RCIS Enterprises, LLC v. Houser Fabrication, LLC

In the
Court of Appeals
Sixth Appellate District of Texas at Texarkana

No. 06-23-00088-CV

RCIS ENTERPRISES, LLC, Appellant

V.

HOUSER FABRICATION, LLC, Appellee

On Appeal from the 336th District Court
Fannin County, Texas
Trial Court No. CV-21-45560

Before Stevens, C.J., van Cleef and Rambin, JJ.
Memorandum Opinion by Justice Rambin
MEMORANDUM OPINION

RCIS Enterprises, LLC, (RCIS) appeals a part of the trial court’s judgment entered

following a bench trial in which Houser Fabrication, LLC, (Houser) recovered breach of contract

damages in the amount of $78,491.10, prejudgment interest under the Texas Prompt Payment

Act, attorney fees, post-judgment interest, and costs.1 On appeal, RCIS contends that there is

legally insufficient evidence supporting the trial court’s findings of fact and conclusions of law

that (1) the parties entered into a legally enforceable contract, (2) the amount of damages

awarded to Houser, and (3) the award of prompt payment interest. RCIS also contends that the

trial court erred in awarding Houser attorney fees and that the amount of fees awarded was

excessive. RCIS further contends that the trial court erroneously released interpleaded funds to

Houser. We find that legally sufficient evidence supports the trial court’s findings and

conclusions that the parties entered into a legally enforceable contract. However, the evidence is

legally insufficient to support the amount of damages, in part, and the award of prompt payment

interest. We will remand this case for a new trial on attorney fees, a determination of

prejudgment interest, and the entry of a final judgment consistent with this opinion.

I. The Trial Court’s Finding of a Legally Enforceable Contract is Supported by
Legally Sufficient Evidence

A. Standard of Review

In a legal sufficiency challenge, we determine “whether the evidence at trial would

enable reasonable and fair-minded people to reach the verdict under review.” City of Keller v.

1
In the trial court’s judgment, RCIS recovered $10,478.37 and prejudgment interest on its counterclaim for damages
related to an unrelated contract (the Bellaire Project). That part of the judgment awarding damages to RCIS was not
appealed. The amount of Houser’s award was offset by RCIS’s award.
2
Wilson, 168 S.W.3d 802, 827 (Tex. 2005). For a bench trial, the trial court’s findings of fact “are

of the same force and dignity as a jury’s answers to jury questions.” .39 Acres v. State, 247

S.W.3d 384, 387 (Tex. App.—Texarkana 2008, pet. denied) (citing Anderson v. City of Seven

Points, 806 S.W.2d 791, 794 (Tex. 1991)). As a result, “[w]e review the findings of fact by the

same standards that are applied in reviewing the legal or factual sufficiency of the evidence

supporting a jury’s answer to a jury question.” Lambright v. Trahan, 322 S.W.3d 424, 430 (Tex.

App.—Texarkana 2010, pet denied) (citing .39 Acres, 247 S.W.3d at 387).

In determining legal sufficiency, “we credit favorable evidence if a reasonable fact-finder

could, and disregard contrary evidence unless a reasonable fact-finder could not.” Ramsay v.

Tex. Trading Co., 254 S.W.3d 620, 625 (Tex. App.—Texarkana 2008, pet. denied) (citing City of

Keller, 168 S.W.3d at 827). “[W]e consider the evidence in a light most favorable to the

challenged findings, indulging every reasonable inference that supports them, [but] we may not

disregard evidence that allows only one inference.” Id. (citing City of Keller, 168 S.W.3d at

822). Also, “we credit favorable evidence if a reasonable fact-finder could, and disregard

contrary evidence unless a reasonable fact-finder could not.” Id. (citing City of Keller, 168

S.W.3d at 827). Because the trial court is the trier of fact, it “is the sole judge of the credibility

of the witnesses and the weight to give their testimony.” Id. (citing City of Keller, 168 S.W.3d at

819).

“When determining whether legally sufficient evidence supports a jury finding, we must

consider evidence favorable to the finding if a reasonable factfinder could and disregard

evidence contrary to the finding unless a reasonable factfinder could not.” Albertsons, LLC v.

3
Mohammadi, 689 S.W.3d 313, 318 n.2 (Tex. 2024) (per curiam) (quoting 4Front Engineered

Sols., Inc. v. Rosales, 505 S.W.3d 905, 908 (Tex. 2016)). “The evidence is legally sufficient if

[there] is more than a scintilla of evidence on which a reasonable juror could find the fact to be

true.” Id. (alteration in original) (quoting 4Front Engineered Sols., Inc., 505 S.W.3d at 909).

“More than a scintilla of evidence exists when the evidence reaches a level enabling reasonable

and fair-minded people to differ in their conclusions.” Petrohawk Props., L.P. v. Jones, 455

S.W.3d 753, 770 (Tex. App.—Texarkana 2015, pet. dism’d) (citing Merrell Dow Pharms., Inc.

v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)). “Less than a scintilla of evidence exists when the

evidence is ‘so weak as to do no more than create a mere surmise or suspicion’ of a fact.” King

Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003) (quoting Kindred v. Con/Chem, Inc.,

650 S.W.2d 61, 63 (Tex. 1983)).

B. Applicable Law

“The requirements of written and oral contracts are the same and must be present for a

contract to be binding.” Lloyd Walterscheid & Walterscheid Farms, LLC v. Waltersheid, 557

S.W.3d 245, 258 (Tex. App.—Fort Worth 2018, no pet.) (citing Critchfield v. Smith, 151 S.W.3d

225, 233 (Tex. App.—Tyler 2004, pet. denied)). To form a binding contract there must be

“(1) an offer, (2) an acceptance in strict compliance with the terms of the offer, (3) a meeting of

the minds, (4) each party’s consent to the terms, and (5) execution and delivery of the contract

with the intent that it be mutual and binding.” KW Const. v. Stephens & Sons Concrete

Contractors, Inc., 165 S.W.3d 874, 883 (Tex. App.—Texarkana 2005, pet. denied) (citing

Buxani v. Nussbaum, 940 S.W.2d 350, 352 (Tex. App.—San Antonio 1997, no writ)).

4
“To be enforceable, a contract must address all of its essential and material terms with ‘a

reasonable degree of certainty and definiteness.’” Fischer v. CTMI, L.L.C., 479 S.W.3d 231, 237

(Tex. 2016) (quoting Pace Corp. v. Jackson, 284 S.W.2d 340, 345 (Tex. 1955)). At the least, a

contract “must . . . be sufficiently definite to confirm that both parties actually intended to be

contractually bound.” Id. (citing Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d

831, 846 (Tex. 2000)). Further, “the agreement’s terms must . . . be sufficiently definite to

‘enable a court to understand the parties’ obligations,’” id. (quoting Forth Worth Indep. Sch.

Dist., 22 S.W.3d at 846), “and to give ‘an appropriate remedy’ if they are breached,” id.

(RESTATEMENT (SECOND) OF CONTRACTS § 33(2) (1981) (footnote omitted) (citations omitted)).

