                                                                                        ACCEPTED
                                                                                    04-15-00096-CV
                                                                        FOURTH COURT OF APPEALS
                                                                             SAN ANTONIO, TEXAS
                                                                               9/10/2015 5:22:20 PM
                                                                                     KEITH HOTTLE
                                                                                             CLERK

                         NO. 04-15-00096-CV
   ______________________________________________________
                                                                  FILED IN
             IN THE FOURTH COURT OF APPEALS 4th COURT OF APPEALS
                    SAN ANTONIO, TEXAS          SAN ANTONIO, TEXAS
                                               9/10/2015 5:22:20 PM
   ______________________________________________________
                                                             KEITH E. HOTTLE
                                                                  Clerk
                     ALS 88 DESIGN BUILD, LLC,

                                                     Appellant,

                                   V.


                       MOAB CONSTRUCTION,

                                           Appellee.
 __________________________________________________________

  On Appeal from the 407th Judicial District Court of Bexar County, Texas
                    Trial Court No. 2014-CI-03033
               Honorable Gloria Saldana, Judge Presiding
___________________________________________________________

                     APPELLEE’S BRIEF
____________________________________________________________

                                        Respectfully submitted,

                                        Thomas C. Hall
                                        THOMAS C. HALL, P.C.
                                        115 E. Travis Street, Suite 700
                                        San Antonio, TX 78205
                                        State Bar No. 08774550
                                        Email - hall@tomhall-lawyer.com
                                        Telephone - (210)222-2000
                                        Facsimile - (210)222-1156
                                        ATTORNEYS FOR APPELLEE


                  ORAL ARGUMENT REQUESTED

                                    1
                IDENTITY OF PARTIES AND COUNSEL


1.   Moab Construction Company / Melissa Madsen (Owner)
     PLAINTIFF / APPELLEE

     Tom Hall
     115 E. Travis Street, Ste. 700
     San Antonio, TX 78205
     COUNSEL FOR PLAINTIFF / APPELLANT


2.   ALS88 Design Build, LLC / Annastacia Sequoya (Owner)
     DEFENDANT / APPELLANT

     Regina Bacon Criswell
     Carriage Place
     7803 Bent Briar
     San Antonio, TX 78250
     COUNSEL FOR DEFENDANT / APPELLANT




                                     2
                           TABLE OF CONTENTS

                                                               Page

IDENTITY OF PARTIES AND COUNSEL                                2

INDEX OF AUTHORITIES                                           4

REQUEST FOR ORAL ARGUMENT                                      5

STATEMENT OF THE CASE                                          6

STATEMENT OF FACTS                                             6

ISSUE PRESENTED                                                6

SUMMARY OF THE ARGUMENT                                        8

    ISSUE 1: The trial court did not err in denying ALS 88's
    Motion for Judgment N.O.V. because the economic loss
    doctrine does not foreclose MOAB’s negligence claim.       9

    ISSUE 2: The trial court did not err in denying ALS 88's
    Motion for Directed Verdict on the issue of negligence.    10

    ISSUE 3: The trial court did not err in denying ALS 88's
    Motion for Directed Verdict on the issue of damages.       14

    ISSUE 4: The trial court did not err in admitting the
    exhibits in question, and excluding the testimony of
     Cullen Patrick Coltrane.                                  15

ARGUMENT                                                       9

PRAYER                                                         19

CERTIFICATE OF SERVICE                                         19

CERTIFICATE OF COMPLIANCE                                      20
                                             3
                             INDEX OF AUTHORITIES

Cases                                                               Page

Case Corp. v. Hi Class Bus. Sys. of Am., Inc., 184 SW3d 760, 782
(Tex. App. 2005, affd in part rev’d in part)                        17

Guevara v. Ferrer, 247 SW3d 662 (Tex. 2007)                         10

Harkins v. Crews, 907 SW2d 51 (Tex. App. - San Antonio, 1995,
        writ denied)                                                15

L/STV, A Joint Venture of Lockwood, Andrews & Newman, Inc.
    and STV Incorporated v. Martin K. Eby construction Company,
    Inc., 435 SW3d 234 (Tex. 2014)                                  9

