BNM Ventures, LLC v. Shannon Green

• Court: Court of Appeals of Texas
• Decided: June 16, 2023
• Docket: 05-22-00474-CV
• Status: Published

Opinion

AFFIRMED in part; REVERSED and RENDERED in part; VACATED and REMANDED and Opinion Filed June 16, 2023

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-22-00474-CV

BNM VENTURES, LLC, Appellant V. SHANNON GREEN, Appellee

On Appeal from the 95th District Court Dallas County, Texas Trial Court Cause No. DC-20-08630

MEMORANDUM OPINION Before Justices Reichek, Nowell, and Garcia Opinion by Justice Reichek In this appeal following a bench trial, BNM Ventures, LLC challenges the

trial court’s judgment in favor of Shannon Green on his claim for breach of a

settlement agreement. BNM brings two issues generally asserting the evidence does

not support the trial court’s finding of breach or its award of damages. Because we

conclude Green failed to adduce any evidence at trial to show the cost-of-completion

damages he sought to recover were reasonable, we reverse the trial court’s award of

those damages and render judgment that Green recover no remedial damages.

Because the remaining damages are unchallenged, they are affirmed. We remand the case to the trial court for a reassessment of attorney’s fees in light of this

disposition.

Background

BNM constructed a home and sold it to Green in April 2019. Several weeks

later, the area received substantial rainfall and the house flooded. Green hired

Lighthouse Engineering, L.L.C. to do a drainage inspection.

A report prepared by Lighthouse concluded there were several issues with the

water drainage on the property, including that the grading around the house did not

meet the minimum requirements of the International Residential Code (“IRC”).

Lighthouse drafted an engineering report recommending remediation measures and

attached a drawing outlining their recommendations.

On August 8, 2019, Green’s attorney sent Michael White, BNM’s managing

partner, a notice of construction defects pursuant to the Texas Residential

Construction Liability Act. Among the defects listed in the notice were that the

“driveway was improperly constructed and allows water to run toward the house,”

and the “final grade was improperly completed on the front and left sides of the

Property, which causes water to drain toward the house, rather than away from it.”

Following a mediation, Green and BNM entered into a settlement agreement in

which BNM agreed to,

Modify the driveway and grading per the Lighthouse Engineering, LLC report attached as Exhibit “B.” Post- completion inspection by an engineer will be performed at

–2– Shannon Green’s expense within 15 days from the date that BNM notifies Mr. Green that repairs are believed to be complete; if the post-completion inspection determines that the modifications made by BNM did not conform to the specifications set forth in Exhibit “B,” BNM will make further modifications until those specifications are met.

In May 2020, White informed Green that BNM’s work was ready for

inspection. The Lighthouse engineer who drafted the original report determined the

repairs did not conform to the report’s specifications. White disputed the engineer’s

conclusion, particularly with respect to the driveway, stating the report was “very

ambiguous.” According to White, the report did not require the driveway to be

broken out and replaced to the extent Lighthouse now claimed was necessary. White

ceased work on the exterior of the house and said he wanted the parties’ attorneys to

resolve the conflict.

On June 1, Green’s attorney sent an email to BNM’s attorney stating that

Green would be “hiring another contractor to finish the exterior work that [BNM]

refuses to complete.” Two days later, Green sent a text message to White stating he

was not sure if White was “waiting on a deal” to complete the repairs, but he was

hiring another company to complete the work. Lighthouse issued an inspection

report the same day stating the work done by BNM was deficient in several ways

including, (1) the grading around the perimeter did not meet the minimum required

by the IRC, and (2) the driveway was not broken out and “swaled” as recommended

in the repair plan.

–3– On June 29, Green received a bid from Armadillo Fences, Decks and

Remodels stating the cost to make the necessary modifications to his property would

be $8,600. Payment by credit card would add an additional service charge of

$301.15. The estimate stated it was also “HIGHLY recommended” to have sod laid

on the property. Ten days later, Armadillo Fences provided Green with an estimate

of $4,288.05 to install 2,199 square feet of sod. Green hired Armadillo Fences and

the record shows the company completed the drainage work and laid sod. Green

paid the estimated amounts, including the credit card fee.

