Opinion issued December 18, 2014.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00456-CV
———————————
LONG Q. PHAM AND THAO M. SILVA, Appellants
V.
HARRIS COUNTY RENTALS, L.L.C., Appellee
On Appeal from the 61st District Court
Harris County, Texas
Trial Court Case No. 2011-20256
OPINION
After a bench trial, the trial court foreclosed a subcontractor’s materialman’s
lien and awarded a retainage claim to the subcontractor against the landowners
when the landowners’ contractor failed to pay the subcontractor. The trial court
also entered a default judgment against the landowner/wife on the basis of her
failure to answer or appear despite the answer and appearance of the
landowner/husband, who represented himself. In five issues on appeal, we
consider whether the trial court erred in (1) failing to make findings of fact; (2)
dismissing appellants’ affirmative defense; (3) finding that the materialman’s lien
had been validly perfected; (4) rendering a default judgment against the
landowner/wife based on her failure to answer or appear; and (5) awarding
attorney’s fees and costs to the subcontractor. We affirm.
BACKGROUND
Appellants Pham and Silva are husband and wife and the owners of an
unimproved piece of land located at 10490 Huffmeister Road, Houston, Texas
77065. Both Pham and Silva are hairdressers who are not in the business of
construction. Sometime before Thanksgiving 2009, Pham entered into an oral
contract with Richard Neal [“Neal”] doing business as Unicom General
Contractors also known as Southern Construction Group, to clear the Land. Neal
hired several subcontractors, including Harris County Rentals, to provide
equipment, such as a forklift, a bulldozer, and an excavator. Pursuant to the
contract, Neal charged Pham a fixed price of $50,174.50 for all the work.
As a part of the process for obtaining a commercial loan from a bank for the
construction of a commercial building on the land, Pham spoke with the bank’s
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employee, Kevin Tran, who asked to do a background check on Neal before the
bank would agree to loan Pham any money. Tran warned Pham that Neal’s
business names “Unicon” and “Southern Construction Groups” did not exist, and
recommended that Pham obtain a lien waiver form for Pham to use whenever he
paid his contractors. In addition, Tran also advised Pham to retain funds from Neal
for a while before Pham made a final payment to Neal.
In accordance with Tran’s advice, Pham asked for a signed lien waiver each
time he paid Neal. By February 4, 2013, Pham had paid Neal $41,000.00, retaining
$9,174.50, or 18 percent (18%) of the total contract price. On March 3, 2010, Neal
came to Appellants’ salon and demanded payment. Pham knew he had to hold on
to the retained funds for a while. Because Neal visited appellants at their
workplace several times, Silva got scared and asked Pham to hurry up and pay
Neal so that he would leave. Pham paid $9,174.50 as final payment to Neal with a
check dated March 3, 2010, that contained the words “Final Payment with
Southern Const.” written in the memo section. Altogether, Appellants made four
periodic payments to Neal totaling $50,174.50.
Harris County Rentals was a subcontractor Neal had hired to lease and
deliver equipment to the worksite. Harris County Rentals completed its portion of
the job on January 15, 2010, and invoiced Neal for a total amount of $8,226.33.
After Neal failed to pay Harris County Rentals the full amount owed to it, Harris
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County Rentals sent a notice of claim to Pham on March 19, 2010. On April 27,
2010, Harris County Rentals filed a lien affidavit in the public records of Harris
County, Texas. On the same day, Appellee sent a copy of the filed lien affidavit to
Neal, Pham and Silva by certified, mail return receipt requested. Both came back
unclaimed.
On April 1, 2011, Harris County Rentals sued Neal, Pham, and Silva. Pham
filed an Original Answer purporting to represent both himself and Silva by virtue
of the use of the words “we,” “our,” and “us” in the pleading. The case proceeded
to a bench trial. Pham appeared at trial pro se; Silva did not appear.
