CDM Constructors, Inc. and CDM Smith, Inc. v. City of Weslaco, Texas

NUMBER 13-19-00447-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI – EDINBURG

CDM CONSTRUCTORS, INC.
AND CDM SMITH, INC., Appellants,

v.

CITY OF WESLACO, TEXAS, Appellee.

On appeal from the 139th District Court
of Hidalgo County, Texas.

MEMORANDUM OPINION

Before Justices Benavides, Longoria, and Tijerina
Memorandum Opinion by Justice Longoria
Appellants CDM Constructors, Inc. and CDM Smith, Inc. bring this interlocutory

appeal to challenge the denial of their motions to dismiss pursuant to the Texas Citizen’s

Participation Act (TCPA). See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(12). By

three issues, appellants contend that the trial court erred in failing to dismiss appellee the
City of Weslaco’s (the City) claims against them. We affirm.

I. BACKGROUND

The Texas Commission on Environmental Quality (TCEQ) notified the City that its

water treatment facilities were non-compliant and needed improvements. The City

contracted with CDM Constructors in 2008 to repair and improve the City’s south

wastewater treatment plant (Project 1). In 2012, the City contracted with CDM

Constructors to build a new treatment plant and distribution system (Project 2).

In October 2018, the City filed suit against CDM Constructors for declaratory relief

regarding CDM Constructors’ allegation that the City still owed $2,400,000 under the

contract for Project 2. The City amended its petition, adding additional claims against

CDM Constructors. The City then filed another amended petition, maintaining the same

claims and adding CDM Smith, among others, as a defendant. In its live pleading, the

City asserts claims against appellants for fraud and conspiracy, for which it seeks

monetary damages, and in the alternative, equitable relief based on the theories of unjust

enrichment and constructive trust. It also asserts claims specifically against CDM

Constructors for “money-had-and-received and declaratory judgment,” seeking rescission

as an equitable remedy.

The City’s live pleading alleges that appellants committed fraud by “making false

representations to the City to pay [appellants] millions of dollars.” Further, the City alleges

that appellants committed acts of bribery and civil conspiracy in order to defraud the city.

The City’s allegations are based on the City’s contention that appellants, along with

several other individuals and companies, conspired to have the contracts for Project 1

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and Project 2 awarded to appellants as part of a larger scheme to inflate invoices and

defraud the City of large amounts of money.

After the City filed its third amended petition, CDM Constructors filed a TCPA

motion to dismiss the City’s claims that were added in the second amended pleading but

did not challenge the initial claim brought by the City. Subsequently, CDM Smith filed a

TCPA motion to dismiss the claims specifically asserted against it by the City’s third

amended petition. The motions were consolidated and set for a single hearing.

The City filed a response, the appellants filed a joint reply in support of their

motions, and the City filed a sur-reply in opposition. The trial court denied appellants’

motions and this appeal followed.

II. TCPA

By three issues, appellants argue that the trial court erred in denying the TCPA

motions to dismiss. Specifically, appellants contend that (1) the TCPA applies to the City’s

challenged claims, (2) the commercial speech exemption cannot apply to the challenged

claims, and (3) there is no clear and specific evidence of all essential elements of the

City’s challenged claims.

A. Standard of Review & Applicable Law

We review de novo a trial court’s ruling on a TCPA motion to dismiss. Dall. Morning

News, Inc. v. Hall, 579 S.W.3d 370, 377 (Tex. 2019). In conducting our review, we

consider the pleadings and evidence in a light favorable to the nonmovant. Dyer v. Medoc

Health Servs., LLC, 573 S.W.3d 418, 424 (Tex. App.—Dallas 2019, pet. denied).

