Nelson v. Vernco Constr., Inc. (566 S.W.3d 716, 2018)

YVONNE T. RODRIGUEZ, Justice

In this contract dispute arising out of a highway construction project, subcontractor Vernco Construction obtained a multimillion-dollar verdict against its former Corporate Vice President David Nelson and against prime contractor E.E. Hood & Sons, Inc. (Hood) after Hood fired Vernco and hired Nelson's own private construction company, Collective Contracting, Inc., to finish certain subcontracted sewer work.

Although the procedural issues at play are complex, Vernco-alleging causes of action for breach of contract, tortious interference with a contract, breach of fiduciary duty, and fraud/conspiracy to defraud-essentially accuses Hood and Nelson of conspiring to sabotage Vernco's subcontract so that Nelson's personal company could then step in, perform work, and receive money that should have gone to Vernco. Hood and Nelson contend there was no conspiracy; rather, Vernco's financial troubles and alleged misappropriation of funds ultimately led to a lapse in insurance coverage at the construction site, which gave Hood good cause to terminate Vernco's subcontract and hire Nelson's company to finish the job. Hood also insists it has already paid Vernco all monies legally owed per the terms of the Vernco Subcontract. Following trial, the jury sided with Vernco on all causes of action.

Hood and Nelson seek reversal of the judgment on multiple grounds. We reverse and render in part on the issue of attorney's fees, reform the remainder of the judgment to reflect liability on breach of fiduciary duty grounds rather than breach of contract grounds, affirm the judgment as modified as to all issues except lost profit damages, and suggest a remittitur on lost profit damages.

I.

BACKGROUND

A.

Factual History

Setting the Stage: Vernco, Hood, and the Applewhite Project

In February 2004, after soliciting bids for a large construction project aimed at bolstering road and utilities infrastructure around the site of a proposed Toyota plant south of San Antonio, Texas (the Applewhite Project), the Texas Department of Transportation (TxDOT) ultimately awarded a prime contract to E.E. Hood & Sons, Inc. (Hood). Hood, in turn, hired Vernco Construction, Inc., as its subcontractor for water utility services. Hood had previously hired Vernco as a subcontractor on a different project (the Pat Booker Project). Jack Claflin was the owner/president of Vernco. Corporate Vice President David Nelson headed Vernco's water utility services division and was largely the point person between Vernco and Hood for both the Pat Booker Project and the Applewhite Project. While this case primarily involves a dispute over the Vernco's work on the Applewhite Project, as a side issue, Vernco alleges that Nelson told the company that as a result of delays on the Pat Booker Project, Vernco would be entitled to between $150,000 and $170,000 in inefficiency claims from TxDOT. According to Claflin, Nelson represented that he would file those claims on Vernco's behalf. It is undisputed that Nelson did not timely file the Pat Booker project inefficiency claims.

Relevant Terms of the Applewhite Project Prime Contract and the Vernco Subcontract

The Applewhite Project's Prime Contract between TxDOT and Hood incorporated by reference the provisions of TxDOT's 1993 Standard Specifications for Construction and Maintenance of Highways, Streets, and Bridges (also known as the "Blue Book"). Germane excerpts of the Blue Book and subsequent change orders modifying the Prime Contract will be discussed later in this opinion.

Prime contractor Hood, in turn, signed a subcontract for utilities services with Vernco (the Vernco Subcontract). Relevant to this appeal are five sections of the Vernco Subcontract.

Payment Arrangement

Section 3(e) of the Vernco Subcontract details the payment arrangement between the parties and places restrictions on what Vernco may do with the money it receives from Hood:

Section 3. PAYMENT. (a) The Contractor agrees to pay the Subcontract for the performance of this Subcontract, as specified herein, the sum of Two Million Two Hundred Nunety [sic] Two Thousand Three Hundred Eleven and Ninety Four Hundredths dollars ($2,292,311.94 [sic] ) subject to additions and deductions for charges agreed upon or determined, as herein after provided. Partial payments will be made to the Subcontractor each month in the amount equal to 95 per cent of the value ... of the quantity ... of the work performed hereunder, less the aggregate of previous payments.... Upon complete performance of this Subcontract by the Subcontractor and final approval and acceptance of Subcontractor's work and materials by the Owner, the Contractor will make final payment to the Subcontractor of the Balance due to him under this Subcontract no sooner than 10 days after full payment for such work and materials has been received [sic] by the Contractor from the Owner.

...

(c) Contractor reserves the right to make payment by joint check or by direct check to Subcontractor's materialmen or sub-subcontractors or any person who has right of action against Contractor or Contractor's Surety under any law. Subcontractor agrees that contractor reserves the right of determination as to what manner of payment shall be made.

...

(e) The Subcontractor agrees and covenants that money received for the performance of this Subcontract shall be used solely for the benefit of persons and firms supplying labor, materials, supplies, tools, machines, equipment, plant or services exclusively for this project in connection with this Subcontract and ... any money paid to the Subcontractor pursuant to this Subcontract shall immediately become and constitute a trust fund for the benefit of said persons and firms, and shall not in any instance be diverted by Subcontractor to any other purpose until all obligations arising hereunder have been fully discharged, and all claims arising therefrom have been fully paid.... [Emphasis in orig.].

Changes to the Scope of Work and Price Adjustments

Section 4 of the Vernco Subcontract deals with how changes and adjustments in the scope of work and the amount of money owned to Vernco will be handled:

Section 4. CHANGES. The Contractor may at any time by written order of Contractor's authorized representative, and without notice to the Subcontractor's sureties, make changes in, additions to and deletions from the work to be performed and materials to be furnished under this Subcontract, and the Subcontractor shall promptly proceed with the performance of this Subcontract as so changed. Any increase or decrease in the Subcontract price resulting from changes shall be agreed upon in writing by the parties hereto. Any claim for adjustment of the subcontract price under this Section must be made in writing within ten days from the date such changes are ordered. The Subcontract price shall be equitably adjusted on account of any such changes, subject to any applicable provisions of the contract between the Contractor and the Owner....

Subcontractor's Inability to Complete Subcontracted Work

Section 5 of the Vernco Contract addresses Vernco's prosecution of work:

Section 5. PROSECUTION OF WORK.

...

(b) In the event the Subcontractor fails to comply, or becomes disabled and is unable to comply with the provisions of this Subcontract as to character or time of performance, and the failure or inability is not corrected within five days after written request by the Contractor to the Subcontractor, the Contractor may, by other Subcontractor or otherwise, without prejudice to any other right or remedy, take over and complete the performance of this Subcontract at the expense of the Subcontractor, or, without taking over the work, may furnish the necessary materials and/or employ the workmen necessary to remedy the situation at the expense of the Subcontractor. If the Contractor takes over the work pursuant to this paragraph it is specifically agreed that the Contractor may take possession of the premises and of all materials the Subcontractor at the site for the purpose of completing the work covered by this Subcontract....

