STEVE McKEITHEN, Chief Justice.
Appellants Packard Engineering Associates and Richard Packard (collectively "Packard") appeal the trial court's order denying their motion to dismiss. See Tex. Civ. Prac. & Rem.Code Ann. § 150.002 (West 2011). We affirm the trial court's order in part and reverse in part and remand the cause for further proceedings consistent with this opinion.
Appellees The Sally Group, L.L.C. d/b/a Rio24 Cigars and Premier Bar ("Rio24"), Michael Wilson, Mary Wilson, and Bonny J. Wilson filed suit against appellants and other parties for alleged negligence, breach of contract, violations of the Deceptive Trade Practices Act ("DTPA"), and common-law fraud concerning the design, engineering, installation, and implementation of a humidification system at Rio24's place of business, a cigar bar in The Woodlands, Texas. Michael Wilson alleged that he was Rio24's principal. Michael Wilson and Bonny J. Wilson contended that they were guarantors on Rio24's lease as well as a note. Michael Wilson's wife, Mary Wilson, asserted that she "is also obligated to [Rio24's] creditors by virtue of the fact these would be considered community obligations."
After being hired by the architect, professional engineer Richard Packard of Packard Engineering Associates prepared the engineering drawings for the humidification system at Rio24. Appellees contended that after Rio24 opened, the business experienced problems with excessive humidity in the humidor, and the humidity controller did not work. According to appellees, they received many complaints from customers that cigars were too wet and would not burn properly. Appellees
According to appellees' petition, Rio24's landlord ordered the business to close when the mold was discovered, resulting in Rio24's loss of "its entire capital investment (approximately $800,000.00), its cigar inventory, its revenue stream, which was showing growth and profit as of November, 2010, and the goodwill the business had generated." Appellees also maintain that they had to default on their rental agreement and their business loan, both obligations had been accelerated, and the personal property located on Rio24's premises was seized and sold at auction. Appellees further alleged that they defaulted on other debts, and that the cost of remediating the mold was deducted from Rio24's tenant security deposit. Appellees asserted that Rio24's losses totaled at least $5,000,000, and that Michael Wilson, Mary Wilson, and Bonny J. Wilson had each lost at least $500,000. Appellees alleged causes of action for breach of contract, DTPA violations, common-law fraud, and negligence.
With their petition, appellees provided as their certificate of merit the affidavit of professional engineer Ronald W. Brown of Consulting MEP Engineers. According to Brown, appellees had specified that the humidor maintain a temperature of seventy degrees and 70% relative humidity, while the remainder of the area was to maintain a temperature of seventy-four degrees and 50% relative humidity. Brown noted that there was only one air handling unit (AHU) for the entire lease space, and that "[i]t is very difficult to achieve two different design points ... when there is only one zone off of one AHU." In addition, Brown stated that although the air cooled condensing unit (ACCU) specified by the drawings indicated a 15-ton Trane Model TTA180, the ACCU installed was a 12.5-ton Carrier Model 38ARD016. Brown also indicated that although the drawings indicated a 15-ton Trane Model TWE 180 AHU, a 12.5-ton Carrier Model 40RM-016 AHU was installed. According to Brown, the ACCU is a two-stage model, which
Brown further stated that although the manufacturer's literature for the ACCU advised "for the unit to have a clear discharge path over the top of the unit[,][t]his was not possible in this instance."
According to Brown, there was no vapor barrier between the bar area and the humidor
Brown stated that his review of the drawings revealed that the exhaust air discharge point is located approximately six feet from the outside air intake, but the Building Code requires a minimum of ten feet. Because the outside air intake was 2,200 cfm, the design meant that the space was at neutral air pressure, but should have been designed and operated at "some positive air pressure to prevent unwanted moisture and contaminants from entering the space[;]" and "this amount of outside air will continue to be introduced into the space even if the compressor unit cycles off one of the stages of cooling capacity... [which] will increase space humidity." Brown concluded that a properly designed, constructed, and installed humidification system would not have discharged additional moisture from the humidifier into the supply duct, but instead directly into the humidor; two cooling units should have been installed for the two different areas; and the "amount of outside air should have been pre-treated to remove any excess moisture." Brown opined that Packard failed to meet the standard of care by trying to design a system that has "two separate temperature control zones off a single air handling unit[;]" trying to "design a system that has two separate humidity zones off one unit[;]" failing to design the ACCU in accordance with the manufacturer's recommendations; placing the exhaust air discharge too close to the outside air makeup; designing a system in which "the [ACCU] may cycle off as required by the temperature sensor, and permit too much moisture to enter the humidity-controlled space[;]" and failing to "verify the requirement for a moisture barrier between the two zones of moisture control."
Packard filed a motion to dismiss, in which Packard asserted that appellees failed to comply with the requirements of section 150.002 of the Texas Civil Practice and Remedies Code, which mandates the filing of a certificate of merit that specifically sets forth, for each theory of recovery, the alleged negligence, error, or omission of Packard. See Tex. Civ. Prac. & Rem.Code Ann. § 150.002(b), (e). The trial court signed an order denying Packard's motion to dismiss, and Packard filed this appeal. See id. § 150.002(f) ("An order granting or denying a motion for dismissal is immediately appealable as an interlocutory order.").
