Opinion issued July 25, 2024
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-23-00759-CV ——————————— TONY’S CONCRETE WORK, LLC, Appellant V. SHELLY GOAD AND DANIEL GOAD, Appellees
On Appeal from the 348th District Court Tarrant County, Texas1 Trial Court Case No. 348-302205-18
MEMORANDUM OPINION
1 Pursuant to its docket equalization authority, the Supreme Court of Texas transferred this appeal from the Second Court of Appeals to this Court. See TEX. GOV’T CODE § 73.001 (authorizing transfer of cases); TEX. R. APP. P. 41.3 (“In cases transferred by the Supreme Court from one court of appeals to another, the court of appeals to which the case is transferred must decide the case in accordance with the precedent of the transferor court . . . .”). Appellees Shelly Goad and Daniel Goad contracted with Spears
Construction Management, LLC to build a new house. Spears Construction
retained Appellant Tony’s Concrete Work, LLC as a subcontractor to prepare and
lay the foundation. Following disputes about the construction of their house, the
Goads sued Spears Construction, Tony’s Concrete, and several other
subcontractors involved in the construction project.2 Spears Construction settled
with the Goads and it assigned its claims against Appellant Tony’s Concrete to the
Goads.
The Goads sued Tony’s Concrete for breach of contract as assignees of
Spears and for negligence in their own capacity. Following a bench trial, the trial
court entered judgment in favor of the Goads awarding them $412,687.52 in
damages plus interests and costs of court. In two issues, Tony’s Concrete argues
that the trial court’s judgment should be reversed, and judgment rendered in its
favor because (1) the Goads’ breach of contract claim is precluded by the
affirmative defense of estoppel, and (2) the Goads’ negligence claim is precluded
by the economic loss rule.
We affirm the trial court’s judgment.
2 The other defendants settled with the Goads and are not parties to this appeal.
2 Background
In November 2017, Shelly Goad and Daniel Goad hired Spears Construction
Management, LLC, a general contractor, to build their house in Tarrant County,
Texas. Spears Construction hired Tony’s Concrete, a subcontractor, to prepare and
lay the foundation for the house in accordance with the plans to be furnished by
Spears Construction. Tony’s Concrete was paid in full, and the concrete was
poured on February 14, 2018.3
After the concrete was poured but before the project was complete, the
Goads learned of problems with the foundation. They alleged that:
a. the foundation was too shallow, not sufficiently stiff, and not embedded into native soil (which caused erosion and severe foundation exposure), resulting in insufficient strength;
b. the control joints were improperly spaced, which caused excessive cracking;
c. the grade beams lacked rebar;
d. the grade beams were not located at the correct depth; and
e. numerous footings in the foundation were altogether missing while others were insufficient.
Concluding it would be less expensive to start the construction over than to repair
the problems, the Goads demolished the construction, which was about thirty
percent complete.
3 Spears Construction hired other contractors to supply and pump the concrete.
3 The Goads sued Spears Construction, Tony’s Concrete, and several other
subcontractors. Spears Construction settled with the Goads and assigned any
claims it had or may have against Tony’s Concrete to the Goads. The Goads then
asserted a breach of contract claim against Tony’s Concrete in their capacity as
assignees to Spears Construction, and a negligence claim in their own capacity.4
The Trial
The trial court conducted a one-day bench trial. Three witnesses testified for
the Goads and one witness testified for Tony’s Concrete.
A. Robert Nicholas
Robert Nicholas, a structural engineer, testified as an expert for the Goads.
He testified that the Goads contacted him when the house was “probably about 30
percent complete.” He reviewed the floor plans, foundation plans, metal building
plans, and geotechnical report, and he walked the property. He told the Goads he
had “several concerns about both the framing and the foundation.” After
conducting a visual inspection, he testified he was “concerned that there [were]
numerous cracks in the foundation, so that’s going to make it very difficult to put
any kind of a hard flooring or a stained concrete type flooring in it.”5 Nicholas
4 The Goads also alleged in their pleadings that they were third-party beneficiaries to the contract between Tony’s Concrete and Spears Construction, but they did not argue that theory at trial or on appeal. 5 Shelly Goad testified that she and her husband intended to use “mainly stained concrete, some tile, some carpet” for flooring in the house.
4 also was concerned with other things, including “some of the other rebar that was
exposed,” erosion around the outside of the slab, and “what looked like soft
leftover fill material[.]”
According to Nicholas, his “biggest concern with—prior to the demo was
the number and the size of the cracks that had already started forming at the top of
the foundation.” He “thought these cracks were kind of excessive, especially for
the age of this particular foundation.” He also was concerned because the material
“the foundation was sitting on was kind of soft” and the reinforcing in the slab
“looked like it was kind of lower than it . . . should have been, not really in the
center of the slab.” Nicholas was worried about the thickness of the concrete, the
depth of the interior beams, and erosion in the corner of the foundation and under
the back patio. He testified that the control joints “were way too far apart.” And
he was concerned with respect to the foundation’s failure to conform with a section
of the International Residential Code. Nicholas made repair recommendations but
the estimate to repair the problems was greater than the price of demolishing and
rebuilding.
Nicholas testified that some deficiencies in the plans were in the pour site
before the concrete was added to it. According to Nicholas, the general contractor
usually relies on his foundation subcontractor to determine the adequacy of the
foundation plans. “The third-party inspectors, especially when they’re doing the
5 pre-pours, are usually . . . almost a waste of money. You know, you really want
the guy that designed the foundation to be out there to look at it because that’s the
guy that knows where everything is going to be at.” Nicholas acknowledged that
the people who inspect the site prior to the pour are supposed to either give
approval if the site conforms to the plans or they say the site is not set up correctly.
He conceded that the contractor who pours the concrete cannot pour until he is
advised that the site is acceptable and comports with the plans.