The TCPA is an anti-SLAPP law; “SLAPP” is an acronym for “Strategic Lawsuits

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Against Public Participation.” Fawcett v. Grosu, 498 S.W.3d 650, 654 (Tex. App.—

Houston [14th Dist.] 2016, pet. denied) (op. on reh’g). The TCPA is intended “to

encourage and safeguard the constitutional rights of persons to petition, speak freely,

associate freely, and otherwise participate in government to the maximum extent

permitted by law and, at the same time, protect the rights of a person to file meritorious

lawsuits for demonstrable injury.” TEX. CIV. PRAC. & REM. CODE ANN. § 27.002; Cox Media

Grp., LLC v. Joselevitz, 524 S.W.3d 850, 859 (Tex. App.—Houston [14th Dist.] 2017, no

pet.). The TCPA “protects citizens from retaliatory lawsuits that seek to intimidate or

silence them” from exercising their First Amendment freedoms and provides a procedure

for the “expedited dismissal of such suits.” In re Lipsky, 460 S.W.3d 579, 586 (Tex. 2015).

We construe the TCPA liberally to effectuate its purpose and intent fully. See Adams v.

Starside Custom Builders, LLC, 547 S.W.3d 890, 894 (Tex. 2018); ExxonMobil Pipeline

Co. v. Coleman, 512 S.W.3d 895, 899 (Tex. 2017); see also TEX. CIV. PRAC. & REM. CODE

ANN. § 27.011(a).

A defendant invoking the act’s protections must show first, by a preponderance of

the evidence, that the plaintiff’s legal action is “based on, relates to, or is in response to”

the defendant’s exercise of one or more of the enumerated rights. In re Lipsky, 460

S.W.3d at 586. If the defendant makes the initial showing, the burden shifts to the plaintiff

to establish by clear and specific evidence a prima facie case for each essential element

of the claim in question. See id. at 587. “Prima facie case” refers to the quantum of

evidence required to satisfy the nonmovant’s minimum factual burden and generally

refers to the amount of evidence that is sufficient as a matter of law to support a rational

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inference that an allegation of fact is true. See id. at 590.

The evidence offered to support a prima facie case must be “clear and specific.”

Bedford v. Spassoff, 520 S.W.3d 901, 904 (Tex. 2017) (per curiam). Clear and specific

evidence means that the nonmovant must provide enough detail to show the factual basis

for its claim. Id. at 904. If the movant’s constitutional rights are implicated and the

nonmovant has not met the required showing of a prima facie case, the trial court must

dismiss the nonmovant’s claim. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005. The trial

court considers “the pleadings and supporting and opposing affidavits stating the facts on

which the liability or defense is based.” Id. § 27.006(a).

B. Applicability

Appellants contend that the TCPA applies to the challenged claims because those

claims “arise from Appellants’ specific exercise of their respective rights of free speech

on matters of public concern, rights to petition, and rights of association.”

1. Free Speech

The TCPA defines the “exercise of the right of free speech” as a “communication

made in connection with a matter of public concern.” TEX. CIV. PRAC. & REM. CODE

ANN. § 27.001(3). A “matter of public concern” includes an issue related to health or

safety; environmental, economic, or community well-being; or a good, product or service

in the marketplace. Id. § 27.001(7)(A)–(B), (E). 1 Communications do not become a

1 Appellants’ TCPA motion to dismiss was denied by written order on August 26, 2019, prior to
September 1, 2019, the date upon which the recent amendments to the TCPA went into effect. The prior,
pre-amendment version of the TCPA therefore applies to appellants’ claims and this appeal. See 2019 Tex.
Sess. Law Serv. Ch. 378 (H.B. 2730) (“Chapter 27, Civil Practice and Remedies Code, as amended by this
Act, applies only to an action filed on or after the effective date of this Act. An action filed before the effective
date of this Act is governed by the law in effect immediately before that date, and that law is continued in
effect for that purpose. . .. This Act takes effect September 1, 2019.”). Accordingly, our citations and
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matter of public concern simply based on the nature of the parties’ business—there must

be some relevance to issues beyond the interests of the parties. See Caliber Oil & Gas,

LLC v. Midland Visions 2000, 591 S.W.3d 226, 239–40 (Tex. App.—Eastland 2019, no

pet.) (holding that, for a communication to relate to economic well-being, it must “have an

impact on more than the party’s personal financial well-being” and to relate to community

well-being, a communication must affect “the well-being of the community at large or at

least a subset of its residents”); see also Staff Care, Inc. v. Eskridge Enters., LLC, No.

05-18-00732-CV, 2019 WL 2121116, at *4 (Tex. App.—Dallas May 15, 2019, no pet.)

