Balfour Beatty Rail, Inc. v. Kansas City Southern Railway Co. (173 F. Supp. 3d 363, 2016)

MEMORANDUM OPINION AND ORDER

Sam A, Lindsay, United States District Judge

The court makes the following findings of. fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure following a bench trial on the following claims by Plaintiff Balfour Beatty Rail Inc. (“Plaintiff’ or “BBRI”) and Defendant The Kansas City Southern Railway Company (“Defendant” or “KCSR”) that remained after summary judgment and were tried to the court: (1) BBRI’s contract claim for cumulative impact or prolongation delay damages (“Prolongation Delay Claim”); (2) BBRI’s claims based on Change Orders 4 and 36 through 50 (contract and quantum meruit); (3) BBRI’s claim under the Texas Prompt Payment Act; (4) KCSR’s breach of contract counterclaim to recover for ballast material allegedly wasted by BBRI; and (5) KCSR’s breach of contract counterclaim to' recover the cost of retaining additional contractors Kanza and Holland to perform tamping, regulating, and de-stressing to supplement and assist BBRI in completing its scope of work. A number of affirmative defenses asserted by the parties also remain. Following a bench trial, and for the reasons that follow, the court finds and concludes that BBRI is entitled to recover, subject KCSR’s' request for a setoff, $34,820.35' plus prejudgment interest for Change Orders 45, 46, 47, and 50; that KCSR is entitled to recover $2,353,299.40 plus prejudgment interest on its counterclaim against BBRI for wasted ballast, and the court will enter judgment in favor of KCSR on that claim in accordance with this memorandum opinion after offsetting the amount awarded to BBRI. Except for attorney’s fees, all other relief not expressly granted herein is denied, and the parties’ remaining claims that survived summary judgment are dismissed with prejudice except to the extent set forth, in this opinion. The court also denies as moot Defendant’s Motion for Partial Judgment as a Matter of Law (Doc. 91).

I. Procedural Background

BBRI originally filed this action against KCSR on July 19, 2010, in. the 191st Judicial District Court,- Dallas County, Texas, asserting state law claims for breach of contract, quantum meruit/unjust enrichment, and failure to promptly pay under the Texas Prompt' Payment Act (“TPPA”) related to construction delays and work, performed by it, on sixty-four miles of railway track line that runs from Rosenberg, Texas, to Victoria, Texas.

On August 20, 2010, KCSR removed the action to federal court on the basis of diversity jurisdiction, and asserted defenses and counterclaims under the parties’ contract for: - (1) ballast material allegedly wasted by BBRI during construction; (2) trackage rights fees incurred by KCSR in using another third party’s tracks as a result of BBRI’s failure to timely complete the railroad construction work or project (“Project”) within the time specified by the parties’ contract; (3) costs for work done by other contractors hired by KCSR to supplement and assist BBRI with tamping, regulating, and de-stressing after BBRI fell behind schedule; and (4) costs incurred for remedial or repair work done by other contractors to correct deficiencies in BBRI’s punch list work and other postcon-struction work. Both parties also seek attorney’s fees, prejudgment and post-judgment interest, and costs of suit.

On September 16, 2011, both parties moved for summary judgment. KCSR moved for partial summary judgment on BBRI’s contract and quantum meruit claims based on delays, ballast, and fill material. BBRI moved for partial summary judgment on all of KCSR’s counterclaims except for KCSR’s claim for wasted ballast. On July 31, 2012, the court granted in part and denied in part the parties’ summary judgment motions. The court granted KCSR’s summary judgment motion with respect to BBRI’s contract and quantum meruit claims based on BBRI’s allegation that it performed additional ballast and fill material work at. crossings due to differing site conditions. The court also granted the motion with respect to BBRI’s quantum meruit claim based on prolongation delays but denied KCSR’s request to dismiss BBRI’s contract claim based bn prolongation delays.

The court also granted BBRI’s summary judgment motion with respect to KCSR’s claim to recover costs for trackage rights fees and corrective or remedial work performed by other contractors and dismissed with prejudice these claims. In its July 31, 2012 opinion, the court- indicated that the following claims remained after summary judgment: (1) BBRI’s contract claim for prolongation delay damages; and (2) KCSR’s counterclaims under the parties’ contract based on (1) wasted ballast; and (2) the cost of retaining additional contractors Kanza and Holland to perform tamping, regulating, and de-stressing to assist BBRI in completing its scope of work. Also remaining after summary judgment were BBRI’s claims for quantum meruit and breach of contract based on Change Orders 4 and 36 through 50, as well as BBRI’s claim for alleged violations of the Texas Prompt Payment Act (“TPPA”), which were not at issue in KCSR’s summary judgment motion or addressed in the court’s prior opinion.

A nine-day bench trial of the parties’ remaining claims was conducted from April 2, 2013, to April 11, 2013. The court heard testimony during the trial from the following witnesses: Patrick Castle (“Castle”), Jose Garcia (“Garcia”), Steve Whitfield (“Whitfield”), Bradford Bright (“Bright”), Colin Kendrick (“Kendrick”), Mark Snailham (“Snailham”), Lee Peek (“Peek”), David Brookings (“Brookings”), Lynn Carnes (“Carnes”), and Bryan Byrd (“Byrd”). Joint Exhibit Nos. 1 through 375, to which there were no objections, were preadmitted at the beginning of the trial. All other evidence was preadmitted subject to objections and the parties’ agreement to withdraw exhibits during or at the end of the trial. In addition, the court admitted, as exhibits, transcribed and videotaped deposition testimony designated by the parties for witnesses who did not testify in person during the trial. These exhibits included Plaintiffs Exhibits 538 through 554 and Defendant’s Exhibits 624 through 634, which consist of deposition designations by the parties for the following witnesses who performed worked on the Project for BBRI or KCSR: Miguel Cruz (“Cruz”); John Gable (“Gable”); Bryan Brown - (“Brown”); Corby Cline (“Cline”); John Dunsworth (“Dunsworth”);' Roosevelt Altez (“Altez”); Humberto Garcia; Harry Stillwagon (“Stillwagon”); and Rigoberto Gordillo. The deposition testimony of Mike Russell (Defendant’s Exhibit 635) was not admitted, as Plaintiffs objection to this exhibit was sustained.

