Party claiming agency status has burden of proof, justices rule

By The SE Texas Record | Jul 23, 2009

Montgomery County District Judge Kathleen Hamilton improperly stuck office building owner Omero Del Papa with a $76,348.91 bill for remodeling work he didn't authorize, appeals judges in Beaumont decided on July 16.

Ninth District judges reversed Hamilton's ruling that Del Papa's company, DB Sterling Investments, had to pay because a tenant contracted for the work as its agent.

"Texas law does not presume agency and the party asserting agency has the burden of proving it," Justice Hollis Horton wrote.

The remodeling contractor didn't prove actual or apparent authority, he wrote.

"Absent either actual or apparent authority, an agent cannot bind a principal," he wrote.

DB Sterling owned a building in The Woodlands and leased a portion of it to B & A Development Group.

In 2006, B & A owner Henry Altman asked Del Papa for more space. They agreed on a price and Del Papa prepared a lease.

Altman didn't execute the lease, but Del Papa gave him access to the space.

Altman asked Jerid Colwell of Pro M & E to remodel the space. They agreed on a price.

Del Papa granted Pro M & E access to the space.

Pro M & E finished the job, but B & A didn't pay for it.

In February 2007, Pro M & E filed a mechanic's lien on the space and sued B & A for breach of contract.

When Pro M & E learned that B & A hadn't signed a lease, Pro M & E amended the lien to assert an agency relationship between B & A and DB Sterling.

In April 2007, Pro M & E filed a breach of contract claim against DB Sterling.

At a bench trial in Hamilton's court, Del Papa said he never authorized Altman to act as his agent with respect to the remodeling.

Del Papa said Pro M & E never sent an invoice to DB Sterling.

Altman said Del Papa never authorized him to act as his agent for any purpose.

Altman said Del Papa told him he would have to pay for everything.

When Del Papa's lawyer asked Colwell if he relied on Altman to pay for the work from the start, Colwell said yes.

When the lawyer asked who else he relied on, Colwell said, "No one."

Hamilton ordered DB Sterling to pay the bill and added interest, bringing the judgment to more than $80,000.

Hamilton made 13 findings of fact and 13 conclusions of law, but Ninth District judges paid more attention to what she didn't find and conclude.

According to Horton, Hamilton didn't find that DB Sterling gave B & A an express right to contract for the remodeling.

Hamilton didn't find that B & A reasonably believed it had authority to contract on DB Sterling's behalf, Horton wrote.

"Additionally, the trial court did not enter an express finding that DB Sterling cloaked B & A with the apparent authority to contract with a third party on its behalf," he wrote.

"The testimony concerning whether B & A had actual authority to enter a remodeling contract as DB Sterling's agent showed that B & A had no actual authority to do so, and there was no evidence to the contrary," he wrote.

"Only after Colwell learned that B & A did not have a leasehold interest following B & A's failure to pay Pro M & E's invoices, all of which occurred after the construction had been completed, did Pro M & E assert an agency theory," he wrote.

Ninth District Justices David Gaultney and Charles Kreger agreed with Horton.

They remanded the case to Hamilton to consider whether she should award attorney's fees to DB Sterling.

Ralph Harrison and Kenna Seiler represented DB Sterling.

William Westcott and Robert Plessala represented Pro M & E.

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