Benge General Contracting, LLC and James Benge v. Hertz Electric, LLC and HTJ Global Electric, LLC

• Court: Court of Appeals of Texas
• Decided: September 7, 2021
• Docket: 05-19-01506-CV
• Status: Published

Opinion

Reversed and Rendered in part, Affirmed in part, and Opinion Filed September 7, 2021

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-19-01506-CV

BENGE GENERAL CONTRACTING, LLC AND JAMES BENGE, Appellants V. HERTZ ELECTRIC, LLC AND HTJ GLOBAL ELECTRIC, LLC, Appellees

On Appeal from the 160th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-16-03630

MEMORANDUM OPINION Before Chief Justice Burns, Justice Partida-Kipness, and Justice Garcia Opinion by Justice Partida-Kipness Appellants appeal an adverse judgment on claims and counterclaims arising

from commercial services contracts. In five issues, appellants contend the trial court

erred in awarding attorney’s fees, allowing a trial amendment of appellees’

counterclaims, awarding both contract and tort damages, granting summary

judgment on appellants’ implied-warranty claim, and granting directed verdict on

appellants’ breach-of-contract claim. We reverse the trial court’s judgment regarding

attorney’s fees and affirm the remainder of the trial court’s judgment. BACKGROUND

Appellant Benge General Contracting, LLC (BGC) hired appellees Hertz

Electrical, LLC (Hertz) and HTJ Global Electric, LLC (HTJ) to perform electrical

work on several commercial sites in North Texas. Appellees submitted single-page

bids containing a bullet list of included and excluded tasks or items for each site.

When identifying some of the included tasks or items, the bids refer to “plans” and,

in one case, “specs.” BGC’s owner James Benge approved the proposals and

stamped BGC’s terms of acceptance on the documents. The stamped terms state,

among other things:

Acceptance of your bid/proposal and beginning work constitutes a binding contract. All work is to be completed with quality and in a reasonable time. Benge General Contracting reserves the right to adjust the schedule accordingly.

Two of the contracts also include a stamp, stating:

BEGINNING WORK WITH THIS RELEASE, YOU CONFIRM YOU ARE ADHERING TO THE PLANS AND SPECIFICATIONS. ANY DEVIATIONS MUST BE APPROVED IN WRITING. YOU ALSO CONFIRM THAT ALL CHANGE ORDERS MUST BE SIGNED BY A PROJECT MANAGER OR THE DIRECTOR OF OPERATIONS. SUPERINTENDENTS AND CUSTOMERS ARE NOT AUTHORIZED TO MAKE CHANGES TO THE PLANS THAT RESULT IN FINANCIAL INCREASES.

Appellees began working on each site between August and November of

2015. Appellees completed all work they understood was required under the

contracts. The record reflects that where city inspection was required, appellees’

–2– work received a “green tag,” indicating the work passed inspection. Benge partially

paid appellees for their services.

BGC contends, however, that it later learned that appellees had failed to

perform the work competently. After hiring other electrical contractors to repair

appellees’ allegedly shoddy work, BGC filed suit against appellees on March 29,

2016. BGC alleged that appellees “failed to perform their duties in a good and

workmanlike manner” and brought claims for breach of contract, money had and

received, and unjust enrichment. BGC also sought attorney’s fees. BGC filed an

amended petition adding an allegation that Hertz and HTJ were merely alter egos for

their owner, Joel Dennie.

Appellees answered and filed counterclaims. Appellees specifically alleged

that BGC failed to pay all that was owed to appellees and their subcontractors and

suppliers. Appellees further alleged that BGC had attempted to harm appellees’

business relationships by making allegedly false and disparaging remarks regarding

Dennie to appellees’ existing and potential clients. Thus, appellees brought

counterclaims for breach of contract and business disparagement. Appellees also

alleged that BGC committed fraud when Benge forged Dennie’s signature on an

Unconditional Final Waiver of Lien associated with one of the contracts. Appellees

sought to make Benge liable for the fraudulent act by alleging that BGC was merely

Benge’s alter ego. Appellees also sought attorney’s fees.

–3– Appellees moved for no-evidence and traditional summary judgment on all of

BGC’s claims. Appellees also moved for leave to add Benge as a party to the lawsuit.

Appellees based their motion for leave on the deposition testimony of Joshua

McDowell, BGC’s former Director of Operations, in which McDowell described

conduct by Benge that supported appellees’ alter-ego claim. The trial court granted

appellees’ summary judgment motion in part, dismissing BGC’s claims against

Dennie and BGC’s claims for money had and received and unjust enrichment against

Hertz and HTJ. The trial court denied appellees’ motion as to BGC’s breach-of-

contract claim and attorney’s fees. The trial court also granted appellees’ motion for

leave to add Benge as a party. Appellees filed amended counterclaims to include

Benge as a third-party defendant.

