Daneshjou Company Inc. and M. B. "Benny" Daneshjou v. Sandra Bullock John W. Bullock, Trustee of Band-Aid Trust David Shrum Loma Excavation, Inc. Michael Hood Felipe Hernandez LOC Consultants Austin Fine Floors Austin Air Conditioning Robert Bellamy Designs DMS Trading

Citation: Not availableDocket: 03-05-00106-CV

Court: Court of Appeals of Texas; March 27, 2009; Texas; State Appellate Court

Original Court Document: View Document

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Daneshjou Company, Inc. and M. B. Benny Daneshjou appeal a district court judgment related to the design and construction of a residence for Sandra Bullock and John W. Bullock, trustee of Band-Aid Trust. The appellants have settled their claims with the Bullocks and dismissed that portion of the appeal but continue to challenge the court's decisions regarding claims against construction superintendent David V. Shrum and various subcontractors. They assert errors including the court's dismissal of certain subcontractor claims, reliance on jury responsibility assignments, and a directed verdict on their Texas Deceptive Trade Practices Act (DTPA) and common-law indemnity claims against Shrum. Additionally, they argue that the evidence does not support the jury's finding that Shrum's breach of contract was excused and contest his entitlement to attorneys' fees.

The factual background includes the appellants designing and constructing a house and grounds for the Bullocks, with Shrum serving as superintendent. The project faced structural and drainage problems, and work was halted in March 2000. DCI sued the Bullocks for breach of contract, while the Bullocks counterclaimed against DCI and Daneshjou for various alleged breaches and fraud. The appellants also filed third-party claims against multiple subcontractors for deficient work. The district court granted several subcontractors' motions for dismissal or summary judgment, leading to severed cases that were appealed separately. The court's assessment of attorneys' fees against Daneshjou individually was reversed, while the rest of the judgment was affirmed.

The jury determined the allocation of responsibility for damages among appellants, Shrum, the Bullocks, and various subcontractors involved in the River Hills Project. The findings against the appellants regarding damages to the Bullocks are uncontested due to a post-trial settlement. Specifically, the jury found that Shrum breached the Independent Contractor Management Agreement (ICMA) by failing to manage on-site operations but excused his failure to comply with the ICMA. It also found that DCI did not indemnify Shrum for claims not attributed to his fault. The jury identified that subcontractors King's Contracting, Wilberto Montiel (d/b/a Will Construction), and Raymond Sandoval/Ultimate Roofing, Inc./Roof Tech Systems breached warranties, contributing to the Bullocks' damages. Conversely, Loma Excavation, Inc., Michael A. Hood, Felipe Hernandez, LOC Consultants, and Austin Fine Floors did not breach any warranties or contracts. The jury apportioned damages as follows: DCI (80%), Daneshjou (17%), King's Contracting, Montiel, and Sandoval (1% each), and Shrum, Loma, Hood, Hernandez, LOC, and Austin Fine Floors (0% each). Shrum's reasonable attorney's fees were determined to be $133,407.39.

Appellants raised several objections, including claims of errors in admitting evidence regarding dismissed subcontractors, directing a verdict for Shrum, and refusing to submit jury questions on DTPA violations and common-law indemnity. They argued that the jury’s finding excusing Shrum's breach was unsupported by sufficient evidence and contested the trial court's judgment regarding the liability of Shrum and certain subcontractors. Additionally, gaps in the record were noted, with several documents related to dismissals and summary judgments missing, which the appellants claimed were not filed with the trial court. The appellants are responsible for presenting the record for appeal, and any omitted material is presumed to support the trial court's judgment.

Appellants' claims against LOC Consultants and Loma Excavation are not part of the current appeal due to prior severances. Claims against Loma were severed into cause number GN-403033 on August 26, 2004, and those against LOC into cause number GN-403689 on October 6, 2004. The notice of appeal in cause number GN-101929, filed after these severances, did not include any rulings related to the severed claims. 

Additionally, claims against Eddie Tausch and Pfister Plumbing were dismissed for untimely service of citation. The appellate record lacks motions to dismiss and any orders granting them, with only a final judgment denying relief remaining. While Pfister submitted a brief, Tausch did not. Appellants argue that the dismissal of claims against Pfister was unfair and assert that their efforts to serve Tausch justify reversing the dismissal. However, the record does not support their claim of diligence, as they failed to provide evidence or details of service timelines in their motions or appeal. 

