Eco Built, Inc. and Ed Travis v. Mark Lulfs D/B/A Paperhanger Plus Landmark Organization, L.P. And California Wholesale Material Supply, Inc. D/B/A Calply

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-08-00427-CV

Eco Built, Inc. and Ed Travis, Appellants

v.

Mark Lulfs d/b/a Paperhanger Plus; Landmark Organization, L.P.;
and California Wholesale Material Supply, Inc. d/b/a Calply, Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT
NO. D-1-GN-03-001970, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING

MEMORANDUM OPINION

Eco Built, Inc. appeals a district court judgment awarding damages to appellee

Landmark Organization, L.P. for breach of a construction subcontract. In three issues, Eco Built

asserts that (1) the district court erred in disregarding jury findings that Landmark had breached

the contract and had thereby damaged Eco Built, (2) the evidence conclusively or by its great weight

and preponderance supported a larger amount of contract damages than the jury awarded to

Eco Built; and (3) no evidence supports the jury’s finding as to the amount of Landmark’s contract

damages or, in the alternative, the evidence conclusively establishes that Landmark waived breach

by Eco Built. Additionally, in a fourth issue, Eco Built and Yancey Ed Travis appeal a portion of

the judgment awarding Landmark damages from them, jointly and severally, based on a directed

verdict on claims that had been assigned to Landmark by one of Eco Built’s suppliers. We will

modify and affirm the judgment in part and reverse and remand it in part.
 BACKGROUND

This appeal stems from disputes among contractors and suppliers who were involved

in the construction of the Hilton Austin building, the “convention center hotel” that is located next

to the Austin Convention Center. The project owner, Austin Convention Enterprises (ACE), an

entity formed by the City of Austin, contracted with appellee Landmark to oversee and manage

construction on ACE’s behalf. Landmark’s duties included hiring and supervising all subcontractors,

architects, and engineers. Landmark executed a subcontract with Eco Built on September 27, 2002

(made effective retroactively on August 12, 2002) whereby Eco Built was to provide all labor

and material necessary to fabricate and install the building’s exterior wall system. In response to the

City of Austin’s expressed desire to feature “eco-friendly” materials in the building, the project’s

plans and specifications called for an exterior wall system that incorporated aerated autoclave

concrete (AAC), a material that weighs significantly less than ordinary concrete. The building’s

outside wall or “skin” was to consist of several hundred large panels comprised of AAC attached to

a steel frame and finished with a stucco-like appearance. Prior to the Hilton Austin project, AAC

had never been used as panels on a high-rise building like the hotel.

Simply described, Eco Built’s scope of work under the subcontract entailed it

purchasing two-inch thick, several square-foot sized pieces of AAC, steel, and other component

materials and fabricating panels by building a steel frame, attaching two layers of the AAC piece

to the frame with screws, and applying two coats of a finishing treatment. Eco Built was then

responsible for having the prefabricated panels transported to the project site and installed on

the building with a crane. Eco Built was also responsible for supplying the AAC component to

2
another contractor who would install it into steel frames constructed on the building itself to

create “field applied” panels, and for applying the finish to the field-applied panels. Eco Built

subcontracted with appellee Mark Lulfs d/b/a Paperhanger Plus to assist it with fabricating, finishing,

transporting and installing the prefabricated panels from materials Eco Built supplied and also in

finishing field-applied panels.

In consideration for the full performance of the work specified under Eco Built’s

subcontract with Landmark, Landmark agreed to pay Eco Built a total sum of $3,975,000. However,

it was explicitly “provided that no payments are to be made unless [Eco Built’s] rate of progress,

work done, and materials furnished are satisfactory to [Landmark] and has herein agreed upon.”