Nicholas reviewed the Reinforcing Steel Observation Report Alpha Testing
prepared before the pour. Spears Construction hired Alpha Testing, a
subcontractor, to provide “professional engineering services, including
construction materials testing services.” He testified that the Alpha Testing report
was not really an inspection report but an observation report. According to
Nicholas, it is the general contractor’s responsibility to have someone on-site who
knows the foundation plans to make sure all is going according to the plans. But,
he said, “the foundation contractor is ultimately responsible for [the foundation]
being right.” Even after the general contractor and its inspector approve the pour,
“that’s where the concrete contractor has to use his own judgment; is it really
ready, do I have the right plans, or are we going to be ripping this out again in
three months.”
6 Nicholas testified that the Alpha Testing report addressed only steel
reinforcement. There was nothing in the report about the footers or their depth or
whether they were there, the control joints, the depth of the concrete in the beams,
or the garage. He testified that the Alpha Testing report was wrong.
After the foundation was demolished, Nicholas learned that the foundation
was not in compliance with the construction plans. The footings were not as deep
as they should have been or were missing altogether, and there was no reinforcing
rebar at the bottom of the slab in the interior grade beams. Also, the garage did not
have the slope required under the Residential Building Code.
B. Stephen Oakes
Stephen Oakes, who owns a construction company, testified as an expert for
the Goads regarding the reasonable costs to demolish and rebuild the house. He
was hired to provide pricing for rebuilding or repairing the Goads’ construction
project. He prepared two estimates: one based on Nicholas’ report for repairs, and
one for demolition and rebuilding to the stage where the construction project had
stopped. According to Oakes, the cost of demolition and rebuilding was
$339,020.85, but repairing the project in lieu of demolition would have cost about
30 percent more.
7 C. Shelly Goad
Shelly Goad testified that she and her husband hired Spears Construction to
build their home for $650,000. The Goads had paid Spears Construction about
$300,000 when the construction stopped.
The Goads opted to demolish the foundation for two reasons. First, they
received a letter from the Homeowners’ Association stating that construction of
their home had to be completed within eighteen months from the date of
commencement. The letter noted that no construction had occurred for about one
year and that the structure was “rapidly deteriorating.” Goad testified that the
Homeowners’ Association planned to start “charg[ing] by the day” if the Goads
didn’t “remedy” the problem, and that if they did not fix the problem, the
Association would do it and bill the Goads for it.
The second reason the Goads opted to demolish the foundation was because
they “found out that the foundation was . . . not as thick as it should be[.]” They
hired Oakes who gave them the cost to repair and the cost to replace. They
realized the repair would have been more expensive and would have simply been a
“Band-Aid.” They also knew they would have to disclose the work done to the
foundation to potential buyers if they ultimately sold the house. The foundation
was demolished in May 2019, the month after the Goads received the letter from
the Homeowners’ Association.
8 The Goads hired another builder after the demolition. The contract price for
the new builder was about the same, around $650,000. According to Goad, during
the demolition and rebuilding, they paid about $3,500 a month for substitute
housing and continued to pay Homeowners’ Association dues of around $1,000 per
year and real estate taxes of approximately $9,000 per year.
D. Antonio Hernandez, Jr.
Antonio Hernandez, Jr. is the Vice President of Tony’s Concrete. He
supervised and worked on the Goads’ home. According to Hernandez, Spears
Construction contacted him about the project, they discussed it, and Hernandez
looked at plans for the project during a meeting with Spears Construction. His
responsibility at the jobsite was “the concrete.” Tony’s Concrete was responsible
for preparing the pour site. According to Hernandez, representatives from Tony’s
Concrete, Spears Construction, and Alpha Testing were there when the pour site
was being prepared. After preparation of the pour site, the site was inspected by
representatives from Spears Construction and Alpha Testing.
Hernandez testified that after Spears Construction and Alpha Testing gave
approval for Tony’s Concrete to pour the concrete, they supervised the pour.
Hernandez was present from the time construction began on the pour site until the
concrete pour was complete. According to Hernandez, Alpha Testing conducted
testing during and after the pour was complete, and it approved the pour.
9 Hernandez testified that before the Goads’ project, Tony’s Concrete had
performed twenty to thirty jobs for Spears Construction. Prior to the Goads’
project, Tony’s Concrete had been told “once or twice” that a foundation it poured
was not right and needed correction. In those cases, Tony’s Concrete did the pour
again, correcting it to the satisfaction of Spears Construction. He testified that had
Tony’s Concrete been told that the Goads’ foundation was not correct or did not
comply with the plans, Tony’s Concrete “absolutely” would have gone back and
corrected it. According to Hernandez, Tony’s Concrete first learned the foundation
was not poured according to the plans after the foundation was torn out.
Closing Arguments
The Goads argued during closing arguments that they were “left with
essentially a slab that had very little reinforcement, was subject to movement and
cracking, and were left with really no choice but to demo it and rebuild.” They
argued they had “paid for the same thing twice” and that they had to “start over
because they can’t rebuild on a foundation that is needing, essentially, a giant
Band-Aid that they’re going to have to pay more for to repair instead of to demo
and replace.” To replace the foundation, they had to replace the plumbing “that
was encased in the foundation, as well as the building that was on top of it.”
Tony’s Concrete argued that the Goads’ breach of contract claim lacked
merit because “the undisputed evidence . . . [was that] Spears and its third-party
10 agent [Alpha Testing] approved not only the pour site but they approved the
foundation. The only reason that the foundation was poured was because they got
approval from Spears and from Alpha Testing.” Tony’s Concrete argued that the
contract claim was barred by estoppel because Tony’s Concrete was never told the
foundation needed to be corrected and it “never had an opportunity from Spears
before it began constructing improvements on it to go out and correct it, as it had
done on other occasions.” Tony’s Concrete argued it had “relied upon Spears not
saying, ‘Hey, get back out here, this foundation is not right, you need to correct it,’
which . . . we would have had to have done at our cost.” The Goads responded that
the elements of estoppel were not established because there was no testimony that
Spears Construction had “full knowledge that something—that it was wrong and
[said,] ‘Do it anyway.’” And they argued there was no reliance by Tony’s
Concrete because the Alpha Testing report was not reviewed by Tony’s Concrete
until after the foundation was poured.