Plaintiffs Exhibits 536 and 537, which are Primavera native schedule files, were admitted for demonstrative purposes subject to the parties’ agreement that KCSR’s expert Byrd would be allowed to examine and opine regarding them, although he may not have previously rendered an opinion on them before trial. Plaintiffs Exhibits 536 and 537 are the files from which Joint Exhibit 230, an as-planned Primav-era schedule, was printed. Joint Exhibit 230, however, does not contain all of the information included in the native Primav-era files. Defendant’s Exhibits 610 and 612 through 616 were admitted for demonstrative purposes subject to Plaintiffs objection that they exceed Byrd’s prior expert report and deposition testimony and went beyond Plaintiffs Exhibits 536 and 537, which, according to Defendant, were not produced prior to trial or included in Plaintiffs exhibit list. The court overrules Plaintiffs objections in- this regard. Plaintiff did not show to the court’s satisfaction that these files were produced prior to trial. Regardless of whether the software files were capable of being physically Bates-stamped, Plaintiff could have given the files Bates numbers and notified Defendant when producing the files that certain Bates numbers corresponded to the Primavera files produced in native format. Plaintiff could have also--given the files exhibit numbers and included them in its pretrial exhibit list as it did with PL’s Ex. 484, a native formatted Punch List. Proceeding in this manner would have prevented the confusion and dispute that ensued at trial regarding Plaintiffs Exhibits 536 and 537, the new rebuttal exhibits created by Defendant in response to these exhibits, and the use of the new exhibits at trial by the parties’ expert witnesses. The court also admitted for all purposes Defendant’s Exhibits 609 and 611, subject to Plaintiffs' objections regarding inconsistent dates. The court overrules the objections to these exhibits because, as explained during the trial, such objections go to the weight of the evidence, not its admissibility.

On April 26, 2013, after the trial in this case concluded, the parties filed a joint list of Exhibits Withdrawn by Both Parties (Doc. 77). On the same day, BBRI objected in writing (Doc. 79) on hearsay grounds to a large number of joint exhibits that were preadmitted and exhibits that were offered by BBRI and KCSR and preadmitted before the trial subject to objections. Alternatively, BBRI requested that the court strike these exhibits, which KCSR would not agree to withdraw.

In response, KCSR contends that BBRI waived any objections to these exhibits by failing to timely object during the trial or by the March 18, 2013 deadline for making written pretrial objections to evidence. For support, KCSR cites Federal Rule of Evidence 103(a)(1)(A) for the proposition that a party may only claim error in the admission of evidence if it timely objects or moves to strike the evidence on the record and states the specific ground for the objection. ■

The court agrees. BBRI cannot claim error in the admission of these exhibits because the joint exhibits were preadmit-ted by agreement of the parties, and the parties’ respective exhibits were preadmit-ted by agreement subject to the objections of the parties to the exhibits. See Fed. R. Evid. 103(a)(1)(A). Moreover, BBRI did not object to.-these exhibits at trial, and no objections to the exhibits were included in BBRI’s written pretrial objections, which were required to. be filed by March 18, 2013. BBRI’s April 26, 2013 hearsay objections are, therefore, untimely and waived under. Federal Rule of Civil Procedure 26(a)(3)(B), unless it can show that good cause exists for its failure to object to the exhibits before trial.

BBRI’s objection stems from KCSR’s refusal to agree to the 'withdrawal of the exhibits attached to its objection, BBRI contends that,'based on its understanding of the court’s ruling and instructions, the exhibits listed in Exhibit A to its objections should not be considered as evidence because they were, not used by either party in the trial via live testimony or deposition designations.

BBRI’s understanding in this regard is not entirely correct. The court did not require the parties to preadmit or withdraw any exhibits; rather, it simply gave them the option of preadmitting exhibits and withdrawing irrelevant documents during or at the end of the trial to expedite the bench trial and avoid burdening the record with exhibits determined by the parties to be irrelevant to their respective claims and defenses. See Tr. 9-13. If the parties are unable to agree to withdraw certain exhibits that they previously agreed to preadmit, the court cannot force either party, at this stage, to withdraw an exhibit that was not objected to in writing by March 18, 2013. For the same reason, the court concludes that BBRI has not established good cause for its prior failure to object timely on hearsay or other grounds to. the exhibits ..attached to its April 26, 2013 objection. Accordingly, the court overrules BBRI's hearsay objection and request for the court to strike the exhibits attached as Exhibit A to its objection (Doc. 79).

On June 11, 2013, Defendant filed its Motion for Partial Judgment as a Matter of Law (Doc. 91). On June 28, 2013, the parties filéd their proposed findings of fact and conclusions of law, and Defendant moved to supplement or correct the trial record with recorded deposition testimony that was played during the trial to impeach BBRI’s witnesses but not previously transcribed by the court reporter and included in the trial record. The court granted Defendant’s motion to supplement or correct the record. In the same order, the court advised the parties that it would address their contentions with respect to Defendant’s Partial Judgment as a Matter of Law (Doc. 91) in its findings and conclusions. On September 6, 2G13, the court heard closing arguments. •

Based upon a preponderance of the evidence, the court makes the following findings of fact and conclusions of law as required by Rule 52(a) of the Federal Rules of Civil Procedure. The facts contained herein are either undisputed or the court has made the finding based on the credibility or believability of each witness. In doing so, the court considered all of the circumstances under which the witness testified, including: the relationship of the witness to Plaintiff or Defendant; the interest, if any, the witness has in the outcome of the case; the witness’s appearance, demeanor, and manner of testifying while on the witness stand; the witness’s apparent candor and fairness, or the lack thereof; the reasonableness or unreasonableness of the witness’s testimony; the opportunity of the witness to observe or acquire knowledge concerning the facts to which he or she testified; the extent to which the witness was contradicted or supported by other credible evidence; and whether such contradiction related to an important factor in the case or some minor or unimportant detail. When necessary, the court comments on the credibility of a witness or the weight to be given to a witness’s testimony. Where appropriate, any finding of fact herein that should more appropriately be regarded as a conclusion of law shall be deemed as such, and vice versa.

II. Findings of Fact

The parties’ claims in this case arise out of a railway track construction Project. The railway track line that forms the basis of the parties’ claims was purchased by KCSR from the former G.H. & S.A. Railway Victoria Division. In November 2007, KCSR solicited bids for a track contractor to construct approximately 85 miles of main line track between Victoria and Rosenberg, Texas. BBRI submitted its bid to perform this work in December 2007. KCSR did not accept the bid initially submitted by BBRI and instead awarded the contract to contractor Gulf Coast Rail Group, Inc. (“Gulf Coast”) to perform certain construction and rehabilitation work on the main line track between Victoria and Rosenberg, Texas.

