City Waited Too Long to Sue on Construction Performance Bond

times. neiman-marcus group, inc. v. dworkin, 919 f.2d 368, 371 (5th cir. case: 09-40586 document: 00511171101 page: 14 date filed: 07/13/2010 necessary at all. if williams never attained final completion of the eagle pointe hartford's duty on the performance bond would have expired within weeks of it detriment and requires the inconsistency to be a cause of that detriment. cook to hartford, the city's documentation stated claims that were far more proceed with the process as soon as we can get the data." no mention was made reasonable or justified reliance on the conduct or statement of the person sought in 1998, hartford issued a payment bond and a performance bond to awaiting documentation on the city's actual expenditures and "stands ready to no. 09-40586 no. 09-40586 and warranty work, the city sued hartford for compensation under the bond, address warranty issues; and third, hartford's october 2004 letter stating that nor are the letters cited by the city availing to it. initially, neither of 1983, no writ) (quoting 37 tex.jur.2d, limitations of actions, � 155). this a district court's ruling on a motion for judgment as a matter of law is de novo, the jury found that hartford had breached its performance bond; mont belvieu edith h. jones, chief judge: its claims and cost documentation, and it did so, in november 2003. according to assert that bar. the city has made no such showing here. as discussed phillips v. sharpstown gen. hosp., 664 s.w.2d 162, 168 (tex.app.�houston united states court of appeals leaving it responsible for the bond claims. and sureties are bound only by the precise terms of the contract they have she was "not denied recovery for her injury based on moody's inconsistent limitations period. we address each defense in turn. liable to suppliers and subcontractors under the terms of the payment bond. made. does the waiver extend liability to post-completion issues, such as defects 371 (emphasis added). in such a case, the party has not acted to "avoid detriment of texas municipalities. bonded project. after that period, a claim is time-barred. to establish quasi- on the promise. texas courts "have emphasized that `estoppel requires a williams industries has or may have. and whereas williams 13 after the project reached substantial completion. in addition, hartford remained f i l e d settled that a surety on a performance bond is entitled to rely on the architect's justified. claims and get them resolved. it has now been nearly two years hartford's liability under the performance bond. hartford's later assertion of its the doctrine applies when it would be unconscionable to allow a person to protection of the state or governmental entity awarding the public work to punch list work, unlike the usual performance bond? did hartford agree to erred in its award of attorney's fees and calculation of prejudgment interest. the agreed to do. on october 30, 2002, the city sent a letter to hartford stating as obligation a charge of $231,000 in liquidated damages for williams's delinquency rule, the plaintiff has the full statutory period within which to bring suit. defendant] will not take advantage of a statute of limitations"), aff'd, russell v. we are exceedingly reluctant to overturn a jury's verdict and will do so promise in the present case is even less certain than that in allied vista. when extensive, amounting to nearly $500,000, than those the city had identified in indeed, quasi-estoppel may bind the city from asserting otherwise due to the2 plaintiff may not `blindly rel[y] upon a situation as being what it seemed rather agents of the city, several months after the city took occupancy of the facility. accordingly, that the plaintiff's reliance "was not reasonable or justified as a iii. discussion settlement discussions between the city and hartford were unsuccessful, to have found for the prevailing party." johnson v. louisiana, 369 f.3d 826, 830 the limitations period, we sustain hartford's position and reverse and render the city's interpretation is weakened by the vagueness of the promise it asserts was representations or conduct arguably concerning the limitations period before its petroleum co., 492 s.w.2d 934, 937 (tex. 1973). 10 and operating. 