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Summit Global Contractors, Inc. v. Enbridge Energy, Limited Partnership And Enbridge Gathering (North Texas) L.P.

Court of Appeals of Texas, Fourteenth District

December 10, 2019

SUMMIT GLOBAL CONTRACTORS, INC., Appellant
v.
ENBRIDGE ENERGY, LIMITED PARTNERSHIP AND ENBRIDGE GATHERING (NORTH TEXAS) L.P., Appellees

          On Appeal from the 215th District Court Harris County, Texas Trial Court Cause No. 2013-69313

          Panel consists of Chief Justice Frost and Justices Jewell and Bourliot.

          MAJORITY OPINION

          Frances Bourliot Justice.

         This appeal involves two agreements for the fabrication of pipes called "spools" used in the oil and gas industry. Summit Global Contractors, Inc., brought breach of contract and quantum meruit claims against Enbridge Energy, Limited Partnership (Enbridge Energy) and Enbridge Gathering (North Texas) L.P. (Enbridge Gathering). After a bench trial, the trial court found that the Enbridge parties did not breach the contracts and concluded that Summit's quantum meruit claim was precluded by the express contracts. Summit challenges the sufficiency of the evidence in support of the trial court's findings and challenges the trial court's conclusion regarding the quantum meruit claim. We affirm.

         Background

         The Enbridge parties began construction of a natural gas processing plant in Wheeler, Texas. International Alliance Group (IAG) was hired to solicit bids for the project. IAG in turn placed Summit on its potential vendor list. IAG sent Summit a "Pipe Fabrication Inquiry Requisition" form requesting a bid for "pipe spool fabrication." The scope of work was to include "all labor, material (exclud[ing] items furnished by customer), small tools, consumables, storage, overheads, etc." The requisition form also required the fabricator to "quote Lump Sum."

         Summit offered an initial "Lump Sum proposal" including overtime but also specifying that "[a]ny down time will be handled on a Time and Material basis." "Extra Work" was to be billed for materials at cost plus 15% and labor at $85 per hour. Summit's owner, Rich Miller, testified that "lump sum" means a "fixed price" for everything in the scope of the contract, which includes some overtime. "Time and material" pricing, on the other hand, is based on the time expended and the materials used for the job. Miller also specified that payment terms would be "NET 30" from invoice date, meaning payment was due within 30 days of invoicing. The first bid included a price quote from a pipe supplier called Wolseley.

         Summit was awarded the job, and a purchase order was issued that incorporated Summit's bid terms and called for a 20% advanced payment. Enbridge Energy was identified as the party to be billed. Enbridge was also required to provide valves for Summit to use in the spool fabrication.[1] The purchase order stated, "PRICE(S) ARE FIRM" and "PRICING AND AVAILABILITY CONFIRMED WITH Rich Miller."

         By the time Summit was awarded the job, however, Wolseley's price quote-upon which Summit's bid was based-had expired. Two days after the purchase order was issued, Summit issued a $10, 847.54 change order request based on an increase in Wolseley's price. Approximately two weeks later, Summit submitted another change order request for a materials price increase from Wolseley of $87, 113.10, which included the amount of the prior request for $10, 847.54.

         IAG's representative contacted a representative from Wolseley regarding the price increase. The Wolseley representative informed the IAG representative that Wolseley's price quote included in Summit's bid package had been valid for only 15 days and Wolseley received the order past its quote validity date. Following negotiations, Wolseley agreed to decrease its increased price from $87, 113.10 to $44, 365.53. The purchase order was revised to reflect the $44, 365.53 price increase. The record does not reflect which Enbridge entity paid that price increase, but it was paid.

         Summit submitted its second "Lump Sum proposal" on June 12, 2012 "to provide labor, material, equipment & delivery necessary to fabricate Pipe Stools." Payment terms, again, were to be "NET 30 from invoice date," and "[a]ny down time [would] be handled on a Time and Material basis." The proposal included overtime. A second purchase order was issued, again with Enbridge Energy identified as the party to be billed. That purchase order incorporated Summit's terms and again required a 20% advanced payment. The second purchase order was issued on June 22, 2012. Summit submitted an invoice for the advanced payment on the same day. That invoice was paid on July 13, 2012.