The court previously dismissed claims against another defendant, G. P. Equipment Co., for similar reasons, reinforcing the trial court's discretion in these matters. The record does not provide a basis to reverse the dismissals against Tausch or Pfister, as appellants made no specific allegations of error regarding Pfister and only offered bare assertions without supporting evidence.

Pfister was not served in a timely manner, and there is no basis to reverse the dismissal of claims against him. The appellants argue that the trial court erred by granting summary judgments against several defendants, including Loma and Perfect Lawns, but only provide evidence regarding Loma and Perfect Lawns. Their assertion regarding the other defendants lacks citation to the record, waiving any error claim. Claims against Loma are not part of this appeal. The court reviews summary judgments de novo, placing the burden on the non-moving party to raise a material fact issue. The appellants claimed that Perfect Lawns, along with Loma, was responsible for drainage issues. However, expert reports, including that of June Melton, attribute the problems to the architect's failure to consult a civil engineer, not to Perfect Lawns. Larry Parker’s affidavit mentions Perfect Lawns coordinating with Robert Bellamy but does not establish any negligence or wrongdoing on their part. The appellants referenced a deposition from Loma's owner, but it was not included in their pleadings. Therefore, the court affirmed the summary judgment for Perfect Lawns, as well as for the other defendants: Robert Bellamy Designs, QSI Custom Cabinets, Inc., DMS Trading, Austin Air Conditioning, and Pfister Plumbing.

The trial involved extensive testimony and over a thousand exhibits, primarily addressing damages from poor construction and billing disputes. There was consensus on the need for additional work, but disagreements arose regarding the source, nature, and costs of the issues. Appellants argued that problems stemmed from indecision, a rushed schedule, interference, and inadequate supervision by Shrum, as well as poor subcontractor work. Conversely, some evidence indicated that the Bullocks were decisive and that appellants mismanaged resources, leading to a rushed timeline, with Daneshjou's design identified as a critical cause of structural issues.

Appellants suggested that minor, well-planned repairs could resolve the project’s defects at a low cost, while other testimonies warned of potential roof collapse, advocating for full roof replacement or even demolition of the main house. Disputes over billing included what constituted costs under the cost-plus contract and the agreement on multiplier rates for overhead. Appellants maintained their billing practices were appropriate, with the Bullocks' consent, while the Bullocks contested this.

Appellants raised multiple issues regarding evidentiary rulings, the jury charge, and the verdict, arguing that evidence of indemnity agreements should have been admitted and that the court improperly included certain entities in the responsibility assessment. Additionally, they challenged the directed verdict for Shrum concerning indemnity claims and alleged violations of the DTPA, asserting that the jury’s findings on contract breaches and responsibility allocations were unsupported. They also disputed Shrum's entitlement to attorneys' fees. The court upheld the summary judgments regarding indemnity claims, reiterating that indemnity agreements require fair notice to be enforceable.

The fair notice requirement consists of two components: the express negligence doctrine and the conspicuousness requirement. The express negligence doctrine necessitates that an intent to indemnify a party for its own negligence must be clearly articulated within the document itself. This requirement is a matter of contract interpretation and thus a legal question for the court. The conspicuousness requirement mandates that the indemnity provision must be prominent enough to attract a reasonable person's attention, also a legal determination for the court. If either requirement is unmet, the indemnity agreement is unenforceable unless both parties have actual knowledge of its terms.

In this case, the appellants lacked valid indemnity agreements with the appellees, as there was no written contract including an indemnity clause. The indemnity language referenced by the appellants was found on a check for payment, not as part of a formal contract, and was printed inconspicuously among other payment-related terms in small print. There was no evidence of additional consideration given for the alleged indemnity agreement, making it unenforceable.

The court supported summary judgments on these claims, ruling that the appellants could not present evidence to the jury concerning their indemnity claims that had been resolved legally. The court also dismissed various subcontractors before trial, which the appellants contested, arguing that this dismissal and the subsequent admission of evidence regarding the subcontractors' work unfairly prejudiced them. The trial court dismissed the claims after the Bullocks settled their claims against the subcontractors, and it was clarified that no defendant has a right of contribution from a settling party.