2 a performance bond guarantees the timely completion of a construction by quasi-estoppel because a party may, pursuant to a contract and for legitimate applying the same standard as used by the district court, and we consider the nor unconscionability. in the present case, the city presented evidence of three representations difficulties. in addition, the company had neglected to pay some of its evidence, draw inferences from it, and resolve credibility determinations in the did not commence the running of the limitations period. texas case law, later, on july 19, 2002, more than five years before the city filed its claim on june 3, 2003, the city promised in writing to supply more details on insufficient to establish promissory estoppel. period: quasi-estoppel and promissory estoppel. the case proceeded to trial, and "had her own attorney to advise regarding her rights and responsibilities" under hartford's primary contention on appeal is that the evidence was legally claiming estoppel as a defense to the running of a limitations period, "[a] movant's favor that reasonable jurors could not reach a contrary verdict. id. light most favorable to the non-moving party. id. the motion should be granted receiving the change order and payment from the city. this argument contract." � 2253.021(b). it is also, by statute, subject to a one-year limitations inducement to delay bringing the action." rendon, supra. no provision of prejudgment interest. clerk the opposing party prior to the running of the limitations period waiving its right no. 09-40586 tex.gov't code � 2254.078(b). further, this argument ignores the very purpose 934, 936 (estoppel "only prevents a party from insisting upon his strict legal that arise within a time period after the final acceptance." (emphasis added)). the parties' next contact occurred in october 2004, in a letter from the hartford timely appealed. in support of estoppel: first, the statements in change order 67 that "all surety will be adopted). cf. transamerica, 669 s.w.2d at 822 (the limitations estoppel may not be premised on so vague a promise, especially when it is incapable of reviving the city's claims. to hold otherwise would be to eviscerate before considering the city's defenses to hartford's argument that its as the facility neared completion in mid-2001, the city issued a certificate of limitations period. allied vista, inc. v. holt, 987 s.w.2d 138, 141�42 when a case has been tried by a jury, a motion for judgment as a matter these letters evinces a promise by hartford to relinquish, modify, or otherwise and mont belvieu was due damages of $468,492.01. in addition, the district the work, to execute to the governmental entity: (1) a performance bond if the the city urges that the july 19, 2001, stipulated date of "substantial the architect is the agent and representative of the owner, and his 14 misrepresentation or detrimental reliance." id. it does, however, assume rights created no inconsistency at all, but flowed from texas law and its contract catholic diocese of amarillo, 60 s.w.3d 389, 391 (tex.app.�amarillo 2001, defensive theory. it does not create a contract right that does not otherwise limitations and i am requesting a tolling agreement from you. if compensation claim." id. in these circumstances, there was neither causation reimburse the city for several of its claims and asserting hartford's right to corresponding obligations" but merely to assert its legal rights. fasken, work items." the letter concluded with this statement: "it [hartford] continues promise (2) that the promisor should have expected would lead the promisee to (tex.app.�houston 2000, writ denied) (testimony of the defendant's executive like--remained incomplete. this was due in part to williams's financial limitations period. those warranties, including their ability to be enforced. the city contends that running of the limitations period because none "amount[s] to an affirmative on july 9, 2002, the city forwarded change order 67 to hartford. of same." completion of the eagle pointe project, its reliance was neither reasonable nor "committed to investigate and provide the city its conclusions on the remaining i. background completion' of a construction contract is regarded, in legal parlance, as `full case: 09-40586 document: 00511171101 page: 10 date filed: 07/13/2010 of law is a challenge to the legal sufficiency of the evidence underlying the jury's by texas law. the judgment against hartford is reversed and at that time, however, a number of "punch list" items--repairs and the hartford now appeals the district court's denial of its motion for judgment as a the statute of limitations that applies to public project bonds, to the ultimate occupancy and took possession in may. by july 2002, eagle pointe was open similarly, inconsistency can be determined as a matter of law. for iv. conclusion under texas law, promissory estoppel may serve as both a cause of action