EVELYN V. KEYES, Justice.
In this dispute over construction trust funds, appellant, Andrew Choy, appeals the trial court's judgment in favor of appellee, Graziano Roofing, Inc. (Graziano). In three issues, Choy argues that the trial court erred in (1) rendering judgment, because Graziano failed to prove each element to establish a violation of the Texas Trust Fund Act (the Act)
We affirm.
In 1998, Lake Olympia Development Corporation (Lake Olympia) created Windwater Homes, L.L.C. (Windwater), a wholly owned subsidiary,
On December 3, 2002, Graziano sued Lake Olympia and Windwater. In its third amended petition, Graziano added claims against Choy, individually. Graziano alleged that, instead of paying Graziano with the construction loan proceeds, Choy had made the decision to misapply or had actually misapplied the funds received for that purpose by Windwater, which he controlled. This appeal follows from the bench trial on Graziano's "Third Amended Petition," filed July 23, 2004. For purposes of trial, Graziano relied on Windwater records it was able to reconstruct following Windwater's bankruptcy. It sought recovery for only 21 of the properties. The damages sought reflected the total principal amount of $134,396.09 for these 21 properties—the original total invoice amount of $226,336.10 for all 39 properties reduced to reflect a payment made by the Windwater bankruptcy trustee to Graziano and by the debt on properties not included in the suit. Graziano also sought its attorney's fees
Following Windwater's bankruptcy, the case was tried to the bench. At trial, Citibank's loan service manager for Windwater, Vernon Facundo, testified that the draw construction sheet included in the business records was the sheet used by the inspector for each draw request. Facundo testified that when a draw request was received by Citibank, the inspector used that sheet to go out to the particular property and document that whatever item was being billed at that time was complete. Facundo also testified that roofing work was typically completed at 35.5 percent of total completion of the house and that the draw was then funded. These procedures were followed with regard to Windwater. In addition, Citibank's loan information sheets were used to annotate all the applicable loan information from origination through payoff, together with all advances. Citibank relied upon the construction draw requests to disburse funds to Windwater. Each referenced a percentage of completion. Citibank's wire transfer form was then used to wire out the construction funds to Windwater's checking account at another bank.
Choy testified that he started working for Lake Olympia in 1983 as president and
Windwater paid its contractors after they submitted an invoice to Windwater's superintendent, who initialed and approved payment. The bookkeeper then issued a check, which Choy would look at when it came to him for signing. Windwater made draw requests on banks in order to pay its contractors. Choy testified that Tan Yu "possibly" took some of the funds received from these draw requests overseas. He did not authorize the construction loan proceeds going overseas, but he knew the loan construction proceeds owed to Graziano were taken overseas because "[t]his particular bank, there's no separate account. It's just the account for the company."
Choy admitted that if somebody signed a draw request for completed roofing work it would be safe to say that someone at Windwater thought the roof was complete on the property. He also admitted that Windwater did not use construction loan proceeds to pay Graziano Roofing for some properties. He agreed it was "possible" that some of the construction loan home proceeds were sent to Tan Yu. Choy issued check and wire transfers from Windwater's operating accounts to Tan Yu when Yu directed him to do so. Choy stated that he did not have a choice as to whether to send money to Tan Yu rather than to contractors because Tan Yu was the owner of the company, and, if he had refused to comply, he would have been fired. Choy admitted he knew that Graziano and other contractors did not get paid for work they had completed. Choy also admitted that bank interest and some payrolls were not paid. Tan Yu also knew the contractors were not being paid for their work. Approximately $4.723 million was wired from Windwater to Tan Yu.
Adam Stanford, Vice-President of Graziano, testified that Exhibit 55 was a summary of invoices for amounts due Graziano for its work for Windwater. The checks Graziano received for payment were signed by Choy or Brigit Halloran. Stanford further testified that Graziano was seeking $134,396.90 in damages, reduced by about $2,600 due to the discovery of a mathematical error.
On June 7, 2007, the trial court entered a final judgment that Graziano recover from Choy the sum of $131,796.09 plus pre-judgment interest and attorney's fees of $65,000, together with costs of unsuccessful appeal, costs of court, and post-judgment interest. On July 12, 2007, the trial court issued findings of facts and conclusions of law.