Tony’s Concrete also argued that the Goads’ negligence claim was barred by
the economic loss rule. It argued that the negligence claim was in essence a breach
of contract claim. The Goads responded that the economic loss rule did not bar
their negligence claim because there was damage to parts of the structure beyond
the foundation, which was the subject of the contract pursuant to which they
asserted their breach of contract claim.
11 The Judgment
The trial court entered a final judgment in favor of the Goads awarding them
$339,020.85 for remedial damages,6 $59,500.00 for loss of use damages,7
$14,166.67 for mitigation damages,8 plus pre-judgment interest, costs of court, and
post-judgment interest.9
The trial court signed findings of fact and conclusions of law. Among the
findings of fact, the trial court found that:
4.10 Tony’s was provided a set of foundation plans by Spears Construction that were dated January 30, 2018 (Plans).
7. The foundation was not built in accordance with the Plans or industry standards, which proximately caused excessive cracking and a weakened foundation;
8. The foundation was not sufficiently embedded into native “undisturbed” soil in accordance with the Plans or industry standards.
6 The remedial damages were awarded for “demolishing the partially constructed house and rebuilding to the same stage of construction.” 7 Loss of use damages were intended to compensate the Goads for finding “alternative living arrangements” for seventeen months. 8 Mitigation damages were awarded to compensate the Goads for “property taxes and HOA fees related to the alternative housing” for seventeen months. While living in alternative housing, the Goads continued to pay property taxes and Homeowners’ Association fees for the house they were building. 9 The judgment does not specify whether the damages were awarded for the Goads’ contract claim or their negligence claim. 10 We number the trial court’s findings and conclusions to correspond to the numbering in the trial court’s findings of fact and conclusions of law. 12 9. There were numerous footings that did not match the Plans or industry standards because they were altogether missing, too shallow, or did not contain the required steel reinforcement.
10. The interior grade beams did not comply with the Plans or industry standards because they did not contain the requisite reinforcing steel and were too shallow.
11. The perimeter grade beams also did not comply with the Plans or industry standards because they were too shallow and not properly embedded into native soil.
12. The control joints did not comply with industry standards because they were spaced too far apart, proximately causing excessive cracking.
13. The garage was not sloped as required by industry standards and the Plans.
18. But for Tony’s failure to abide by the Plans and reasonable standards of care for a reasonable and prudent company in the foundation construction industry, the foundation would likely not have been excessively cracked and weakened to the point that the foundation, the plumbing encased in the foundation, and the partially constructed house on top of the foundation had to be demolished and rebuilt.
The trial court also concluded that:
2. Tony’s breached [its] contract [with Spears Construction] by failing to follow the Plans and the applicable codes (Residential Building Code, American Concrete Institute, and Portland Cement Association). These deficiencies proximately caused excessive cracking and a weakened foundation, ultimately requiring the partially constructed house to be demolished.
3. Tony’s failed to perform the job in accordance with the reasonable standards of care for a reasonable and prudent company in the foundation construction industry.
13 4. But for Tony’s failure to abide by the Plans and reasonable standards of care for a reasonable and prudent company in the foundation construction industry, Plaintiffs’ foundation would likely not have been excessively cracked and weakened requiring the partially constructed house to be demolished and rebuilt.
8. Tony’s failed to present sufficient evidence at trial that it was excused from complying with the contract.
9. Tony’s failed to present sufficient evidence at trial that it was excused from complying with industry standards.11
This appeal ensued.
Standard of Review
In a bench trial, the trial court, as fact finder, is the sole judge of the
credibility of witnesses. Bell Helicopter Textron, Inc. v. Burnett, 552 S.W.3d 901,
913 (Tex. App.—Fort Worth 2018, pet. denied) (citing Shear Cuts, Inc. v.
Littlejohn, 141 S.W.3d 264, 270–71 (Tex. App.—Fort Worth 2004, no pet.)). The
trial court may consider all surrounding facts and circumstances in connection with
the testimony of each witness, and it may accept or reject all or any part of that
testimony. Id. We review the trial court’s findings after a bench trial using the
same standard of review we use to review jury findings. O’Neal v. Dale, No. 02-
20-00173-CV, 2021 WL 210848, at *5 (Tex. App.—Fort Worth Jan. 21, 2021, no
pet.) (mem. op.) (citing Lloyd Walterscheid & Walterscheid Farms, LLC v.
Walterscheid, 557 S.W.3d 245, 257 (Tex. App.—Fort Worth 2018, no pet.)); see
11 Tony’s Concrete requested additional and amended findings of fact and conclusions of law but the trial court did not respond.
14 also Robbins v. Robbins, 550 S.W.3d 846, 854 (Tex. App.—Fort Worth 2018, no
pet.) (“A trial court’s findings of fact have the same force and dignity as a jury’s
answers to jury questions and are reviewable for legal and factual sufficiency of
the evidence to support them by the same standards.”). We defer to the trial
court’s findings of fact provided they are supported by the record. Sw. Elec. Power
Co. v. Lynch, 595 S.W.3d 678, 683 (Tex. 2020). “When the appellate record
includes a reporter’s record, findings of fact on disputed issues are not conclusive
and may be challenged for the sufficiency of the evidence.” Super Ventures, Inc.
v. Chaudhry, 501 S.W.3d 121, 126 (Tex. App.—Fort Worth 2016, no pet.) (citing
Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex. 2003)).