         Summit met its first deadline for delivering spools. Summit then fell behind on meeting its remaining delivery deadlines, which were extended. According to Summit, one or both Enbridge parties caused the late deliveries due to delays in making the second advanced payment, negotiating the price decrease with Wolseley, and delivering the valves. Summit contends that it incurred expenses for unexpected overtime and other overhead due to the delays. Summit submitted change order requests after the job was completed totaling $390, 088.95 for the purported delays. Representatives from Summit, the Enbridge parties, and IAG met to discuss the change order requests. The Enbridge parties and IAG concluded the requested change orders were not justifiable.

         Summit filed an affidavit of lien against Enbridge Energy for $390, 088.95 and filed this lawsuit, bringing claims, in relevant part, for breach of contract, quantum meruit, and promissory estoppel. In its petition, Summit alleged that both Enbridge Energy and Enbridge Gathering were parties to the relevant purchase orders. Referring to the Enbridge parties collectively as "Enbridge," Summit alleged that Enbridge breached the contracts. Summit also asserted quantum meruit and other alternative liability claims against both Enbridge parties.

         The Enbridge parties answered and filed counterclaims in which they also referred to themselves collectively as "Enbridge." Although both purchase orders identify Enbridge Energy as the party to be billed, the Enbridge parties did not dispute that both defendants were bound by the purchase orders.[2]

         After a bench trial, the trial court found that (1) as to the first purchase order, it incorporated Summit's bid terms for a lump sum contract; the payment terms were net 30, and the prices were firm; despite this, the price for materials in Summit's bid had increased; and Summit made its first delivery on time but made subsequent deliveries late; (2) as to the second purchase order, it incorporated Summit's bid terms for a lump sum contract; (3) "Enbridge" paid Summit the entire amount due under both purchase orders plus "over $30, 000 that resulted from drawing changes, material price increases, and the like"; and (4) Summit's change order requests totaling $390, 088.95 were "untimely and unsupported." The trial court concluded that (1) the purchase orders were valid and enforceable "lump-sum bid contracts"; (2) "Enbridge" did not breach the contracts; (3) Summit is not entitled to recover damages for breach of contract or attorney's fees; and (4) Summit's quasi contract and promissory estoppel claims are precluded by express contract. The trial court referred to both Enbridge parties collectively as "Enbridge" in its findings and conclusions, as did the parties in their proposed findings and conclusions. The court signed a take nothing judgment in favor of the Enbridge parties.

         Discussion

         In four issues, Summit challenges the legal sufficiency of the evidence in support of the trial court's findings and rulings on Summit's breach of contract and quantum meruit claims. We conclude that Summit has not established as a matter of law that either Enbridge party breached the purchase orders. We further conclude that Summit's quantum meruit claim is precluded by express contract.

         We review a legal sufficiency challenge to court findings using the same standards applied in reviewing the evidence supporting jury findings.[3] Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). We review the evidence in the light most favorable to the challenged findings and indulge every reasonable inference that would support them. 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).

         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. See City of Keller, 168 S.W.3d at 819, 822; 2900 Smith, Ltd. v. Constellation NewEnergy, Inc., 301 S.W.3d 741, 745 (Tex. App.-Houston [14th Dist.] 2009, no pet.). 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.).

         In an appeal from a bench trial, we review a trial court's conclusions of law de novo and will uphold them if the judgment can be sustained on any legal theory supported by the evidence. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Stavinoha v. Stavinoha, 126 S.W.3d 604, 608 (Tex. App.- Houston [14th Dist.] 2004, no pet.). We review the legal conclusions drawn from the facts to determine their correctness. BMC Software, 83 S.W.3d at 794; Stavinoha, 126 S.W.3d at 608. Incorrect conclusions of law do not require reversal if the controlling findings of fact support the judgment under a correct legal theory. BMC Software, 83 S.W.3d at 794; Stavinoha, 126 S.W.3d at 608.

