Levco Constr., Inc. v. Whole Foods Mkt. Rocky Mountain/Sw. L.P. (549 S.W.3d 618, 2017)

Evelyn V. Keyes, Justice

Levco Construction, Inc. ("Levco") sued Cleveland Construction, Inc. ("CCI") and Whole Foods Market Rocky Mountain/Southwest L.P. ("Whole Foods") for claims arising out of its role as a subcontractor on a construction project to build a Whole Foods store in Houston, Texas ("the Project"). CCI and Whole Foods also asserted claims against each other and Levco. Following a bench trial, the trial court determined that Whole Foods owed CCI, the general contractor, breach of contract damages of $465,809.57 plus interest and attorney's fees. The trial court further determined that CCI owed $190,250.77 plus interest and costs to intervenor Insurors Indemnity Co. ("Insurors"), the issuer of Levco's surety bond for the Project, for work that Levco performed.

Levco and Whole Foods appealed. Levco argues that: (1) the trial court erred in failing to award any damages to Levco despite its "liability findings of common law fraud against [Whole Foods]"; and (2) the Construction Contract between Whole Foods and CCI "does not eliminate [Levco's] right to recover from [Whole Foods] because of the trial court's finding of common law fraud against [Whole Foods]." Whole Foods argues that (1) the trial court erred in concluding that Whole Foods breached the parties' contract governing the Project; (2) the trial court erred in concluding that CCI did not breach the contract or that CCI's breach was excused by Whole Foods' prior material breach; (3) the trial court erred in concluding that neither CCI nor Levco owed Whole Foods indemnity under the contract; (4) "CCI's claim for action on the bond fails as a matter of law"; and (5) this Court should order Levco to reimburse Whole Foods for half of the costs incurred by Whole Foods in obtaining the appellate record.

We affirm.

Background

The trial court's findings of fact were largely undisputed regarding the general background; accordingly, the following facts reflect the facts of the case as found by the trial court and supported by the evidence presented at trial.

A. Whole Foods Leases Land and Plans to Construct a Store

In April 2008, Whole Foods, acting through an affiliate company, entered into a ground lease with Finger-FFC WPM, Ltd., for a plot of land located at 701 Waugh Drive, Houston, Texas, on which Whole Foods intended to build a store. The effective date of the lease was April 30, 2008, with construction to begin in 2010. Unable to meet the deadline of the initial ground lease, Whole Foods entered into a second amendment of the lease, dated July 9, 2009. As part of the amendment, Whole Foods' affiliate entity promised Whole Foods a $7 million bonus as a tenant improvement allowance provided that the store was completed by June 30, 2011.

Whole Foods entered into an architectural services contract with Stone Soup 6, f/k/a Beckham Design Group Architects ("Stone Soup"), for the purpose of developing plans and specifications for the Project, and, in August 2009, Stone Soup prepared a "bid set" of plans that were ultimately used as the "for construction" drawings on the Project.

B. Whole Foods, CCI, and Levco Engage in the Bidding Process as Construction of the Project is Poised to Begin

In March 2010, Whole Foods contacted CCI to solicit a bid for work as the general contractor on the project. Whole Foods provided CCI with the bid set of plans from Stone Soup on March 25, 2010, and instructed it to submit a completed bid by March 30, 2010. This accelerated bidding process allowed Whole Foods to meet the deadlines for commencing construction on the Project set out in the amended lease.

CCI then entered into discussions with various subcontractors, including Levco, and assembled its bid. Levco submitted a bid to CCI for the site, concrete, and utility portions of the Project for a total cost of $711,514. CCI incorporated that bid and others into its own bid for the Project, and it presented a total bid of $5,150,000 for the Project to Whole Foods. Whole Foods awarded the work to CCI.

In April 2010, prior to executing a contract with CCI, Whole Foods issued a Notice to Proceed to CCI, instructing it to begin working on the Project. However, on April 8, 2010, a meeting was held between Whole Foods and CCI to identify issues on the Project. Whole Foods had failed to obtain necessary easements and permits, and the subcontractors needed information and participation on behalf of the architects in order to move forward. CCI was unable to get the necessary information from Whole Foods, but it nevertheless adjusted construction plans so that the Project could move forward.

C. The Parties Enter into Their Respective Agreements

In May 2010, Whole Foods and CCI entered into a form agreement promulgated by the American Institute of Architects, which set out the specific terms and general conditions for the construction of the Project ("Construction Contract"). CCI agreed to complete site work and build the shell construction for the store of approximately 10,413 square feet. The original contract duration was to be twenty-two weeks, with September 2010 as the completion date. The Construction Contract set out detailed provisions for CCI to submit payment applications. It also required conditional and, under specific circumstances, unconditional lien waivers and other documents in order for CCI to receive payment. CCI agreed to pay its own subcontractors promptly, and the parties agreed to a retainage amount of 10% of the progress payments.

The parties also agreed that CCI's performance "shall be required only to the extent consistent with the Contract Documents" and that CCI "shall not be responsible for the adequacy of the performance and design criteria specified in the Contract Documents," as those documents were to be provided by Whole Foods through its architect. Finally, the contract provided for final payment, including the retainage amounts, upon completion of the Project. That provision contemplated that the final payments would then be used to pay off any remaining amounts owing to subcontractors and materialmen, and it provided a remedy in the event that a subcontractor refused to furnish a release or waiver so that a "lien remains unsatisfied after payments are made."

While it was negotiating with Whole Foods, but prior to executing the Construction Contract, CCI also entered into a contract with Levco as a subcontractor ("Subcontractor Agreement"). The Subcontractor Agreement expressly incorporated the Construction Contract-which had not yet been executed by CCI and Whole Foods at the time CCI and Levco signed the Subcontractor Agreement-by reference, and it obligated Levco to perform its work in accordance with CCI's schedule as set out in its agreement with Whole Foods. Levco's work on the Project was originally set to begin in May 2010 and to be completed in September 2010.

The Subcontractor Agreement conditioned payment from CCI to Levco upon CCI's first having received payment from Whole Foods. The Subcontractor Agreement further required that Levco provide certain documents with its pay applications, such as lien waivers for itself and its own subcontractors, in order to be entitled to payment. Finally, the Subcontractor Agreement required Levco to obtain a 100% payment and performance bond for the total subcontract amount, and the bond was issued by Insurors.