BNM filed this suit seeking a declaratory judgment that the settlement

agreement did not require more construction than was required by “the plain

language and plain meaning” of the original Lighthouse engineering report. BNM

asked the court to specifically declare that BNM’s interpretation of the report’s

specifications for the driveway was correct. BNM stated there was a justiciable

controversy because Green indicated his intention to recover the additional costs of

having the repairs performed “pursuant to his own interpretation of the Lighthouse

report.” Green brought a counterclaim for breach of contract asserting that BNM

refused to make the changes necessary for its work to conform to the original

engineering report’s specifications. BNM moved for, and was granted, an order of

mediation. No settlement resulted.

A trial was conducted before the court without a jury. White testified he

believed the work performed by BNM was consistent with the engineering report

–4– prepared by Lighthouse. White further testified BNM did not refuse to finish the

drainage work, but had merely paused the work to allow the attorneys for both sides

to resolve the issue of what the Lighthouse report required. White conceded the

grading around the house did not meet the minimum slope required by the IRC, but

stated the code provides exceptions to that requirement. White did not ask

Lighthouse whether reliance on an exception would be permitted.

Michael Gandy, owner of Lighthouse, testified the engineering report clearly

required the driveway to be broken out and rebuilt to divert water away from the

house and meet code requirements. The work done by BNM, according to Gandy,

was insufficient to resolve the property’s drainage issues. Gandy stated he could

find no record of anyone from BNM contacting his office to get clarification or

resolve any ambiguities in the report. He further stated there was nothing about the

property that would cause it to fall under an exception to the IRC’s grading

requirement.

Green testified he hired Armadillo Fences only after BNM walked off the job.

He stated he was concerned the house was not safe while the work was left undone.

After he sent the text to White saying he was going to hire someone else, White

never responded that BNM was willing and able to make the modifications

Lighthouse said were needed for the work to meet the report’s specifications. Green

agreed that the settlement agreement did not require BNM to install sod.

–5– George Francey, a general contractor with Armadillo Fences, testified he

generated the estimate of $8,600 for the drainage work based on the original

Lighthouse report, the inspection report, and a site inspection he performed of the

property. Francey said he believed the $4,288 sod installation was necessary to keep

the dirt used to regrade the property from washing away. Francey agreed that the

type of sod he used was more expensive than Bermuda grass. But, he opined the

work he performed was “reasonable and necessary to keep the water from coming

into the house.” When questioned about what portions of the total amounts charged

were for labor and what portions were for materials, Francey stated he did not know.

Neither the estimate nor the invoice for the drainage work contained a breakdown of

costs.

After hearing the evidence, the trial court denied BNM’s request for a

declaratory judgment and ruled in favor of Green on his claim for breach of contract.

The court specifically found that BNM breached the settlement agreement by failing

to correct the deficiencies cited by Lighthouse following its inspection. As damages,

the judgment awarded Green the amounts he paid Armadillo Fences for the drainage

work and sod as well as the expenses he incurred mediating both his original

construction liability claim and the dispute over the settlement agreement in this

case. BNM brought this appeal.

–6– Analysis

I. Evidence of Breach

In its first issue, BNM contends the evidence does not support the trial court’s

conclusion that BNM breached the settlement agreement.1 BNM argues the

evidence shows instead that Green fired BNM before it was given a chance to

complete the repairs in accordance with Lighthouse’s instructions. In reviewing a

legal sufficiency challenge to the evidence, we credit evidence that supports the

verdict if a reasonable factfinder could have done so and disregard contrary evidence

unless a reasonable factfinder could not have done so. Akin, Gump, Strauss, Hauer

& Feld, L.L.P. v. Nat’l Dev. & Research Corp., 299 S.W.3d 106, 115

(Tex.2009); City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex.2005). We consider

all the evidence in the light most favorable to the prevailing party and indulge every

reasonable inference in that party’s favor. St. Joseph Hosp. v. Wolff, 94 S.W.3d 513,

520–21 (Tex. 2003). The evidence is legally sufficient if “more than a scintilla of

evidence exists.” Browning–Ferris, Inc. v. Reyna, 865 S.W.2d 925, 928 (Tex. 1993).

More than a scintilla of evidence exists if the evidence furnishes some reasonable

basis for differing conclusions by reasonable minds about a vital fact’s existence.