(mem. op.) (noting that, to determine whether the TCPA applies, a court “must look to the

content of the communications themselves and not focus solely on the occupation of the

speaker or the related industry”); Blue Gold Energy Barstow, LLC v. Precision Frac, LLC,

No. 11-19-00238-CV, 2020 WL 1809193, at *7 (Tex. App.—Eastland Apr. 9, 2020, no

pet.) (mem. op.).

Appellants contend that the communications at issue here fall into the category

protected by the TCPA as they involved matters of public concern, specifically the City’s

water treatment plant. The City, however, likens this case to Creative Oil & Gas, LLC v.

Lona Hills Ranch, LLC, 591 S.W.3d 127 (Tex. 2019), which the City contends served to

restrict the scope of the TCPA. The City argues that the TCPA does not apply here

because this case involved communications relating to a private contract dispute which

relates to appellants’ “own financial interests, not matters of public concern.” We agree

analyses are to the TCPA as it existed prior to September 1, 2019, unless otherwise noted. Nothing in this
opinion should be read to express an opinion regarding the proper construction or application of any
amended provision of the TCPA.
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with appellants.

Here, contrary to the cases cited by the City that follow the holding in Creative Oil,

the contract was not between private entities, but rather between private companies and

the City, and concerned the public water supply in the City.

We have previously held that private communications are sometimes
covered by the TCPA. E.g., ExxonMobil Pipeline Co., 512 S.W.3d 895;
Lippincott v. Whisenhunt, 462 S.W.3d 507 (Tex. 2015) (per curiam). These
prior cases involved environmental, health, or safety concerns that had
public relevance beyond the pecuniary interests of the private parties
involved. See ExxonMobil Pipeline Co., 512 S.W.3d at 898, 901 (concluding
that private statements by movants concerning plaintiff's alleged failure to
gauge a storage tank related to a matter of public concern due to “serious
safety and environmental risks”); Lippincott, 462 S.W.3d at 509–10
(concluding that alleged improper provision of medical services by a health
care professional are matters of public concern).

Id., 591 S.W.3d at 136. As discussed in detail by Morris v. Daniel,

In Creative Oil, a ranch sued to terminate an oil and gas lease. 591 S.W.3d
at 130. The operator and lessee counterclaimed alleging the ranch had
misrepresented the status of the lease to third-party purchasers of
production and urged these third-party purchasers to stop making
payments. Id. The ranch responded by filing a motion to dismiss under the
[TCPA], arguing that its statements to third parties were an exercise of the
right to free speech because these communications addressed a matter of
public concern. Id. The ranch maintained that its speech addressed a matter
of public concern because, among other things, its speech related to goods,
products, or services offered in the marketplace. Id. at 134 (relying on prior
version of [the TCPA] that explicitly included marketplace goods, products,
and services in definition of “matter of public concern”).

The Court rejected the ranch’s position. Id. at 134–36. It observed
that almost all contracts involve a marketplace good, product, or service but
that this is not enough to make every communication about these contracts
a matter of public concern. Id. at 134. The Court reasoned that for the
ranch’s statements to be on a matter of public concern, the statements had
to be relevant to the wider marketplace—the public audience of potential
buyers and sellers—rather than just the parties to the contract and the third-
party purchasers to whom the ranch made the statements. Id. at 134–36.
The Court held that a private contract dispute affecting only the fortunes of

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 the litigants necessarily is not a “matter of public concern” under any
definition of these words. Id. at 137.

615 S.W.3d 571, 577–78 (Tex. App.—Houston [1st Dist.] 2020, no pet.). Appellants

contend that the City’s public water supply is a matter of public concern because it

implicates the wider marketplace. See id. Moreover, unlike Creative Oil, the City’s

allegations are based on conversations regarding the agreement, or procurement of the

agreement, between the City, a governmental entity, and appellants. See id.

Communications relating to the manner in which the government operates relate to

matters of public concern. In re Lipsky, 411 S.W.3d at 543. In addition, “the award of

public contracts is almost always a public matter and an issue of public concern.” Farias

v. Garza, 426 S.W.3d 808, 819 (Tex. App.—San Antonio 2014, pet. denied), disapproved

on other grounds, In re Lipsky, 460 S.W.3d at 591.

