Stewart & Stewarts Development, Inc. v. Reuben L. Wright

Court of Appeals of Texas·Decided March 4, 2025·No. 01-23-00452-CV·Published

Opinion

Opinion issued March 4, 2025.

In The

Court of Appeals

For The

First District of Texas

construction contract. After a bench trial, the trial court rendered judgment in Wright’s favor awarding him $21,000 in damages and $9,746.25 in attorney’s fees.

On appeal, Stewart argues the trial court erred in awarding Wright a portion of the damage award because Wright’s project manager, acting with apparent authority, verbally authorized Stewart to retain $11,400 of the $42,000 down payment. Stewart also argues the trial court erred in failing to file findings of fact and conclusions of law.

We affirm the trial court’s judgment.

Background

In 2017, Appellee Reuben L. Wright contracted with Appellant Stewart & Stewarts Development, Inc. to construct four duplexes on property Wright owned in the City of Needville, Texas (“Project”). The parties agreed on a construction price of $420,000, and Wright agreed to make a down payment of $42,000. The cover page of the construction contract, executed by Wright and by Jaqueline Stewart on behalf of Stewart, identified Stewart as the builder, Jaqueline as Stewart’s project manager, Wright as the owner, and Robert Neblett as Wright’s project manager.

Articles 3.7.2 and 3.7.3 of the contract require Wright and Stewart to provide the other with the name of their authorized representative for the Project. Article 3.7.5 states: “All instructions from the Owner or his representative shall be given to the Builder or his representative in writing.” Article 3.8 required Wright to pay

Stewart a down payment of 10% of the total contract price of $420,000 and make further payments upon completion of different stages of the Project. Aside from the cover page, the contract does not mention Neblett or define the scope of his responsibilites as Wright’s project manager and purported representative for the Project.

Although Wright made the required initial down payment of $42,000 in 2017, Stewart’s work on the Project was delayed for two years due to permitting issues. In May 2019, Stewart sent an email to Wright stating it would “no longer be the building contractor on the West First Street Duplex Project in Needville, Texas, effective 5/13/2019.” According to Stewart, its work on the Project had been delayed by two years “due to predevelopment issues unrelated to the construction of the buildings which had nothing to do with Stewart.” Stewart stated that it was eventually “allowed to purchase a building permit” in April 2019, but by this time the “material, cost, and labor associated with the project ha[d] increased, thereby making it not feasible to continue at the contract cost agreed on 4/11/2017.” According to Stewart, it had “requested a change order [from Wright] to increase the total project by 5 percent to help offset the cost associated with the two-year delay,” but Wright refused the request. Stewart further stated that as a result of the two-year delay, the Project would have “increased costs associated and [Stewart] did not want

to continue working on the project without any agreed change order to prevent shortages during construction of the project.”

Relevant to the issue on appeal, Stewart’s email further stated:

Stewart & Stewarts received verbal permission from the project manager, Robert Neblett, on 5/13/2019, to deduct amounts from the work completed and costs associated with the project. Costs associated to date includes:

1) Building Permit $1,400.00 2) Framework for 4-slabs – $10,000

For a total of $11,400 to be deducted from the initial down payment of $42,000.

Based on Neblett’s purported “verbal permission,” Stewart retained $11,400 from Wright’s initial down payment and returned only $30,600 to Wright.

The Lawsuit

Wright sued Stewart for breach of the construction contract. Wright alleged that Stewart breached the contract by failing to “construct the 4-Symmetric Duplexes on Concrete Foundation.” According to Wright, Stewart “abandoned the project as of May 13, 2019 by informing [Wright] that [Stewart] would no longer be the Building Contractor on the West First Street Duplex Project in Needville, Texas effective May 13, 2019, unless [Wright] agree[d] to 5% increase in total project cost.” Wright alleged there were no provisions in the contract permitting Stewart to increase “the cost of the contract due to delays in the construction of the building.”

Wright alleged that, as a result of Stewart’s breach, Wright had to retain a new builder to complete Stewart’s work on the Project at a higher cost. Wright further alleged,

In the alternative, [Stewart’s] breach of contract described hereinabove has injured [Wright], causing [Wright] to pay additional monies for the performance of the new contractor due to the breach of contract.

Additionally, [Stewart] retained $10,000.00 from [Wright’s] down payment unjustly and when a request for refund was issued, [Wright]

refused.

Stewart filed a general denial.1 Trial Testimony

Wright and Jaqueline were the only witnesses that testified during the bench trial.2 Wright testified that he paid Stewart a down payment of $42,000 when he signed the contract in April 2017, but Stewart did not begin working on the Project until 2019 because of permitting issues. When asked if Stewart had performed any work on the Project, Wright testified that in 2019, Stewart placed two-by-fours around the area where the buildings’ concrete foundations were to be constructed. According to Wright, Stewart did not pour concrete or construct the foundations for the buildings, and the two-by-fours were placed in the wrong location.

1 Stewart also asserted the statute of frauds as an affirmative defense, but this issue was not litigated during the bench trial. See TEX. R. CIV. P. 94.

2 Stewart’s and Wright’s attorneys testified in support of their claims for attorney’s fees.

Wright testified that in May 2019, Stewart notified him that it was terminating the contract. Although Stewart returned to Wright $30,600 of the $42,000 down payment, Stewart retained $11,400 for costs Stewart purportedly incurred for the Project, including $10,000 for framework for the four building slabs and $1,400 for a building permit. He testified that Stewart had merely placed “some little bitty boards around four blocks of dirt” and had not performed any work for the $10,000 of the down payment it retained. Wright testified that because of Stewart’s wrongful termination of the contract, Wright had to hire another builder to complete the Project at a higher price of $498,000, which was $78,000 more than the $420,000 Wright had agreed to pay Stewart.

When asked about Neblett’s role in the Project, Wright testified that Neblett is “a person who knows people.” Wright testified that the contract identified Neblett as the project manager and he agreed that a project manager is also known as the general contractor. When asked what a project manager and general contractor’s duties entail, Wright testified, “They are the person who is the go-between between the owner and the project that’s being submitted by the people who are on site.” Wright, who denied hiring Neblett, testified that he paid Neblett’s “travel to go onto the job site and interface with the City of Needville engineers.”

When asked about Stewart’s retention of the $11,400 from the $42,000 down payment, Wright testified that he had no documents reflecting whether Neblett had

given verbal approval to Stewart to retain $11,400 of the down payment, and he had no evidence, other than his testimony, that he “disapproved of [Neblett’s] approval” of the deduction. Wright testified that all changes to the contract had to be in writing, the contract did not allow Stewart to deduct any portion of the $42,000 down payment, and he never signed an agreement allowing anyone to “give verbal permission for [his] funds to be withdrawn from the down payment.”

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Stewart & Stewarts Development, Inc. v. Reuben L. Wright, (Tex. Ct. App. 2025).

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