TA Operating Corp. v. Solar Applications Engineering, Inc.

191 S.W.3d 173, 2005 WL 2401879
CourtCourt of Appeals of Texas
DecidedFebruary 8, 2006
Docket04-04-00180-CV
StatusPublished
Cited by16 cases

This text of 191 S.W.3d 173 (TA Operating Corp. v. Solar Applications Engineering, 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
TA Operating Corp. v. Solar Applications Engineering, Inc., 191 S.W.3d 173, 2005 WL 2401879 (Tex. Ct. App. 2006).

Opinion

OPINION

Opinion by

CATHERINE STONE, Justice.

In this appeal, we are asked to determine whether the doctrine of substantial performance excuses a contractor’s failure to comply with an express condition precedent to final payment that is unrelated to completion of the building. Concluding that it does not, we grant TA Operating Corporation’s motion for rehearing. We withdraw our opinion and judgment of March 30, 2005 and issue this opinion and judgment in their place.

BACKGROUND

TA Operating Corporation, a truck stop travel center company, contracted with Solar Applications Engineering, Inc. to construct a prototype multi-use truck stop in San Antonio for a fixed price of $3,543,233. Solar agreed to begin construction within fourteen days after signing the contract and complete the project within 270 days, in February 2000. Various delays occurred, however, partly due to confusion over the construction plans. Solar had been given an older set of construction plans from September 1998, on which it based its bid and estimated the project completion. TA, however, expected the project to be built from a set of plans that were dated May 1999. The discrepancy was not discovered until June 1999, and created numerous problems because the two sets of plans were substantially different. Numerous change orders were issued throughout the construction process, and the two sets of plans were reconciled in a comprehensive change order that was issued in February 2000.

Through a series of approved change orders, TA extended project completion until May 26, 2000, and received a letter *177 from Tracey Sutton, Solar’s on-site manager, that the project would be substantially complete by May 30, 2000. Both parties agree that the project was not substantially complete until August 11, 2000, the day TA was issued a temporary certificate of occupancy by the City of San Antonio, certifying that the building had passed all major city inspections and was ready for use.

Upon substantial completion, TA sent Solar a “punch list” of items that needed to be finished to complete the building. Solar disputed several items on the list and delivered a response to TA listing the items Solar would correct, and listing the subcontractor responsible for each item. Solar began work on the punch list items and filed a lien affidavit against the project on October 2, 2000 in the amount of $472,392.77. TA understood the lien affidavit to be a request for final payment.

On October 18, 2000, TA sent notice to Solar that Solar was in default for not completing the punch list items, and for failing to keep the project free of liens. TA stated in the letter that Solar was not entitled to final payment until it completed the remainder of the punch list items and provided documentation that liens filed against the project had been paid. TA ultimately sent Solar a letter of termination citing Solar’s failure to complete the punch list items as grounds for termination, which Solar accepted on November 13, 2000. In its reply letter, Solar disputed that the termination was for cause. Solar acknowledged at least two items on the punch list had not been completed, and submitted a final application for payment in the amount of $472,148,77, the unpaid retainage. 1 TA refused to make final payment, however, contending that Solar had not complied with section 14.07 of the contract, which expressly made submission of an all-bills-paid affidavit a condition precedent to final payment:

14.07 Final Payment
A. Application for Payment
1. After CONTRACTOR has, satisfactorily completed all corrections identified during the final inspection and has delivered, in accordance with the Contract Documents, all maintenance and operating instructions, schedules, guarantees, Bonds,
Certificates or other evidence of insurance certificates of inspection, marked-up record documents (as provided in paragraph 6.12), and other documents, CONTRACTOR may make application for final payment following the procedure for progress payments.
If any Subcontractor or Supplier fails to furnish such a release or receipt in full, CONTRACTOR may furnish a Bond or other collateral satisfactory to OWNER to indemnify OWNER against any Lien.
2. The final Application for Payment shall be accompanied (except as previously delivered) by: i) all documentation called for in Contract Documents, including but not limited to the evidence of insurance; ii) consent of the surety, if any, to final payment; and iii) complete and legally effective releases or waivers (satisfactory to OWNER) of all Lien rights arising out of or Liens filed in connection with the Work.

Although Solar did not comply with this condition precedent to final payment, Solar sued TA for breach of contract under the theory of substantial performance. At the time of trial, $246,627.82 in liens existed against the project. Solar did not dispute that the liens existed, nor did it dispute *178 that it was contractually obligated to submit an all-bills-paid affidavit as a condition precedent to final payment. TA counterclaimed for breach of contract and requested a judgment against Solar for damages incurred for Solar’s failure to complete the project timely, the cost of repairing defective work, and liens filed against the project. The trial judge severed TA’s counterclaim for damages related to liens filed against the project by subcontractors 2 and entered judgment for Solar in the amount of $392,000, the amount of consideration remaining on the contract less the cost of remediable defects in the work.

TA raises seven issues on appeal, asserting: 1) the doctrine of substantial performance does not excuse Solar’s failure to comply with an express condition precedent to final payment; 2) the trial court erred in applying a common law measure of damages in entering judgment; 3) the trial court erred in submitting a jury question excusing Solar’s failure to complete the work timely; 4) the trial court erred in denying TA offset for delay damages, attorney’s fees, and outstanding mechanic’s liens; 5) the trial court erred in awarding Solar pre-judgment interest under the Property Code; 6) the trial court erred in awarding Solar conditional appellate attorney’s fees; and 7) the trial court erred in refusing to submit TA’s requested jury question on fraud.

Condition Precedent to Final Payment

The first issue we must resolve is whether the doctrine of substantial performance excuses the breach of an express condition precedent to final payment that is unrelated to completion of the building. TA acknowledges that Solar substantially performed its work on the project, but contends its duty to pay was not triggered until Solar pleaded or proved it provided TA with documentation of complete and legally effective releases or waivers of all liens filed against, the project. TA argues that Solar’s failure to plead or prove that it fulfilled this condition precedent to final payment barred its right to recover final payment. See Tex.R. Civ. P.

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Bluebook (online)
191 S.W.3d 173, 2005 WL 2401879, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ta-operating-corp-v-solar-applications-engineering-inc-texapp-2006.