KCSR subsequently terminated its contract with Gulf Coast and approached BBRI in late 2007 about submitting another bid to complete the work started by Gulf Coast. As was the case with the initial bid process, BBRI had the opportunity and obligation to assess fully the work required to complete the Project. BBRI had access to the railroad track site, as well as the plans and specifications prepared by KCSR for prospective bidders. The Information to Bidders that was provided to BBRI during the bid process required each bidder to visit the site to become familiar with the site conditions relating to the execution of the Project. The Information to Bidders warned bidders that failure to do so would not relieve the successful bidder of its obligation to provide all material and labor necessary to successfully complete the Project by the specified date.

In the KCSR bid form submitted by BBRI, BBRI certified that it had inspected the site and read the bid documents. The bid form warned that the failure or omission of BBRI, as a bidder, to inspect the worksite or carefully review the bid documents would not relieve it from any obligation with respect to its bid. KCSR met with BBRI at the Project site, answered BBRI’s questions, and provided BBRI with construction design plans that were final'in some respects but incomplete with respect to the track construction work to be performed by BBRI. During this time, BBRI had the opportunity to inspect the Project site and observe the work done to date on the Project, including the grading work done thus far by KCSR’s grading contractor Kanza before contracting with KCSR to construct the main line track. BBRI, therefore, was able to see the type of grade on which it would be constructing track. BBRI was also able to observe the pre-ballast area and the rest of the line that still needed to be graded.

On August 20, 2008, the parties entered a Master Agreement, effective September 1, 2008, for BBRI as contractor “to furnish, upon request of Company [KCSR], all supervision, labor, material, tools, equipment, supplies, and things of every nature” to complete the work requested by KCSR on the railway track line. Jt. Ex. 84.003. In addition to generally describing the work to be performed by BBRI, the Master1 Agreement sets forth the general terms of the parties’ agreement that govern compensation and- invoicing, change orders, safety, notices, limitation of damages and Project delays, amendments, and prior or contemporaneous agreements.

From October 15, 2008, to October 31, 2008, a series of proposals by BBRI to complete the Project was submitted to KCSR. These proposals included various changes" to the mileage and scope of the Project because, during the time that BBRI continued to submit proposals and the - parties negotiated the SOW, Gulf Coast continued to do work on the Project, which shrunk the scope of the work remaining to be performed by BBRI. Castle, who oversaw BBRI’s proposals, acknowledged during the trial that he was aware that Gulf Coast was still on the jobsite performing work at the South end of the Project while BBRI and KCSR continued to negotiate the SOW. Tr. 132-33. On October 31, 2008, BBRI submitted a final proposal to KCSR that decreased the amount of rail to be constructed by BBRI from 77 miles to 65.1 miles because a decision was made to have Gulf Coast continue con-strueting a small portion of rail at the southern end of the Project. When BBRI submitted its final proposal, Gulf Coast had not finished constructing the portion of rail at the southern end of the Project, where BBRI intended to start its work .on the Project, Tr. 92.

Subject to the terms and conditions set forth in the Master Agreement, the parties executed a Statement of Work (“SOW”) on November 13, 2008, that describes the work to be performed by BBRI. The court refers herein collectively to the Master Agreement and SOW as the “Contract.” The first page of the SOW summarizes the Project as follows:

The former G.H. & S.A. Railway Victoria Division from Rosenberg to Victoria has been purchased by ... (KCSR) for rehabilitation. The limits of this project are from MP RV 18.6 near Rosenberg, Texas to MP RV 82.28 near Victoria, Texas. [BBRI] will construct track on the mainline with concrete ties and through El Campo between MP 36.29 and MP 41.77 on wood ties as well as the siding at El Campo and El Toro. This track work project can be described as track construction utilizing KCSR-sup-plied material. KCSR will be supplying 136# welded rail (1,400-ft and 1,600 strings), and ballast in a stockpile to be transloaded into bottom dump ballast cares and/or ballast in bottom dump rail cars, concrete ties, and the elastic fasteners. The contractor will be responsible for unloading the track material and transporting it to the required locations. Concrete ties will, be supplied by trucks to a central location and offload[ed] and reloaded onto tie cars by [BBRI]. The reconstruction of the at-grade road crossings is included in this project. It is expected that the contractor will be working from [the] south end of the project going north.

Jt. Ex. 4. The SOW required each party to designate a project manager, who was to act as the point of contact for the other party. Id. at 4.014. The SOW incorporates Exhibits A through G, which set forth the scope of work; rates and fees; supplemental terms; subcontractor and material lists; additional track construction terms; and specifications, drawings, plans, and track charts. Exhibit E to the SOW pertaining to materials provides: “Unless otherwise stated herein, [BBRI] shall furnish all materials, supplies, tools, equipment and labor necessary for the proper prosecution and completion of the Sérvices.” Jt. Ex. 4.018. The first page of the SOW also incorporates by reference the “Bid Documents,” which are defined' as only" “the materials delivered to the Contractor in connection with the Company’s solicitation of Contractor’s proposal to provide the Work” on the Project. Jt. Ex. 4. The SOW states that, to the' extent that the Bid Documents conflict with the SOW, the terms of the SOW control. The Contract requires BBRI to perform its work in a safe manner.

The original contract price for the negotiated scope of work was $12,206,666. This amount included a lump-sum amount of $10,416,193 for mobilization, surveying and setting out, skeletonized track, ballasting, tamping and regulating, welding and stressing, grade crossing (prep and followup), and other miscellaneous work (including sidings and bridges), plus $1,790,473 to furnish and install asphalt, which was calculated and paid based on a unit rate of $115 per ton of asphalt installed. The SOW provides that BBRI will construct the track, pursuant to the Project specifications. The SOW required at least 10 inches of ballast to be .installed under the tie with an allowed variance of +/-2 inches and dictated that care be “exercised not to distribute ballast .in excess qf the amount required for the lift to be made.” Jt. Ex. 4.020, 4.022. The SOW also provided for a shoulder of no more than 12 inches from the tie. Id. at 4.022. The parties intended and the SOW provides that skeleton track construction using the NTG machine would only be conducted on alternate weeks to allow for rail distribution. Id. at 4.008. The parties recognized that there would be instances when other contractors would be working in the vicinity of BBRI. Id. at 4.014. In this regard, the SOW expressly states: “It shall be [BBRI’s] responsibility to coordinate with others so as not to disrupt the progress of [its] own or other work. Id.

