       NUMBERS 13-11-00005-CV AND 13-11-00013-CV

                         COURT OF APPEALS

                THIRTEENTH DISTRICT OF TEXAS

                  CORPUS CHRISTI - EDINBURG

BRANNAN PAVING GP, LLC
D/B/A BRANNAN PAVING COMPANY,                                  Appellant,

                                       v.

PAVEMENT MARKINGS, INC.,
SAN JUAN INSURANCE AGENCY INC.
D/B/A VALLEY INSURANCE PROVIDERS
AND LEICHT GENERAL AGENCY,                                     Appellees.


                 On appeal from the 430th District Court
                       of Hidalgo County, Texas.


                                  OPINION
          Before Justices Rodriguez, Benavides, and Perkes
                      Opinion by Justice Perkes
     This is an appeal from a breach of contract case between a contractor, Brannan

Paving GP, L.L.C., d/b/a Brannan Paving Company (“Brannan Paving”), and its
subcontractor, Pavement Markings, Inc. (“Pavement Markings”).                           Brannan Paving

claimed that Pavement Markings breached the subcontract by not obtaining additional

insured coverage. Pavement Markings joined San Juan Insurance Agency, Inc., d/b/a

Valley Insurance Providers (“VIP”), who in turn joined Leicht General Agency (“LGA”).

Brannan Paving subsequently asserted negligence claims against VIP and LGA.1

        Brannan Paving appeals the trial court’s take-nothing judgment, contending by

four issues, which we have reordered, that the trial court: (1) erred by including a waiver

instruction in Question Number 1, a breach of contract question; (2) improperly rendered

judgment because the jury’s answer to Question Number 1 regarding breach of contract

and waiver is not supported by legally sufficient evidence; (3) erred by not granting a new

trial because the jury’s answer to Question Number 1 regarding breach of contract and

waiver is not supported by legally and factually sufficient evidence; and (4) erred by

granting LGA’s motion to disregard the jury’s answers to jury Question Numbers 3 and 4

regarding negligence.          Pavement Markings, as cross-appellant, challenges the trial

court’s take-nothing judgment on its claim for attorney’s fees against VIP, arguing by one

issue that the trial court erred in disregarding the jury’s answers to Question Numbers 5

and 6 regarding deceptive trade practices. We reverse and remand.

                       I. FACTUAL AND PROCEDURAL BACKGROUND

        On March 5, 2004, Brannan Paving and Pavement Markings entered into an

agreement related to a highway construction project whereby Pavement Markings

contracted to perform road striping services for the project, which included a section of

        1
         Instead of having a trial regarding the liability claims between the contractor and subcontractor,
and thereafter a subsequent separate trial regarding the insurance carrier’s alleged liability, all claims and
causes of action were brought and heard in the same trial.
                                                      2
U.S. Highway 77 near Sinton, Texas. According to Juan Villescas Jr., the president of

Pavement Markings, the company commenced operations on that section of highway on

“the next day” after signing the contract. The following excerpt from the contract became

the focus of the lawsuit:

              The Subcontractor agrees:

              ....

              G.     To carry Workman’s Compensation and Public Liability
              Insurance in companies acceptable to the Owner and Contractor
              and to furnish the Contractor with certified copies of the applicable
              policies prior to commencement of operations under this
              subcontract.

              ....

              STATUTORY WORKERS’ COMP

              Brannan Paving Company, Inc. is to be named as an “Additional
              Insured” as respects to general liability and automobile policy. A
              “Waiver of Subrogation” shall be issued in favor of Brannan
              Paving Company, Inc. in regards to all lines of insurance.

It is undisputed that Paving Markings never supplied Brannan Paving with certified copies

of the applicable policies.

       On May 16, 2004, there was a single-vehicle traffic accident on the section of U.S.

Highway 77 on which Pavement Markings had been working, and one of the passengers

in the vehicle was killed and the other two occupants were injured. A negligence lawsuit

was brought against Brannan Paving and Pavement Markings for joint and several

liability. According to the testimony of Waylan Justin Brannan Jr., the owner of Brannan

Paving, Brannan discovered after the accident that Pavement Markings had not added

Brannan Paving as an additional insured, and Brannan Paving brought a cross-claim for

                                            3
breach of contract against Pavement Markings for failing to “defend, indemnify, hold

harmless and name Brannan Paving GP, L.L.C. as an additional insured.”

        Pavement Markings then joined its surplus lines retail agent, VIP, asserting causes

of action for VIP’s negligence in failing to procure insurance, DTPA violations, fraud,

breach of fiduciary duty, negligent and false misrepresentation, and breach of contract.

VIP, in turn, joined LGA, the surplus lines managing general agent, seeking contribution

and indemnity in the event Pavement Markings prevailed on its third party claims. VIP

alleged that LGA was negligent for failing to provide an additional insured endorsement

as requested by VIP. VIP also moved to designate the surplus lines carrier, “Evanston

Insurance Company and Markel Southwest Underwriters, Inc.” (“Evanston”), as a

responsible third party, and the trial court granted the motion.

