Is a subcontractor’s performance made impossible by a designer’s incomplete plans or the defective work of another subcontractor? Under those circumstances, is the subcontractor legally discharged from performing its contractual obligations?  The Dallas Court of Appeals, in a lengthy opinion, recently addressed this issue.

In EM Building Contractor Services, LLC v. Byrd Building Services, LLC, Byrd, a general contractor, filed suit against EM Building, a drywall subcontractor, over three separate hotel projects located in Texas.  After EM Building failed to meet project schedule, failed to provide evidence of required insurance coverage, and subcontracted all the work to others without permission, Byrd sent notices of default and demands to cure.  After Byrd ordered full work stoppage on two of the projects until the defaults were cured, EM Building abandoned the projects. Byrd completed the projects using other subcontractors and, not surprisingly, filed suit against EM Building.

Among the many defenses that EM Building asserted was impossibility.  It claimed that the design plans for one of the projects were incorrect and the framing subcontractor’s work on another project was out of tolerance, delaying installation of the drywall.  The Court categorically rejected EM Building’s arguments, finding that the impossibility defense was inapplicable.

The Court discussed that impossibility comes in two flavors: original and supervening.  “Original” impossibility exists when the contact was to something that from the outset was impossible.  “Supervening” impossibility, in contrast, occurs after the contract is made and party’s performance is made impracticable without fault by an event that the parties assumed would not occur.

While the delays caused by others made it more difficult for EM Building to perform its work, they did not excuse EM Building’s performance.  In the Court’s eyes, a change in the degree of difficulty or expense in performing does not amount to impracticability unless it is “well beyond the normal range”, whatever that may happen to mean.  The party claiming impossibility must also show that it used reasonable efforts to overcome the obstacles and that even with those efforts, performance was impracticable.

As applied to EM Building’s defenses and evidence, the Court did not find that any of the issues EM Building encountered or alleged rose to the level of impossibility of performance.  Neither the incorrect architectural plans nor the incomplete or improper work of trades upon whose work the drywall was to be installed created original or supervening impossibility that discharged EM Building’s performance.

After going through a myriad of other defenses that EM Building asserted as well as the claims Byrd brought, the Dallas Court of Appeals affirmed the summary judgment issued at the trial court.  Byrd walked away with a judgment against EM Building for $177,199.23 in actual damages and $85,185.27 in attorney’s fees and costs.  Whether it can collect on that judgment is unknown.

When determining whether the facts of a potential default fit a particular defense, like impossibility, it is always prudent to consult with legal counsel. The attorneys in our Austin and Dallas offices are available to answer any questions you may have.

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