D. Construction on the Project Experiences Almost Immediate Delays that Affect Levco and CCI's Other Subcontractors

Work proceeded on the Project, and, on June 1, 2010, Levco submitted its first payment application to CCI for $123,514 for work completed in May 2010. This pay application was accompanied by the documents required by the Subcontractor Agreement. Accordingly, after deducting 10% for retainage, CCI issued payment to Levco less than thirty days later for $111,162.60.

Delays began to affect the Project almost immediately. At a June 8, 2010 meeting, which also included the architect, CCI notified Whole Foods of numerous issues that Whole Foods needed to resolve. These issues included the need to obtain City of Houston water and fire line account numbers as part of the permitting process and the need to execute a warranty deed with Centerpoint Energy so that Centerpoint could make a permanent provision of power to the site. Whole Foods failed to address these issues in a timely manner, thereby delaying the construction work.

On June 30, 2010, Levco submitted another payment application for work completed in June. CCI made a timely payment for this work.

In July 2010, the Project encountered even more delays. Some of the delays were due to weather. Others were related to problems with the building plans and specifications or with the "Architect's Supplemental Instructions" ("ASIs") that were issued by Stone Soup in an attempt to correct or clarify existing plans. Some of the problems-caused by changes in the design of the structural steel and solar panels initiated by Whole Foods and its architects-affected what CCI referred to as the "critical path" of steps that were necessary so that the Project could reach final completion on time. CCI submitted various change orders to Whole Foods to address the additional costs and delays associated with the Project.

The Project subsequently encountered additional delays in the installation of water lines, and Whole Foods agreed to further change orders to address additional costs and delays.

E. Levco Falls Behind Paying its Own Subcontractors, CCI Terminates the Subcontractor Agreement, and Insurors Steps in Under the Terms of the Bond

As the Project experienced delays, Levco fell behind in paying its subcontractors. At the end of July 2010, one of Levco's subcontractors, WM Trucking, notified CCI of its intent to place a lien on the Project for work it had completed in May 2010, despite CCI's having already paid Levco's May 2010 payment application. CCI discovered that Levco had failed to list WM Trucking on its affidavits detailing the names of its subcontractors and the amounts they were owed when it submitted its pay applications.

In August 2010, several of Levco's subcontractors whom Levco had failed to pay again notified CCI of their intent to place liens on the Project, despite the fact that CCI had already paid Levco for this work. CCI notified Levco that it had breached the Subcontractor Agreement by failing to mitigate its delays in installing grade beam foundations, and CCI likewise furnished notice to Insurors, Levco's surety, that Levco was failing to perform under the Subcontractor Agreement.

Levco submitted its third payment application on August 16, 2010, requesting payment of $78,579.50, after deduction of the retainage amount, as the amount due for the progress of work actually performed. However, the accompanying affidavit and documents demonstrated that Levco owed its subcontractors and vendors $146,125 for work performed through July 31, 2010. Levco also failed to provide the lien waivers from its suppliers and subcontractors that were required under the terms of the Subcontractor Agreement with its payment application. CCI notified Levco and Insurors that Levco was required to provide the necessary waivers to be entitled to payment under the terms of the Subcontractor Agreement. When Levco failed to provide the waivers, CCI issued payment directly to the subcontractors in the amount of $78,579.50.

As required by the terms of Levco's payment bond issued by Insurors, CCI notified Insurors regarding the notices of liens it was receiving from Levco's subcontractors. CCI informed Insurors that Levco had failed to provide lien waivers and had failed to maintain its schedule by not meeting the concrete pouring deadline.

This pattern continued from August through October 2010, with Levco submitting with its pay applications affidavits that failed to reflect all of the work of its subcontractors and failing to provide subcontractor lien waivers. In spite of CCI's notice to it, Insurors likewise failed to pay Levco's subcontractors under the terms of the payment bond.

In November 2010, CCI issued a final notice requesting that Levco submit a recovery schedule for its outstanding work. Insurors responded by offering to guarantee Levco's invoices with specific subcontractors and representing that Levco would meet the construction schedule. Due to delays caused by problems with the structural steel drawings, design of parking lot solar panel systems, Centerpoint's refusal to relocate a power pole, Whole Foods' inability to obtain a water easement, and the discovery of an unanticipated gas line, CCI notified Whole Foods and revised its construction schedule. CCI likewise worked with Levco to establish a schedule starting on November 29, 2010, for completing work that Levco was obligated to perform. However, Levco had fallen behind on its obligations again by December 1, 2010. Furthermore, Levco had not yet provided CCI with the necessary lien releases.

On January 10, 2011, CCI notified Whole Foods of the numerous problems caused by the delays on the Project related to Whole Foods' failure to procure necessary permits.

On January 17, 2011, CCI sent a letter to Levco informing it that "CCI elects to terminate its [Subcontractor] Agreement with Levco Construction." CCI considered Levco's failure to adhere to the agreed-upon work schedule and its failure to remove its lower-tier subcontractors' intents to file liens to be breaches of the Subcontractor Agreement. It then made a demand upon Insurors to complete the Project under its performance bond. Insurors elected to have Levco complete the work, as was permitted under the terms of the bond, and on January 24, 2011, CCI

agreed to Insurors' use of Levco to complete the remaining work pursuant to the terms of the performance and payment bond, which in turn incorporated the Subcontractor Agreement.

Also on January 24, 2011, CCI sent to Whole Foods additional written notice of the cause of many of the construction delays-such as Whole Foods' failure to obtain needed permits, easements, and corrected plans and specifications from the architect. Beginning in February 2011, the Project incurred even more critical path delays due to problems with permitting, redesign of various elements of the building, and utility easement issues that were under Whole Foods' control. CCI also continued to submit change orders related to the delays caused by Whole Foods.

Corporate supervisors with Whole Foods eventually received the notices of delay sent by CCI, and on April 7, 2011, Whole Foods appointed new personnel to oversee the Project. Whole Foods' managers and executives expressed disappointment at the previous Senior Project Manager's handling of the Project, and Whole Foods' Regional President, Mark Dixon, acknowledged that he had received numerous complaints about the Senior Project Manager's lack of communication.