        Brannan Pavings and Pavement Markings settled the underlying negligence suit

against them. 2      Brannan Paving filed its own cross-claim against VIP and LGA “to

recover all damages proximately caused by VIP’s and LGA’s negligence in failing to

provide the requested blanket additional insured endorsement to Pavement Markings’s

general liability policy, including amounts paid to settle claims against [Pavement

Markings], reasonable costs of defense or attorney fees, litigation costs, and such further

relief deemed appropriate . . . .” The trial was bifurcated, and the issues to be covered by

the first trial were limited to the alleged breach of contract and negligence claims, thus

leaving aside for a second trial other issues, such as the reasonableness of the



        2
            The court signed an agreed order of dismissal with prejudice on March 29, 2007, but the original
plaintiffs were not technically removed from the case until September 9, 2010, at which point the trial court
granted LGA’s motion to correct parties.
                                                     4
settlement. During the trial, the parties agreed to separately try the attorney-fee issues

to the trial court after the jury rendered a verdict.

       The first question submitted to the jury asked whether Pavement Markings had

breached the contract. The first question also included an instruction on waiver. The

jury responded, “No.” Based on the jury’s response to the first question, LGA and VIP

each moved to disregard the answers to the other jury questions, which dealt with

compensation resulting from a breach, whether the negligence of any of the named

parties, including Evanston, caused the “occurrence in question,” the percentages of

responsibility attributable to each party listed if negligence was found, whether VIP

violated the DTPA in its interactions with Pavement Markings, and the compensation due

Pavement Markings in the event the jury found DTPA violations. The trial court entered

a take-nothing judgment against Brannan Paving and Pavement Markings on the

grounds that “the jury’s answer to Question No. 1 precludes any finding of liability” in their

favor. This appeal followed.

                                  II. WAIVER INSTRUCTION

       Brannan Paving contends the trial court improperly rendered judgment based on

the jury’s answer to the following question:

                                        Question No. 1

             Did Pavement Markings, Inc. fail to comply with its sub-contract
       agreement with Brannan Paving?

            Failure to comply by Pavement Markings is excused if compliance
       was waived by Brannan Paving. Waiver is an intentional surrender of a
       known right or intentional conduct inconsistent with claiming the right.

              Answer “Yes” or “No.”

                                               5
The jury answered “No.”

       By two issues, Brannan Paving argues that the trial court erred because the

evidence was legally and factually insufficient to support: (1) the trial court’s inclusion of

the waiver instruction; and (2) a jury finding that Pavement Markings did not breach the

subcontract.   By a third, related issue, Brannan Paving asserts that because the

evidence was legally and factually insufficient to support the jury’s answer to Question

Number 1, the trial court also erred in denying its motion for new trial.

A.     Preservation

       The Texas procedural rules “govern the preservation requirements for raising a

jury charge complaint on appeal and require the complaining party to make an objection

before the trial court.” Thota v. Young, 366 S.W.3d 678, 689 (Tex. 2012); see TEX. R.

CIV. P. 274; TEX. R. APP. P. 33.1. At trial, Brannan Paving timely objected to the inclusion

of waiver in the jury question on the grounds that “I [Brannan Paving’s attorney] don’t think

that the proof in this case is sufficient to support a waiver argument.” The trial court

overruled the objection. On appeal, VIP and LGA argue that Brannan Paving’s “no

evidence” objection failed to preserve a complaint as to the form of the question. VIP

and LGA contend that Brannan Paving should have requested a separate question on

excuse, which includes waiver, and that Brannan Paving’s failure to do so does not

comply with the preservation requirement of Texas Rule of Civil Procedure 278. Rule

278 provides in relevant part: “Failure to submit a question shall not be deemed a

ground for reversal of judgment, unless its submission, in substantially correct wording,



                                              6
has been requested in writing and tendered by the party complaining of the

judgment . . . .” TEX. R. CIV. P. 278.

        The preservation requirements of rule 278 apply when a party complains of an

omission of an instruction; it does not apply, however, when a party argues that another

party’s proposed instruction be omitted entirely. Turner v. Precision Surgical, L.L.C., 274

S.W.3d 245, 248 n.2 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (citing TEX. R. CIV. P.

274; Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994); Yellow Cab

& Baggage Co. v. Green, 277 S.W.2d 92, 93 (Tex. 1955); Greer v. Seales, No.

09-05-001-CV, 2006 WL 439109, at *4 n.3 (Tex. App.—Beaumont Feb. 23, 2006, no pet.)

(mem. op.)). Brannan Paving does not appeal the omission of a requested instruction

but the inclusion of one. Thus, the preservation requirements of rule 278 do not apply to

Brannan Paving’s issue.

       On appeal, Brannan Paving asserts that the trial court’s erroneous inclusion of a

waiver instruction in the breach-of-contract question prevents this Court from knowing on

what grounds the jury answered the question in the negative—whether on the grounds

that there was no breach of contract or, alternatively, on the grounds that there actually

was a breach of contract but Brannan Paving waived the consequent rights of the breach.

In other words, Brannan Paving frames this issue as a Casteel issue, which would

potentially trigger a presumed-harm analysis. See Crown Life Ins. Co. v. Casteel, 22

S.W.3d 378, 388 (Tex. 2000) (establishing that reversible error is presumed when a trial

court submits to a jury a broad-form question that incorporates multiple theories of

liability, one or more of which is invalid, and the appellate court cannot determine upon


                                            7
which of the court-provided grounds the jury found its answer to the question). The

Texas Supreme Court, in considering preservation of this particular issue, has ruled that a

party need not explicitly reference Casteel in its trial objection or challenge the form of the

question. Thota, 366 S.W.3d at 690. A no-evidence objection is sufficient to preserve

this issue. Id. at 691. Brannan Paving’s complaint being properly preserved, we review

the contested charge to determine whether the trial court committed error.

