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Schear Hampton Drywall, LLC v. Founders Commercial, Ltd.

Court of Appeals of Texas, Fourteenth District

August 29, 2019


          On Appeal from the 61st District Court Harris County, Texas Trial Court Cause No. 2015-22140

          Panel consists of Justices Christopher, Bourliot, and Spain.



         This dispute involves the foreclosure of a mechanic's lien.[1] Schear Hampton Drywall, LLC sued to foreclose on its lien against Founders Commercial Ltd. and challenges in three issues the trial court's reduction of the amount of Schear Hampton's lien and failure to award attorney's fees to Schear Hampton. We affirm.


         Founders entered into a general contract with Construction Supervisors, Inc., for the construction of a senior living residential project in Houston, Texas known as "The Abbey." Construction Supervisors entered a subcontract with Target Masonry to complete brick and stucco work on The Abbey. Target Masonry subsequently walked off the job. Construction Supervisors then hired Schear Hampton to complete the stucco work. The subcontract between Construction Supervisors and Schear Hampton called for Schear Hampton to "[f]urnish and install [s]tucco in compliance with plans and specifications for a complete turnkey job" for the sum of $235, 000. According to Schear Hampton, the contract price was increased by $155, 967 pursuant to change orders approved by Construction Supervisors.

         Midway into construction on The Abbey, Construction Supervisors notified Founders that it could not comply with the general contract because of financial problems. Founders agreed to pay the subcontractors directly and let Construction Supervisors manage the project.

         Schear Hampton served Founders with a "Notice to Owner and Prime Contractor of Unpaid Claim for Materials and/or Labor Furnished." In the notice, Schear Hampton claimed that under its subcontract with Construction Supervisors, there was an unpaid balance of $152, 173.60 for "materials and/or labor during the months of . . . October [and] September 2014." Schear Hampton described its services as "[s]tucco-labor and material." Schear Hampton later filed an "Amended Affidavit for Mechanic's and Materialman's Lien" in the amount of $152, 173.60 and then filed this lawsuit against Founders and Construction Supervisors, seeking foreclosure of the lien.

         Founders answered and asserted that Schear Hampton's lien claim should be offset by "damages caused by Schear [Hampton's] breach of its subcontract with Construction Supervisors," "the cost to correct errors and omissions by Schear [Hampton] in the performance of its subcontract," and "the amount necessary to complete the work Schear [Hampton] agreed to perform in its subcontract." Founders filed a counterclaim for negligence and breach of contract in connection with Schear Hampton's performance under the subcontract. Founders also sought a declaration that Schear Hampton "has been paid the full amount to which it is entitled for its services rendered and materials supplied."

         After a bench trial, the trial court rendered judgment that Schear Hampton's lien was partially valid "in the amount of $36, 678.32" and that Founders was entitled to an offset for $15, 000 in damages on its counterclaim. The trial court awarded Schear Hampton damages of $21, 678.32 against Founders and awarded Founders that amount in a default judgment against Construction Supervisors.[2] The trial court declared that the lien is "null and void and of no force and effect . . . to the extent it exceeds the amount of $21, 678.32." The trial court also ordered that if the judgment for Schear Hampton was not "paid when final," then Schear Hampton could "conduct a foreclosure sale in compliance with the provisions of the Texas Property Code, with respect to the real property identified" in the lien.


         Schear Hampton challenges the judgment in three issues, contending (1) the trial court's reduction of the lien and offset for Founders' damages are not supported by legally and factually sufficient evidence; (2) the trial court erred in denying Schear Hampton's request for attorney's fees; and (3) the trial court failed to order a foreclosure in compliance with the Property Code.

         I. Is the judgment supported by legally and factually sufficient evidence?

         Schear Hampton in its second issue challenges the sufficiency of the evidence in support of the trial court's findings that Schear Hampton was owed less than the amount alleged in its lien and that the lien amount should be offset by the damages awarded to Founders.

         We review the trial court's decision for legal and factual sufficiency of the evidence using the same standards applied in reviewing the evidence supporting a jury's finding. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). We review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit favorable evidence if a reasonable factfinder could and disregard contrary evidence unless a reasonable factfinder could not. Id. at 827.

         We sustain a legal sufficiency or "no evidence" challenge only when (1) the record discloses a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. Marathon Corp. v. Pitzner, 106 S.W.3d 724, 727 (Tex. 2003); Vast Constr., LLC v. CTC Contractors, LLC, 526 S.W.3d 709, 719 (Tex. App.-Houston [14th Dist.] 2017, no pet.). A party attacking the legal sufficiency of an adverse finding on an issue on which it had the burden of proof must show that the evidence conclusively establishes all vital facts in support of the issue. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001). When a party challenges the legal sufficiency of the evidence on a finding on which it did not bear the burden of proof, the party must show that no evidence supports the finding. Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 215 (Tex. 2011); Sloane v. Goldberg B'Nai B'Rith Towers, No. 14-17-00557-CV, 2019 WL 2000484, at *9 (Tex. App.-Houston [14th Dist.] May 7, 2019, no pet. h.).

