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Charles Griffin Custom Ready-Built Homes, Inc. v. Dieringer

Court of Appeals of Texas, Seventh District, Amarillo

May 29, 2018


          On Appeal from the 237th District Court Lubbock County, Texas Trial Court No. 2014-511, 371; Honorable Les Hatch, Presiding

          Before QUINN, C.J., and CAMPBELL and PIRTLE, JJ.



         This appeal arises from a dispute between Appellant, Charles Griffin Custom Ready-Built Homes, Inc. (hereinafter "Griffin"), and Appellees, Brandon Dieringer and Laura Dieringer, concerning a contract whereby Griffin agreed to construct and deliver to the Dieringers a ready-built home. Griffin originally filed suit alleging the Dieringers failed to pay certain contractual sums due and owing and the Dieringers asserted counterclaims for breach of contract and for claims under the Texas Deceptive Trade Practices Act based on negligent misrepresentation, breach of an implied warranty of habitability, and breach of an implied warranty of good and workmanlike construction. Following a bench trial, the trial court entered a judgment in favor of Griffin for $45, 759.21.

         Asserting two issues, Griffin maintains the trial court erred by not awarding it recovery of (1) its reasonable and necessary attorney's fees and (2) an "occupancy fee" specified in the contract. By a cross-appeal, the Dieringers contend they were the "prevailing party" and the trial court erred in not awarding them recovery of attorney's fees and costs. We affirm.


         The Dieringers contracted with Griffin to purchase a custom, ready-built home that would be partially constructed at Griffin's site in Lubbock County and then transported to the Dieringers property in Glasscock County, Texas. The contract provided, in relevant part, that the Dieringers would "close" on the agreement within ten days after the house was completed on location and that they would not move into the house until the balance was paid in full. The contract also provided that the Dieringers would pay Griffin $40.00 per day for any period of occupancy prior to final payment. The contract further provided that in the event of non-payment, Griffin would be entitled to recovery of interest at the rate of 12 percent on any amounts owed, together with reimbursement of "any legal expenses needed to enforce payment of the contract in full after ten days."

         Work on the home at Griffin's site was completed in November 2013. At the time, the Dieringers performed a walk-through of the home and tendered the progress payment due on "completion on the Seller's site." The home was then delivered and assembly of the two pre-constructed pieces began on approximately November 22, 2013. Subsequent to assembly of the home, Griffin subcontractors made numerous trips to the property to complete the construction of porches and final touch-up work. When the work was finally complete, Lyndall Hurst, Griffin's owner, met with the Dieringers and agreed on the final amount owed. Subsequent to that agreement, the Dieringers moved into the home but did not make the final payment. Griffin filed suit for breach of contract on May 9, 2014, and the Dieringers subsequently filed their counterclaims. The cause proceeded to a bench trial on May 9, 2016.

         Hurst testified at trial that there were no structural, foundational, or non-cosmetic defects in the home, and he claimed that all work and services Griffin agreed to provide had been completely performed. Specifically, he testified that he had fixed everything the Dieringers had brought to his attention and he was unaware of any additional concerns or problems. In contrast, the Dieringers maintained that there were additional items that needed repair, including roof repairs, rebricking, door repairs, texture and paint repairs, and carpet repairs. They also maintained that certain final inspections were lacking. Upon closing, the Dieringers nonsuited their causes of action against Griffin for negligent misrepresentation and for all claims under the Texas Deceptive Trade Practices Act.

         On July 1, 2016, the trial court entered judgment that Griffin recover from the Dieringers the sum of $45, 759.21. Both parties subsequently requested findings of fact and conclusions of law. In its Findings of Fact and Conclusions of Law, the trial court found that both parties had breached the contract and, as such, neither party was a "prevailing party" for purposes of an award of attorney's fees. The trial court further concluded that Griffin's breach was not material, that it had substantially performed the terms of the contract, and that it was entitled to a judgment in the sum of $45, 759.27, [1]after all offsets, payments, and credits. The trial court also found that Griffin was not entitled to recover the contractually agreed-upon occupancy fees because the Dieringers were excused from performance by Griffin's demand for payment in full without credit for reasonable and necessary repairs.

         On appeal, Griffin contends the trial court erred in not awarding it recovery of contractual occupancy fees, its reasonable and necessary attorney's fees, and costs. By way of cross-appeal, the Dieringers contend the trial court erred by entering a judgment in favor of Griffin because it never pled nor proved a claim based on substantial performance and the issue was not tried by consent. Alternatively, the Dieringers contend the evidence is legally and factually insufficient to establish the required elements of substantial performance.

         Substantial Performance

         When a contractor has substantially performed a building contract, he is entitled to recover the full contract price less the cost of remedying non-material defects that are remedial. Vance v. My Apartment Steak House, 677 S.W.2d 480, 481 (Tex. 1984) (citing Atkinson v. Jackson Bros., 270 S.W. 848, 850 (Tex. Comm'n App. 1925)). In those instances where a contract has not been fully performed, substantial performance is regarded as a condition precedent to the right to sue on that contract. Atkinson, 270 S.W. at 850; RAJ Partners, Ltd. v. Darco Constr. Corp., 217 S.W.3d 638, 643 (Tex. App.- Amarillo 2006, no pet.); Carr v. Norstok Bldg. Systems, Inc., 767 S.W.2d 936, 940 (Tex. App.-Beaumont 1986, no writ). Usually, the doctrine of substantial performance comes into play when both parties to a construction contract are alleged to have breached the contract in question-the contractor with respect to minor (non-material) defects, and the owner with respect to final payment of sums due.

         In Vance, the Texas Supreme Court acknowledged Atkinson as correctly stating that "the doctrine of substantial performance is an equitable doctrine that was adopted to allow a contractor who has substantially completed a construction contract to sue on the contract rather than being relegated to his cause of action for quantum meruit." Vance, 677 S.W.2d at 482. By definition, this doctrine recognizes that the contractor has not totally fulfilled his obligations under the construction contract and is, therefore, technically in breach of contract. Id. In such cases, to allow for this lack of full performance, "the amount recoverable by the contractor is the contract price, less the reasonable cost of remedying the defects or omissions in such a way as to make the building conform to the contract." ...

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