B.     Standard of Review

       “We review a trial court’s decision to submit or refuse a particular instruction under

an abuse of discretion standard of review.” Id. at 687 (quoting In re V.L.K., 24 S.W.3d

338, 341 (Tex. 2000)). “The trial court has considerable discretion to determine proper

jury instructions, and ‘[i]f an instruction might aid the jury in answering the issues

presented . . . or if there is any support in the evidence for an instruction, the instruction is

proper.’” Id. (quoting La.-Pac. Corp. v. Knighten, 976 S.W.2d 674, 676 (Tex. 1998)).

“‘An instruction is proper if it (1) assists the jury, (2) accurately states the law, and (3) finds

support in the pleadings and evidence.’” Id. (quoting Healthcare, L.P., v. Hawley, 284

S.W.3d 851, 855–56 (Tex. 2009)).

C.     Applicable Law

       Although the trial court enjoys considerable discretion in determining the propriety

of jury instructions, the trial court is bound to submit only “those questions, instructions,

and definitions raised by the pleadings and the evidence.” Harris County v. Smith, 96

S.W.3d 230, 236 (Tex. 2002); see TEX. R. CIV. P. 278. At issue in this case is whether

waiver was raised by the evidence.


                                                8
       Waiver is the “intentional relinquishment of a known right or intentional conduct

inconsistent with claiming that right.” Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex.

2003) (quoting Sun Exploration & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987);

U.S. Fid. & Guar. Co. v. Bimco Iron & Metal Corp., 464 S.W.2d 353, 357 (Tex. 1971)).

Evidence of waiver generally takes one of three forms: (1) express renunciation of a

known right; (2) silence or inaction, coupled with knowledge of the known right, for such

an unreasonable period of time as to indicate an intention to waive the right; or (3) other

conduct of the party knowingly possessing the right of such a nature as to mislead the

opposite party into an honest belief that the waiver was intended or assented to. Alford,

Meroney & Co. v. Rowe, 619 S.W.2d 210, 213 (Tex. 1981).

       “Waiver is largely a matter of intent, and for implied waiver to be found through a

party’s actions, intent must be clearly demonstrated by the surrounding facts and

circumstances.” Jernigan, 111 S.W.3d at 156 (citing Motor Vehicle Bd. v. El Paso Indep.

Auto. Dealers Ass’n, Inc., 1 S.W.3d 108, 111 (Tex. 1999)); Rowe, 619 S.W.2d at 213

(citing Ford v. Culbertson, 308 S.W.2d 855, 865 (Tex. 1958)). “There can be no waiver

of a right if the person sought to be charged with waiver says or does nothing inconsistent

with an intent to rely upon such right.” Jernigan, 111 S.W.3d at 156 (citing Maryland

Cas. Co. v. Palestine Fashions, Inc., 402 S.W.2d 883, 888 (Tex. 1966)).

       Waiver is an affirmative defense. See TEX. R. CIV. P. 94. It may be asserted

against a party who waives a right springing from law or, as in this case, from a contract.

Tenneco Inc. v. Enter. Prod. Co., 925 S.W.2d 640, 643 (Tex. 1996) (citing Rowe, 619

S.W.2d at 213); Ford, 308 S.W.2d at 865). Waiver is ordinarily a question of fact, but


                                            9
when the surrounding facts and circumstances are undisputed, the question becomes

one of law. Jernigan, 111 S.W.3d at 156–57; Tenneco, 925 S.W.2d at 643.

D.     Discussion

       In response to Brannan Paving’s objection to the jury charge, the trial court

responded, “But it’s an issue of fact. There’s disputed facts. You have your position;

they have their’s [sic]. Waiver is, generally, a question of fact unless, clearly, there is no

dispute on what waiver facts are available. Okay. I’m going to deny—I’m going to

overrule your objection.” We agree with the trial court’s summation of the applicable law

of waiver, but we disagree with the conclusion that there were disputed facts on waiver in

this trial; the record shows that it was the interpretation of the relevant facts that was

disputed rather than the facts themselves.

       All three appellees argue that Brannan Paving waived Pavement Markings’s

compliance with the subcontract by allowing Pavement Markings to “commence

operations” before receiving certified copies of the applicable policies. Brannan Paving

never contested the fact that work began without it first receiving and verifying the

contents of the applicable insurance policy, nor did Brannan Paving proffer a competing

version of events. There was no evidence admitted that addressed Brannan Paving’s

intent; instead, appellees’ interpretation of “prior to commencement of operations”

language was that it precluded Brannan Paving’s recovery. The facts were not disputed.

The parties merely came to differing conclusions about the contract based on the same

underlying facts. Whether those facts constitute waiver is a question of law, which we




                                             10
review de novo. See Formosa Plastics Corp., USA v. Kajima Int’l, Inc., 216 S.W.3d 436,

488 (Tex. App.—Corpus Christi 2006, pet. denied).

