Costello, Inc. and Alex Khoshakhlagh, P.E. v. Briggs Brothers Enterprises

CourtCourt of Appeals of Texas
DecidedJanuary 18, 2024
Docket01-23-00307-CV
StatusPublished

This text of Costello, Inc. and Alex Khoshakhlagh, P.E. v. Briggs Brothers Enterprises (Costello, Inc. and Alex Khoshakhlagh, P.E. v. Briggs Brothers Enterprises) 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.

Bluebook
Costello, Inc. and Alex Khoshakhlagh, P.E. v. Briggs Brothers Enterprises, (Tex. Ct. App. 2024).

Opinion

Opinion issued January 18, 2024

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-23-00307-CV ———————————— COSTELLO, INC. AND ALEX KHOSHAKHLAGH, P.E., Appellants V. BRIGGS BROTHERS ENTERPRISES CORPORATION, Appellee

On Appeal from the 240th District Court Fort Bend County, Texas Trial Court Case No. 23-DCV-30067

MEMORANDUM OPINION

Appellants—Alex Khoshakhlagh, P.E., and his employer Costello, Inc.—

challenge the trial court’s order denying their motion to dismiss appellee Briggs

Brothers Enterprises Corporation’s (BBEC) tortious interference claim. The motion

to dismiss was based on Civil Practice and Remedies Code section 150.002(a), which requires a plaintiff suing for damages arising out of the provision of

professional services by a licensed or registered professional, such as an engineer,

to file with its complaint an affidavit, commonly referred to as a certificate of merit.

It is undisputed that BBEC did not file a certificate of merit.

Costello and Khoshakhlagh contend that the trial court erred because BBEC’s

tortious interference claim arose out of the provision of professional engineering

services, thus section 15.002(a) required BBEC to file a certificate of merit prepared

by a qualified third-party engineer. Because we conclude that the record supports

the trial court’s implied conclusion that section 150.002(a) does not apply to BBEC’s

tortious interference claim, we affirm the trial court’s order denying Costello and

Khoshakhlagh’s motion to dismiss.

Background

In January 2023, BBEC sued Costello and Khoshakhlagh along with Fulshear

Municipal Utility District MUD No. 1 (Fulshear MUD).1 In its original petition,

BBEC described itself as “a successful and trusted contractor with experience in the

construction industry, including experience performing earthwork and paving

work.” BBEC alleged that it “performed labor and furnished materials necessary for

the construction of five [Fulshear MUD] projects.” BBEC listed the five projects and

their titles, which indicated that the projects entailed paving and grading work.

1 Fulshear MUD is not a party to this appeal. 2 BBEC stated that it performed the work “pursuant to separate contracts [with

Fulshear MUD] for each of the projects.”

BBEC claimed that, although it had substantially performed under the five

construction contracts, Fulshear MUD failed to pay it what it was contractually

owed. Based on these allegations, BBEC asserted causes of action against Fulshear

MUD for breach of contract and violation of the Texas Prompt Payment Act and

sought declaratory relief.

Regarding Costello and Khoshakhlagh, BBEC alleged,

Costello and its employee Khoshakhlagh acted as the engineer and owner’s representative on the projects. Throughout the projects, Khoshakhlagh and Costello interfered with BBEC’s contracts with both subcontractors and Fulshear MUD. For example, Costello, through Khoshakhlagh, solicited baseless and fraudulent claims for nonpayment from BBEC’s subcontractors. Further, knowing that various subcontractors’ nonpayment claims were without merit, Costello, through Khoshakhlagh, nonetheless used the baseless claims it had solicited to encourage Fulshear MUD to cease paying BBEC, an endeavor in which Costello ultimately succeeded.