In an appeal of a judgment rendered after a bench trial, the trial court's findings of fact have the same weight as a jury's verdict, and we review the legal and factual sufficiency of the evidence used to support them just as we would review a jury's findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.1994); In re K.R.P., 80 S.W.3d 669, 673 (Tex.App.-Houston [1st Dist.] 2002, pet. denied). When challenged, a trial court's findings of fact are not conclusive if, as in the present case, there is a complete reporter's record. In re K.R.P., 80 S.W.3d at 673; Amador v.
In his first issue, Choy argues that the trial court erred in rendering judgment because Graziano failed to prove each element necessary to establish a violation of the Act. Specifically, Choy contends that Graziano was required to prove (1) the existence of trust funds, as defined by the Act, related to CitiBank and Frost Bank; (2)(a) Choy's duty to Graziano as a trustee under the Act to pay out funds to Graziano as a beneficiary under the Act, and (b) the tracing of funds from any loan proceeds to the timing of the receipt and disbursement of the funds; and (3) the misapplication of trust funds by Choy, rendering him personally liable under the Act. Choy argues that the trial court's findings with respect to those elements were not supported by legally and factually sufficient evidence.
The Texas Supreme Court has indicated that the Act should be construed liberally in favor of laborers and materialmen. RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex.1985). The Act was specifically enacted to serve as a special protection for subcontractors and materialmen, when contractors refuse to pay the subcontractor or materialman for labor and materials. Taylor Pipeline Constr., Inc. v. Directional Road Boring, Inc., 438 F.Supp.2d 696, 715 (E.D.Tex.2006); Herbert v. Greater Gulf Coast Enters., Inc., 915 S.W.2d 866, 870-71 (Tex.App.-Houston [1st Dist] 1995, writ denied).
Choy first argues that legally insufficient evidence supports the existence of "trust funds" within the meaning of the Act. Specifically, he argues that "there is no evidence, or insufficient evidence to support Findings of Fact Nos. 13-23, 27-34 and 40." Choy contends that Graziano was required to prove "as to each Windwater loan, that loan receipts were received by Windwater or Mr. Choy, (2) that the loan receipts were from a loan for the improvement of specific real property, and (3) that the loan was secured by a lien on that same property." He contends the
The findings of fact challenged in this section state:
Section 162.001 of the Act, entitled "Construction Payments and Loan Receipts as Trust Funds," provides,
TEX. PROP.CODE ANN. § 162.001(a), (b) (Vernon 2007).
The loan documents introduced into the record show that Windwater received home construction loan funds borrowed from Citibank and Frost Bank for the purpose of improving the specific real property in Texas for which Graziano seeks damages. The loan documents further show that each loan was secured by a
Specifically, according to Citibank's "Construction Lending Department Inspection Sheet," Citibank considered roofing work complete for the purpose of disbursing construction loan proceeds to Windwater at the 35.5% completion point. In addition, Citibank's representative, Vernon Facundo, testified that Exhibit 100
The record of Citibank's construction lending to Windwater shows, through the draw requests, wire transfer forms, and confirmations entered in the record by Graziano, that Graziano did roofing work on the 11 homes whose roofing was more than 35% complete and for which Graziano seeks recovery in this suit; that Graziano invoiced Windwater in a specific amount for its completed work on each of those homes; that Windwater promptly sent a draw request to Citibank in response to each invoice; and that, upon receipt of the draw requests, Citibank immediately funded each request by wire to Windwater for the invoiced roofing work. The 11 Citibank properties on which more than 35% of the roofing was completed by Graziano and for which draws were made, were 7138 Turtle Lagoon Row (89% complete); 7126 Turtle Lagoon Row (84% complete); 7106 Harmony Cove (74% complete); 7139 Windwater Lagoon (41.5% complete); 150 Palm Boulevard (78% complete); 6023 Arrowana Lane (89% complete); 6027 North Arrowana Lane (75.5% complete); 7118 Harmony Cove (47.5% complete); 7114 Harmony Cove (46.5% complete); 7110 Laguna Villas Lane (36.5% complete); and 226 Flamingo Island Drive (90.5% complete). The property at 7110 Harmony Cove was listed as being only 33.5% complete, rather than a minimum of 35% complete. Therefore, Graziano allowed for a $2600 reduction of the amount that would be due for complete roofing for 7110 Harmony Cove. The amount due Graziano for labor and materials on the property at 7110 Harmony Cove was likewise properly invoiced, and funds to pay Graziano's invoice were requested and received by Windwater.