However, only “those terms that are ‘material and essential’ to the parties’ agreement”

are required to “be definite and certain.” Id. (quoting Radford v. McNeny, 104 S.W.2d 472, 475

(Tex. 1937)). “[M]aterial and essential terms are those that parties would reasonably regard as

‘vitally important ingredient[s]’ of their bargain.” Id. (second alteration in original) (quoting

Neeley v. Bankers Tr. Co. of Tex., 757 F.2d 621, 628 (5th Cir. 1985)). Which terms are material

is “determined on a case-by-case basis.” Id. (quoting McCalla v. Baker’s Campground, Inc., 416

S.W.3d 416, 418 (Tex. 2013) (per curiam)).

The Texas Supreme Court has set forth several principles in analyzing whether a contract

is enforceable. See id. at 239–40. The following are those principles applicable to this case.

First, “because the law disfavors forfeitures, we will find terms to be sufficiently definite

whenever the language is reasonably susceptible to that interpretation.” Id. at 239. Concomitant

to this principle, “if the parties clearly intended to agree and a ‘reasonably certain basis for

5
granting a remedy’ exists, we will find the contract terms definite enough to provide that

remedy.” Id. (quoting RESTATEMENT (SECOND) OF CONTRACTS § 33 cmt. b). Further,

[w]hen “the actions of the parties . . . show conclusively that they have intended
to conclude a binding agreement, even though one or more terms are missing or
are left to be agreed upon[,] . . . courts endeavor, if possible, to attach a
sufficiently definite meaning to the bargain.”

Id. (second alteration in original) (quoting RESTATEMENT (SECOND) OF CONTRACTS § 33 cmt. a).

Second, “[p]art performance under an agreement may remove uncertainty and establish

that a contract enforceable as a bargain has been formed.” Id. at 240 (alteration in original)

(quoting RESTATEMENT (SECOND) OF CONTRACTS § 34(2)). Further, “the parties’ actions ‘in

reliance on an agreement may make a contractual remedy appropriate even though uncertainty is

not removed.’” Id. (quoting RESTATEMENT (SECOND) OF CONTRACTS § 34(3)). Thus, “[w]hen

the parties’ actions demonstrate that they intended to ‘conclude a binding agreement, even

though one or more terms . . . are left to be agreed upon . . . , courts endeavor, if possible, to

attach a sufficiently definite meaning to the bargain.’” Id. (quoting RESTATEMENT (SECOND) OF

CONTRACTS § 33(2) cmt. a). “The law favors finding agreements sufficiently definite for

enforcement, ‘particularly . . . where one of the parties has performed his part of the contract.’”

Id. (quoting Tanenbaum Textile Co. v. Sidran, 423 S.W.2d 635, 637 (Tex. App.—Dallas 1967,

writ ref’d n.r.e.)).

C. The Evidence at Trial Regarding the Contract

Garney Companies, Inc. (Garney) was the general contractor for the Lower Bois D’Arc

Creek Reservoir Program – Water Treatment Plant and Pump Station Project, Project Numbers

384 and 358 (the “Leonard Project”). In March 2020, Garney entered into a subcontract with
6
RCIS to perform steel-erection work for the Leonard Project. The original contract price was

$348,800.00 for RCIS’s scope of work.

Scott Houser (Scott), Houser’s owner, had known the owner of RCIS, Benjamin Castro,

since 2015. Scott testified that Houser had done five or six steel-erection projects for RCIS,

including the Leonard Project. According to Scott, in early October 2020, Castro called Scott

and said he had started the Leonard Project but might need Houser to finish it because Castro

was having trouble with his crew.2 On the morning of October 19, RCIS lost all of its workers

on the Leonard Project. Later that day, Castro began negotiations with Houser to finish the

structural steel work on the Leonard Project.3 Within the next few days, Castro provided Houser

with the steel-erection drawing submittals from HME, Inc. (HME),4 which detailed the steel-

2
Garney’s daily reports for the Leonard Project state that RCIS had two welders and one helper working on
October 1 thru October 5, 2020. The reports state that RCIS had one welder and one helper working on October 6
thru October 9. From October 13 thru October 16, the reports state that RCIS had one welder and four workers at
the worksite. Regarding RCIS, the report for Monday, October 19, states, “Lost all workers by 10am. Should have
more welders tomorrow. Working at East Chem deck.” Also, for RCIS, the reports from October 20 thru October
22, state, “Working at East Chem deck,” but do not indicate whether any welders or other workers were present.
The report for October 27, also states, “RCIS to have a full crew on Monday to erect East Chem canopies.”
3
Scott explained that there were four buildings in the Leonard Project called the north chemical, east chemical, west
chemical, and lime. He described the project as follows:

You had tilt wall buildings that are essentially concrete walls that are stood up by another
contractor. And inside of those buildings, you have what we call bar joists that basically make up
the roof structure for those enclosed buildings. And then on top of the bar joists, you get what we
call B decking, and it’s just a decking -- decking materials that go down. And then they’re not a
waterproof barrier. They then come back and lay the -- another contractor will come back and lay
the waterproof barrier on top of the decking that we install, as well as the galvanized canopies that
are outside that were connected to the concrete tilt wall buildings. Those needed to be installed as
well.

That was the -- the full scope of the project for Ben and [Scott].
4
HME was the manufacturer of all of the steel for the Leonard Project.

7
erection work for the Leonard Project.5 Castro never gave Houser a copy of RCIS’s contract

with Garney.

In determining the scope of work, Scott asked Castro, by text message, whether the

exterior wall panels were in Houser’s scope of work. Castro replied, “Nope. Steel only.” Scott

explained that he was referring to the fascia and panels attached to the canopies depicted on the

HME drawings and that the reason he asked was because a qualified person was required to

install them. He also explained that the panels were metal cladding that goes on the exterior of

the building and that they were “outside [the] normal structural steel scope.” A few minutes

after telling Scott that the scope of work was steel only, Castro sent Scott a text message stating,

“You have the construction drawings. That’s the metal packages.”

Based on the information Castro gave Scott, and his inspection of the project, Scott

offered to finish the steel-erection work for $180,000.00. He testified that he based his offer on

the square footage, the bid of his subcontractor, Steel Ruiz,6 and equipment and crane rentals.

Scott testified that by October 27, Houser and RCIS had come to an agreement that Houser

would complete the remaining steel-erection work for $180,000.00 and that Houser would cover

the cost of equipment and cranes. On November 3, Castro sent text messages to Scott stating,

5
Scott testified that initially he was not provided with the full set of drawings but that Castro explained to him the
scope of work on the north chemical building.
6
Houser subcontracted with Steel Ruiz to provide the labor for the steel-erection work. Scott testified that Steel Ruiz
gave him an initial offer “not to exceed” $117,000.00 and that its final price was $80,500.00.
8
“Keep it at $180k. You must provide allll [sic] equipment. And we will have a signed

contract[.][7] If a crane is needed, like you said, then provide it.”

On October 27, Steel Ruiz’s crew began working on the Leonard Project. By November

19, according to Scott, seventy-five percent of the work was done, and Houser sent its first pay

application to RCIS.8 Scott testified that before the pay application was sent, he confirmed with

Castro and Garney’s superintendent, Dana Savidge, that they agreed on the percentage. Steel

Ruiz worked on the Leonard Project through December 11. Scott explained that Steel Ruiz was

not able to complete a section of the west chemical building upper canopy and the lower canopy

because of manufacturer deficiencies, and a small canopy at the north chemical building because

it had been fabricated incorrectly. He testified that if RCIS had asked Houser to return to the

jobsite and finish the steel-erection work, it would have done so. On December 12, RCIS paid

Houser $65,000.00 on its first pay application.