BBEC sued Costello and Khoshakhlagh for tortious interference with the

existing contracts. Specifically, BBEC asserted,

BBEC had valid contracts with Fulshear MUD and various subcontractors, suppliers, and other vendors. Costello and Khoshakhlagh tortiously interfered with these contracts by soliciting fraudulent nonpayment claims from vendors, disparaging BBEC, and encouraging Fulshear MUD to stop paying and/or terminate BBEC based upon the fraudulent claims. Costello and Khoshakhlagh’s interference proximately caused BBEC actual damages. BBEC also seeks recovery of exemplary damages.

3 Costello and Khoshakhlagh filed a motion to dismiss BBEC’s tortious

interference claim. They asserted that BBEC did not comply with Civil Practice and

Remedies Code section 150.002, requiring that a certificate of merit, signed by a

qualified professional, accompany a plaintiff’s “complaint” in an action “aris[ing]

out of the provision of professional services by [certain] licensed or registered

professional[s],” such as engineers. See TEX. CIV. PRAC. & REM. CODE

§ 150.002(a).2

In their dismissal motion, Costello and Khoshakhlagh stated that Fulshear

MUD hired Costello, “an engineering firm,” and Khoshakhlagh, “a licensed

engineer under the State of Texas,” to serve as “the professional engineer” for

Fulshear MUD’s “projects at issue.” They asserted that they were retained by BBEC

“to provide the engineering, consulting, construction management, inspection

services, and other professional services as authorized by Fulshear MUD.” They

claimed that, “as part of their professional engineer services,” they were required to

2 The legislature amended section 150.002 in 2023, but the amendments apply only to actions filed on or after September 1, 2023. See Act of May 17, 2023, 88th Leg., R.S., ch. 438, §§ 1–3, 2023 Sess. Law Serv. 1037, 1037–38. This suit is governed by the pre-amendment version of section 150.002 because it was filed before September 1, 2023. Thus, all our citations refer to the pre-amendment version of section 150.002. See Act of May 23, 2019, 86th Leg., R.S., ch. 661, § 2, 2019 Sess. Law Serv. 1916, 1916–17.

4 review “applications for payment” submitted by Fulshear MUD’s contractors and

“[to] make recommendations to the Fulshear MUD regarding such applications.”3

In its response to the motion, BBEC asserted that it was not required to file a

certificate of merit. BBEC pointed to its previous allegation that Costello and

Khoshakhlagh had “acted as both the engineer and the owner’s representative on

[Fulshear MUD’s] projects.” BBEC repeated its allegations that, “[d]uring the

course of construction [of Fulshear MUD’s projects], Khoshakhlagh solicited

fraudulent non-payment claims from BBEC’s subcontractors, advised Fulshear

MUD to withhold payment to BBEC for labor and materials BBEC provided to the

projects, and encouraged Fulshear MUD to terminate its contracts with BBEC.”

BBEC explained that “[t]he acts creating [its tortious interference] claim were the

misrepresentations regarding project financing and alleged unpaid subcontractors.”

It asserted, “Khoshakhlagh made these misrepresentations while serving as the

project manager/owner representati[ve] and not as a licensed engineer. The

misrepresentations were not made in reference to any professional engineering

activities.”

3 After Costello and Khoshakhlagh filed the motion to dismiss, Fulshear MUD filed a counter-claim against BBEC for breach of contract. Fulshear MUD alleged that it had received notices from BBEC’s subcontractors and suppliers stating that BBEC had not paid them. As permitted by the parties’ contract, Fulshear MUD withheld part of its payments to BBEC based on the non-payment notices. Fulshear MUD alleged that BBEC then refused to finish its work on the projects in breach of the contract. 5 Costello and Khoshakhlagh replied. They claimed, “Providing contract

administration services is a professional service that Costello Defendants were

contractually required to provide to Fulshear MUD. Owners typically request these

construction phase and contract administration services to ensure that a project is

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Costello, Inc. and Alex Khoshakhlagh, P.E. v. Briggs Brothers Enterprises, Counsel Stack Legal Research, https://law.counselstack.com/opinion/costello-inc-and-alex-khoshakhlagh-pe-v-briggs-brothers-enterprises-texapp-2024.