The subcontract provided for monthly progress payments to Eco Built—essentially

draws against the total contract amount—“covering the value of work completed to the satisfaction

of [ACE] during that month.” Eco Built was required to submit applications for such payments

on which it would list materials it had purchased and work that had been performed during that

period. The work and materials were required to be categorized among several line-items in a

“schedule of values.” To each line item was assigned a percentage of the total contract value, and

payment requests were to be charged against these values. The subcontract contemplated that

Landmark would incorporate information from Eco Built’s application into its own requests for

payment from ACE. ACE would then inspect the work and materials to verify the information

provided in the payment requests, and either pay the request or withhold payment pending cure of

any deficiencies. Assuming Landmark was paid for the materials or work, it would pay Eco Built,

and Eco Built would in turn pay its suppliers and subcontractors. The subcontract contained a pay-

3
when-paid clause—“PAYMENT TO [ECO BUILT] SHALL BE CONDITIONED ON PAYMENT

TO [LANDMARK] BY [ACE].”

Also of note, the subcontract required Eco Built to furnish Landmark a treasury-rated

payment and performance bond covering one-hundred percent of Eco Built’s contractual scope

of work. The bond was included in the total contract amount. Finally, the subcontract authorized

Landmark to terminate the contract at any time without cause upon written notice to Eco Built.

Essentially three sets of key disputes arose concerning Eco Built’s work on the

project. The first related to difficulty Eco Built encountered in obtaining the required bond. Despite

repeated assurances to Landmark that it would imminently obtain and furnish the bond, weeks

and then months elapsed without Eco Built satisfying the requirement. The second set of disputes

concerned the quality of Eco Built’s work. Although Landmark had paid an initial progress payment

application for Eco Built’s set-up costs (e.g., expenses for fabrication equipment, tools, and its

facility), complaints about cracked or misaligned panels prompted ACE to withhold payment to

Landmark for work and materials related to the panels, and Landmark in turn withheld payment from

Eco Built. The third set of disputes, related to the second, concerned Eco Built’s failure to pay its

suppliers and subcontractors and the prospect that Landmark could ultimately be required to satisfy

those obligations. These outstanding obligations included payments due to Paperhanger Plus and

to California Wholesale Materials Supply, Inc. d/b/a Calply, which had supplied steel to Eco Built.

On November 15, 2002, Landmark served notice to Eco Built that it was in default

under several provisions of the subcontract and demanded that the defaults be cured within 72 hours.

The claimed defaults included Eco Built’s failure to provide a payment and performance bond;

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to promptly amend and make good any defective materials and/or workmanship to the approval of

Landmark, ACE, and the project’s architect; to pay its subcontractors and vendors; to provide a

written quality control and assistance program; and to obtain the approval of Landmark and

ACE before subcontracting its work. The notice further cited an incident earlier that day when

Eco Built “[n]otified Landmark . . . that due to your inability to make payroll you were stopping

work effective immediately.”

Within a few days after this notice, however, Landmark and Eco Built agreed

to modify their subcontract into two agreements—(1) a $2,500,000 purchase contract whereby

Landmark would buy the prefabricated panels from Eco Built, and (2) a $1,475,000 subcontract

to cover Eco Built’s erection and installation of the prefabricated panels and finishing of the

field applied panels. This modification had the effect of reducing the amount of bond Eco Built was

required to obtain, as only the second contract required a bond. Also, on November 21, Landmark

issued five checks covering materials and work for which Eco Built had requested payment in early

October. Each of these checks was made payable jointly to Eco Built and the vendor or third-tier

subcontractor who had provided the materials or work for which Eco Built had requested payment.

One such check was payable to Eco Built and Paperhanger Plus, another was payable to Eco Built

and Calply, and the remainder were each payable to Eco Built and other materials vendors.

The disputes continued, however. On December 6, Landmark invoked its right

to terminate the subcontract and subsequently hired another subcontractor to complete fabrication

and installation of the exterior wall panels. As of the date of termination, Eco Built still had not

obtained a bond. By that date, Eco Built had submitted a total of four progress payment applications

5
covering materials and work provided through November 25. Landmark had not been paid by ACE

in connection with this work, nor had Landmark paid Eco Built anything beyond the initial progress

payment and the November 21 joint checks. In January 2003, Landmark issued an additional

joint check payable to Eco Built and the vendor of the AAC panels. Landmark subsequently issued

checks directly to two other Eco Built materials vendors and to two vendors of Paperhanger Plus.