Houser sent its second pay application to RCIS on December 18, for work performed on

the Leonard Project from November 19 to December 17. At that time, Houser estimated that it

had completed ninety-five percent of the steel-erection work. The total amount requested was

$102,675.00, which included both the $56,500.00 not paid on the first pay application and a

$5,500.00 change order. Scott also testified that on November 18, RCIS invoiced Garney a net

7
Scott testified that he normally required a signed contract before starting work. On the Leonard Project, although
Castro said they would have a written contract, he never sent one to Scott despite Scott’s repeated requests to send
him one. Scott testified that when he asked Castro for a contract, Castro “either sidestepped” the issue, said he
would have it in a few days, or said he was out of the office. Text messages between Scott and Castro sent in
October, November, and December 2020, support Scott’s testimony.
8
The first pay application requested payment of $121,500.00, which was seventy-five percent of $180,000.00 less
ten percent retainage (($180,000.00 x 75%) less $13,500.00 retainage).
9
amount of $132,739.35 and that on December 1, RCIS invoiced Garney a net amount of

$61,750.00. He noted that those amounts were very similar to the amounts Houser had requested

from RCIS in its two pay applications.

Castro acknowledged that RCIS sent a pay application to Garney for work performed

through October 15 and represented that thirty-four percent of its steel-erection work was

complete. He also acknowledged that RCIS sent a pay application to Garney for work through

November 15 and represented that seventy-four percent of the steel-erection work was complete.

For work done December 1 through December 15, he acknowledged that RCIS represented on its

pay application that ninety-two percent of the steel-erection work was complete.

Castro admitted that he did not provide Houser a copy of RCIS’s contract with Garney

before Houser began working on the Leonard Project. However, he maintained that grout work

under the steel columns, the exterior horizontal ribbed metal wall panels, and supervision of

Houser’s crew9 were included in Houser’s scope of work because those items were included in

RCIS’s scope of work under its contract with Garney. He also testified that Scott’s inquiry

regarding the exterior wall panels was referring to the tilt wall concrete panels.

D. Analysis

In its first issue, RCIS contends that there is no evidence of a meeting of the minds by the

parties on the essential terms of the contract. Specifically, RCIS contends that there is no

9
At trial, Castro testified that he supervised Houser’s crew in November and December because Houser did not. The
only text message that he relied on in support of that contention was a text message he sent to Houser on February
12, 2021, stating, “You didn’t have 1 guy from your company to foreman like you said you were going too [sic]. I
was there every week.” Rafael Ruiz, who worked on the Leonard Project for Steel Ruiz, testified that Castro was at
the worksite “almost every day.” However, he testified that Castro only observed who was working and never
instructed the Steel Ruiz crew about how to do their work or where they should work.
10
evidence that there was a meeting of the minds on the scope of Houser’s work. RCIS points to

portions of Scott’s testimony it contends establishes the terms of Houser’s scope of work were

not sufficiently defined. It also relies on Castro’s testimony that Houser’s scope of work was

broader than the scope of work identified by Scott.

“Whether there was a meeting of the minds is based on an objective standard of what the

parties said and did rather than their subjective state of mind.” Ho v. Benco Mach., LLC, No. 06-

20-00061-CV, 2020 WL 7268586, at *3 (Tex. App.—Texarkana Dec. 11, 2020, no pet.) (mem.

op.) (quoting Moe’s Home Collection, Inc. v. Davis St. Mercantile, LLC, No. 05-19-00925-CV,

2020 WL 3637623, at *2 (Tex. App.—Dallas July 6, 2020, no pet.) (mem. op.)). Further,

“evidence of a party’s subjective misunderstanding has no bearing on the definiteness of the

agreement, which is an objective inquiry.” Id. at *4 (quoting Moe’s Home Collection, Inc., 2020

WL 3637623, at *4).

Initially, we note that at trial, although Castro disagreed about the scope of work Houser

was obligated to perform, he did not deny that RCIS and Houser had an agreement that Houser

would finish the steel-erection work on the Leonard Project. To determine whether there was

more than a scintilla of evidence that the parties had a meeting of the minds regarding Houser’s

scope of work, we look not only to the parties’ testimony, but to the other relevant evidence

introduced at trial: the text messages between the parties, HME’s steel-erection drawings, and

the parties’ conduct and experience.

Both parties were experienced in steel-erection work and had worked on other steel-

erection projects together. The evidence shows that during their discussions of the Leonard

11
Project, Castro sent Scott HME’s steel-erection drawings, which showed the details of the steel

components and the erection of the buildings. When Scott had questions regarding the scope of

work and dimensions of the buildings, Castro replied, “You have the construction drawings.

That’s the metal packages,” and instructed Scott to “[g]o off the construction drawings.” That is

evidence that both parties understood that the scope of Houser’s work would be determined by

the construction drawings that Castro supplied to Scott.10 The only exception to the work shown

on the drawings was the exterior wall panels that were to be connected to the canopies, about

which Scott specifically asked, and Castro replied that they were not in RCIS’s scope of work.11

Both parties agreed that Houser would also pay for all equipment and any cranes used by Houser

on the project, as evidenced by their text messages. Finally, the evidence shows that Houser and

Steel Ruiz performed all of the steel-erection work they could from October 27 through

December 11, without any complaint from RCIS that Houser was not complying with the scope

of work under the agreement.

On this record, we find that more than a scintilla of evidence supports the trial court’s

implied finding that the parties had a meeting of the minds regarding the scope of Houser’s work

10
The HME construction drawings state:

FOR FIELD USE
FINAL PLANS
NOTE TO CONTRACTOR AND ERECTOR
RESPONSIBILITY FOR FIELD MODIFICATIONS OF
ADDITIONAL MATERIAL WILL NOT BE
ACCEPTED UNLESS PREVIOUSLY AUTHORIZED
BY HME, INC.
11
Although Castro testified that Scott’s inquiry about exterior wall panels was referring to the tilt wall concrete
panels, the trial court, as fact-finder, “is the sole judge of the credibility of the witnesses and the weight to give their
testimony.” Ramsay, 254 S.W.3d at 625. As a result, it could have given more weight to Houser’s testimony that
the reference was to the metal panels that were to be connected to the canopies.
12
on the Leonard Project. As a result, legally sufficient evidence supports the trial court’s implied

finding. We overrule RCIS’s first issue.

II. Legally Insufficient Evidence Supports the Trial Court’s Damages Findings, in Part

RCIS’s second issue challenges the legal sufficiency of the evidence supporting the trial

court’s findings on damages and RCIS’s affirmative defense of waiver and release. RCIS argues

that the evidence conclusively establishes that Houser waived and released any claim for unpaid

work covered under its first pay application, except the unpaid retainage. It also argues that no

evidence supports the trial court’s damages findings because Houser presented no evidence of

the reasonable cost to complete the work it contracted to perform, to remedy the alleged defects

in its work, or of equipment and crane rental and fuel charges. We will address these arguments

separately.

