11th Court of Appeals

                                                                  Eastland, Texas

                                                                        Opinion

A-1 Systems, Inc. d/b/a Lon Smith Roofing

Appellant

Vs.                   No.  11-00-00394-CV C Appeal from Palo Pinto County

Dan Seay

Appellee

This is an appeal from the trial court=s order granting Dan Seay=s motion for judgment notwithstanding the verdict (JNOV).  A-1 Systems, Inc. d/b/a Lon Smith Roofing filed suit against Seay for breach of contract and quantum meruit seeking to recover payment for the installation of a roof on Seay=s home.  Seay filed a counterclaim alleging deceptive trade practices, breach of implied warranty, breach of contract, fraud in the inducement, unjust enrichment, and negligent misrepresentation.  The jury found that Lon Smith Roofing did not substantially perform the roofing contract but that Lon Smith Roofing did perform compensable work for Seay.   The jury awarded Lon Smith Roofing $18,682.50 in damages.  On August 24, 2000, the trial court entered judgment for Lon Smith Roofing and awarded Lon Smith Roofing $18,682.50 in damages and $23,300.00 in attorney=s fees.  On August 29, 2000, Seay filed a motion for JNOV, a motion for additional findings of fact, a motion for judgment in favor of Seay, and a motion for new trial. On September 15, 2000, the trial court entered a JNOV, setting aside its August 24 judgment,^[1] entering judgment for Seay, and awarding Seay $25,149.23 in damages and $35,827.00 in attorney=s fees.  We affirm in part, and we reverse and remand in part.

Seay contracted with Lon Smith Roofing on March 10, 1998, to install a stone-coated steel roof on his new home.  The contract price was $37,365.00; and Seay was to pay $9,341.25 up front, $9,341.25 upon delivery of the materials, and the balance of $18,682.50 upon completion of the roof.   The record shows that Seay made payments to Lon Smith Roofing totaling $18,341.25.  Seay testified at trial that construction began on his home in March 1998 and that, at the end of July, Lon Smith Roofing indicated that the roof work was complete.  

In August 1998, there was a significant rain, and the roof leaked.  Lon Smith Roofing returned to the job and made repairs, which included enlarging and replacing certain valleys where the water runs off of the roof.  On September 4, 1998, Lon Smith Roofing and Seay met and agreed upon a Apunch list@ of items to be touched up and finished before the roof would be considered completed.  The parties both signed the Apunch list@ which stated that, upon completion and inspection of the items listed in the Apunch list,@ the outstanding balance would be paid.  Seay testified that the Apunch list@ was completed by Lon Smith Roofing. On September 11, 1998, Lon Smith Roofing sent a letter to Seay requesting payment on the outstanding balance.  Seay did not respond to the letter until October 1998.

Seay testified that the Apunch list@ was not completed satisfactorily, that the roof continued to leak, and that he hired a roofing expert to come inspect the roof.  Stephen L.  Patterson, a consulting engineer with Roof Technical Services, testified that he inspected the Seay roof on September 10, 1998.  Patterson testified that the roof should have had reverse battens and a waterproof underlayment and that the roof was installed improperly and did not meet accepted industry standards.  Patterson recommended that Seay remove the roof and replace it with a composition shingle roof.

On October 20, 1998, Seay sent a letter to Lon Smith Roofing which included Patterson=s report and recommendation and in which Seay stated that the roof would be removed and replaced.  In the letter, Seay also requested a return of all payments and claimed additional expenses in removing the roof.  Lon Smith Roofing responded by requesting an inspection of the alleged defects.  Lon Smith Roofing made an offer of settlement to repair the roof.  Seay rejected the offer of settlement and replaced the roof with a composition shingle roof in December 1998.  Lon Smith Roofing then brought suit to recover the outstanding payment.  

Lon Smith Roofing argues on appeal that the trial court erred in vacating the judgment in its favor, in granting Seay=s motion for JNOV, and in granting judgment for Seay.  In the jury charge, Question No. 2 asked the jury whether Lon Smith Roofing performed compensable work for Seay.  The jury answered A[Y]es.@  Question No. 3 asked the jury the Areasonable value of such compensable work at the time and place it was performed.@  The jury answered $18,682.50.  Seay=s motion for JNOV stated that there was no evidence to support the jury=s answers to Questions Nos. 2 and 3.  The trial court granted Seay=s motion, set aside the judgment in favor of Lon Smith Roofing, and granted judgment for Seay.