Ledesma v. Texas Employers’ Insurance Association, 795 SW2d 337
        (Tex. App. - Beau., 1990, no writ)                          18

McGowan v. State, 375 SW3d 585 (Tex. App. - Houston [14th],
        2012, Pet. Den’d)                                           16

Moore v. Memorial Hermann Hospital System, Inc., 140 SW3d 870
        (Tex. App. - Hou. [14th], 2004, no writ)                    17-18

PNP Petroleum I, LP, PNP Management, Inc. v. Taylor, 438 SW3d
        723 (Tex. App. - San Antonio, 2014, rev. den’d)             15-16

Settlement Funding, LLC v. RSL Funding, LLC, 3 F. Supp. 3d 590
        (DC-Houston, 2014)                                          17

Sharyland Water Supply Corporation v. City of Alton, 354 SW3d 407
        (Tex. 2011)                                                 10

Statutes and Other Authorities                                      Page

Tex. Civ. Prac. & Rem. Code, §150.001-.003                          9

Tex. Civ. Prac. & Rem. Code §150.002(e)                             6

TRCP, Rule 193.6(a)                                                 17
                                               4
                      REQUEST FOR ORAL ARGUMENT


    Pursuant to Texas Rule of Appellate Procedure 75, Appellee requests oral argument
in this case because the nature of the relationship between the Plaintiff and Defendant
is somewhat unusual and the facts are complex.




                                          5
                          STATEMENT OF THE CASE

      Appellee generally agrees with the Statement of the Case by Appellant, but would

disagree that MOAB terminated the services of ALS 88 for its own convenience.

Appellee also disagrees with the statement that after the termination of ALS 88, that

MOAB was unable to complete the project through no fault of ALS 88. In addition,

MOAB disputes that it failed to file an Affidavit in accordance with Tex. Civ. Prac. &

Rem. Code §150.002(e).

                              ISSUES PRESENTED

ISSUE 1:     The trial court did not err in denying ALS 88's Motion for Judgment
             N.O.V. because the economic loss doctrine does not foreclose MOAB’s
             negligence claim.

ISSUE 2:     The trial court did not err in denying ALS 88's Motion for Directed Verdict
             on the issue of negligence.

ISSUE 3:     The trial court did not err in denying ALS 88's Motion for Directed Verdict
             on the issue of damages.

ISSUE 4:     The trial court did not err in admitting the exhibits in question, and
             excluding the testimony of Cullen Patrick Coltrane.

                            STATEMENT OF FACTS

      MOAB was awarded a contract to construct a new administration building for the

Internation Boundry and Water Commission near Zapata. MOAB hired ALS 88 as the

architect on the project. MOAB sued ALS 88 alleging negligence in the completion of


                                           6
the project that MOAB hired ALS 88 to do. One of the biggest complaints against ALS

88 was the fact that ALS 88 continually went around MOAB, the general contractor

from the contract in question, and dealt and communicated with the owner of the

project directly. (RR vol. 4, page 55-59) One of the major issues was that ALS 88's 75%

design product was sent directly to the owner, and MOAB was not even aware of this

fact. (RR vol. 4, page 59) Among other problems with the 75% design drawings is that

the design sponsored by ALS88 cost two times what the budget for the project was. (RR

vol. 4, page 62) This created expectations on the part of the owner that the building

that they were going to receive was consistent with those design drawings. (RR vol. 4,

page 63) As a result of those expectations, dissatisfaction resulted on the part of the

owner, which continued. (RR vol. 4, page 63-4) MOAB disputes the allegations (Brief

p. 4) that ALS 88 negated each allegation by competent evidence. MOAB did identify

many instances in which ALS 88 failed to respond appropriately to inquiries and requests

for revisions in the design. (RR - vol. 4, pages 67-75). Melissa Madsen, president of

MOAB, testified that the 75% design drawings were not revised in order to conform to

design comments made by the owner. (RR vol. 4, page 67) Exhibit 19 was introduced

into evidence, which documented that ALS 88 had not responded to the list of

comments and questions from the owner. (RR vol. 4, page 67-8) In response to requests

that the comments be responded to, ALS 88 indicated that it would be filing a claim for


