IN RE: J.A.R. CONCRETE (2026)

ORDER

On this day, the Court considered Appellant Ronald E. Ingall's appeal of the bankruptcy court's Order, In re: J.A.R. Concrete, Inc., No. 24-03001 (Bankr. W.D. Tex. Apr. 28, 2025), ECF No. 179. See Notice Appeal, ECF No. 1. For the reasons set forth below, the decision of the bankruptcy court is AFFIRMED.

I. BACKGROUND

This appeal involves a construction contract between a public mobility authority, Camino Real Regional Mobility Authority (“CRRMA”), and a contractor, J.A.R. Concrete, Inc. d/b/a J.A.R. Construction, Inc. (“JAR”), for a project to widen Pellicano Drive in El Paso, Texas (the “Project”). Appellant's Br. 2, ECF No. 16; Appellee's Br. 9, ECF No. 41. This Order assumes familiarity with the bankruptcy court's April 28, 2025, Opinion, and its comprehensive findings of fact. See In re J.A.R. Concrete, Inc., 673 B.R. 663 (W.D. Tex. 2025). In this Background Section, the Court provides only a brief overview of the facts, which are discussed in more detail where pertinent to the analysis, below.

In 2019, CRRMA invited contractors that had been pre-approved by the Texas Department of Transportation (“TxDOT”) to submit sealed bids for the Project. Appellee's Br. 9. CRRMA accepted JAR's bid for the Project and, on March 18, 2020, CRRMA and JAR entered into a contract (the “Contract”). See AA0174–0175.¹

On April 20, 2020, CRRMA issued the Notice to Proceed, from which the Project was to be substantially completed within 399 “working days,” with an anticipated substantial completion date of October 2021. See AA0174–75, 5163. CRRMA extended the substantial completion period through written and agreed upon modifications based on time impact analyses (“TIAs”), which, cumulatively, resulted in a final July 21, 2022, substantial completion deadline. See AA3907, 3916–17.

Due to a number of problems, “many of which are hotly contested” in this case, the Project remains unfinished. In re J.A.R. Concrete, Inc., 673 B.R. at 673. On December 7, 2022, CRRMA issued a Notice of Intent to Default (the “Cure Notice”) due to JAR's failure to “prosecute the work to assure completion within the number of days specified” and to “perform the work in accordance with the Contract requirements.” AA0859–60. The Cure Notice identified six corrective actions for JAR to take within ten days. Id. And notified JAR that if it failed to perform the corrective actions CRRMA would “provide written notice to [JAR] and the Surety[, the United States Fire Insurance Company,] declaring [JAR] to be in default of the Contract.” Id. Relevant to this appeal, the corrective actions included that JAR must (1) place CRCP reinforcing steel, also known as rebar, between two specific locations, “STA 131+00 and 151+50,” (2) provide evidence of order placement for the water master meter enclosure, and (3) implement and maintain the traffic control as shown on the parties' plan. Id.

On December 22, 2022, CRRMA issued a notice of default, declaring JAR in default for failure to place the rebar between STA 131+00 and 151+50 and failing to implement the traffic control (the “Default Notice”). AA0897–98. As a result of JAR's default, CRRMA “[made] a claim against the performance bond furnished by [the] [S]urety,” who “is responsible for making every effort to expedite the resumption of work and completion of the [Contract].” Id.

On January 9, 2023, JAR submitted a notice of claim for wrongful default, challenging the default and seeking payment for work performed. AA0900–02. And, on January 30, 2023, CRRMA responded, stating its position that the default was not wrongful. AA0936–38.

On January 17, 2024, CRRMA filed a complaint for a declaratory judgment against JAR's trustee in bankruptcy (the “Trustee”). See Compl., In re J.A.R. Concrete, Inc., No. 24-03001 (Bankr. W.D. Tex. Jan. 17, 2024), ECF No. 1. In response, the Trustee filed counterclaims, seeking monetary and declaratory relief and alleging that CRRMA's default was wrongful. See Counterclaim, In re J.A.R. Concrete, Inc., No. 24-03001 (Bankr. W.D. Tex. Feb. 21, 2024), ECF No. 11. Central to the parties' dispute is whether an engineering firm called Atkins North America, Inc. (“Atkins”), led by licensed engineer Edgar Fino, was the “Engineer” under the Contract, or whether CEA Group (“CEA”), another engineering firm, was the “Engineer.” See In re J.A.R. Concrete, Inc., 673 B.R. at 673–83.