The appellants argued that the absence of the subcontractors at trial affected the jury's assessment of responsibility, leading to their disproportionate share of liability. Although the court found no error in the motions for summary judgment and dismissal, the admission of the dismissed parties' evidence remained a separate issue, reviewed for abuse of discretion. The court must uphold any evidentiary ruling if a legitimate basis exists in the record.

Relevant evidence may be excluded if its probative value is significantly outweighed by the risk of unfair prejudice. Appellants argue that evidence of absent third parties' conduct was prejudicial because their responsibility could not be determined in their absence. However, the law allows for the assessment of responsibility concerning settling persons and third parties, and the trier of fact can assign percentages of responsibility in negligence cases, including those involving defective products and legal violations. A 'settling person' is defined as someone who has compensated a claimant regarding potential liability for harm. 

The appellants could have requested a jury question on the responsibility of subcontractors who settled with the Bullocks. A question regarding Loma's responsibility was submitted despite Loma's claims being resolved before the trial. Evidence of subcontractors' allegedly poor work was relevant to the claims and could have helped the appellants by potentially shifting more responsibility to those subcontractors. The quality of work was central to determining whether the appellants constructed the house in accordance with their contractual obligations and warranties.

The court found no unfair prejudice in admitting this evidence, even with the absence of the subcontractor responsible for specific tasks. Appellants did not demonstrate error in admitting evidence of the severed subcontractors' work. Additionally, appellants contested the trial court's decision to allow the jury to assign responsibility to LOC, a settling party, and argued that including LOC in the jury charge was improper. Although LOC was severed from the case and not a proper party to the appeal, the court upheld the trial court's decision to submit a question regarding LOC's responsibility, noting that appellants failed to preserve their objection regarding its inclusion.

The statute allows the fact-finder to determine the percentage of responsibility of a settling party, even if LOC settled prior to submission. Appellants claimed that LOC inadequately fulfilled its obligations, and there was supporting evidence in the record. Despite potential errors in submitting LOC's case, appellants did not demonstrate harm from the judgment against LOC. They argued that other subcontractors, who were not held accountable, should face trial for their role in the defective construction and that they were entitled to contribution from subcontractors dismissed before trial. However, these assertions lack merit or have been waived. For subcontractors with affirmed take-nothing judgments, no error or harm was found in not submitting their responsibility, as the jury could not assess liability against those judicially determined to have none. Appellants could have requested the jury to consider the responsibility of subcontractors who settled directly with the Bullocks, similar to LOC and Loma, but did not preserve any complaint regarding the court's submissions. 

Regarding claims against Shrum, appellants challenged the trial court’s directed verdict on their common-law indemnity and DTPA claims, arguing insufficient evidence supported the jury's findings that excused Shrum’s contract breach and indicated he bore no responsibility for the Bullocks' damages. They also contended that Shrum was not entitled to attorneys' fees, asserting that the trial court wrongly determined Daneshjou's DTPA claims were groundless. A directed verdict is appropriate when the plaintiff fails to present sufficient evidence or admits to a defense. The review process favors the party against whom the verdict was rendered, disregarding contrary evidence.

Conflicting evidence of probative value that raises a material fact issue must be submitted to the jury. Appellants argue that a material fact issue exists regarding Shrum's common-law duty to indemnify them; however, they failed to demonstrate error or harm. Common-law indemnity applies only in cases of purely vicarious liability. In this case, the Bullocks did not claim the appellants were vicariously liable for Shrum's actions, but rather for actions by Daneshjou and DCI, which were not attributable to Shrum. Consequently, the court properly granted a directed verdict regarding common-law indemnity, as the jury's findings showed Shrum had zero responsibility while appellants were found 97% responsible for the Bullocks' damages, indicating no harm from the absence of a common-law indemnity question.

