IN THE FIFTH COURT OF APPEALS DALLAS, TEXAS COURT OF APPEALS NO. 05-09-00947-CV

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IN THE FIFTH COURT OF APPEALS
DALLAS, TEXAS
COURT OF APPEALS NO. 05-09-00947-CV
CNA SURETY GROUP d/b/a CONTINENTAL CASUALTY COMPANY,
AND RB CONTRACTING CO., L.P.
Appellants,
v.
MT. HEBRON MISSIONARY BAPTIST CHURCH
Appellee.
Appeal from the 160th Judicial District Court
Dallas County, Texas (Tr. Ct. No. 05-11212)
AMENDED BRIEF OF APPELLANT RB CONTRACTING CO., L.P.
Respectfully submitted,
HARRISON STECK, P .C.
Michael Scott MacQuaid
State Bar No. 00794210
John J. Drake
State Bar No. 06108020
Henry E. Steck
State Bar No. 19094500
512 Main Street, Suite 1100
Fort Worth, Texas 76102
[phone] -Telephone
[phone] -Facsimile
ATTORNEYS FOR RB CONTRACTING
CO., L.P.
ORAL ARGUMENT REQUESTED
IDENTITY OF INTERESTED PARTIES & COUNSEL
APPELLANT CNA SURETY GROUP D/B/A CONTINENTAL CASUALTY COMPANY
Keith A. Langley and Dennis C. Sauter, Jr.
LANGLEY WEINSTEIN HAMEL LLP
901 Main Street, Suite 600
Dallas, TX 75202
Attorneys for Appellant CNA Surety Group d/b/a Continental Casualty Company on
Appeal
APPELLANT RB CONTRACTING CO., L.P.
Michael Scott Mac Quaid,
Iohn J. Drake, and Henry E. Steck
HARRISON. STECK, P.c.
512 Main Street, Suite 1100
Fort Worth, Texas 76102
Attorneys for Appellant RB Contracting Co., L.P. on Appeal and for CNA Surety Group
d/b/a Continental Casualty Company and CNA Surety Group d/b/a Continental Casualty
Company, as assignee ofR B Contracting Co., L.P., in the Trial Court
Robert 1. Palmer and Kyle W. Johnson
DAVID, GOODMAN & MADOLE
Two Lincoln Centre
5420 LBJ Freeway, Suite 1200
Dallas, Texas 75240
Attorneys for RB Contracting, Co., LP (until order of withdraw entered on July 19, 2008)
and Robert Bowman in the Trial Court
APPELLEE MT. HEBRON MISSIONARY BAPTIST CHURCH
Kevin Wiggins,
Carlos Morales, and Eric Walker
Adorno Y oss White & Wiggins, L.L.P.
90 I Main Street, Suite 6200
Dallas, Texas 75202
Attorneys for Appellee in the Trial Court and on Appeal
TABLE OF CONTENTS
Identity ofInterested Parties & Counsel ............................................................................. .i.
Index of Authorities .......................................................................................................... iii
Record References ............................................................................................................ v
Statement of the Case .......................................................................................................... vi
Issues Presented ................................................................................................................... 2
Statement of the Facts .......................................................................................................... 3
Summary of the Argument. ................................................................................................ 10
ARGUMENT ..................................................................................................................... 12
1. When the Owner judicially admitted, and the undisputed evidence
established, that its cause of action accrued more than twenty-five (25)
months (the contractual limitations period) before it filed suit under the
performance bond, did the trial court err in entering judgment upon the
claims asserted under the performance bond? ............................................. 12
II. Where the jury properly found that replacing a cracked - but still usable -
parking lot at a cost of more than 220% of the original contract price
constituted "economic waste", did the trial court err in entering judgment
for the full replacement value of the parking lot? ........................................ 23
III. Where the undisputed evidence established an unpaid contract balance of
$81,310.00, did the trial court err in entering judgment for the Owner
without crediting the unpaid contract balance? ........................................... 26
IV. When the owner failed to segregate its attorneys' fees between its fee
bearing and non-fee bearing claims as required by the Texas Supreme
Court's Tony Gullo Motors decision and its progeny, and failed to properly
prove up its paralegal fees, and the undisputed evidence established that the
jury verdict improperly included court costs; did the trial court err in
entering judgment awarding attorneys' fees based upon the jury verdict? .27
Request For Relief. ............................................................................................................. 35
Certificate of Service .......................................................................................................... 36
Certificate of Compliance .................................................................................................. 37