         A trial court should make additional findings of fact only if they have some legal significance to an ultimate issue in the case. Stuckey Diamonds, Inc. v. Harris Cty. Appraisal Dist., 93 S.W.3d 212, 213 (Tex. App.-Houston [14th Dist.] 2002, no pet.); Vickery v. Comm'n for Lawyer Discipline, 5 S.W.3d 241, 255 (Tex. App.-Houston [14th Dist.] 1999, pet. denied). Summit asserts that because it requested additional findings of fact, we cannot presume the trial court relied upon proper legal principles or factual findings to support the challenged findings or conclusions. That is incorrect because Summit requested additional findings that are inconsistent with the trial court's judgment. This court noted long ago that "[t]he primary purpose for findings of fact is to assist the losing party in narrowing his issues on appeal by ascertaining the true basis for the trial court's decision." Vickery, 5 S.W.3d at 255. When a party requests findings contrary to the judgment, as Summit did, the court's failure to make such findings is consistent with its judgment. See Vickery, 5 S.W.3d at 256. The presumption of validity is not rebutted by the court's failure to make findings contrary to its judgment. Id. With these standards in mind, we turn to Summit's issues presented on appeal.

         I. Summit did not conclusively establish that it suffered damages because of Enbridge Energy's purported delays.

         In three issues, Summit contends that Enbridge Energy's purported delays in making advanced payments, negotiating with Wolseley, and providing valves constituted breach of the purchase order agreements and Summit incurred damages because of Enbridge Energy's delays.[4] We conclude that Summit has not shown as a matter of law that it suffered damages because of any delay by Enbridge Energy.[5]

         A. Contract Interpretation Principles

         Summit's argument is based in part on its interpretation of the parties' agreements. Thus, we refer to the general principles concerning contract interpretation. See Port of Houston Auth. of Harris Cty. v. Zachry Constr. Corp., 513 S.W.3d 543, 551 (Tex. App.-Houston [14th Dist.] 2016, pet. denied).

         In construing a contract, we look to the language of the parties' agreement. Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., No. 17-0332, 2019 WL 2668317, at *5 (Tex. June 28, 2019). We construe contracts de novo. Id. We give effect to the parties' agreement as expressed in the instrument. Id. We give the contract its plain, grammatical meaning unless it "would clearly defeat the parties' intentions." Id. If we determine that the contract's language is unambiguous-in other words, it can be given a certain or definite legal meaning or interpretation- we construe it as a matter of law. Id.

         Both parties contend that the agreements are unambiguous, but they disagree on the interpretation. Summit argues that Enbridge Energy was required to make 20% advanced payments at the time the purchase orders were issued. The Enbridge parties argue these payments instead were due within 30 days after invoicing.[6]Summit also argues that it incurred overhead for work outside the scope of the agreements caused by Enbridge Energy's delays. The Enbridge parties argue that any overhead incurred by Summit was included in the parties' "lump sum" agreements.

         Summit asserts that we can look outside the four corners of the parties' agreements to interpret the parties' intentions. The supreme court recently reiterated that our primary duty in construing an unambiguous contract is to ascertain the intent of the parties from the language within the four corners of the instrument. U.S. Shale Energy II, LLC v. Laborde Props., L.P., 551 S.W.3d 148, 151 (Tex. 2018). However, we consider the words used "in light of the facts and circumstances" surrounding the execution of the agreement. Id. We may consider these circumstances only when they inform but not when they contradict the instrument. Id.

         Summit further contends that we can look to the bid proposals to support our interpretation of the purchase orders. We agree that we can consider the bid proposals because they are part of the parties' agreements. Texas's version of the Uniform Commercial Code applies to the sale of goods. See Tex. Bus. & Com. Code § 2.102. When a contract contains a mix of sales and services, the UCC applies if the sale of goods is the "dominant factor" or "essence" of the transaction. Cont'l Casing Corp. v. Siderca Corp., 38 S.W.3d 782, 787 (Tex. App.-Houston [14th Dist.] 2001, no pet.). The spools are without question goods as defined by the UCC. Tex. Bus. & Com. Code § 2.105. The UCC states that a "contract to sell" applies to not only a present sale of goods but also an agreement to sell goods at a future time. Id. § 2.106(a)-(b).

         The purchase orders contemplate the sale of "Goods, and the services related thereto." Although Summit agreed to fabricate the spools, Enbridge ultimately contracted for a finished product. We conclude that the future sale of spools to Enbridge was the dominant factor of the transaction. See ...


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