                                           7
the money owed. (RR vol. 4, page 69) Melissa Madsen testified that it was known by all

involved in the project, that the 75% design comments had never been addressed. (RR

vol. 4, page 71) This is an ongoing dialogue between MOAB and ALS 88 to attempt to

get ALS 88 to revise the 75% design drawings to incorporate the comments and

questions raised by the owner. (RR vol. 4, page 74) Melissa Madsen testified that the

75% revised drawings were never submitted and that ALS 88 went to 90% drawings

without the revisions. (RR vol. 4, page 75) The 90% design drawings were rejected by

the owner, because ALS 88 Design refused to incorporate the comments. (RR vol. 4,

page 76) The first design comment made by the owner was that the owner would be

the copyright owner of all aspects of the project, including ALS 88 autoCAD for the

project. As is shown below, ALS 88 refused to turn over the autoCAD drawing to the

owner. (RR vol. 5, page 154) In addition, Melissa Madsen detailed many of the various

ways in which the design drawings done by ALS 88 were flawed. (RR vol. 5, page 172-3)

                       SUMMARY OF THE ARGUMENT

      The economic loss doctrine does not preclude recovery in negligence when the

basis of the lawsuit is professional negligence. There was ample evidence of what ALS

88's obligations were under the contract with MOAB, and ample evidence that ALS 88

did not comply with those obligations. MOAB sponsored testimony that the actions of

ALS 88 resulted in delays of the project, and ultimately MOAB being terminated from


                                          8
the project, and ample evidence of the damages resulting therefrom. ALS 88 did not

even come close to negating the acts of negligence claim by MOAB. There is no

evidence that the trial court’s ruling on exhibits and testimony caused the rendition of

an improper verdict.

                                      ARGUMENT

       ISSUE 1:      The trial court did not err in denying ALS 88's Motion
                     for Judgment N.O.V. because the economic loss
                     doctrine does not foreclose MOAB’s negligence claim.

       Appellant relies upon L/STV, A Joint Venture of Lockwood, Andrews & Newman,

Inc. and STV Incorporated v. Martin K. Eby construction Company, Inc., 435 SW3d 234

(Tex. 2014) for the proposition that the economic loss doctrine precludes recovery of

damages in this case. That is clearly not true. In discussing the economic loss rule, the

Supreme Court notes that Texas courts have applied the rule to actions for negligence

performed on the services but that, “Professional malpractice cases are an exception.”

at 243-4 It discusses malpractice cases against lawyers, and notes that, “These factors

also support negligent actions against other professionals.” at 244, citing footnote 42,

which footnote cites the Tex. Civ. Prac. & Rem. Code, §150.001-.003 and mentions

architects expressly. It also notes that whether and how to apply the economic loss rule

does not lend itself to easy answers or broad pronouncements, but rather depends on

the rationales in a particular situation. At 245-6 It is interesting to note that one of the


                                             9
rationales in question is whether or not the architect contracts directly with the owner

or the general contractor. As in here, the contract in question was between the architect

and the general contractor. (Exhibit 4, RR vol. 4, page 27) The analysis by the Court is

grounded in the different principals that apply to negligence law and contract law, and,

in this case, since the parties contracted at arms length, there is no basis upon which to

apply the economic loss rule.

       The Appellant also cites Sharyland Water Supply Corporation v. City of Alton, 354

SW3d 407 (Tex. 2011). In that case, the City sued the Defendant for breach of contract

alleging that the sewer system installed by the Defendant was negligently installed. The

Court of Appeals had ruled that the economic loss rule applied and barred the claim in

question. In holding that the economic loss rule did not preclude recovery in this case,

the Supreme Court stated that the economic loss rule did not bar recovery in that case

and notes that, “The operation of the economic loss rule is not well mapped, and

whether there is a ‘rule’ at all is a subject of contention.” at 419

       ISSUE 2:      The trial court did not err in denying ALS 88's Motion
                     for Directed Verdict on the issue of negligence.

       Appellee would point out that the actions of the Defendant, a professional

architect, were clearly within the rule that a lay person could determine that the actions

were not within the standard of care. Guevara v. Ferrer, 247 SW3d 662 (Tex. 2007)

Even if expert testimony was necessary, there was such testimony in this case. The

                                             10
primary allegations against the Defendant in this case are that the Defendant, on an

ongoing basis, refused to deal directly with the contractor, but rather went around the

contractor and dealt directly with the owner. The Defendant even admitted that she did

not follow the directive from the owner about no direct communication with the owner.