On February 26, 2013, the trial court rendered judgment that: (1) Silva failed
to answer or appeal; (2) Harris County Rentals’ claims against Neal were
nonsuited; (3) Pham and Silva were jointly and severally liable to Harris County
Rentals in the amount of $5,017.45 plus pre-judgment and post-judgment interests;
(4) foreclosed Harris County Rentals’ lien; (5) authorized the issuance of writs or
orders to collect on this Judgment; and (6) awarded $3,000.00 in attorney’s fees,
plus costs.
On March 28, 2013, Pham and Silva asked the trial court for a new trial
along with the statutory findings of facts and conclusions of law. Upon the trial
court’s failure to issue its findings of facts and conclusions of law, Pham and Silva
timely sent the statutory notice of past due findings and conclusions. With no
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affirmative ruling on their motion for a new trial, the motion was overruled by
operation of law. TEX. R. CIV. P. 329(b). This appeal followed.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
In their first issue on appeal, Pham and Silva contend the trial “committed
reversible error by failing to make required Findings of Fact and Conclusions of
Law even though timely requested[.]”
Findings of fact and conclusions of law are required upon request in any
case tried in the district or county court without a jury. Gene Duke Builders, Inc. v.
Abilene Hous. Auth., 138 S.W.3d 907, 908 (Tex. 2004) (per curiam); see also TEX.
R. CIV. P. 296, 297. A trial court’s failure to make findings is not harmful error if
the record before the appellate court affirmatively shows that the complaining
party suffered no injury. Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996) (per
curiam). Harm to the complaining party is presumed unless the contrary appears on
the face of the record when the party makes a proper and timely request for
findings and the trial court fails to comply. Id.
However, when there is only a single ground of recovery or a single defense,
the appellant suffers no harm because the reason for the trial court’s judgment is
clear, and the appellate court does not have to guess the reason for the trial court’s
decision. Nev. Gold & Silver, Inc. v. Andrews Indep. Sch. Dist., 225 S.W.3d 68, 77
(Tex. App.—El Paso 2005, no pet.). On the other hand, when there are multiple
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grounds for recovery or multiple defenses, an appellant is forced to guess what the
trial court’s findings were, unless they are provided to him. Larry F. Smith, Inc. v.
The Weber Co. Inc., 110 S.W.3d 611, 614 (Tex. App.—Dallas 2003, pet.
denied); Nev. Gold & Silver, 225 S.W.3d at 77. Putting the appellant in the position
of having to guess the trial court’s reasons for rendering judgment against him
defeats the inherent purpose of Rules 296 and 297. Larry F. Smith, 110 S.W.3d at
614; see also TEX. R. CIV. P. 296, 297. The purpose of a request under the rules is
to “narrow the bases of the judgment to only a portion of [the multiple] claims and
defenses, thereby reducing the number of contentions that the appellant must raise
on appeal.” Id. (citing 6 McDonald & Carlson, TEX. CIV. PRAC. § 18:3 (2d ed.
1998)).
Here, the only cause of action asserted against Pham and Silva was for the
foreclosure of Harris County Rentals’ lien against their property, and the amount of
damages claimed was based on Pham’s and Silva’s failure to retain ten percent of
the contract price. Because the suit was based on a single cause of action, Pham
and Silva could not have been confused about the potential bases for the trial
court’s judgment. See Wood v. Pharia L.L.C., No. 01-10-00579-CV, 2010 WL
5060621, at *9 (Tex. App.—Houston [1st Dist.] Dec. 9, 2010, no pet.) (“[W]here,
as here, there is only a single ground of recovery or a single defense in the case, an
appellant is not harmed by a failure to file findings and conclusions because he is
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not required to guess the reasons for a trial court’s judgment.”) As such, error, if
any, by the trial court in failing to make findings of fact and conclusions of law
was harmless.
Accordingly, we overrule issue one.
PERFECTION OF LIEN
In their third issue on appeal, Pham and Silva contend that “Appellee did not
perfect its lien against appellants as a matter of law since [it] failed to comply with
the statutory notice provision of the Texas Property Code.”