Insurance Coverage

Section 10 of the Vernco Subcontract outlines insurance requirements for the Applewhite Project:

Section 10. INSURANCE. (a) The Subcontractor shall provide and maintain Workman's Compensation and Employer's Liability Insurance for the protection of his employees, as required by law of an employer or to limits specified in the contract. The Subcontractor shall also provide and maintain full force and effect, during the term of this Subcontract, insurance (including but not limited to insurance covering the operation of automobiles, trucks and other vehicles) with an insurance company satisfactory to the Contractor protecting the Subcontractor, the Owner and the Contractor against liability from damages ... arising from and growing out of the Subcontractor's operations in connection with the performance of this Subcontract.

(b) [...] Written proof satisfactory to the Contractor and the Owner of compliance with the requirements of this section shall be furnished to the Contractor and the Owner before any work is performed under this Subcontract. Such proof of insurance shall provide for ten (10) days written notice to the Contractor and the Owner prior to the cancellation or modification of any insurance referred to therein.

Breach

Finally, Section 31 deals with what happens in the event of a breach:

Section 31. BREACH OF TERM OR CONDITION. Upon Subcontractor's breach of any term or condition of this Subcontract, except those which specifically provide a period within which a particular breach may be cured, the Contractor, in his sole discretion, may immediately declare this Subcontract terminated, and shall be entitled to all the rights and remedies provided by this Subcontract and by law. The waiver by Contractor of any particular breach shall in no way affect Contractor's right to terminated [sic] this Subcontract on any subsequent breach.

Vernco Defaults on Obligations to Suppliers; Nelson and Claftin Become Personal Guarantors of the Vernco Subcontract

On June 16, 2004, Hood issued Vernco its first check for work on the Applewhite Project. On July 15, 2004, Hood issued Vernco a second check. The combined value of both those checks was more than $950,000. Vernco was obligated to pay its suppliers from that sum of money; however, the evidence is undisputed that Vernco failed to do so, at least in part. One supplier, National Waterworks, made a claim against Vernco with Hood and threatened to file liens against the project, alleging that Vernco failed to pay an invoice. According to Hood, the outstanding claim could have led Hood to lose the Prime Contract entirely. As such, on August 11, 2004, Hood executed a letter agreement with Vernco (the Letter Agreement) and personal guaranty agreements with Claflin and Nelson (the Guaranty Agreements) to rectify the problem. The Letter Agreement stated as follows:

1. Vernco stipulates[,] acknowledges[,] and agrees that it has received from Hood, pursuant to the Contract[,] the sum of $950,663.96.

2. From the sum of $950,663.96 Vernco was obligated to pay all suppliers in connection with the Contract. [...]

3. Although paid by Hood, Vernco failed to pay the suppliers the sum of $583,440.73 through June 30, 2004.

4. National Waterworks Inc. of Waco, Texas has submitted a claim against Hood. [...]

5. Vernco is therefore in breach of the Contract and has requested Hood to settle the debt and obligation owed in the following manner:

a. Vernco will furnish no less than three crews averaging 4-6 people on the job evidenced by the Contract until such job is completed to the full satisfaction of Hood and all suppliers of Vernco are paid in full. Hood has no obligation to accept the crews and all work performed shall be subject to the approval by Hood.

b. All future checks to Vernco pursuant to the Contract shall be joint checks issued to Vernco and its suppliers.

c. Hood is authorized, at its election, to direct or make any payment owed Vernco under any other contract to suppliers under the Contract.

d. David Nelson and Jack Claflin will execute an affidavit, at Hood's request, identifying all suppliers and amounts owed as of August, 1, 2004, and further an affidavit upon completion of Contract identifying all suppliers and that all suppliers have been paid in full.

e. David Nelson and Jack Claflin individually do hereby, jointly and severally, agree to fully indemnify, protect, and hold harmless Hood it's [sic] officers and directors from and against any and all claims, demands, costs, liabilities, or other expenses of any kind or nature arising from or out of the Contract.... David Nelson and Jack Claflin agree to provide additional security or collateral, at the request of Hood, sufficient to secure the obligations of Vernco under the Contract or this Agreement.

f. David Nelson and Jack Claflin agree to assume any and all liabilities and obligations owed by Vernco to Hood; including but not limited to all obligations by Vernco to pay its suppliers and to protect Hood from any and all claims associated therewith and to execute the Guarantee Agreements attached hereto....

Work Stalls As Scope of Applewhite Project Expands; TxDOT Issues Change Order 17

In summer 2004, the parties realized that the Applewhite Project would need sewer pipes larger than those originally contemplated in the Prime Contract. Horizontal drilling work on the Applewhite Project stopped for several months as prime contractor Hood and TxDOT attempted to reach a mutually agreeable price point for the sewer pipe change order and scope of work. Negotiations ultimately stalled, leading TxDOT to invoke the force account provisions of the Prime Contract. Using the price schedule set out in the Blue Book for work performed on a force account basis, TxDOT issued Change Order 17, which made certain alterations to the scope of work on the Prime Subcontract. The change order allowed for certain force account markups (FAMs) to be paid.

After Change Order 17 was issued, Hood met with its subcontractors, including Vernco, to discuss the changes, including the allocation of FAMs among the subcontractors. What happened at that meeting is disputed. No written agreement as to how the FAMs would be split appears in the record. It is undisputed that Vernco never formally requested an equitable adjustment in price in writing under the procedure set out in Subcontract Section 4. Nevertheless, the parties all agree that Hood promised to give Vernco the 55 percent labor burden, and Vernco actually received that FAM payment in a two-party check. Beyond that, the record is conflicting.

At trial, Claflin and Nelson both claimed to have been on the phone during the part of the meeting dealing with the FAMs. However, Claflin testified that Nelson later told him that in addition to the 55 percent labor burden markup, Hood would also pay Vernco 20 percent on labor, 10 percent on materials, and 20 percent on equipment. Nelson agreed that he understood that Hood would pay those specific percentages on markups, but also claimed at trial that it was Claflin who had told him Hood would pay those percentages, and not the other way around. Ranney Hood and Randy Hood both insisted that they initially told all subcontractors that they would only receive the 55 percent labor burden; however, Ranney Hood testified that Hood eventually gave a 10 percent materials markup to the other subcontractors and not Vernco.