The trial court may grant a motion for JNOV if a directed verdict would have been proper and when there is no evidence upon which the jury could have made its findings.   TEX.R.CIV.P. 301; Best v. Ryan Auto Group, Inc., 786 S.W.2d 670, 671 (Tex. 1990).  To determine whether the trial court erred in granting a motion for JNOV, the appellate court must consider only the evidence and the reasonable inferences that support the jury's answers.   Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex. 1990).  The record is reviewed in the light most favorable to the jury's finding, considering only the evidence and inferences that support the finding and rejecting the evidence and inferences contrary to the finding.  See  Navarette v. Temple Independent  School  District, 706 S.W.2d 308, 309 (Tex. 1986).  The JNOV should be reversed when there is more than a scintilla of competent evidence to support the jury's finding.  Mancorp, Inc. v. Culpepper, supra at 228.  More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, rises to a level that would enable reasonable and fair‑minded people to differ in their conclusions.  Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997), cert. den=d, 523 U.S. 1119 (1998); Burroughs Wellcome Company v. Crye, 907 S.W.2d 497, 499 (Tex. 1995), quoting  Transportation Insurance Company v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994).

Questions Nos. 2 and 3 were based upon Lon Smith Roofing=s claim for recovery in quantum meruit.   Quantum meruit is an equitable remedy which does not arise out of a contract but is independent of it.   Colbert v. Dallas Joint Stock Land Bank of Dallas, 102 S.W.2d 1031, 1034 (Tex. 1937).  Generally, a party may recover under quantum meruit only when there is no express contract covering the services or materials furnished.  Vortt Exploration Company, Inc. v. Chevron U.S.A., Inc., 787 S.W.2d 942 (Tex. 1990); Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988).  This remedy "is based upon the promise implied by law to pay for beneficial services rendered and knowingly accepted."  Vortt Exploration Company, Inc. v. Chevron U.S.A., Inc., supra at 944.  Recognizing that quantum meruit is founded on unjust enrichment, the supreme court set out the elements of a quantum meruit claim in  Bashara v. Baptist Memorial Hospital System, 685 S.W.2d 307, 310 (Tex. 1985).  To recover under quantum meruit, a claimant must prove that:  (1) valuable services were rendered or materials furnished; (2) for the person sought to be charged; (3) which services and materials were accepted by the person sought to be charged, used, and enjoyed by him; (4) under such circumstances as reasonably notified the person sought to be charged that the plaintiff in performing such services was expecting to be paid by the person sought to be charged.  Vortt Exploration Company, Inc. v. Chevron U.S.A., Inc., supra; Bashara v. Baptist Memorial Hospital System, supra.

There is no evidence to establish that Seay accepted, used, and enjoyed the services and materials provided by Lon Smith Roofing.  Seay testified that he signed the Apunch list@ which stated that, upon completion of the items contained in the punch list, Seay would pay the outstanding balance on the contract.  Seay testified that the items on the Apunch list@ were completed but were not completed satisfactorily.   Seay further testified that the roof  was of no value to him.  There was also evidence that the roof could not be repaired.  There was testimony that the roof continued to leak until it was removed and replaced a few months after it was installed.  After it was replaced, the roof never leaked, and Seay was able to complete the construction of his home.  Although Lon Smith Roofing presented testimony that the roof was installed in a workmanlike manner, that the roof could be repaired, that it was not allowed to repair the roof, and that the roof should not have been removed, there is no evidence that the roof as installed was accepted, used, and enjoyed by Seay.  Because of the lack of such evidence, there is no evidence to support the jury=s finding that Lon Smith Roofing performed compensable work for Seay, and there is no evidence to support the jury=s award of damages in the amount of $18,682.50.  The trial court did not err in granting Seay=s motion for JNOV and in setting aside the jury=s answers to Questions Nos. 2 and 3. 

Lon Smith Roofing next argues that the trial court erred in granting judgment for Seay and that Seay did not prove his claims for affirmative relief as a matter of law.  Seay argues that the parties stipulated that if the jury answered Ano@ to Questions Nos. 1 and 2 then Seay was entitled to judgment on his claim for breach of contract.  Question No. 1 asked whether ALon Smith Roofing substantially performed the contract in question.@  Seay argues that, because the jury answered Ano@ to Question No. 1 and the trial court set aside the jury=s answer to Question No. 2 on whether Lon Smith Roofing performed compensable work for Seay, he is entitled to judgment based upon the stipulation. 

Lon Smith Roofing=s original brief was filed on July 25, 2001.  On August 15, 2001, Seay filed a motion pursuant to TEX.R.APP.P. 34.6(e) to correct the reporter=s record, claiming that there was an omission in Volume 7 of the reporter=s record concerning the way the jury was charged.  In Volume 7, pages 4 and 5 of the reporter=s record, the following conversation occurred:

THE COURT: I want to put on the record that it=s understood and agreed by the attorneys that a yes answer to No. 1, the Court will award damages of 18,675.75 less $1,300.

[APPELLANT=S COUNSEL]: So agreed and stipulated.

THE COURT: In lieu of 14, that=s my understanding of what the evidence is.

[APPELLANT=S COUNSEL]; That=s the evidence in this case.

[APPELLEE=S COUNSEL]: Okay.  Yes.  Then also the flip side of that, that if they answer - -

THE COURT: If they answer no, then damage award to the plaintiff - - to the defendant is  - - do you have that number then if it=s  - -

[APPELLANT=S COUNSEL]: We can=t do that, Judge, because we got the soffit damage issue.