and, no. 09-40586 matter of law. because the city's claim was barred by the applicable statute of case: 09-40586 document: 00511171101 page: 5 date filed: 07/13/2010 subcontractors, and they filed payment bond claims with hartford. hartford williams industries, a general contractor, for the construction of the eagle v. in the united states court of appeals than as being what it in reality was.'" dean v. frank w. neal & assocs., inc., limitations. phillips v. sharpstown gen. hosp., 664 at 168. thus, negotiations the two parties' obligations to each other under their prior agreements. the narrow range of promises and promissory conduct: the "conduct or words rendered. court awarded mont belvieu $218,747.65 in attorney's fees and $260,704.62 in 11 law. vastine v. bank of dallas, 808 s.w.2d 463, 464 (tex. 1991) ("guarantors only when the facts and inferences are so strongly and overwhelmingly in the period on claims commencing from "the date of final completion, abandonment, denied). to reserve all of its rights and defenses in this matter and it is without waiver hartford jointly, and a cover letter. the cover letter stated that the city "will claim within the limitations period was excused by promissory estoppel or quasi- composites, inc. v. westlake styrene corp., 15 s.w.3d 124, 136 city's attorney to hartford. it stated: 9 ladd v. knowles, 505 s.w.2d 662, 669 (tex.civ.app.�amarillo 1974, writ ref'd adjustment costs. subcontractors and suppliers." hartford feared that williams would go under, used the proceeds to settle payment bond claims and reimburse its own as to the meaning of a surety agreement, the interpretation favorable to the covered the expense of changes requested by the city and included an "equitable estoppel as a defense to that bar, a party must show a statement or conduct by contract with a prime contractor shall require the contractor, before beginning lopez v. munoz, hockema & reed, l.l.p., 22 s.w.3d 857, 864 (tex. 2000). 5 823 (tex.app.�corpus christi 1984, writ ref'd n.r.e.). further, "[i]t is well adjustment," subject to the following terms: tolling agreement and how quickly hartford can process these terms, such as pricing and payment, would apply. id. at 140. the appeals court (tex.app.�houston dec. 20, 2007, no writ) (unpublished). in douglas, when an therefore advised the city to "exercise reasonable caution in the payment of any change order does not suggest, in any way, that hartford's collateral obligations but compel a finding of liability, and no contract claim could be subject to a n.r.e.)); see dobbs v. russell, 347 s.w.2d 796, 797 (tex.civ.app.�fort worth this vagueness speaks, as well, to the reasonableness of the city's reliance affect the state of limitations; as with change order 67, they are too vague to 864 (tex. 2000) (citations omitted). put otherwise, it "forbids a party from city for doing so itself; second, hartford's march 19, 2003, letter offering to plaintiff�appellant (tex.app.�houston 1999, review denied); see tex. gov't code � 2253.078(a). no. 09-40586 with williams. knowledgeable in texas's law of public project bonds. if the city relied upon the case: 09-40586 document: 00511171101 page: 12 date filed: 07/13/2010 lyle w. cayce from asserting it as a defense" because it does not constitute a promise to waive to settle a claim were not promissory conduct that could establish estoppel. id. inducement to delay bringing the action.'" rendon v. roman catholic diocese insufficient to support the jury's finding that promissory estoppel or quasi- of the statute of limitations or tolling. in a march 19, 2003, letter by its attorney, james cupples. the letter agreed to to complete many of the punch list items and warranty repairs that it had defendant�appellee dobbs, 163 tex. 282, 354 s.w.2d 373 (tex. 1962). thus, in rendon, the court inducement to delay initiation of a civil suit." rendon, 60 s.w.3d at 392. them. under this agreement, the city paid williams $674,628.50. that sum july 13, 2010 no. 09-40586 actual completion date was july 19, 2001." the cover page of the change order of amarillo, 60 s.w.3d 389, 392 (tex.app.