(RR vol. 5, page 51) In addition, a significant complaint was that the Defendant refused

to incorporate design changes requested by the owner into the architectural designs. The

conduct of the Defendant in this case is so clearly outside the realm of reasonableness,

that any lay person could determine that the conduct in question was not what a

reasonably prudent architect would do. There was ample testimony of the fact that the

owner and the general contractor have control over the quality of the work that is done

by the architect in a design/build case like this. (RR vol. 4, page 53) The Defendant

herself admitted that she was contractually obligated and also obligated by custom in the

industry to respond to MOAB’s comments and to the owner’s comments. (RR vol. 6,

page 60) The Defendant admitted she did not obey the directive. (RR vol 6, page 51)

As set forth, infra, the Defendant repeatedly refused to incorporate the owner’s design

review comments into the architectural design. When asked directly if she refused to

make any changes in the 75% design drawings in response to the comments, the

Defendant said:



                                           11
      ANSWER:             All I – I’m not going to answer that. I don’t think it’s
                          fair. This was sent to me before even the submittal
                          was done, the 90 percent was done, and we don’t have
                          those documents to check, so I can’t answer that. And
                          I was getting these daily from him. Even Melissa said
                          he was antagonistic. And I’m like trying to be as nice
                          as I can, but when I’m being bothered in the middle of
                          trying to get some work done, he’s changing the
                          roofing on me, and we still have no budget, and I pull
                          out a set of drawings and send it to him and then he
                          turns around and does this, it wasn’t even part of the
                          – in other words, he was antagonistic, trying to fight.
                          And I have an e-mail I sent to Melissa, one of my
                          engineers almost got into a fist fight with him at one
                          of the meetings.

      QUESTION:           So are you –

      ANSWER:             So I don’t – I can’t – I’m not going to comment on
                          this at all because it is what it is.

      QUESTION:           You’re not going to answer my question?

      ANSWER:             No. (RR vol. 6, page 71)

In addition, Exhibit 6 was entered into evidence, which is an email from the owner

containing the design comments on the architect’s design, which instructs the Defendant

to respond directly to MOAB with the responses. (RR vol. 4, page 64) In fact, the

Defendant took the position that the 75% design drawings were complete when they

were sent in, even though it was known that the 75% design comments by the owner had

never been addressed. (RR vol. 6, page 71)



                                          12
      In addition, the testimony of Melissa Madsen quoted in the Brief of the Appellant

at page 11 indicates that Ms. Madsen was familiar with the way an architect produces

work and the design/build context, and that in her experience ALS 88 did not respond

to the design/build appropriately in this situation without objection.

                                   Proximate Cause

      There is ample evidence of proximate cause in this case. Exhibit 27 was

introduced into evidence, which is an email from MOAB to ALS 88 imploring the

Defendant to provide the revised 75% design drawings and advising her that the delays

caused by the Defendant resulted in the project being behind schedule, and they must

get caught up. Melissa Madsen also indicated that the actions of ALS made the project

unsalvageable. (RR vol. 5, page 8) The owner, at that point, took the position that they

were not going to tolerate any more delays. (RR vol. 4, page 75) Because of these delays

caused by the Defendant, the owner would not allow MOAB any further delays, and, as

a result of an extreme rain, the project was further delayed resulting in the termination

of MOAB. (RR vol. 4, page 81-2) In addition, there is some evidence of proximate

cause in the Defendant’s actions in refusing to turn over the CAD drawings. Exhibit 3

was admitted into evidence, which is a letter from ALS 88 Design indicating that Teresa

Scott of the Small Business Administration called her and said that the owner was going

to terminate the contract per default with MOAB because ALS 88 had not turned in the


                                           13
AutoCAD drawings with the 90% construction documents. (RR vol 5, page 166) ALS

88 still refused to turn the work over.