THE COURT: Yeah.  We=re not down to that yet.  And that=s the only one, wasn=t it, where we ended up submitting - -

[APPELLANT=S COUNSEL]: Yes, sir, that gets your damages.

THE COURT: Now, we=ve got another one, Seay damages, that if they find that Defendant Seay is entitled to damages, then he=s entitled to out-of-pocket expenses of 18,000 - - what?

THE COURT: It=s 18,341.25, that=s what he said, plus their answer to what now is 14.

[APPELLANT=S COUNSEL]: That=s the insurance deal.

[APPELLEE=S COUNSEL]: Judge, I submitted an unjust enrichment.

THE COURT: Aren=t those the only damages that I=m going to award as a matter of law depending on the answer?  Okay.

On August 30, 2001, this court abated the appeal and instructed the trial court to conduct a hearing to determine what occurred when the jury was charged.  The trial court held a hearing on September 28, 2001, and entered findings of fact and conclusions of law on that same day.  At the hearing, Seay=s trial counsel stated that there was a stipulation by the parties that if the jury answered Ano@ to Questions Nos. 1 and 2, then Seay would be entitled to judgment on his breach of contract claim.  Seay=s trial counsel also stated that Seay=s request for damages in the amount of $25,149.23 was not contested by Lon Smith Roofing.  Seay=s trial counsel claimed that Volume 7 of the record is unclear because it does not reflect the conversation concerning the stipulations.  Seay=s trial counsel testified that he thought the stipulations were on the record.   Kim A. Brooks, the official court reporter, testified at the hearing that there was nothing incorrect in Volume 7 of the record, that she was on the record every time she was instructed to be, that there was nothing that could be transmitted that was not, and that the reporter=s record was complete.

The trial court stated on the record that the reporter=s record does not reflect the informal charge conference.  The trial court stated that it remembered an agreement as to the effect of Question 1 and that, because of that agreement, it did not submit Seay=s Acontract question.@  The trial court further stated what Athe Court tried to do on page 4 and 5 of Volume 7 was to put the agreement at the informal charge conference into the record.  And it may have been a feeble effort, but that=s what the Court attempted to do.@  The trial court=s findings of fact and conclusions of law state that the trial court finds that Lon Smith Roofing agreed and stipulated during the charge conference that negative answers to Questions Nos. 1 and 2 would result in judgment for Seay on his breach of contract claim.  The trial court further found that Lon Smith Roofing agreed and stipulated that Seay=s damage claims totaling $25,149.23 were not contested.  The trial court found that Seay was entitled to judgment because the jury answered Ano@ to Question No. 1 and the jury=s answer to Question No. 2 was set aside and that Seay was entitled to judgment in the amount of $25,149.23 based upon the stipulation.

Lon Smith Roofing argues in its supplemental brief that the claimed stipulations do not comply with TEX.R.CIV.P. 11.  Rule 11 states:

Unless otherwise provided in these rules, no agreement between the attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record. 

There is no written agreement signed by the parties in the record as to the effect of the jury=s answers to Questions Nos. 1 and 2 on Seay=s breach of contract claim.  Although the reporter=s record reveals in Volume 7, pages 4 and 5 that there was some agreement between the parties, the record does not provide a stipulation in open court that Seay would be entitled to judgment on his breach of contract claim in the event the jury answered Ano@ to Questions Nos. 1 and 2 and stipulating to an award of damages in the amount of $25,149.23.  Therefore, any stipulation between the parties does not comply with Rule 11 and is unenforceable.  J.B. Custom Design and Building v. Clawson, 794 S.W.2d 38 (Tex.App. - Houston [1st Dist.] 1990, no writ).   Because the stipulation is unenforceable, there is nothing in the record to support a judgment and an award of damages for  Seay on his breach of contract claim.  We sustain Lon Smith Roofing=s issue on appeal that the trial court erred in entering judgment for Seay, and we sustain the issue in the supplemental brief that the stipulations do not comply with Rule 11.  Because of our disposition of the above issues on appeal we need not address Lon Smith Roofing=s remaining issues on appeal or Seay=s cross-points.  TEX.R.APP.P. 47.1. 

The judgment of the trial court insofar as it grants Seay=s motion for JNOV and denies Lon Smith Roofing=s quantum meruit claim  is affirmed.  The judgment of the trial court insofar as it grants judgment for Seay and awards damages to Seay in the amount of $25,149.23 and attorney=s fees in the amount of $35,827.00 is reversed and remanded to the trial court for further proceedings on Seay=s causes of action. 

JIM. R. WRIGHT

August 15, 2002                                                                       JUSTICE

Do not publish.  See TEX.R.APP.P. 47.3(b).

Panel consists of: Wright, J., and

McCall, J., and McCloud, S.J.^[2]

^[1]We note that, in its judgment, the trial court stated that it is setting aside its August 22 judgment; however, the record indicates that the final judgment was entered on August 24, 2000.

²Austin McCloud, Retired Chief Justice, Court of Appeals, 11th District of Texas at Eastland sitting by assignment.