F. Levco Files Suit and CCI Works to Complete the Project

On April 15, 2011, Levco filed suit against CCI and Whole Foods. Levco complained that various delays caused by Whole Foods resulted in its working on the Project for months beyond the original September 2010 deadline in the Subcontrator Agreement. In fact, Levco's work on the Project was still ongoing at the time it filed suit.

On May 13, 2011, Levco notified CCI and Whole Foods of its claim under Texas Property Code Chapter 53. Whole Foods characterized this claim as a "Fund-trapping Notice" and contended that it required Whole Foods to withhold any further payments to CCI. CCI, on the other hand, contended that this notice did not comply with the Property Code and, thus, was invalid.

On June 14, 2011, Levco finally issued the needed lien releases and waivers for the period of August 2010 to June 2011. CCI then released a payment of $348,175.94 directly to Insurors for work performed by Levco under the terms of the performance bond. According to the evidence presented at trial, the original Subcontractor Agreement amount plus the change orders issued on the Project and the final retainage, less the payments made to Levco or on its behalf, left a remaining balance owed to Levco by CCI of $190,250.77. This amount was to be paid from the retainage that CCI was to receive from Whole Foods. Levco then released any claim against Whole Foods and CCI with respect to the contractual sums paid to it by CCI.

On June 15, 2011, Levco filed a Lien Affidavit and Claim against the Project alleging that it had an unpaid claim in the amount of $1,075,983.35. This lien claim did not reflect the $348,175.94 payment made by CCI to Insurors for Levco's work under the performance bond and Subcontractor Agreement.

On June 22, 2011, Stone Soup issued a certificate of substantial completion on the Project under the terms of the Construction Contract. The Project was finally completed on June 24, 2011. Whole Foods accepted CCI's work, began occupying the premises, and collected its $7 million bonus under the terms of the amended lease for the premises.

In July 2011, two subcontractors filed liens on the Project for unpaid amounts.

On July 14, 2011, Whole Foods approved CCI's closeout documents, and the closeout documents required under the Construction Contract were sent to Whole Foods via FedEx on September 2, 2011 and accepted by Whole Foods' project manager.

On July 15, 2011, CCI issued to Whole Foods its final pay application for its last progress payment in the amount of $13,094.63 and its application for the release of the contractual retainage amount of $593,735.20. On August 26, 2011, CCI submitted a pay application for an outstanding change order in the amount of $36,251.60.

On September 29, 2011, Whole Foods paid the final progress payment of $13,094.63. However, Whole Foods refused to release the final payments of the retainage and outstanding change order. CCI offered to provide conditional lien releases and waivers in exchange for Whole Foods' agreement to release the final payment, and CCI also offered to bond around or otherwise discharge Levco's lien on the Project in exchange for Whole Foods' commitment to make the final payment on the Project. CCI also, on at least one occasion, asked Whole Foods to release some of the retainage amounts directly to its subcontractors. Whole Foods nevertheless continued to withhold the final payment.

On October 10, 2011, CCI filed its own lien affidavit with the Harris County Clerk, alleging a claim for $629,986.80. Beginning in October, several more subcontractors filed liens. Whole Foods' agreement with the lessor, Finger-FFC WPM, Ltd., required Whole Foods to obtain an indemnity bond to address the liability created by these liens.

On November 21, 2011, Whole Foods notified CCI by letter that the Construction Contract required CCI to "keep the Project free from liens arising out of CCI's Work," and stated that "[a]s of the date of this letter, it appears that several lien filings by subcontractors and/or suppliers to CCI and/or one or more of its subcontractors on the Project remain in existence, thereby clouding title to the property." The letter acknowledged that CCI had resolved some of the lien filings, and it demanded that CCI promptly remove and discharge the remaining liens or furnish bonds covering them in accordance with the Construction Contract. Whole Foods also requested indemnity.

On November 28, 2011, CCI responded to Whole Foods' requests, stating that it had been attempting to work with Whole Foods to address its concerns but that Whole Foods "failed to respond to any of those requests" until it sent the two letters on November 21. CCI provided Whole Foods with lien releases for most of the subcontractors listed in the November 21, 2011 letter. Regarding the remaining liens, CCI informed Whole Foods that those liens related to the withheld change order payment application or to the withheld retainage and that it would pay the subcontractors and secure lien releases once it received payment from Whole Foods. The letter stated, "As you are aware, CCI has a paid-if-paid provision in its contracts; therefore, once [Whole Foods] pays CCI, it will pay its lower tier subcontractors and secure all appropriate releases." It also stated, "Additionally, [CCI is] unaware of any complaints by [Whole Foods] that CCI has failed to meet any of its contractual obligations other than these obligations for payment due under the retainage amounts."

This letter further stated that CCI had previously sent Whole Foods a list of retainage amounts owed to CCI's subcontractors and had requested that Whole Foods make those payments "either directly, through joint checks, or to CCI." CCI provided copies of the emails containing those requests and informed Whole Foods that it had not responded to any of those emails. Finally, CCI asserted a claim for indemnity against Whole Foods, asserting that Levco's liens and claims "relate to issues beyond the control of CCI and relate solely to issues within the control of [Whole Foods]" such as "damages related to faulty drawings and delays from [Whole Foods] in responding to Levco's change order requests." The letter once again stated that, upon Whole Foods' payment of the change orders and retainage that Whole Foods was improperly withholding, CCI "will immediately pay its subcontractors and secure all necessary releases and waivers."

Whole Foods did, in 2014, issue some payments directly to CCI's subcontractors, reducing the amount owed to CCI under the Construction Contract to $465,809.57. However, Whole Foods never paid the remainder of the final change order payment application or the retainage amounts, and the parties proceeded with litigation.

G. Trial Court Conducts a Bench Trial

The trial court held a bench trial beginning in October 2014.

1. Levco's claims at trial

At trial, Levco asserted only its claim against Whole Foods for fraud based on Whole Foods' failure to provide proper construction documents during the bidding process, while nevertheless forcing Levco to perform work without proper permits and despite defective designs and plans. Levco sought to establish that the delays caused by Whole Foods and Whole Foods' demand that Levco personnel be on site even when the construction plans were changing-thus preventing Levco from being able to staff other projects-put it out of business. Levco also claimed out-of-pocket losses because of Whole Foods' failure to disclose and remedy the incomplete and inaccurate plans and specifications for the Project. Levco asserted that these damages, including interest and attorney fees, totaled $2.2 million dollars and it presented expert testimony from its damages expert, Warren Cole. Levco also disputed the amounts of various change orders. However, Arnold Acker, Insurors' expert, opined that Levco was not justified in its claims related to the disputed change orders.