       After considering the record, we hold that Pavement Markings failed to meet its

burden to prove that Brannan Paving’s conduct, or more accurately inaction, was

inconsistent with the intent to assert its contractual right of being insured against the

potential negligence of its subcontractor. See Jernigan, 111 S.W.3d at 156. We hold

that Brannan Paving’s inaction did not show an intent to yield the right. See Tenneco,

925 S.W.2d at 643 (ruling that inaction may establish waiver if it is for so long a period of

time that it shows an intent to yield the known right). Brannan Jr. testified that he was

unaware that Brannan Paving was not listed as an additional insured under Pavement

Markings’s policy until after the accident.       These facts may indicate a laxness in

enforcement or Brannan Paving’s oversight in ensuring that Pavement Markings comply

with the contract, but they do not show the intent “clearly demonstrated by the

surrounding facts and circumstances” to relinquish a known right. See Jernigan, 111

S.W.3d at 156.

       Pavement Markings and VIP compare this case to Tenneco. In that case, several

oil companies, including Tenneco Oil Company, shared ownership in a natural gas liquids

fractionation plant.   Tenneco, 925 S.W.2d at 641–42.          The plant operations were

governed by a contract “called the Restated Operating Agreement,” which provided,

among other things, that “each owner, under certain circumstances” deliver a certain

amount of raw natural gas liquids, or “raw make,” to the plant for processing. Id. at 642.

In addition, section 12.2 of the agreement provided that when an owner conveyed its


                                             11
ownership interest to a subsidiary, the subsidiary must “enter[] into an agreement with

Operator” to provide the same amount of daily raw make as the conveying owner. Id.

      Under the agreement, Tenneco Oil was to deliver 31,000 barrels of raw make per

day. Id. Tenneco Oil subsequently conveyed its ownership interest in the plant to its

wholly owned subsidiary, Tenneco Natural Gas Liquids. Id. Under section 12.2 of the

agreement, Tenneco Natural Gas Liquids should have contracted with the operator to

provide at least 31,000 barrels of raw make per day—the same daily commitment of

Tenneco Oil. Id. Tenneco Natural Gas Liquids did not enter into such agreement and

delivered less than 31,000 barrels per day, and other plant owners subsequently

challenged the conveyance from Tenneco Oil to Tenneco Natural Gas Liquids as a

breach of contract.   Id.   The “Tenneco Defendants” alleged that the other owners

waived the contractual right. Id. at 643.

      In analyzing the issue of waiver, the supreme court noted that the Tenneco

Defendants provided evidence in the form of “deposition excerpts from the [complaining]

plant owners’ designated representatives” that demonstrated that “(1) various owners

knew that Tenneco Oil had transferred its ownership interest to Tenneco Natural Gas

Liquids; (2) Tenneco Natural Gas Liquids had not executed an agreement in satisfaction

of Section 12.2; and (3) Tenneco Natural Gas Liquids was delivering substantially less

than 31,000 barrels per day.” Id. Moreover, evidence showed that the other plant

owners “accepted Tenneco Natural Gas Liquids as a full-fledged fellow owner and that

they had elected not to enforce any rights arising under Section 12.2.” Id.




                                            12
        The facts giving rise to waiver in Tenneco are distinguishable from the facts in this

case.    In Tenneco, the evidence showed that the complaining parties knew of the

subsidiary’s failure to comply with the contract but nevertheless treated the subsidiary “as

a full-fledged fellow owner” and “elected not to enforce any rights . . . .” Id. at 643. Here,

there is no evidence that Brannan Paving was aware of Pavement Markings’s failure to

comply with the subcontract; in fact, the evidence establishes the opposite—Brannan Jr.

testified that he discovered the failure to obtain additional insured coverage after the

accident had already occurred. Unlike the complaining parties in Tenneco, Brannan

Paving did not affirmatively decline a contractual provision that Brannan Paving knew

Pavement Markings to have breached.

        In Tenneco, the evidence showed that complaining parties, knowing of the breach,

failed to enforce their contractual rights for three years. Id. In this case, there was only

one day between entering into the agreement and Pavement Markings’s commencement

of operations.    The traffic accident occurred about two months later.         There is no

evidence that Brannan Paving, who was unaware of the alleged breach, remained

inactive for so long a period of time as to manifest its intent to waive compliance with the

contract as in Tenneco. See Jernigan, 111 S.W.3d at 157 (“the defendant’s silence or

inaction must be inconsistent with the intent to rely upon the right . . . .”). Thus, we hold

that Tenneco does not support a conclusion that Brannan Paving, through its oversight or

laxness, exemplified a clear intent to relinquish a known right.




                                             13
E.     Condition Precedent

       LGA supports its waiver contention by construing the contractual provision that

required Pavement Markings to provide Brannan Paving certified copies of the applicable

insurance policies as a condition precedent to Pavement Markings’s performance of road

work under the contract. It is true that a condition precedent can be waived, see Sun

Exploration & Production Co., 728 S.W.2d at 37, but the elements of waiver still require a

showing of intent, see Jernigan, 111 S.W.3d at 156. Assuming without deciding that the

insurance provision was a condition precedent, we nevertheless hold that Pavement

Markings failed to satisfy its burden of proof to present some evidence that Brannan

Paving intended to relinquish its contractual right. Because there was no evidence that

Brannan Paving intentionally relinquished a known right, which is a necessary element of

waiver, the trial court erred by submitting the waiver instruction to the jury.

