CCC Grp., Inc. v. S. Cent. Cement, Ltd.

MICHAEL MASSENGALE

Reversed and remanded.

Brianne W. Richardson, David V. Wilson II, Hays McConn, Rice & Pickering, Houston, TX, for Appellant. J. Daniel Long, A. Randall Friday, Carlton D. Wilde, Jr., W. Matthew Carver, Crady, Jewett & McCulley, LLP, Houston, TX, for Appellee.

Panel consists of Justices JENNINGS, BLAND, and MASSENGALE. OPINION

MICHAEL MASSENGALE, Justice.

South Central Cement, Ltd. prevailed at trial on its claims that CCC Group, Inc. breached a contract and was negligent in connection with the construction of a cement-storage warehouse that collapsed. On appeal from the judgment, CCC argues that the evidence is legally and factually insufficient to establish that it breached any contract, the cause of the structure's failure, or any resulting damages. We conclude that no evidence supports the jury's award of future repair damages. Consequently, we reverse and remand for a new trial.

Q. ... Did you do anything to try to make a determination of what you believe the cause of the wall collapse was?

A. It was hard to determine how high the cement had actually been filled in the building because once the walls collapsed, the cement went out with it. But from what I could see the pipes by design were cut off 20 feet above the floor. It was obvious from the photographs and from visual observation while I was there that the cement had been filled higher than the bottom of those pipes because there was a crater, like a volcanic crater. Some had been pumped down there and so there was a hole where the pipe was but the cement came up several feet higher than the bottom of the pipe and tapered off towards the walls and that was true at the two ends of the building.

Q. Did you actually see cement above the bottom downspout of the pipe when you were there?

A. Yes. At the two pipe discharges at the ends of the building where it collapsed, it was higher than the bottom of the pipe.

Q. Was that not what this wall was designed to allow for?

A. The wall was designed to have—now, be aware that when the cement comes out and flows, it is going to have a little bit of slope to it.

Q. Right.

A. But if you brought more and more in and if you get above the bottom of that pipe, it will still slope away. So, I can't say how high it was at the wall, but it was higher than the 20 feet at the two end pipes.
As the designer of the retaining wall and having observed the aftermath of the collapse, Holloway demonstrated that he had a basis for his “belief” that leaving out the shear plates resulted in the wall's failure. And in light of this testimony, CCC's second criticism that Holloway failed to “describe any investigation of the warehouse or consider any other possible factors that may have contributed,” is simply an incorrect characterization of the record.

CCC's third complaint about Holloway's testimony, raised for the first time on appeal, was that he stated there was “no way of knowing” whether the concrete blocks were stacked in the appropriate sequence. We conclude this complaint about the testimony is waived for failure to raise it at trial because it would require evaluation of Holloway's reasons for believing the lack of shear plates caused the collapse—an explanation that may have been provided at trial in the face of an objection, but which is absent from the record due to the lack of an objection. See Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 233 (Tex.2004) (“[W]hen a reliability challenge requires the court to evaluate the underlying methodology, technique, or foundational data used by the expert, an objection must be timely made so that the trial court has the opportunity to conduct this analysis.”); Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 412 (Tex.1998); see also Tex.R.App. P. 33.1(a)(1) (“As a prerequisite to presenting a complaint for appellate review, the record must show that the complaint was made to the trial court by a timely request, objection, or motion ....”). And finally, by failing to object to Holloway's qualifications, CCC also waived that objection to his testimony. See Nissan Motor Co. Ltd. v. Armstrong, 145 S.W.3d 131, 143–44 (Tex.2004) (where pretrial motion to exclude expert's testimony attacked reliability of opinions but not expert's qualifications, objecting party did not preserve complaints regarding qualifications for appeal).

C. Testimony of River's retained experts

Finally, CCC argues that the testimony of River's retained experts did not provide any evidence regarding the cause of the wall's failure. CCC's argument is contradicted by the record, at least with respect to Joseph Dreher, a civil and structural engineer. Dreher reviewed the calculations that River performed in designing the wall, concluding that the calculations were correct, including the calculations regarding the shear plates. Although Dreher did not explicitly attribute the wall's failure to the omission of the shear plates, he concluded that omitting them would result in “a problem with the walls.” He further testified that the shear plates would have worked as specified, had they been included in the wall. Again, CCC did not object to any of Dreher's testimony.

* * *

We conclude that Holloway and Dreher gave testimony sufficient to support the jury's finding that CCC's failure to install shear plates in the retaining wall in Warehouse A caused the wall to collapse. We therefore overrule CCC's challenges with respect to the sufficiency of the evidence of causation.

III. Damages

CCC argues that insufficient evidence supports the jury's damages awards. A jury has broad discretion to award damages within the range of evidence presented at trial. See, e.g., Powell Elec. Sys., Inc. v. Hewlett Packard Co., 356 S.W.3d 113, 126–27 (Tex.App.-Houston [1st Dist.] 2011, no pet.). “Evidence corresponding to the exact amount found by the trier of fact is not essential.” Id. at 126. But the verdict must fall within the range of the evidence presented, and a jury may not “pull figures out of a hat” in assessing damages. See First State Bank v. Keilman, 851 S.W.2d 914, 931 (Tex.App.-Austin 1993, writ denied).