Hood Terminates the Vernco Contract, Then Hires David Nelson's Company to Finish Work on the Applewhite Project

After the discussion regarding Change Order 17, Vernco continued its work on the Applewhite Project. In January 2005, Vernco received a check for $50,000.00, which represented the first profits Vernco was entitled to keep for itself in full. Vernco was scheduled to make a $14,515 insurance premium payment to Insurance One in early January 2005. The evidence is undisputed that Vernco failed to make this payment. Vernco maintains on appeal that due to the lack of FAM payments and the four percent retainage that Hood kept on every payment, Vernco could not pay its bills, including the insurance premium, out of the $50,000 check. Vernco's insurance coverage had lapsed once before, but Vernco was able to reinstate coverage.

A week before Nelson received notice that Vernco's insurance coverage had lapsed and Hood terminated the Vernco Subcontract, Nelson began asking agent Gerald Koenning about obtaining insurance coverage for his personal construction company, Collective Contracting. Koenning was also the insurance agent for Vernco. At that point in time, Collective Contracting had no cash on hand. The only asset in its possession was a pickup truck.

On January 28, 2005, Nelson learned that Vernco's insurance coverage had lapsed because Vernco failed to pay the outstanding premium. Nelson informed Hood that Vernco employees could not report to work that day because Vernco's liability insurance had lapsed for non-payment and it was a safety issue. Nelson did not first tell Claflin about the lapse in insurance coverage before calling Hood. While Nelson did tell Hood about the lapse in insurance coverage, Nelson did not tell anyone else on Vernco's other jobs.

Ranney Hood told Nelson to have Koenning call Hood to discuss the insurance situation. Based on Vernco's failure to maintain liability insurance, Hood called Claflin in and terminated the Vernco Subcontract. That same day, Hood hired Nelson's own personal construction company, Collective Contracting, Inc. (CCI), to perform the remainder of the work on the water utility subcontract.

At the time Nelson began working on the Applewhite Project, Collective Contracting was not a TxDOT-approved subcontractor, nor did it have insurance coverage. Hood advanced Collective Contracting $14,438.29 so that it could procure insurance. Hood's accounts payable bookkeeper testified that Hood's advancement of money to a subcontractor in that fashion was unusual. Collective Contracting was also subject to a smaller retainage percentage in the payments it received from Hood as compared to Vernco. Vernco alleges that by contracting with Collective Contracting as a separate entity instead of hiring Nelson in-house directly, Vernco was also able to claim an extra five percent FAM for itself for employing a subcontractor. By the time the Applewhite Project was completed, Collective Contracting was able to purchase new equipment and had other contracts with Hood.

B.

Procedural History

Vernco Sues; Hood and Nelson Question Vernco's Standing

Vernco reached an agreement effective September 1, 2006, with one of its creditors, Jefferson State Bank (the Bank), to stave off foreclosure of certain liens against the company (the Forbearance Agreement). As part of the Forbearance Agreement, Vernco and Claflin as Vernco's guarantor acknowledged that the Bank had a security interest in various Vernco assets, that it had taken "ownership, possession, custody and control of the Company's receivables and proceeds therefrom" with the consent of both Claflin and Vernco, and that:

One of the receivables that Lender now owns is a claim against E.E. Hood & Sons, Inc., David Nelson and other parties ... styled and numbered as 'Vernco Construction, Inc. v. David Nelson, et al.'; Cause No. 2006-CI-18807 and pending in the 225th Judicial District Court of Bexar County, Texas ('the Litigation'). The Company and the Guarantor have requested that, in consideration for the Company's and Guarantor's assistance to Lender in collecting the sums that are subject to the Litigation, they be compensated for such assistance in the event of a recovery and upon the terms and conditions set forth herein.

In a section of the Forbearance Agreement detailing various acknowledgement, Vernco, Claflin, and the Bank make the following acknowledgment about the Bank's security interests:

3. Acknowledgment of Security Interests. The Company and the Guarantor jointly and severally acknowledge the validity and enforceability of the security interests granted in favor of the Lender pursuant to the security agreements.... The Company and Guarantor jointly and severally acknowledge that Lender, pursuant to applicable law, is the owner of all of the Company's receivables (and proceeds therefrom), including, but not limited to, the receivables and claims (including the commercial tort claims) identified in the Litigation. However, the Company and Gaurantor acknowledge that Lender has not accepted and taken ownership of such receivables and claims in full satisfaction of its claims against the Company and Guarantor, the remaining balance of such claims being set forth above.

After the effective date of the Forbearance Agreement with the Bank, Vernco sued Hood, Nelson, and Collective Contracting. Hood and Nelson filed a pretrial motion to dismiss for want of jurisdiction, asserting that Vernco lacked standing to prosecute the case because it had assigned all its interests to the Bank under the Forbearance Agreement. In response, Vernco submitted a copy of an addendum to the Forbearance Agreement that it and the Bank had executed after the motion to dismiss was filed (the Addendum) purportedly clarifying that Vernco was acting in accordance with the Bank's wishes. The trial court denied the motion to dismiss, and the case proceeded to trial. Hood and Nelson renewed their challenges to jurisdiction several times during trial. The trial court declined to rule on those challenges or otherwise dismiss the case.

At Trial

Vernco ultimately proceeded to trial on several causes of action: (1) breach of contract by Hood; (2) breach of fiduciary duty by Nelson, with Hood being implicated as a party to the breach through knowing participation; (3) tortious interference with a contract by Nelson; (4) fraud and conspiracy to defraud by both Hood and Nelson.

Jury Charge and Verdict

Breach of Contract

The jury charge's Question 1 asked: "Did Hood fail to comply with the Applewhite Subcontract prior to January 21, 2005 by failing to pay Vernco markups for labor, equipment, and/or materials pursuant to the Applewhite Subcontract?" The jury responded "yes." Question 2 asked: "What amounts of money, if any, if paid now in cash, would fairly and reasonably compensate Vernco for its damages, if any, proximately caused by Hood's breach of the Applewhite Subcontract?" The question instructed the jury to consider only:

(1) lost profits, if any, on the non-force account work; (2) lost profits, if any, on the force account work; (3) loss of Vernco's value, if any, as a business. The jury returned a verdict in the following amounts:

• $1,191,758.00 in lost profits on non-force account work

• $2,122,978.00 in lost profits on force account work

• $511,000.00 in loss of Vernco's value as a business.

The jury also awarded attorney's fees of $800,000.00, plus $30,000.00 in contingent attorney's fees if Hood appealed (Question 3).