                                     III. HARM ANALYSIS

       Having determined that no evidence manifested Brannan Paving’s intent to waive

insurance coverage, we must consider whether the inclusion of the waiver instruction was

harmful. An appellate court will only reverse a judgment for a charge error if the error

was harmful because it “probably caused the rendition of an improper judgment” or

“probably prevented the appellant from properly presenting the case to the court of

appeals.” See TEX. R. APP. P. 44.1(a); Thota, 366 S.W.3d at 687. Brannan Paving

argues that we should apply the Casteel presumed-harm analysis.




                                             14
A.       Casteel

         Casteel established that there is presumed harm when a trial court submits a

broad-form jury question that incorporates multiple theories of liability, one or more of

which is invalid, and the appellate court cannot determine upon which ground the jury

found its answer to the question. See Casteel, 22 S.W.3d at 388. The supreme court

has extended the Casteel presumed-harm analysis to the improper mixing of valid and

invalid theories on damages, see Harris County v. Smith, 96 S.W.3d 230 (Tex. 2003), but

has otherwise been reluctant to extend it further, expressly declining to apply it to a jury

question involving a valid theory of liability and an improperly included instruction on

inferential rebuttal. See Bed, Bath, & Beyond, Inc. v. Urista, 211 S.W.3d 753, 756–57

(Tex. 2006). Recently, the supreme court considered whether to apply Casteel to a jury

question that included liability and an instruction on inferential rebuttal and an affirmative

defense. See Thota, 366 S.W.3d at 680. The supreme court concluded that Casteel

did not apply, but it did so because the contested jury question included several blanks,

which allowed the supreme court to determine on which basis the jury found its verdict.

See id. at 691–92.

B.       Discussion

         Unlike Thota, the jury question in this case had only one blank, and we cannot

determine whether the jury’s “no” answer meant that it found that a breach did not exist or

that a breach did exist but was subsequently waived. Both theories were advanced at

trial.




                                             15
       VIP took the position that the absence of the additional insured endorsement did

not preclude actual coverage, and the only expert to testify at trial, Gary Beck,

emphatically declared that there was “no doubt in [his] mind” that Brannan Paving was an

additional insured and that Pavement Markings did not breach the contract. In the

closing argument by the counsel for VIP, counsel emphasized Beck’s expert opinion and

the position that there was no breach because coverage existed.

       Counsel for LGA, on the other hand, argued to the jury to answer jury Question

Number 1 in the negative because in his “personal opinion . . . it was weighed [sic].”

LGA’s attorney then explained why waiver was a proper ground upon which to answer

Question Number 1.

       Counsel for Pavement Markings stated in his closing argument, “[T]here’s really

only two positions in this case[;] Valley Insurance Providers has a theory, and Leicht

General Agency has a theory. And if you believe Valley Insurance Providers’ theory,

there was coverage,” and thus no breach of contract. If, however, “LGA’s theory is

correct, I would argue to you that there still is no breach of contract because Brannan

Paving waived that provision.”

       Although two theories were included in the jury question, there was only one blank.

We hold the trial court’s inclusion of a valid theory of liability and an improperly-included

affirmative defense instruction in the same question with only one answer blank created

the type of confusion that the Casteel presumed-harm analysis was designed to address.

See Thota, 366 S.W.3d at 687–88; Casteel, 22 S.W.3d at 388; see also Pantaze v.

Welton, No. 05-96-00509-CV, 1999 WL 673448, at *6 (Tex. App.—Dallas Aug. 31, 1999,


                                             16
no pet.) (mem. op., not designated for publication) (holding Casteel applies when the trial

court improperly included the affirmative defense of waiver in a jury question).

       The erroneous inclusion of an affirmative-defense instruction is different than the

erroneous inclusion of an inferential-rebuttal instruction, which the supreme court has

excluded from the Casteel presumed-harm analysis. See Urista, 211 S.W.3d at 756–57.

“Inferential rebuttal defenses are distinct from affirmative defenses in that an inferential

rebuttal, as the name implies, rebuts part of the plaintiff’s cause of action, while an

affirmative defense relieves the defendant of liability even if all the elements of the

plaintiff’s cause of action are established.”    Perez v. DNT Global Star, L.L.C., 339

S.W.3d 692, 700 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing Moulton v. Alamo

Ambulance Serv., 414 S.W.2d 444, 448 (Tex. 1967); Buls v. Fuselier, 55 S.W.3d 204, 211

(Tex. App.—Texarkana 2001, no pet.)).            An affirmative defense “provides an

independent reason why the plaintiff should not recover.” Genesis Tax Loan Servs. v.

Kothmann, 339 S.W.3d 104, 108 (Tex. 2011) (citing Gorman v. Life Ins. Co. of N. Am.,

811 S.W.2d 542, 546 (Tex. 1991)).

       Applied here, the jury had two independent bases on which it could find Brannan

Paving should not recover on its breach of contract claim. We are unable to determine

which ground the jury chose, and we cannot tell what effect the inclusion of the

affirmative-defense instruction on waiver had on the jury. Given that waiver pervades

Brannan Paving’s first through third issues on appeal, they are all sustained.         See

Casteel, 22 S.W.3d at 389–90.