In its sole appellate issue, Packard complains that the trial court should have granted the motion to dismiss because although the certificate of merit addressed appellees' negligence claim, it did not address appellees' breach of contract, DTPA, and fraud claims. We review an order denying a motion to dismiss pursuant
Section 150.002 of the Civil Practice and Remedies Code
Tex. Civ. Prac. & Rem.Code Ann. § 150.002(a), (b), (e) (emphasis added). "`Factual basis' is not defined in the statute, but courts have held that the purpose of the certificate of merit `is to provide a basis for the trial court to conclude that the plaintiff's claims have merit.'" Durivage v. La Alhambra Condo. Ass'n, No. 13-11-00324-CV, 2011 WL 6747384, at *3 (Tex.App.-Corpus Christi Dec. 21, 2011, pet. dism'd) (mem. op.) (quoting Criterium-Farrell Eng'rs, 248 S.W.3d at 400). However, "[s]ection 150.002(b) does not require that the `third-party' `licensed professional engineer' explain the law to the trial court." Nangia v. Taylor, 338 S.W.3d 768, 772 (Tex.App.-Beaumont 2011, no pet.). The statute does not require a claimant to marshal his evidence, and it does not foreclose the defendant from later challenging the sufficiency of the claimant's evidence or the admissibility of the expert's opinion by filing a motion to exclude the testimony or a motion for summary judgment. See Tex. Civ. Prac. & Rem.Code Ann. § 150.002; CBM Eng'rs, Inc. v. Tellepsen Builders, L.P., ___ S.W.3d ___, 2013 WL 125713, at *6 (Tex. App.-Houston [1st Dist.] 2013, pet. filed) (not yet released for publication).
We address appellees' breach of contract and DTPA causes of action together. Appellees contended that Packard entered into a contract to design, engineer, construct,
As discussed above, Brown's affidavit stated that the ACCU and AHU installed at Rio24's premises were not made by the manufacturer specified in the drawings, nor were they the capacity specified in the drawings. Brown opined that Packard was negligent and failed to meet the industry standard of care for design and engineering by designing two separate temperature control zones off of a single air-handling unit, causing excessive moisture to form in the duct system during the cooling mode; did not install the ACCU in accordance with the manufacturer's recommendations; placed the air discharge location too close to the outside air makeup; designed the system in a way "where the [ACCU] may cycle off ... and permit too much moisture to enter the humidity controlled space[;]" and "failed to verify the requirement for a moisture barrier between the two zones of moisture control." Although Brown's affidavit couches some of the enumerated acts and omissions of Packard in terms of negligence, the assertions also provide a "factual basis" for appellees' breach of contract claim.
The Supreme Court has held that a contractual relationship may create duties under both contract and tort law, and "[t]he acts of a party may breach duties in tort or contract alone or simultaneously in both." Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986). Therefore, we reject the notion that the portions of Brown's affidavit that characterize Packard's acts and omissions as negligent may not also serve to provide a factual basis for appellees' breach of contract claim. As discussed above, the statute does not foreclose appellants from later challenging the sufficiency of appellees' evidence as to a particular cause of action or the admissibility of the expert's opinion by filing a motion to exclude the testimony or a motion for summary judgment. See Tex. Civ. Prac. & Rem.Code Ann. § 150.002. The issue of whether appellees' causes of action most appropriately properly sound in negligence, breach of contract, or both, is one that the parties may litigate at a later stage of the proceeding, since the purpose of the certificate of merit is simply to provide a basis for the trial court to conclude that appellees' claims have merit. See Criterium-Farrell Eng'rs, 248 S.W.3d at 400.
We turn now to appellees' fraud claim. Appellees alleged that Packard "concealed from Rio24 the true nature and extent of the problems associated with the humidification system, most particularly its flawed design, engineering[,] and construction[]" and that although Packard "knew the humidification system designed, engineered[,] and installed for Rio24 was flawed, would never operate as intended, and would ultimately fail," Packard never informed Rio24 of the facts. According to appellees, Packard should have known that the alleged false representations to Rio24 would adversely affect its business and that if Packard had "told Rio24 the truth, Rio24 may have pursued other options that would have allowed it to correct the flawed, ill-designed humidification system and remain in business through today."
The elements of fraud are: (1) a material representation was made; (2) the representation was false; (3) the speaker knew when the representation was made that it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) in making the representation, the speaker intended that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party suffered injury. Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 337 (Tex.2011). The affidavit does not identify or otherwise discuss any knowingly false or recklessly-made representations by Packard upon which Packard intended appellees to rely to their detriment. See id.; see also Garza v. Carmona, 390 S.W.3d 391, 398 (Tex.App.-Corpus Christi 2012, no pet.) (not yet released for publication). Therefore, we conclude that the trial court abused its discretion by denying Packard's motion to dismiss with respect to appellees' fraud claim. Accordingly, we sustain Packard's issue in part and remand the cause to the trial court to determine whether the dismissal of appellees' fraud claim should be with or without prejudice to refiling. See Tex. Civ. Prac. & Rem. Code Ann. § 150.002(e); Tex.R.App. P. 43.2(d); Garza, 390 S.W.3d 391, 398.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.