2. Insurors' claims at trial

Insurors, which had intervened in the suit to recover its losses under the contractual indemnity clause and a right to equitable subrogation provided for in its performance bond, recognized that its recovery was contingent upon Levco's recovery. It argued that it had a superior lien on any amounts that CCI owed to Levco and that CCI should be required to pay any such amounts directly to Insurors.

3. CCI's claims at trial

Regarding Levco's claims, CCI asserted that the Subcontractor Agreement specified a procedure for Levco to make a claim to CCI regarding damages flowing from Whole Foods' delays. However, Levco had made no such claim to CCI in this regard. CCI also alleged that Levco had allowed liens to be filed on the property, had failed to complete its work in a timely manner, and had failed to comply with the Subcontractor Agreement's notice and claim provisions. In addition, CCI argued that Insurors owed it contribution and indemnity for Levco's claims and that Insurors was not entitled to receive any amounts above and beyond the remaining unpaid balance of the Subcontractor Agreement.

CCI claimed that Whole Foods had breached the Construction Contract by withholding the final payment and the retainage fees, and it sought action on Whole Foods' indemnity bond. CCI also claimed that it did not owe Whole Foods any defense or indemnity obligations because Whole Foods could not show that CCI had breached the contract or had been negligent or that any alleged breach or negligence by CCI caused Levco's claims.

CCI sought to establish that the delays were caused by Whole Foods and provided the expert testimony of Bryan Byrd, who testified that the Project suffered 226 days of critical path delay ascribable to Whole Foods. Byrd also testified that, to a lesser extent, Levco was also responsible for some of the delays. Whole Foods' expert, Michael D'Onofrio, agreed with Byrd's estimation of the extent of the critical path delays, but he had not done any delay analysis to determine the cause of the delays. D'Onofrio testified that he could not ascribe any of the delay to CCI. And Whole Foods' personnel admitted that there were delays on the Project caused by Whole Foods, though it asserted that Levco had failed to make a proper claim under the relevant contractual provisions for damages from the delay.

CCI asserted that Whole Foods owed it $465,809.59 as amounts due under the terms of the Construction Contract for work it performed on the Project. It agreed that it would pay Levco and Insurors the remaining payment of $190,250.77 once CCI received its final payment from Whole Foods.

4. Whole Foods' claims at trial

Whole Foods contended that CCI was the breaching party, arguing that, among other failures, CCI had failed to pay subcontractors, had failed to keep the Project free from liens and claims, had failed to provide requested documents, and had refused to indemnify Whole Foods, in violation of the terms of the Construction Contract. Whole Foods also sought to enforce the indemnity provision of the Construction Contract against CCI-and Levco as CCI's subcontractor-and to invalidate CCI's and Levco's liens.

Mike Shaw, the project manager for Whole Foods, testified at trial. Significantly, he testified that he could not identify any critical path delays that had been caused by either CCI or Levco.

H. Trial Court's Judgment

The trial court rendered a final judgment on May 4, 2015. It ordered that CCI recover from Whole Foods $465,809.57 in actual damages, plus attorney's fees and pre- and post-judgment interest. In its findings of fact and conclusions of law, the trial court stated that this judgment was based on a conclusion that Whole Foods breached the Construction Contract by withholding final payment.

The trial court also ordered that Insurors recover from CCI $190,250.77 plus costs and pre- and post-judgment interest. In its findings of fact and conclusions of law, the trial court found that this amount was still due and owing to Insurors for work Levco performed on the Project, to be paid out of the retainage payment that Whole Foods owed to CCI.

The trial court denied any other relief. It determined that Levco was not entitled to any further relief on its claims against Whole Foods. And it determined that Whole Foods was not entitled to any relief on its breach of contract or indemnity claims. The trial court explained in its findings of fact and conclusions of law that, to the extent that CCI's conduct constituted a breach, the breach was excused by Whole Foods' withholding of the final payments. The trial court also determined that Whole Foods had failed to establish that any of the claims against it had arisen from or had been caused by any negligence or breach by CCI.

Levco and Whole Foods both appealed.

I. Levco's Issues on Appeal

Levco alleged at trial that Whole Foods committed fraud based on its failure to disclose during the bidding process that the plans and specifications for the Project were not complete. The trial court found that Levco had established a claim of common law fraud against Whole Foods, but it ultimately determined that Levco was not entitled to any damages from Whole Foods on that claim.

In two issues on appeal, Levco argues that: (1) the trial court erred in failing to award any damages to Levco despite its "liability findings of common law fraud" against Whole Foods; and (2) the Construction Contract between Whole Foods and CCI "does not eliminate [Levco's] right to recover from [Whole Foods] because of the trial court's finding of common law fraud against [Whole Foods]."

A. Standard of Review

In an appeal from a judgment after a bench trial, we accord the trial court's findings of fact the same weight as a jury's verdict. Milton M. Cooke Co. v. First Bank & Trust , 290 S.W.3d 297, 302 (Tex. App.-Houston [1st Dist.] 2009, no pet.) ; see Brown v. Brown , 236 S.W.3d 343, 347 (Tex. App.-Houston [1st Dist.] 2007, no pet.). Unchallenged findings of fact are binding on an appellate court, unless the contrary is established as a matter of law or there is no evidence to support the finding. Walker v. Anderson , 232 S.W.3d 899, 907 (Tex. App.-Dallas 2007, no pet.) ; see McGalliard v. Kuhlmann , 722 S.W.2d 694, 696 (Tex. 1986) ; Mullins v. Mullins , 202 S.W.3d 869, 874, 876-77 (Tex. App.-Dallas 2006, pet. denied). However, when an appellant challenges a trial court's findings of fact, an appellate court reviews those fact findings by the same standards it uses to review the sufficiency of the evidence to support a jury's findings. See Pulley v. Milberger , 198 S.W.3d 418, 426 (Tex. App.-Dallas 2006, pet. denied).