Law Applicable to Trapped Funds and Retainage
Chapter 53 of the Property Code governs mechanic’s and materialman’s
liens. See TEX. PROP. CODE ANN. §§ 53.001–.260 (Vernon 1995 & Supp. 2014). A
person who provides labor or materials to construct a building or improvement
under a contract with the property owner, the owner’s agent, or an original
contractor is entitled to a lien against that property. TEX. PROP. CODE ANN. §
53.021(a) (Vernon Supp. 2014). A subcontractor is considered a derivative
claimant and must rely on his statutory lien remedies. First Nat’l Bank v. Sledge,
653 S.W.2d 283, 285 (Tex. 1983) (discussing earlier versions of lien
statutes); Stolz v. Honeycutt, 42 S.W.3d 305, 310 (Tex. App.—Houston [14th
Dist.] 2001, no pet.). A subcontractor may seek recovery from “trapped” funds
held by the property owner or funds “retained” by the owner. Sledge, 653 S.W.2d
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at 286; Stolz, 42 S.W.3d at 310; Hadnot v. Wenco Distribs., 961 S.W.2d 232, 234
(Tex. App.—Houston [1st Dist.] 1997, no writ). “Trapped” funds are funds not yet
paid to the original contractor at the time the property owner receives notice that a
subcontractor has not been paid; on receiving such notice, the owner may withhold
those funds from the original contractor until the claim is paid or settled or until the
time during which a subcontractor may file a lien affidavit has passed. TEX. PROP.
CODE ANN. § 53.081 (Vernon 2007); TEX. PROP. CODE ANN. § 53.082 (West
1995); Stolz, 42 S.W.3d at 311; Hadnot, 961 S.W.2d at 235. “Retained” funds are
funds withheld from the original contractor either under a contractual agreement or
under section 53.101, which requires a property owner to retain ten percent of the
contract price for thirty days after the project is completed. See TEX. PROP. CODE
ANN. §§ 53.025, .101 (Vernon 2007); Stolz, 42 S.W.3d at 311; Hadnot, 961
S.W.2d at 234. In this case, Pham made final payment to the contractor, Neal, on
March 3, 2010, and Harris County Rentals’ notice of lien was not sent to Pham
until April 27, 2010, so, as acknowledged by Pham’s counsel at trial, “There’s no
funds trapped . . . we’re strictly looking for the retainage.”
No Specific Denial of Conditions Precedent
With respect to Harris County Rentals’ retainage claim, Pham argues that
Harris County Rentals did not prove that it complied with section 53.103 of the
Texas Property Code. Section 53.103 provides that to perfect a retainage lien, a
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person must (1) “send the notices required by this chapter in the time and manner
required;” and (2) file an affidavit claiming a lien not later than the thirtieth day
after the earlier of the date the work is completed, the original contract is
terminated, or the original contractor abandons performance under the original
contract. TEX. PROP. CODE ANN. § 53.103 (Vernon Supp. 2014). On appeal, Pham
argues that Harris County Rentals filed its affidavit on April 27, 2010, more than
30 days after the project was completed on February 23, 2010.
According to Harris County Rentals, however, it was not required to prove
that it complied with section 53.103 because, pursuant to Texas Rule of Civil
Procedure 54, it pleaded that all conditions precedent had been performed or had
occurred. Rule 54 provides:
In pleading the performance or occurrence of conditions precedent, it
shall be sufficient to aver generally that all conditions precedent have
been performed or have occurred. When such performances or
occurrences have been so plead, the party so pleading same shall be
required to prove only such of them as are specifically denied by the
opposite party.
TEX. R. CIV. P. 54. In its Original Petition, Harris County Rentals pleaded, “The
Plaintiff fully performed all conditions precedent for recovery on said obligation
and for recovery of attorney’s fees and/or all conditions precedent have occurred
for recovery.” This language sufficiently placed Pham on notice of Harris County
Rentals’ claim that all conditions precedent had occurred.
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Because Harris County Rentals pleaded that all conditions precedent had
been performed or occurred, it was required to prove only the conditions precedent
that Pham specifically denied. However, Pham did not specifically deny that
Harris County Rentals had timely filed its affidavit, thereby perfecting its retainage
lien. Pham’s Original Answer was a pro se letter to the trial court, in which he
asserted that he had paid Neal in full and argued that there had to be some way to
protect consumers, and that the matter should be between Harris County Rentals
and Neal. This denial, however, is not sufficient.