We review a trial court’s conclusions of law de novo. O’Neal, 2021 WL
210848 at *5 (citing Walterscheid, 557 S.W.3d at 257); see also Reliance Nat’l
Indem. Co. v. Advance’d Temps., Inc., 227 S.W.3d 46, 50 (Tex. 2007) (“Appellate
courts review legal determinations de novo, whereas factual determinations receive
more deferential review based on the sufficiency of the evidence.”); BMC Software
Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002) (citation omitted) (“The
appellant may not challenge a trial court’s conclusions of law for factual
insufficiency; however, the reviewing court may review the trial court’s legal
conclusions drawn from the facts to determine their correctness.”). A conclusion
of law will not be reversed unless it is erroneous as a matter of law. “Even an
15 incorrect conclusion of law will not require a reversal if the controlling findings of
fact support a correct legal theory.” Garner v. Long, 49 S.W.3d 920, 922 (Tex.
App.—Fort Worth 2001, pet. denied) (citing Piazza v. City of Granger, 909
S.W.2d 529, 532 (Tex. App.—Austin 1995, no writ)).
Breach of Contract
During trial, Tony’s Concrete argued that the Goads were estopped from
asserting a breach of contract claim because Spears Construction and Alpha
Testing had “approved the foundation,” and thus the Goads could not “claim that
Tony’s did anything wrong because Tony’s would not have gone forward without
the approval of Spears and Alpha Testing[.]” On appeal, Tony’s Concrete argues
that “[t]here is no evidence in the record that the foundation caused the Goads to
order the demolition of the partially constructed home.” Tony’s Concrete further
argues:
The Goads[’] trial petition judicially admits that Spears Construction and Alpha Testing were hired with the responsibility to “ensure” that the Goads’ “foundation” was in “compliance with the Project[’]s specification and plans.”12 12 In support of its judicial admission argument, Tony’s Concrete cites to the Goads’ Fifth Amended Petition, which states: Alpha was hired as a third-party inspector to inspect Plaintiffs’ foundation to ensure its compliance with the Project’s specifications and plans. According to Alpha’s reinforcing steel report . . . the reinforcing steel was “compliant” with the Project’s January 30, 2018 specifications and plans provided by Spears Construction. The Seventh Amended Petition, the live petition at trial, does not refer to Alpha Testing.
16 ...
[T]he trial court’s finding that the “partially constructed house on top of the foundation had to be demolished and rebuilt” is contrary to the judicial admission in the Goads’ trial pleading that it was not until the demolition in May of 2019 that any problem with the foundation was discovered.13 It was the metal buildings being constructed on the foundation that caused the Goads to order the demolition, according to their trial pleading. There is no evidence in the record that the foundation caused the Goads to order the demolition of the partially constructed home. Therefore, the trial court’s finding that the partially constructed home on top of the foundation had to be demolished was never the cause of the demolition of the partially constructed home.
The Goads argue that in April 2019, before the demolition, Spears
Construction sent Tony’s Concrete “notice of a potential claim” that the “concrete
foundation was negligently poured.” They argue the notice letter offered Tony’s
Concrete the opportunity “to inspect the foundation prior to the Goads’
demolition.” Moreover, even though Tony’s Concrete claims to have relied on
Alpha Testing’s report in constructing the foundation, the Goads argue that
Hernandez acknowledged during trial that Alpha Testing’s report was not received
until “[s]ometime after [the pour] was done.”
To prevail on a breach of contract claim, a plaintiff must establish that (1) a
valid contract exists between the plaintiff and the defendant; (2) the plaintiff
13 According to Tony’s Concrete’s appellate brief, this judicial admission is from the Goads’ Seventh Amended Petition, in which they allege they discovered foundation problems “[d]uring the demolition on the Project in May of 2019.”
17 tendered performance or was excused from doing so; (3) the defendant breached
the terms of the contract; and (4) the plaintiff sustained damages. Foster v. Nat’l
Collegiate Student Loan Tr. 2007-4, No. 01-17-00253-CV, 2018 WL 1095760, at
*9 (Tex. App.—Houston [1st Dist.] Mar. 1, 2018, no pet.) (mem. op.) (quoting
West v. Triple B Servs., LLP, 264 S.W.3d 440, 446 (Tex. App.–Houston [14th
Dist.] 2008, no pet.)). Tony’s Concrete does not dispute that there was a contract
between Spears Construction and Tony’s Concrete, or that Spears Construction
assigned its claims against Tony’s Concrete to the Goads.14 Rather, Tony’s
Concrete argues that the Goads’ breach of contract claim is precluded both by
estoppel15 and the Goads’ judicial admissions. We discuss each argument in turn.
14 As an assignee, the Goads stand in Spears Construction’s shoes and may assert only those rights that Spears Construction could assert. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 420 (Tex. 2000). 15 In its First Amended Answer to Plaintiffs’ Fifth Amended Petition—the latest answer in the clerk’s record—Tony’s Concrete asserted a general denial and two affirmative defenses: estoppel and laches. Tony’s Concrete does not assert its laches defense on appeal. In asserting the estoppel defense, Tony’s Concrete argued that the plaintiffs were [E]stopped from recovering under breach of contract or any other claim against Tony’s Concrete because Tony’s Concrete poured the foundation for the house and garage under the direction and supervision of Jack Spears acting for Spears Construction after he and Defendant Alpha Testing, Inc. . . , who was hired by Spears Construction, approved the pour site after inspecting it, which had the site not been in accordance with the construction plans, they were obligated to inform Tony’s Concrete so it could make the corrections necessary to conform to the plans prior to pouring the concrete. Additionally, Tony’s Concrete during the pour placed saw joints in the concrete where Jack Spears directed while Alpha Testing took break cylinders to determine the concrete was in 18 A. Estoppel
Tony’s Concrete identifies the elements of equitable estoppel as “(1) a false
representation or concealment of material facts; (2) made with knowledge, actual
or constructive, of those facts; (3) with the intention that it should be acted on;
(4) to a party without knowledge or means of obtaining knowledge of the facts;
(5) who detrimentally relies on the representations.” Johnson & Higgins of Tex.,
Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 515–16 (Tex. 1998) (citing
Schroeder v. Tex. Iron Works, Inc., 813 S.W.2d 483, 489 (Tex. 1991)).16 Tony’s
Concrete argues that “[t]he undisputed facts the trial court received during the
bench trial are classic estoppel.” We disagree.