BGC filed a third amended petition, modifying its breach-of-contract claim

and adding claims for breach of implied warranty and fraud. As to its breach-of-

contract claim, BGC alleged that appellees “failed to perform most of the agreed

items, failed to perform others correctly, and did not perform any work timely.” The

newly asserted claim for breach of implied warranty contained allegations

previously stated in support of BGC’s breach-of-contract claim. Namely, BGC

alleged that appellees failed to perform their services “in a good and workmanlike

manner.” BGC alleged in its fraud claim that appellees fraudulently misrepresented

that they had paid subcontractors and suppliers and that they were capable of

completing the contracted work “timely and in a good and workmanlike manner.”

–4– Appellees moved for no-evidence summary judgment on BGC’s newly

asserted claims. Regarding BGC’s implied-warranty claim, Appellees argued that

BGC had no evidence that it had no other remedy available or that appellees failed

to perform the contracted services. Appellees also argued that BGC had no evidence

of any element of its fraud claim. BGC filed a response, asserting that appellees had

improperly added an element to the implied-warranty claim. Specifically, BGC

argued that it did not need to prove it had no other remedy to prevail on this claim.

BGC then cited 344 pages of documents, including Benge’s affidavit, as evidence

that appellees failed to perform in a good and workmanlike manner. The trial court

granted appellees’ motion and dismissed BGC’s implied-warranty and fraud claims.

The parties proceeded to trial on BGC’s claims for breach of contract and

attorney’s fees and appellees’ counterclaims for breach of contract, fraud, alter ego,

business disparagement, and attorney’s fees. At the close of BGC’s evidence,

appellees moved for a directed verdict on BGC’s breach-of-contract claim. The trial

court granted appellees’ motion.

At the close of appellee’s evidence, BGC moved for a directed verdict on

appellees’ fraud claim on the ground that it was not “a broad form of fraud.”

According to BGC, there was no evidence of conspiracy between Benge and BGC

to forge Dennie’s signature on a lien waiver. BGC also asserted that there was no

evidence that Benge communicated with McDowell with intent to harm appellees’

business relationships or that Benge used BGC as an alter ego to protect himself

–5– from fraudulent activities. BGC asserted that Benge’s communications with

McDowell concerned use of “money from these jobs to pay for [Benge’s] wife’s

vacations and things like that; however there was no evidence to tie any of those

alleged very general allegations to any damage to Mr. Dennie.”

Appellees opposed BGC’s motion, arguing the lien releases were not

enforceable because they were obtained on “a false promise to eventually pay those

invoices in full.” Appellees also argued there was evidence of fraud in the form of

McDowell’s testimony that Benge would “use funds for one project that Mr. Dennie

was working on to pay other projects” and “personal expenses.” According to

appellees, Dennie would not have entered into the contracts with BGC if he had

known this. Appellees admitted there was no evidence of forgery but noted the other

evidence of fraud. Thus, appellees moved to amend their petition consistent with this

other evidence.

The trial court granted appellants’ motion for directed verdict as to appellees’

business disparagement claim and appellees’ motion to amend their petition.

Appellees filed their fourth amended petition, modifying their fraud claim to allege

that Benge misappropriated project funds and falsely represented that BGC would

pay appellees in exchange for lien waivers, and that they relied on BGC’s

misrepresentations when signing the lien waivers.

The jury returned a verdict for appellees on their breach of contract and fraud

claims and found for appellees on their request for attorney’s fees. The jury also

–6– found that Benge was using BGC as his alter ego in perpetrating a fraud on appellees.

The trial court entered a judgment consistent with the jury’s findings. BGC filed a

motion for new trial. The trial court denied the motion, and this appeal followed.

ANALYSIS

In five issues, appellants contend the trial court erred in (1) awarding appellees

attorney’s fees against BGC; (2) allowing a trial amendment to appellees’ petition;

(3) failing to require appellees to elect tort or contract damages; (4) granting no-

evidence summary judgment on BGC’s breach-of-implied-warranty claim; and (5)

granting directed verdict on BGC’s breach-of-contract claim. We address each issue

in order.

I. Attorney’s Fees

Appellants contend that the trial court erred in making both BGC and Benge

liable for attorney’s fees. According to appellants, Texas law prohibits awarding

attorney’s fees against a limited liability company. Thus, neither BGC nor, by

extension, Benge could be liable for attorney’s fees. Appellees contend, however,

that the jury’s alter-ego finding permits such an award. We agree with appellants.

Appellees sought attorney’s fees under chapter 38 of the civil practice and

remedies code. See TEX. CIV. PRAC. & REM. Code § 38.001. We review an award of

attorney’s fees under the statute for an abuse of discretion. Avila v. Larrea, 506

S.W.3d 490, 494 (Tex. App.—Dallas 2015, pet. denied). A trial court abuses its

discretion if it acts without reference to guiding rules and principles. Id.

–7– Texas follows the American Rule, under which litigants may recover

attorney’s fees only if specifically allowed by statute or contract. See Epps v. Fowler,

351 S.W.3d 862, 865 (Tex. 2011); Phoneternet, LLC v. Drawbridge Design, No. 05-

17-00890-CV, 2018 WL 3238001, at *2 (Tex. App.—Dallas July 3, 2018, no pet.)