In this case, we hold appellants’ communications regarding their contract with the

City were based on or related to a matter of public concern. See Hicks v. Group & Pension

Administrators, Inc., 473 S.W.3d 518, 530 (Tex. App.—Corpus Christi–Edinburg 2015, no

pet.) (concluding emails regarding concerns about a company’s ability to perform services

to be provided by the company pursuant to a potential contract between the company

and a school district related to matter of public concern); see also Mission Wrecker Serv.,

S.A., Inc. v. Assured Towing, Inc., No. 04-17-00006-CV, 2017 WL 3270358, at *4 (Tex.

App.—San Antonio Aug. 2, 2017, pet. denied) (mem. op.). Appellants’ first issue is

sustained.

C. Commercial Speech Exemption

By their second issue, appellants argue that the “commercial speech exemption”

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does not prevent dismissal of the City’s challenged claims. Intertwined with and overlying

the TCPA’s multi-step dismissal process is the TCPA provision exempting certain actions

from the TCPA’s application. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.010; Morrison

v. Profanchik, 578 S.W.3d 676, 680 (Tex. App.—Austin 2019, no pet.). The commercial

speech exemption provides that the TCPA, and its dismissal provisions, do not apply to

a legal action brought against a person primarily engaged in the business of selling or

leasing goods or services, if the statement or conduct arises out of the sale or lease of

goods, services, or an insurance product, insurance services, or a commercial transaction

in which the intended audience is an actual or potential buyer or customer. TEX. CIV. PRAC.

& REM. CODE ANN. § 27.010(a)(2). When invoked, the trial court must consider an

exemption’s applicability after and in the context of the movant having met its initial burden

under the first step of the dismissal process. See Castleman v. Internet Money Ltd., 546

S.W.3d 684, 688 (Tex. 2018); Morrison, 578 S.W.3d at 680. The party asserting the

commercial speech exemption bears the burden of proving its applicability by a

preponderance of the evidence. Hieber v. Percheron Holdings, LLC, 591 S.W.3d 208,

211 (Tex. App.—Houston [14th Dist.] 2019, pet. denied); Grant v. Pivot Tech. Sols., Ltd.,

556 S.W.3d 865, 887 (Tex. App.—Austin 2018, pet. denied). In deciding whether the

nonmovant has satisfied that burden, the scope of our review includes the pleadings and

any supporting affidavits, both of which are taken as evidence in the TCPA context. See

TEX. CIV. PRAC. & REM. CODE ANN. § 27.006; Hersh v. Tatum, 526 S.W.3d 462, 467 (Tex.

2017); Hieber, 591 S.W. 3d at 211. We also review this evidence in the light most

favorable to the nonmovant. Hieber, 591 S.W.3d at 211. If an action falls under a TCPA

9
exemption, the TCPA does not apply and may not be used to dismiss the action. See

TEX. CIV. PRAC. & REM. CODE ANN. § 27.010; Best v. Harper, 562 S.W.3d 1, 11–12 (Tex.

2018). Accordingly, application of an exemption relieves the nonmovant from making a

prima facie case. See Round Table Physicians Group, PLLC v. Kilgore, 607 S.W.3d 878,

883 (Tex. App.—Houston [14th Dist.] 2020, pet. filed); see also Atlas Survival Shelters,

LLC v. Scott, No. 12-20-00054-CV, 2020 WL 6788714, at *6 (Tex. App.—Tyler Nov. 18,

2020, no pet.) (mem. op.).

Focusing on the text and context of the TCPA’s commercial-speech
exemption, we construe the exemption to apply when (1) the defendant was
primarily engaged in the business of selling or leasing goods, (2) the
defendant made the statement or engaged in the conduct on which the
claim is based in the defendant’s capacity as a seller or lessor of those
goods or services, (3) the statement or conduct at issue arose out of a
commercial transaction involving the kind of goods or services the
defendant provides, and (4) the intended audience of the statement or
conduct were actual or potential customers of the defendant for the kind of
goods or services the defendant provides.