Litton Loan Servicing, L.P. v. Manning, 366 S.W.3d 837, 840 (Tex. App.—Dallas

1 Although the issue asserted in BNM’s brief is that the trial court abused its discretion in finding BNM in breach, we liberally construe the argument to challenge the sufficiency of the evidence supporting the finding. TEX. R. APP. P. 38.9. –7– 2012, pet. denied). The final test for legal sufficiency must always be whether the

evidence at trial would enable reasonable and fair-minded people to reach the verdict

under review. Del Lago Partners, Inc. v. Smith, 307 S.W.3d 762, 770 (Tex. 2010).

To evaluate a factual sufficiency challenge, we consider and weigh all the

evidence. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001) (per curiam).

We can set aside a verdict only if the evidence is so weak or the finding is so against

the great weight and preponderance of the evidence that it is clearly wrong and

unjust. Id. We must not substitute our judgment for that of the factfinder and should

remain cognizant that the factfinder is the sole judge of witness credibility. Golden

Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003).

BNM does not dispute on appeal that the work it performed on Green’s house

failed to meet the specifications of the Lighthouse report. Instead, BNM contends

only that it was prevented from completing its performance under the settlement

agreement because Green hired another contractor. Prevention of performance is an

affirmative defense that must be pleaded or else it is waived. Orr v. Broussard, 565

S.W.3d 415, 422 (Tex. App.—Houston [14th Dist.] 2018, no pet.). In addition, the

party asserting prevention of performance must obtain findings of fact on that issue.

Id. In this case, BNM did neither.

Even assuming the issue was preserved for our review, we conclude the

evidence supports the trial court’s finding that BNM breached the agreement. To

show that its performance was prevented, BNM needed to show it made an attempt

–8– to complete performance and performance was refused. See Dorsett v. Cross, 106

S.W.3d 213, 217-18 (Tex. App.—Houston [1st Dist.] 2003, pet. denied). There is

no evidence in the record that BNM ever offered or attempted to make the

modifications Lighthouse determined were necessary to bring BNM’s work into

compliance with the engineering report made the basis of the settlement agreement.

Indeed, BNM consistently asserted, both before and through trial of this case, that

the work it did met the report’s specifications and no modifications were required.

Although BNM may have believed its work met the specifications of the report, it

agreed to make whatever modifications an inspection deemed necessary, and it

refused to do so. The initial refusal to do any further work until the parties’ lawyers

“worked it out” occurred before Green informed BNM it was hiring another

contractor. Accordingly, we conclude the evidence is sufficient to support the trial

court’s finding of breach. We resolve BNM’s first issue against it.

II. Evidence of Completion Cost Damages

In its second issue, BNM contends the evidence does not support the trial

court’s award of damages. BNM argues Green failed to submit any evidence to

show the amount he paid Armadillo Fences was reasonable. 2 We agree.

2 Again, the issue asserted in BNM’s brief is that the trial court “abused its discretion in awarding damages without adequate proof.” We construe the argument to challenge the legal sufficiency of the evidence to support the implied finding that the damages sought by Green were reasonable and necessary. TEX. R. APP. P. 38.9; see also Vickery v. Comm’n for Lawyer Discipline, 5 S.W.3d 241, 258 (Tex. App.—Houston [14th Dist.] 1999, pet. denied) (appellant may challenge implied findings for legal and factual sufficiency). –9– “The party seeking to recover the cost of completion in a breach of contract

case has the burden to prove that the damages sought are reasonable and necessary.”

Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 200 (Tex.

2004). To establish reasonableness, a party must show more than simply “the nature

of the injuries, the character of and need for the services rendered, and the amounts

charged therefore.” McGinty v. Hennen, 372 S.W.3d 625, 627 (Tex. 2012) (quoting

Dallas Ry. & Terminal Co. v. Gossett, 294 S.W.2d 377, 383 (Tex. 1956). There

must be some other evidence showing that the amounts charged are reasonable. Id.