(mem. op.). Section 38.001 authorizes an award of attorney’s fees for certain types

of claims brought by a “person” against “an individual or corporation.” See TEX.

CIV. PRAC. & REM. CODE § 38.001.1 Under the plain language of section 38.001, a

trial court cannot order limited liability partnerships (LLP), limited liability

companies (LLC), or limited partnerships (LP) to pay attorney’s fees. See

Phoneternet, LLC, 2018 WL 3238001, at *2 (section 38.001 does not permit

recovery against an LLC); Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438, 452–

55 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (same). The availability of

attorney’s fees under a particular statute is a question of law for the court. See

Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560, 574 (Tex. App.—Houston

[1st Dist.] 2014, pet. denied).

Appellants argue that the trial court could not order BGC to pay attorney’s

fees under section 38.001 because BGC is an LLC. The parties do not contest BGC’s

status as an LLC. Appellants further argue that the trial court was also prohibited

1 The Texas Legislature amended section 38.001 effective September 1, 2021. Those amendments apply to “an action commenced on or after the effective date of the Act.” Act of June 15, 2021, 87th Leg., R.S., H.B. 1578, § 1 (to be codified at TEX. CIV. PRAC. & REM. CODE § 38.001). This lawsuit was filed on March 29, 2016. Thus, the prior version of the law applies to this action, and all references to section 38.001 herein are to the prior version. –8– from ordering Benge to pay attorney’s fees. According to appellants, if BGC cannot

be liable for attorney’s fees, and BGC is Benge’s alter ego, then, by extension, Benge

also cannot be liable for attorney’s fees.

Appellees contend, however, that it would be unfair to allow Benge to get the

benefit of an LLC that was “a mere ‘corporate fiction’ and illusory for liability

purposes.” Although there is a logical appeal to appellees’ argument, appellees cite

dicta from only one federal case to support their argument. See Gibraltar Sav. v.

LDBrinkman Corp., 860 F.2d 1275, 1295 (5th Cir. 1988) (“If we were to uphold the

‘alter ego’ finding, LDBrinkman Corp. might be liable for attorneys’ fees as if it

were a contractual maker or guarantor of the note. Because such liability was not

established, we express no opinion on whether disregard alone would activate

section 38.001 and entitle Gibraltar to attorneys’ fees.” (internal citations omitted)).

Appellees also cite authority establishing that the alter-ego theory permits piercing

the corporate veil of an LLC to hold members liable for an LLC’s debts. Appellees,

however, do not cite any authority applying this doctrine to attorney’s fees. Absent

mandatory, or at least persuasive, authority applying the alter-ego theory to hold an

LLC’s members liable for attorney’s fees that could not be incurred by the LLC, we

must abide by the plain statutory language. Accordingly, we conclude that the trial

court abused its discretion in awarding attorney’s fees, and we sustain appellants’

first issue.

–9– II. Trial Amendment

In their second issue, appellants contend the trial court erred in allowing

appellees to amend their petition during trial. According to appellants, the

amendment stated a new cause of action for fraud by omission that was unsupported

by the evidence and “extremely prejudicial” to appellants. Appellees contend,

however, that the amended fraud claim was supported by testimony previously

offered at trial and served merely to conform the pleadings to the evidence. We agree

with the appellees.

Under rule of civil procedure 66, a trial court is required to freely grant a

request to amend pleadings during trial unless the opposing party presents evidence

the amendment would prejudice that party in maintaining an action or defense on

the merits. TEX. R. CIV. P. 66; see also State Bar of Tex. v. Kilpatrick, 874 S.W.2d

656, 658 (Tex. 1994) (per curiam). The trial court must allow an amendment to a

pleading if it is merely procedural in nature, such as conforming the pleadings to the

evidence at trial. Chapin & Chapin, Inc. v. Tex. Sand & Gravel Co., 844 S.W.2d

664, 665 (Tex. 1992) (per curiam); Hampden Corp. v. Remark, Inc., 331 S.W.3d

489, 498 (Tex. App.—Dallas 2010, pet. denied). An amendment is not mandatory,

however, if it asserts a new substantive matter that reshapes the cause of action.