Frost Bank records show that Windwater submitted six Construction Draw Requests to Frost Bank. These Construction Draw Requests encompassed the nine Frost Bank properties on which Graziano had done the roofing. Each of the Construction Draw Requests was signed by Choy or Halloran as an officer and agent of Windwater, and each stated "Roof Complete."
Viewing the evidence in the light most favorable to Graziano and indulging every reasonable inference in its favor, we conclude that the evidence is legally sufficient to support the challenged findings. See Associated Indem. Corp., 964 S.W.2d at 285-86. Considering and weighing all of the evidence, we further conclude that the challenged findings are not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust, and therefore the evidence is factually sufficient. Ortiz, 917 S.W.2d at 772. Accordingly, after reviewing the exhibits, we conclude that the trial court correctly classified the funds obtained from Frost Bank and Citibank as construction trust funds requested by Windwater to pay its obligations to Graziano for completed roofing work on the properties at issue in this suit and wire transferred to Windwater's account by Citibank and Frost Bank for that purpose. See TEX. PROP.CODE ANN. § 162.001(b).
Choy argues, however, that, in addition, Graziano failed to introduce "any documentary evidence of the dates when Graziano supplied labor and/or materials to each property . . ., the dates any invoices were issued to Windwater, or the dates any obligations owed to Graziano by Windwater were due and payable under the terms of any invoice issued to Windwater under the terms of any contract with Windwater." Choy provides no argument or authority for the inclusion of the requirements he seeks to add to the proof of the existence of trust funds under § 162.001(b) of the Act. It is cardinal law in Texas that a court construes a statute, "first, by looking to the plain and common meaning of the statute's words" and, if the language is unambiguous, adopting the interpretation supported by the plain meaning of the provision's words and terms. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex.1999); see TEX. GOV'T CODE ANN. §§ 311.011; 312.002 (Vernon 2005). Courts "may add words into a statutory provision only when necessary to give effect to clear legislative intent," and "[o]nly truly extraordinary circumstances showing unmistakable legislative intent should divert us from the enforcing the statute as written." Fitzgerald, 996 S.W.2d at 867. We find no support in the statute, the case law, or the rules of statutory construction for the requirements Choy seeks to add to the proof of "trust funds" under section 162.001(b) of the Act, and we decline to add them.
Choy also argues that the evidence is legally and factually insufficient to show
The challenged findings state:
The challenged conclusions of law state:
Section 162.002, entitled, "Contractors as Trustees," provides, "A contractor, subcontractor, or owner or an officer, director,
Choy testified that he was the President of Windwater and that he had control over the funds received from Frost Bank and Citibank. Furthermore, Adam Stanford, the Vice-President of Graziano, testified that he received checks from Windwater and that the checks were signed by Choy. Choy produced no contrary evidence. Based on this evidence, we conclude that Choy was a trustee of construction trust funds. See C & G, Inc. v. Jones, 165 S.W.3d 450, 455-56 (Tex. App.-Dallas 2005, pet. denied) (concluding that officers of company had control or direction of trust funds); see also Nuclear Corp. of America v. Hale, 355 F.Supp. 193, 197 (N.D.Tex.1973), aff'd, 479 F.2d 1045 (5th Cir.1973) (holding that company's president was trustee of trust funds because he had control and direction over funds).
Likewise, Graziano was properly classified as a beneficiary of trust funds. A subcontractor who furnishes labor or material for the construction or repair of an improvement on specific real property in this state is a beneficiary of any trust funds paid or received in connection with the improvement. TEX. PROP.CODE ANN. § 162.003 (Vernon 2007). The evidence established that Graziano, a subcontractor, installed roofs on a number of homes for Windwater, including those homes for which recovery was sought. Choy produced no contrary evidence. We thus conclude that Graziano was a beneficiary of any trust funds paid or received in connection with its roofing services. See id.