Appendix ................................................................................................................ 38
11
INDEX OF AUTHORITIES
Cases
C&L Elec. Cooperative Corp. v. Am. Casualty Co.,
199 F. Supp. 220 (E.D. Ark. 1959) ................................................................................ 22
Chada v. Tapp,
558 P.2d 1225, 1227 (Ore. 1977) .................................................................................... 22
Crawford v. Lawyer's Surety Corp.,
321 S.W.2d 640 (Tex. Civ. App.-Austin 1959, writ refd n.r.e.) ................................. 14
Duster v. Aetna Ins. Co.,
668 S.W.2d 806,806 (Tex. App.-Houston [14th Dist.] 1984, writ refd.) ................... 13
Ft. Worth State School v. Jones,
756 S.W.2d 445,446 (Tex. App.-Fort Worth 1998, no writ) ......................................... 20
Gill Sav. Ass 'n v. Int'l Supply Co.,
759 S.W.2d 697,702 (Tex. App.-Dallas 1988, writ denied) ................................ 30,32
Holy Cross Church of God in Christ v. Wolf,
44 S.W.3d 562,568 (Tex. 2001) .................................................................................... 15
Hoover v. Gregory,
835 S.W.2d 668,677 (Tex. App.-Dallas 1992, writ denied) ....................................... 14
Hunt Oil Co. v. Live Oak Energy, Inc.,
No. 05-07-01553-CV, 2009 Tex. App. LEXIS 8089
(Tex. App.-Dallas Oct. 19,2009, no pet. h.) ............................................................... 12
Hutson v. Chambless,
300 S.W.2d 943,945 (Tex. 1957) .... :~ ................................................................ 23, 24, 25
Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc.,
962 S.W.2d 507, 514 (Tex. 1998) ................................................................................. 13
Jordan v. Meyer & Co.,
39S.W.I081 (Tex. 1897) .............................................................................................. 14
Morey v. Page,
802 S.W.2d 779, 783 (Tex. App.-Dallas 1990, no writ) ............................................. 20
Multi-Mota Corp. v. ITT Commerical Fin. Corp.,
806 S.W.2d 560,570-571 (Tex. App.-Dallas 1990, writ denied) ......................... 30, 32
New Jersey Division of Taxing v. Selective In. Co. ofA m.,
944 A.2d 669, 672 (App. Div. 2008) ............................................................................... 22
Provident Life & Accident Ins. Co. v. Knott,
128 S.W.3d 211,221 (Tex. 2003) ................................................................................... 13
Safeway Stores, Inc. v. Certainteed Corp.,
687 S.W.2d 22,25 (Tex. App.-Dallas 1986),
rev'd on other grounds, 710 S.W.2d 544 (Tex. 1986) .................................................. .14
Schneider Nat 'I Carriers, Inc. v. Bates,
147 S.W.3d 264,275 (Tex. 2004) .................................................................................. 13
iii
Stewart Title Guar. Co. v. Aiello,
941 S.W.2d 68, 73 (Tex. 1997) ...................................................................................... 29
Stewart Title Guaranty Co. v. Sterling,
822 S.W.2d 1, (Tex. 1991) ............................................................................................. 29
Stine v. Stewart,
80 S.W.3d 586, 592 (Tex. 2002) .................................................................................... 13
Tony Gullo Motors 1, L.P. v. Chapa,
212 S.W.3d 299,311 (Tex. 2006) ............................................................................ 29, 30
Turner, Collie & Braden, Inc. v. Brookhollow, Inc.,
642 S.W.2d 160, 164 (Tex. 1982) ..................................................................................... 27
Turner Const. v. Am. States Ins. Co.,
579 A.2d 915 (Sup. Ct. Penn 1990) ............................................................................... 22
Water Commission v. Nat 'I Am. Surety Co.,
930 F. Supp. 1411, 1419 (D. Haw. 1996) ........................................................................ 22
Statutes
TEX. CW.PRAC. & REM. CODE ANN. § 16.070 ................................................................... 12
TEX. CN. PRAC. & REM. CODE ANN. § 38.001 .................................................................... 28
IV
RECORD REFERENCED
The record is cited herein as follows:
Clerk's record: "CR[Vo1.]:[Page]";
Reporter's record: "RR[Vo1.]:[Page]:[Line]";
Appellee's Exhibits: "RRll, MHBC [Number]"; and
Joint Exhibits: "RR13, JX[Number]".
v
STATEMENT OF THE CASE
A. NATURE OF CASE
Suit by Contractor against Owner for breach of contract and quantum meruit
[CR1:51-57] and by Owner against Contractor [CRI :58-70] and its performance bond
surety [CRI :29-46] for breach of contract.
B. TRIAL COURT
160th Judicial District, Dallas County, Texas, the Honorable Jim Jordan, presiding.