Tortious Interference with a Contract

The jury also found that Nelson intentionally interfered with the Vernco Subcontract (Question 8), that Nelson did not have a good faith belief he had the right to do so (Question 9), and that he was 75 percent responsible for tortious interference damages (Question 12). Koenning and Insurance One were deemed to have also interfered in the Vernco Subcontract (Question 10) and were 25 percent responsible for tortious interference damages (Question 12). Question 11 asked what amount of money would compensate Vernco for such interference. The question instructed the jury to consider only (1) lost profits, if any, on the non-force account work; (2) lost profits, if any, on the force account work; (3) loss of Vernco's value, if any, as a business. The jury returned a verdict in the following amounts:

• $1,191,758.00 in lost profits on non-force account work

• $2,122,978.00 in lost profits on force account work

• $511,000.00 in loss of Vernco's value as a business.

Breach of Fiduciary Duty

Question 14 set out the question of fiduciary duty as follows:

Did Nelson comply with his fiduciary duty to Vernco?

Nelson owed Vernco a fiduciary duty relating to the performance of his role at Vernco as Vernco's employee in charge of Vernco's water utilities work on the Pat Booker and Applewhite projects. To prove he complied with his duty, Nelson must show all of the following:

• the conduct in question was fair and equitable to Vernco;

• Nelson made reasonable use of the confidence that Vernco placed in him;

• Nelson acted in the utmost good faith and exercised the most scrupulous honesty toward Vernco;

• Nelson placed the interest of Vernco before his own;

• Nelson did not use the advantage of his position to gain any benefit for himself at the expense of Vernco;

• Nelson did not place himself in any position where his self-interest might conflict with his obligations as a fiduciary; and

• Nelson fully and fairly disclosed all important information to Vernco concerning the conduct in question.

The jury answered "no" and found that Nelson acted with malice (Questions 14 and 16). The jury also found that Hood knowingly participated in Nelson's breach of his fiduciary duty to Vernco (Question 17) and acted with malice as well (Question 18).

Question 15 asked what amount of money would compensate Vernco for such interference. The question instructed the jury to consider (1) lost profits, if any, on the non-force account work; (2) lost profits, if any, on the force account work; (3) loss of Vernco's value, if any, as a business. The jury returned a verdict in the following amounts:

• $1,191,758.00 in lost profits on non-force account work

• $2,122,978.00 in lost profits on force account work

• $511,000.00 in loss of Vernco's value as a business

• $350,000.00 from the failure to pursue inefficiency claims.

Fraud

On Vernco's fraud claim, the jury found that both Hood and Nelson committed fraud against Vernco but that Koenning and Insurance One did not commit fraud (Question 19). In Question 21, the jury found Hood and Nelson each 50 percent liable for damages (Question 21). In Question 20, the jury was asked what amount of money would reasonably compensate Vernco for damages caused by fraud. The question instructed the jury to consider only (1) lost profits, if any, on the non-force account work; (2) lost profits, if any, on the force account work; (3) loss of Vernco's value, if any, as a business. The jury returned a verdict in the following amounts:

• $1,191,758.00 in lost profits on non-force account work

• $2,122,978.00 in lost profits on force account work

• $511,000.00 in loss of Vernco's value as a business.

Related to the fraud findings in Question 19, the jury found that both Hood and Nelson acted with malice (Question 22).

Civil Conspiracy

Question 23 was contingent on jury answers of either "no" to Question 14 (i.e. finding that Nelson did not comply with his fiduciary duty) or "yes" to Question 19 (i.e. one or more defendants committed fraud). Question 23 asked:

Were two or more of those listed below part of a conspiracy that damaged Vernco?

To be part of a conspiracy, a defendant and another person or persons must have had knowledge of, agreed to, and intended a common objective or course of action that resulted in the damages to Vernco. One or more persons involved in the conspiracy must have performed some act or acts to further the conspiracy.

Answer 'Yes' or 'No' as to each of the following:

Hood ANSWER: Yes Nelson ANSWER: Yes Koenning/Insurance Once ANSWER: Yes

Punitive Damages

Questions 24 and 25 related to the jury's malice findings as to the breach of fiduciary duty and fraud claims. The instruction asked the jury to assess exemplary damages-"an amount that you may in your discretion award as a penalty or by way of punishment." The jury assessed $150,000.00 in punitive damages against Hood (Question 24) and $150,000.00 against Nelson (Question 25).

The jury's final verdict is represented in visual form below in Table 1.1.

JURY'S FINAL VERDICT BREACH OF TORTIOUS BREACH OF FRAUD CONTRACT INTERFERENCE FIDUCIARY WITH A DUTY CONTRACT Hood Liable? ? n/a ? (knowing ? (co-conspirator) participation Nelson Liable? n/a ? ? ? (co-conspirator) Joint/Several NO NO YES YES Liability? DAMAGES Lost Profits (Non-Force $1,191,758.00 $1,191,758.00 $1,191,758.00 $1,191,758.00 Account) Lost Profits (Force $2,122,978.00 $2,122,978.00 $2,122,978.00 $2,122,978.00 Account) Lost Business Value $511,000.00 $511,000.00 $511,000.00 $511,000.00 Failure to Pursue Pat Booker Inefficiency ---- ---- $350,000.00 ---- Claims Attorney's Fees $800,000.007 n/a n/a n/a Punitive Damages • $150,000.00 against Hood ---- ---- • $150,000.00 against Nelson FINAL TOTAL Hood Individually $3,825,736.00 n/a in damages + $150,000 in punitive damages $800,000 in attorney's fees Nelson Individually n/a $2,869,302.00 $150,000 in punitive damages in damages (75% responsibility) Hood & Nelson, n/a n/a $4,175,736.00 $3,825,736.00 Jointly/Severally in damages in damages Table 1.1

[Editor's Note : The preceding image contains the reference for footnote ].

Judgment

Litigation between the parties continued following the verdict, but prior to the entry of judgment. The trial court entered its final judgment on April 7, 2010. In the recitals section of the judgment, the trial court took notice of the jury's verdict, finding that Vernco prevailed on all its causes of action and that all the jury's findings as to liability and damages were legally sufficient. However, the trial court noted that "[w]hile Vernco is entitled to the greatest recovery possible, Vernco cannot have a double recovery of damages."

Recognizing this, in the decretal clauses of the judgment, the trial court ordered that Vernco, in its action for breach of contract, "shall have and recover from Defendant Hood" actual damages ($3,825,736.00); prejudgment interest at a rate of 6 percent ($918,176.64); daily interest at a rate of $628.88 per day starting on January 30, 2010 through the date of entry of the final judgment; attorney's fees for trial work ($800,000.00); and conditional attorney's fees in the event Hood appealed ($30,000.00).