Section 5 of the Master Agreement contains a specific procedure for change.orders applicable to claims for adjustment in the Contract price as a result of additions, deletions, or revisions in the Contract Work requested by KCSR. This provision required BBRI, as the contractor, to submit a written claim for an increase in the amount to be paid by KCSR as a result of the requested change in work within 15 days of being notified of the requested change.' The provision further required BBRI to provide data .to support the claimed amount and a written statement that the amount claimed for the change covered all known amounts to which it’ was entitled as a' result of the change order. Section 5.B states that no claim for a price adjustment by BBRI will be valid or paid by KCSR unless set forth in a written change order signed by both parties. In the event the parties are unable to reach agreement on the amount of price adjustment, the change order provision states that BBRI will not be obligated to perform the' additional work requested by KCSR, but it must not unreasonably withhold, delay, or - condition its consent to. the change requested by KCSR. Section 5.C of the change order provision provides that BBRI will not be entitled to an increase in the agreed upon Contract price or an extension of the Contract time with respect to any work it performs that is not required by the SOW unless the SOW is amended, modified, or supplemented accordingly.

The Master Agreement states that any amendment to the agreement must be done in writing and signed by an authorized representative for each party, Regarding- compensation and invoicing, the Master Agreement required BBRI to submit invoices for all work performed under the Contract within 90 days of performance of the work, and states that any invoice reflecting work performed -more than 90 days prior to KCSR’s receipt of the invoice will not be paid.

Regarding Project delays, the SOW provides:

If, in the opinion of the Company, the Contractor falls behind schedule at any time, Contractor will add additional manpower and equipment immediately and keep them on the job until the work is back on schedule without any additional cost to the Company. If overtime work is required to maintain the schedule, Contractor will direct its work force to do so without any additional cost to the Company.

Jt. Ex. 4.002. The SOW includes a. liquidated damages provision that further provides ■ the following • regarding delays caused by KCSR’s- failure to .timely meet its obligations under the SOW:

Contractor will'mitigate to the extent reasonably. practicable any delays caused by the Company’s failure to timely meet its obligations under this [SOW]. If such failure by the Company prevents Contractor’s crews from working more than 4 hours during a day .(each such occurrence referred to as a “Delay Day”), then Contractor sh,all notify railroad of such delay and reason there- . for[ ]. Contractor agrees to keep a record of any Delay Days caused by the Company during the term of this Agreement, The Project Managers for the Company and Contractor will meet periodically to jointly agree upon the number of Delay Days. The Company will pay Contractor the daily rates set forth .in-.equipment and labor rates added to schedule 1, and as supplemented ..., for such agreed-upon Delay Days.

Id,

The SOW contains three deadlines. BBRI was required to complete “all track construction, ballasting, tamping and rail adjustment” work by May 1, 2009. Jt. Ex. 4.001-.002. The parties refer to this as the substantial completion deadline. By May 15, 2009, BBRI was required to complete final dressing and clean up of the Project site. BBRI’s deadline for demobilization of its equipment and labor was set for May 31, 2009. The SOW expressly provides that “[t]ime is of the essence in completing the Services,” and the parties’ conduct during the Project and witness testimony demonstrate that both parties understood that time was of the essence in completing the Project on schedule. Jt. Ex, 4.002.. Other language in the Contract demonstrates the parties’ intent that time was of the essence in completing the Project. BBRI stipulated at trial that time was of the essence but contends that KCSR waived the right to assert that time was of the-essence. The testimony and documentary evidence in this case, however, establish the contrary and show that both parties understood at all times during the Project that time was of the essence in completing the Project .by the deadlines set forth in the Contract. Moreover, as herein explained, the defenses of waiver and estoppel were only alleged by Plaintiff in its pleadings and included in the Pretrial Order as defenses to KCSR’s claims. Accordingly, the court does not consider BBRI’s waiver and es-toppel arguments to the extent it contends in its posttrial brief that waiver or estoppel supports its own claims.

The as-planned construction schedule that BBRI submitted to KCSR in 'October 2008 in conjunction with its bid included the following dates: (1) November 3, 2008 mobilization start; (2) April 29, 2009 final ballast drop; (3) April 30, 2009 final de-stressing; and (4) May 9, 2009 punch list completion: BBRI understood that this schedule was aggressive and complex, and that time was of the essence. Among other things, the schedule included little or no float and involved extensive labor and equipment working on a single track with no parallel track that could be used to bring in materials. BBRI knew going into the Project that the design plans were not complete. It also knew that it would have to interface and coordinate its work and schedule with the work and schedules of other contractors working on the Project site. BBRI had never undertaken a project of this magnitude and kind using the construction methods it proposed, including use of an NTC machine for track construction to build skeleton track and, as a result, experienced a steep learning curve in the beginning of the Project.

During the first few months, the Project and BBRI’s work were plagued by delays and problems attributable to BBRI and its crew. BBRI did not begin building skeleton track with the NTC machine until November 25, 2008, eight days after the scheduled start time, because it was involved in protracted negotiations with Harsco, the owner' of the NTC machine, over the NTC machine subcontract. The NTC machine sat idle at the jobsite while BBRI continued its negotiations with Har-sco, who wanted assurances of payment and refused to contract with BBRI unless KCSR provided that assurance by agreeing to pay Harsco under a joint check agreement. As a result, BBRI’s start of ballast distribution was delayed by nine days. BBRI was three weeks late in starting its surfacing works (tamping and regulating ballast). BBRI did not start its de-stressing until, more than two months after the scheduled start date. As of December 10, 2008, BBRI had been working on the Project for 23 days but had “only built five miles of skeleton track,” although BBRI’s original as-planned construction schedule required it to complete this amount of skeleton track by November 21, 2008. Def.’s Ex. 624 at 94-95. BBRI fell behind the tamping and de-stressing schedule and was' never able to catch up. BBRÍs de-stressing crews were inexperienced and did not timely or properly de-stress the rail, which resulted in. broken ties and misalignment of the rail, and BBRI’s failure to meet its construction targets.

To complicate matters, BBRI encountered problems with its crew during the first two months of the Project. Altez was brought in by Snailham, BBRI’s vice president of rail services, to serve as BBRI’s Project Manager, although BBRI area manager Garcia believed that he was the only person qualified to do the job, Altez was responsible for Project documentation, including change orders, and oversight and organization of the Project. Garcia’s brother, Humberto Garcia, was appointed to act as BBRI’s field construction supervisor. Altez was overwhelmed by the Project, lacked people skills, and had difficulty communicating with Peek, Humberto Garcia, and other people on the Project. Humberto Garcia and Altez were unable to get along and argued about everything from paperwork to crew work assignments. Al: tez complained to his supervisor that Humberto Garcia was a problem and blamed him for delays in the Project. Humberto Garcia, on the other hand, did not believe that Altez was providing him with the information needed to do his job. Humberto Garcia told his brother (Jose) that he could no longer work with Altez and left the Project. As a result of the lack of communication, BBRI’s crews were unorganized, and its foremen resorted to fighting over equipment and workers.