Choy contends, however, that, as a trustee under the Act, he had no duty to pay out trust funds to a subcontractor who furnished labor or materials for the construction or repair of specific real property "unless and until certain events occur in a particular sequence." Specifically, Choy contends that Graziano had to submit "evidence that the labor and/or materials were provided prior to the receipt of trust funds and that the payment obligation arising therefrom is due and payable within 30 days of receipt of the trust funds." (Emphasis in original). He contends that section 162.031 of the Act, entitled "Misapplication of Trust Funds," "permits a recipient of loan proceeds to use such proceeds for any purposes whatsoever provided they do not have at the time such loan proceeds are received any outstanding `current or past due obligations' as defined under Property Code Section 162.005(2)." He further contends that Graziano ignored the definition of "current or past due obligations" in section 162.005(2) and that there is a "complete absence of any evidence that complies with Act's definition of `current and past due obligations.'" Choy states that the term "due and payable" "is limited to `no later than 30 days following receipt of the trust funds.'" He contends that "[i]f an obligation is not due and payable within 30 days of receiving the trust funds then those funds are not trust funds under the definitions of the Trust Fund Act." Finally, Choy claims that "there is no evidence in the record to prove" that Windwater was obligated to Graziano for labor or materials furnished in the direct prosecution of work under a construction contract prior to the receipt of trust funds and that "such obligations were due and payable 30 days from the receipt of trust funds."
Section 162.031(a) of the Property Code provides,
TEX. PROP.CODE ANN. § 162.031(a) (Vernon 2007).
Section 162.005 of the Property Code defines "current or past due obligations" as used in section 162.031 as "those obligations incurred or owed by the trustee for labor or materials furnished in the direct prosecution of the work under the construction contract prior to the receipt of the trust funds and which are due and payable by the trustee no later than 30 days following receipt of the trust funds." TEX. PROP.CODE ANN. § 162.005 (Vernon 2007).
Under the Code Construction Act, it is presumed that in enacting a statute the Legislature intended that the entire statute be effective, that the result be just and reasonable, and that it be feasible of execution and in the public interest. TEX. GOV'T CODE ANN. § 311.021 (Vernon 2005). In construing a statute, the court considers the object sought to be attained and the consequences of a particular construction. Id. § 311.023 (Vernon 2005). Also, words are given their ordinary meaning. Id. § 312.002; Fitzgerald, 996 S.W.2d at 865. Therefore, in construing a statute, we generally focus on and will follow the plain language of the statute unless following the plain language would lead to absurd and unintended consequences. Fleming Foods, Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex.1999).
As a trustee of the funds borrowed by Windwater from First American Bank and Frost Bank for the improvement of specific real property secured in whole or in party by a lien, Choy clearly had a duty under the Act to pay out trust funds for all "current and past due obligations" owed for labor or materials furnished by Graziano under the construction contract for work completed on specific properties. See TEX. PROP.CODE ANN. §§ 162.001, 162.002, 162.003, 162.031. To misapply trust funds under the Act, the trustee must have disbursed or otherwise diverted trust funds without first fully paying all "current or past due obligations," namely "those obligations incurred or owed by the trustee for labor or materials furnished in the direct prosecution of the work under the construction contract prior to the receipt of the trust funds and which are due and payable by the trustee no later than 30 days after receiving the trust funds." TEX. PROP.CODE ANN. §§ 162.005, 162.031.