The trial court further ordered that, with respect to the breach of fiduciary duty claim, Vernco "shall have and recover jointly and severally from Defendants Hood and Nelson" actual damages ($350,000.00); prejudgment interest ($70,000.00); and daily interest at a rate of $47.95 a day starting on January 30, 2010 through the date of entry of the final judgment. The trial court also ordered that Hood and Nelson were jointly and severally liable for court costs.

With respect to punitive damages, the trial court ordered that Vernco recover $150,000.00 in punitive damages individually against Nelson and $150,000.00 in punitive damages individually against Hood.

The trial court ordered that Vernco take nothing against Collective Contracting.

Finally, the trial court also ordered post-judgment interest to accrue at a rate of 5 percent per annum.

The judgment's final paragraph states: "This Final Judgment is intended to be a full, final, and appealable judgment, disposing of all parties, claims, and causes of action in this cause; all relief not expressly awarded by this judgment is hereby, in all things, DENIED." The judgment was signed April 7, 2010.

Notably, while the trial court made recitals in the judgment preamble that Vernco prevailed on its causes of action for tortious interference with a contract and fraud/conspiracy to defraud against Hood and Nelson and that the law and the jury's findings support joint and several recovery on those claims, after the trial court's paragraph noting that double recovery was impermissible, the judgment decretal paragraphs contain nothing ordering Vernco to recover on its claims for tortious interference with a contract or fraud/conspiracy to defraud. Reading the judgment as a whole, particularly in light of its concerns about double recovery, we take the exclusion of the tortious interference and fraud/conspiracy to defraud causes of action from the judgment to be an intentional effort by the trial court to avoid granting a double recovery of damages, and not simply a clerical error amenable to correct via a judgment nunc pro tunc. We deal with the effect of these omissions later in the opinion.

The final breakdown of the trial court's judgment as we understand it from the judgment's decretal clauses is set out below visually in Table 1.2 below.

TRIAL COURT'S FINAL JUDGMENT FROM HOOD INDIVIDUALLY FROM NELSON INDIVIDUALLY For breach of contract: For punitive damages re: breach of • $3,825,736.00 in actual damages [lost fiduciary duty: profits/business value] • $918,176.64 in prejudgment interest (6%) • $150,000 (punitive damages) • $800,000 in attorney's fees • $30,000 in conditional attorney's fees on appeal For punitive damages re: breach of fiduciary duty: FROM COLLECTIVE CONTRACTING, INC. • $150,000 • Take Nothing ($0) TOTAL: • $4,743,912.64 (damages/interest) • $830,000.00 (attorney's fees) JOINT AND SEVERAL LIABILITY (From Either Hood or Nelson) For breach of fiduciary duty: • $350,000.00 in actual damages [i.e., lost inefficiency claims] • $70,000.00 in prejudgment interest • $47.95/day from 1/30/10 to the date of entry of final judgment Other: Costs of court RECOVERY NOT PERMITTED FROM EITHER PARTY For tortious interference For breach of fiduciary duty: For fraud: with a contract: • No relief granted for actual • No relief granted • No relief granted damages (i.e. $3,825,736 in lost profits jointly/severally against Hood & Nelson) Table 1.2

Post-Judgment Proceedings

Following rendition of judgment, Hood and Nelson appealed. That appeal was transferred from the Fourth Court of Appeals to this Court by order of the Supreme Court of Texas.

On initial appeal, we vacated the trial court's judgment and dismissed for want of subject matter jurisdiction. Nelson v. Vernco Const., Inc. , 406 S.W.3d 374, 380 (Tex.App.-El Paso 2013, pet. granted). We found that Vernco lacked standing to bring the lawsuit ab initio because Vernco lost any justiciable interest in the controversy when, prior to suit, the company assigned all of its interests in the litigation to the Bank in the Forbearance Agreement. Id. While we held that there would have been subject-matter jurisdiction had Vernco shown it filed suit on the Bank's behalf with prior authorization, we declined to consider the Addendum that purported to authorize Vernco to file suit on the Bank's behalf in our analysis: "As Vernco did not make an offer of proof of the supplement to the trial court and the supplement was not admitted into evidence but is merely appended to Vernco's brief, it was not before the trial court and is not before this Court." Id.

The Texas Supreme Court reversed, holding that we had erroneously concluded the Addendum was not part of the appellate record. Vernco Const., Inc. v. Nelson , 460 S.W.3d 145, 150 (Tex. 2015). Without ultimately deciding the jurisdictional issue, the high court held that "[c]ontrary to the court of appeals' suggestion otherwise, we are not limited to reviewing evidence provided in an offer of proof at the trial on the merits" because the dispositive ruling hearing here was made pretrial. Id. at 150. Thus, a proper jurisdictional review would include pleadings related to the pretrial motion to dismiss hearing, and "[b]oth the forbearance agreement and the addendum are included with the pleadings germane to the motion to dismiss[.]" Id. The Supreme Court observed that while the trial court had apparently held an evidentiary hearing related to the standing issue, no reporter's record appeared in the appellate record, nor did the parties explain the absence of the reporter's record or what effect it had, if any, on the jurisdictional analysis. Id. at 151. The Court went on to hold that "[c]learly, however, the addendum is part of the clerk's record before the trial court and certainly must be considered if the matter was determined on the pleadings." Id. "Because the court of appeals did not consider evidence in the relevant portion of the appellate record," the Court reversed our judgment and remanded the case for further proceedings, "including reconsideration of the standing issue." Id.

We hear this case on remand from the Supreme Court of Texas.

II.

DISCUSSION

Although this case deals primarily with the interpretation of a contract numbering only a few pages, the trial record in this case is extensive, as is the briefing presented by both appellants. Together, Hood and Nelson collectively raise twenty-five issues on appeal-Hood advances twelve issues and Nelson thirteen. Many of these appellate points also embrace clusters of multiple subpoints. Not all points and subpoints raised in the Issues Presented section of the brief match neatly with the headings or substantive arguments raised in the text of the briefs themselves.

"A point of error addressing more than one specific ground of error is multifarious." Shull v. United Parcel Serv. , 4 S.W.3d 46, 51 (Tex.App.-San Antonio 1999, pet. denied). "If a court concludes that a point of error is multifarious, it may refuse to review it or it may consider the point of error if it can determine, with reasonable certainty, the error about which complaint is made." Id. As explained in further detail below, several of the points in Hood's Opening Brief are multifarious.