                                            17
                                          IV.     NEGLIGENCE

        By its fourth issue, Brannan Paving contends the trial court erred in granting LGA’s

motion to disregard jury Question Numbers 3 and 4 regarding negligence.3 Question

Number 3 asked, “Did the negligence, if any, of those named below proximately cause the

occurrence in question?”4 There was an answer blank by each listed party. The jury

found the negligence of Brannan Paving, Pavement Markings, VIP, and LGA, but not

Evanston, proximately caused the occurrence in question. Question Number 4 asked

the jury to “[a]ssign percentages of responsibility only to those you found or contributed to

cause the occurrence in Question No. 3 . . . .” The jury found Brannan Paving to be 10%

responsible, Pavement Markings to be 0% responsible, VIP to be 50% responsible, LGA

to be 40% responsible, and Evanston to be 0% responsible. Interestingly, the jury

questions, as submitted, wholly failed to identify the name of the party that was

purportedly injured by the “occurrence” and no jury question was submitted regarding

damages.

        LGA moved to disregard the jury’s findings under Question Numbers 3 and 4 on

the grounds: (1) no evidence supports the jury’s findings, particularly with respect to

duty; (2) Brannan Paving’s claims sound in contract, thus precluding recovery in tort; and

(3) the jury’s answers to Question Numbers 1, 2, and 7 rendered Question Numbers 3

and 4 immaterial because the jury found Pavement Markings was not liable to Brannan

        3
           Brannan Paving, in its brief, argues “[t]here is evidence to support a duty from Valley [VIP] to
Pavement Markings and a breach of that duty.” Brannan Paving’s brief further includes discussion of VIP.
Thus, we are going to construe Brannan Paving’s issue as including VIP. See TEX. R. APP. P. 38.1(f).
        4
              As noted by counsel for VIP during Brannan Paving’s JNOV hearing, “What was the
occurrence? Well, every lawyer in this room, Your Honor, has a different idea about what the occurrence
was.” “Everybody has a different idea of what the occurrence was, and the occurrence was never defined
for the jury.” No complaint about the manner of submission of the jury question is before us.
                                                    18
Paving. The trial court granted LGA’s motion without specifying the grounds for its

ruling, which Brannan Paving now appeals. Brannan Paving acknowledges there is no

privity of contract between it and LGA. Brannan Paving asserts, however, that LGA “was

in a chain of agencies handling the insured’s order and therefore owed a duty to use

reasonable care to secure coverage and to not provide inaccurate statements about

coverage being secured.” We disagree.

A.    Standard of Review

      Foreseeability of harm is the principal factor to consider when determining whether

a party owes a duty. See City of Waco v. Kirwan, 298 S.W.3d 618, 624 (Tex. 2009).

We analyze foreseeability by determining whether the defendant, “as a person of ordinary

intelligence, should have anticipated the dangers that his negligent act created for

others.” Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 549–50 (Tex. 1985). We make

this determination from a two-prong test: (1) the injury must be of such general character

as might reasonably have been anticipated; and (2) the injured party should be so

situated to the wrongful act that injury to him or one similarly situated might reasonably

have been foreseen. Mellon Mortgage Co., v. Holder, 5 S.W.3d 654, 655 (Tex. 1999);

Nixon, 690 S.W.2d at 551.

      An insurance broker owes common-law duties to a client for whom the broker

undertakes to procure insurance: (1) to use reasonable diligence in attempting to place

the requested insurance; and (2) to inform the client promptly if unable to do so. May v.

United Servs. Ass'n of Am., 844 S.W.2d 666, 669 (Tex. 1992); Sonic Sys. Int'l, Inc. v.

Croix, 278 S.W.3d 377, 389 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). The


                                           19
nature of the relationship between the insurance broker and the client is a significant

consideration in determining the existence of a duty of care in cases involving

professional negligence. W. Houston Airport, Inc. v. Millennium Ins. Agency, Inc., 349

S.W.3d 748, 754 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (citing Tex. Home

Mgmt., Inc. v. Peavey, 89 S.W.3d 30, 34 (Tex. 2002)). In this regard, the Fourteenth

Court of Appeals opined:

      Generally, one who has sustained damages because of professional
      negligence may not proceed against the professional unless there is privity
      of contract. See Ervin v. Mann Frankfort Stein & Lipp CPAs, L.L.P., 234
      S.W.3d 172, 182 (Tex. App.—San Antonio 2007, no pet.) (pertaining to
      accountant-client relationship); Hartman v. Urban, 946 S.W.2d 546, 548–50
      (Tex. App.—Corpus Christi 1997, no writ) (pertaining to engineer-client
      relationship); Wright v. Gundersen, 956 S.W.2d 43, 48 (Tex.
      App.—Houston [14th Dist.] 1996, no writ) (pertaining to attorney-client
      relationship). Privity for purposes of professional negligence is the
      contractual connection or relationship existing between two or more parties;
      the relationship can be formed by express or implied contract. Ervin, 234
      S.W.3d at 182. Several courts in other jurisdictions have concluded that
      an insurance broker does not owe a duty unless there is privity. See, e.g.,
      Seal v. Hart, 2002 MT 149, 28–38, 310 Mont. 307, 50 P.3d 522; Benjamin
      Shapiro Realty Co., LLC. v. Kemper Nat'l Ins. Co., 303 A.D.2d 245, 756
      N.Y.S.2d 45, 46 (N.Y. App. Div. 2003); Lu-An-Do, Inc. v. Kloots, (1999), 131
      Ohio App. 3d 71, 76, 721 N.E.2d 507, 510; Workman v. McNeal Agency,
      Inc., 217 Ga. App. 686, 458 S.E.2d 707, 709 (Ga. App. 1995).