That section 162.005(2) defines "due and payable obligations" to include all obligations "due and payable by the trustee no later than 30 days following receipt of the trust funds" does not mean, as Choy contends, that "[i]f an obligation is not due and payable within 30 days of receiving the trust funds then those funds are not trust funds under the definitions of the Trust Fund Act." Nor does it mean that the trustee has no obligation to pay out trust funds it has requested from a bank pursuant to a construction loan to pay an obligation unless the beneficiary of the funds proves that the "obligations were due and payable 30 days from the receipt of trust funds," and that the trustee has no obligation to pay obligations already due and payable when an invoice was sent to the trustee triggering the trustee's draw request for construction loan funds, as here. An obligation that is due and payable by the trustee at the time he requests construction loan funds to pay an invoice he has received for "obligations incurred or owed by the trustee for labor or materials furnished in the direct prosecution of the
Any construction of the statute such as that Choy urges upon the Court would be absurd. First, it would remove from the definition of "current and past due obligations" all past due obligations, rendering the statutory definition of "past due obligations" meaningless. Second, it would mean that borrowers like Windwater could request construction loan funds on the basis of an invoice for completed work, as here, and not have to pay the beneficiary whose invoice supported the borrower's draw request because the beneficiary invoiced the borrower before it requested the funds and did not specify that it required payment within 30 days after the borrower received the funds that were released by the bank to the borrower on the basis of the invoice. We find no basis for adding this requirement to the language of the statute. See Fitzgerald, 996 S.W.2d at 867.
We hold that, by the plain language of the Act, the words "due and payable . . . no later than 30 days" after a trustee's receipt of construction trust funds include invoices already due and payable at the time trust funds are requested by a trustee. See TEX. PROP.CODE ANN. §§ 162.005, 162.031.
The evidence supports the challenged findings under the proper construction of the statute. Specifically, the Citibank and Frost Bank records admitted into evidence and cited above in response to the first part of Choy's first issue establish that at the time Frost Bank and Citibank disbursed funds to Windwater for construction costs for the 21 properties identified in Graziano's petition Graziano had supplied roofing materials and performed roofing services on those properties; the roofing was counted as complete on 20 of those 21 properties and 33.5% complete out of the necessary 35% required by Citibank for work to be counted as complete on the 21st house; Windwater made draws upon Citibank and Frost Bank for roofing supplies and services as the work was completed; and Citibank and Frost Bank immediately funded each draw request by wire transfer to Windwater.
Graziano also produced a "Summary of Draw Request, Wire Transfer Form and Wire Transfer Confirmation" for Citibank, summarizing this information, as well as a "Summary of Completion and Dollars Disbursed or Funded for Citibank and Graziano Roofing's Invoice Amount," referencing exhibits and summarizing the percentage of completion of each property, the amount drawn, the amount of Graziano's invoice for the property, the amount of reduction from the original invoice, and the funds wired to Windwater. Similarly, it produced a "Summary of Completion and Funds Disbursed from Frost Bank," stating the date of the draw request for roofing work on each property, the Windwater agent making the request, the draw amount, the status of the roof as complete, the source exhibits showing the draws funded, the amount of Graziano's invoice, and the amount of the invoice reduction. No objection was made to any of these exhibits.
These exhibits show that Windwater's obligation to pay Graziano for the properties for which Graziano seeks recovery under the construction contract was owed by the trustee for labor and materials furnished in Graziano's direct prosecution
Choy produced no evidence to the contrary.
Viewing the evidence in the light most favorable to Graziano and indulging every reasonable inference in its favor, we conclude that the evidence is legally sufficient to support the challenged findings. See Associated Indem. Corp., 964 S.W.2d at 285-86. Considering and weighing all of the evidence, we further conclude that the challenged findings are not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust, and therefore the evidence in support of the challenged findings is factually sufficient. Ortiz, 917 S.W.2d at 772.
Choy contends, however, that even when obligations are current or past due under the statute, the Act "does not prioritize what beneficiaries get paid first from loan proceeds when there are several beneficiaries," nor does it "provide that a trustee has misapplied trust funds where the loan receipts are simply insufficient to satisfy all then current or past due obligations." This argument is inapplicable in this case because there is no evidence of additional beneficiaries entitled to the same draw proceeds whom Choy failed to pay or whom Choy paid instead of paying Graziano from "simply insufficient" funds. Rather, the record evidence shows that Windwater made draws on Citibank and Frost Bank pursuant to its contracts with them to pay invoices received from Graziano for completed roofing work on specified properties and that it did not pay Graziano. Choy testified that, Tan Yu, the owner of Windwater, of which Choy was president, and Lake Olympia, started removing money from the commingled funds of the two companies, amounting ultimately to $4.732 million; that Tan Yu "possibly" took overseas some of the funds received from the draw requests Windwater made on the banks to pay its contractors; and that he, Choy, knew the loan construction proceeds owed to Graziano were taken overseas because "[t]his particular bank, there's no separate account. It's just the account for the company." Choy admitted he knew that Graziano did not get paid for work it had completed.
