Unreported / Non-Citable
Background
Southern Star Transport sued Los Fresnos Construction for breach of contract and sworn account, seeking approximately $26,508 for materials and hauling services provided during construction of Ramirez Elementary School. The work was performed under a project organized by Descon, a general contractor hired by the school district, which subcontracted with LFC for site work and with Southern Star for materials hauling.
Southern Star submitted invoices to LFC, which forwarded them to Descon for payment. Descon paid the parties through joint checks made payable to both Southern Star and LFC. When Descon encountered financial difficulties and filed for bankruptcy, it failed to pay the balance owed to both Southern Star and LFC. Southern Star filed suit against LFC in February 2019, more than four years after the parties’ dealings ceased.
The trial court entered a take-nothing judgment for LFC after a bench trial, finding that Southern Star had failed to prove a direct contract with LFC and that the suit was barred by the statute of limitations.
The Court’s Holding
The appellate court affirmed the trial court’s judgment. The court found that the evidence established Southern Star’s contract for materials and hauling was with Descon, the general contractor, not with LFC. While Southern Star maintained what it called an “open account” with LFC for administrative purposes (with invoices sent to LFC), the actual payment obligation arose from the contract between Descon and Southern Star, and Descon—not LFC—was responsible for payment upon delivery of materials to the construction site.
The court also affirmed on statute of limitations grounds. Southern Star filed suit in February 2019, more than four years after the parties’ dealings concluded in February 2015. This violated Texas Civil Practice and Remedies Code § 16.004(c), which imposes a four-year limitations period on suits for sworn accounts. The trial court properly determined that the suit was time-barred even if a contract with LFC had existed.
Regarding a threshold issue, the court rejected Southern Star’s argument that LFC failed to file a verified denial. Although LFC’s answer was initially omitted from the appellate record, the trial court clerk subsequently filed an amended record showing that LFC had timely filed a proper verified denial.
Key Takeaways
- In construction disputes involving multiple parties, careful attention to contract formation and payment obligations is critical—administrative routing of invoices does not create contractual liability with intermediary parties.
- Joint check agreements do not necessarily establish a privity of contract relationship between all parties receiving payments; the court will look to the underlying contract terms to determine who is actually liable.
- The statute of limitations for sworn accounts is strictly enforced; parties must file suit within four years of the last transaction, or the claim is barred regardless of the underlying merits.
- In bench trials, appellate courts defer to the trial court’s credibility determinations and factual findings if supported by any probative evidence.
Why It Matters
This decision provides important guidance for material suppliers and subcontractors in construction disputes. The case underscores that formal contract language and payment chains control liability, not informal accounting relationships. Even though Southern Star maintained billing contact with LFC and received joint checks with LFC’s name, the court found no contractual obligation because the underlying supply contract was with Descon. Parties cannot bypass their direct contractors to reach intermediaries by relying on administrative convenience or informal account relationships.
The opinion also serves as a reminder that the statute of limitations for sworn accounts in Texas is a strict, four-year deadline measured from the last transaction date. Construction parties facing payment disputes from past projects must act quickly to preserve claims, particularly when multiple parties and payment chains are involved.