The bankruptcy court held a multi-part trial. Id. at 670. The first stage was held on November 13, 2024, with the bankruptcy court issuing its opinion on December 20, 2024. Id. The second stage was held across three days, on January 13, 14, and 15, 2025. Id. at 671. On April 28, 2025, the bankruptcy court issued its opinion on the second and first stages of the trial, superseding its December 20, 2024, first stage opinion. Id. at 663, 670–71. In its April 28, 2025, Order, the bankruptcy court determined that CRRMA's default of JAR was proper.. Id. at 718–19. On June 6, 2025, the Trustee appealed the bankruptcy court's Order to this Court. See Notice Appeal.

The Trustee filed Appellant's Brief, after which CRRMA filed Appellee's Brief, and the Trustee filed a Reply Brief, ECF No. 44. CRRMA filed a Motion for Leave to File Sur-Reply, ECF No. 45, to which the Trustee filed a Response in Opposition, ECF No. 46.

II. DISCUSSION

A. Jurisdiction

This Court has jurisdiction to hear “appeals from final judgments, orders, and decrees ․ of bankruptcy judges entered in cases and proceedings” under the Bankruptcy Code. 28 U.S.C. § 158(a). Unlike in other contexts, a final order, for the purposes of § 158 appellate jurisdiction, need not dispose of the entire case. In re Moody, 817 F.2d 365, 367–68 (5th Cir. 1987). Instead, “a bankruptcy proceeding is over [and thus appealable] when an order has been entered that ends a discrete judicial unit in the larger case.” Id. at 368.

Here, the bankruptcy court issued its opinion on the first and second stages of trial on April 28, 2025. See In re J.A.R. Concrete, Inc., 673 B.R. at 663, 671. Specifically, the bankruptcy court held that CRRMA's default of JAR under the contract was not wrongful. Id. at 670. On May 28, 2025, the bankruptcy court certified that opinion as a final judgment pursuant to Federal Rule of Bankruptcy Procedure 7054(a) and Federal Rule of Civil Procedure 54(b), and abated the third stage of trial. See Order, In re J.A.R. Concrete, Inc., No. 24-03001 (Bankr. W.D. Tex. May 28, 2025), ECF No. 182. To be sure, “[a] third stage of trial concerning the Trustee's ‘affirmative claims’ still remains to be held.” In re J.A.R. Concrete, Inc., 673 B.R. at 671. But the bankruptcy court's opinion ended a discrete judicial unit, by fully resolving CRRMA's request for declaratory relief, and this Court has jurisdiction to hear the appeal. See Moody, 817 F.2d at 367–68.

B. Standards of Review

A bankruptcy court's conclusions of law are reviewed de novo. Perry v. Dearing (In re Perry), 345 F.3d 303, 309 (5th Cir. 2003). Its findings of fact are reviewed for clear error, meaning that its assessment of the evidence may only be set aside if the reviewing court has “the definite and firm conviction that a mistake has been committed.” Id. (quoting Robertson v. Dennis (In re Dennis), 330 F.3d 696, 701 (5th Cir. 2003)). Mixed questions of law and fact are reviewed de novo. In re Bourbon Saloon, Inc., 647 F. App'x 342, 346 (5th Cir. 2016) (citation omitted). Equitable orders are reviewed for abuse of discretion. See Browning Mfg. v. Mims (In re Coastal Plains, Inc.), 179 F.3d 197, 204–05 (5th Cir. 1999). A court “abuses its discretion if it bases its decision on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” Esmark Apparel, Inc. v. James, 10 F.3d 1156, 1163 (5th Cir. 1994). The reviewing court may affirm on any grounds supported by the record. Plunk v. Yaquinto (In re Plunk), 481 F.3d 302, 305 (5th Cir. 2007).

C. Analysis

1. The Bankruptcy Court properly determined that Atkins and Fino were the Engineer under the Contract.

The Trustee attacks the bankruptcy court's finding that CRRMA properly defaulted JAR under the Contract on many fronts. One of the Trustee's principal arguments is that it was error for the bankruptcy court to determine that Atkins and Fino were the Engineer. See Appellant's Br. 29–34. The Court takes this argument first because, under the Contract, the Engineer is entrusted with significant authority to make decisions, including decisions regarding default. See In re J.A.R. Concrete, Inc., 673 B.R. at 686–91. If Atkins and Fino improperly acted as Engineer, that finding alone would likely require reversal of the bankruptcy court's decision. See Appellant's Br. 33–34.