�amarillo 2001, writ denied) (quoting and quasi-estoppel, we need not address the remaining issues.1 overlooks, however, williams's obligations, per the terms of its contract with the for the fifth circuit a claim that has already expired at the time of the promise. moore, 492 s.w.2d above, change order 67 does not speak to the limitations period or suggest any verdict. streber v. hunter, 221 f.3d 701, 721�22 (5th cir. 2000). our review of 12 over the following months, williams continued to falter, ultimately failing it needed additional information and was "ready to proceed with the process." terms of change order 67 to delay filing suit for years after the substantial as here, a defense to failure to fulfill a legal obligation. rendon v. roman for the southern district of texas was not a cause of the plaintiff's pre-litigation detriment); maguire oil co. v. fifth circuit 8 hartford fire insurance company, in force. and also, that williams industries will pursue completion exception, as applied to the timeliness of a claim, therefore encompasses a a. statute of limitations to change order 67, the limitations period ran well before hartford's 2003 and gas co. v. albrecht, 878 s.w.2d 236, 240 (tex.app.�corpus christie 1994, writ matter of law." id. it therefore reversed a jury verdict in favor of the plaintiff. in original). in allied vista, the plaintiff relied on a promise by his former secured . . . "); empire steel corp. v. omni steel corp., 378 s.w.2d 905, 911 matter of law. the district court concluded that the city had raised genuine unlike other species of estoppel, quasi-estoppel "requires no showing of natural expiration. the city concedes, in fact, that its next contact with change order 67 speaks to the limitations period, and the statement that he accepted a benefit." lopez v. munoz, hockema & reed, l.l.p., 22 s.w.3d 857, forced to file suit against hartford for not performing under the fashion, unconscionability "necessarily requires a reliance component." douglas cause loss or injury to the other"). reliance is therefore relevant where it speaks 3 in completing the project. to determine this charge, the change order stipulated continue to look to williams and ultimately the hartford for any punch list items accepting the benefits of a transaction or statute and then subsequently taking 2004 letters. these letters, and any promises they contain, are therefore support its defense of quasi-estoppel. agreeing to the parties' contract amounts to an inconsistent position with opl's 225 s.w.3d at 593. were the law otherwise, settlement negotiations would all review denied). the party asserting estoppel must prove four elements: (1) a 1990); fasken land & minerals, ltd. v. occidental permian ltd., 225 s.w.3d defense. benefit it received from its settlement with williams and, by extension, hartford. see never discussed what items of equipment would be forthcoming or what specific much, and after sending an engineer to assess the situation, hartford responded change order 67, which set the date of "substantial completion" as cupple's response was non-responsive. it stated that hartford was still rejected the plaintiff's assertion of estoppel as a defense to the statute of b. promissory estoppel enforceability of the promise." wheeler v. white, 398 s.w.2d 93, 96 (tex. 1966). instance, "rights expressly secured by contract" ordinarily cannot be "dissolve[d]" limit, quasi-estoppel could not lie in her employer's changed position as to of mont belvieu is a legally sophisticated party and, as a municipality, or termination of the public work project." tex. gov't code � 2253.078(a). and hartford filed suit in july 2007, seeking a declaration that any claims on the issues of material fact on two potential defenses to the running of the limitations however, holds to the contrary. "it has been uniformly held that `substantial mont belvieu does not challenge the district court's rejection of its equitable estoppel1 of remaining punch list and/or warranty items or compensate the another's disadvantage, a right inconsistent with a position previously taken. asserts quasi-estoppel as an excuse for its failure to file a claim in a timely under texas law, quasi-estoppel "precludes a party from asserting, to williams industries an additional $214,359.29. of mont belvieu, texas. when the builder failed to complete punch list items (5th cir. 2004). this is such a case. the city's position is simply unsupported no. 09-40586 undertaken by the prospective defendant must `amount[ ] to an affirmative the limitations period therefore commenced on that date and concluded one year case: 09-40586 document: 00511171101 page: 6 date filed: 07/13/2010 nagle, 633 s.w.2d 796, 800 (tex. 1982) (citing "moore" burger, inc. v. phillips delay must be "unmixed with any want of diligence on their part." id. the city employee failed to file a worker's compensation claim within the applicable time the law, "including the need to timely file a workers' compensation claim." id. no. 09-40586 not suspend the running of the applicable limitation statute or estop a litigant project; this failure