Per TEX.R.APP.P. 38.1(h), when appellants present a list of extremely long, multifarious issues on appeal that do not match up with arguments raised in the body of the brief so that "we cannot tell which arguments and authorities sections in the brief address which issues," we need only address those issues actually raised in the body of the appellant's brief. Columbia Med. Ctr. of Las Colinas v. Bush ex rel. Bush , 122 S.W.3d 835, 841 n.1 (Tex.App.-Fort Worth 2003, pet. denied). As for those particular points that have been adequately briefed, we will endeavor to address all such points necessary to the resolution of this appeal. TEX.R.APP.P. 47.1. Bearing these briefing rules in mind, we proceed.

We deal with the parties' joint jurisdictional argument first before addressing each party's legal sufficiency, jury charge, and evidentiary error complaints, grouped by cause of action where appropriate.

A.

JURISDICTION

(Hood Issue One/Nelson Issue One)

We begin with jurisdiction. In Issue One of both Appellants' briefs, Hood and Nelson assert that we should vacate the trial court's judgment because as a result of the Forbearance Agreement, only the Bank had standing to prosecute this claim, not Vernco. Per Appellants' argument, since Vernco bargained its right to recover damages from Hood and Nelson away to the Bank in order to stave off foreclosure, Vernco had no legal authority to institute suit in the first place, rendering all actions in this case void ab initio for want of jurisdiction.

We disagree.

Standard of Review

We review subject-matter jurisdiction de novo. Estate of Matthews, III , 510 S.W.3d 106, 113 (Tex.App.-San Antonio 2016, pet. denied). Standing is an essential component of subject-matter jurisdiction. Id. "The issue of standing focuses on whether a party has a sufficient relationship with the lawsuit so as to have a justiciable interest in its outcome."

Fitness Evolution, L.P. v. Headhunter Fitness, L.L.C. , No. 05-13-00506-CV, 2015 WL 6750047, at *13 (Tex.App.-Dallas Nov. 4, 2015, no pet.) (mem. op. on reh'g). Under Texas law, the standing inquiry requires examination of the following:

(1) the plaintiff must be personally injured-he must plead facts demonstrating that he (rather than a third party) suffered the injury-and the injury must be concrete and particularized, actual or imminent, not hypothetical;

(2) the plaintiff's alleged injury is fairly traceable to the defendant's conduct; and

(3) the plaintiff's alleged injury is likely to be redressed by each form of requested relief.

Id. ; see also Heckman v. Williamson Cty. , 369 S.W.3d 137, 155 (Tex. 2012).

The first element-injury-focuses in on whether the plaintiff "plead[ed] facts demonstrating that he, himself (rather than a third party or the public at large), suffered the injury." Heckman , 369 S.W.3d at 155. "A plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority[.]" [Emphasis and internal citation omitted]. Austin Nursing Ctr., Inc. v. Lovato , 171 S.W.3d 845, 848-49 (Tex. 2005). "In order to establish standing to maintain a breach of contract action, a plaintiff must show either third-party beneficiary status or privity." OAIC Commercial Assets, L.L.C. v. Stonegate Village, L.P. , 234 S.W.3d 726, 738 (Tex.App.-Dallas 2007, pet. denied). "For purposes of standing, privity is established by proving that the defendant was a party to an enforceable contract with either the plaintiff or a party who assigned its cause of action to the plaintiff." [Internal quotations and alterations omitted]. Id. ; see also Republic Petroleum, L.L.C. v. Dynamic Offshore Res. NS, L.L.C. , 474 S.W.3d 424, 430 (Tex.App.-Houston [1st Dist.] 2015, pet. denied) ("A plaintiff establishes standing to maintain a breach-of-contract action by demonstrating that it has an enforceable interest as a party to the contract, as an assignee of a party, or as a third party beneficiary.").

The second element-traceability-recognizes that the "court [can] act only to redress injury that fairly can be traced to the challenged action of the defendant, and not injury that results from the independent action of some third party not before the court." [Internal quotations and citation omitted]. Heckman , 369 S.W.3d at 155.

Finally, the third element-redressability-delineates the plaintiff's burden to "establish a substantial likelihood that the requested relief will remedy the alleged injury in fact." [Internal quotations and citations omitted]. Id. at 155-56. "If, for example, a plaintiff suing in a Texas court requests injunctive relief as well as damages, but the injunction could not possibly remedy his situation, then he lacks standing to bring that claim." Id. at 155. The redressability element largely reflects the trial court's inability to render advisory opinions. Under element three, "the trial court's decision must be able to bind the parties[;]" if the trial court's decision would simply result in an advisory opinion, there is no live controversy and no subject-matter jurisdiction. Estate of Matthews, III , 510 S.W.3d at 116.

Scope of Review

The Texas Supreme Court has made clear that in this case, the scope of our review includes evidence submitted at the pretrial hearing related to the jurisdictional motion, since that was the evidence before the trial court when it rendered its decision. Vernco Constr., Inc. , 460 S.W.3d at 150. With respect to pretrial hearings, "[i]f all the evidence is filed with the clerk and only arguments by counsel are presented in open court, the appeal should be decided on the clerk's record alone." Michiana Easy Livin' Country, Inc. v. Holten , 168 S.W.3d 777, 782 (Tex. 2005). We presume pretrial hearings "are nonevidentiary absent a specific indication or assertion to the contrary." Id. at 783. "If the proceeding's nature, the trial court's order, the party's briefs, or other indications show that an evidentiary hearing took place in open court, then a complaining party must present a record of that hearing to establish harmful error." Id. "When there is no reporter's record" when a reporter's record is necessary to establish evidence, "we must presume that sufficient evidence was introduced to support both the trial court's express findings and any omitted findings necessary to support the order." Big Bend Commc'ns, Inc. v. Meille , No. 08-03-00201-CV, 2003 WL 22023658, at *2 (Tex.App.-El Paso Aug. 28, 2003, no pet.) (mem. op.).

Although the Texas Supreme Court speculated that there may have been evidence presented at the pretrial jurisdictional hearing, the Court also seemed to indicate that "the trial court's docket sheet suggests that the hearing transcript was not omitted from the appellate record, but simply does not exist." Vernco Constr., Inc. , 460 S.W.3d at 151 n.4. We will not belabor the effect of this phantom reporter's record, as its presence or absence is not dispositive. Regardless of whether this issue is decided on the pleadings or as a result of reporter's record default presumption that sufficient facts exists to support the trial court's ruling, we determine that subject-matter jurisdiction existed in the trial court.

Analysis

As stated previously, this is not the first time we have considered the jurisdictional issue. Having received clarity from the Texas Supreme Court that the Addendum is, in fact, part of the record before this Court, we address subject-matter jurisdiction in light of the Addendum.