In a legal-sufficiency challenge, we consider whether the evidence at trial would enable a reasonable and fair-minded factfinder to reach the verdict under review. City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005). We "must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not." Id. We will only reverse the judgment if: (1) there is a complete absence of evidence of a vital fact, (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a mere scintilla, or (4) the evidence establishes conclusively the opposite of the vital fact. Id. at 810. The record contains more than a mere scintilla of evidence if reasonable minds could form differing conclusions about a vital fact's existence.

King Ranch, Inc. v. Chapman , 118 S.W.3d 742, 751 (Tex. 2003). Conversely, the record is insufficient when the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence. Id. ; Ford Motor Co. v. Ridgway , 135 S.W.3d 598, 601 (Tex. 2004).

In a factual-sufficiency challenge, we consider and weigh all the evidence, and can set aside a verdict only if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and manifestly unjust. Golden Eagle Archery, Inc. v. Jackson , 116 S.W.3d 757, 761-62 (Tex. 2003). We may not substitute our own judgment for that of the factfinder, even if the evidence would support a different result. Maritime Overseas Corp. v. Ellis , 971 S.W.2d 402, 407 (Tex. 1998). The amount of evidence necessary to affirm the factfinder's judgment is far less than that necessary to reverse its judgment. GTE Mobilnet of S. Tex. Ltd. P'ship v. Pascouet , 61 S.W.3d 599, 616 (Tex. App.-Houston [14th Dist.] 2001, pet. denied).

We review conclusions of law by the trial court de novo and will uphold them if the judgment can be sustained on any legal theory supported by the evidence. Brown , 236 S.W.3d at 348. The trial court's conclusions of law are not subject to challenge for lack of factual sufficiency, but we may review the legal conclusions drawn from the facts to determine their correctness. Id.

B. Relevant Contract Provisions

Levco's work on the Project and its relationship with Whole Foods was governed by the Subcontractor Agreement between CCI and Levco, which provided that CCI had entered into the Construction Contract with Whole Foods for the Project. It provided that "[t]he Construction Contract is incorporated herein by reference and made a part of this Agreement" and that the Construction Contract "includes the signed agreement between CCI and [Whole Foods] and all documents forming part of that contract (collectively the 'Contract Documents')." The Subcontractor Agreement further provided that "[t]he Contract Documents and Subcontract are intended to be complimentary so that anything required in one shall be of like effect as if required by both" and that "Subcontractor [Levco] is bound to CCI by all terms and conditions of this Subcontract and, except as otherwise provided herein, by all terms and conditions of the Contract Documents, which are incorporated herein and are an integral part of this Subcontract."

The Construction Contract contained a disclaimer of any warranty regarding the accuracy of the "Contract Documents," which the Contract defined as including Project drawings and specifications:

Anything to the contrary in the Contract Documents notwithstanding, and to the fullest extent permitted by law, [Whole Foods] disclaims any and all implied or express warranties regarding: (i) the accuracy, sufficiency, or completeness of the Contract Documents; (ii) the constructability of the improvements depicted in the Contract Documents; (iii) the data, opinions or recommendations expressed in or implied by any report, survey, analysis or investigation provided to Contractor relating to legal limits, geologic or hydrologic conditions, hazardous substances, surface and subsurface obstructions; and (iv) the conditions of existing improvements, including without limitation the landlord's work and the premises. Any such deficiency or condition shall not create a cause of action against [Whole Foods] for breach of express or implied warranty, misrepresentation, or fraud. If Contractor believes that it is entitled to extra time or compensation as a result of errors in the Contract Documents, reports, surveys, analyses, investigations, or concealed field conditions, the Contractor shall, as a condition precedent to seeking redress in any court, follow the claim procedures set forth in Article 15 of these General Conditions.

(Emphasis added; all-capital lettering altered for ease of reading).

Article 15 set out detailed procedures for addressing claims and disputes between Whole Foods and its contractors. It required claims to "be initiated by written notice to the other party and to the Initial Decision Maker with a copy sent to the Architect," and it provided that "[c]laims by either party must be initiated within 21 days after occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes, or should reasonably have recognized, the condition giving rise to the Claim." Article 15 provided that "[t]imely submission of such written notice and compliance with other provisions of this Article 15 is a condition precedent to any obligation of [Whole Foods] to adjust the Contract Time, Contract Sum, General Conditions Amount, or otherwise compensate Contractor for any condition or occurrence giving rise to a Claim," and it provided that failure to comply with Article 15's requirements "shall be deemed waiver of any right by contractor to make any claim or obtain any recovery relating to or arising from such condition or occurrence." Article 15 also set out specific procedures for making a claim for additional costs or the need for additional time.

Like the Construction Contract, the Subcontractor Agreement set out procedures for addressing changes in the work as a result of unforeseen circumstances or for seeking extensions of time to complete the work. It specifically stated,

In the event Subcontractor shall incur damages and/or additional costs as a result of any act, or failure to act by the Owner [Whole Foods] or any of their representatives and/or any of the Owner's other contractors and their subcontractors, Subcontractor shall provide CCI any and all notices in the form and manner required by the Contract Documents with respect to claims for damages and additional costs against Owner.

It also stated, "In no event shall Subcontractor be entitled to damages and/or additional costs as the result of any act or failure to act by Owner unless the Owner is liable for and pays the same to CCI."

C. Relevant Findings of Fact and Conclusions of Law

Relevant to Levco's claims against Whole Foods, the trial court found:

Whole Foods failed to timely address many issues which were causing delays to the Project. CCI issued correspondence advising Levco that if Levco had been damaged due to Owner delays, then Levco had to submit a claim in accordance with and pursuant to the Subcontract. Levco never submitted such a claim.

Thus, regarding Levco's claims, the trial court found that "Whole Foods' bid invitation and submission period constituted a waiver of the requirement for CCI and its subcontractors to personally visit and observe the site under which the work was to be performed." However, the trial court also found that "self-caused delays or delays caused by or through Whole Foods were the cause of all the delays on the Project complained of by Levco."