There was no testimony at trial that Spears Construction knowingly made
any false representations or concealed material facts with the intent that Tony’s
Concrete rely to its detriment on those representations or concealed facts. “The
accordance with the construction plans. Finally, at the conclusion of the pour after the concrete had set for the proper amount of time, Alpha Testing tested the concrete. Following the pour, Tony’s Concrete received a copy of a report from Alpha Testing to Spears Construction showing the pour site was in conformity with the “contractors[’] drawings” and that the concrete compression test of the concrete [sic] was “compliant with project specifications.” 16 Tony’s Concrete cites a single equitable estoppel case: Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998), in which the Supreme Court held equitable estoppel did not bar the assertion of a limitations defense. Tony’s Concrete cites the case solely for its recitation of the elements of estoppel. See id. at 515–16. It does not discuss the facts of the case, which are distinguishable.
19 doctrine of equitable estoppel can only be invoked where the conduct of a party
has been such as to induce action in reliance upon it and where it would operate as
a fraud upon the assured if the party was afterwards allowed to disavow its
conduct.” Sparkman v. Cunningham, No. 11-10-00304-CV, 2012 WL 3264483, at
*2 (Tex. App.—Eastland Aug. 9, 2012, no pet.) (mem. op.) (citing Mass. Bonding
& Ins. Co. v. Orkin Exterminating Co., 416 S.W.2d 396, 401 (Tex. 1967)); see also
Wyde v. Francesconi, 566 S.W.3d 890, 897 (Tex. App.—Dallas 2018, no pet.)
(“The elements of equitable estoppel are substantially the same as the elements of
fraud.”) (citing Johnson & Higgins of Tex., Inc., 962 S.W.2d at 524). In the
absence of testimony—or even any allegations—regarding any purportedly
fraudulent acts by Spears Construction, we hold “classic [equitable] estoppel” does
not preclude the Goads’ contract claim.
In any event, we do not believe that Tony’s Concrete is asserting an
equitable estoppel defense. Rather, it appears that Tony’s Concrete’s defense is
one of quasi-estoppel. Indeed, despite its enumeration of the elements of equitable
estoppel, Tony’s Concrete relies on Lopez v. Munoz, Hockema & Reed, L.L.P., 22
S.W.3d 857 (Tex. 2000), where a quasi-estoppel defense of acceptance of the
benefits was pled.
“Quasi-estoppel precludes a party from asserting, to another’s disadvantage,
a right inconsistent with a position previously taken. The doctrine applies when it
20 would be unconscionable to allow a person to maintain a position inconsistent with
one to which he acquiesced, or from which he accepted a benefit.” Id. at 864
(citing Atkinson Gas Co. v. Albrecht, 878 S.W.2d 236, 240 (Tex. App.—Corpus
Christi 1994, writ denied)); see also Forney 921 Lot Dev. Partners I, L.P. v. Paul
Taylor Homes, Ltd., 349 S.W.3d 258, 268 (Tex. App.—Dallas 2011, pet. denied)
(noting quasi-estoppel “is a long-standing doctrine applied to preclude
contradictory positions: it precludes a person from asserting, to another’s
disadvantage, a right inconsistent with a position previously taken”). Quasi-
estoppel, or estoppel by contract, “is not actually one of estoppel, as estoppel in
pais; it is just another way of stating that a party is bound by the terms of his
contract unless it is void, annulled, or set aside in some way.” Sparkman, 2012
WL 3264483 at *2 (citing Stevens v. State Farm Fire & Cas. Co., 929 S.W.2d 665,
672 (Tex. App.—Texarkana 1996, writ denied)).17 Put another way, quasi-
estoppel “forbids a party from accepting the benefits of a transaction or statute and
then subsequently taking an inconsistent position to avoid corresponding
obligations or effects.” Brooks v. Brooks, 257 S.W.3d 418, 423 (Tex. App.—Fort
17 Reliance is not an element of quasi-estoppel. Sparkman v. Cunningham, No. 11- 10-00304-CV, 2012 WL 3264483, at *3 (Tex. App.—Eastland Aug. 9, 2012, no pet.) (citing Steubner Realty 19, Ltd. v. Cravens Rd. 88, Ltd., 817 S.W.2d 160, 164 (Tex. App.—Houston [14th Dist.] 1991, no writ)); see also Brooks v. Brooks, 257 S.W.3d 418, 423 (Tex. App.—Fort Worth 2008, pet. denied) (explaining that “unlike equitable estoppel, quasi-estoppel requires no showing of misrepresentation or detrimental reliance”).
21 Worth 2008, pet. denied) (citations omitted); see also Richardson v. Allstate Tex.
Lloyd’s, 235 S.W.3d 863, 865 (Tex. App.—Dallas 2007, no pet.) (“Under Texas
law, the affirmative defense of estoppel applies in a breach-of-contract claim when
a party accepts a benefit voluntarily and with knowledge of all material facts.”)
(emphasis in original). But there “can be no ratification or estoppel from
acceptance of the benefits by a person who did not have knowledge of all material
facts.” Clark v. Cotten Schmidt, L.L.P., 327 S.W.3d 765, 770 (Tex. App.—Fort
Worth 2010, no pet.) (citing Frazier v. Wynn, 472 S.W.2d 750, 753 (Tex. 1971)).
In Lopez, cited but not discussed by Tony’s Concrete, the plaintiffs’ former
counsel settled a wrongful death case in which it was paid a forty-five percent
contingency fee. 22 S.W.3d at 859. After the settlement was signed, the funds
were disbursed. Id. at 860. Three years later, the plaintiffs sued their former
counsel for breach of contract, breach of fiduciary duty, fraud, negligence, and
deceptive trade practices arguing that the contingency fee should have been forty
percent. Id. The trial court granted the attorneys’ motion for summary judgment
and the court of appeals reversed, rendering judgment for the plaintiffs in the
amount of $750,000, representing the disputed five percent of the contingency fee.
Id. The Supreme Court reversed the court of appeals’ judgment on the contract
and fiduciary duty claims, rendering judgment that the plaintiffs take nothing on
those claims, and it remanded the remaining claims to the trial court. Id. at 864.
22 The Supreme Court rejected the attorneys’ quasi-estoppel acceptance of the
benefits defense raised in connection with the plaintiffs’ fraud, negligence, and
deceptive trade practice claims.18 Id. at 863 (holding plaintiffs’ “initial acceptance
of a lesser portion of [a] settlement is not inconsistent with their later assertion that
they were entitled to more”).
We are not persuaded by Tony’s Concrete’s quasi-estoppel arguments or its
citation to Lopez. In its appellate brief, Tony’s Concrete only argues with respect
to Spears Construction that “Spears Construction and Alpha Testing were hired
with the responsibility to ‘ensure’ that the Goads’ ‘foundation’ was in ‘compliance
with the Project[’]s specification and plans’” and that it would be
“unconscionable” to allow someone “to maintain a position inconsistent with the
one to which he [acquiesced].” But there is no real discussion with citations to the
record or applicable authorities that Spears Construction had “knowledge of all
material facts” prior to accepting the benefits of the contract with Tony’s Concrete
18 In Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 859 (Tex. 2000), Lopez’s contingency fee agreement with its former counsel awarded it forty percent of any recovery and forty-five percent of any recovery if the case was “appealed to a higher court.” The parties’ dispute stemmed from the issue of whether the appellate process was initiated when defense counsel filed a cash deposit in lieu of a cost bond after the trial court’s verdict in favor of Lopez and while settlement negotiations were taking place. Lopez argued that merely initiating the appellate process was not tantamount to “appeal[ing] to a higher court” as contemplated by the contingency agreement. Id. at 861. The Supreme Court held that when the cash deposit was made, the case was ‘“appealed to a higher court’ under the contract’s terms.” Id.
23 and later maintained an inconsistent position.19 See Benton v. Contractor’s
Supplies, Inc., No. 12-20-00207-CV, 2021 WL 4613867, at *7 (Tex. App.—Tyler
Oct. 6, 2021, no pet.) (mem. op.) (holding appellant concrete subcontractor “has
not argued nor does the evidence disclose that [materials supplier] accepted
payments from [general contractor] to avoid a corresponding obligation or effect,
therefore the doctrine [of quasi-estoppel] is inapplicable”). Given the scant
briefing on this topic, the dearth of testimony regarding Spears Construction’s
alleged knowledge, and Hernandez’s trial testimony that the foundation work, in
fact, was not performed according to the plans, Tony’s Concrete’s quasi-estoppel
defense lacks merit.
B. Judicial Admissions
Tony’s Concrete also argues on appeal that the Goads were precluded from
advancing their breach of contract claim “based on the judicial admissions in the
Goads[’] trial pleading as well as the trial record.” It argues that the trial court’s
finding of fact that the “partially constructed house on top of the foundation had to
be demolished and rebuilt” is not supported by the “judicial admission in the
19 Tony’s Concrete notes in its statement of facts that Hernandez testified that the pour site was approved after being inspected by representatives of Spears Construction and Alpha Testing. And it states that Spears Construction and Alpha Testing representatives also supervised the pour. But it does not explain how this fact alone is sufficient to establish its quasi-estoppel defense or to preclude the Goads’ breach of contract claim.
24 Goads’ trial pleading that it was not until the demolition in May of 2019 that any
problem with the foundation was discovered.”
Tony’s Concrete did not argue in the trial court that its estoppel defense was
based on judicial admissions. Rather, Tony’s Concrete argued during closing
argument that its estoppel defense was based on the approval given by Spears
Construction and Alpha Testing, who “approved not only the pour site but they
approved the foundation. The only reason that the foundation was poured was
because they got approval from Spears and from Alpha Testing.” Tony’s Concrete
argued that when the foundation was complete, Spears Construction “approved it
by beginning to construct improvements on it. They never . . . contacted my client
and said, ‘This foundation is not in accordance with plans, get out here and get it
corrected[.]’” Because Tony’s Concrete did not raise the judicial admission
argument in the trial court, he is precluded from raising it now for the first time on
appeal. See $1,943.76 In U.S. Currency v. State, No. 2-07-021-CV, 2009 WL
213438, at *5 (Tex. App.—Fort Worth Jan. 29, 2009, pet. denied) (mem. op.)
(stating appellate court may not address issue that was not raised in the trial court).
Even if Tony’s Concrete had preserved the issue, Tony’s Concrete would
not prevail. Tony’s Concrete argues that the Goads’ petition “judicially admits that
Spears Construction and Alpha Testing were hired with the responsibility to
‘ensure’ that the Goads’ ‘foundation’ was in ‘compliance with the Project[’]s
25 specification and plans.’” If the “trial pleading” to which Tony’s Concrete refers is
the Goads’ Fifth Amended Petition, that petition was superseded by the Seventh
Amended Petition, which was the live pleading at trial. “Statements in a
superseded pleading cannot be considered judicial admissions and must be
introduced into evidence as any other admission before it can be considered as
evidence.” Huff v. Harrell, 941 S.W.2d 230, 239 (Tex. App.—Corpus Christi–
Edinburg 1996, writ denied). “The discarded pleading is still a statement that can
be introduced in evidence as an admission, but it is not conclusive.” Loy v. Harter,
128 S.W.3d 397, 407 (Tex. App.—Texarkana 2004, pet. denied); see also Quick v.
Plastic Sols. of Tex., Inc., 270 S.W.3d 173, 185 (Tex. App.—El Paso 2008, no pet.)