Additional delay early on in the Project resulted from' BBRI’s decision to start the Project with equipment that:could not pull rail. BBRI started with a loader, but it soon realized that the loader did not have sufficient horsepower to pull the rail. BBRI then brought in a “dozer”; however, the dozer also' lacked sufficient power. Defi’s Ex. 631 at 3Í-34. For a period of time, BBRI used the loader and the dozer in tandem to pull the rail, which did not work well. BBRI finally brought in a loader that was big enough to do the job.

BBRI had issues with its mini-train because its Crew had never worked with a mini-train before and had to be trained on the job, and oné óf the mini-train cars had a bent wheel that caused four or five derailments. Every time it derailed, the rails on the car had to be off-loaded, then a track hoe would lift the car back on the rail, and the rails would be reloaded onto the car. Each derailment caused a delay of several hours. BBRI also began by pulling the rail six miles at time, which required pulling two ]4-mile strings six miles, two ]4-mile strings 5% miles, and so, on. This proved to be inefficient and ultimately had to be changed. BBRI dragged the rail over the bed in a'way that damaged the track bed. BBRI’s rollers constantly broke and even caught fire from overuse. In addition, BBRI had difficulties with road closings at crossings that caused delays and caused the Texas Department of Transportation (“TXDOT”) to scrutinize and shut down work at the' crossings early on in' the Project. • '•

When BBRI finally started distributing rail, it experienced delays because its ballast distribution and tamping crews were “jumping around” the Project rather than following the linear schedule as planned. Tr. 563. By mid-December, it was apparent to Altez that BBRI would not be able to complete the Project on time because of its slow start. Because of the slow start, KCSR had to slow down ballast deliveries in late December 2008, as the ballast stockpile was full, and .there was no place for it to put the new deliveries of ballast. KCSR stopped delivering ballast .on December 20, 2008, for approximately two weeks to give BBRI a chance to catch up.

In an effort to get the Project back on schedule, KCSR revised its rail delivery schedule and considéred supplementing BBRI’s work by bringing in a second crew to build track conventionally (without the NTC machiné) from the north end of the Project..Because of.the delays.that, BBRI had experienced, Altez .thought this, was a good idea and recommended to BBRI on December 19, 2008, that it subcontract this work at, a competitive rate to build from the north so BBRI could finish the Project on time while continuing to work from the south end' of the Project. This never happened. Whitfield, BBRI’s planning and technical support manager in Jacksonville, Florida, instead modified the Project schedule to shorten the time that BBRI had to complete each task and changed the sequence of certain work to be done concurrently. Whitfíéld’s proposed revised Project schedule was more aggressive than the original schedule and had no float for critical path work to be performed by BBRI. Whitfield acknowledged that in . the five years before this Project, he had not prepared a schedule with as little float as the revised schedule for this Project. Whitfield’s revised proposed schedule was unrealistic in many respects in that it did not account for the way in which BBRI was building track, and a number of these flaws in the proposed schedule were exposed during KCSR’s cross-examination of Whitfield during the trial.

Adjustments to BBRI’s plans and schedule continued in January 2009. On January 11, 2009, BBRI, knowing that it was behind schedule, notified KCSR by e-mail that it was adjusting its schedule and bringing a new superintendent to the job to improve its performance. At the same time, BBRI requested that KCSR stop the railroad tie deliveries so it could make the adjustments to its performance. In January 2009, KCSR resumed ballast deliveries after BBRI started to make progress with the track construction, -and straightened out its schedule and processes. Even though it was just now adding resources in January 2009, BBRI had already determined that its production costs in November and,December were more .than it. had anticipated.

> By February 2009; the Project was still behind schedule, and both parties blamed each other for delays. On February 11, 2009, KCSR notified BBRI ■ that it was behind schedule and was in danger of not meeting the contractual completion date. In that notice, KCSR requested that BBRI engage additional staff and equipment at no charge to KCSR to get the work back on schedule. On February 11, 2009, and again on February 12, 2009, BBRI eon-firmed that it had recently added additional resources for ballast operations, that it was behind on de-stressing operations, and that it would provide additional people and equipment to complete that work on time. Around the same time, BBRI began to demand increasing deliveries of ballast and attributed the delays in its work to KCSR’s failure to deliver' sufficient amounts of ballast to the site.

BBRI arrived in El Campo, Texas, on February 20, 2009, a day earlier than planned, but it. was not prepared to proceed with the skeleton track construction through El Campo because it had not pre-plated the wood ties that were to be used through El Campo with the NTC machine, which is designed to use either concrete ties or pre-plated wood ties. The SOW required KCSR to provide ties but it did not require KCSR to provide pre-plated ties or labor to pre-plate the ties supplied. See Jt. Ex. 4.018-19. BBRI knew that the SOW required it to construct the track through .El Campo with wood ties and planned to use the NTC machine through El Campo. For this reason and because the Contract did not require KCSR to supply pre-plated ties for El Campo or any other areas, BBRI was responsible for pre-plating the ties for use through El Campo. In December 2008, Altez solicited bids for a subcontractor to pre-plate the wood ties to determine if it was more cost efficient to subcontract the work. In February 2009, BBRI submitted a change order request to KCSR seeking approximately $231,000 for timber tie pre-plating for El Campo. The change order was denied by KCSR because the cost was part of BBRI’s lump-sum bid and Contract price. Although BBRI knew that the El Campo section would require pre-plated ties, it never performed the pre-plating or obtained a subcontractor to do it before reaching El Campó. In retrospect, Altez was unable tó recall why the ties did not get pre-plated before BBRI arrived at El Campo and- believéd that BBRI simply never got around to getting the ties pre-plated. Because the NTC machine required pre-plated wood ties, BBRI was unable to continue its work with the NTC machine when it arrived at El Campo. Garcia testified at trial that if KCSR had not required it to move 'the NTC machine to the North on February 20, 2009, after it arrived at El Campó, BBRI could have proceeded though El Campo using the NTC Machine without pre-plated wood ties as it had done at FM 444. According to Garcia, the process of using wood ties that were not pre-plated could be done as follows using the NTC machine:

[T]he machine would thread the rails on top of the ties, and then there is a man in the middle of the machine under there putting the insulators on top of the plates. At that same time when this ’machine was threading the rail, my intention was to set spikes on top of the ties just enough to keep it engaged for the machine to go through and come back and spike it with mechanized equipment spike the rest of the rail.