Among other things, CCC argues that the evidence is legally and factually insufficient to support the jury's assessment of damages for future repair costs. “A party seeking to recover remedial damages must prove that the damages sought are reasonable and necessary.” McGinty v. Hennen, 372 S.W.3d 625, 627 (Tex.2012) (citing Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 200 (Tex.2004) (per curiam)). “[T]he plaintiff must show more than simply ‘the nature of the injuries, the character of and need for the services rendered, and the amounts charged therefor.’ ” Id. (quoting Dall. Ry. & Terminal Co. v. Gossett, 156 Tex. 252, 294 S.W.2d 377, 383 (1956)). The plaintiff need not use magic words such as “reasonable” or “necessary,” but is only required to present sufficient evidence to support a finding that that the costs were reasonable and the repairs were necessary. Ron Craft Chevrolet, Inc. v. Davis, 836 S.W.2d 672, 677 (Tex.App.-El Paso 1992, writ denied); Carrow v. Bayliner Marine Corp., 781 S.W.2d 691, 694 (Tex.App.-Austin 1990, no writ); Liptak v. Pensabene, 736 S.W.2d 953, 958 (Tex.App.-Tyler 1987, no writ). The plaintiff may not merely offer evidence of how repair costs or estimates were derived, but must also adduce evidence that the costs were actually reasonable. McGinty, 372 S.W.3d at 627–28.

South Central relied upon the testimony of Peter James Aries to establish its future damages. CCC objected to Aries as unqualified to give his testimony, and it further argues that no other evidence supports the jury's assessment of future repair damages. We review the admission of expert testimony under an abuse of discretion standard. Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 638 (Tex.2009). “If scientific, technical, or other specialized knowledge” would assist the jury, a witness who is qualified as an expert by “knowledge, skill, experience, training, or education” may testify as an expert. Tex.R. Evid. 702. Such an individual “may testify ... in the form of an opinion or otherwise.” Id. The proponent of the witness's testimony bears the burden to show that the expert's testimony is relevant and rests on a “reliable foundation.” E.I. du Pont de Nemours & Co., Inc. v. Robinson, 923 S.W.2d 549, 555 (Tex.1995) (citing Daubert v. Merrell Dow Pharms., 509 U.S. 579, 597, 113 S.Ct. 2786, 2799, 125 L.Ed.2d 469 (1993)).

CCC also argues that, although Aries testified as an expert witness, South Central improperly failed to designate him as an expert on damages. The record on this point is unclear. The arguments of counsel before Aries took the stand indicate that South Central designated Aries as an expert in engineering, but not on damages, and CCC objected to his testimony on the latter. During cross-examination, however, counsel for South Central objected, “Mr. Aries hasn't been designated as an expert in this case.” If Aries was not properly designated, then the trial court could have excluded his testimony, and we would review its decision with respect to admissibility for an abuse of discretion. See Ersek v. Davis & Davis, P.C., 69 S.W.3d 268, 274 (Tex.App.-Austin 2002, pet. denied); Cruz v. Furniture Technicians of Hous., Inc., 949 S.W.2d 34, 35 (Tex.App.-San Antonio 1997, writ denied); Tex.R. Civ. P. 195.2; see also Tex.R. Evid. 705. Because our analysis leads to the same result as if we held that trial court should have excluded Aries's testimony as untimely designated, we assume without deciding that Aries was properly designated as an expert witness.

Aries, a structural engineer, works for BEI Engineers, an engineering consulting firm. He testified that BEI, on behalf of South Central, proposed various scenarios for repairing the retaining wall in Warehouse A, beyond the repairs initially made by CCC after the wall's collapse. Before and repeatedly during Aries's testimony, CCC objected that South Central had not established that Aries had personal knowledge of how BEI made its estimates of future repair costs. The trial court overruled CCC's objections and admitted both the testimony and documents reflecting BEI's estimates.

Aries testified on only one topic: South Central's options for future repairs to the warehouses, with a particular focus on two estimates prepared by BEI. One estimate for proposed repairs ran to $5.4 million, while the other was for $4 million. Aries testified that the proposed solutions were “workable,” but clarified, “[h]ow feasible and cost-effective, you know, we never got that far.” He stated that he assumed that the repairs were still possible at the time of trial, but qualified that statement, saying, “I'm not even exactly sure what we came up with at the time. But I would assume that, yeah, there's always a way.”