(“Statements contained in superseded pleadings are not conclusive and
indisputable judicial admissions.”) (citing Sosa v. Cent. Power & Light, 909
S.W.2d 893, 895 (Tex. 1995)).
The Goads’ Fifth Amended Petition was not admitted into evidence or even
discussed at trial. Although the trial court took judicial notice of the Fifth
Amended Petition, that is not tantamount to admitting it into evidence. See
Gonzalez v. Gonzalez, 679 S.W.3d 221, 230 (Tex. App.—Houston [1st Dist.] 2023,
no pet.) (holding that while trial court can take “judicial notice of the fact that a
party’s [property] inventory has been filed,” “unless a party’s inventory is admitted
into evidence at trial, it cannot be relied upon as evidence”) (citing Barnard v.
26 Barnard, 133 S.W.3d 782, 788–89 (Tex. App.—Fort Worth 2004, pet. denied))
(“As a general rule, documents not admitted into evidence are not considered by an
appellate court.”). Although a “trial court can take judicial notice of the existence
of certain documents in its records,” it “‘may not take judicial notice of the truth of
factual statements and allegations contained in the pleadings, affidavits, or other
documents in the file.’” Kenny v. Portfolio Recovery Assocs., LLC, 464 S.W.3d
29, 34 (Tex. App.—Houston [1st Dist.] 2015, no pet.) (emphasis in original)
(quoting Guyton v. Monteau, 332 S.W.3d 687, 693 (Tex. App.—Houston [14th
Dist.] 2011, no pet.)). Thus, to the extent that Tony’s Concrete’s estoppel
argument is based on any statements in the Goads’ Fifth Amended Petition, the
argument lacks merit.
With respect to the Seventh Amended Petition, Tony’s Concrete argues that
the trial court’s finding that the “partially constructed house on top of the
foundation had to be demolished and rebuilt” is contrary to the “judicial admission
in the Goads’ trial pleading that it was not until the demolition in May of 2019 that
any problem with the foundation was discovered.” The finding of fact about which
Tony’s Concrete complains states:
But for Tony’s failure to abide by the Plans and reasonable standards of care for a reasonable and prudent company in the foundation construction industry, the foundation would likely not have been excessively cracked and weakened to the point that the foundation, the plumbing encased in the foundation, and the partially constructed house on top of the foundation had to be demolished and rebuilt. 27 It is unclear how this finding from the trial court, or the judicial admission in the
Seventh Amended Petition which purportedly contradicts this finding, precludes
the Goads’ breach of contract claim. Tony’s Concrete never connects the dots in
this respect. In any event, we are not persuaded by the argument.
Notwithstanding the allegation in the Goads’ Seventh Amended Petition,
and contrary to Tony’s Concrete’s assertion, there is evidence in the record that the
foundation problems caused the Goads to order the demolition.20 Nicholas testified
that the Goads contacted him prior to the demolition. He reviewed the floor plans,
the foundation plans, the metal building plans, a geotechnical report, and he
walked the property before the demolition. He testified that he had “several
concerns” with “the framing and the foundation.” He testified about “numerous
cracks in the foundation,” exposed rebar, erosion around the outside of the slab,
and “what looked like soft leftover fill material[.]” Nicholas was concerned about
“the number and the size of the cracks that had already started forming at the top of
the foundation,” the material the foundation was sitting on, which was “kind of
20 Ordinarily, facts that are alleged or admitted in a party’s live pleadings are accepted as true and are binding on the pleader. Bernal v. Chavez, 198 S.W.3d 15, 19 (Tex. App.—El Paso 2006, no pet.) (citing Hous. First Am. Savings v. Musick, 650 S.W.2d 764, 767 (Tex. 1983)). However, if evidence is introduced that contravenes the admission, the opposing party must object to the introduction of the evidence, or the live pleading will not be treated as a binding judicial admission. Id. at 769. Tony’s Concrete did not object to any testimony elicited from the Goads with respect to the reason for the demolition.
28 soft,” the reinforcing in the slab, which “looked like it was kind of lower than it . . .
should have been, not really in the center of the slab,” the thickness of the
concrete, the depth of the interior beams, erosion in the corner of the foundation
and under the back patio, and the control joints that “were way too far apart.”21
Shelly Goad also testified that the Goads opted to demolish the foundation in
part because they found it “was not as thick as it should be[.]” The Goads also
opted to demolish the foundation because it was less expensive than the repairs
would have been, and because the repairs would have been a “Band-Aid” for the
foundation problems. There is thus evidence in the record supporting the trial
court’s finding that “the plumbing encased in the foundation, and the partially
constructed house on top of the foundation had to be demolished and rebuilt” as a
result of Tony’s Concrete’s failure in pouring the foundation.
Tony’s Concrete last complains about a single conclusion of law, in which
the trial court concluded that:
Tony’s breached [its] contract [with Spears Construction] by failing to follow the Plans and the applicable codes (Residential Building Code, American Concrete Institute, and Portland Cement Association). These deficiencies proximately caused excessive cracking and a weakened foundation, ultimately requiring the partially constructed house to be demolished.
21 Tony’s Concrete erroneously states in its brief that Nicholas “outlined all the problems with the partially constructed house without ever mentioning the foundation.” On the contrary, as set forth above, Nicholas testified as to several concerns he had about the foundation prior to demolition of the partially constructed house.