The exemption expressly provides that the TCPA “does not apply to
a legal action brought against a person primarily engaged in the business
of selling or leasing goods or services,” but only “if the statement or conduct
arises out of the sale or lease of goods, services, or an insurance product,
insurance services, or a commercial transaction.” TEX. CIV. PRAC. & REM.
CODE [ANN.] § 27.010(b). While these clauses do not expressly state that
the statement or conduct must arise out of “the defendant’s” sale or lease
of goods or services, or that the defendant be acting in its capacity as a
seller or lessor of those goods or services, we believe that is the only
reasonable and logical construction of the exemption when considered
within its statutory context.

Castleman, 546 S.W.3d at 688. We begin by addressing the fourth element, the intended

audience, as it is dispositive of appellants’ second issue.

The City was required to show that the intended audience of appellants’

statements and conduct was an actual or potential customer for the kind of services that

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appellants provide. The City contends that as the actual customer of appellants’ services

for the construction contract, the City was the intended audience of the statements made

to procure the contract. Specifically, the City argues that the communications were

directed to the City from others on behalf of appellants. Appellants, in contrast, argue that

the alleged statements complained of by the City were made to separate individuals and

other businesses, not the City itself, and therefore were not made to an intended

customer. We agree with appellants. To establish the applicability of the commercial

speech exemption, the City needed to show that the intended audience of the alleged

statements were actual or potential customers of appellants. Castleman, 546 S.W.3d at

688. However, by its own pleadings and in its appellate briefing, the City’s lawsuit is based

on allegations that appellants schemed and conspired with certain individuals and

businesses without the City’s knowledge, meaning, the City was clearly not the audience

of the alleged statements. We conclude the City failed to establish the commercial speech

exemption. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(a)(2); Castleman, 546

S.W.3d at 688. Appellants’ second issue is sustained.

Accordingly, because we hold that the TCPA is applicable to the challenged claims

and the commercial speech exemption has not been established, we turn now to whether

the City established by clear and specific evidence a prima facie case for each essential

element of the claim in question. See In re Lipsky, 460 S.W.3d at 587.

D. Prima Facie Case

Appellants argue in their third issue that the City did not meet its burden to establish

clear and specific elements for each of the challenged claims. See TEX. CIV. PRAC. & REM.

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CODE ANN. § 27.005(c) (providing that trial court may not dismiss legal action if nonmovant

shows by “clear and specific evidence prima facie case for each essential element of

claim in question”). “‘[P]rima facie case’ has a traditional legal meaning. It refers to

evidence sufficient as a matter of law to establish a given fact if it is not rebutted or

contradicted. It is the minimum quantum of evidence necessary to support a rational

inference that the allegation of fact is true.” In re Lipsky, 460 S.W.3d at 590 (internal

citations and quotations omitted). Because the TCPA does not define “clear and specific

evidence,” we give those terms their ordinary meanings. Id. “The words ‘clear’ and

‘specific’ in the context of this statute have been interpreted respectively to mean, for the

former, ‘unambiguous,’ ‘sure,’ or ‘free from doubt’ and, for the latter, ‘explicit’ or ‘relating

to a particular named thing.’” Id. (quoting KTRK Television, Inc. v. Robinson, 409 S.W.3d

682, 689 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). Collectively, these elements

require that a party “provide enough detail to show the factual basis for its claim.” In re

Lipsky, 460 S.W.3d at 591.

1. Fraud

A plaintiff seeking to prevail on a fraud claim must prove that (1) the
defendant made a material misrepresentation; (2) the defendant knew the
representation was false or made the representation recklessly without any
knowledge of its truth; (3) the defendant made the representation with the
intent that the other party would act on that representation or intended to
induce the party’s reliance on the representation; and (4) the plaintiff
suffered an injury by actively and justifiably relying on that representation.

Exxon Corp. v. Emerald Oil & Gas Co., L.C., 348 S.W.3d 194, 217 (Tex. 2011). Appellants

specifically challenge the City’s evidence on “the reliance [and] intent elements.”