In this case, there was no evidence presented to show that the amount charged

by Armadillo Fences was reasonable for the work performed. Although Francey

stated the work done was reasonable and necessary to resolve Green’s drainage

problems, he offered no testimony to justify the price charged for the work. The

only testimony concerning cost showed the sod Armadillo Fences chose to install

was the more expensive option. Furthermore, Green conceded the sod was outside

the scope of the work specified in the Lighthouse report. Without testimony

regarding the reasonableness of the amounts charged to complete the work

contracted for, the evidence is insufficient to support the award. Id.; see also GHP

Nail Systems, LLC v. Benelux Cosmetics B.V., 651 S.W.3d 574, 584-85 (Tex. App.—

Houston [14th Dist.] 2022, no pet.); Perry Homes v. Alwattari, 33 S.W.3d 376, 385

(Tex. App.—Fort Worth 2000, pet. denied) (evidence repairs were necessary without

evidence expenses were reasonable insufficient to support award of repair damages).

–10– Green argues the words “reasonable” and “necessary” need not be used so

long as there is sufficient evidence for the trier of fact to conclude the costs were

reasonable. See CCC Grp., Inc. v. S. Cent. Cement, Ltd., 450 S.W.3d 191, 200 (Tex.

App.—Houston [1st Dist.] 2014, no pet.). But, Francey testified only as to the scope

of the work performed and the total amount paid. Mere proof of amounts charged

or paid does not demonstrate reasonableness. Ebby Halliday Real Estate, Inc. v.

Murnan, 916 S.W.2d 585, 589 (Tex. App.—Fort Worth 1996, writ denied). While

in some cases evidence concerning the process of how costs were calculated will be

sufficient to support the reasonableness of the ultimate price, no such evidence was

submitted here. See McGinty, 372 S.W.3d at 628.

Green additionally argues BNM failed to preserve this issue by not raising it

in the trial court. In a civil nonjury case, a complaint regarding the legal or factual

sufficiency of the evidence—including a complaint challenging the damages found

by the trial court—may be raised for the first time on appeal. TEX. R. APP. P. 33.1(d).

We resolve BNM’s second issue in its favor.

III. Conclusion

BNM does not challenge the trial court’s award to Green of the expenses he

incurred in connection with the mediation of his original claim under the Texas

Residential Construction Liability Act and the mediation of the claims in this case.

We recognize that mediation expenses are generally considered costs of suit.

However, in this case, the mediation of Green’s original construction liability claim

–11– occurred before this suit was filed. Because the trial court did not order the

mediation of the construction liability claim, the expenses of that mediation were

necessarily awarded as damages rather than court costs. See TEX. CIV. PRAC. & REM.

CODE ANN. § 154.054; Spears v. Huber, No. 07-11-0193-CV, 2012 WL 933780, at

*4 (Tex. App.—Amarillo 2012, no pet.) (court may award expenses of mediation it

ordered as court costs). The significant reduction in the amount of damages awarded

to Green compels us to give the trial court an opportunity to reconsider its assessment

of attorney’s fees. See Young v. Qualls, 223 S.W.3d 312, 314 (Tex. 2007) (per

curiam). Accordingly, we reverse the trial court’s award of completion costs and

render judgment that Green recover no remedial damages. We further vacate the

award of attorney’s fees and remand this case to the trial court for a redetermination

of reasonable and necessary fees to be awarded. We affirm the trial court’s judgment

in all other respects.

/Amanda L. Reichek/ AMANDA L. REICHEK JUSTICE

220474F.P05

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

BNM VENTURES, LLC, Appellant On Appeal from the 95th District Court, Dallas County, Texas No. 05-22-00474-CV V. Trial Court Cause No. DC-20-08630. Opinion delivered by Justice SHANNON GREEN, Appellee Reichek. Justices Nowell and Garcia participating.

In accordance with this Court’s opinion of this date, the judgment of the trial court is AFFIRMED in part, REVERSED AND RENDERED in part, and VACATED AND REMANDED in part. We REVERSE that portion of the trial court's judgment awarding SHANNON GREEN $13,351.73 and RENDER judgment that he take nothing by his claim for remedial damages. We further VACATE the portion of the trial court’s judgment awarding SHANNON GREEN his attorney’s fees. In all other respects, the trial court's judgment is AFFIRMED. We REMAND this cause to the trial court for further proceedings consistent with this opinion.

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

Judgment entered this 16th day of June 2023.

–13–