Greenhalgh v. Serv. Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex. 1990); see also

Chapin, 844 S.W.2d at 665; Hampden Corp., 331 S.W.3d at 498. If the amendment

is not mandatory, the trial court has discretion to allow the amendment. Kilpatrick,

–10– 874 S.W.2d at 658; Stephenson v. LeBoeuf, 16 S.W.3d 829, 839 (Tex. App.—

Houston [14th Dist.] 2000, pet. denied). We will reverse the trial court’s decision to

allow an amendment only if the trial court clearly abused its discretion. Kilpatrick,

874 S.W.2d at 658; Stephenson, 16 S.W.3d at 839.

“Under Rules 63 and 66 a trial court has no discretion to refuse an amendment

unless: 1) the opposing party presents evidence of surprise or prejudice, or 2) the

amendment asserts a new cause of action or defense, and thus is prejudicial on its

face, and the opposing party objects to the amendment.” Greenhalgh, 787 S.W.2d at

939 (internal citations omitted); see also Greenville Automatic Gas Co. v. Automatic

Propane Gas & Supply, LLC, 465 S.W.3d 778, 783–84 (Tex. App.—Dallas 2015,

no pet.); Rodriguez v. Crowell, 319 S.W.3d 751, 758–59 (Tex. App.—El Paso 2009,

pet. denied). Merely asserting a new cause of action, however, does not make an

amendment prejudicial to the opposing party as a matter of law. Smith Detective

Agency & Nightwatch Serv., Inc. v. Stanley Smith Sec., Inc., 938 S.W.2d 743, 749

(Tex. App.—Dallas 1996, writ denied); Rodriguez, 319 S.W.3d at 759. We must

evaluate the amendment in the context of the record of the entire case. Smith

Detective Agency, 938 S.W.2d at 749; Rodriguez, 319 S.W.3d at 759. An

amendment is prejudicial on its face if, viewed in the context of the record, (1) it

asserts a new substantive matter that reshapes the cause of action or the nature of the

trial, (2) the opposing party could not have anticipated the amendment in light of the

prior development of the case, and (3) the amendment would detrimentally affect

–11– the opposing party’s presentation of the case. Smith Detective Agency, 938 S.W.2d

at 749; Rodriguez, 319 S.W.3d at 759. An additional cause of action may not be a

new substantive matter if it has common elements with previously pleaded matters

and the evidentiary proof required to support it is the same for an already pleaded

cause of action. Smith Detective Agency, 938 S.W.2d at 749 (citing Kilpatrick, 874

S.W.2d at 658).

Appellees alleged in their third amended counterclaim, their live pleading at

time of trial, that Benge and BGC “conspired to fabricate an Unconditional Final

Waiver of Lien with an electronically forged signature of Joel Dennie.” This

allegation formed the basis of appellees’ claim that appellants “committed actual

fraud.” No evidence of this alleged conspiracy was introduced by either party.

Appellees admitted this fact during argument on appellants’ motion for a directed

verdict. Evidence of other fraudulent acts, however, was introduced. Appellees

specifically cited McDowell’s testimony that Benge “used money from these jobs to

pay for his wife’s vacations and things like that.” Appellees cited other testimony by

McDowell that Benge used funds intended for one of appellees’ projects to fund

other projects to appellees’ detriment.

McDowell testified that as the director of operations, he knew where project

funds were used. As to one project, McDowell testified, “We very oftentimes didn’t

have funds, so when funds came in they were used to pay various bills, contractors,

taxes, payroll.” He testified further that “it was a practice on that job to make payroll

–12– and to pay [Benge’s] wife’s credit card, among other things, with the funds that we

received.” McDowell confirmed that Benge handled the funds on eight other projects

in a similar fashion, indicating that “[t]he funds were used for a variety of different

things, including personal expenses, . . . used for [Benge’s] wife’s business,

[Benge’s] credit cards, [Benge’s] wife’s credit cards, vacations, [and] contract

payments.” He also testified that the money at issue should have been paid to

appellees, and that Benge had a practice of making subcontractors, such as appellees,

sign lien waivers before being paid. Appellees also cited Dennie’s testimony that

Benge promised full payment when asking Dennie to execute the lien waivers.

According to appellees, Dennie would not have executed the lien waivers if he had

known that Benge had been improperly diverting project funds.

Appellees contend that this evidence supported a broad-form fraud claim, and

appellees asked the trial court for leave to amend their counterclaims. Appellants did

not object that they would be surprised or prejudiced by such an amendment but

merely restated their request for a directed verdict on the appellees’ original claim

regarding the allegedly forged signature. On appeal, appellants contend the

amendment was improper because there is no evidence that they had a duty to

disclose information regarding Benge’s use of projects funds to appellees.

Appellants did not raise this objection to the trial court, and thus did not preserve the

issue for appeal. TEX. R. APP. P. 33.1(a); see also TEX. R. EVID. 103(a)(1).

–13– Considering that the evidence giving rise to appellees’ motion for leave to

amend was presented before the motion, and even highlighted by appellants during

argument on their motion for directed verdict, we conclude the appellants failed to

demonstrate that they could not anticipate the amendment to appellees’

counterclaims. See Smith Detective Agency, 938 S.W.2d at 749. Appellants likewise

failed to establish, or even object, that they were prejudiced by the amendment.

Greenhalgh, 787 S.W.2d at 939. Rather, the record reflects that the amendment was

procedural in nature, merely conforming the pleadings to the evidence at trial. See

Chapin & Chapin, Inc., 844 S.W.2d at 665. Thus, the amendment was mandatory,

and the trial court had no discretion to disallow it. See Kilpatrick, 874 S.W.2d at 658.

