish contract’s claim. Northern International — Great Harkness, (Tex. Franks v. 117 S.W. 913 (Tex.Comm’n Casey, v. 46 S.W.2d 669 Co. breach, Civ.App. 1909); App.1932, holding approved); Southern Tessman, 92 Tex. 49 S.W. Schulz Allen, Transportation Co. v.

Pacific any damages sustained. (Tex.Civ.App. S.W.2d 300 [14th — Houston Sweeney County Tarrant Butcher & court, 1975, writ). no The Atkinson Dist.] Constr. however, departed from the traditional bur n.r.e.); 1969, writ ref’d —Fort Worth see proof by effectively requiring den of Inc., Center, Franks v. Associated Air contractor to establish the ele (5th Cir.1981)(“Under F.2d Texas ment of the owner’s cause of action. This law, repairs the reasonable cost of is an departure was founded on the belief that at plaintiff’s proof essential element common law the contractor could not recov damages.”) In a suit an owner er under the contract in the absence of the complete failure a contractor for performance. doctrine of substantial “No time, meet the contract on the owner must part such rule has ever been as to the measure of dam burden law, equity.” common much less a rule of ages. generally v. Methodist See Walsh A.L. 3A Corbin on Contracts South, Episcopal 212 S.W. 950 Church (1960). Furthermore, reasoning (Tex.Comm’n judgmt adopted); App. 1919,— that, ignores in cases such as Atkinson (Tex. McKnight Renfro, present dispute, parties and the have n.r.e.). Civ.App. ref’d writ —Dallas parties breached the contract and both Similarly, by in a an owner for a con suit seeking damages for the breach construction, complete failure to tractor’s other. proof satisfy the owner must case, In both Atkinson and this the own- damages complete as to the measure of damages upon er sued based the con- Zang Bldg. the structure. v. Hubbard & complete per- tractor’s failure to render Co., (Tex.Civ.App.— 85 Realty 125 S.W. formance, and the contractor sued for dam- 1910). An generally Marshall San See ages upon pay. based owner’s failure to tonio, (Tex.Civ.App. 1901). 63 S.W. cases, contracting party each al- However, following Texas under law At leged independent of contract. breach kinson, brings a contractor a cause when case, assuming proves In such a the owner pay, of action for the owner’s failure to completely per- the contractor has not substantially performing after on the con formed, proves but the contractor he has tract, and the owner counterclaims for de substantially performed, the owner is enti- workmanship, fective the contractor effec damages resulting from the tled recover proof of the dam tively has burden less-than-complete perform- contractor’s age element of the owner’s cause of action Likewise, is entitled ance. the contractor furnishing al by evidence on “deductions to recover his that result from necessary remedy course, lowable pay. failure to Of as a owner’s Co., matter, Drilling and omissions.” Matador damage practical claims will be Post, 1190, (5th Inc. v. 662 F.2d Cir. only par- offset each other and 1981). proving In addition to his own dam larger ty proving the amount ages, prove must the owner’s actually par- the other a contractor will recover disadvantage, or risk ty. Placing damages, on each to his own the burden right forfeiture of his to enforce the con exclusively defect is within the control and tract. Engineering, BPR Construction & access of the owner. In both the case at Rivers, (Tex. Inc. v. 249-50 Atkinson, bar and the owner either made Civ.App. n.r.e.). writ dref repairs or had the made. The contractor — Dallas contractor, suing that the anomalous did not know and should not have been contract, on the must breach on his expected to know without investigation the part own and the value of that breach. damages. measure of “Ultimately, it is the Shipyards Corp. Todd Jasper Electric dissatisfied who knows best what Co., (5th Cir.1969) Service F.2d particular phase of the construction un- (placing of the burden on the owner is a satisfactory Hopkins to it.” Construction view”). “better In the absence of such Co. v. Reliance Ins. 475 P.2d proof the can nothing contractor recover (Alaska 1970). owner, having respon- his suit may and the owner receives what sibility usually for and supervising any re- be, depending upon how already much has work, pair position is in the better to estab- paid been under the a substantial damages. lish measure of windfall. generally Ryan See v. Thur By placing on the contractor the burden mond, 481 S.W.2d 199 (Tex.Civ.App . —Cor proving defects, remedy cost to pus n.r.e.). Christi writ ref’d Addi court good Atkinson created a defense to tionally, the contractor is faced with the any suit contract the contractor. proving risk of the owner’s so As concurring opinion observed convincingly that the finder of fact deter Inc., BPR Engineering, Construction and he, contractor, mines did not substan Rivers, 250: tially perform. If the attempts contractor According Atkinson, logic to the if imposed by to meet the burden the rule of proves the cost of reme- [the contractor] Atkinson and the fact finder thereafter dying one or more defects asserted substantially perform, finds he not did he owner, the dilemma still exists be- judgment cannot receive a on the contract jury cause the court or find another only quantum is left with meruit evidence, defect raised but con- claim. Atkinson v. Jackson cerning which the amount of the owner’s way, S.W. at 851. In this the rule of damage has not been shown. All an may require the contractor to owner needs to do in order to establish a defeat his own suit. The contractor’s alter claim, defense to the contractor’s entire balancing native to this delicate act is to while retaining the benefit of the con- forego altogether suit on the contract work, tractor’s is to raise a fact issue only sue for the value of his services. defect, concerning any no matter how perspective, From the contractor’s neither slight in relation to the total of the work juristic alternative is desirable. From the performed. perspective, neither alternative is fair. possibility unjustifiably of the owner’s compelling An plac- additional reason for alleging presents defects series of ing proof the burden of on the owner is contractor with a most onerous burden. general long recognized found rule present The contractor must evidence re- party peculiar this state that having defect, garding remedy every the cost to knowledge proved of the facts to be has proof the absence of such forfeits proof of such facts. W.A. rights. his contract The smaller his M., Ryan T.Ry.Co., & Co. v. K. & 65 Tex. breach, greater the forfeiture. A.L. (1885). In a substantial Corbin, 3A Corbin on Contracts damages applies case same measure of (1960). to both the contractor and the owner. At- majority urges v. the fact an owner has kinson Jackson 270 S.W. at 850. peculiar expressed knowledge Those as the con- to be price proved placed upon tract less the cost of re- and the reasonable onerous burden pair of alleged the defect or omission. The evidence of presenting contractor of for the amount of the allowance defective alleged by an be every defect owner owner”). discovery upon the broad work falls by use of Texas’ avoided problems may be Although these rules. rules, prodi JJ., discovery KILGARLIN, join in