A. Conclusive Evidence Established Waiver and Release of Unpaid Balance of
the First Pay Application

1. Evidence Relating to Waiver and Release

As discussed above, on November 19, Houser sent its first pay application to RCIS. In

the application, Houser claimed that seventy-five percent of the steel-erection work was

complete, and billed RCIS seventy-five percent of $180,000.00 ($135,000.00), less ten percent

retainage ($13,500.00), for a net of $121,500.00. On December 12, RCIS paid Houser a progress

payment of $65,000.00. In return, on behalf of Houser, Scott executed an “UNCONDITIONAL

WAIVER AND RELEASE ON PROGRESS PAYMENT” (the Release) that provided, in

relevant part:

Project Leonard WTP
13
Job No. __________________

The signer of this document has been paid and has received a progress
payment in the sumof [sic] $65,000.00 for all labor, services, equipment, or
materials furnished to the property or to RCIS Enterprises, LLC. on the property
of North Texas Municipal (owner) located at 361 County Rd. 4965___
(location) to the following extent: Steel Erecting/Welding______ (job
description). The signer therefore waives and releases any mechanic’s lien right,
any right arising froma [sic] payment bond that complies with a state or federal
statute, any common law payment bond right, any claim for payment, and any
rights under any similar ordinance, rule, or statute related to claim orpayment [sic]
rights for persons in the signer’s position that the signer has on the above
referenced project to the following extent:

This release covers a progress payment for all labor, services, equipment,
or materials furnished to the property or to RCIS Enterprises, LLC.. [sic] as
indicated in the attached statement(s) or progress payment request(s), except for
unpaid retention, pending modifications and changes, or other items furnished.

....

NOTICE: THIS DOCUMENT WAIVES RIGHTS UNCONDITIONALLY
AND STATES THAT YOU HAVE BEEN PAID FOR GIVING UP THOSE
RIGHTS. THIS DOCUMENT IS ENFORCEABLE AGAINST YOU IF
YOU SIGN IT, EVEN IF YOU HAVE NOT BEEN PAID. IF YOU HAVE
NOT BEEN PAID, USE A CONDITIONAL RELEASE FORM.

Date 12-11-2020
Houser Fabrication, LLC (Company name) By
[/s/Scott Houser] (Signature)
Owner (Title)

The undisputed evidence at trial established that the $65,000.00 progress payment was toward

Houser’s first pay application and that it was the only monies Houser received from RCIS on the

Leonard Project.

On December 18, Houser sent its second pay application to RCIS for work performed on

the project from November 19 to December 17. That pay application represented that ninety-

14
five percent of the steel-erection work was completed, billed RCIS ninety-five percent of

$180,000.00 ($171,000.00), plus $5,500.00 for a change order, less five percent retainage

($8,825.00), and less the previous payment ($65,000.00), for a net amount of $102,675.00. In

other words, the net amount included $56,500.00 that was withheld from the first pay

application.

In its original answer and original counterclaim, RCIS asserted the affirmative defenses

of waiver and release.

2. Findings of Fact and Conclusions of Law Relevant to Waiver and
Release

The trial court entered the following findings of fact relevant to the waiver and release

issue:

22. On December 11, 2020, the value of Houser’s unpaid work, less offsets
for equipment, was $78,491.10.
....
30. The total amount of the work to be performed by Houser on the Leonard
job was $180,000.00 less work not performed by Houser ($18,414.48) and
a credit for equipment ($18,094.42). $180,000.00-$18,414.48-$18,094.42
= $143,491.10.
....
32. On Nov[ember] 19, 2020[,] Houser emailed its first payment application
and certificate for payment to RCIS, therein billing for unpaid work in the
amount of $121,500.
....
35. On December 11, 2020, RCIS paid Houser $65,000.00, leaving a balance
owed of $56,500.00.
36. RCIS never issued any further payments to Houser on the Leonard
[P]roject.
37. Houser’s principal damages are calculated as the net amount for which it
billed (after deductions for work not performed and an equipment credit)
of $143,491.10 - $65,000.00 paid by RCIS = Principal Damages of
$78,491.10.

15
38. On December 17, 2020, Houser issued an invoice to RCIS in the amount
$102,675.00, which represent[ed] a carry-forward amount owed from the
previous invoice of $56,500.00, plus new work for $46,175.00.
....
42. Prompt pay interest of 18% on $56,500.00 from 12/21/2020 through
8/21/2023 (973 days at $27.86/day) = $27,107.78.
....
44. Houser has been damaged for RCIS’s failure to pay the net sum due to
Houser of $78,491.10.
....
65. Houser did not release any claims or defenses in this lawsuit.
66. Houser’s application of the payment it received from RCIS did not
prejudice either RCIS, or Houser’s ability to assert the claims and defenses
it brought in this lawsuit.
....
70. Houser did not act in a manner as to intentionally surrender any known
right, claim, cause of action, or defense regarding the Leonard Project.
71. Houser did not engage in intentional conduct inconsistent with claiming
any right or asserting any claim, cause of action, or defense regarding the
Leonard Project.

Relevant to the waiver and release issue, the trial court entered the following conclusions of law:

9. Houser substantially performed its work at the project.
10. Because Houser substantially performed its work, it is entitled to full
payment under the Leonard [c]ontract less the value of its unperformed
work and rental equipment provided by RCIS.
....
15. RCIS’s affirmative defenses asserted against Houser are without merit and
should be denied in their entirety.

3. Standard of Review and Applicable Law

“When a party attacks the legal sufficiency of the evidence supporting an adverse finding

on an issue on which [it] has the burden of proof, [it] must demonstrate on appeal that the

evidence establishes, as a matter of law, all vital facts in support of the issue.” Pettit v. Tabor,

No. 06-19-00002-CV, 2020 WL 216025, at *8 (Tex. App.—Texarkana Jan. 15, 2020, pet.

denied) (mem. op.) (quoting Dow Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per
16
curiam)). “To prevail on appeal, the party must first show that no evidence supported the trial

court’s finding and then, if there was none, that the evidence conclusively established the finding

urged by the party.” Id. (citing PlainsCapital Bank v. Martin, 459 S.W.3d 550, 557 (Tex.

2015)). “To determine whether no evidence supported the finding, we ‘first examine the record

for evidence that supports the finding, while ignoring all evidence to the contrary.’” Id. (quoting

Dow Chem. Co., 46 S.W.3d at 241). “If no evidence supports the finding, then we ‘examine the

entire record to determine if the contrary proposition is established as a matter of law.’” Id.

(quoting Dow Chem. Co., 46 S.W.3d at 241).

At trial, it was undisputed that Scott signed the Release on behalf of Houser in exchange

for the $65,000.00 payment on its first pay application. “A release is a contract, so we construe

it as such.” Finley Res., Inc. v. Headington Royalty, Inc., 672 S.W.3d 332, 339 (Tex. 2023).

“The construction of an unambiguous contract is a question of law which we review de novo.”

Petrohawk Props., L.P., 455 S.W.3d at 765 (citing Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex.