Tr. 207. Garcia and Kendrick both reluctantly acknowledged, though, that Hársco and KCSR had concluded that this manner of using the NTC machine was unsafe and not recommended. For this reason, KCSR did not allow BBRI to use the NTC Machine and wood ties that had not been pre-plated through Él Campo and instead requested BBRI to move the NTC Machine to the North of the Project to avoid delay and having the NTC machine sit idle while BBRI constructed the track through El Campo conventionally. BBRI was opposed to the'move even though.it had previously considered adding a second crew in the North to make up lost tíme and finish the Project work by May 1, 2009. BBRI requested and KCSR agreed to compensate BBRI to make the move to the North, which according to Garcia, took five days. According to Garcia, KCSR also agreed to an change order for BBRI to move certain equipment again to El Campo when it reached the Colorado River bridge.

As of February 13, 2009, BBRI had adjusted only one rail- less than one thousand feet and was struggling to achieve 14 mile of de-stressing per day. KCSR, therefore, requested that BBRI provide a remedial action plan explaining how it intended to get back on schedule. On February 21, 2009, Garcia notified KCSR that.he would be personally overseeing the de-stressing operation to ensure that it was done in a proper and efficient manner. Garcia had been on the Project since the beginning. Initially, he spent only one to two days per week on the jobsite helping BBRI’s crews unload equipment and material. In late December 2008, Snailham told Garcia he was needed on the Project on a full-time basis. Altez believed that Garcia’s full-time presence on the Project was needed to facilitate communication with Peek. Garcia also helped in organizing BBRI’s work on the Project, which according to Garcia, was “pretty unorganized” in the beginning and fraught with issues due to the BBRI’s steep learning curve in overseeing such a large project. Tr. 186.

BBRI was never able to recover fully from the numerous issues it experienced early on during the Project. In May 2009, after BBRI faded to complete the Project within the time specified under the Contract, KCSR hired contractors Kanza and Holland to perform tamping, regulating, and de-stressing to supplement and assist BBRI in completing its scope of work. Specifically, KCSR hired Kanza to perform tamping work at a cost of $234,703.31 and Holland to perform welding services at a cost of $73,185. KCSR seeks to recover these costs, $2,353,299.40 for ballast wasted by BBRI, and its attorney’s fees and costs.

On June 30, 2009, BBRI submitted a change order to' KCSR, requesting $3,938,513 in additional compensation for delays in its work under the Contract. BBRI contends that it incurred a twenty-eight-day delay in completing its work because it ran out of ballast several times. BBRI contends that KCSR breached the Contract in failing to provide sufficient ballast deliveries, which was critical to the Project schedule. In addition to its Prolongation Delay Claim for $3,938,513, BBRI submitted fifty-one change order requests to KCSR, thirty-four of which KCSR paid. BBRI seeks $432,549 for the remaining unresolved Change Orders 4 and 36 through 50. BBRI contends that it is entitled to interest on these unpaid sums under the TPPA in the amount of $2,989,391.59. BBRI also seeks to recover $1,193,113:97 for attorney’s fees, consultant fees, and expenses. Overall, BBRI seeks a total of $8,553,567.73, which amount is in addition to the $12,206,666 lump-sum amount agreed to by the parties and already paid by KCSR. It is also in addition to the approximate $200,000 paid to BBRI for change orders that were agreed upon by the parties and not the subject of this lawsuit. See Jt. Ex. 345.

III. Conclusions of Law

As previously noted, the following claims were tried to the court: (1) BBRI’s contractual Prolongation Delay Claim and its Change Orders 4 and 36 through 50 based on contract and quantum meruit theories of recovery; (2) BBRI’s claim under the TPPA; (3) KCSR’s contractual counterclaim to recover wasted ballast; and (4) KCSR’s contractual. counterclaim to recover the cost of retaining additional contractors Kanza and Holland to perform tamping, regulating, and de-stressing to supplement and assist BBRI in completing its scope of work. The parties agree that Texas law governs their claims and defenses.

A. Breach of Contract .

1. Breach of Contract and Damages

The elements of a breach of contract claim under Texas law are: “(1) the existence of a valid contract; (2) performance or tendered performance' by the plaintiff; (3) breach of the contract by the defendant; and (4) damages sustained by the plaintiff as a result -of the breach.” Smith Int’l, Inc. v. Egle Grp., LLG, 490 F.3d 380, 387 (5th Cir.2007) (citation omitted). “A breach of contract occurs when a party fails to perform an act that it has expressly or impliedly promised to perform.” Case Corp. v. Hi-Class Bus. Sys., 184 S.W.3d 760, 769-70 .(TexApp.-Dallas 2005, pet. denied). A breach of contract also occurs when one party to a contract prevents another party to the contract from performing its side of the bargain. See Texas Nat’l Bank v. Sandia Mortg. Corp., 872 F.2d 692, 699 (5th Cir.1989). The court determines as a matter of law what the contract requires of the parties. See Meek v. Bishop Peterson & Sharp, P.C., 919 S.W.2d 805, 808 (Tex.App.-Houston [14th Dist.] 1996, writ denied). When the terms of a contract are clear and unambiguous, and the facts concerning breach or performance are undisputed or conclusively established, the issue of whether the facts show performance or breach is also decided as a matter of law. Id. Generally, a party to a contract who is in default is precluded from bringing an action for breach of the contract. Dobbins v. Redden, 785 S.W.2d 377, 378 (Tex.1990) (“[A] party to a contract who is [itself] in default cannot maintain a suit for its breach.”); Baker Marine Corp. v. Weather-by Eng’r Co., 710 S.W.2d 690, 696 (Tex.App.-Corpus Christi 1986, no writ)-(“Baker, the breaching party, cannot take advantage of provisions favorable to it contained in the very contract which it was found to have breached.”).