       The Defendant did not conclusively negate MOAB’s negligence claims. In this

regard, the Appellant argues that MOAB failed to identify a single design flaw. Nothing

could be further from the truth. The Plaintiff testified extensively about the design flaws

in the architect’s drawings. (RR vol. 5, page 172-3)

       Appellant also argues that the evidence conclusively establishes that Defendant

was not required to provide design documents and AutoCAD software as asserted by

the Plaintiff. (Brief p. 16) There is clearly evidence that ALS was obligated to provide

the CAD software because the owner demanded it. (RR vol. 5, page 153)

       ISSUE 3:      The trial court did not err in denying ALS 88's Motion
                     for Directed Verdict on the issue of damages.

       Appellant argues (Brief p. 17) that out of pocket damages are recoverable for a

party’s reliance on the subject contract. That is exactly what MOAB testified as to what

the damages in this case are. Ms. Madsen testified that MOAB was paid a total of

$329,383.05 for the job. MOAB’s cost in running this project through the time of

termination was $929,887.74. The difference is what MOAB was requesting in terms of

damages, which number is $600,504.69, which is what the jury awarded. (RR vol. 5, page

25) The jury was certainly free to determine that the loss on the project was a proximate

result of the Defendant’s conduct. Appellant also faults Plaintiff for failing to plead

                                            14
special damages, thereby waiving the right to recover them, citing Harkins v. Crews, 907

SW2d 51 (Tex. App. - San Antonio, 1995, writ denied). What that case deals with is the

trial court failing to assess stipulated damages due to a temporary estate administration.

The ruling of the Court is that the Appellees did not plead to recover the cost of the

temporary administrator, nor was such an issue put to the jury. At 61

                        Failure to Plead for Special Damages

      Appellant argues, without any real support, that the Plaintiff was not entitled to

recover special damages because of failure to plead same. Appellee would demonstrate

that Plaintiff clearly put Defendant on notice of the damages sought in paragraph 4 of

the Plaintiff’s Original Petition which alleges that, as a result of the actions of the

Defendant herein, the project in question was placed in jeopardy and such actions were

a proximate cause of damages to the Plaintiff in an amount in excess of the minimum

jurisdiction of the Court. The pleading in question was never the subject of any special

exceptions by the Defendant. (CR p. 2)

      ISSUE 4:      The trial court did not err in admitting the exhibits in
                    question, and excluding the testimony of Cullen Patrick
                    Coltrane.

      Initially, Appellee would demonstrate that the Appellant completely fails to even

attempt to allege that the rulings on the exhibits and testimony in question constitute

reversible error. As this Court has held previously in PNP Petroleum I, LP, PNP


                                           15
Management, Inc. v. Taylor, 438 SW3d 723 (Tex. App. - San Antonio, 2014, writ den’d),

errors in admission or exclusion of evidence are generally not reversible unless Appellant

can show the whole case turns on the complained of evidence. At 733 The objection to

Exhibit 5 was that it was not a business record because it’s an email from MOAB’s

employee. (RR vol. 2, page 28) Clearly, an employee of an entity can generate emails

that comply with the Business Records Act.

       The objection to Exhibit 5 is that it’s a document that the Plaintiff received from

the Defendant. (RR vol. 4, page 30) It is not at all clear what the objection is except that

it somehow does not comply with the Business Records Act.

       Likewise, Exhibit 6 is an email received from the Defendant. The argument

apparently is that a document received and generated by another party cannot be a

business record. This is clearly not the case.

                          Plaintiff’s Exhibit 12, 13, 22 and 25

       Appellant cites no authority for the argument in regard to Plaintiff’s Exhibit 12,

13, 22 and 25, and, therefore the same is waived.

       Exhibit 12 was an email received by Appellee from the owner of the business

concerning the project made the basis of the lawsuit. Emails are admissible under the

Business Records Act, McGowan v. State , 375 SW3d 585 (Tex. App. - Houston [14th],

2012, Pet. Den’d).