Accordingly, we overrule appellants’ second issue.

III. Election of Remedies

In their third issue, appellants contend the trial court erred in allowing

appellees to recover on both their contract and tort claims. According to appellants,

appellees should be required to elect their remedy because both claims arise from

the same events. We disagree.

A party is generally entitled to pursue damages through alternative theories of

recovery. Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182,

184 (Tex. 1998) (per curiam); Toyota Motor Sales, U.S.A., Inc. v. Reavis, No. 05-

19-00075-CV, ___ S.W.3d ___, 2021 WL 2253535, at *10 (Tex. App.—Dallas June

3, 2021, no pet. h.). “[A] judgment awarding damages on each alternate theory may

–14– be upheld if the theories depend on separate and distinct injuries and if separate and

distinct damages findings are made as to each theory.” Peterson Grp., Inc. v. PLTQ

Lotus Grp., L.P., 417 S.W.3d 46, 64 (Tex. App.—Houston [1st Dist.] 2013, pet.

denied). Under the one-satisfaction rule, however, a plaintiff may recover only once

for a particular injury. Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex.

2000); Allan v. Nersesova, 307 S.W.3d 564, 574 (Tex. App.—Dallas 2010, no pet.).

The rule applies when a defendant commits technically differing acts that result in a

single injury. Casteel, 22 S.W.3d at 390; Allan, 307 S.W.3d at 574. The fact that

there may be more than one theory of liability does not modify this rule. Stewart

Title Guar. Co. v. Sterling, 822 S.W.2d 1, 8 (Tex.1991); Allan, 307 S.W.3d at 574.

Whether the rule applies is determined not by the cause of action, but by the injury.

See Sterling, 822 S.W.2d at 7–8.

Although not expressly stated, appellants essentially argue that the trial court

should have applied the one-satisfaction rule to appellees’ breach-of-contract and

fraud counterclaims because they both alleged the same injury: economic loss from

appellant’s alleged failure to pay for services rendered. In other words, appellants

contend that appellees have alleged only an economic loss. Generally, “a party may

not recover in tort for purely economic losses suffered to the subject matter of a

contract.” James J. Flanagan Shipping Corp. v. Del Monte Fresh Produce N.A., Inc.,

403 S.W.3d 360, 365 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (citing

Sharyland Water Supply Corp. v. City of Alton, 354 S.W.3d 407, 415, 418 (Tex.

–15– 2011)). To determine whether this “economic loss” rule applies, we consider “both

the source of the defendant’s duty to act (whether it arose solely out of the contract

or from some common-law duty) and the nature of the remedy sought by the

plaintiff.” Formosa Plastics Corp. USA v. Presidio Eng’rs & Contractors, Inc., 960

S.W.2d 41, 45 (Tex. 1998) (quoting Crawford v. Ace Sign, Inc., 917 S.W.2d 12, 12

(Tex. 1996)). We look to the substance of the cause of action, not the way it was

pleaded, to determine the type of action that is brought. Jim Walter Homes, Inc. v.

Reed, 711 S.W.2d 617, 617–18 (Tex. 1986); Clark v. PFPP Ltd. P’ship, 455 S.W.3d

283, 288 (Tex. App.—Dallas 2015, no pet.). “The nature of the injury most often

determines which duty or duties are breached. When the injury is only the economic

loss to the subject of a contract itself, the action sounds in contract alone.” Clark,

455 S.W.3d at 289 (quoting Reed, 711 S.W.2d at 618).

In some circumstances, however, a party’s actions may simultaneously breach

duties in contract and tort. Reed, 711 S.W.2d at 618. Generally, to maintain a

separate tort claim, the plaintiff must show an injury independent from the economic

losses recoverable for breach of contract. D.S.A., Inc. v. Hillsboro Indep. Sch. Dist.,

973 S.W.2d 662, 663–64 (Tex. 1998) (per curiam). Thus, the economic-loss rule has

been applied to bar negligence and products liability claims when the alleged injury

was also the subject-matter of a contract, see Sharyland Water Supply, 354 S.W.3d

at 417–18, it has not been extended to bar recovery for fraudulent inducement claims,

see Formosa Plastics Corp., 960 S.W.2d at 47.

–16– Here, appellees brought counterclaims for both breach of contract and fraud

based on appellants’ alleged failure to compensate appellees for their services.

Appellees’ breach-of-contract counterclaim was based on “enforceable agreements”

under which appellees agreed to provide “electrical contracting and painting services

at several jobsites in North Texas” in exchange for BGC’s promise to compensate

appellees for the services. Their fraud counterclaim, as stated in appellees’ fourth

amended counterclaims, was based on Dennie’s reliance Benge’s allegedly false

representation that he would pay for work performed by appellees “in exchange for

the signing of lien releases.” Appellees alleged that appellants knew the

representations were false when made and omitted facts regarding Benge’s

misappropriation of project funds otherwise intended to compensate appellees for

work performed.