Appellants state that the City’s only “evidence” on the element of reliance are the

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allegations in its pleadings and the affidavit of the City’s attorney, both of which appellants

argue are baseless and conclusory. The City may rely on circumstantial evidence—

indirect evidence that creates an inference to establish a central fact—unless “the

connection between the fact and the inference is too weak to be of help in deciding the

case.” In re Lipsky, 460 S.W.3d at 589. Here, the City’s evidence consisted of allegations

that appellants concocted a bribery scheme to secure a lucrative contract with the City

regarding the City’s water treatment plant. There is no dispute that the City and appellants

entered into multimillion dollar contracts for appellants to design and construct new and

updated water treatment facilities, which necessarily infers that the City relied on

appellants’ representations to award the contract to appellants.

The movant for dismissal under the TCPA has no burden to disprove the existence

of a prima facie case. Indeed, the movant cannot do so, because “[p]rima facie proof is

not subject to rebuttal, cross-examination, impeachment[,] or even disproof.” Rodriguez

v. Gonzales, 566 S.W.3d 844, 849 (Tex. App.—Houston [14th Dist.] 2018, pet. denied)

(quoting KBMT Operating Co., LLC v. Toledo, 492 S.W.3d 710, 721 (Tex. 2016)).

Appellants also challenge the City’s evidence on the intent element. The City, in

turn, states that it presented evidence through its pleadings and supporting affidavits that

appellants “failed to disclose the truth to the City precisely because they intended for the

City to rely on their misrepresentations.”

In Texas’s fraud jurisprudence, courts considering the intent element focus
on the defendant’s knowledge and intent to induce reliance. Ernst & Young,
L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 578 (Tex. 2001). A
defendant who acts with knowledge that a result will follow is considered to
intend the result. Id. at 579. A party’s intent is determined at the time that it
makes the complained-of representation; however, intent may be inferred

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 from the party’s acts made after the representation. Aquaplex, Inc. v.
Rancho La Valencia, Inc., 297 S.W.3d 768, 775 (Tex. 2009). “[I]ntent to
defraud is not usually susceptible to direct proof.” Id. at 774–75. Thus, intent
to defraud, or intent to induce reliance, most often must be proven by
circumstantial evidence. Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432,
435 (Tex. 1986). “Intent is a fact question uniquely within the realm of the
trier of fact because it so depends upon the credibility of the witnesses and
the weight to be given to their testimony.” Id. at 434.

Samson Lone Star Ltd. P’ship v. Hooks, 497 S.W.3d 1, 15 (Tex. App.—Houston [1st Dist.]

2016, pet. denied). Fraud [can] not be inferred from the “vague, indefinite, and

inconclusive” testimony of interested witnesses. In re Lipsky, 460 S.W.3d at 588 (quoting

S. Cantu & Son v. Ramirez, 101 S.W.2d 820, 822 (Tex. App.—San Antonio 1936, no

writ)).

Appellants argue, however, that the affidavit is conclusory and therefore

insufficient to satisfy the TCPA’s requirement of “clear and specific evidence.”

Bare, baseless opinions do not create fact questions, and neither are they
a sufficient substitute for the clear and specific evidence required to
establish a prima facie case under the TCPA. See Elizondo v. Krist, 415
S.W.3d 259, 264 (Tex. 2013) (“Conclusory statement[s] . . . [are] insufficient
to create a question of fact to defeat summary judgment.”); City of San
Antonio v. Pollock, 284 S.W.3d 809, 816 (Tex. 2009) (holding conclusory,
baseless testimony to be no evidence).

In re Lipsky, 460 S.W.3d at 592–93. The City’s argument is largely based on inference—

specifically stating “[t]here can be no explanation for these bribe payments other than the

CDM Entities intended for the City to rely on the information being conveyed through the

chain of conspirators, including presentation of the falsified cost reports and phony

invoices from the CDM Entities.” However, the City also presented evidence that an agent

for appellants, through a series of bribe payments, secured “favorable votes and other

actions” to obtain the contracts with the City, allowing the appellants to defraud the City

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through “falsified cost reports and phony invoices.” The agent’s affidavit gives specific

facts about how appellants intended to defraud the City. Accordingly, we find that the City

established a prima facie case under the TCPA as to the challenged elements of its fraud

claim against appellants.