More importantly, Aries had no direct involvement in cost estimates with respect to the repair options, other than providing “maybe the preliminary sketches” to BEI's estimator, along with a list of materials required for the work. When asked whether he was “at all familiar with any cost estimates that were done” for one of the proposed modifications, he responded that he was “pretty sure” that a cost estimate was done and that he was “sure” he had seen it, but that he was not familiar with it. With respect to the other proposed modification, he explained, “I really didn't pay attention to the detail, the price.” He testified that he believed that BEI tried to base its estimates on prevailing costs in Harris County at the time and that his firm was familiar with those costs, but he did not testify about what those costs were, the sources from which they were derived, or how BEI determined that they were reasonable. He elaborated:

A. Are you asking if we're familiar with the costs in Harris County or these costs that are reflected?

Q. The costs coming up with—

A. Yeah. I mean, I can't recall—you know, it looks like these were done—these weren't done in our estimating software at the time. That's why I thought I was just giving the data over to our estimator. But it looks like I used the spreadsheet to do these.
He did not explain what “spreadsheet” he used or how he used it, nor did he identify the nature or source of any underlying pricing information. He also did not explain whether using the spreadsheet would result in different estimates from BEI's estimating software.

Both estimates had a margin of error of 30% in either direction, meaning that BEI's estimates of the total costs could have spanned a range from as little as $2.8 million to more than $7 million. Aries explained this by stressing repeatedly that the estimates were “real preliminary” and “conceptual,” and BEI had not done any “detailed engineering or checking” or any feasibility studies, nor had it prepared detailed design drawings that would be necessary before actually performing any repairs.

Expert testimony is conclusory if there is no factual basis for it or if the basis offered does not, on its face, support the opinion. City of San Antonio v. Pollock, 284 S.W.3d 809, 817 (Tex.2009). A court may also conclude that an expert's testimony is unreliable if there is too great an analytical gap between the data upon which the expert relies and the opinion offered. Gammill v. Jack Williams Chevrolet, Inc., 972 S.W.2d 713, 727 (Tex.1998) (citing Gen. Elect. Co. v. Joiner, 522 U.S. 136, 146, 118 S.Ct. 512, 519, 139 L.Ed.2d 508 (1997)). A party challenging expert testimony as premised on an unreliable methodology must make a timely objection to preserve error on appeal, but may bring a challenge that the expert's testimony is “conclusory or speculative and therefore non-probative on its face ... even in the absence of any objection to its admissibility.” Coastal Transp., 136 S.W.3d at 233; see also Mar. Overseas, 971 S.W.2d at 410, 412.

Aries's testimony does not demonstrate that the estimated costs of BEI's proposed repairs were reasonable and necessary. See McGinty, 372 S.W.3d at 627. Aries demonstrated no familiarity with how the costs were derived. On the contrary, his testimony repeatedly reinforced that he lacked knowledge of the costs involved and he did not participate directly in estimating costs. Moreover, BEI did no assessment of whether the proposed repairs were feasible or cost-effective, and it had not performed enough of the engineering legwork to determine whether the repairs would be realistic.

In light of these facts, we hold that Aries's testimony with respect to future repair costs was conclusory. Pollock, 284 S.W.3d at 817. It is also unreliable, as too great an analytical gap exists between the data upon which Aries relied—technical calculations about the materials to be used in the proposed repairs—and the opinions he offered regarding repair costs. Gammill, 972 S.W.2d at 727; see also Robinson, 923 S.W.2d at 555. Because Aries's testimony on repair costs was conclusory and unreliable, it constitutes no evidence in support of the jury's award of future repair damages.

We further agree with CCC that the record contains no other competent evidence of the cost of reasonable and necessary future repairs. Indeed, South Central relies entirely on Aries's testimony and the BEI estimates to support the jury's award on appeal. Because the evidence does not support the future repairs award, we sustain CCC's argument on this point.

Ordinarily, appellate courts render judgment when sustaining a no-evidence issue. Guevara v. Ferrer, 247 S.W.3d 662, 670 (Tex.2007). However, if there is evidence to support some award of damages, rendition is inappropriate. Id. In that scenario, we must remand for a new trial, unless we can suggest a remittitur. Id.

In this case, the evidence at trial conclusively demonstrated that Warehouse A was damaged by the collapse of its retaining wall and that the retaining wall in each warehouse falls short of the capacity that South Central paid CCC to build. The evidence is also conclusive that repairing or rebuilding the walls will result in actual costs to South Central, even though there is no evidence of the reasonable and necessary amount of those costs. Thus, we cannot render a judgment for CCC, nor are we able to suggest a remittitur. We therefore must remand for a new trial. Id.

Because CCC disputes liability, and the costs of future repairs constitute unliquidated damages, we may not order a separate trial solely on those damages. Tex.R.App. P. 44.1(b). Instead, we must remand for a new trial on both liability and damages. Id.; Minn. Min. & Mfg. Co. v. Nishika Ltd., 953 S.W.2d 733, 740 (Tex.1997). Further, CCC's remaining points on appeal all relate to other measures of damages, and it is undisputed that South Central did or will incur each such type of damages. CCC argues only that the jury's damages awards are supported by legally and factually insufficient evidence. Because each of these issues, if sustained, would require us to remand for a new trial, we do not reach them.

Conclusion

Because no evidence supports the jury's award of future repair damages, we reverse and remand for a new trial. -------- Notes: