Lake Conroe Medical Center, Ltd. v. KMT Building Co.

290 S.W.3d 541, 2009 Tex. App. LEXIS 4245, 2009 WL 1650358
CourtCourt of Appeals of Texas
DecidedJune 11, 2009
Docket09-07-00520-CV
StatusPublished
Cited by10 cases

This text of 290 S.W.3d 541 (Lake Conroe Medical Center, Ltd. v. KMT Building Co.) 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
Lake Conroe Medical Center, Ltd. v. KMT Building Co., 290 S.W.3d 541, 2009 Tex. App. LEXIS 4245, 2009 WL 1650358 (Tex. Ct. App. 2009).

Opinion

OPINION

STEVE McKEITHEN, Chief Justice.

Appellant Lake Conroe Medical Center, Ltd. a/k/a Lake Area Medical Center, L.P. a/k/a Lake Conroe Medical Center Management, Inc. (“LCMC”) sued appellees KMT Building Company (“KMT”) and Douglas Joslyn . (“Joslyn”) for allegedly breaching a contract for construction of a medical building. KMT and Joslyn filed a counterclaim, in which they asserted that LCMC had breached the agreement and sought to recover damages for LCMC’s alleged breach of contract, and also sought foreclosure on KMT’s mechanic’s lien. After a jury trial, the trial court signed a judgment that awarded KMT actual damages of $460,057, foreclosed on the mechanic’s lien, and ordered that LCMC take nothing against KMT and Joslyn. LCMC then filed this appeal, in which it raises seven issues for our consideration. We reverse and remand.

*543 Background

Joslyn and his wife Kathy owned KMT. LCMC entered into a contract with KMT for the construction by KMT of two 15,000 square foot “office buildings” in Montgomery County. Joslyn and his wife had previously owned the land where the project was to be built, but they sold the land to LCMC before construction began. Joslyn testified that he and his wife agreed to discount the price of the property by $100,000 in consideration for LCMC’s promise to contract with KMT for the construction of two office buildings.

Under the terms of the construction contract, LCMC was to pay KMT $2,796,000 for the two buildings, and the contract price could “be increased or decreased only in accordance with written change orders indicating the changes to be made and the cost for such change.” The contract price was to be paid in accordance with a standard draw schedule, which was attached to the contract. The contract provided that KMT “hereby contracts and agrees to build, construct and complete in a good and workmanlike manner, according to the plans and specifications agreed upon by the parties hereto and attached hereto as Exhibit “A”, and to furnish and provide all labor and material to be used in the construction.... ” The specifications attached to the contract indicated, among other things, that KMT was to construct two 15,000-square-foot buildings, “12 ADA Restrooms,” 1 and the work was to include “Architectural plans and engineering[.]” The specifications did not state what material KMT was to use to frame the building. The draw schedule attached to the contract mentioned exterior frame construction and interior wall construction, but did not specify what materials were to be used.

The contract further provided as follows: “all additions or extras shall be paid for by Owner on the basis of [the] prior agreement. All such orders, adjustments and the charge therefor shall be in writing. Claims by the Contractor for extra costs must be approved by Owner in writing before executing the work involved. Additions shall be charged at cost -I- 20%.” In addition, the contract stated, “[i]n the event that the Owner wishes to upgrade any items on the Specification Outline the increase in the cost of the upgrade above the allowance shall be added to the contract sum and the amount of such difference shall be paid to Contractor, and the draw next following installation of the item shall be increase[d] accordingly.” Furthermore, the contract provided as follows:

The Contractor shall re-execute any work that fails to conform to the requirements of the Contract, the plans, specifications and drawing [sic] that appear or become evident during the progress of the work, and shall remedy any defects due to faulty materials or workmanship which appear within a period of one (1) year f[ro]m the date of completion of the Contract, all at Contractor’s expense.

The contract also contained a merger clause, which provided:

This Contract and the contract documents represent the full and final agreement as to work to be performed by Contractor, and no verbal agreements not specifically covered by the Contract and/or Contract documents shall be of any force and effect and anything that has been understood by Owner not clearly stated herein must be agreed to *544 mutually by the parties and reduced to writing. [ 2 ]

At trial, Dr. Dimitrious Mantzoros, the general partner of LCMC, testified that the first building had to be made of steel because one of the tenants in the building was a hospital, and the hospital intended to have an emergency-room-type facility and an imaging facility. Mantzoros testified that the contract does not specify whether the building was to be constructed of wood or steel, but that he and his partners met with Joslyn before executing the contract, and they only discussed steel buildings with Joslyn. Mantzoros explained that having the building framed with steel was important because it allowed for “tremendous flexibility in moving walls around.” According to Mantzoros, one of the intended purposes of the building was to serve disabled and injured people, and the contract required that all improvements shall be suitable for the purposes intended.

Mantzoros explained that after the plans had been completed, Joslyn informed him that it would take four months to have steel delivered, but that Joslyn could begin construction immediately if he used wood instead. Mantzoros testified that he “had concerns because I didn’t want the wood building!,]” but because tenants had already signed leases, “I was between a rock and a hard spot. I had to make a decision, so I made the decision to at least proceed with Building 1.” Mantzoros explained that he agreed to “just do Building Number 1 out of wood because it’s a medical office.” Mantzoros admitted that the contract did not indicate whether the building was to be framed with wood or steel. Mantzoros testified that the first building has not been certified as compliant with the requirements of the ADA, and LCMC was “going to have to do all the repairs that are necessary in order to get certified.” Joslyn attempted to repair some of the ADA issues.

Mantzoros testified that the only change order he signed with respect to the building pertained to issues related to the foundation and the number of bathrooms the building was to contain. According to Mantzoros, some other change orders were “directly between Mr. Joslyn and [a tenant]. They were negotiating on their own. I was not involved, or Lake Area Medical Center was not involved in those contracts or change orders.” Mantzoros testified that LCMC ultimately terminated KMT due to KMT’s alleged failure to provide architectural plans, the building’s noncompliance with the requirements of the ADA, and problems with easements for the utilities, and the next day, LCMC hired another company to construct the shell of the second building for $875,000. According to Mantzoros, the total cost of repairing the ADA issues was $62,629.73, and LCMC paid approximately $265,000 above the contract price to complete the project.

Lisa Dominey, the property manager of LCMC, testified that Mantzoros contacted her about building a medical office building in the Montgomery area. Dominey also testified that medical buildings are generally made out of steel “because you need that flexibility to be able to do future renovations or expansions.

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Bluebook (online)
290 S.W.3d 541, 2009 Tex. App. LEXIS 4245, 2009 WL 1650358, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lake-conroe-medical-center-ltd-v-kmt-building-co-texapp-2009.