Eco Built also submitted a fifth and final application for payment claiming additional work and

materials between November 26 and its December 6 termination, but Landmark made no payments

to Eco Built for such work and materials.

Litigation ensued. Paperhanger Plus and Calply sued Eco Built, Landmark, and

Landmark’s surety for amounts they claimed they were owed on the project, and Landmark and

Eco Built asserted claims against each other. Among other relief each requested, Landmark sought

to recover its costs of completing fabrication and installation of the wall panels and Eco Built sought

to recover sums it alleged Landmark owed it for work and materials it had provided under the

parties’ subcontract. Calply also asserted a claim against appellant Yancey Ed Travis as a guarantor

of Eco Built’s alleged outstanding payment obligations to Calply. Prior to trial, Landmark paid

Paperhanger Plus $100,001 to settle the subcontractor’s claim against it, and Paperhanger Plus

assigned to Landmark its claims against Eco Built. Landmark also paid $65,000 to Calply in

August 2007. Over a month later, Calply executed what purported to be an assignment to Landmark

6
of its claims against Eco Built. Landmark also obtained partial summary judgment against Eco Built

on a promissory estoppel claim Eco Built had asserted.1

Landmark proceeded to trial on causes of action against Eco Built for breach of the

subcontract, fraud, and negligent misrepresentation. It also asserted the claims of Paperhanger Plus

and Calply against Eco Built as assignee. Eco Built, in turn, asserted its own claim against

Landmark for breach of the subcontract (specifically, Landmark’s failure to pay what Eco Built

contended it was owed) and a claim that Landmark had converted Eco Built’s tools and equipment

following termination.

During trial, Landmark moved for and obtained a directed verdict on the Calply

claims. Following presentation of evidence, the district court submitted each of the remaining

claims to the jury. The submissions of the parties’ competing contract claims are significant to

our analysis. In Question 1, the district court inquired whether Eco Built had failed to comply with

the “Landmark/Eco Built Contract” (defined by reference to the original contract executed in

September 2002), and, in Question 3, whether Landmark had failed to comply with that contract.

In both questions, the district court instructed the jury that a failure to comply must be “material” and

supplied a definition of materiality that generally tracked the factors identified in section 241 of the

Second Restatement of Contracts and applied by the Texas Supreme Court in Mustang Pipeline Co.,

Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 199 (Tex. 2004) (per curiam).2

1
Early in the litigation, Landmark’s surety also obtained summary judgment, on limitation
grounds, on claims asserted against it by Eco Built.
2
Regarding materiality, the jury was instructed that the circumstances to consider in
determining whether a failure to comply is material include:

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 In Question 2, the district court submitted—predicated on a finding that Eco Built

had failed to comply with the contract—an affirmative defense of waiver asserted by Eco Built. The

court instructed the jury that Eco Built’s failure to comply was excused if Landmark “waived”

compliance, and that “waiver” is “an intentional surrender of a known right or intentional conduct

inconsistent with claiming that right.” In Question 4, the court submitted—predicated on a finding

that Landmark had failed to comply with the contract—an equitable estoppel defense asserted by

Landmark.3

a. the extent to which the injured party will be deprived of the benefit which he
reasonably expected;

b. the extent to which the injured party can adequately be compensated for the
part of that of which he will be deprived;

c. the extent to which the party failing to perform or to offer to perform will
suffer forfeiture;

d. the likelihood that the party failing to perform or to offer to perform will cure
his failure, taking into account the circumstances indicating any reasonable
assurances.

See Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 199 (Tex. 2004)
(per curiam) (quoting Restatement (Second) of Contracts § 241 (1981)).
3
Specifically, the jury was instructed that Landmark’s failure to comply would be excused
if each to the following circumstances had occurred:

1. Eco Built

a. by words or conduct made a false representation or concealed
material facts;

b. with knowledge of the facts or with knowledge or information that
would lead a reasonable person to discover the facts; and

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 In Question 5, the district court inquired—predicated on (1) findings that both

Eco Built and Landmark had failed to comply with the subcontract and (2) failures to find that either

party’s breach had been excused—“Who failed to comply with the Landmark/Eco Built Contract

first?” Next, predicated on (1) a finding that Eco Built had breached and a failure to find it had

been excused, or (2) that Eco Built had breached first, Question 6 asked the jury to award

damages to Landmark, considering only “[t]he difference between the unpaid agreed price of the

Landmark/Eco Built Contract and the amount Landmark incurred to complete the scope of work

contained in the Landmark/Eco Built Contract.” Similarly, Question 7—predicated on (1) a finding

that Landmark had breached first and a failure to find it had been excused or (2) that Landmark had

breached first—asked the jury to award damages to Eco Built, considering only “[t]he difference

between the amount paid by Landmark to Eco Built for work and materials provided and the amount

Landmark had agreed to pay Eco Built for that work and materials.”

The jury found that both Eco Built and Landmark had failed to comply with

the subcontract, failed to find that either party’s non-compliance had been excused, and that

c. with the intention that Landmark would rely on the false
representation or concealment in acting or deciding not to act; and

2. Landmark

a. did not know and had no means of knowing the real facts; and

b. relied to its detriment on the false representations or concealment of
material facts.

See Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury Charges: Business,
Consumer, Insurance & Employment PJC § 101.25 (2008).

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Eco Built had breached first. Because the predicates for the contract damages submissions in

Questions 6 and 7 were each stated in the disjunctive, the jury answered both questions, awarding

Landmark $481,859.26 and Eco Built $62,503.85. The jury failed to find that Eco Built had

committed fraud against Landmark or that Eco Built had failed to comply with its agreement with

Paperhanger Plus, but did find that Eco Built had made a negligent misrepresentation on which

Landmark had justifiably relied. As with Landmark’s contract damages submission, the negligent-

misrepresentation damages submission instructed the jury to consider only “[t]he difference between

the unpaid agreed price of the Landmark/Eco Built Contract and the amount Landmark incurred to

complete the scope of work contained in the Landmark/Eco Built Contract,” and the jury awarded

an identical amount—$481,859.26. On the other hand, the jury also found that Landmark had

converted Eco Built’s property and awarded a total of $92,000 in damages on that claim.

Landmark elected to recover on its contract claim. Based on the jury’s findings,

the district court rendered judgment awarding Landmark a sum of $474,859.26—representing the

jury’s award of $481,859.26 in contract damages, offset by Eco Built’s $92,000 in conversion

damages, plus $85,000 in stipulated attorney’s fees—plus prejudgment interest. The district court

did not award Eco Built any portion of the damages the jury had awarded for Landmark’s breach of

the subcontract. Additionally, based on its directed verdict on the Calply claims, the district court

awarded Landmark, as assignee, a total of $63,505.97, plus prejudgment interest, jointly and

severally from Eco Built and Travis. The $63,505.97 figure represented $58,505.97 in damages plus

$5,000 in stipulated attorney’s fees.

This appeal followed.

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 ANALYSIS

Eco Built’s contract claim

In its first issue, Eco Built argues that the district court erred in disregarding the jury’s

findings that Landmark had failed to comply with the subcontract and that Eco Built had been

damaged by the breach. The district court could have disregarded these findings only if they had

no support in the evidence or were immaterial. Southeastern Pipeline Co. v. Tichacek, 997 S.W.2d

166, 172 (Tex. 1999); Spencer v. Eagle Star, 876 S.W.2d 154, 157 (Tex. 1994); Billy Smith Enter.,

Inc. v. Hutchison Constr., Inc., 261 S.W.3d 370, 374 (Tex. App.—Austin 2008, pet. dism’d).