2011)). “When the contract is unambiguous, ‘the instrument alone will be deemed to express the

intention of the parties for it is objective, not subjective, intent that controls. Generally[,] the

parties to an instrument intend every clause to have some effect and[,] in some measure[,] to

evidence their agreement.’” Id. (quoting City of Pinehurst v. Spooner Addition Water Co., 432

S.W.2d 515, 518 (Tex. 1968)). “[A]ll the usual ‘rules of construction’ apply, like the familiar

presumptions favoring consistent usage, disfavoring surplusage, and using the plain meaning of

undefined terms.” Mosaic Baybrook One, L.P. v. Simien, 674 S.W.3d 234, 257 (Tex. 2023)

(alteration in original) (quoting Perthuis v. Baylor Miraca Genetics Labs., LLC, 645 S.W.3d 228,

17
236 (Tex. 2022)). “[W]e examine the entire [Release] and attempt to harmonize all its parts,

even if different parts appear contradictory or inconsistent.” Id. (first alteration in original)

(quoting Endeavor Energy Res., L.P. v. Energen Res. Corp., 615 S.W.3d 144, 148 (Tex. 2020)).

“Further, when construing a contract, a court is ‘to take the wording of the instrument, consider

the same in the light of the surrounding circumstances, and apply the pertinent rules of

construction thereto and thus settle the meaning of the contract.’” Petrohawk Props., L.P., 455

S.W.3d at 765 (quoting City of Pinehurst, 432 S.W.2d at 519). Nevertheless, evidence of the

surrounding circumstances “may only be used to aid the understanding of an unambiguous

contract’s language, not change it or ‘create ambiguity.’” URI, Inc. v. Kleberg Cnty., 543

S.W.3d 755, 757 (Tex. 2018) (citing Cmty. Health Sys. Pro. Servs. Corp. v. Hansen, 525 S.W.3d

671, 688 (Tex. 2017)).

“[T]o effectively release a claim in Texas, the releasing instrument must ‘mention’ the

claim to be released. Even if the claims exist when the release is executed, any claims not

clearly within the subject matter of the release are not discharged.” Victoria Bank & Tr. Co. v.

Brady¸ 811 S.W.2d 931, 938 (Tex. 1991) (quoting Vela v. Pennzoil Producing Co., 723 S.W.2d

199, 204 (Tex. App.—San Antonio 1986, writ ref’d n.r.e.)).

4. Analysis

At trial, Scott did not dispute that he signed the Release on behalf of Houser in exchange

for the $65,000.00 payment on its first pay application. Rather, the only evidence was that he

did so. As a result, unless the Release was ineffective to release any claims by Houser, there is

18
no evidence to support the trial court’s finding that Houser did not release any claims or

defenses.

As the Texas Supreme Court has noted, “[t]he purpose of progress payment releases is to

ensure that the contractor will not accept payment for work performed and then insist on

additional payment for that work.” Zachry Constr. Corp. v. Port of Houston Auth. of Harris

Cnty., 449 S.W.3d 98, 119 (Tex. 2014). A release “operates to extinguish the claim or cause of

action as effectively as would a prior judgment between the parties and is an absolute bar to any

right of action on the released matter.” Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d

505, 508 (Tex. 1993) (citing Hart v. Traders & Gen. Ins. Co., 189 S.W.2d 493, 494 (Tex. 1945)).

As relates to Houser’s claims against RCIS, under the plain language of the Release, in

exchange for a $65,000.00 “progress payment for all labor, services, equipment, or materials” it

furnished to RCIS on the Leonard Project related to “Steel Erecting/Welding,” Houser waived

and released any claim for payment that it had on the Leonard Project to the extent the claim was

“for labor, services, equipment, or materials furnished to the property or to RCIS Enterprises,

LLC.. [sic] as indicated in the attached statement(s) or progress payment request(s),” except for

unpaid retention.

RCIS argues that the Release extinguished Houser’s actions against it for breach of

contract and quantum meruit insofar as those actions were for unpaid labor, services, equipment,

or materials covered by Houser’s first pay application, except for unpaid retainage. In its brief,

Houser only argues that the Release “makes it clear that any release therein is limited in scope to

work already performed, as indicated in any attachment.” Left unaddressed by both parties are

19
the fact that there was no document attached to the Release and how the lack of an attachment

affects the scope of the Release.

Nevertheless, the undisputed evidence in this case establishes that at the time the Release

was executed, Houser had only submitted its first pay application. It is also undisputed that the

$65,000.00 payment was on Houser’s first pay application and that it was the only payment

Houser received from RCIS related to the Leonard Project.

Considering the wording of the Release, “in the light of the[se] surrounding

circumstances,” we conclude, as a matter of law, that under the Release, Houser waived and

released any claim for additional payment covered by its first pay application, except for unpaid

retainage. See Petrohawk Props., L.P., 455 S.W.3d at 765 (quoting City of Pinehurst, 432

S.W.2d at 519). As a result, the Release extinguished Houser’s breach of contract and quantum

meruit actions asserted against RCIS, to the extent it claimed damages for unpaid labor, services,

equipment, or materials covered by Houser’s first pay application, except for unpaid retainage.

We find that the evidence establishes as a matter of law that Houser released and waived

any claim for additional payment covered by its first pay application, except for unpaid

retainage, i.e. the unpaid $56,500.00. We sustain RCIS’s second issue, in part. As a result, we

will reduce the actual damages award by $56,500.00.12

12
Houser also contends that RCIS waived its complaint that Houser released its claim to future payments by
executing the first pay application because it did not make this argument to the trial court. However, RCIS did not
make this complaint on appeal. To the extent Houser contends that RCIS waived its complaint that Houser released
and waived its claim for payment of the unpaid balance of the first pay application, we note that the record shows
RCIS asserted the affirmative defenses of release and waiver and presented evidence in support of those defenses.
Also, the trial court made findings of fact regarding those defenses, which shows the trial court was aware that RCIS
was asserting and relying on them. Under this record we find that RCIS did not waive its complaint on appeal.
20
B. Legally Sufficient Evidence Supported the Other Damage Findings of Fact

RCIS challenges the remainder of the damages awarded to Houser because, it argues,

“Houser presented no evidence of the reasonable cost to complete the work [Houser] agreed to

perform, the reasonable cost to remedy the defects in [Houser’s] work, [and] the reasonable

equipment-rental and crane expenses” incurred for Houser’s work. We disagree.

1. Applicable Law and Standard of Review

A contractor who has substantially performed its building contract is entitled to recover

“the contract price, less the reasonable cost of remedying the defects or omissions in such a way

as to make the building conform to the contract.” Vance v. My Apartment Steak House of San

Antonio, Inc., 677 S.W.2d 480, 482 (Tex. 1984) (quoting Atkinson v. Jackson Bros., 270 S.W.

848, 850 (Tex. Comm’n App. 1925, holding approved)). “This deduction measures the damages

allowed the owner for failure on the part of the contractor to fully comply with the

specifications.” Id. (quoting Atkinson, 270 S.W. at 850). Because Houser asserted an

affirmative claim for relief, it had the burden to prove each element of its claim, including the

reasonable cost of remedying the defects and omissions of its work. See id. Nevertheless, it was

not required to prove the exact amount of the cost. Rather, it was required to produce sufficient

evidence “to afford [the fact-finder] a reasonable basis for determining” the reasonable cost. Id.

at 484.