W. Houston Airport, Inc. v. Millennium Ins. Agency, Inc., 349 S.W.3d 748, 752 (Tex.

App.—Houston [14th Dist.] 2011, pet. denied).

B.    Discussion

      Brannan Paving asserted cross-claims against Pavement Markings’s surplus lines

retail agent, VIP, for negligently “failing to provide the requested blanket additional

insured endorsement to Pavement Markings’s general liability policy . . . .” and upon VIP’s

surplus lines managing general agent, LGA, for negligently failing to provide an additional

                                            20
insured endorsement as requested by VIP.        Brannan Paving sought “to recover all

damages proximately caused by VIP’s and LGA’s negligence in failing to provide the

requested blanket additional insured endorsement to Pavement Markings’s general

liability policy, including amounts paid to settle claims against [Pavement Markings],

reasonable costs of defense or attorney fees, litigation costs, and such further relief

deemed appropriate . . . .”

       An insurance agent, however, generally does not owe a duty unless there is privity.

Brannan Paving does not cite, nor did we find, any Texas case that interposed any duty in

favor of a non-client upon a client’s insurance agent regarding the agent’s negligent

failure to procure a liability policy with a certificate designating the non-client as an

additional insured. Rather, in West Houston Airport, the Fourteenth Court of Appeals

was asked to determine whether “an insurance broker owes a duty to a non-client when

the broker’s client requests procurement of a general-liability policy with a certificate

designating the non-client as an additional insured.” Id. at 751. The court concluded

that even if the injury relevant to the case was foreseeable, there was no relationship,

contractual or otherwise, between the parties; they had never even communicated with

each other prior to the lawsuit. See id. at 754. The court held that no duty existed.

See id.

       The same logic necessarily precludes the imposition of a duty on LGA or VIP as to

Brannan Paving. Brannan Paving was not a client of either company, and the evidence

shows that there was no contractual connection or relationship between Brannan Paving

and LGA or VIP, such as would create privity. In fact, the evidence indicates that


                                           21
Brannan Paving never directly communicated with LGA.               Accordingly, we hold that

neither LGA nor VIP owed a duty of professional care to Brannan Paving regarding the

procurement of insurance as an additional insured. See W. Houston Airport, 349 S.W.3d

at 754–55; see also Hartman v. Urban, 946 S.W.2d 546, 550 (Tex. App.—Corpus Christi

1997, no writ) (holding engineer who prepared erroneous plat did not owe duty to

subsequent purchaser because of lack of privity, even though it was foreseeable

purchaser would rely on plat). We overrule Brannan Paving’s fourth issue.

                     V.     PAVEMENT MARKINGS’S CROSS-APPEAL

       By one cross-issue, Pavement Markings appeals the trial court’s take-nothing

judgment on its claim against VIP for attorney’s fees. Specifically, Pavement Markings

argues it is entitled to recover the attorney’s fees that it incurred in defending itself against

Brannan Paving under:        (1) the “Equitable Exception” to the general rule requiring

contractual or statutory basis for recovery of attorney’s fees; and (2) the Deceptive Trade

Practices Act (DTPA).

A.     Equitable Exception

       In Texas, attorney’s fees expended in litigation with third parties are not generally

recoverable as damages if they are not provided by statute or by agreement between the

parties. Turner v. Turner, 385 S.W.2d 230, 233 (Tex. 1965); City of Garland v. Booth,

895 S.W.2d 766, 771 (Tex. App.—Dallas 1995, writ denied). In Turner, the Texas

Supreme Court discussed an exception—often called the “equitable exception” or the

“tort of another exception”—to this rule. See 385 S.W.2d at 233. The exception is

recognized in the Second Restatement of Torts, as follows:


                                               22
       One who through the tort of another has been required to act in the
       protection of his interests by bringing or defending an action against a third
       person is entitled to recover reasonable compensation for loss of time,
       attorney fees and other expenditures thereby suffered or incurred in the
       earlier action.

RESTATEMENT (SECOND) OF TORTS § 914 (1979); see also Turner, 385 S.W.2d at 234.

       Assuming without deciding that the equitable exception to the American Rule has

been adopted,5 we hold that it is inapplicable to the present case because there is no

underlying finding that VIP committed any tort against Pavement Markings.                       In that

regard, the relevant jury questions involving negligence, Question Numbers 3 and 4,

wholly failed to indicate the name of any injured party. A prerequisite to recovery under

the exception is that the party seeking recovery show that a tort of another, here VIP,

required the party, here Pavement Markings, to bring or defend an action against a third

party, here Brannan Paving.          See RESTATEMENT (SECOND)            OF   TORTS § 914 (1979).

Because the jury did not find VIP committed a tort against Pavement Markings, we

overrule this sub-issue.

B.     DTPA

       Pavement Markings also asserts that it can recover its attorney’s fees under the

DTPA because the jury found, in Question Numbers 5 and 6, that VIP violated the DTPA

by acting unconscionably and in a “false, misleading, or deceptive” manner toward

Pavement Markings.          In Question Number 7, the jury was asked what damages,


       5
           Although the Texas Supreme Court discussed the existence of the equitable exception, see
RESTATEMENT (SECOND) OF TORTS § 914 (1979), in Turner v. Turner, it did not adopt it. See 385 S.W.2d
230, 233 (Tex. 1965); see also Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. Nat’l Dev. & Research Corp.,
299 S.W.3d 106, 119 (Tex. 2009) (construing the exception as not adopted by Turner and Texas law).
Since Turner, however, the Texas appellate courts have split on whether to adopt the exception. As in
Turner, we need not address the exception because it is inapplicable to the case.