Appellants also claimed error in the directed verdict on their DTPA claims, arguing Shrum breached a warranty by failing to perform his duties adequately. Shrum denied any express warranties and contended that implied warranties do not apply to his services. The Integrated Construction Management Agreement (ICMA) between Shrum and DCI was deemed the complete agreement, nullifying any prior representations. There was no evidence of express or implied warranties, as implied warranties arise only under compelling circumstances, which were absent here due to available contract remedies. The supreme court recognizes an implied warranty for tangible goods, but Shrum did not repair or modify such goods; he only supervised subcontractors. The trial court's decision to grant directed verdicts and not submit the warranty claims to the jury was appropriate. Lastly, although the jury found Shrum breached his contract with DCI, it excused the breach due to DCI's own acts or omissions.

The jury determined that Shrum was responsible for zero percent of the damages to the Bullocks, a finding that appellants argue lacks sufficient legal and factual evidence. In evaluating legal sufficiency, the court examines evidence supporting the finding while disregarding contrary evidence, requiring appellants to prove a complete absence of evidence for an adverse finding on an issue where they did not hold the burden of proof. For challenges on issues where the appellant had the burden, they must show the evidence conclusively established all vital facts against the finding.

A legal sufficiency challenge may succeed if there is a lack of evidence on a vital fact, legal rules prevent consideration of the only evidence offered, the evidence is merely a scintilla, or the evidence conclusively contradicts a vital fact. Conclusiveness is determined by whether reasonable people could differ in their conclusions. 

For factual sufficiency, the court weighs all evidence without substituting its judgment for that of the jury, which judges witness credibility. An appellant must demonstrate that a finding is so contrary to the overwhelming weight of the evidence as to be clearly wrong when they bear no burden of proof, or that it is against the great weight of evidence if they did have the burden.

The jury found that Shrum breached duties under the ICMA by neglecting day-to-day management tasks, a finding not contested on appeal. They also concluded that Shrum's breach was excused due to one or more conditions: appellants' conduct hindering his performance, waiver by the appellants, or previous failure to comply with the contract. Contrary to appellants' assertion, the jury's question did not require proof that the hindrance was wrongful, as the law only requires that it materially prevents performance to excuse it.

The review will assess whether sufficient legal and factual evidence exists to support the jury's conclusion that the appellants obstructed Shrum from performing his contractual duties, without considering the legality of their actions. Shrum identified specific acts and omissions by the appellants that hindered his ability to schedule subcontractors and acquire materials, ultimately affecting the project's timely and professional completion. Evidence indicated that the appellants provided inadequate plans and delayed payments for supplies and labor, resulting in material and labor shortages. Melton noted that the lack of detailed plans left workers without guidance, while David Shiflet criticized the minimal plans and stated that good judgment would require a structural engineer's involvement for such an expensive project. Expert testimonies from Loredo Truss and Gary Sweatt emphasized the necessity of a structural engineer for creating a comprehensive framing plan. Michael Skoller, while disagreeing with Melton, acknowledged that retrofitting the roof would need extensive planning documentation. Parker indicated he could not construct the house based on the provided plans. Shrum reported challenges in obtaining materials due to DCI's late payments and mentioned that subcontractors refused to work due to unpaid invoices. He also highlighted restrictions on his authority to hire or fire subcontractors, which compounded delays in project completion. Shrum argued that the accumulated delays rendered the five-month timeframe unmanageable, as the work should have been extended over ten months. He stated that despite Daneshjou's promise to pay subcontractors promptly, this commitment was only upheld for a brief period. Although some work was subpar, Shrum asserted that the primary issue was the incomplete state of the project. The appellants countered that they provided adequate plans, supplies, and labor, and were not responsible for Shrum's breach, with Daneshjou claiming fewer plans were needed due to his dual role as designer and builder. Terry Ortiz, an LOC engineer, remarked that most houses typically do not require engineered framing plans.