Appellants characterize this counterclaim as fraud by omission and argue

there is no evidence a special relationship to support such a claim. See Bradford v.

Vento, 48 S.W.3d 749, 755 (Tex. 2001) (“As a general rule, a failure to disclose

information does not constitute fraud unless there is a duty to disclose the

information.”). The gravamen of appellees’ fraud counterclaim, however, was not

that Benge fraudulently omitted information but that he fraudulently induced Dennie

to sign lien waivers to obtain a payment he never intended to make; indeed, a

payment already owed under the contracts. Thus, appellees stated a claim for

fraudulent inducement. See Holloway v. Dekkers, 380 S.W.3d 315, 324 (Tex.

–17– App.—Dallas 2012, no pet.) (“[W]ith a fraudulent inducement claim, the elements

of fraud must be established as they relate to an agreement between the parties.”)

(citing Haase v. Glazner, 62 S.W.3d 798–99 (Tex. 2001)). Accordingly, appellees

had a viable fraud claim in addition to their contract claim, and the trial court did not

err in awarding both contract damages and damages for fraudulent inducement. See

Formosa Plastics Corp., 960 S.W.2d at 47. We overrule appellants’ third issue.

IV. No-Evidence Summary Judgment on Breach-of-Implied-Warranty Claim

In their fourth issue, appellants contend the trial court erred in granting no-

evidence summary judgment on their claim for breach of the implied warranty of

good and workmanlike performance. Appellees contend, however, that appellants

failed to produce more than a scintilla of evidence raising a genuine issue of material

fact. Specifically, appellees contend that appellants failed to properly respond to the

motion by identifying evidence relating to each element of their claim. We agree

with appellees.

After an adequate time for discovery, the party without the burden of proof

may, without presenting evidence, move for summary judgment on the ground that

there is no evidence to support an essential element of the nonmovant’s claim or

defense. TEX. R. CIV. P. 166a(i). The motion must specifically state the elements for

which there is no evidence. Id.; Timpte Indus., Inc. v. Gish, 286 S.W.3d 306, 310

(Tex. 2009). The trial court must grant the motion unless the nonmovant produces

summary judgment evidence that raises a genuine issue of material fact. See TEX. R. –18– CIV. P. 166a(i) & cmt.; Hamilton v. Wilson, 249 S.W.3d 425, 426 (Tex. 2008).

When, as here, trial court’s order does not specify the grounds for its summary

judgment, we must affirm the summary judgment if any of the theories presented to

the trial court and preserved for appellate review are meritorious. Provident Life &

Acc. Ins. Co. v. Knott, 128 S.W.3d 211, 216 (Tex. 2003).

After appellants filed their third amended petition asserting additional claims

for breach of implied warranty, negligent misrepresentation, and fraud, appellees

filed a motion for no-evidence summary judgment on the new claims. In response,

appellants argued, as they do on appeal, that appellees improperly added an element

to the implied-warranty claim.2 According to appellants, appellees improperly

interpreted Rocky Mountain Helicopters, Inc. v. Lubbock Cty. Hosp. Dist., 987

S.W.2d 50, 53 (Tex. 1998), to require a plaintiff to prove it had no other adequate

remedy to sue for breach of an implied warranty of good and workmanlike

performance. Appellants contend this requirement applies only to claims under the

Deceptive Trade Practices Act (DTPA). Thus, they argued that they need only prove

that appellees sold services to appellants; the services consisted of repair or

modification of appellants’ tangible goods or property; appellees did not perform the

services in a good and workmanlike manner; and appellants suffered an injury as a

2 Appellants’ response did not address their negligent misrepresentation or fraud claims.

–19– result. See generally Parkway Co. v. Woodruff, 901 S.W.2d 434, 438–39 & n.3 (Tex.

1995). We disagree.

Although Rocky Mountain Helicopters addressed the question of other

adequate remedies in the context of a DTPA claim, this is unremarkable. From its

inception, the implied warranty itself has been closely associated with consumer

transactions covered by the DTPA. See Melody Home Mfg. Co. v. Barnes, 741

S.W.2d 349, 354 (Tex. 1987) (first recognizing a cause of action for breach of the

implied warranty under the DTPA). Despite this close association, there is no

indication in Rocky Mountain Helicopters that the other-adequate-remedies

requirement applies only to DTPA claims. Rather, the supreme court stated only that

“[p]ublic policy does not justify imposing an implied warranty for service

transactions in the absence of a demonstrated, compelling need” and “[t]here is no

compelling need for an implied warranty when other adequate remedies are available

to the consumer.” Rocky Mountain Helicopters, 987 S.W.2d at 53 (citing Parkway,

901 S.W.2d at 440).

Indeed, this requirement has been applied outside of the DTPA context. See,

e.g., Irwin v. Nortex Found. Designs, Inc., No. 02-08-436-CV, 2009 WL 2462566,

at *3 (Tex. App.—Fort Worth Aug. 13, 2009, no pet.) (mem. op.) (affirming

summary judgment on implied warranty claim arising from home construction

defects based on evidence claimant had other adequate remedies through prior

settlement); Trans-Gulf Corp. v. Performance Aircraft Servs., Inc., 82 S.W.3d 691,

