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Childress Engineering Services, Inc. v. Nationwide Mutual Insurance Co.

Court of Appeals of Texas, Second District, Fort Worth

December 7, 2017

CHILDRESS ENGINEERING SERVICES, INC. APPELLANT
v.
NATIONWIDE MUTUAL INSURANCE COMPANY, AS SUBROGEE TO MERITAGE HOMES OF TEXAS, L.L.C. APPELLEE

         FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY TRIAL COURT NO. 067-264677-13

          PANEL: SUDDERTH, C.J.; GABRIEL and KERR, JJ.

          MEMORANDUM OPINION[1]

          BONNIE SUDDERTH CHIEF JUSTICE

         In three issues, Appellant Childress Engineering Services, Inc. (Childress) appeals the trial court's grant of Appellee Nationwide Mutual Insurance Company's (Nationwide) motion for summary judgment. We reverse.

          Background

         This suit arises from allegations of a faulty foundation constructed in Lindsay Kirk's home. Kirk entered into a contract to purchase a home from Meritage Homes of Texas, L.L.C. (Meritage) in 2008. In the years that followed, Kirk experienced several issues with her new home and in 2011, Kirk sued Meritage for negligence, breach of contract, breach of warranty, violations of the Deceptive Trade Practices Act, and fraud, alleging in part that the foundation was not properly designed or built. During the Kirk lawsuit, Meritage requested that Childress, who designed the foundation, and Tealstone Concrete, Inc., who built the foundation, provide it a defense and indemnify it against Kirk's claims. Both subcontractors declined to do so. In 2012, Kirk and Meritage settled that lawsuit with an agreement that Meritage would pay $150, 000 to Kirk.

         Nationwide, as subrogee to Meritage, filed the instant suit against Childress and Tealstone in March 2013 seeking to recover the $150, 000 it had paid to Kirk. Tealstone quickly settled with Nationwide, agreed to pay $100, 000, and was dismissed from the suit in August 2014. In its petition, Nationwide asserted that Meritage and Childress entered into a contract in October 2002 that called for Childress to provide the design and engineering specifications for homes that Meritage was building in Dallas and Fort Worth and that the contract remained in force through the events giving rise to the instant suit.

         In July 2014, Nationwide filed its first motion for traditional summary judgment in this suit. Attached to the motion was an affidavit by Bradley M. Gordon, an attorney who initially defended Meritage in the Kirk lawsuit. In his affidavit, Gordon asserted that Childress provided the engineering services for the Kirk home pursuant to an October 29, 2002 contract that he attached to his affidavit (the October 2002 Contract). While the October 2002 Contract identified Childress as the subcontractor, it identified "Legacy/Monterey Homes, L.P. dba Legacy Homes and MTH Homes-Texas, L.P., DBA Hammonds Homes" (Legacy)-not Meritage-as the contractor. It also provided that the scope of work would be defined in an "exhibit A, " but exhibit A was not included in the summary judgment evidence. Gordon's affidavit did not explain any link between Legacy and Meritage, nor did it explain the absence of exhibit A.

         Childress objected to Nationwide's summary judgment evidence, including Gordon's affidavit and his attachment of the October 2002 Contract. Childress lodged a hearsay objection and argued that Gordon "[did] not properly introduce the Subcontract[] into evidence, " and that "Gordon [was] not shown to be the custodian of records of the Subcontract between Meritage Homes of Texas, LLC and Childress" and, therefore, "there [was] no basis for Gordon to testify that true and correct copies of the Subcontracts" were attached to the affidavit. The trial court sustained this objection and granted Childress's motion to strike the October 2002 Contract.

         During the time that Nationwide's first motion for summary judgment was pending, Childress had filed a motion to dismiss Nationwide's claims in which it argued that Nationwide had failed to comply with the requirements of section 150.002 of the civil practice and remedies code by failing to file a certificate of merit. See Tex. Civ. Prac. & Rem. Code Ann. § 150.002 (West 2011) (requiring the filing of a certificate of merit with the complaint in an action for damages arising out of the provision of professional services by a licensed or registered professional). The trial court denied Childress's motion to dismiss, and Childress appealed the trial court's denial to this court in an interlocutory appeal. This court affirmed the trial court's denial in February 2015 and remanded the case to the trial court for further proceedings. See Childress Eng'g Servs., Inc. v. Nationwide Mut. Ins. Co., 456 S.W.3d 725, 730 (Tex. App.-Fort Worth 2015, no pet.).

         Upon remand, Nationwide filed a new motion for partial summary judgment in December 2015 and attached copies of the claims made by Kirk in her petition, amended petition, statement of claims, and amended statement of claims in the Kirk lawsuit; the same affidavit by Gordon that it had filed with its 2014 summary judgment motion, referring to Legacy as the contractor but without the October 2002 Contract attached; and an affidavit of Gregory Ave, an attorney who had represented Nationwide in its defense of Meritage in the Kirk lawsuit. This time, Nationwide attached the October 2002 Contract as its own exhibit and declared in the motion that it was "[a] true and correct copy of Meritage's subcontractor agreement with Childress." Again, the contract did not identify Meritage as a party to the contract, nor did it include exhibit A. And, again, no explanation was provided either in the motion or the attached documents and affidavits as to the connection, if any, between Legacy and Meritage or the absence of exhibit A.

          Less than a week later, Nationwide filed a supplemental traditional motion for partial summary judgment. In its supplemental motion, Nationwide provided evidence of the settlement between Meritage and Kirk in 2011, attaching a second affidavit by Gordon. Neither the motion nor the affidavit addressed the discrepancies in the October 2002 Contract.

         Childress filed objections to the evidence attached to Nationwide's initial and supplemental motions for traditional summary judgment, including the following objection to the October 2002 Contract:

Exhibit E purports to be a copy of a Subcontract Agreement between Legacy/Monterey Homes, L.P., dba Legacy Homes and MTH Homes-Texas, L.P., dba Hammonds Homes and Childress Engineering. Defendant objects to and moves to strike Exhibit E because Plaintiff does not properly introduce the Subcontract into evidence and therefore it constitutes hearsay pursuant to Texas Rule of Evidence ...

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