Choy also attempts to inject into the proof of a violation of section 162.031(a), governing the misapplication of construction trust funds, a requirement that the beneficiary—here, Graziano— must provide direct evidence of the specific dates on which it performed work on each property "establishing precisely when labor or materials were furnished by a beneficiary to a particular property and the precise terms of payment agreed to with the owner." Choy also contends that Graziano had to introduce into evidence its contract with Windwater "with specific payment terms." Choy's attempt to add to the requirements supported by the plain language of section 162.031(a) is no more supportable here than his attempt to add requirements to the interpretation of sections 162.001 and 162.005(2) of the Act. See Fitzgerald, 996 S.W.2d at 865; TEX. GOV'T CODE ANN. §§ 311.023; 312.002. We decline to impose additional requirements to the proof of a violation of section
Although there is no tracing requirement in the language of the statute, Choy also contends that "Graziano [had to] offer evidence tracing funds from any loan proceeds or bank accounts to establish the timing of the receipt and alleged disbursement of funds." Choy relies on Kirschner v. State, 997 S.W.2d 335 (Tex.App.-Austin 1999, pet. ref'd), as support for his claim.
In Kirschner, the contractor, Kirschner, was building a home for the buyers and sending bills for labors and materials. Once the buyers believed that Kirschner was billing them for materials that they had already paid for and labor that had never been performed, they fired him. It was later determined that Kirschner had not paid 17 subcontractors, prompting an indictment by the State. After he was convicted, Kirschner appealed, arguing that the evidence was legally insufficient to show that he misappropriated trust funds. This Court concluded that the State offered no evidence as to "when ten of the twelve subcontractors and vendors named in the indictment furnished the labor or materials for which they were not paid by Kirschner. Absent this evidence, the State failed to prove that there was a current or past due obligation owed these ten alleged beneficiaries at the time Kirschner received trust funds." Id. at 341. However, the State introduced into evidence copies of invoices submitted by the two remaining subcontractors listed in the indictment, together with evidence that Kirschner had made draws on loan proceeds committed to those projects and had not used the trust funds he received to pay those obligations. Id. at 341-42. Bank records and Kirschner's own cost documentation showed that he wrote many checks against trust funds after the obligations to the two sub-contractors became payable, most of them payable to beneficiaries of the trust, but one payable to his wife and one to himself. Id. at 342. Because Kirschner paid himself before paying his obligations to trust beneficiaries, the court held that the subcontractors had established a misapplication of trust funds. Id. The court rejected Kirschner's argument that the State was required to trace the flow of funds and prove that any questionable payments were not, in fact, payments directly related to the project. Id. at 342-43.
Here, the record contains ample, unrebutted evidence that Graziano provided labor and materials for the roofing work on the 21 projects for which he sought recovery in this lawsuit; that it invoiced the work on each of these properties upon completion for specific amounts of money,
Finally, Choy argues that no evidence, or factually insufficient evidence,
The findings of fact challenged in this section state:
The conclusions of law challenged in this section state:
Choy contends that "[a]lthough the phrase `directly or indirectly retains, uses, disburses, or otherwise diverts trust funds' is not statutorily defined, case law provides guidance on evidence need to prove this element under Property Code [section] 162.031(a)." Specifically, he contends that, in Kirschner, the court found that checks paid to non-beneficiaries at the time current and past due obligations remained outstanding evinced a misapplication of trust funds by the trustee. See Kirschner, 997 S.W.2d at 342. Choy also cites Morelli v. State, 9 S.W.3d 909, 912 (Tex.App.-Austin 2000, pet. ref'd), for the proposition that no segregation of funds by construction projects is required and that the intent to defraud must be shown to establish the misapplication of funds. We find both Kirschner and Morelli to be inapplicable because they do not correspond to the circumstances of this case.
Here, Choy testified that he wired over $4.3 million to Tan Yu. He testified that he wired money that should have gone to contractors and that he and Tan Yu knew that contractors were not getting paid.