Daneshjou testified about additional drawings made onsite that were either taken or destroyed without being entered into evidence. Shrum acknowledged that a contractor might have legitimate reasons for withholding payment from a subcontractor or supplier. Delays in payment were attributed to the coordination of bill approvals with Sandra Bullock's schedule, as testified by Daneshjou's secretary, Stephanie Montemayor. Appellants highlighted increased onsite activity during late 1999, suggesting Shrum's claims of insufficient labor were unfounded. Daneshjou also noted that the Bullocks were slow in decision-making and payments, leading to further delays. DCI's general manager, Russell Gustafson, testified that weather and preparations for a wedding contributed to project delays. Witnesses suggested that a diligent superintendent could have identified and rectified construction deficiencies. Appellants argued that Shrum did not demonstrate that any payment issues hindered his performance, and they contended that Shrum failed to prove that they breached the ICMA prior to his actions. However, the jury found sufficient evidence to excuse Shrum’s performance due to material hindrances caused by the appellants, including inadequate project plans and delays in supplies and labor. Consequently, the jury determined Shrum bore no responsibility for the Bullocks’ damages, supported by the court's instruction to not assess proportionate responsibility regarding Shrum. The finding of zero responsibility was deemed not reversible error. Although there was evidence suggesting Shrum's partial responsibility for damages, sufficient evidence supported the jury's conclusion to excuse him under the ICMA. The court also upheld the award of attorneys' fees to Shrum against DCI, despite appellants’ claims that he was not entitled to such fees based on his alleged partial responsibility and the legal basis of their claims. The trial court's decision to award attorneys' fees was found to be proper.

Paragraph eight of the ICMA stipulates that in any litigation regarding the agreement, the prevailing party is entitled to reasonable attorney's fees, determined by the court. In the case at hand, DCI sued Shrum for breach of contract. Although the jury found Shrum breached his management duties under the ICMA, it excused his noncompliance and held him not liable for the Bullocks' damages, while DCI was found 80% responsible. As Shrum was deemed the prevailing party regarding the ICMA, the court appropriately awarded him attorney's fees from DCI. However, the trial court erred in awarding attorney's fees to Shrum from Daneshjou, as the ICMA is solely between Shrum and DCI, and Daneshjou was not a party to that agreement. Furthermore, Shrum could not claim fees from Daneshjou under the DTPA because there was no claim under section 17.50 against Daneshjou, nor does section 17.555 authorize attorney's fees. Consequently, the award of fees to Shrum from Daneshjou was legally erroneous. Regarding the judgment against King's Contracting, Montiel, and Sandoval, the trial court did not err in refusing a judgment notwithstanding the jury's verdict assigning only 1% responsibility to each subcontractor, as directed verdicts are only appropriate when justified by the evidence. The appellants argued that these subcontractors were significantly responsible for the alleged deficiencies, which they estimated at $4 million, but this claim was not supported by sufficient evidence to warrant a different judgment.

The jury determined that three subcontractors breached their warranty and contract with DCI, attributing 1% of the damages to the Bullocks to each subcontractor. DCI's total construction cost was established at $4,072,919, contradicting the appellants' claim that the subcontractors' work alone was around $4 million. Key evidence identified King as the main framer for the roof, while Sandoval worked on the flat roof and clay tile installation, and Montiel handled masonry. The subcontractors were not implicated in the decisions leading to billing disputes or landscaping issues. 

Expert testimony highlighted the roof's complexity and the designer's failure to provide detailed plans, which contributed to the risk of progressive collapse. Melton, an expert, asserted that constructing the roof without a framing plan was implausible. Although Parker, another expert, opposed Melton’s collapse theory, he acknowledged difficulties in constructing the house from the provided plans. Criticism of King and others by expert McGivern focused on improper framing practices, with testimonies indicating gaps were due to poor cuts rather than structural movement. 

Deficiencies in the roofing led to leaks, but some issues were deemed easily fixable, and not all problems stemmed from the subcontractors’ work. The masonry was also found to be compromised by water, with Griffith identifying multiple construction defects including a code-violating chimney. Overall, while there was evidence of inadequate construction, it was also evident that many problems originated from poor design. The jury's discretion in assessing responsibility was affirmed, and the court noted it cannot override the jury's findings even if alternative allocations of responsibility could be supported by the evidence.

Evidence indicates that the jury assessed damages from various project aspects, including the boathouse, guesthouse, retaining wall, and gate. The trial court correctly denied the motion for judgment notwithstanding the verdict regarding the 1% responsibility assigned to King, Sandoval, and Montiel. Appellants argued that the trial court erred by assigning zero responsibility to subcontractors Loma, Hood, Hernandez, LOC, and Austin Fine Floors. They claimed these subcontractors contributed enough to the project to warrant some responsibility for damages. However, the jury's findings were upheld, as there was insufficient evidence to support the assertion that these subcontractors were more than minimally responsible for the damages sustained by the Bullocks. The lack of direct evidence linking the subcontractors to substandard work further supported the jury's assessment of zero responsibility. The trial court's refusal to grant a new trial or alter the verdict was deemed appropriate. Ultimately, the trial court erred in awarding attorneys' fees against Daneshjou individually, leading to a reversal of that judgment; however, all other aspects of the district court's judgment were affirmed.

