S.K. Apparel Mfg., Inc. v. The City of Houston--Appeal from 189th District Court of Harris County

Affirmed and Opinion filed August 8, 2002

Affirmed and Opinion filed August 8, 2002.

In The

Fourteenth Court of Appeals

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NO. 14-01-00554-CV

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S.K. APPAREL  MFG., INC., Appellant

V.

THE CITY OF HOUSTON, Appellee

On Appeal from the 189th District Court

Harris  County, Texas

Trial Court Cause No. 00-29245

O P I N I O N

This is an appeal from the granting of summary judgment. In two issues, appellant claims the trial court erred in (1) granting summary judgment and (2) reciting that the judgment was based on all exhibits submitted by appellant. We affirm.

Background and Procedural History

In 1998, the City of Houston (ACity@) issued two bid invitation requests for sealed bids to provide (1) shirts and/or pants under a Fire Fighters Uniform Contract for the Houston Fire Department and (2) shirts under a Special Purpose Clothing Contract for Various Departments. Both bid requests stated:

[T]he City may accept this bid offer by issuance of a Notice of Award Letter and/or Purchase Order covering award of said bid to this Bidder at any time on or before the 120th day following the day this Official Bid Form is opened by the City. This offer shall be irrevocable for 120 days after bid opening or for 90 days after City Council awards the bid, whichever comes last, but this period may be extended by written agreement of the parties.

On January 15, 1999, the City issued a Notification of Award letter to S.K. Apparel (AApparel@), accepting a portion of Apparel=s bid for pants under the Fire Fighters Uniform Contract in the total amount of $358,587.50 (First Contract). On July 21, 1999, the City issued a notification letter to Apparel accepting Apparel=s bid for shirts under the Special Purpose Clothing Contract in the total amount of $121,863.13 (Second Contract). In both contracts, the Term of Agreement provision stated:

It is emphasized that the City of Houston does not guarantee to purchase any specific quantity of any item listed during the period of this agreement; rather, the quantities may vary depending upon the actual needs of the user Departments.

The City issued three purchase orders under the First Contract.[1] Apparel delivered a portion of the pants under the First Contract, which the City rejected on the basis that they were Apoor quality goods.@ The City gave notice to Apparel that it considered its actions to be in breach of contract and announced its intent to hold an administrative hearing to allow Apparel to Apresent evidence that would affect the decision to disqualify it from participating in City business.@

Apparel responded with a suit against the City, alleging breach of both contracts, fraud, and intentional infliction of emotional distress and seeking damages in excess of one million dollars along with attorney=s fees. The City specially excepted to all claims. The trial court sustained the City=s special exceptions as to all but the breach of contract claims and ordered Apparel to amend its petition accordingly. Apparel amended its petition, limiting its claim to breach of the two contracts. Thereafter, the City filed a traditional motion for summary judgment, which the trial court heard January 8, 2001. By request of both parties the trial court took the motion under advisement, giving both parties until January 24, 2001, to submit additional evidence. The trial court granted the City=s motion April 4, 2001, and this appeal followed.

Summary Judgment

Apparel claims the trial court erred in granting the City=s motion for summary judgment. The standard of review for a traditional motion for summary judgment Ais whether the successful movant at the trial level carried its burden of showing that there is no genuine issue of material fact and that judgment should be granted as a matter of law.@ KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). This court must take as true all evidence favorable to the nonmovant and must make all reasonable inferences in the nonmovant=s favor. See id. When a trial court=s order granting summary judgment does not specify the ground or grounds relied on for its ruling summary judgment will be affirmed if any of the theories advanced are meritorious. See Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. 1989).

Breach of Contract

Apparel claims material fact issues exist on its breach of contract claims against the City. To prevail on a breach of contract claim, Apparel must prove (1) the existence of a valid contract; (2) Apparel=s performance under the contract; (3) breach of the contract by the City; and (4) damages. See Scott v. Sebree, 986 S.W.2d 364, 372 (Tex. App.CAustin 1999, pet. denied). The parties do not dispute the existence of valid contracts.

The First Contract

Apparel claims the City breached the First Contract by denying Apparel access to conduct on-site measurements of the Fire Department=s employees pursuant to the terms of the contract. The first bid request included a document titled ASpecifications for Fire Fighter Uniform Contract@ (ASpecifications@), which states the successful bidders Awill have the option of sizing all [Houston Fire Department] members at their Houston store location and/or at the Fire Department Quadrant houses.@ The City claims no breach occurred because the parties modified this provision.