                                                  23
excluding attorney’s fees, Pavement Markings should receive for the DTPA violations.

The jury awarded zero damages. No jury question was submitted regarding attorney’s

fees and no attorney’s fees were awarded.6

       On appeal, Pavement Markings argues that attorney’s fees are recoverable

“economic damages” for DTPA violations. See TEX. BUS. & COM. CODE ANN. § 17.50(a)

(West 2011). The DTPA defines “economic damages” as follows:

       “Economic damages” means compensatory damages for pecuniary loss,
       including costs of repair and replacement. The term does not include
       exemplary damages or damages for physical pain and mental anguish, loss
       of consortium, disfigurement, physical impairment, or loss of
       companionship and society.

Id. § 17.45(11). According to Pavement Markings, because attorney’s fees are not

explicitly excluded as economic damages, they qualify.

       The Texas Supreme Court, however, has repeatedly held that a party who has

failed to recover actual damages or damages for mental anguish is not entitled to recover

attorney's fees under the DTPA. See Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 567

(Tex. 2002). The supreme court recently expounded on this matter, as follows:

             The DTPA authorizes consumer suits when deceptive acts are the
       producing cause of "[actual damages] or damages for mental anguish."
       TEX. BUS. & COM. CODE § 17.50(a)(1). The statute permits trial courts to
       award relief only to a prevailing consumer. Id. § 17.50(b). Among those
       remedies is an order to restore illegally acquired money or property, see id.
       § 17.50(b)(3), and that is the remedy Cruz seeks. But those remedies are
       unavailable unless a consumer has prevailed.

              The jury awarded Cruz no damages on his DTPA claim. He cannot,
       therefore, satisfy section 17.50(a)(1). The trial court found that Cruz had
       suffered "injury or harm" but left it to the jury to quantify that amount. We
       have held that a party who failed to recover actual damages or damages for

       6
            During the trial, the parties stipulated that the trial court would determine the amount of
attorney’s fees to be awarded in the event of a successful outcome in this portion of the trial.
                                                  24
        mental anguish was not entitled to attorney's fees under the DTPA. See
        Gulf States Utils. Co. v. Low, 79 S.W.3d 561, 567 (Tex. 2002). We see no
        reason to treat Cruz's restoration claim differently. Even a rescission
        award requires a showing of actual damages. See Russell v. Indus.
        Transp. Co., 113 Tex. 441, 258 S.W. 462, 465 (Tex. 1924) (holding that
        "some pecuniary injury is essential to an action to rescind a contract for
        fraud"). This is not a case in which Cruz's injury was undisputed but "the
        jury was not asked to place a monetary value on this injury." Bonanza
        Rests. v. Uncle Pete's, Inc., 757 S.W.2d 445, 448 (Tex. App.—Dallas 1988,
        writ denied) (holding that where consumer clearly sustained injury, jury's
        failure to award damages was not fatal to rescission claim, because jury
        had not been asked about the particular injury sustained). The statute's
        clear language provides a cause of action only to consumers who have
        sustained damages, and the jury awarded Cruz none.

Cruz v. Andrews Restoration, Inc., 364 S.W.3d 817, 823 (Tex. 2012); see also In re Nalle

Plastics Family Limited Partnership, No. 11-0903, ___ S.W.3d ___, 2013 Tex. LEXIS 396

(Tex. May 17, 2013) (“While attorney’s fees for the prosecution or defense of a claim may

be compensatory in that they make a claimant whole, they are not, and have never been,

damages.”).

        Pavement Markings’s only damages claim constitutes attorney’s fees, which has

been expressly excluded as a sole ground of recovery under the DTPA. Thus, we

overrule this sub-issue.

        We overrule Pavement Markings’s cross-issue.

                                           VI.     CONCLUSION

        We reverse the judgment with respect to the breach of contract claims brought by

Brannnan Paving GP, LLC against Pavement Markings, Inc., and remand the breach of

contract claims to the trial court for further proceedings.7 We affirm: (1) the judgment


        7
          No determination or disposition is made hereby regarding the availability of attorney’s fees by any
party with respect to such breach of contract claims.

                                                    25
with respect to the negligence claims brought by Brannan Paving GP, LLC against San

Juan Insurance Agency, Inc., d/b/a Valley Insurance Providers (“VIP”) and Leicht General

Agency, and render that Brannan Paving GP, LLC take nothing by its negligence claims;

and (2) the judgment with respect to the DTPA claims brought by Pavement Markings,

Inc. against San Juan Insurance Agency, Inc., d/b/a Valley Insurance Providers, and

render that Pavement Markings Inc. take nothing by its DTPA claims.8




                                                       GREGORY T. PERKES
                                                       Justice

Delivered and filed the
25th day of July, 2013.




       8
          No determination or disposition is made regarding any other claim or cause of action that was
brought by Pavement Markings, Inc. against VIP. Pavement Markings, Inc. did not assert any claim or
cause of action against LGA in the trial court.
                                                  26