To prove the misapplication of construction trust funds, the plain language of the statute required only that (a) a trustee "intentionally or knowingly or with intent to defraud directly or indirectly" (b) "retain[], use[], disburse[], or otherwise divert[] trust funds" (c) "without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries." TEX. PROP.CODE ANN. § 162.031(a). Viewing the evidence in the light most favorable to Graziano and indulging every reasonable inference in its favor, we conclude that the evidence is legally sufficient to support the challenged findings. See Associated Indem. Corp., 964 S.W.2d at 285-86. Considering and weighing all of the evidence, we further conclude that the challenged findings are not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust, and therefore the evidence in support of the challenged findings is factually sufficient. Ortiz, 917 S.W.2d at 772.
We overrule Choy's first issue.
In his second issue, Choy argues that the "trial court erred in concluding that liability exists under the Trust Fund Act of intra-company transfers of funds."
Choy does not challenge a specific finding of fact or conclusion of law. Rather, he states that although Choy testified that he and others had the authority to and did wire money to Tan Yu, the owner of lake Olympia and Windwater, of which Choy was president, "there was no testimony or documentary evidence indicating exactly when these transfers were made, the sources of the transferred funds, the amount of each transfer, and who made the individual transfers." Choy contends that Graziano failed to carry its burden of proving that funds were "diverted, disbursed, or misapplied." He further contends that "the fact that the funds were never disbursed by Mr. Choy, but remained within the corporate structure, should not cause Mr. Choy to be held personally liable under the Trust Fund Act."
Choy again attempts to add requirements of proof not contemplated by the plain language of the case law, contrary to the canons of code construction. See Fitzgerald, 996 S.W.2d at 865; TEX. GOV'T CODE ANN. §§ 311.023; 312.002. Moreover, the authorities he cites are inapplicable under the circumstances of this case. There is no evidence that construction trust funds received from Frost Bank and Citibank to pay Graziano's invoices "remained within the corporate structure." Rather, there is unrefuted evidence that they were received by Windwater in response to draw requests made by Windwater to the banks to pay Graziano's invoices for completed roof work, that they were not used to pay Graziano, that they were commingled with
Again, we "may add words into a statutory provision only when necessary to give effect to clear legislative intent," and "[o]nly truly extraordinary circumstances showing unmistakable legislative intent should divert us from the enforcing the statute as written." Fitzgerald, 996 S.W.2d at 867. There is no such intent expressed here, and increasing the beneficiary's burden of proof of the misapplication of trust funds by requiring him to prove the exact method by which a trustee's disposed of trust funds not used to pay the beneficiary—proof within the trustee's control—is plainly contrary to the legislative intent that the beneficiary prove only that the trustee "intentionally or knowingly or with intent to defraud, directly or indirectly retain[ed], use[d], disburse[d], or otherwise divert[ed] trust funds without first fully paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds." TEX. PROP.CODE ANN. § 162.031(a).
We overrule Choy's second issue.
In his third issue, Choy argues that the trial court erred in awarding Graziano prejudgment interest based on the interest rate contained in the Texas Prompt Pay Act. Choy contends that conclusions of law 15 and 17 are erroneous.
The relevant conclusions of law provide,
Graziano responds that Choy never raised this argument at trial and that therefore the issue is waived.
To make these claims on appeal, Choy was required to present these complaints to the trial court. See TEX.R.APP. P. 33.1 (preserving error); see also Allright, Inc. v. Pearson, 735 S.W.2d 240, 240 (Tex.1987) (error regarding award of prejudgment interest must be preserved); Miller v. Kendall, 804 S.W.2d 933, 945 (Tex.App.-Houston [1st Dist.] 1990, no writ) (motion to amend or correct judgment or motion for new trial is proper vehicle for preserving error in judgment); Wohlfahrt v. Holloway, 172 S.W.3d 630, 639 (Tex.App.-Houston [14th Dist.] 2005, pet. denied) (error regarding postjudgment interest is waived if not complained of at trial level). We
We overrule Choy's third issue.
We affirm the judgment of the trial court.
Justice JENNINGS, concurring in the judgment only.