Texas Rule of Civil Procedure 54 requires the opposing party to specifically
deny which conditions precedent have not been performed or have not occurred.
See TEX. R. CIV. P. 54.; Gill Sav. Assn. v. Int’l Supply Co., Inc., 759 S.W.2d 697,
701 (Tex. App.—Dallas 1988, writ denied); Sunbelt Constr. Corp. v. S & D Mech.
Contractors, Inc., 668 S.W.2d 415, 417–18 (Tex. App.—Corpus Christi 1983, writ
ref’d n.r.e.). By failing to specifically deny that Harris County Rentals failed to
timely file its lien affidavit, Pham waived his right to complain of such failure on
appeal. See Gill, 759 S.W.2d at 701; Sunbelt, 668 S.W.2d at 418.
Accordingly, we overrule Pham’s third issue.
AFFIRMATIVE DEFENSE OF LIEN WAIVER
In his second issue on appeal, Pham contends “the trial court erred by
dismissing Appellants’ affirmative defense of release and waiver.” Specifically,
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Pham claimed that he had obtained lien waivers signed by Neal, in which Neal,
stated as follows:
The undersigned has been paid and received a final payment in the
sum of $___________ for labor, services, equipment, or materials
furnished to the Contractor, Owner, or Prime Subcontractor on the
above described Project. The undersigned does certify that any and
all payments due to third parties on said project for services and/or
materials have been paid in full. The undersigned does hereby release
pro tanto any mechanic liens, stop notice or bond rights that the
undersigned has on said Project.
Notice: This document waives rights unconditionally and states that
you have been paid for giving up those rights. This document is
enforceable against you if you sign it, even if you have not been paid.
If you have not been paid, use a conditional release form.
Pham contends that he “relied on the notarized affidavit that appellants rightfully
requested so that they can move on with their lives.” Essentially, Pham contends
that this lien waiver, signed by Neal, precluded Harris County Rentals from filing a
lien.
We construe this as a sufficiency challenge to the trial court’s implied
finding that Pham had failed to prove his affirmative defense of release and waiver.
In the absence of findings of fact, “the trial court’s judgment implies all necessary
fact findings in support of the judgment.” Schoeffler v. Denton, 813 S.W.2d 742,
744 (Tex. App.—Houston [14th Dist.] 1991, no writ). These implied findings may
be challenged for legal and factual sufficiency when the appellate record includes
the reporter’s and clerk’s records, as it does here. BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 795 (Tex. 2002).
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Standard of Review
A party challenging the legal sufficiency of an adverse finding on an issue
upon which it had the burden of proof at trial must establish, as a matter of law, all
essential facts in support of the issue. Sterner v. Marathon Oil Co., 767 S.W.2d
686, 690 (Tex. 1989). The party “must show that there is no evidence to support
the factfinder’s finding and that the evidence conclusively establishes the opposite
of the finding.” Indian Oil Co., LLC v. Bishop Petroleum, Inc., 406 S.W.3d 644,
652 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (citing Dow Chem. Co. v.
Francis, 46 S.W.3d 237, 242 (Tex. 2001)). A party challenging the factual
sufficiency of an adverse finding on an issue on which it had the burden of proof at
trial must demonstrate that the finding “is against the great weight and
preponderance of the evidence” so as to be clearly wrong and unjust. Dow Chem.
Co., 46 S.W.3d at 242.
Sufficiency of the Evidence to Support Negative Finding on Affirmative Defense
The record in this case includes three documents entitled
“UNCONDITIONAL WAIVER AND RELEASE UPON FINAL PAYMENT,”
and signed by Neal, stating that “[t]he undersigned does hereby release pro tanto
any mechanic liens, stop notice or bond rights that the undersigned has on said
Project.” In addition, there are several other identical documents signed by other
subcontractors on the project. However, there is no document in the record
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showing that Harris County Rentals executed such a waiver and release. Pham has
not provided this Court with any authority for its argument that these releases by
other entities somehow serve to also waive Harris County Rentals’ right to file a
lien. Because Harris County Rentals is not “the undersigned” on any of the releases
in the record, the releases cannot be construed as a waiver of its right to file a lien.