In this case, the trial court made a finding of fact that “RCIS is entitled to an offset of

$18,094.42 for equipment it provided for the Leonard Project” and an implied finding of fact that

21
the reasonable cost for remedying the defects and omissions of its work was $18,414.48.13

“When determining whether legally sufficient evidence supports a [fact] finding, we must

consider evidence favorable to the finding if a reasonable factfinder could and disregard

evidence contrary to the finding unless a reasonable factfinder could not.” Albertsons, LLC, 689

S.W.3d at 318 n.2 (quoting 4Front Engineered Sols., Inc., 505 S.W.3d at 908). “The evidence is

legally sufficient if [there] is more than a scintilla of evidence on which a reasonable juror could

find the fact to be true.” Id. (alteration in original) (quoting 4Front Engineered Sols., Inc., 505

S.W.3d at 909). “More than a scintilla of evidence exists when the evidence reaches a level

enabling reasonable and fair-minded people to differ in their conclusions.” Petrohawk Props.,

L.P., 455 S.W.3d at 770 (citing Havner, 953 S.W.2d at 711). “Less than a scintilla of evidence

exists when the evidence is ‘so weak as to do no more than create a mere surmise or suspicion’

of a fact.” Chapman, 118 S.W.3d at 751 (quoting Kindred, 650 S.W.2d at 63).

2. Analysis

As noted above, Scott testified that one of the terms of Houser’s contract with RCIS was

that Houser would be responsible for the cost of the equipment and crane rental attributable to

Houser’s work. In explaining what was due under the contract, Scott testified that the equipment

and crane rentals attributable to Houser, as well as the fuel costs, should be deducted from what

was due under the contract. In its brief, RCIS acknowledges that Scott testified that the amount

of those items was $18,094.42. RCIS does not challenge the sufficiency of Scott’s testimony

13
The trial court entered the following finding of fact:

68. RCIS is entitled to a credit in the amount of $18,414.48 for work not performed by
Houser on the Leonard Project.

22
regarding the actual cost of those items. Rather, it faults Houser for “present[ing] no evidence

that $18,094.42 represented the reasonable equipment-rental and crane expenses and fuel

charges that RCIS incurred for Houser’s work on the Leonard [P]roject.” (Emphasis added).

However, because Houser was entitled to recover its “contract price, less the reasonable

cost of remedying the defects or omissions in such a way as to make the building conform to the

contract,” see Vance, 677 S.W.2d at 482 (quoting Atkinson, 270 S.W. at 851), Houser’s burden

of proof included establishing what was owed under the contract. Since Houser was responsible

under the contract for the rental cost of the equipment and crane, and the fuel expenses

attributable to its work, RCIS was entitled to an offset against what was owed under the contract

for the rental and fuel expenses it incurred that were attributable to Houser’s work. As a result,

Houser’s burden was to establish the actual cost of the equipment and crane rental and the fuel

costs, not the reasonable cost of those items.

Houser also provided sufficient evidence to give the trial court a reasonable basis for

determining the reasonable cost of remedying its defects or omissions of its work. Scott testified

that the Steel Ruiz crew left the Leonard Project because it was not able to complete a section of

the west chemical building upper canopy and the lower canopy because of manufacturer

deficiencies, and a small canopy at the north chemical building because it had been fabricated

incorrectly. He estimated that at that time, Houser had completed 92.4 percent of its scope of

work. Scott also estimated that the total square footage that Houser was not able to complete

was 2,500 to 2,700 square feet.

23
Scott also testified that he based his bid at $7.70 per square foot, which he opined was the

market value.14 He testified that Houser’s base minimum was $7.15 per square foot, and that

RCIS’s price was $12.00 to $13.00 per square foot. He also testified that Steel Ruiz initially bid

the labor for $117,000.00 and ultimately completed the work for $80,500.00.

Although Scott never testified regarding the exact cost to complete Houser’s scope of

work, he provided the trial court with a description of the items that had not been completed, the

approximate square footage of those items, the per-square-foot charges of both Houser and

RCIS, and the amount Steel Ruiz was paid for completing approximately ninety-two percent of

Houser’s scope of work. The trial court’s finding of the reasonable cost of remedying the defects

and omissions in Houser’s work fell within that testimony.15 As a result, we find that Houser

produced sufficient evidence to give the trial court a reasonable basis to determine the reasonable

cost for remedying the defects and omissions of its work. We overrule RCIS’s second issue, in

part.

III. Houser Was Not Entitled to Prompt Payment Interest

In its judgment, the trial court awarded Houser prompt payment interest in the amount of

$33,423.65. The judgment recites that it arrived at this amount as follows:

14
Scott testified that he had estimated over one hundred erection projects, similar to Leonard, and that he was
familiar with the typical charges for those types of projects. He based his familiarity on conversations with others in
the same field and on bid tabulations from projects that give the amounts bid by each contractor on the projects.
15
The fact-finder “generally has discretion to award damages within the range of evidence presented at trial.” Sw.
Energy Prod. Co. v. Berry–Helfand, 491 S.W.3d 699, 713 (Tex. 2016) (citing Gulf States Utils. Co. v. Low, 79
S.W.3d 561, 566 (Tex. 2002)).

24
(a) prompt pay interest of 18% on $65,000 [sic] from 12/21/2020 through
7/27/2023 (947 days at $32.05/day) = $30,351.35 [sic]16

(b) prompt pay interest of 18% on the remaining $13,491.10 ($78,491.10 -
$65,000[.00]) from 4/21/22 through 7/27/2023 (462 days at $6.65/day) =
$3,072.30.

RCIS asserts that the trial court erred in awarding prompt payment interest on the unpaid amount

under the first pay application because, among other things, Houser waived and released its

rights to the unpaid balance, except unpaid retainage. It asserts that the trial court erred in

awarding prompt payment interest on the unpaid retainage and the balance owed under the

second pay application because RCIS never received payment from Garney for those items, as

required by Section 28.002(c) of the Texas Property Code. See TEX. PROP. CODE ANN. §

28.002(c). For these reasons, RCIS asserts that there is legally insufficient evidence supporting

the trial court’s findings of fact in support of its prompt payment interest award.

A. Applicable Law

Section 28.002(c) provides, in relevant part:

(c) A subcontractor who receives a payment . . . from a contractor in
connection with a contract to improve real property shall pay each of its
subcontractors the portion of the payment, including interest, if any, that is
attributable to work properly performed . . . as provided under the contract by that
subcontractor, to the extent of that subcontractor’s interest in the payment. The
payment required by this subsection must be made not later than the seventh day
after the date the subcontractor receives the contractor’s payment.

TEX. PROP. CODE ANN. § 28.002(c). Thus, under the statute, a subcontractor that receives a

payment from a contractor must “pay each of its subcontractors the portion of th[at] payment”
16
As noted above, the trial court’s findings of fact state, “On December 11, 2020, RCIS paid Houser $65,000.00,
leaving a balance owed of $56,500.00,” and “[p]rompt pay interest of 18% on $56,500.00 from 12/21/2020 through
8/21/2023 (973 days at $27.86/day) = $27,107.78.” The trial court’s judgment mistakenly based its award on the
$65,000.00 prior payment, rather than the $56,500.00 balance it found was owed under the first pay application.
25
that is attributable to the work performed by its subcontractor no “later than the seventh day after

the date the subcontractor receives the contractor’s payment.” Id. (emphasis added); see Henry

Bldg., Inc. v. Milam, No. 05-99-01400-CV, 2001 WL 246882, at *3 (Tex. App.—Dallas Mar. 14,

2001, pet. denied) (not designated for publication). If the subcontractor fails to timely pay its

subcontractor, the “unpaid amount bears interest at the rate of 1 ½ percent each month.” TEX.