The trial court acknowledged Levco's fraud claim in its findings of fact, stating:

Levco asserted fraud claims against Whole Foods regarding representations that the plans and drawings submitted for bid were accurate and construction-ready. The bid-set drawings were approved by Whole Foods' architect to be used as the "for construction" set and as such constituted representations to Levco that the drawings were accurate and construction-ready and that Levco should act on those representations. However, these representations turned out to be false. Thus, Whole Foods and/or its architect made the representation of the drawings as being accurate recklessly and Levco relied on those representations to their detriment. Consequently, Levco is able to establish all the elements of common-law fraud against Whole Foods with regard to the accuracy and sufficiency of the Project plans and specifications.

In spite of this finding, the trial court failed to award Levco any damages from Whole Foods. Rather, the final judgment awarded Levco's surety, Insurors, $190,250.77 as the final amount it was due under the Subcontractor Agreement with CCI. This was based on the trial court's findings that, following Levco's issuance of the required lien releases and waivers, CCI paid $348,175.95 for Levco's work on the project directly to Insurors, the holder of Levco's surety bond, in addition to the sums that CCI had paid directly to Levco for pay applications submitted to CCI on June 1, 2010, and June 30, 2010, and to Levco's own subcontractors in September 2010. The trial court found:

Based on the original Subcontract amount of $711,514.00 and after allowing for change orders issued on the Project, final retainage, and deducting all payments made to Levco or for its benefit (including subcontractor retainage), Levco and/or Insurors is owed a balance of $190,250.77 out of the retainage that CCI is owed from Whole Foods. This number reflects a $104,903.26 net increase in the Subcontract sum due to change orders, and a deduction of $626,166.49 for prior payments made to Levco or for its benefit, including payments made directly to Levco's subcontractors.

Regarding evidence of Levco's damages, the trial court found:

At the time of trial Levco provided no testimony to support any claim of unpaid or unapproved change order requests by Levco. Further, Levco's damages expert, Warren Cole, failed to account for the fact that many of the change orders purportedly in dispute by Levco were previously agreed to by Levco. Moreover, Mr. Cole failed to address Insurors' expert, Mr. Arnold Acker's, contention that Levco was not justified in its claims related to the disputed change orders. Mr. Cole's damage model calculations also assumed overhead and profit well in excess of the percentage of overhead and profit Levco originally used to bid the project. Additionally, Mr. Cole's analysis failed to account for losses and overhead ascribable to Levco's other projects. Also, the undisputed testimony adduced at trial showed that Levco was only owed a balance of $190,250.77 out of the retainage that CCI is owed from Whole Foods. Most importantly, at trial, Levco failed to produce any evidence that it had properly given CCI notice, under the Subcontract, of any claim Levco had against Whole Foods for delay damages.

D. The Contracts Bar Levco's Recovery on its Fraud Claim against Whole Foods

On appeal, Levco argues that the trial court erred in failing to award it damages from Whole Foods on its fraud claim. Whole Foods argues, in part, that the governing contracts-the Construction Contract and the Subcontractor Agreement-bar Levco from recovering on its fraud claim. We agree with Whole Foods.

The economic loss rule serves to limit recovery in negligence and product liability cases where the damages relate only to the subject matter of a contract. See LAN/STV v. Martin K. Eby Const. Co., Inc. , 435 S.W.3d 234, 238-45 (Tex. 2014) ; Sharyland Water Supply Corp. v. City of Alton , 354 S.W.3d 407, 415-18 (Tex. 2011). In general, the rule "precludes recovery in tort for economic losses resulting from a party's failure to perform under a contract when the harm consists only of the economic loss of a contractual expectancy." Chapman Custom Homes v. Dallas Plumbing , 445 S.W.3d 716, 718-19 (Tex. 2014) (per curiam) (citing LAN/STV , 435 S.W.3d at 243 ). In deciding whether the economic loss rule applies in this case, we examine the source of the defendant's duty and the nature of the claimed injury. El Paso Marketing, L.P. v. Wolf Hollow I, L.P. , 383 S.W.3d 138, 143 (Tex. 2012) ; Clark v. PFPP Ltd. P'ship , 455 S.W.3d 283, 288 (Tex. App.-Dallas 2015, no pet.).

Here, the source of Whole Foods' duty to provide construction documents to Levco flowed exclusively from Whole Foods' contractual relationship with CCI and with CCI's subcontractors like Levco. The Construction Contract, which was expressly incorporated into Levco's Subcontractor Agreement with CCI, identified the "Contract Documents" as including Project drawings and specifications-the same documents that Levco complained of in its fraud claim. The Construction Contract expressly disclaimed "any and all implied or express warranties regarding ... the accuracy, sufficiency, or completeness of the Contract Documents," and it provided that "[a]ny ... deficiency [in the Contract Documents] or condition [of the premises] shall not create a cause of action against [Whole Foods] for breach of express or implied warranty, misrepresentation, or fraud." Rather, it provided a mechanism for seeking "extra time or compensation as a result of errors in the Contract Documents, reports, surveys, analyses, investigations, or concealed field conditions." This mechanism required, among other things, timely written notice.

The Subcontractor Agreement between CCI and Levco likewise provided,

In the event Subcontractor shall incur damages and/or additional costs as a result of any act, or failure to act by the Owner [Whole Foods] or any of their representatives and/or any of the Owner's other contractors and their subcontractors, Subcontractor shall provide CCI any and all notices in the form and manner required by the Contract Documents with respect to claims for damages and additional costs against Owner.

It also stated, "In no event shall Subcontractor be entitled to damages and/or additional costs as the result of any act or failure to act by Owner unless the Owner is liable for and pays the same to CCI."

Thus, Levco's claim seeking to hold Whole Foods liable for misrepresentations or inaccuracies in its Contract Documents is essentially a complaint that Whole Foods violated these specific contractual obligations to CCI and to Levco as CCI's subcontractor. The reasonableness of Whole Foods' actions here cannot be evaluated apart from the parties' agreements. Levco's involvement in the Project was entirely governed by its Subcontractor Agreement with CCI, which in turn incorporated CCI's Construction Contract with Whole Foods. The subsequent actions of Whole Foods' providing Contract Documents to Levco and Levco's completing work based on the specifications in those documents was made pursuant to the parties' contractual agreements. The subject matter of the dispute-the accuracy of the Contract Documents and remedy for expenses or delays caused by deficiencies in the Contract Documents-is addressed in the parties' contracts. This indicates that Levco's claims are barred by the economic loss rule. See El Paso Marketing, L.P. , 383 S.W.3d at 142-43 ("Tort obligations are in general obligations that are imposed by law-apart from and independent of promises made and therefore apart from the manifested intention of the parties-to avoid injury to others."). The nature of Levco's alleged injury also indicates that the claim sounds in contract. See Clark , 455 S.W.3d at 289. Levco sought to recover damages that it incurred in performing its obligations under its Subcontractor Agreement with CCI. Thus, its alleged damages likewise flow from the contractual relationships among the parties here, and those contracts provided a method for addressing increased expenses or performance delays causes by errors or inaccuracies in the Contract Documents.