The jury determined that the appellants committed fraud and engaged in deceptive practices that caused damages to the Bullocks, including unconscionable actions and negligent misrepresentation by Daneshjou, which the Bullocks justifiably relied upon. The jury awarded $2,145,000 for repairs, demolition, and reconstruction of the house, $400,000 for maintenance and loss of use, and $1,947,875 in actual damages due to overcharges. Additionally, $1,402,125 was awarded in exemplary damages, and $1,184,332.19 was granted for attorneys' fees. Claims without specific judgments are considered resolved against the appellants, as indicated by the judgment denying relief not expressly granted, aiming for finality regarding all parties and issues. The judgment on claims against Loma has been affirmed in a separate appeal, while the status of claims against LOC remains unclear, although LOC is described as a settling party. An Amended Scheduling Order was signed and filed in November 2003, with gaps in the record being construed against the appellants on appeal. The appellants have not clearly indicated an intention to challenge the judgment regarding all seven appellees. Their arguments must be concise and well-cited per procedural rules. Appellants assert that their replies to summary judgment motions were not filed; however, these record gaps negatively impact their appeal. Perfect Lawns argues that the appellants' settlement with the Bullocks precludes their claims. Initially framed as breach of contract and derivative claims, appellants later characterized their non-contract claims to include both direct and derivative components, potentially allowing their claims to survive the impact of settlement on contribution claims.

In Beech Aircraft Corp. v. Jinkins and Filter Fab, Inc. v. Delauder, the appellate court addressed the exclusion of indemnity agreements related to Loma, which had been severed from the case, affirming the dismissal of the indemnity claims against Loma. The indemnity language was noted to be in six-point type. Regarding contribution claims, any error in granting summary judgment or dismissing these claims was rendered harmless due to the appellants' settlement with the Bullocks. The presence of subcontractors responsible for only 3% of the damages, who did not appear at trial, weakened the argument that the jury would solely blame the trial parties. The proportionate responsibility statute does not apply to contract claims, and appellants could have requested a jury question on allocating responsibility to settling parties. There is a critical distinction between determining the proportionate responsibility of settling parties and prohibiting a plaintiff from obtaining contribution, which encourages settlement. The court concluded that any error in dismissing contribution claims against settling parties was waived by the appellants’ settlement with the Bullocks, as a settling party cannot seek contribution from other tortfeasors for its settled share. Therefore, the dismissal of appellants' contribution claims against subcontractors stands, as they have assumed liability. Lastly, appellants claimed the trial court did not submit a question regarding the negligence of subcontractors to the jury.

The trial court correctly rejected the appellants' contribution claim, leaving no reversible error regarding the negligence issue. The appellants did not preserve a complaint about the jury charge's omission of "wrongfulness" and cannot circumvent this requirement through a sufficiency challenge. Even assuming wrongfulness was necessary, the jury charge, which went unchallenged, provided the essential elements for the cause of action. Attorneys' fees can be claimed under a specific agreement paragraph, independent of indemnity rights, which stipulates that recovery is contingent on Shrum not being at fault. There was no jury or court finding to support awarding Shrum attorneys' fees against Daneshjou personally. Shrum's reliance on the appellants' amended complaint does not imply that Daneshjou is a consumer under the DTPA, as he was not specifically named as such in prior claims. The jury awarded damages to the Bullocks based on fraud and DTPA violations, actions not attributed to the subcontractors. Appellants contend that the jury unfairly assigned them most of the $7 million verdict, while failing to address that a significant portion of the award was for damages unrelated to the subcontractors. The jury determined the subcontractors' responsibility based on the award for repairs, and prior judgments confirmed that Loma had no liability. There is no reversible error in the jury's finding of zero responsibility for Loma, which had previously received a take nothing summary judgment.