First, though, we must note that while the Addendum controversy dominated our previous discussion of jurisdiction, there is an unaddressed problem looming in the background of this issue. Although both we and the parties treated this question as a standing issue in the initial appeal, on closer review, it appears that Hood and Nelson's arguments regarding Vernco's authority to prosecute this lawsuit go not to the jurisdictional issue of standing, but the procedural issue of capacity.

"Texas courts have had considerable difficulty in defining the relationship between the similar, but distinct, doctrines of capacity and standing." Fitness Evolution, 2015 WL 6750047, at *12. "A plaintiff has standing when it is personally aggrieved, regardless of whether it is acting with legal authority; a party has capacity when it has the legal authority to act, regardless of whether it has a justiciable interest in the controversy." [Emphasis in original, internal citation omitted]. Austin Nursing Ctr., Inc. , 171 S.W.3d at 848-49. While standing is a jurisdictional issue, capacity is an affirmative defense. Estate of Matthews, III , 510 S.W.3d at 113 ; John C. Flood of DC, Inc. v. SuperMedia, L.L.C. , 408 S.W.3d 645, 653 (Tex.App.-Dallas 2013, pet. denied). Consequently, "[u]nlike standing, an argument that an opposing party does not have the capacity to participate in a suit can be waived" by failing to raise the issue in a verified pleading under TEX.R.CIV.P. 93(1). [Internal citation omitted]. See Estate of Matthews, III , 510 S.W.3d at 113.

Appellants' arguments bleed the concepts of standing and capacity together. Their chief argument seems to be that Vernco did not have the Bank's authority to litigate on the Bank's behalf. That sounds to us like a capacity issue that has been improperly recast as a standing issue. "Capacity is a party's legal authority to go into court to prosecute or defend a suit." Fitness Evolution , 2015 WL 6750047, at *14. "While the question of whether a party is entitled to sue on a contract is often informally referred to as a question of 'standing,' it is not truly a standing issue because it does not affect jurisdiction." Fitness Evolution , 2015 WL 6750047, at *14. Instead, that question is more properly conceptualized as a capacity issue. Id.

Take for example Republic Petroleum, L.L.C. , 474 S.W.3d at 430, decided after this case came back down from the Texas Supreme Court on remand. In Republic Petroleum , Republic and Dynamic Offshore entered into an oil-and-gas lease. Republic ultimately assigned its working interest in the lease to a third party. Thereafter, Republic sued Dynamic Offshore for breach of contract. Id. at 428. Dynamic Offshore challenged Republic's standing, maintaining that Republic's assignment of its contractual rights to a third party defeated subject-matter jurisdiction. The Houston First Court of Appeals disagreed.

The Court began its analysis by stating that "[a] plaintiff establishes standing to maintain a breach-of-contract action by demonstrating that it has an enforceable interest as a party to the contract, as an assignee of a party, or as a third party beneficiary." Id. at 430. The Court further observed that an assignor's obligations under a contract generally survive assignment, and that conversely, "a party who assigns its interest under a contract has standing to sue for damages that it incurred based on the rights it had prior to the assignment, unless the breaching party's actions caused no damage to the assignor or the assignor right's under the agreement were terminated or otherwise released; liability for the non-assigning party's breach of its obligations do not disappear upon assignment, but remain in place." Id. Dynamic Offshore could not defeat subject-matter jurisdiction and erase any liability for breach of contract by arguing that Republic has assigned its contractual rights to a third party; instead, the true (and waivable) issue was whether Republic had the capacity to bring suit as the assignee's representative. Id. at 431.

Republic Petroleum establishes that both the original contracting party and the assignee would have standing to bring a breach of contract suit against the defendant. Consequently here, Vernco as original contracting party had standing to sue Hood and Nelson because those parties were in privity and Vernco suffered the alleged injury. Vernco's assignment of its claims to the Bank as part of the Foreclosure Agreement also gave the Bank potential standing to bring the claim as well, since the Bank thereby obtained a property interest in the claim. However, the separate issue of whether Vernco had the actual authority to bring suit on the Bank's behalf in light of the agreement's scope and what was actually transferred is a capacity issue that was waived by Hood and Nelson's failure to file a timely verified objection on that ground as required by TEX.R.CIV.P. 93(1).

In summary, even though it contractually assigned an interest in the claim to a third party, Vernco had standing as the original injured party to sue on this claim. Our inquiry is complete, and we confirm subject-matter jurisdiction.

Both Hood's and Nelson's Issue One is overruled.

B.

LIABILITY FINDINGS :

SUFFICIENCY/CHARGE ERROR POINTS BY CAUSE OF ACTION

Having determined that the trial court had jurisdiction to consider this dispute, we next turn to the merits points dealing with various legal and factual sufficiency challenges and alleged jury charge errors. We set out the applicable standards of review before addressing each of Appellants' claims individually.

Standards of Review

For Legal and Factual Sufficiency

We sustain a legal sufficiency challenge when the judgment is unsupportable as a matter of law because (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) there is "no more than a mere scintilla" of evidence proving a vital fact, or (4) the evidence conclusively establishes the opposite proposition of a proffered vital fact. City of Keller v. Wilson , 168 S.W.3d 802, 810 (Tex. 2005). We view evidence in the light most favorable to the ruling on a legal sufficiency challenge, indulging "every reasonable inference" in the trial court's favor. El Paso Indep. Sch. Dist. v. Pabon , 214 S.W.3d 37, 41 (Tex.App.-El Paso 2006, no pet.). "Any evidence of probative force supporting a finding requires us to uphold" the trial court's ruling. ACS Invs., Inc. v. McLaughlin , 943 S.W.2d 426, 430 (Tex. 1997). "Where an outcome-determinative interpretation of evidence falls within the zone of reasonable disagreement, we are without jurisdiction to disturb the verdict or decision for legal sufficiency." Clayton Williams Energy, Inc. v. BMT O & G TX, L.P. , 473 S.W.3d 341, 349 (Tex.App.-El Paso 2015, pet. denied). "When a legal sufficiency point is sustained, it is our duty to reverse and render." Heritage Res., Inc. v. Hill , 104 S.W.3d 612, 619 (Tex.App.-El Paso 2003, no pet.).

"In a factual sufficiency challenge, the court of appeals must consider and weigh all of the evidence, and can set aside a verdict only if the evidence is so weak or if the finding is so against the great weight and preponderance of the evidence that it is clearly wrong and unjust." [Internal quotation marks omitted]. Samuels v. Nasir , 445 S.W.3d 886, 891 (Tex.App.-El Paso 2014, no pet.). When we sustain a factual sufficiency challenge, the proper remedy is reversal and remand to the trial court for a new trial. Hill, 104 S.W.3d at 619.