The fact that Levco pled this claim as a common-law fraud cause of action is immaterial here. In determining whether Levco is precluded from recovering in tort for losses resulting from Whole Foods' failure to perform under the contract and whether Levco's harm consists of "the economic loss of a contractual expectancy," courts look to the source of a defendant's duty and the nature of the claimed injury and are not bound by a plaintiff's own characterization of its cause of action. See Chapman Custom Homes , 445 S.W.3d at 718-19 ; El Paso Mktg. , 383 S.W.3d at 143. Likewise, the trial court's finding that Levco "is able to establish all elements of common-law fraud against Whole Foods" does not change the underlying nature of the dispute as one sounding in contract and is irrelevant in light of the trial court's determination that Levco failed to establish the right to any recovery against Whole Foods under the terms of the parties' contracts.

Evaluating Levco's claim against Whole Foods in light of its contractual rights and obligations, the trial court found that, although Levco "is able to establish all elements of common-law fraud against Whole Foods with regard to the accuracy and sufficiency of the Project plans and specifications," CCI had advised Levco that if it had been damaged due to Whole Foods' delays in correcting the construction documents, it was required to submit a claim in accordance with the contractual provisions. The trial court found that "Levco never submitted such a claim." The trial court found that Levco was entitled to $190,250.77 out of the retainage that Whole Foods owed CCI under the Construction Contract, which included "a $104,903.26 net increase in the Subcontract sum due to change orders, and a deduction of $626,166.49 for prior payments made [by CCI] to Levco or for its benefit, including payments made directly to Levco's subcontractors." The trial court also found that Levco otherwise failed to produce evidence of any unpaid or unapproved change order requests submitted pursuant to the parties' contracts and that it failed to present "any evidence that it had properly given CCI notice, under the [Subcontractor Agreement], of any claim Levco had against Whole Foods for delay damages."

On appeal, Levco argues that the trial court's findings relevant to Levco's damages apply "only to CCI since Levco never submitted evidence or argument that it was entitled to any damages from CCI" and that the trial court "failed to address the proof of Appellant Levco's damages, which were never disputed by Whole Foods." Levco also argues that its damages expert, Warren Cole, submitted a report indicating that Levco's out-of-pocket losses amounted to $2,147,221 "that was never rebutted by any witness called by Whole Foods or by argument from Whole Foods' counsel."

To the extent Levco argues that the trial court's findings fail to address Levco's claims against Whole Foods, we observe that in the absence of findings of fact and conclusions of law, we are to infer that the trial court made any findings of material fact necessary to support its judgment and may affirm on any legal theory consistent with the evidence. See Worford v. Stamper , 801 S.W.2d 108, 109 (Tex. 1990). Furthermore, Levco's arguments fail to attack the sufficiency of the trial court's findings that Levco did not make a proper claim for damages due to Whole Foods' delays in accordance with and pursuant to the Subcontract; that "self-caused delays" contributed to the delays that Levco complains of; that Levco "provided no testimony to support any claim of unpaid or unapproved change order requests"; that Cole "failed to account for the fact that many of the change orders purportedly in dispute by Levco were previously agreed to by Levco"; that another expert, Acker, contended "that Levco was not justified in its claims related to the disputed change orders"; and that Cole's analysis made unsupported assumptions regarding overhead and profit and "failed to account for losses and overhead ascribable to Levco's other projects." These unchallenged findings are supported by the evidence and are binding on this Court. See Walker , 232 S.W.3d at 907. Cole's expert report is likewise insufficient to outweigh the other evidence in the record-such as invoices and records from CCI reflecting the amount paid to or on behalf of Levco and the amount still owing to Levco for work performed under the Subcontractor Agreement.

We conclude that the trial court's findings that "the undisputed testimony adduced at trial showed that Levco was only owed a balance of $190,250.77 out of the retainage that CCI is owed from Whole Foods"-an amount that the trial court awarded Levco's surety in the final judgment-and that "Levco failed to produce any evidence that it had properly given CCI notice, under the Subcontract, of any claim Levco had against Whole Foods for delay damages" are supported by legally and factually sufficient evidence. The fact that the trial court also found that Levco could established the elements of common-law fraud against Whole Foods is immaterial in light of our conclusion that such a claim is barred by the economic loss rule. Accordingly, the trial court did not err in failing to award Levco damages on its fraud claim against Whole Foods.

We overrule Levco's claims on appeal.

II. Whole Foods' Issues on Appeal

At trial, Whole Foods alleged that CCI breached the Construction Contract in multiple ways, including by failing to pay subcontractors, failing to keep the Project free from liens, failing to provide necessary documentation, and refusing to indemnify Whole Foods. Whole Foods sought to enforce the Construction Contract's indemnity provisions against CCI and to invalidate CCI's lien. Whole Foods also sought to invalidate Levco's lien and to have Levco indemnify it against CCI's claims.

The trial court found that Whole Foods breached the Construction Contract with CCI and awarded CCI $465,809.57 as actual damages on that claim, in addition to attorney's fees and pre- and post-judgment interest. The trial court also found that Whole Foods was not entitled to indemnification under the Construction Contract. The trial court's judgment did not award any damages to Whole Foods on any of its claims.

On appeal, Whole Foods argues that: (1) the trial court erred by concluding that it breached the Construction Contract and that CCI did not breach that agreement; (2) the trial court erred by declaring that neither CCI nor Levco had a duty to indemnify Whole Foods; (3) "CCI's claim for action on the bond fails as a matter of law"; and (4) this Court should order Levco to reimburse Whole Foods for its half of the costs incurred in obtaining the appellate record.