–20– 697 (Tex. App.—Eastland 2002, no pet.) (declining to impose the implied warranty

on claims arising from allegedly defective repair of airplane fuel tanks discovered

by subsequent purchaser because the “economic loss should be restricted to the risk

allocations contained within the contracts”). We likewise find no reason to restrict

the other-adequate-remedies requirement to DTPA claims. Here, appellants had

other adequate remedies as demonstrated by their claims for breach of contract and

unjust enrichment, and there is no compelling need to impose an implied warranty

in this case. See Rocky Mountain Helicopters, 987 S.W.2d at 53. Accordingly, we

conclude the trial court did not err in granting summary judgment on appellants’

implied-warranty claim. We overrule appellants’ fourth issue.

V. Directed Verdict on Appellants’ Breach-of-Contract Claim

In their fifth issue, appellants contend the trial court erred in granting directed

verdict on their breach-of-contract claim. Appellees contend, however, the trial court

did not err because appellants failed to produce the “exact terms” the parties agreed

to and appellees allegedly breached. We agree with appellees.

A directed verdict is proper when the when a plaintiff fails to present evidence

raising a fact issue essential to the plaintiff’s right of recovery. Prudential Ins. Co.

of Am. v. Fin. Review Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000); Edes v. Arriaga,

No. 05-17-01278-CV, 2019 WL 2266391, at *4 (Tex. App.—Dallas May 24, 2019,

no pet.) (mem. op.) (“A directed verdict for a defendant may be proper in three

situations: (1) when a plaintiff fails to present evidence raising a fact issue essential

–21– to the plaintiff’s right of recovery; (2) if the plaintiff either admits or the evidence

conclusively establishes a defense to the plaintiff’s cause of action; or (3) a legal

principle precludes recovery.”). If a question of law provides the basis for the

directed verdict, we review the trial court’s ruling de novo. Varel Int’l Indus., L.P.

v. PetroDrillbits Int’l, Inc., No. 05-14-01556-CV, 2016 WL 4535779, at *4 (Tex.

App.—Dallas Aug. 30, 2016, pet. denied) (mem. op.). If a directed verdict rests on

the plaintiff’s failure to present evidence raising a fact issue essential to its right of

recovery or evidence conclusively establishing a defense barring the plaintiff’s

recovery, we apply a legal sufficiency or “no evidence” standard in our review. Id.

Thus, with respect to the evidentiary inquiry, the directed verdict was proper on

appellants’ breach-of-contract claim only if appellants failed to present more than a

scintilla of evidence raising a fact question regarding their entitlement to relief. See

Halmos v. Bombardier Aerospace Corp., 314 S.W.3d 606, 619–20 (Tex. App.—

Dallas 2010, no pet.).

More than a scintilla of evidence exists when the evidence “rises to a level

that would enable reasonable and fair-minded people to differ in their conclusions.”

Coastal Transp., Inc. v. Crown Cent. Petrol. Corp., 136 S.W.3d 227, 234 (Tex.

2004) (internal quotation omitted). In determining whether more than a scintilla of

evidence exists, we view the evidence in the light most favorable to the non-movant.

Id. We credit the favorable evidence if reasonable jurors could and disregard the

contrary evidence unless reasonable jurors could not. City of Keller v. Wilson, 168

–22– S.W.3d 802, 827 (Tex. 2005). We may affirm a directed verdict on any ground that

supports it. RSL-3B-IL, Ltd. v. Prudential Ins. Co. of Am., 470 S.W.3d 131, 136 (Tex.

App.—Houston [1st Dist.] 2015, pet. denied); Exxon Corp. v. Breezevale Ltd., 82

S.W.3d 429, 443 (Tex. App.—Dallas 2002, pet. denied).

At the close of evidence on appellants’ claims, appellees moved for a directed

verdict on appellants’ breach-of-contract claim. Appellees argued that appellants

failed to offer any evidence that appellants performed under the contracts or were

excused from performance and that they sustained damages from appellees’ alleged

breach. Appellees asserted that appellants failed to offer any evidence of the “exact

terms” agreed upon. Relying on Benge’s testimony that the “plans and

specifications” defined appellees’ duties under the contracts, appellees argued that

appellants’ contract claims could not be sustained without production of the same,

which appellants failed to do. As support for their contention that they performed

the work competently, appellees also noted evidence of “green tags,” demonstrating

passed inspections, and Benge’s testimony that “follow[ing] the code” is the primary

standard. Finally, appellees asserted that appellants’ evidence of work performed by

other contractors failed to demonstrate a causal connection between work performed

by appellees and appellants’ alleged damages.