29 Tony’s Concrete argues that the conclusion “is defeated by estoppel based on
judicial admissions in the Goads[’] trial pleading as well as the trial record,” but it
does not identify the pleading or any testimony in support of its argument. The
argument is thus waived. See Turner v. Turner, No. 14-00-00175-CV, 2001 WL
1098068, at *2 (Tex. App.—Houston [14th Dist.] Sept. 20, 2001, no pet.) (mem.
op.) (“It is not this court’s responsibility to sift the record to find error or evidence
in support of appellant’s argument.”) (citations omitted); see also TEX. R. APP. P.
38.1(h) (“The brief must contain a clear and concise argument for the contentions
made, with appropriate citations to authorities and to the record.”).
Even if Tony’s Concrete had not waived the issue, it would not prevail.
Tony’s Concrete’s sole witness, Hernandez, conceded during trial that the
foundation was not built according to the plans, stating, “I believe after they tore
[the foundation] out is when I learned that it wasn’t to—accordance to the plans.”
Given the testimony and exhibits admitted at trial, we conclude Tony’s
Concrete’s estoppel argument lacks merit and that the trial court properly found in
favor of the Goads on their breach of contract claim. We overrule Tony’s
Concrete’s first issue.
Negligence
The Goads asserted a breach of contract claim and a negligence claim
against Tony’s Concrete. Tony’s Concrete argues that the economic loss rule bars 30 the Goads’ negligence claim because “[a]ll of the damages alleged for the
negligence claim are economic. The Goads are not alleging a negligence claim for
personal injury or for property damage independent of the home which is the
subject of the contract at issue.”
The Goads respond that the economic loss rule does not apply because the
contract between Tony’s Concrete and Spears Construction concerned
“construction of the foundation, which did not encompass the plumbing or the
vertical construction on top of the foundation, both of which were damaged by
[Tony Concrete’s] acts and omissions.” In any event, they argue that even if their
negligence claim were barred by the economic loss rule, the trial court’s judgment
should be affirmed because their claim for breach of contract supports the trial
court’s judgment and the award of damages in their favor.
The economic loss doctrine “generally precludes recovery in tort for
economic losses resulting from a party’s failure to perform under a contract when
the harm consists only of the economic loss of a contractual expectancy.”
Chapman Custom Homes, Inc. v. Dall. Plumbing Co., 445 S.W.3d 716, 718 (Tex.
2014). Courts have defined “economic loss” as “‘damages for inadequate value,
costs of repair and replacement of the defective product, or consequent loss of
profits—without any claim of personal injury or damage to other property.’” Bass
v. City of Dall., 34 S.W.3d 1, 9 (Tex. App.—Amarillo 2000, no pet.) (quoting
31 Thomson v. Espey Huston & Assocs., Inc., 899 S.W.2d 415, 421 (Tex. App.—
Austin 1995, no writ)). If a plaintiff’s injury stems from “a failure to fulfill a
contractual obligation,” the economic loss rule “bars recovery of economic losses
in tort.” Gurka v. Trevino, No. 01-21-00039-CV, 2022 WL 3588739, at *4 (Tex.
App.—Houston [1st Dist.] Aug. 23, 2022, no pet.) (citing Eagle Oil & Gas Co. v.
Shale Expl., LLC, 549 S.W.3d 256, 268 (Tex. App.—Houston [1st Dist.] 2018, pet.
dism’d)). But the rule does not bar all tort claims that “arise out of a contractual
setting.” Id. (citing Chapman, 445 S.W.3d at 718).22
The trial court entered a final judgment in favor of the Goads awarding them
$339,020.85 for remedial damages, $59,500.00 for loss of use damages,
$14,166.67 for mitigation damages, and pre-judgment interest, costs of court, and
post-judgment interest. [3 CR 1464-45] The final judgment does not specify
whether the award of damages is based on the Goads’ contract claim or the
negligence claim.
We have already concluded that the Goads’ breach of contract claim was not
precluded by estoppel. And Tony’s Concrete did not challenge the sufficiency of
the evidence supporting the trial court’s award of damages as it concerns the
Goads’ breach of contract claim. Thus, because we have affirmed the trial court’s
22 The applicability of the economic loss rule is a case-specific determination. Barzoukas v. Found. Design, Ltd., 363 S.W.3d 829, 838 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (“The economic loss rule’s reach depends on specific circumstances.”). 32 final judgment as it concerns the Goads’ breach of contract claim and the final
judgment damages could have been awarded for that claim, we need not decide
whether the Goads’ negligence claim is barred by the economic loss rule. While
we are not bound by the trial court’s conclusions of law, we will uphold them if the
judgment can be sustained on any legal theory supported by the evidence. See
Lockheart Chapel, Inc. v. Katim Endeavors, Inc., No. 02-21-00405-CV, 2022 WL
3456834, at *2 (Tex. App.—Fort Worth Aug. 18, 2022, no pet.) (mem. op.) (citing
Wyde, 566 S.W.3d at 894); Whitaker v. Lahmon, 873 S.W.2d 770, 771 (Tex.
App.—Waco 1994, no writ) (“Our duty is to affirm the judgment of the trial court
if it was proper under any legal theory.”) (citing Birdo v. Ament, 814 S.W.2d 808,
810 (Tex. App.—Waco 1991, writ denied)); Sixty-Seven Properties v. Cutsinger
Elec. Contractors, Inc., 536 S.W.2d 268, 271 (Tex. App.—Corpus Christi 1976, no
writ) (“It is a well settled rule of law in this State that an appellate court will affirm
the judgment of a trial court on any legal theory of law applicable to the case that
has support in the evidence. . . .”).
We overrule Tony’s Concrete’s second issue.
Conclusion
33 Veronica Rivas-Molloy Justice
Panel consists of Justices Hightower, Rivas-Molloy, and Farris.