2. Damages

Direct evidence of damages is not required, but the evidence must be sufficient to

allow a rational inference that some damages naturally flowed from the defendant’s

conduct. See S & S Emergency Training Sols., Inc. v. Elliott, 564 S.W.3d 843, 847 (Tex.

2018); In re Lipsky, at 591, 592; Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1099

(1938) (“A party who breaks his contract cannot escape liability because it is impossible

to state or prove a perfect measure of damages.”).

Appellants argue that the City’s pleadings “provide only general averments and

conclusory assumptions” regarding the alleged damages. Such conclusory statements

would not satisfy the requirements for “clear and specific evidence” under the TCPA. See

In re Lipsky, 460 S.W.3d at 593 (explaining that “general averments of direct losses and

lost profits,” even in specified dollar amounts, do not satisfy minimum requirements of

TCPA). The City, however, responds that it established a prima facie case under the

TCPA with respect to the damages incurred through its pleadings and supporting

affidavits. Specifically, the City points to the specific amount of $2,978,950 as an

“overpayment” by the City based on appellants fraudulent overcharges in the conspiracy

scheme. The City presented the affidavit of Juan E. Gonzalez, the City Attorney for the

City of Weslaco, wherein he averred:

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 The City was damaged by the actions of [appellants] and [co-defendants].
Amendment No. 1 to [co-defendant’s] contract cost the City $2,978,950.
Given the facts as we now know, this was a high overpayment that was
shared among the defendants in this lawsuit, because the purpose of the
payment was to compensate Leonel Lopez, Jr. and others. Therefore, the
City is damaged by at least that figure.

The City also presented the affidavit of Leonel Lopez, Jr., wherein Lopez

confessed to being part of a bribery scheme involving appellants and co-defendants

related “to the construction and rehabilitation of a Wastewater Treatment Plant and Water

Treatment Plant in Weslaco, Texas.” The City provided the trial court evidence of an

alleged bribery scheme concocted in part by appellants in order to defraud the City. In

furtherance of its allegations, the City’s evidence as it related to damages adequately set

forth the particular loss the City claims and how the loss relates to the alleged acts of

appellants. Appellants argue in part that the City’s failure to account for a settlement

received from another defendant in this matter renders the provided evidence “insufficient

to show that the City’s damages are susceptible to calculation with any certainty.”

However, the City is not required to provide evidence sufficient to allow an exact

calculation of the lost profits; rather, it was only required to present evidence sufficient to

support a rational inference that appellants’ actions caused it to lose some specific,

demonstrable profits. S & S Emergency Training, 564 S.W.3d at 848 (citing In re Lipsky,

460 S.W.3d at 592–93). Accordingly, we find that the City met its burden to establish a

prima facie case under the TCPA for the element of damages.

3. Equitable Relief

Appellants argue that the record evidence is insufficient to support the City’s

equitable relief claims, specifically the City’s claims for money had and received, unjust

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enrichment, constructive trust, and recission.

A constructive trust is an equitable, court-created remedy designed to prevent

unjust enrichment. KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 87 (Tex. 2015) (citing

Meadows v. Bierschwale, 516 S.W.2d 125, 131 (Tex. 1974) (“Constructive trusts, being

remedial in character, have the very broad function of redressing wrong or unjust

enrichment in keeping with basic principles of equity and justice.”)). The party requesting

a constructive trust must establish the following: (1) breach of a special trust or fiduciary

relationship or actual or constructive fraud; (2) unjust enrichment of the wrongdoer; and

(3) an identifiable res that can be traced back to the original property. Matter of Haber Oil

Co., Inc., 12 F.3d 426, 437 (5th Cir.1994) (applying Texas law); see also Meadows, 516

S.W.2d at 128–31. Here, appellants only challenge that the City did not identify a specific

res to support the constructive trust claim. To prove an identifiable res, the proponent of

the constructive trust must show that the specific property that is subject to the

constructive trust is the same property—or the proceeds from the sale thereof or revenues

therefrom—that was somehow wrongfully taken. Wheeler v. Blacklands Prod. Credit

Ass’n, 627 S.W.2d 846, 851 (Tex. App.—Fort Worth 1982, no writ); In re Hayward, 480

S.W.3d 48, 52 (Tex. App.—Fort Worth 2015, no pet.). The City argues that the funds

identified as improperly obtained through the fraudulent contract is the res underlying its

claim against appellants. The City established a prima facie case that the monetary

payment to appellants on the allegedly fraudulent invoices was the res.