Under Texas law, “[t]he normal measure of damages in a breach of contract case is the benefit-of-the-bargain measure.” Mays v. Pierce, 203 S.W.3d 564, 577 (Tex.App.-Houston [14th Dist.] 2006, pet. denied). Under this standard for measuring damages, “[a] nonbreaching party is generally entitled to all actual damages necessary to put it in the same economic position in which it would have been had the contract not been breached.” CQ, Inc. v. TXU Mining Co., L.P., 565 F.3d 268, 278 (5th Cir.2009) (citation and internal quotation marks omitted); Parkway Dental Assocs., P.A. v. Ho & Huang Props,, L.P., 391 S.W.3d 596, 607 (Tex.App.-Houston [14th Dist.] 2012, no pet.) (“The goal in measuring damages for a breach-of-contract claim is to provide just compensation for any loss or damage actually sustained as a result of the breach.”); Tacon Mech. Contractors, Inc. v. Grant Sheet Metal, Inc., 889 S.W.2d 666, 670 (Tex.App.-Houston [14th Dist.] 1994), writ denied).

The benefit-of-the-bargain measure of damages “is not based upon the facts as they actually occurred but instead is focused on what the injured party’s economic position would have been if the contract had been fully performed.” Id. at 608. Benefit-of-the-bargain damages are calculated by subtracting the value received by the non-breaching party from the value the party expected to receive when the contract was made. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 817 (Tex.1997) (“[B]enefit-of-the-bargain damages measure the difference between the value as represented and the value received.”); DaimlerChrysler Motors Co. v. Manuel, 362 S.W.3d 160, 180 (Tex.App-Fort Worth 2012, no pet.) (“[T]he benefit of the bargain measure.. .utilizes an expectancy theory and evaluates the difference between the value as represented and the. value received”) (internal quotation mark^ and citation omitted).

The party seeking to recover for remedial damages or the cost of completion in a breach of contract case generally has the burden to prove that the damages sought are reasonable and necessary. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 200-01 (Tex.2004) (per curiam). Evidence of the amounts charged and paid, standing alone, is.generally insufficient to show that the charges are reasonable and necessary. Id. at 200-01.

When there is substantial conflict in the evidence as to the exact cost of repairs and whether items are “extras” or included in: the contractual scope of work, such -inconsistencies- and conflict do not preclude recovery. Vance v. My Apartment Steak House of San Antonio, Inc., 677 S.W.2d 480, 484 (Tex.1984). When “an injured party has produced the best evidence available, and if it is sufficient to afford a reasonable basis for determining [its] loss, [it] is not to be denied a recovery because the exact amount of the damage is incapable of ascertainment.” Id. The issue should instead be decided by the fact finder. Id.

2. Recovery for Substantial Performance Under a Contract

In building or construction contracts, the strict rule that one who has not fully or strictly complied with a contract cannot maintain a suit for its breach is relaxed by the doctrine of substantial performance, which allows the breaching party to go forward with a contract action even though it has breached nonmaterial terms of the contract' but has otherwise substantially performed under the contract. Dobbins, 785 S.W.2d at 378; Vance, 677 S.W.2d at 481. Thus, the doctrine 6f substantial performance allows a party to a contract who breaches but nevértheléss substantially completes performance to sue on the parties’ contract and recover damages for that performance under the contract. Dobbins, 785 S.W.2d at 378. The doctrine of substantial performance can also be asserted as an affirmative defense to a breach of contract claim. See Smith v. Smith, 112 S.W.3d 275, 279 (Tex.App.-Corpus Christi 2003, pet. denied). Substantial performance is a condition precedent to bringing a lawsuit on a contract. Atkinson v. Jackson Bros., 270 S.W. 848, 850 (Tex.Comm’n App.1925). The contractor seeking to recover under the doctrine of substantial performance has the burden to plead and prove substantial performance. Carr v. Norstok Bldg. Sys., Inc., 767 S.W.2d 936, 940 (Tex.App.-Beaumont 1989, no writ).

Substantial .performance” means:

[T]he contractor must have in good faith intended to comply with the contract, and shall have substantially done so in the sense that the defects are not pervasive, do not constitute a deviation from the general plan contemplated for the work, and are not so essential that the object of the parties in. making the contract and its purpose cánnot, without difficulty, be accomplished by remedying them.

Turner, Collie & Braden, Inc. v. Brookhollow, Inc., 642 S.W.2d 160, 164 (Tex.1982) (quoting Atkinson v. Jackson Bros., 270 S.W. at 850). “[T]he doctrine assumes, if there is substantial, performance, the breach is immaterial.” Gentry v. Squires Const., Inc., 188 S.W.3d 396, 403, n. 3 (Tex.App.-Dallas 2006, no pet.). Accordingly, “[i]f a party has .committed a material breach of a contract, [its] performance cannot be substantial.” Patel v. Ambassador Drycleaning & Laundry Co., 86 S.W.3d 304, 309 (Tex.App.-Eastland 2002, no pet.) (citing Measday v. Kwik-Kopy Corp., 713 F.2d 118 (5th Cir.1983) (“The principle of substantial performance may be expressed by saying: ... that a breach which is, material, or which goes to r the root of the matter or essence of the contract, is fatal to-.the plaintiffs ..case in spite of [its] part performance;”)) (citation omitted).

Generally, there are two meas.ures of damages for the breach of a construction contract: remedial damages and difference-in-value damages. Id. Under the doctrine of substantial performance, a contractor may recover the full contract price less the cost of remedying the defects that are remediable without impairing the building or thing constructed as a whole. Vance, 677 S.W.2d at 482-83. If the owner counterclaims alleging the contractor breached the construction contract, the owner’s measure of damages is generally the cost of completing the job or remedying the defects that are remediable. Weitzul Constr., Inc. v. Outdoor Environs, 849 S.W.2d 359, 363 (Tex.App.-Dallas 1993, writ denied). If the owner has paid only part of the contract price to the contractor, the owner’s damages are credited against the balance of the amount owed on the contract. Id: When a contractor fails to substantially comply with the terms of a contract, the difference-in-value measure will generally apply. Turner, Collie & Bra-den, Inc., 642 S.W.2d at 164. The difference-in-value measure allows an owner to recover the difference between the value of the building or thing as constructed and its value had it been constructed according to the contract. Id.