Although the record does not explicitly indicate the basis on which the district court disregarded

these findings, there is no indication that the court set aside these findings for lack of evidentiary

support. The record is instead consistent with the district court’s having given these findings effect

but determining they were immaterial. See Billy Smith Enter., Inc., 261 S.W.3d at 372-74.4

A jury question is immaterial “when it should not have been submitted, it calls for

a finding beyond the province of the jury, such as a question of law, or when it was properly

submitted but has been rendered immaterial by other findings.” Id. (quoting Tichacek, 997 S.W.2d

at 172). On appeal, the parties join issue as to whether the jury’s findings that Landmark had failed

to comply with the subcontract and that Eco Built had been damaged were rendered immaterial by

4
Following the verdict, Landmark filed a one-page motion for entry of judgment that did
not mention the findings in question, but merely attached a form of judgment that is substantively
identical to the judgment that the district court ultimately signed. That judgment incorporated the
jury’s verdict by reference and awarded damages to Landmark on its contract claim, but omitted any
mention of the jury findings that Landmark had breached and that Eco Built had been damaged.
Neither the judgment nor any other ruling reflects that the district court set aside these or other
findings.

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the jury’s finding in Question 5 that Eco Built had breached before Landmark did. The parties’

contentions center on the implications of the “fundamental principle of contract law that when one

party commits a material breach of that contract, the other party is discharged or excused from

further performance.” Mustang Pipeline Co., Inc., 134 S.W.3d at 196 (citing Hernandez v. Gulf

Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994)).

Landmark argues that because the jury found in Question 5 that Eco Built’s material

breach of the subcontract found in Question 1 occurred before Landmark’s material breach through

failure to pay Eco Built, found in Question 3, Landmark was, as a matter of law, discharged from

any payment obligations under the subcontract that could have been the basis for the jury’s findings

of breach in Question 3. However, the principle on which Landmark relies is subject to an important

caveat, as Eco Built observes. When a contracting party commits a material breach, the non-

breaching party must elect between two courses of action, either continuing performance under the

contract or ceasing performance and terminating the contract. See Gupta v. Eastern Idaho Tumor

Inst., Inc., 140 S.W.3d 747, 756 (Tex. App.—Houston [14th Dist.] 2004, pet. denied); World Access

Telecomms. Group, Inc. v. Statewide Calling, Inc., No. 03-05-00173-CV, 2006 Tex. App. LEXIS

9061, at *18 (Tex. App.—Austin Oct. 17, 2006, no pet.) (mem. op.). If the non-breaching party

elects to treat the contract as continuing and insists the party in default continue its performance, the

previous breach constitutes no excuse for nonperformance on the part of the party not in default,

and the contract continues in force for the benefit of both parties. Hanks v. GAB Bus. Servs., Inc.,

644 S.W.2d 707, 708 (Tex. 1982); Gupta, 140 S.W.3d at 756.

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 In this case, Landmark acknowledges that it continued to treat its subcontract with

Eco Built as continuing—and continued to demand performance from Eco Built—until Landmark

finally terminated the contract on December 6, 2002. Consequently, Landmark was not discharged

by virtue of Eco Built’s material breach from any payment obligations to Eco Built that accrued

under the subcontract prior to termination. See Gupta, 140 S.W.3d at 756; World Access Telecomms.

Group, Inc., No. 03-05-00173-CV, 2006 Tex. App. LEXIS 9061, at *18.5 The jury’s findings that

Landmark breached the subcontract and that Eco Built was damaged were, therefore, not rendered

immaterial by the jury’s finding in Question 5 that Eco Built had materially breached first.