A modification of a contract is some change in an original agreement that introduces a new or different element into the details of the contract, but leaves its general purpose and effect undisturbed. EnsearchCorp. v. Rebich, 925 S.W.2d 75, 83 (Tex. App.CTyler 1996, writ dism=d by agr.). To prove a modification, the City must show that Apparel (1) had notice of the change and (2) accepted the change. Price Pfister, Inc. v. Moore & Kimmey, Inc., 48 S.W.3d 341, 349-50 (Tex. App.CHouston [14th Dist.] 2001, pet. denied ). The summary judgment record shows that on January 29, 1999, Apparel=s president wrote to Herbert Hunter, Product Evaluator for the City=s fire department, proposing alternatives to on-site measurements, including a suggestion that the City supply Aforms to be filled out by each employee with name, employee number, waist size, [and] inseam measurement.@ On March 27, Apparel received these measurements from the City without objection, responding only with a request for clarification on thirteen individuals.

We conclude the City showed as a matter of law that Apparel had notice of a change to the method of obtaining measurements and accepted this change. Accordingly, we find the parties modified the contract and the City did not breach the contract by supplying the measurements at Apparel=s request.

Apparel also asserts the City breached the First Contract by failing to give Apparel ninety days to deliver its merchandise to the City. The Specifications state that Apparel=s delivery of the merchandise must be completed Awithin ninety (90) working days after receipt of City of Houston purchase order(s).@ The City=s first purchase order, requesting 11,512 pairs of pants, was provided to Apparel on March 4, 1999. It is undisputed that Apparel did not deliver any merchandise within ninety working days of March 4. The City ultimately gave Apparel a July 30, 1999 deadline to fill the first purchase order.[2] On July 27, Apparel delivered 4,970 pairs of pants to the City, less than half of the ordered allotment. The City rejected the entire shipment because the merchandise did not match the quality of the sample submitted with Apparel=s bid and because the pants were not packaged in accordance with the Specifications. When Apparel informed the City that it could not correct the deficiencies and complete delivery until the second week in November, the City advised Apparel that it was considering Apparel to be in breach of contract.

Apparel contends summary judgment was inappropriate because a fact issue exists as to whether the March 4 purchase order provided sufficient information for Apparel to proceed with its performance. Specifically, Apparel claims it could not move forward on the contract until May 20, 1999, when it received merchandise samples from the City. However, nothing in the First Contract requires the City to provide samples as a pre-condition of a valid purchase order. Further, despite being given additional time to complete delivery of the first purchase order, Apparel=s delivery was incomplete and did not conform with its bid or the Specifications. We reject Apparel=s argument that the City breached the contract by failing to provide Apparel ninety days to deliver the merchandise.

The Second Contract

Apparel also claims the City breached the Second Contract by rescinding it following Apparel=s breach of the First Contract. However, the summary judgment evidence conclusively shows that the City never rescinded the Second Contract. Any action by the City to cancel or rescind a contract must be done by City Council, in an open meeting, acting by resolution or ordinance. See Central Power & Light Co. v. City of San Juan, 962 S.W.2d 602, 612 13 (Tex. App.CCorpus Christi 1998, pet. dism=d). The City submitted an affidavit from the City Secretary, Anna Russell, stating that the City=s records contain no resolution or ordinance rescinding the Second Contract. While it is true that the City has never issued a purchase order under the Second Contract, it had no obligation to do so. Both the First and Second Contracts are Arequirements contracts,@ which do not establish an amount that the City must purchase from Apparel, but merely prohibit the City from purchasing from other sellers. See Merritt Campbell, Inc. v. RxP Products, Inc., 164 F.3d 957, 963 (5th Cir. 1999); see also Tex. Bus. & Com. Code Ann. ' 2.306 (Vernon 1994).

The trial court did not err in granting summary judgment on Apparel=s breach of contract claims. Apparel=s first issue is overruled.

Summary Judgment Evidence

Apparel=s second issue states A[t]he Trial Court erred in ruling that the Summary Judgment was based on all of [Apparel=s] exhibits attached to her response to [the City=s] Summary Judgment.@ The substance of Apparel=s argument is that the trial court erred if it sustained the City=s objections and refused to consider Apparel=s summary judgment evidence. Apparel contends it is not clear from the trial court=s order whether the court was excluding Apparel=s exhibits based on the City=s objections. To the contrary, the court=s order plainly states:

Although the Court agrees with the City=s objections, the Court based its ruling on this Summary Judgment on all the exhibits attached to [Apparel=s] Response. For the purposes of this Judgment, and in ruling on the City=s Motion for Summary Judgment, the Court fully considered [Apparel=s] Response and supporting exhibits.

In other words, notwithstanding the validity of the City=s objections, the trial court considered all Apparel=s exhibits before granting summary judgment to the City. Because Apparel=s second issue presupposes the court did not consider this evidence, it is moot.

The trial court=s judgment is affirmed.

/s/ Leslie Brock Yates

Justice

Judgment rendered and Opinion filed August 8, 2002.

Panel consists of Justices Yates, Seymore, and Guzman.

Do Not Publish CTex. R. App. P. 47.3(b).

[1] No evidence exists that the City ever issued any purchase orders under the Second Contract.

[2] The City concedes that it extended the triggering date for the ninety-day requirement beyond the March 4 purchase order to March 27, 1999, the date Apparel received the fire department employees= measurements.