While the remedial and difference'-in-value measures of damages generally'apply in construction contract cases, the Texas Supreme Court in Vance explained that the proper measure of damages must be determined by the facts of each individual case. Vance, 677 S.W.2d at 482 n. 1 (“There are numerous factual settings that may arise in the context of a building construction contract dispute, and we do not imply that the rules' set forth herein will apply to all building contract cases. The proper measure of damages as well as any allowance for offsets must be determined by the facts of the case.”) (citing Guittard, Building Contracts: Damages and Restitution, 32 Tex. B.J. 91 (1969)); see also Carr, 767 S.W.2d at 940 (applying benefit-of-bargain measure of damages in contract construction case); Classic Superoof LLC v. Bean, No. 05-12-00941-CV, 2014 WL 5141660, at *7 (Tex.App.-Dallas Oct. 14, 2014, pet. denied) (same); Westminster Falcon/Trinity L.L.P. v. Shin, No. 07-11-0033-CV, 2012 WL 5231851, at *2 n. 3 (Tex.App.-Amarillo Oct. 23, 2012, no pet.) (mem. op.) (awarding benefit-of-bargain measure of damages after concluding that remedial and difference-in-value damage theories did not apply based on facts of construction case).

BBRI contends for the first time in its posttrial brief that, even if it did not fully perform under the Contract, it substantially performed. Prior' to trial and in the Joint Pretrial Order, BBRI maintained only that it fully complied with the Contract or was excused by KCSR’s material prior breach of the Contract. Under Rule 15(b), [w]hen issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings” and “failure so to amend [the pleadings] does not affect the result of the trial of these issues.”. Fed. R. Civ. P. Í5(b). The'purpose of this rule “is to allow the course of the trial, rather than the formal pleadings, to control the outcome.” Flannery v. Carroll, 676 F.2d 126, 131 (5th Cir.1982). “[I]t is not .often,” however, “that amendments are allowed after the close of evidence, since the opposing party may be deprived of a fair opportunity to defend and to offer any additional evidence,” Triad Elec. & Controls, Inc. v. Power Sys. Eng’r, Inc., 117 F.3d 180, 193-94 (5th Cir.1997). As a result, “trial of unpled issues by implied consent is not lightly to be inferred under Rule 15(b), [and] such inferences are to be viewed on a case-by-case basis and in light of the notice demands of procedural due process.” Id. at 193-94.

Whether an issue has been tried by consent turns on: “whether the parties recognized that the unpleaded issue entered the case at trial, whether the evidence that supports the unpleaded issue was introduced at trial without objection, and whether a finding of trial by consent prejudiced the opposing party’s opportunity to respond.” Portis v. First Nat’l Bank of New Albany, 34 F.3d 325, 332 (5th Cir.1994). A party does not consent to try “a new issue by introducing evidence or failing to object to evidence when the evidence is relevant to pleaded issues in the case.” Moody v. FMC Corp., 995 F.2d 63, 66 (5th Cir.1993). Courts have, “broad discretion in determining whether or not a pretrial order should be modified or amended.” United States v. Texas, 680 F.2d 356, 370 (5th Cir.1982).

Federal Rule of Civil Procedure 16(e) permits a court to modify a pretrial order in order to prevent “manifest injustice.” “It has been suggested that proper treatment of the pretrial order after entry requires- an appropriate balance between firmness to preserve the essential integrity of the order, and adaptability to meet changed or newly discovered conditions or to respond to the special demands of justice.” Central Distribs., Inc. v. M.E.T., Inc., 403 F.2d 943, 944 (5th Cir.1968). The Fifth Circuit has allowed amendments when “no surprise or prejudice to the opposing party results.” Quick Techs., Inc. v. Sage Grp. PLC, 313 F.3d 338, 346 (5th Cir.2002).

Here, BBRI did not request to amend its pleadings or the Joint Prétrial Order, and the court concludes that prejudice will occur if it allows BBRI to amend the Joint Pretrial Order after the trial of this case. BBRI acknowledged at trial that it did not complete its work by the contractual deadlines in the SOW, and there was conflicting evidence as to whether BBRI’s work substantially complied with these deadlines. This evidence, however, is relevant to the pleaded issues of whether time was of the essence in completing the work and-KCSR’s breach of contract claim because the SOW required a substantial portion of BBRI’s mainline track work (track construction, ballasting, tamping, and rail adjustment) to be completed by May 1, 2009, whereas completion of all work, including final dressing and clean up of the Project site was to be done by May 15, 2009. The evidence is also relevant to BBRI’s affirmative defenses of whether any breach under the Contract by it, including the contractual requirement that time was of the essence, was excused or waived. Accordingly, the court concludes that the issue was not tried by consent, and the failure to plead substantial performance or include it in the Pretrial Order resulted in waiver of the issue, Even assuming that the issue was tried by consent and not waived, BBRI would, not be able to prevail under the equitable .theory of substantial performance because, as herein explained, the court concludes that it materially breached the Contract first. See Patel, 86 S.W.3d at 309 (“If a party has committed a material breach of a contract, [its] performance cannot be substantial.”).

3. Contract Interpretation

“The interpretation of a contract — including whether the contract is ambiguous — is a question of law.” McLane Foodservice, Inc. v. Table Rock Rests., L.L.C., 736 F.3d 375, 377 (5th Cir.2013); Coker v. Coker, 650 S.W.2d 391, 394 (Tex.1983). A court’s primary concern in interpreting a contract under Texas law is to ascertain the parties’ intent. National Union Fire Ins. Co. v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex.1995). Texas courts avoid unreasonable constructions and “construe contracts from a utilitarian standpoint, bearing in mind the particular business activity;” Frost Nat’l Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex.2005). “The. language in an agreement is to be given its plain grammatical meaning unless to do so would defeat the parties’ intent.” DeWitt Cty. Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 101 (Tex.1999). If a contract “is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and the court will construe the contract as a matter of law.” Coker, 650 S.W.2d at 393. If, on the other hand, the contract language is “susceptible to two or more reasonable interpretations,” an ambiguity exists. Enterprise Leasing Co. v. Barrios, 156 S.W.3d 547, 549 (Tex.2004). Disagreement by the parties, however, over the meaning of an unambiguous contract does not turn an otherwise unambiguous contract into one that is ambiguous. McLane Foodservice, Inc., 736 F.3d at 378. (“Ambiguity does not arise because of a ‘simple lack of clarity,’ or because the parties proffer different interpretations of the contract.”).

In National Union Fire Insurance Company v. CBI Industries, Incorporated, the Texas Supreme Court explained that an ambiguity in a contract may be “patent” or “latent”: “A patent ambiguity is evident on the face of the contract. A latent ambiguity arises when a contract which is unambiguous on its face is applied to the subject matter with which it deals and an ambiguity appears by reason of some collateral matter.” 907 S.W.2d at 520 (internal quotation marks, footnotes, and citations omitted). Parol evidence is admissible to ascertain the true intention of the parties as expressed in their contract when a latent amb