lessened our WALLACE and of a position and awkward giously unfair concurring opinion. compliance attempting to show

contractor contract while simulta a construction

with required to dam

neously being establish that same from his

ages breach Therefore, I is indefensible.

contract previous decision in At

would overrule our Bros, adopt the rule v. kinson

that in an action for collection substantially of a com the contract ALBRIGHT, Petitioner, M. James defendant, pleted contract the construction v. for to avail himself of a set-off order al., Respondent. et CITY OF HOUSTON incomplete from or de sustained work, has the burden of as to fective No. C-2891. damages. the measure of such United of Texas. Supreme Court En use Acme Maintenance States for Contracting gineering Co. v. Wunderlich June (10th Cir.1955); Co., 228 F.2d 66 United Lichter v. States Use for Benefit of Co., (8th F.2d 13 Cir. Henke Const. 1946); States Use and United Benefit Corp. Foster Wheeler v. American (2nd Cir.1944); Co., 142 F.2d 726

Surety Morley rel v.

United States ex Johnson Cir.1938); Co., (2d 98 F.2d 781 Unit

Const. States, Cooperage Baltimore

ed use (D.C.1928); McCay, 28 F.2d 777 Co. v. Housing Authority

Alaska v. Walsh State 1980); Co., Inc., (Alaska 625 P.2d 831

& (La.App. Busby, 141

Charest v. So.2d 1962); Basso, 347 Mich. Antonoff (1956);

N.W.2d 604 Rickertsen Carska (1961);

don, 172 Neb. 108 N.W.2d 392 Lintz, A. 76 N.J.L.

Dyer Burton, Durkee,

(1908); A. Inc. v. Charles (1954); 433, 123 N.E.2d 432

162 Ohio St. Drive-In, Indemnity Inc. v. Home

Exton 480, 261 A.2d 319 Ver 436 Pa. Corp. v. Brick

mont Steel Structural

man, A.2d De 126 Vt. Kittitas, 57 Wash.2d v. Town

Blasio (1960); A.L. 3A P.2d 606 § (2d ed. on Contracts

Corbin rule re supplement) (stating the

and 1962 placing of the burden on

quiring the self-evident”); S. is “sensible owner

Williston, on Contracts Williston 1962) (“The establishing

(3d ed. burden

Case Details

Case Name: Vance v. My Apartment Steak House of San Antonio, Inc.

Court Name: Texas Supreme Court

Date Published: May 23, 1984

Citation: 677 S.W.2d 480

Docket Number: C-2623

Court Abbreviation: Tex.