Whole Foods' Claims of Breach of the Construction Contract

Whole Foods argues that the trial court erred by concluding that it breached the Construction Contract while also concluding that CCI did not breach the contract. It argues that the Construction Contract required CCI to provide statutory lien waivers and releases as a condition precedent to payment by Whole Foods. Whole Foods also argues that CCI failed to satisfy multiple contractual obligations, such as failing to pay subcontractors as required, invoicing Whole Foods for Levco's work even though it did not intend to pay Levco, allowing liens to be placed on the Project and then refusing to address them, overcharging Whole Foods by failing to carve out the correct retainage amounts, and refusing to honor its obligation to indemnify Whole Foods.

A. Standard for Construing a Contract

When reviewing a contract, our goal is to determine the parties' true intentions as expressed in the instrument. Plains Exploration & Prod. Co. v. Torch Energy Advisors Inc. , 473 S.W.3d 296, 305 (Tex. 2015) ; see Coker v. Coker , 650 S.W.2d 391, 393 (Tex. 1983). "We 'construe contracts from a utilitarian standpoint bearing in mind the particular business activity sought to be served,' and avoiding unreasonable constructions when possible and proper." Plains Exploration & Prod. Co. , 473 S.W.3d at 305 (quoting Reilly v. Rangers Mgmt., Inc. , 727 S.W.2d 527, 530 (Tex. 1987) ). We must "consider the entire writing, harmonizing and giving effect to all the contract provisions so that none will be rendered meaningless." Id. (citing Moayedi v. Interstate 35/Chisam Rd., L.P. , 438 S.W.3d 1, 7 (Tex. 2014) ). "No single provision taken alone is given controlling effect; rather, each must be considered in the context of the instrument as a whole," and we must "give words their plain, common, or generally accepted meaning unless the contract shows that the parties used words in a technical or different sense." Id. If the contract's language can be given a definite legal meaning or interpretation, then it is not ambiguous and we will construe the contract as a matter of law. See El Paso Field Servs., L.P. v. MasTec N. Am., Inc. , 389 S.W.3d 802, 806 (Tex. 2012) (citing Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am. , 341 S.W.3d 323, 333 (Tex. 2011) ).

The elements of a breach-of-contract claim are (1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; (3) breach by the defendant; and (4) damages as a result of breach. Bank of Tex. v. VR Elec., Inc. , 276 S.W.3d 671, 677 (Tex. App.-Houston [1st Dist.] 2008, pet. denied). "Whether a party has breached a contract is a question of law for the court ... when the facts of the parties' conduct are undisputed or conclusively established." Grohman v. Kahlig , 318 S.W.3d 882, 887 (Tex. 2010) (citing Sullivan v. Barnett , 471 S.W.2d 39, 44 (Tex. 1971) ).

B. Relevant Contract Provisions

Whole Foods argues that the Construction Contract "expressly required CCI to do certain things it never did," while CCI argues that it complied with the contract and that Whole Foods was the breaching party.

Among other relevant provisions, the Construction Contract set out specific provisions governing applications for payment during the Project. It required CCI to submit to Whole Foods and its architect an itemized application for payment at the beginning of each month that indicated the percentage of completion of each portion of the work under the contract and that contained an itemization of the amount to be retained pending final completion of the project and a record of all disbursements made to subcontractors and materialmen. The Construction Contract further stated that applications for payment must include:

Conditional Lien Waiver and Release(s) for the entire amount sought in the Application for Payment, fully executed by Contractor, all Subcontractors and Sub-subcontractors of any tier and all materialmen with respect to all Work covered by the Application for Payment [and] Unconditional Lien Waiver and Release(s) fully executed by Contractor, all Subcontractors and Sub-subcontractors of any tier and all materialmen with respect to all Work for which payment was made more than five days before the date of the Application for Payment.

Furthermore, the parties agreed that "Applications for Payment shall not include requests for payment for portions of the Work for which the Contractor does not intend to pay a Subcontractor or material supplier, unless such Work has been performed by others whom the Contractor intends to pay." And the parties agreed that "[t]he Contractor shall pay each Subcontractor no later than seven days after receipt of payment from the Owner the amount to which the Subcontractor is entitled, reflecting percentages actually retained from payments to the Contractor on account of the Subcontractor's portion of the Work."

Furthermore, regarding the processing of payment applications for work done under the Construction Contract, the agreements provided a mechanism for the Project's architect, upon receipt of a payment application, either to "issue to the Owner a Certificate for Payment, with a copy to the Contractor, for such amount as the Architect determines is properly due, or notify the Contractor and Owner in writing of the Architect's reasons for withholding certification in whole or in part as provided in Section 9.5.1." Section 9.5.1 provided, in relevant part, that

The Architect or the Owner may withhold a Certificate for Payment in whole or in part, to the extent reasonably necessary to protect the Owner, [under certain circumstances]. The Architect or Owner may also withhold a Certificate for Payment, or, because of subsequently discovered evidence, may nullify the whole or a part of a Certificate for Payment previously issued, to such extent as may be necessary in the Architect's or the Owner's opinion to protect the Owner from loss for which the Contractor is responsible, including loss resulting from acts and omissions described in Section 3.3.2 because of ... third party claims filed or reasonable evidence indicating probable filing of such claims unless security acceptable to the Owner is provided by the Contractor[, or] failure of the Contractor to make payments properly to Subcontractors or for labor, materials or equipment....

The Construction Contract set out specific requirements to be met before the work could be determined to be "substantially complete," and it set out provisions for moving the Project to final completion and final payment. These included the issuance by the architect of a "Certificate of Substantial Completion" that:

shall establish responsibilities of the Owner and Contractor for security, maintenance, heat, utilities, damage to the Work and insurance, shall include a list of items that the Contractor must complete in order for the Work to achieve Final Completion (the "Punch List"), and shall fix the time within which the Contractor shall finish all items on the list accompanying the certificate.

Regarding final completion and final payment, the contract stated:

The Project shall not be considered to have reached Final Completion, and neither final payment nor any retained percentage shall become due until:

.1 Contractor has completed all Punch-list items and a full cleaning of the Project ... [and]

.2 the Contractor submits to the Owner all of the following: (1) an affidavit that payrolls, bills for