PROP. CODE ANN. § 28.004(b).

B. Analysis

Because we have previously held that Houser waived and released its claim to any unpaid

amounts under the first pay application, except unpaid retainage, RCIS was not liable under

Section 28.002(c) for prompt payment interest attributable to these unpaid amounts. As a result,

we find that legally insufficient evidence supports the trial court’s award of $30,351.35 based on

these unpaid amounts.

Regarding the remaining amounts, in order to show that RCIS was liable for prompt

payment interest, Houser was required to show that (1) RCIS received a payment from a Garney,

(2) a portion of which was attributable to work properly performed by Houser covered by the

unpaid retainage in the first pay application and covered by the second pay application, and

(3) RCIS failed to pay Houser within seven days after it received payment from Garney. See

TEX. PROP. CODE ANN. §§ 28.002(c), 28.004(b). Thus, under the statute, RCIS’s liability was

only triggered if it received a payment from Garney that was attributable to work performed by

Houser and it failed to pay Houser within seven days of its receipt of the payment.

26
Because the statute does not define “receives,” “we will use the plain and ordinary

meaning of the term and interpret it within the context of the statute.” Tex. Health & Hum.

Servs. Comm’n v. Est. of Burt, 689 S.W.3d 274, 280 (Tex. 2024) (quoting Hogan v. Zoanni, 627

S.W.3d 163, 169 (Tex. 2021)). The plain and ordinary meaning of “receive[s]” is “to come into

possession of: ACQUIRE.” Receive, MERRIAM—WEBSTER’S COLLEGIATE DICTIONARY (11th

ed. 2003); see Receive, BLACK’S LAW DICTIONARY (10th ed. 2019) (“To take (something offered,

given, sent, etc.); to come into possession of or get from some outside source.”). Thus, Houser

had to show that RCIS came into possession of a payment from Garney that was attributable to

work performed by Houser covered by the unpaid retainage in the first pay application and

covered by the second pay application.

Castro testified that the last payment RCIS received from Garney for Houser’s work was

on December 10, 2020, from which Houser was paid $65,000.00 on the first pay application.

Houser offered no evidence to contradict that testimony, and it does not dispute it on appeal.

The evidence also shows that on December 16, 2021, Garney interpleaded $86,649.19 into the

registry of the court. Garney represented it owed those funds to RCIS under their contract for the

Leonard Project, and for which amount Houser alleged was due it from RCIS. Those funds

remained in the registry of the court until November 3, 2023, when the funds were released to

Houser pursuant to the trial court’s order.

Because the record shows that RCIS never received, or came into possession of, a

payment from Garney that was attributable to work performed by Houser covered by the unpaid

retainage in the first pay application and covered by the second pay application, we find that

27
legally insufficient evidence supports the trial court’s award of the remaining $3,072.30 of

prompt payment interest.

We sustain this issue, and we will strike the trial court’s award of $33,423.65 in prompt

payment interest from the trial court’s judgment.17 Nevertheless, because Houser pleaded for

“pre-judgment . . . interest . . . at the highest rate allowed by law,” we will remand this case for a

determination of this issue.

IV. Attorney Fees

A. The Trial Court Did Not Abuse its Discretion in Finding a Lack of Unfair
Surprise or Prejudice

RCIS also challenges the trial court’s award of attorney fees for Houser. It asserts that

the trial court abused its discretion in allowing Houser’s attorney-fee evidence because the

record does not support the trial court’s finding that RCIS was not unfairly surprised or

prejudiced by Houser’s failure to disclose documentation of its attorney fees before trial.

1. Background

The trial of this case began on April 3, 2023. Approximately three months earlier, RCIS

served requests for production and interrogatories and requested, among other things, documents

supporting Houser’s claim for attorney fees, including the resume of each person called to testify

concerning the claim, and documents showing the itemization of attorney fees and costs, and the

identities of persons for whom attorney fees were sought. On February 8, 2023, Houser

responded to the requests and interrogatories, produced no documents, and indicated that it

would “provide relevant documents in compliance with all required pre-trial deadlines regarding

17
Because we sustain this issue, we need not address RCIS’s other arguments.
28
exhibits.” It is undisputed that Houser did not produce any documents related to its claim for

attorney fees before the trial began.

Before the trial began on April 3, the parties and the trial court agreed that the issue of

attorney fees would be taken up after the determination of the outcome of the substantive case.

The trial of the substantive case concluded on April 12. On April 27, Houser filed its motion to

reopen evidence to present evidence in support of its claim for attorney fees, and it served the

motion on RCIS. Attached to the motion was the resume of Houser’s attorney, Karen Ensley,

her affidavit in which she gave detailed testimony in support of Houser’s claim for attorney fees,

and billing records. The billing records contained itemized descriptions of the work performed,

the date it was performed, the hours worked, hourly rate, dollar amounts billed, the name of the

person performing the work, and whether it pertained to the Leonard Project or to the Bellaire

Project.

On May 26, RCIS filed its response opposing the motion to reopen evidence, and the trial

court, after a hearing, granted the motion to reopen evidence. After a hearing on June 23, the

trial court awarded Houser its attorney fees.

2. Applicable Law and Standard of Review

“Under Rule 193.6 of the Texas Rules of Civil Procedure, when a party fails to timely

[make, amend, or] supplement a discovery response, the untimely disclosed evidence may be

excluded.” In re D.W.G.K., 558 S.W.3d 671, 679 (Tex. App.—Texarkana 2018, pet. denied)

(citing TEX. R. CIV. P. 193.6(a)). “Exclusion is mandatory and automatic unless the court finds

that there was good cause for the failure to [make,] amend or supplement, or the failure will not

29
unfairly surprise or prejudice the other party.” Id. (citing TEX. R. CIV. P. 193.6(a); Morrow v.

H.E.B., Inc., 714 S.W.2d 297, 297–98 (Tex. 1986) (per curiam); Good v. Baker, 339 S.W.3d 260,

271 (Tex. App.—Texarkana 2011, pet denied)). “The party seeking to introduce the evidence

has the burden of establishing good cause or lack of unfair surprise or prejudice.” Id. (citing

TEX. R. CIV. P. 193.6(b); Baker, 339 S.W.3d at 271).

“The trial court has discretion to determine whether the offering party has met its burden

to show good cause or lack of unfair surprise or prejudice, and the record must support such

finding.” Id. (citation omitted) (citing TEX. R. CIV. P. 193.6(b)). The trial court’s finding may

be supported by evidence in the record, “counsel’s uncontested representations . . . as to the state

of discovery in the case,” and “counsel’s statements made in open court without any objections .

. . if the trial court credits them.” Jackson v. Takara, 675 S.W.3d 1, 6 (Tex. 2023) (per curiam).

We “review[] a trial court’s decision under Rule 193.6(a) for abuse of discretion.” Id. (citing In

re J.P.B., 180 S.W.3d 570, 575 (Tex. 2005) (per curiam)).

