Appeal from the 122nd District Court Galveston County, Texas
Trial Court Case No. 15-CV-0757
consists of Justices Lloyd, Kelly, and Hightower.
Russell Lloyd, Justice.
Commerce Centers, Inc. is appealing the judgment rendered
against it after a bench trial on J.R. Birdwell Construction
and Restoration's breach of contract claim. On appeal,
UCC argues that the trial court erred by rendering judgment
against UCC on Birdwell's breach of contract claim
because there is no evidence, or insufficient evidence, that
UCC breached the contract and there is no evidence, or
insufficient evidence, to support the trial court's award
of $574, 951 to Birdwell. We affirm the trial court's
2010, UCC purchased an insurance policy from Travelers Lloyds
Insurance Company (Travelers) which covered wind and hail
damage to a commercial building located in Dallas (the
Building). After the Building's roof was damaged by wind
and hail in 2011, UCC hired Birdwell as its general
contractor and put Birdwell "in charge of the
restoration and renovation of damages sustained to [the
Building]" with respect to its roof damages (the
the terms of the Agreement, UCC warranted that it would file
"a claim with [Travelers] for damages [it] believe[d]
were caused by a peril covered by [its] insurance
If the insurance company agrees to pay the claim for damage
to the property, [UCC is] required to have [Birdwell] perform
such work at the prices determined by [Travelers]. [UCC] also
agree[s] to allow [Birdwell] to perform any repairs
ultimately prescribed by [Travelers], which includes the
estimate of repair and [Travelers'] adjuster's
report, as set forth in [Travelers'] claim file. By
reference, said adjuster's report and estimate become
part of this agreement. Material and labor specifications
will follow upon [Travelers'] approval.
further agreed that, as its general contractor, Birdwell
would "obtain any appropriate property insurance damage
estimate and will perform any necessary restoration and/or
renovation work in accordance with [Travelers']
determination" and "work with the Public Adjuster
as a building consultant at no additional cost," if UCC
elected to retain a public adjuster in the process. UCC
agreed that it would "not have another person or entity
perform any of the work included in this claim" and that
all work "will be completed by [Birdwell]."
contract also states that "[t]he dollar amount of the
Agreement is the amount allowed by [UCC's] insurance
carrier for the approved scope of loss, which is equal to the
Replacement Cost Value, plus any supplements in accordance
with the provisions of this Agreement," and UCC
"agrees and accepts that the Public Adjuster's Fee
will be in addition to the costs to repair the
building." The parties also interlineated the following
terms: "Adjusters fee will be absorbed by J.R.
Birdwell" and "Work will be performed for insurance
Birdwell inspected the Building, Birdwell invited Clay
Morrison, a public adjuster at Morrison & Morrison, Inc.
(Morrison), to inspect the Building and provide a second
opinion as to the damage. Morrison inspected the Building in
September 2012 and confirmed that the Building had suffered
extensive hail and wind damage. UCC subsequently hired
Morrison to act as its public adjuster with respect to
pursuing a claim with Travelers for damages to the Building.
January 26, 2013, Morrison notified Travelers of UCC's
claim for damages to the Building. On January 31, 2013,
Morrison and Birdwell attended an inspection of the Building
with Travelers' adjuster, Kevin Brown. Birdwell took core
samples from the Building's roof and shared those samples
with Morrison and Brown. These core samples demonstrated to
Brown, as he later wrote in Travelers' claim file, that
all layers of the Building's roof were saturated and that
the roof, therefore, should be replaced. Brown, who told
Morrison during the inspection that he believed that the roof
was a total loss, also prepared an estimate demonstrating his
determination that the scope of loss was total and prescribed
a complete removal andreplacement of the roof.
removed Brown from the file and appointed a new adjuster to
re-evaluate the loss. Travelers' second adjuster, Kirk
Speary, determined that the roof did not need to be replaced
because it could be repaired by coating it with foam.
Pursuant to Speary's report, Travelers' paid UCC
$235, 503.72 to cover the cost of repairing the roof.
Travelers also paid UCC an additional $1, 000 after it
determined that UCC had previously paid its deductible on a
UCC, and Birdwell agreed that Travelers' prescription to
apply another layer of foam to the Building's roof would
not be a proper repair. According to Morrison, such a repair
would not only be ineffective, it would also violate local
building codes. As a result, Morrison continued working on
the claim for the rest of 2013, seeking to persuade Travelers
to change its position.
UCC and Travelers were unable to resolve their disagreement
over the scope of repair during the adjustment process,
Morrison suggested that UCC meet with an attorney, Jeff
Raizner, to discuss the possibility of filing a lawsuit
against Travelers. According to Birdwell representative David
Conrad, UCC was concerned about the costs associated with the
litigation and had requested a meeting with Birdwell to
discuss the amount of Raizner's attorney's fees and
to determine whether there "would there be enough funds
left for [Birdwell] to reroof [the] building correctly"
if UCC retained Raizner to resolve its dispute with UCC.
testified that he met with UCC's Grace Tsai and Grace
indicated that UCC would not retain Raizner's firm to
pursue a lawsuit against Travelers unless Birdwell would
agree that it would repair the damage to the Building for
whatever amount Travelers paid in insurance proceeds, minus
Morrison's and Raizner's fees. Birdwell agreed to
Grace's requested modification. According to Conrad, he
and Grace agreed that "once [UCC] had received the
paperwork from [Travelers] or the public adjuster showing the
amounts that [Travelers] decided to pay[, ] that [Birdwell]
would roof [the Building] for the remaining amount that was
left over after the attorney and the public adjuster were
Q. All right. And so, did you talk about the economics of the
transaction, how it would work out if there were a lawsuit?
A. Absolutely. We talked about that there's a PA fee. And
now that if she decided to involve the attorney that
there's going to be an attorney fee and that there will
be enough money as long as the insurance company decides to
total the whole roof and pay for the whole roof for us to
roof it with her only paying her deductible.
Q. And did she ask you to agree to that?
A. Yes. We discussed it. Absolutely.
Q. And so, what did you say when she asked you that?
A. I told her that we could do it for the remaining amount.
April or May of 2014, UCC hired Raizner to pursue its dispute
with Travelers. Raizner subsequently sent a demand letter to
Travelers on UCC's behalf demanding $2, 739, 773.12 which
would, among other things, cover the $1, 604, 990.55 needed
to replace the roof.
UCC and Travelers were unable to resolve their dispute, UCC
filed a lawsuit against Travelers in 2014 seeking to recover
the replacement value of the roof and asserting various
causes of action related to Travelers' handling of the
insurance claim. During discovery in that case, UCC obtained
Travelers' claim file, which included Brown's
estimate and his report stating that the roof was a total
loss and it needed to be replaced.
parties mediated their dispute and, as a result of mediation,
Travelers and UCC executed a confidential settlement
agreement on May 27, 2015 in which Travelers agreed to pay
UCC an additional $2.5 million to settle all of UCC's
claims, including its insurance claim, for a total of $2,
UCC received its settlement payment, Conrad had multiple
conversation with UCC's vice president, Joseph Tsai.
about replacing the roof. Conrad testified:
Q. Okay. And what was the purpose of those communications?
A. Well, once they had received the paperwork from the
insurance company or the public adjuster showing the amounts
that the insurance company decided to pay that we would roof
it for the remaining amount that was left over ...