For Jury Charge Errors

"We review a trial court's decision to submit or refuse a particular instruction under an abuse of discretion standard of review." In re V.L.K. , 24 S.W.3d 338, 341 (Tex. 2000). "Our review requires that we consider the pleadings of the parties, the evidence presented at trial, and the charge in its entirety." De Leon v. Furr's Supermarkets, Inc. , 31 S.W.3d 297, 300 (Tex.App.-El Paso 2000, no pet.). "An instruction is proper if it (1) assists the jury, (2) accurately states the law, and (3) finds support in the pleadings and evidence." Columbia Rio Grande Healthcare, L.P. v. Hawley , 284 S.W.3d 851, 855-56 (Tex. 2009). "An appellate court will not reverse a judgment for a charge error unless that error was harmful[.]" Thota v. Young , 366 S.W.3d 678, 687 (Tex. 2012). As such, we will not reverse a judgment for charge error unless the error "probably caused the rendition of an improper judgment" and, even then, "only as to the part affected by the error." TEX.R.APP.P. 44.1(a)(1), (b).

1.

Breach of Contract by Hood

(Hood's Issues Two and Nine With Related Subissues)

We first address the question of whether Hood agreed to-and breached the Vernco Subcontract by failing to-pay Vernco all of the force account markups Hood received from TxDOT pursuant to Change Order 17.

In Hood's Issue Two, Hood argues that we should overturn the breach of contract verdict because, inter alia , the Vernco Subcontract never explicitly entitled Vernco to the FAMs. Instead, Section 4 of the Subcontract required Vernco to submit a written claim for an equitable increase in the contract price within ten days; Vernco never did so. As such, Hood never breached the contract terms.

In its brief, Vernco does not directly contest Hood's implicit claim that a written request for a price increase was a condition precedent to an equitable price adjustment under the language of Vernco Subcontract Section 4. Rather, Vernco, echoing the argument it presented in the trial court, contends that the Subcontract as written , by incorporating the Prime Contract and the Blue Book by reference, created a web of reciprocal rights and responsibilities that allowed Vernco to step into the shoes of the "contractor" for the Prime Contract's payment purposes, giving the company a direct right to all the FAMs that TxDOT gave Hood without having to first submit a written request to Hood. Vernco maintains that Hood breached the Subcontract by withholding those FAMs.

We agree that the Subcontract incorporates several documents by reference, but disagree with the contention that any of those documents automatically entitled Vernco to the FAMs. Section 4 of the Vernco Subcontract clearly controls the issue of subcontract price increases, and, as we explain below, Vernco's failure to request a price increase in writing is dispositive on the breach question.

Contract Construction Standards

The standard and scope of our review related to contract construction hinges on whether the contract is ambiguous or not. See Clayton Williams Energy, Inc. , 473 S.W.3d at 348. "To determine if a contract is ambiguous, we look only to its text and do not consult parol." Id. "If there is only one reasonable reading of a contract," the contract is unambiguous; "the parties' intent is a pure question of law and we are bound to interpret the terms of the contract as written and not how the parties would like them to have been written." Id. We review unambiguous contracts de novo , "limiting our scope of review to the 'four corners' of the document and excluding any extrinsic evidence from consideration." Id. If a contract is ambiguous, we review construction questions as questions of fact under the legal and factual sufficiency standards, and the scope of our review expands: "[a]n ambiguous contract opens the door to parol evidence that sheds light on the parties' true intent." Id.

"The goal of contract interpretation is to ascertain the parties' true intent as expressed by the plain language they used." Great Am. Ins. Co. v. Primo , 512 S.W.3d 890, 893 (Tex. 2017). Under the plain-language approach, "we assign terms their ordinary and generally accepted meaning unless the contract directs otherwise." Id. The plain-language inquiry is objective, not subjective. "A contract's plain language controls, not what one side or the other alleges they intended to say but did not." [Internal citation and quotation marks omitted]. Id. When interpreting a contract or other legal text, "we do not cherry-pick words and read them in a vacuum; we read them in their context within the document." Clayton Williams Energy, Inc. , 473 S.W.3d at 352. We strive to give meaning to all contract language so that no provision is rendered meaningless. Great American Ins. Co. , 512 S.W.3d at 893. Likewise, we also must avoid inserting language or provisions the parties did not use or "otherwise rewrit[ing] private agreements." Id. "We construe contracts from a utilitarian standpoint bearing in mind the particular business activity sought to be served and will avoid when possible and proper a construction which is unreasonable, inequitable, and oppressive." [Internal citations and quotation marks omitted]. Frost Nat'l Bank v. L & F Distrib., Ltd. , 165 S.W.3d 310, 312 (Tex. 2005) (per curiam). "However, parties make their own contracts, and it is not within the province of this court to vary their terms in order to protect them from the consequences of their own oversights and failures." [Internal citation and quotation marks omitted]. Springer Ranch, Ltd. v. Jones , 421 S.W.3d 273, 280 (Tex.App.-San Antonio 2013, no pet.).

Applicable Law: Breach of Contract

To prevail on a breach-of-contract claim, a party must establish the following elements:

(1) a valid contract existed between the plaintiff and the defendant,

(2) the plaintiff tendered performance or was excused from doing so,

(3) the defendant breached the terms of the contract, and

(4) the plaintiff sustained damages as a result of the defendant's breach.

West v. Triple B Servs., L.L.P. , 264 S.W.3d 440, 446 (Tex.App.-Houston [14th Dist.] 2008, no pet.). "A breach of contract occurs when a party fails or refuses to do something he is contractually obligated to do." Cody Tex., L.P. v. BPL Expl., Ltd. , 513 S.W.3d 522, 535 (Tex.App.-San Antonio 2016, pet. denied). A material breach discharges or excuses the other party from continued performance on the contract; a non-material breach does not relieve the other party of complying with the contract, but simply gives the non-breaching party a cause of action for damages. Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc. , 518 S.W.3d 432, 436 (Tex. 2017).

a.

Did the Vernco Subcontract Directly Entitle Vernco to All Force Account Markups?

The trial court allowed for significant testimony at trial regarding the contracting parties' intent, the admission of which we deal with later in this opinion. However, the contract is not ambiguous, nor does either party argue that contract is ambiguous. We agree that the contract is unambiguously subject to only one reasonable reading. As such, on appeal, we consider only the contract's text in determining which party owed what obligations; the subjective understandings of any party or their agents do no