Appellants next argue that the City’s claims for unjust enrichment and money had

and received must be dismissed as a “valid, express contract covers the subject matter

17
of the parties’ dispute, there can be no recovery under a quasi-contract theory.” Fortune

Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000). However, because the City

seeks to have the contracts voided as part of their allegations against appellants, this

argument by appellants fails. As an alternative theory of recovery, if the City prevails and

the contracts are voided, no “valid, express contract” would cover the subject matter of

the dispute. Accordingly, the City has established a prima facie case for its claims for

unjust enrichment and money had and received, as pled in the alternative.

Lastly, appellant CDM Constructors challenges the City’s rescission claim, stating

that “[t]he City does not even attempt to provide evidence that might preclude dismissal

under the TCPA of its rescission claim” against appellant CDM Constructors. CDM

Constructors specifically argues that a rescission claim cannot be based upon a

completed contract and that the contract between the City and CDM Constructors was

undisputedly completed. To the contrary, the City contends that CDM Constructors did

not fully perform on the contract, and even if it had, exceptions justify a rescission claim

in this case based on the fraudulent conduct of CDM Constructors. The City relies on

Sister Initiative, LLC v. Broughton Maintenance Association, Inc. to support its position,

which explains

[a] recognized exception to this rule is that rescission may be allowed
without complete or partial restoration of the consideration where the
particular circumstances indicate that to be the more equitable result, as
where a defrauded party’s inability to make restoration is due to the wrongful
conduct of the fraudulent party.

No. 02-19-00102-CV, 2020 WL 726785, at *24–25 (Tex. App.—Fort Worth Feb. 13, 2020,

pet. denied) (mem. op.) (citing Turner v. Hous. Agric. Credit Corp., 601 S.W.2d 61, 65

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(Tex. App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.)); see also Shenandoah Assocs. v.

J & K Props., Inc., 741 S.W.2d 470, 476 (Tex. App.—Dallas 1987, writ denied) (stating

that a recognized exception to the rule requiring restoration of the parties to their original

status “is when the purchaser terminates the contract and the court has examined the

circumstances and determined that it would be more equitable to grant the rescission

without the complete or partial restoration of the consideration received by the purchaser

while in possession of the purchased item”); Boyter v. MCR Constr. Co., 673 S.W.2d 938,

941 (Tex. App.—Dallas 1984, writ ref’d n.r.e.) (stating that to be entitled to the equitable

remedy of rescission, “a party must show either (1) that he and the other party are in the

status quo . . . or (2) that there are special equitable considerations that obviate the need

for the parties to be in the status quo”). Here, where the City is attempting to void the

allegedly fraudulently induced contracts, it has provided a prima facie case under the

TCPA on its rescission claim.

Appellants generally argue that the City was required to show that it had no

adequate remedy at law in order to pursue its equitable relief claims. In response,

however, the City argues that the equitable relief claims were pled in the alternative, and

as such “it is inappropriate to dismiss one alternative claim simply because the City might

prevail on another.” Appellants have not challenged the City’s proof of a prima facie case

as to any other specific elements of its equitable relief claim. Consequently, we need not

address those elements. See TEX. R. APP. P. 38.1(i) (appellant’s brief must contain clear

and concise argument for contentions made with citation to authorities and record).

4. Summary

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 Accordingly, having found that the City established a prima facie case under the

TCPA as to appellants’ challenged claims, we overrule appellants’ third issue.

III. CONCLUSION

The judgment of the trial court is affirmed. 2

NORA L. LONGORIA
Justice

Delivered and filed on the
25th day of March, 2021.

2 Appellants also raise a fourth issue that “governmental immunity does not bar the City’s liability

under the TCPA for costs, fees, and sanctions.” However, as we have affirmed the trial court’s denial of
appellants’ TCPA motion, we need not address this issue. See TEX. R. APP. P. 47.1.
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