was excused by both promissory estoppel and quasi-estoppel; exist."). because the city is unable to establish promissory estoppel with respect estoppel excused the city's failure to file suit on its performance bond within the performance.'" transamerica ins. co. v. hous. auth. of victoria, 669 s.w.2d 818, and a jury found in favor of the city, awarding nearly $500,000 in damages. this clause must serve to extend the limitations period because, otherwise, against hartford. without some excuse, the city's claims were time-barred. in calculating the total due williams, change order 67 offset against the city's case: 09-40586 document: 00511171101 page: 4 date filed: 07/13/2010 later assertion of its voting rights under that same contract . . . ."). that party limitations for the reason that the representations of the defendant's (delaware) v. madeley, 626 s.w.2d 726, 734 (tex. 1981) ("estoppel . . . is a similarly, "the mere exchange of information between potential litigants should case: 09-40586 document: 00511171101 page: 9 date filed: 07/13/2010 there is no agreement reached prior to october 30, 2004, i will be representation is the representation of the owner." id. at 822.2 7 project for the benefit of the project's owner. the hartford fire insurance 6 and warranty claims that remain unresolved." hartford cashed the check and the city and williams on july 2, 2002, to resolve the various disputes between no. 09-40586 limitations, and no act of hartford excuses the city's failure to bring suit within includes a limitations period that runs for one year following completion of the case: 09-40586 document: 00511171101 page: 1 date filed: 07/13/2010 since the initial claim was made. that these questions remain open may be dispositive of the matter under texas strongly to causation and unconscionability. consequently, where a party case: 09-40586 document: 00511171101 page: 13 date filed: 07/13/2010 statute. tex. gov't code � 2253.021 et seq. (vernon 2008). further contract funds to williams because of williams' alleged non-payment of would be altered, but merely that they would remain "in force." finally, the case: 09-40586 document: 00511171101 page: 11 date filed: 07/13/2010 warranties would "remain in force" does not purport to alter the substance of undermining the reasonableness of any reliance by the city, the purported the city by, inter alia, fixing the date of substantial completion and determining completion, ending hartford's obligation to the city; and that the district court city of houston, 69 s.w.3d 350, 367 (tex.app.�texarkana 2002, writ denied) (a city responds that the limitations period never began to run. because we find viewing the evidence in the light most favorable to the city, it is legally an inconsistent position to avoid corresponding obligations or effects." atkinson v. moody gardens, inc., no. 14-07-00016-cv, 2007 wl 4442617, *4 juxtaposed against clear and unambiguous statutory text creating the case: 09-40586 document: 00511171101 page: 2 date filed: 07/13/2010 that, while the contract had mandated completion by february 14, 2001, "[t]he 2002. hartford did not respond to the city's documentation. reasons, have the right to assert superficially inconsistent positions at different maintain a position inconsistent with one to which he acquiesced, or from which n.a., 724 s.w.2d 102, 108 (tex.app.�dallas 1987, writ ref'd n.r.e.)) (emphasis complete punch list items. that communication, and others made after the city for expenditures which the city may have to make to achieve project, as the city asserts, the limitations period never commenced. as a matter of law, the city failed to present legally sufficient evidence to case: 09-40586 document: 00511171101 page: 8 date filed: 07/13/2010 waive the limitations defense in perpetuity? if not, when did its waiver expire? unsuccessfully for summary judgment, and subsequently for judgment as a hartford raises several issues on appeal: that the evidence at trial was of change order 67, which was to resolve dueling claims between williams and some definite and substantial injury, (3) that such an injury occurred, and 577, 594 (tex.app.�el paso 2005, petition denied) ("we simply fail to see how the required repairs (with the exception of recently completed 4 166 s.w.3d 352, 358 (tex.app.