Landmark also urges that it had no obligations under the subcontract to make any

payment to Eco Built. It emphasizes evidence of Eco Built’s “inferior work” and the pay-after-pay

clause in the subcontract. This amounts to a contention that the district court properly disregarded

the findings that Landmark had breached its payment obligations and that Eco Built had been

damaged because there is no evidence to support the finding of breach. This cannot be a basis for

affirming the judgment, however, because there is no indication that Landmark ever challenged the

jury’s finding of breach for lack of evidentiary support or that the district court set it aside on that

basis. See Billy Smith Enter., Inc., 261 S.W.3d at 372-74; Tex. R. App. P. 33.1.

5
Landmark’s acknowledgment that the contract continued in effect until December 6, 2002,
obviates any potential issues with omitted or deemed findings regarding whether or when Landmark
elected to terminate the subcontract prior to that time. Nor could any such finding be deemed in
favor of Landmark, as there is no evidence that Landmark elected to terminate the subcontract before
December 6. See Tex. R. Civ. P. 279; Ramos v. Frito-Lay, Inc., 784 S.W.2d 667, 668 (Tex. 1990)
(elements omitted from a jury charge that constitute only part of theory of recovery may be deemed
found in support of judgment if no objection is made and they are supported by factually sufficient
evidence).

13
 Landmark also argues that its “failure to elect” to terminate the subcontract before

December 6, 2002, should not “excuse” Eco Built’s material breach in failing to provide the bond

because Eco Built had “unclean hands in causing Landmark not to terminate earlier.” This argument

seems to relate to Question 4, which submitted Landmark’s affirmative defense of equitable estoppel

to its liability for breach of contract. The jury failed to find that Landmark’s failure to comply with

the subcontract was excused by equitable estoppel. To the extent Landmark is arguing that the

evidence conclusively established that defense, we reject that contention, which, in any event,

Landmark did not preserve below. Alternatively, to the extent Landmark is attempting to rely on

some other equitable defense to its contract liability, it likewise failed to preserve that contention.

See Tex. R. App. P. 33.1.

Finding no basis in the evidence for the district court to have disregarded the jury’s

findings that Landmark failed to comply with the subcontract and that Eco Built was damaged

thereby, we sustain Eco Built’s first issue. In its second issue, Eco Built argues that the evidence

conclusively establishes that it incurred damages greater than the $62,503.85 the jury awarded it or

that the jury’s failure to award greater damages was against the great weight and preponderance of

the evidence. Eco Built’s arguments center on a damages calculation that Landmark presented at

trial to demonstrate what it viewed as the maximum amount Eco Built could recover if, as Eco Built

contended, Landmark had agreed to pay Eco Built for work and materials requested in Eco Built’s

progress payment applications. However, we conclude that Eco Built did not preserve these

contentions in the district court.

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 Eco Built did not object to Question 7 or otherwise raise its legal-sufficiency

contention prior to submission. Following the verdict, Eco Built filed two motions that were

authored and presented by Travis with consent of appellants’ trial-level counsel and Landmark—a

motion for new trial and a “motion to set aside directed verdict and objection to entry of judgment.”

Although we have attempted to construe the substance of these filings fairly, we cannot discern

that either complains of or seeks relief concerning the jury’s damages finding in Question 7.

Consequently, we must overrule Eco Built’s complaint regarding the legal sufficiency of the

evidence supporting the jury’s answer on Question 7. See Tex. R. Civ. P. 324(b)(2), (3), (4); Tex. R.

App. P. 33.1; T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 220 (Tex. 1992) (party

must preserve legal sufficiency point by: (1) moving for instructed verdict, (2) moving for judgment

notwithstanding verdict, (3) objecting to submission of jury question, (4) moving to disregard jury’s

answer to vital fact question, or (5) moving for new trial).