In response, appellants asserted that evidence of canceled checks and

Dennie’s signature on the lien waivers demonstrated that appellants performed under

the contracts by paying appellees at an agreed, discounted rate. Appellants also

–23– argued they did not need to produce the “plans and specifications” but could simply

rely on the one-page, signed bids, stamped “quality,” to show that appellees failed

to perform under the contracts. According to Benge, appellees did not perform to a

quality standard. Regarding causation, appellants asserted that merely hiring

“remedial electricians” was sufficient evidence to show that appellees’ alleged

failure to perform “quality” work caused appellants’ alleged damages. Appellants

assert these same arguments on appeal.

Appellants’ live petition alleged that appellees “failed to perform most of the

agreed items, failed to perform others correctly, and did not perform any work

timely” as the bases for appellants’ breach-of-contract claim. Thus, to prove their

claim, appellants necessarily had to offer proof of the “agreed items.” Appellants

contend that all of the “agreed items” are within the “four corners” of the signed

bids.3 We disagree.

“Documents incorporated by reference in a contract, become part of that

contract.” Weekley Homes, L.P. v. Rao, 336 S.W.3d 413, 419 (Tex. App.—Dallas

2011, pet. denied) (citing In re Bank One, 216 S.W.3d 825, 826 (Tex. 2007) (per

curiam) (orig. proceeding)). “[A]ll that is required is that the incorporated document

be referenced by name.” Gray & Co. Realtors, Inc. v. Atl. Hous. Found., Inc., 228

3 Appellants point out that appellees’ “directed verdict attacks the vagueness of the very contracts they themselves are suing upon.” Appellants, however, do not contest the jury’s verdict on appellees’ breach- of-contract counterclaim. –24– S.W.3d 431, 436 (Tex. App.—Dallas 2007, no pet.) (concluding a “Contract of Sale”

was incorporated into broker’s representation agreement because it was mentioned

six times in the representation agreement and the representation agreement had no

purpose without the real estate contract).

The record reflects that all of the contracts at issue refer other documents,

none of which were produced at trial. Specifically, all of the contracts refer to

“plans” in the itemized list of tasks included in the project—for example, “Rough

and Trim electrical per plans” and “Install owner provided light fixtures, per plans.”

At least one contract also states that the base bid is “[p]er plans[] and specs.” At least

one other contract reflects appellants’ stamp, stating, in part, “YOU CONFIRM

YOU ARE ADHERING TO THE PLANS AND SPECIFICATIONS.” The

contracts’ references to “plans,” “specs,” or “plans and specifications” reflect the

parties’ intent to incorporate other documents to form the complete contracts.

Indeed, Benge testified that these “plans and specifications” were part of the

contracts. He also testified that the “plans and specifications” were available at the

job site and defined the scope of work to be performed. This is sufficient to

demonstrate that the contracts incorporated separate “plans and specifications,” that

defined the scope of appellees’ work. See Gray & Co. Realtors, 228 S.W.3d at 436.

Yet, appellants failed to produce these documents at trial.

Indeed, the record reflects that, aside from appellees’ alleged failure to

perform in a good and workmanlike manner, appellants did not offer any evidence

–25– of any contractual term that appellees allegedly breached. Appellants argue on

appeal that the jury could have found that appellees failed to meet this performance

standard based on Benge’s testimony that appellees did not perform “quality” work.

As previously noted, however, appellants’ live pleading did not allege a failure to

perform in a good and workmanlike manner as a basis for appellants’ breach-of-

contract claim, and there is no implied warranty to so perform in this context.

Accordingly, we conclude appellants failed to present more than a scintilla of

evidence raising a fact question regarding their entitlement to relief. See Halmos,

314 S.W.3d at 620. We overrule appellants’ fifth issue.

CONCLUSION

Under section 38.001 of the civil practice and remedies code, a trial court may

not award attorney’s fees against an LLC. Thus, the trial court erred in awarding

attorney’s fees, and we reverse the trial court’s judgment as to attorney’s fees and

render judgment that appellees recover no attorney’s fees. Having overruled all of

appellants’ remaining issues, we affirm the remainder of the trial court’s judgment.

/Robbie Partida-Kipness/ ROBBIE PARTIDA-KIPNESS JUSTICE

191506F.P05

–26– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT

BENGE GENERAL On Appeal from the 160th Judicial CONTRACTING, LLC AND District Court, Dallas County, Texas JAMES BENGE, Appellants Trial Court Cause No. DC-16-03630. Opinion delivered by Justice Partida- No. 05-19-01506-CV V. Kipness. Chief Justice Burns and Justice Garcia participating. HERTZ ELECTRIC, LLC AND HTJ GLOBAL ELECTRIC, LLC, Appellees

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED in part and REVERSED in part. We REVERSE that portion of the trial court’s judgment awarding attorney’s fees to Appellees and RENDER judgment that Appellees take no attorney’s fees. In all other respects, the trial court's judgment is AFFIRMED.

It is ORDERED that each party bear its own costs of this appeal.

Judgment entered September 7, 2021.

–27–