�fort worth 2005, no writ) (quoting neal v. pointe public recreational facility in mont belvieu. these bonds are required by performance bond by the city were barred by the statute of limitations. the the city of mont belvieu is concerned about the possible statute of filed its claim more than one year after final completion of the eagle pointe case: 09-40586 document: 00511171101 page: 3 date filed: 07/13/2010 texas law mandates that a "governmental entity that makes a public work not every representation, of course, constitutes a promise enforceable by city counterclaimed for payment under the performance bond. hartford moved before jones, chief judge, and benavides and prado, circuit judges. agent--"that no legal action . . . would be necessary" and that he "would take (4) that injustice that may be remedied only by enforcing the promise. nagle v. agreement to cover the cost of all current and future claims which positions," but "because she elected not to timely pursue a workers' against the city on that issue, and in hartford's favor on promissory estoppel claims are time-barred, we must determine whether those defenses are reimburse the city up to $32,000 to resolve several claims. for the other claims, estoppel; that the performance bond expired at the time of substantial no. 09-40586 certificate of completion as the final discharge of its duty on the bond because completion of remaining punch list and/or warranty items" or compensate the case: 09-40586 document: 00511171101 page: 7 date filed: 07/13/2010 bond. please let me know if you are agreeable to entering into a company issued such a bond to a construction company on a project for the city hartford's performance bond incorporated texas statutory law, which no. 09-40586 consequently, delay in bringing suit ordinarily does not operate as an estoppel." limitations period had run, cannot establish an inconsistency regarding described this as the "date of substantial completion." texas law for most public work contracts, and their terms are largely defined by city of mont belvieu, texas, 1961) (promissory estoppel applicable only to "promises or assurances that [the (tex.app.-fort worth 1964, writ ref'd n.r.e.) (where doubt and uncertainty exist judgment. support promissory estoppel. equally critical, promissory estoppel cannot revive to be estopped by the person seeking the benefits of the doctrine.'" allied visa, party "should not be permitted to adopt an inconsistent position and thereby contract is in excess of $100,000 . . . ." � 2253.021(a). this bond is "solely for the whether her injury had occurred within the course of employment. the plaintiff employer to supply him with equipment for a new recycling plant. the parties c. quasi-estoppel only when "there is no legally sufficient evidentiary basis for a reasonable jury hartford was its letter of october 30, 2002, complaining of williams's failure to period "may be extended by the existence of an agreement to remedy defects . . . this doctrine; rather, it is a limited exception to broader rules. "as a general appeal from the united states district court no. 09-40586 found that the promise was "too vague to support detrimental reliance" and, inc., 987 s.w.2d at 142 (tex.app. 1999) (quoting simpson v. mbank dallas, the construction process was tumultuous, with many delays and change attached were a check for the full $674,628.50, made out to williams and none of these representations, however, is legally sufficient to excuse the rights when it would be unjust to allow him to enforce them"); sun oil co. cannot "be equitably charged with choosing to accept benefits in a manner july 19, 2001, was signed by the city's architect and its project manager, both no. 09-40586 whereas the city and williams industries have reached an promissory estoppel serves simply to "estop[] a promisor from denying the it requested additional information from the city and stated that hartford was warranties will remain in force" and that "williams industries will pursue legally insufficient to support the jury's finding that the city's failure to file its genuinely inconsistent with his subsequent claim." neiman-marcus, 919 f.2d at pickett, 280 s.w. 748, 753 (tex.comm.app. 1926, jdgmt. adopted)). the city's agreement to waive or extend it. the city presented no other evidence of insurance company [--] have agreed that all warranties will remain completion," as used in change order 67, is not "final completion" and therefore no. 09-40586 repairs at the wave pool caisson grates). the city agrees to pay action to take care of the matter"--were not promises that "comprised orders occasioned by architectural flaws and mid-course alterations to the plans. city and the change order, to complete punch list and warranty items, even industries and in turn its bonding company -- the hartford fire ii. standard of review the document at the heart of this case is change order 67, executed by