Landmark’s contract claim

In addition to its arguments concerning the damages the jury awarded on its own

contract claim, Eco Built also challenges, in its second issue, the legal sufficiency of the evidence

supporting the jury’s award of $481,859.26 in contract damages to Landmark. As previously noted,

Question 6 asked the jury to determine the difference between (1) “the unpaid agreed price of the

Landmark/Eco Built Contract” (i.e., the payments to Eco Built that Landmark saved by terminating

the subcontract and using another subcontractor); and (2) “the amount Landmark incurred to

complete the scope of work contained in the Landmark/Eco Built Contract” (i.e., Landmark’s

costs to complete the work that Eco Built had originally contracted to perform). Eco Built argues

15
that Landmark failed to present competent evidence of its completion costs (the second component)

because while Landmark presented testimony that it incurred large out-of-pocket costs of

completion, it failed to present any evidence that these costs were reasonable and necessary. See

Mustang Pipeline, 134 S.W.3d at 200-01 (“The party seeking to recover the cost of completion in

a breach of contract case has the burden to prove that the damages sought are reasonable. Evidence

of the amounts charged and paid, standing alone, is no evidence that such payment was reasonable

and necessary.”) (citing Dallas Ry. Terminal Co. v. Gossett, 294 S.W.2d 377, 382-83 (Tex. 1956)).

However, as was the case with Eco Built’s contract damages, Eco Built did not preserve this legal-

sufficiency complaint below. Tex. R. App. P. 33.1; T.O. Stanley Boot Co., 847 S.W.2d at 220.

Eco Built also argues that Landmark failed to present legally sufficient evidence that

some of the components of its claimed costs of completion had been within the scope of Eco Built’s

contract. Eco Built did preserve this contention below to the extent it complained in its new trial

motion that Landmark’s damages model had excluded several change orders Landmark had made

to the Eco Built contract from its calculation of the unpaid agreed price of the Landmark-Eco Built

subcontract (the first component of the calculation) yet determined Landmark’s costs of completion

(the second component) based on a contractual scope of work that had incorporated the same change

orders. Landmark disputed whether it had agreed to these change orders. Eco Built argued that the

total amount of its alleged change orders—$709,863.85—should be added to “the unpaid agreed

price of the Landmark/Eco Built Contract” before subtracting that figure from Landmark’s costs of

completion to determine Landmark’s damages. Assuming so, this would not alone demonstrate that

the evidence supporting the jury’s award of $481,859.26 to Landmark was legally insufficient.

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Landmark presented evidence that its costs of completion were $4,918,755.73 and that the remaining

unpaid balance of the Eco Built contract was $3,219,838.47 (not including the alleged change

orders), a difference of $1,698,920.26. Including the alleged change orders in the unpaid balance

of the Eco Built contract would reduce this difference to $989,056.41—still well above the amount

the jury awarded. We overrule Eco Built’s second issue.

In its third issue, Eco Built argues in the alternative that conclusive evidence and a

statement by Landmark’s counsel during closing argument established Eco Built’s waiver defense

as a matter of law.6 Eco Built points to evidence that in November 2002, Landmark and Eco Built

agreed to modify their original subcontract into two agreements, which had the effect of reducing

the amount Eco Built was required to bond from almost $4 million to $1,475,000. During closing

argument, Landmark’s counsel emphasized that the parties had agreed to “split” the contract to aid

Eco Built in obtaining a bond. Eco Built further observes that the jury issue on its breach-of-contract

liability, Question 1, inquired whether it had “failed to comply with the Landmark/Eco Built

contract,” and defined “Landmark/Eco Built contract” by reference to a copy of the original

subcontract. From this, Eco Built reasons that the evidence and counsel’s statements conclusively

establish its waiver defense as to any breach-of-contract claims that were predicated on a bond

requirement in the subcontract. Even assuming this, however, Eco Built has not demonstrated error

in the judgment because the broad-form submission of Eco Built’s breach-of-contract liability in

6
Eco Built raised this argument in its motion for new trial. Thus, while this argument was
preserved, Eco Built’s remedy would be limited to a new trial. See Horrocks v. Texas Dep’t of
Transp., 852 S.W.2d 498, 499 (Tex. 1993).

