Allegheny Millwork, Inc. v. Jeff Honeycutt D/B/A Noah Quality Services

CourtCourt of Appeals of Texas
DecidedJune 8, 2022
Docket05-21-00113-CV
StatusPublished

This text of Allegheny Millwork, Inc. v. Jeff Honeycutt D/B/A Noah Quality Services (Allegheny Millwork, Inc. v. Jeff Honeycutt D/B/A Noah Quality Services) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Allegheny Millwork, Inc. v. Jeff Honeycutt D/B/A Noah Quality Services, (Tex. Ct. App. 2022).

Opinion

Affirm and Opinion Filed June 8, 2022

In The Court of Appeals Fifth District of Texas at Dallas No. 05-21-00113-CV

ALLEGHENY MILLWORK, INC., Appellant V. JEFF HONEYCUTT D/B/A NOAH QUALITY SERVICES, Appellee

On Appeal from the 380th Judicial District Court Collin County, Texas Trial Court Cause No. 380-03386-2018

MEMORANDUM OPINION Before Justices Schenck, Carlyle, and Garcia Opinion by Justice Schenck Allegheny Millwork, Inc. (“Allegheny”) appeals the trial court’s order

confirming an arbitration award, and judgment in conformance therewith, in favor

of Jeff Honeycutt d/b/a Noah Quality Services (“NQS”). Allegheny urges the trial

court erred in confirming the award and in denying its motion to vacate or modify

same because the arbitrator exceeded her powers in arriving at the result that

Allegheny was liable for NQS’s actual damages and expenses of the proceeding.

NQS asserts Allegheny’s appeal is frivolous warranting sanctions against it. See

TEX. R. APP. P. 45. We affirm the trial court’s order and judgment and decline NQS’s request for imposition of sanctions. Because all issues are settled in law, we

issue this memorandum opinion. Id. 47.4.

BACKGROUND

In July 2016, Allegheny and NQS entered into a subcontract agreement

whereby NQS became the installer of doors and related hardware at a construction

project known as Blue Star Omni Hotel. Allegheny had previously entered into an

agreement with the project’s general contractor, Manhattan Construction Company

(“Manhattan”). That agreement was incorporated into the agreement between

Allegheny and NQS.

Various disputes arose between Allegheny, NQS and Manhattan during the

construction project. On July 13, 2018, NQS filed suit in the district court of Collin

County against Allegheny, Manhattan, and the owner of the project. Pursuant to its

agreement with Allegheny, made applicable to NQS as well, Manhattan moved to

compel the matter to arbitration and the district court signed an agreed order

compelling arbitration and abated the case.

NQS submitted a statement of claims to the arbitrator asserting claims of

breach of contract, quantum meruit, and promissory estoppel against Allegheny and

Manhattan, and additional claims of fraud and theft under the Texas Theft Liability

Act against Allegheny. NQS claimed it was entitled to recover expenses it incurred

as a result of delays and inefficiencies in the construction of the project. Allegheny

denied liability on all counts asserting NQS was not entitled to any additional

–2– payment absent approval of the owner and asserted a counterclaim for breach of

contact claiming there were deficiencies in the work performed by NQS and that it

suffered damages when NQS left the project before its completion.

Prior to the final hearing, Manhattan and Allegheny entered into a settlement

whereby Manhattan made a payment to Allegheny, Allegheny agreed to indemnify

Manhattan from claims arising from the project,1 and NQS non-suited its claims

against Manhattan. The dispute between Allegheny and NQS proceeded to a final

arbitration hearing over two days in June 2020 before a single arbitrator. By

agreement of all parties, the proceedings were not recorded or transcribed. On

August 5, the arbitrator issued her Final Award in favor of NQS and made various

findings, including the following:

The contract between [Allegheny] and [NQS] was dated May 27, 2016 and signed in mid-July 2016 (the “Contract”).

There were inefficiencies on the job including but not limited to areas not being ready for door installation, lack of an adequate hardware room, lack of elevator access and out of sequence work. These inefficiencies required NQS to expend additional straight time hours and overtime hours.

As a result of the inefficiencies on the job, pursuant to the Contract, NQS was entitled to receive additional compensation.

1 As part of the settlement, a change order, Change Order No. 9, was approved adding: $180,000 for any and all damages associated with any door installation performed under the scope of this subcontract. This settlement agreement is intended to resolve all claims known and future claims from Noah Quality Services. This arrangement does not release any remaining obligation in accordance with the original subcontract agreement, including, but not limited to, latent defects in labor and/or materials, provided to the project and/or warranty obligations. –3– Allegheny expected NQS to be paid an amount in excess of the stated contract amount.

Allegheny and NQS worked together to submit a claim to Manhattan Construction Company (“MCC”), the general contractor on the job.

On March 9, 2018, there was a meeting with Bill Wolf (on behalf of Allegheny) and Mark Penny (on behalf of MCC) during which 2 invoices were discussed—one for $32,749.70 for additional costs incurred by Allegheny and one for $207,000 for additional costs incurred by NQS. During the meeting, Wolf and Penny discussed the components of NQS’s claim. MCC agreed to pay Allegheny an additional $180,000 in exchange for a release by Allegheny and indemnity from claims by NQS. Per Penny’s testimony, MCC thought NQS had been delayed to some extent on the job. Penny testified that at least some portion of the money paid by MCC was to be used to settle NQS’s claims.

NQS had unpaid retainage on the job of $10,750.

Allegheny asserts a backcharge of $116,742 against NQS. Notice of the backcharge was not presented to NQS as required by the Contract. The evidence presented to the Arbitrator was insufficient to show that the amounts included in the backcharge were reasonable, necessary and attributable to NQS.

Reasonable and necessary attorney’s fees for representation of Claimant in this matter are $202,000. Claimant incurred expenses totaling $3,194.353.

The evidence does not support a finding of a violation of the Texas Theft Liability Act.

Based upon her findings, the Arbitrator awarded NQS actual damages of $166,162;2

attorney’s fees and expenses in the amount of $205,194.35; interest at the rate of 5%

2 The actual damages are comprised of a portion of the $180,000 Manhattan paid to Allegheny ($155,412) and the unpaid retainage ($10,750). The arbitrator explained her rational for apportioning the payment from Manhattan as follows:

–4– commencing August 5, 2020; and reimbursement of AAA fees and expenses paid

by NQS in the amount of $10,003.34.

NQS filed a motion in the district court seeking confirmation of the

arbitrator’s award and Allegheny moved to vacate or modify same. After hearing

the motions, the district court denied Allegheny’s motion to vacate or modify and

granted NQS’s motion to confirm, and issued a judgment in conformance with the

arbitrator’s final award. This appeal followed.

DISCUSSION

I. Standard of Review

Review of a trial court’s decision as to vacatur or confirmation of an

arbitration award is de novo and reaches to the entire record. Centex/Vestal v.

Friendship W. Baptist Church, 314 S.W.3d 677, 683 (Tex. App.—Dallas 2010, pet.

denied). Because Texas law favors arbitration, however, our review is “extremely

narrow.” Id.; see also CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002).

An arbitration award is presumed valid and entitled to great deference. Ancor

Holdings, LLC v.

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