         In reviewing factual sufficiency, we examine the entire record, considering both the evidence in favor of and contrary to the challenged findings. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998); 2900 Smith, Ltd. v. Constellation NewEnergy, Inc., 301 S.W.3d 741, 746 (Tex. App.-Houston [14th Dist.] 2009, no pet.). When a party attacks the factual sufficiency of an adverse finding on which it bore the burden of proof, it must establish that the finding is against the great weight and preponderance of the evidence. Dow Chem. Co., 46 S.W.3d at 242; Burton v. Prince, 577 S.W.3d 280, 285 (Tex. App.-Houston [14th Dist.] 2019, no pet.). When a party challenges the factual sufficiency of the evidence supporting a finding on which it did not have the burden of proof, we may set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998); Safeco Ins. Co. of Am. v. Clear Vision Windshield Repair, LLC, 564 S.W.3d 913, 919 (Tex. App.-Houston [14th Dist.] 2018, no pet.). If we determine the evidence is factually insufficient, we must detail the evidence relevant to the issue and state in what regard the contrary evidence greatly outweighs the evidence supporting the trial court's judgment; we need not do so when affirming the judgment. Gonzalez v. McAllen Med. Ctr., Inc., 195 S.W.3d 680, 681 (Tex. 2006); 2900 Smith, 301 S.W.3d at 746.

          We apply these standards mindful that the factfinder is the sole judge of the credibility of the witnesses and the weight to be given to their testimony, and we indulge every reasonable inference in support of the factfinder's findings. See City of Keller, 168 S.W.3d at 819, 822; 2900 Smith, 301 S.W.3d at 745. When, as here, there is a complete reporter's record of the trial, the trial court's findings of fact will not be disturbed on appeal if there is any evidence of probative force to support them. See Barrientos v. Nava, 94 S.W.3d 270, 288 (Tex. App.-Houston [14th Dist.] 2002, no pet.). Likewise, incorrect conclusions of law will not require reversal if the controlling facts support a correct legal theory. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).

         A. Evidence of Amount Owed to Schear Hampton

         Schear Hampton challenges the trial court's finding that "[t]he balance owed to [Schear Hampton] for work on The Abbey performed by [Schear Hampton] is $36, 678.32." Schear Hampton argues that it presented the following evidence: (1) it was owed $390, 967 under the subcontract and change orders for completed work; (2) it was paid $238, 793.40; and (3) it was owed a remaining balance of $152, 173.60.

         To prevail on its claim, Schear Hampton had to prove it performed the labor or furnished the materials and the debt is valid. See Crawford Servs., Inc. v. Skillman Int'l. Firm, L.L.C., 444 S.W.3d 265, 268 (Tex. App.-Dallas 2014, pet. dism'd). Schear Hampton thus has the burden of proof on appeal to conclusively establish these elements or that the trial court's finding as to the amount owed is against the great weight and preponderance of the evidence. See Dow Chem. Co., 46 S.W.3d at 241-42; Burton, 577 S.W.3d at 285.

         Founders presented a pay application at trial that was preadmitted by agreement and reflected a balance due to Schear Hampton of $36, 678.32. The pay application was for the period ending April 20, 2015, and referenced the original contract amount of $235, 000, "'Approved' Changes To The Contract" of $131, 783.24, and "Previous Payments" of $330, 104.92. After the previous payments were applied, the pay application reflects the "CURRENT PAYMENT DUE" of $36, 678.32. The document is stamped "ENTERED 15 APR 2015."

         Schear Hampton challenges the pay application on the following grounds: (1) it was dated after Schear Hampton filed its lien and "clearly created for the litigation by Founders"; (2) Founders made a judicial admission in its third party petition that Schear Hampton had an unpaid balance of $152, 173.60 and did not complain that the lien claim was excessive or invalid; and (3) the pay application is not signed and was not authenticated. Founders counters that (1) there is no evidence the document was created for litigation; (2) Founders' pleading referencing the amount of Schear Hampton's lien claim is not a judicial admission; (3) none of the pay applications admitted at trial were signed; and (4) Shear Hampton did not object to the authenticity of the document.

         As to Schear Hampton's first argument, the pay application was presented at trial through John Black, the president of Construction Supervisors. He testified that the pay application was dated April 20, 2015, after all the work was done on The Abbey project. According to him, the pay application was sent from Schear Hampton to Construction Supervisors, and it was initialed by an accountant from Construction Supervisors. According to Founders, the pay application was served in discovery by Construction Supervisors, and the Bates stamp on the document admitted at trial reflects that to be correct. Whether the pay application was created for litigation relates to the weight of the evidence, and we defer to the trial court, as the factfinder and sole judge of the credibility of the evidence, on this issue. See City of Keller, 168 S.W.3d at 819.

         We agree with Founders that the recitation in Founders' petition of the amount of Schear Hampton's lien claim is of no moment and is not a judicial admission that Founders owed Schear Hampton the amount of its lien claim. Similarly, Schear Hampton has not established how the lack of a signature indicates the pay application is no evidence of the amount owed. At most, it raises a fact question about whether the payments referenced in the document were made.[3] We also must defer to the factfinder on this question.

         Black testified that the pay application showed an amount due in April 2015 of $36, 678. We agree with Founders that this is some evidence of the amount owed to Schear Hampton after completion of the work. Schear Hampton argues that the pay application reflects a payment of $92, 000 that is not supported by evidence of "when, how, or by whom" that payment was made. However, the pay application itself is evidence of the ...

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