17
Question 1 enabled the jury to find breach based on contractual obligations other than the bond

requirement. We overrule Eco Built’s third issue.

Directed verdict on Calply claims

Finally, in the fourth issue presented on appeal, Eco Built and Travis jointly contend

that the district court erred in granting a directed verdict in Landmark’s favor on the assigned Calply

claims and awarding $58,505.97 in damages jointly and severally against them. When reviewing

a directed verdict, we view the evidence in the light most favorable to the party against whom the

verdict was rendered and disregard all contrary evidence and inferences. See Szczepanik v. First S.

Trust Co., 883 S.W.2d 648, 649 (Tex. 1994); White v. Southwestern Bell Tel. Co., 651 S.W.2d 260,

262 (Tex. 1983). If there is any conflicting evidence of probative value that raises a material fact

issue on any theory of recovery, that issue should be submitted to the jury. Szczepanik, 883 S.W.2d

at 649; White, 651 S.W.2d at 262.

Appellants argue that the district court erred in awarding damages based on the

directed verdict because the evidence presents a fact issue as to whether Landmark’s payment of

$65,000 to Calply satisfied in whole or in part the claims that Calply purported to assign to

Landmark. Appellants emphasizes evidence that Landmark first made an electronic transfer of

$65,000 to Calply to “clear their account” on August 24, 2007, yet did not execute an assignment

until early October. And that assignment, appellants add, purported to assign “claims in existence

as of September 18, 2007,” which was almost a month after Landmark’s payment to Calply.

18
 More broadly, appellants have complained both here and below that the award

resulted in a double- or even triple-recovery for the same injury.7 Although Landmark insists that

“the evidence is that the payment is to clear [Calply’s] claim against Landmark” and that this claim

is distinct from Calply’s claim against Eco Built, Landmark’s own damages witness acknowledged

that the payment was to satisfy an obligation that Eco Built had incurred to Calply for steel Eco Built

had purchased. Landmark asserts, and appellants conceded in its post-verdict filings below, that the

amount of Eco Built’s outstanding unpaid obligations to Calply had been $58,505.97. Thus, Calply

was paid in excess of this amount by Landmark to “clear their account,” then purported to assign to

Landmark its right to recover the same $58,505.97 obligation from Eco Built.

Appellants have requested reversal of the portion of the district court’s judgment

awarding Landmark damages on the assigned Calply claims and remand for trial. We agree that

appellants have shown themselves entitled to this relief. Consequently, we sustain appellants’

fourth issue.

CONCLUSION

We have concluded that the district court erred in disregarding the jury’s findings

that Landmark had breached the Landmark-Eco Built subcontract and that Eco Built had been

damaged thereby. We have overruled Eco Built’s issues pertaining to the amount of damages the

jury awarded to Eco Built and to Landmark. In light of these holdings, we modify the district court’s

judgment to reduce Landmark’s award of actual damages from Eco Built, $474,859.26, by the

7
Contrary to Landmark’s assertions on appeal, Eco Built preserved this complaint by raising
it in its objection to entry of judgment.

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amount of the jury’s award of contract damages to Eco Built, $62,503.85, for a net total of

$412,355.41. As so modified, we affirm that portion of the judgment. Having modified the

damage award, we must also reverse the amount of prejudgment interest awarded to Landmark and

remand that portion of the cause to the trial court for recalculation of prejudgment interest. See

Lairsen v. Slutzky, 80 S.W.3d 121, 132 (Tex. App.—Austin 2002, pet. denied). We also reverse the

portion of the district court’s judgment awarding Landmark, as assignee of Calply, $58,505.97, and

remand for further proceedings.

__________________________________________

Bob Pemberton, Justice

Before Chief Justice Jones, Justices Pemberton and Waldrop

Modified and, as Modified, Affirmed in part; Reversed and Remanded in part

Filed: August 13, 2010

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