Pham points out that under section 53.085(e) of the Property Code, “[a]
person signing an affidavit under this section is personally liable for any loss or
damage resulting from any false or incorrect information in the [lien release]
affidavit.” TEX. PROP. CODE ANN. § 53.085 (Vernon Supp. 2014). We agree that Neal
might be liable to Pham for damages arising out of any false statement in his signed lien
releases, including his statement that “any and all payment due to third parties on said
project for services and/or materials have been paid in full.” However, any misstatement
by Neal in his own lien waiver cannot serve as a basis for waiving Harris County Rentals’
lien rights.
After examining the record for evidence that supports the trial court’s
finding, we hold there is more than a scintilla of evidence to support the trial
court’s implied finding that Pham did not show that Harris County Rentals released
or waived its right to file a lien. Considering and weighing all the evidence, the
finding by the trial court is not so against the great weight and preponderance of
the evidence as to be clearly wrong and unjust.
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Accordingly, we overrule issue two.
DEFAUL JUDGMENT AGAINST SILVA
In issue four, Pham and Silva contend “the trial court erred in rendering a
default judgment against Appellant Silva because she had good cause for her
mistaken belief that Appellant Pham, her husband, was representing [her] when he
timely filed an answer, and represented for both of them at trial pro se.”
It is undisputed that Silva did not answer or appear at trial. Instead, Pham
filed an answer and appeared at trial purportedly on behalf of both. However,
Pham is not an attorney and may not act as attorney on behalf of Silva because he
is not licensed by the State Bar of Texas. Martin v. Comm’l Metals Co., 138
S.W.3d 619, 622 (Tex. App.—Dallas 2004, no pet.) (holding that one appellant
could not represent other appellants, who were minors at time of filing because he
was not licensed attorney); Jimison v. Mann, 957 S.W.2d 860, 861 (Tex. App.—
Amarillo 1997, no writ) (holding that rabbi/reverend who purported to act as next
friend of plaintiff could not act as legal counsel because he was not licensed to
practice law); Magaha v. Holmes, 886 S.W.2d 447, 448 (Tex. App.—Houston [1st
Dist.] 1994, orig. proceeding) (holding that plaintiff’s mother could not act as his
attorney because she was not licensed to practice law).
Nevertheless, Silva contends that she has a meritorious defense under
Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939), thereby
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precluding a default judgment because she was “acting under the mistaken belief
that Appellant Pham could represent the couple as a pro se attorney and that his
answer was sufficient to prevent default of both Appellants.”
However, Silva did not raise this issue in the trial court in her motion for
new trial, nor did she and present evidence in support of her claim of a meritorious
defense. See Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 928 (Tex. 2009)
(stating motion for new trial “sets up a meritorious defense if it alleges facts which
in law would constitute a defense to the plaintiff’s cause of action and is supported
by affidavits or other evidence providing prima facia proof that the defendant has
such a defense”). Thus, Silva has failed to preserve error as to this complaint. See
TEX. R. APP. P. 33.1(a); see also Gammill v. Fettner, 297 S.W.3d 792, 802 (Tex.
App.—Houston [14th Dist.] 2009, no pet.) (holding defendant’s failure to raise
Craddock argument in motion for new trial failed to preserve argument for
appellate review).
Accordingly, we overrule issue four.
ATTORNEY’S FEES
In issue five, Pham and Silva contend “the trial court erred in awarding
attorney’s fees and costs.” Specifically, “Appellants ask that if this Court should
find that Appellants are just in their arguments [on appeal], this Court should
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reverse the costs and attorney’s fees judgment.” Having overruled Pham’s and
Silva’s other arguments, we also overrule issue five.
CONCLUSION
We affirm the trial court’s judgment.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Jennings and Keyes.
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