C. VERDICT AND JUDGMENT
The case proceeded to trial on January 9, 2009 and was submitted to the jury on
January 29, 2009. The jury returned a verdict that (i) the Contractor failed to comply
with the project plans and specifications, (ii) the cost to bring the project into compliance
with the plans and specifications was $995,461.03, and (iii) the defects resulting from the
Contractor's failure to comply with the plans and specifications could not be corrected
without creating "economic waste." [CRl :78-84 & 90] The jury awarded the Owner
$412,000.00 in attorneys' fees. [Jd.] The jury awarded the Contractor $33,256.00 on its
quantum meruit claim plus attorneys' fees and pre-judgment interest. [Jd.] The Court
entered judgment against (i) the Contractor based upon the jury verdict, reduced by the
Contractor's award against the Owner, and (ii) the Surety for the penal limit of the
Performance Bond, $791,500.00, plus $80,451.09 in pre-jUdgment interest and
$412,000.00 in attorneys' fees. [CR2:421-22 (the Clerk's record is missing page 2 of 3
of the judgment, which will be requested, a complete copy of the Judgment is attached
hereto in Appendix as Tab 1)].
VI
IN THE FIFTH COURT OF APPEALS
DALLAS, TEXAS
COURT OF APPEALS NO. 05-09-00947-CV
CNA SURETY GROUP d/b/a CONTINENTAL CASUALTY COMPANY,
AND RB CONTRACTING CO., L.P.
Appellants,
v.
MT. HEBRON MISSIONARY BAPTIST CHURCH
Appellee.
Appeal from the 160th Judicial District Court
Dallas County, Texas (Tr. Ct. No. 05-11212)
AMENDED BRIEF OF APPELLANT RB CONTRACTING CO., L.P.
TO THE HORNORABLE JUSTICES OF THE DALLAS COURT OF APPEALS:
Appellant, RB Contracting Co., L.P., respectfully files this amended brief pursuant
to Rules 38.1 and 38.7 of the TEXAS RULES OF ApPELLATE PROCEDURE and the Agreed
Motion for Leave to File Appellant RB Contracting Co., L.P.'s First Amended Brief and
to Extend Time for Filing of Appellee's Brief mailed for filing on Thursday, December
31,2009.
1
ISSUES PRESENTED
1. When the Owner judicially admitted, and the undisputed evidence established, that
its cause of action accrued more than twenty-five (25) months (the contractual
limitations period) before it filed suit under the Perfonnance Bond, did the trial
court err in entering judgment upon the claims asserted under the Performance
Bond?
2. Where the jury properly found that replacing a cracked - but still usable - parking
lot at a cost of more than 220% of the original contract price constituted
"economic waste", did the trial court err in entering judgment for the full
replacement value of the parking lot?
3. Where the undisputed evidence established _an 'unpaid contract balance of
$81,310.00, did the trial court err in entering judgment for the Owner without
crediting the unpaid contract balance?
4. When the owner failed to segregate its attorneys' fees between its fee-bearing and
non-fee-bearing claims as required by the Texas Supreme Court's Tony Gullo
Motors decision and its progeny and failed to properly prove up its paralegal fees,
and the undisputed evidence establishes that the jury verdict improperly included
court costs, did the trial court err in entering judgment awarding attorneys' fees
based upon the jury verdict?
2
STATEMENT OF THE FACTS
A. INTRODUCTION
In 2002, Appellant RB Contracting Co., L.P. (the "Contractor") and Appellee Mt.
Hebron Missionary Baptist Church (the "Owner") entered into a construction contract
(the "Construction Contract") whereby the Contractor agreed to provide labor and
materials to complete concrete and paving work on a new facility being constructed for
the Owner in Garland, Texas (the "Project"). [RRII, MHBC 103]. The original amount
of the Construction Contract was $740,000.00. [RRII, MHBC 103; RR5:92:10-13]. Of
this amount, only $450,000.00 related to the curbs and pavmg which were the basis of the
Owner's claims. (RR13, JX9, p. 2, line item 7 of schedule of values).
Appellant Continental Casualty Company (the "Surety") issued a perfonnance
bond (the "Perfonnance Bond) [RRll, MHBC 107; CR1:3l, ~10] and a payment bond
[CR1:31, ~9] on behalf of the Contractor for concrete and paving work at a facility in
Garland, Texas (the "Project"). The Performance Bond was issued in favor of the Owner
and required the Surety to take action "[w]henever [the] Contractor shall be, and declared
by [the] Owner to be in default under the [Contract]," and it included a contractual
limitations provision that required suit to be instituted within "twenty-five (25) months
from the date on which the right of action accrues." [RRII, MHBC 107].
B. PERFORMANCE AND DEFAULTS UNDER CONSTRUCTION CONTRACT AND
PERORMANCE BOND
The Contractor began its construction work on the project around January, 2003.
[RR4:127:7-17] The Contractor's performance of its construction work started out well
3