Plains Builders, Inc. v. Steel Source, Inc.

408 S.W.3d 596, 2013 WL 3945925, 2013 Tex. App. LEXIS 9430
CourtCourt of Appeals of Texas
DecidedJuly 30, 2013
Docket07-11-00198-CV
StatusPublished
Cited by7 cases

This text of 408 S.W.3d 596 (Plains Builders, Inc. v. Steel Source, Inc.) 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
Plains Builders, Inc. v. Steel Source, Inc., 408 S.W.3d 596, 2013 WL 3945925, 2013 Tex. App. LEXIS 9430 (Tex. Ct. App. 2013).

Opinion

OPINION

JAMES T. CAMPBELL, Justice.

This case arises from the construction of the Texas State Veterans’ Home in Amarillo. Appellants are Plains Builders, Inc., and its surety Travelers Surety Company of America while appellees and cross-appellants are Steel Source, Inc., and Steel Source, a Division of Lloyd N. Moreau, L.L.C. (Steel Source). Plains Builders challenges an adverse money judgment in favor of Steel Source, Plains Builders and Travelers challenge a finding of liability on a payment bond, and Steel Source contends the trial court failed to award the full amount of its actual damages. We will reverse in part and render judgment that Steel Source take nothing from Plains Builders and Travelers on the payment bond claim and otherwise affirm the judgment of the trial court.

Background

Plains Builders, as general contractor for the construction of the veterans’ home, subcontracted with Construction Services, a proprietorship, to furnish material and labor for the project. The recited value of the subcontract was $1,868,590. Construction Services in turn subcontracted to Steel Source a portion of the labor and materials it was to supply. The value of the Construction Services-Steel Source subcontract was $880,000. Of this amount, the parties allocated $550,000 for materials and $330,000 for labor. After the contracts were signed, Plains Builders, Construction Services and Steel Source signed a joint check agreement providing:

Applicable to the products and services furnished by Construction Services to [Plains Builders] ... and as a condition precedent to furnishing said materials for use and incorporation in the [veterans’ home project], Construction Services requests that until it is paid in full, all payments made or to be made by [Plains Builders] to Construction Services with respect to this project, be made payable jointly to Construction Services and [Steel Source]. It is understood that all payments shall be timely and in the form of an immediate and unconditional instrument, specifically a Cashier’s Check. Upon issuance of a check by [Plains Builders], it shall be promptly (within 3 business days) endorsed by Construction Services and delivered to [Steel Source], It is un *601 derstood that this is a continuing Agreement applicable to the original contract sum and any subsequent billing related to this project only.

Plains Builders issued five cashier’s checks made jointly payable to Construction Services and Steel Source. Construction Services refused to endorse each joint check unless at the time of its endorsement Steel Source simultaneously delivered a cashier’s check to Construction Services for a portion of the amount of the joint check.

As the veterans’ home project progressed, Construction Services began experiencing significant cash flow problems. Joint checks were issued by Plains Builders in April and May 2006 for $125,557.88 and $125,337.49 respectively. At the time, Steel Source had submitted a draw of $237,000 to Construction Services. Steel Source retained $50,000 from the April check and a like amount from the May check but released the balance to Construction Services. According to Steel Source, it did so because Construction Services insisted, and because of the risk that work on the entire project would halt if Construction Services could not continue.

Through an undated letter bearing a June 1, 2006 fax date stamp, Construction Services then notified Plains Builders that it was “Discontinuing [the] joint checking agreement with [Steel Source].” According to the letter, the reason for the discontinuance was, “Failure to complete punch out and reframing. Construction Service (sic) had to reframe a lot of walls, studs and mise, work.” At the time, Steel Source did not know Construction Services had sent the letter.

Following this notice letter, Plains Builders issued four checks totaling $80,000 to Construction Services as the sole payee and four checks totaling $134,151.78 to Construction Services and West Texas Builders, a supplier of materials, as joint payees.

Plains Builders finally discharged Construction Services from the veterans’ home project and expended some $750,000 completing the work left unfinished and making up a payroll shortage of Construction Services. Steel Source asserted Construction Services failed to pay it amounts due totaling $137,300. According to Steel Source, had Plains Builders issued all checks due Construction Services according to the terms of the joint check agreement, it would have received full payment.

Steel Source brought suit against Plains Builders, Travelers, and Construction Services. 1 A default judgment was taken against Construction Services. Steel Source moved for summary judgment on a claim that Plains Builders breached the joint check agreement to its damage. The trial court rendered a partial summary judgment in favor of Steel Source on liability but reserved the issue of damages for trial. After a bench trial, the court rendered judgment in favor of Steel Source and jointly and severally against Plains Builders and Travelers on a claim for re-tainage in the principal amount of $33,000 and against Plains Builders in the principal sum of $80,000 on the breach of the joint check agreement claim. Findings of fact and conclusions of law were filed. Plains Builders appeals and by cross-appeal Steel Source challenges the amount of damages it was awarded.

Analysis

Appeal of Plains Builders

Challenges to the Partial Summary Judgment

*602 By its first issue, including multiple sub-issues, Plains Builders challenges the trial court’s grant of partial summary judgment in favor of Steel Source.

We review the trial court’s summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). A movant, on a traditional motion for summary judgment on affirmative claims, bears the initial burden of showing its entitlement to judgment as a matter of law by conclusively proving each element of its cause of action. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex.2000) (per curiam). Only if the mov-ant satisfies this burden does the burden shift to the non-movant to raise a genuine issue of material fact precluding summary judgment. Id.

A party seeking to recover for breach of a contract must prove: (1) the existence of a valid contract; (2) its performance or tender of performance; (3) the defendant’s breach of the contract; and (4) damages sustained by the plaintiff as a result of the breach. Valero Mktg. & Supply Co. v. Kalama, Int’l, 51 S.W.3d 345, 351 (Tex.App.-Houston [1st Dist.] 2001, no pet.).

Plains Builders first asserts that the joint check agreement is not an enforceable contract because it lacks consideration.

Joint check arrangements may be initiated by parties at the top or bottom of the contract claim.

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408 S.W.3d 596, 2013 WL 3945925, 2013 Tex. App. LEXIS 9430, Counsel Stack Legal Research, https://law.counselstack.com/opinion/plains-builders-inc-v-steel-source-inc-texapp-2013.