3. Analysis

In In re D.W.G.K., we noted that

in order to establish the absence of unfair prejudice, the party seeking to call an
untimely disclosed witness or introduce untimely disclosed evidence must
establish that, notwithstanding the late disclosure, the other party had enough
evidence to reasonably assess settlement, to avoid trial by ambush, and to prepare
rebuttal to expert testimony.

In re D.W.G.K.¸ 558 S.W.3d at 680. RCIS argues that because Houser failed to produce

documents related to its claim for attorney fees before trial, it was unable to rebut Houser’s

expert testimony, and because the billing records produced disclosed nothing about the persons

30
listed on them (e.g., whether they were attorneys or paralegals), it was unable to properly

evaluate whether the attorney fees were reasonable and necessary.

However, as Houser’s counsel pointed out at the attorney fees hearing, if Houser had

produced documents on February 9, RCIS would have received them about eight weeks before

trial, but because the majority of work performed in the case occurred after that time, the records

would have shown only about one-quarter of the work that was performed through the end of

trial.18 Further, because Houser produced the billing records with its motion to reopen evidence

on April 27, RCIS received billing records about eight weeks before the hearing on attorney fees,

except these records showed all the work performed through the end of the trial on the

substantive trial. Also, although the billing records did not state which persons performing work

were paralegals or attorneys, it did state the work performed and the hourly rates of those

persons, and it contained several entries by an attorney for work done at a paralegal rate. As a

result, the trial court could have determined that RCIS had enough information to cross-examine

Houser’s expert regarding the rates charged and the experience of the persons shown on the

billing records.

On this record, the trial court could have reasonably concluded that, because RCIS had

the same amount of time to prepare for the cross-examination of Ensley at the attorney fees

hearing after it received the billing records and Ensley’s affidavit as it would have had to prepare

for Ensley’s cross-examination at trial, but with less information had the documents been

produced on February 8 and supplemented a few weeks later, RCIS was not unfairly prejudiced

18
Houser’s attorney also stated that even if these records had been supplemented at the end of the discovery period,
they would have contained only about one-third of the total work that was performed through trial.
31
by Houser’s untimely production of the attorney-fee evidence. As a result, we find that the trial

court did not abuse its discretion in admitting the evidence. We overrule this issue, in part.

B. The Award of Attorney Fees Must Be Remanded for a New Trial

RCIS also complains that the trial court erred because the attorney fees award is

excessive in relation to the damages recoverable by Houser, and it asks us to remand the case for

a new trial to determine any attorney fees to be awarded to Houser. In this case, the trial court’s

final judgment is based on Houser prevailing on its contract claims against RCIS regarding the

Leonard Project, and awarded Houser all of its requested damages, being actual damages of

$78,491.10 and prompt payment interest of $33,423.65, for a combined total of $111,914.75.

The trial court also awarded Houser $114,896.08 in attorney fees. We have determined that

Houser released its claim to $56,500.00 of the awarded actual damages and failed to show its

entitlement to prompt payment interest. Striking these amounts from the trial court’s judgment

results in actual damages of $21,991.10, and prompt payment interest of $0.00.

The results obtained by the prevailing party is one of the factors that Texas courts take

into consideration when awarding attorney fees. In Rohrmoos Venture v. UTSW DVA

Healthcare, LLP, the Texas Supreme Court stated:

In Texas courts, the base lodestar calculation of reasonable hours times a
reasonable rate should account for any results obtained up to trial. But to the
extent that the results obtained are not reflected in the base lodestar, then the fact
finder may determine whether the results obtained consideration necessitates an
adjustment to achieve a reasonable fee under the second step of the lodestar
method.

Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 500 n.12 (Tex. 2019). The

Texas Supreme Court has also held that when a court of appeals substantially reduces the trial
32
court’s damages award, an award of attorney fees based in part on the results obtained may be

harmful error:

Not every appellate adjustment to the damages which a jury considered as “results
obtained” when making attorney’s fees findings will require reversal. In this case,
however, considering both the absolute value of the difference between the
erroneous and correct amounts of damages, and the fact that the correct damages
were one-seventh of the erroneous damages, we are not reasonably certain that the
jury was not significantly affected by the error. Accordingly, the trial court’s
error was harmful.

Barker v. Eckman, 213 S.W.3d 306, 314 (Tex. 2006).

Likewise, in this case, there is a substantial difference between the erroneous and correct

amounts of damages, and the correct damages are less than one-fifth of the erroneous damages.

As a result, we are not reasonably certain that the trial court was not significantly affected by the

error, and we find that the amount of attorney fees awarded by the trial court was harmful error.

See id. Accordingly, we sustain this issue, in part, and we will remand the case to the trial court

for a new trial as to attorney fees. See id. at 315.

V. Disposition of Interpleaded Funds

In its fifth issue, RCIS challenges the trial court’s order releasing the funds interpleaded

by Garney to Houser, and it asks us to direct the trial court on remand to order Houser to return

the released funds to the registry of the court. The trial court’s judgment ordered the clerk of the

court to release the interpleaded funds to Houser, and provided that upon release of the funds that

Houser “issue a credit in favor of [RCIS] against the Final Award, applied first against the

principal damages award and thereafter against all other amounts awarded to [Houser].”

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“[F]unds deposited in the trial court’s registry are subject to the trial court’s control, and

the court has the equitable power to make such orders as it deems necessary to protect those

funds.” In re Scott Pelley, P.C., No. 05-21-00314-CV, 2021 WL 3891595, at *5 (Tex. App.—

Dallas Aug. 31, 2021, orig. proceeding) (mem. op.) (alteration in original) (quoting Sommers v.

Concepcion, 20 S.W.3d 27, 36 (Tex. App.—Houston [14th Dist.] 2000, pet. denied)). In this

appeal, we have substantially reduced the damages award, and we have remanded the award of

attorney fees for a new trial. Because the attorney fees award is undetermined, we are unable to

determine whether any of the released funds should be returned to the registry of the court.

As a result, we overrule this issue. That being said, because this case is being remanded,

the trial court may exercise its equitable powers to make such “further orders as it deems

necessary to protect the interpleaded funds.” US MCT, Inc. v. Brodsky, No. 05-98-00204-CV,

2001 WL 1360301, at *9 (Tex. App.—Dallas Nov. 7, 2001, no pet.) (not designated for

publication).

VI. Disposition

For the reasons stated, we affirm, in part, reverse and render, in part, and reverse and

remand, in part. We affirm the trial court’s judgment that Houser is entitled to damages. We

reverse, in part, the trial court’s judgment awarding Houser $78,491.10 in actual damages and

render judgment for $21,991.10 in actual damages. We reverse, in part, the trial court’s

judgment awarding Houser $33,423.65 in prompt payment interest and render judgment for

$0.00 in prompt payment interest. We reverse, in part, the trial court’s judgment awarding

Houser $114,896.08 in attorney fees and remand this case for a new trial on attorney fees, a

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determination of prejudgment interest, if any, to make such further orders as it deems necessary

to protect the interpleaded funds, and to enter a final judgment consistent with this opinion.

Jeff Rambin
Justice

Date Submitted: October 03, 2024
Date Decided: January 30, 2026

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