                                            16
                               Testimony of Appellee

      Appellant complains of the testimony of the owner as to what expectations they

had as far as the project was concerned. Statements of contracting parties have been

held to be exceptions to hearsay under state of mind. Settlement Funding, LLC v. RSL

Funding, LLC, 3 F. Supp. 3d 590 (DC-Houston, 2014) In addition, in Case Corp. v. Hi

Class Bus. Sys. of Am., Inc., 184 SW3d 760, 782 (Tex. App. 2005, affd in part rev’d in

part) the Court held that similar statements were admissible. HBS argued in the trial

court and on appeal that this exhibit was not offered for the truth of the statements

recounted, but rather to show the statements were made; it was a statement of operative

facts; and it met several exceptions to the hearsay rule, i.e., the exhibit is a business

record and the statements show existing state of mind, are present sense impressions,

and admissions of Case's agents.

                      Testimony of Cullon Patrick Coletrane

      It is undisputed that Mr. Coletrane was not identified in response to a Request for

Disclosure sent to the Defendant ALS 88. The argument is made that in designating

subcontractors of MOAB that was sufficient to allow the testimony and that he ws a

rebuttal witness and was not required to be identified on the issue of Ms. Madsen’s

testimony about cost loaded budgets. Because the witness was not properly identified,

under TRCP, Rule 193.6(a), the exclusion of the testimony is automatic. Moore v.


                                           17
Memorial Hermann Hospital System, Inc., 140 SW3d 870 (Tex. App. - Hou. [14th], 2004,

no writ) addressed a situation in which a trial court excluded testimony of a rebuttal

expert. In noting that the standard of review is abuse of discretion, and noting that the

burden is to establish that the ruling probably caused the rendition of an improper

Judgment, the Court affirmed the refusal to let the undesignated witness testify. In that

case the witness was a pharmacist, and the pharmacy itself was identified. Although

Appellant refers to Mr. Coletrane as a professional architect, in his proffer, Mr. Coletrane

testified that he was a landscape architect. (RR vol. 6, page 162)       Interestingly, Mr.

Coletrane was asked about the cost loaded budget, which was the area upon which

counsel argued that his testimony was admissible (RR vol. 6, page 155). He was asked

if, in the five design build projects that he worked on before, whether or not he was

provided with a cost loaded budget by the contractor early on in the project, and he said,

“No.” (RR vol. 6, page 163) In Ledesma v. Texas Employers’ Insurance Association, 795

SW2d 337 (Tex. App. - Beau., 1990, no writ), one of the parties attempted to call a

witness who had not been identified by name. The proponent of the testimony argued,

as Appellant does here, that the other party would not be surprised by the witness as the

name of the pharmacy had been included in some supplemental answers provided to the

party. The trial court refused to permit the testimony of the unidentified witness, and

the Court of Appeals ruled that that was not an abuse of discretion.


                                            18
       WHEREFORE, PREMISES CONSIDERED, Appellee prays that the opinion

of the trial court be in all things affirmed.

                                           Respectfully submitted,

                                           THOMAS C. HALL, P.C.


                                                     /s/ Thomas C. Hall
                                           By:       ___________________________
                                                     Thomas C. Hall
                                                     115 E. Travis Street
                                                     Suite 700
                                                     San Antonio, TX 78205
                                                     State Bar No. 08774550
                                                     Email - hall@tomhall-lawyer.com
                                                     Telephone - (210)222-2000
                                                     Facsimile - (210)222-1156
                                                     ATTORNEYS FOR APPELLEE




                             CERTIFICATE OF SERVICE

       I hereby certify that a true and correct copy of the foregoing was sent by Efile
Services (rbclaw@yahoo.com) and also by facsimile to the following, on this the 11th day
of September, 2015.

Regina Bacon Criswell
Criswell & Fisch
Carriage Place
7803 Bent Briar
San Antonio, TX 78250
Fax: 210-251-2071
                                                     /s/ Thomas C. Hall
                                                     ___________________________
                                                     THOMAS C. HALL

                                                19
                        CERTIFICATE OF COMPLIANCE

       I hereby certify that this Brief is in compliance with the rules governing the length
and font requirements for briefs prepared by electronic means. The Brief was prepared
using WordPerfect X6. According to the software used to prepare this brief, the total
word count, including footnotes, but not including those sections excluded by rule, is
3,184. The “Garamond” font is used in this brief, with 14 pt. font or greater for the body
of the brief, and 12 pt. font for any footnotes.



                                                 /s/ Thomas C. Hall
                                                 ___________________________
                                                 THOMAS C. HALL




                                            20