The Trustee argues that the bankruptcy court erred in finding that Atkins and Fino were the Engineer because the Contract unambiguously identified CEA as the Engineer and the bankruptcy court improperly relied on parol evidence in making its determination.² Appellant's Br. 29–34. CRRMA responds that the bankruptcy court was correct—the Engineer was not identified in the Contract and the parties intended for the Engineer to be whoever performed the role under the Contract. Appellee's Br. 19–25. In the alternative, CRRMA contends that even if the Contract is found to be ambiguous, the bankruptcy court's alternative finding—that parol evidence leads to the same result—was also correct. Id. at 24–25.

Contract interpretation is a matter of state law. Cahill v. Turnkey Vacation Rentals, Inc., 500 F. Supp. 3d 569, 573 (W.D. Tex. 2020) (citing DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 54, 136 S.Ct. 463, 193 L.Ed.2d 365 (2015)). The parties do not dispute that Texas law governs. See Appellant's Br.; Appellee's Br. Under Texas law, whether a contract is ambiguous is question of law. Parrott v. Int'l Bancshares Corp., 167 F.4th 728, 741 (5th Cir. 2026) (citation omitted). Thus, the Court reviews de novo the bankruptcy court's conclusion that the contract was unambiguous. See Perry, 345 F.3d at 309.

“A contract is not ambiguous if it can be given a definite or certain meaning as a matter of law.” King v. Baylor Univ., 46 F.4th 344, 362 (5th Cir. 2022) (citation omitted). An ambiguity exists when the contract's “meaning is uncertain and doubtful or it is reasonably susceptible to more than one interpretation.” Parrott, 167 F.4th at 741 (quoting In re Davenport, 522 S.W.3d 452, 456 (Tex. 2017)). “[A] contract is ambiguous only when the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.” Id. (citations omitted).

When interpreting a contract under Texas law, a court's “primary concern ․ is to ascertain the true intentions of the parties as expressed in the instrument.” Id. (quoting Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). “[T]erms are typically given ‘their plain, ordinary, and generally accepted meaning.’ ” Id. (quoting Davenport, 522 S.W.3d at 456–57). A court “must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless.” Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011) (citation omitted).

“[W]hen a contract is silent, the question ‘is not one of interpreting the language but, rather, one of determining its effect.’ ” Maxey v. Maxey, 617 S.W.3d 207, 222–23 (Tex. App. 2020) (citation omitted). “Although consideration of surrounding circumstances is sometimes helpful in understanding the words chosen by the parties, such extrinsic evidence cannot justify interpreting contractual ‘language [to] say what it unambiguously does not say.’ ” Endeavor Energy Res., L.P. v. Energen Res. Corp., 615 S.W.3d 144, 148 (Tex. 2020) (citation omitted).

Here, the contract is a one-page document that incorporates by reference several other documents, including, as relevant to this appeal, “the Proposal,” “Specifications,” and “the plans.” See AA0174–75. The Specifications define “Engineer” as “[t]he Professional Engineer licensed in Texas who represents the interests of the Owner.” AA0195. The Specifications do not identify a person or entity to serve as the Engineer, nor do they include any procedures to notify JAR of the identity of the Engineer, or to change the person or entity serving as the Engineer. See AA0180–375.

The Proposal includes twenty-three exhibits, one of which—Exhibit N—is entitled “Engineer's Seal.” See AA7199–200, 7249–50. The Engineer's Seal provides the following attestation: “The enclosed specifications, special provisions, general notes and specifications data in this document have been issued by me or under my responsible supervision.” AA7250. Below the attestation is the seal of Frank A. Corral, a licensed professional engineer and employee of CEA. Id.; AA3592. The Proposal's other exhibits include the documents referenced in the attestation, namely the specifications, special provisions, and general notes. See AA7200. Also a part of the Contract are “the plans,” which include the seal of another licensed professional engineer, Ruben Chavez, another CEA employee. AA4864–65.

The Trustee argues that because the Proposal identified the Engineer's Seal as that of a CEA engineer, the plans are stamped by another CEA engineer, and these documents are incorporated by reference into the Contract, the Contract unambiguously identifies CEA as the Engineer. Appellant's Br. 29–34. For its part, CRRMA argues that, because no person or entity is named in the definition of the Engineer, the Contract is silent as to the Engineer's identity. Appellee's Br. 20. And that this silence unambiguously indicates that “the identity of the Engineer was not a term that needed to be known in advance at the time of contracting.” Id. Rather, the Engineer under the Contract was whoever ultimately served in that role. See id. at 20–21. In short, that “the identity [of the Engineer] was purposefully unspecified.” Id. at 20.

At first blush, the Trustee's interpretation may appear reasonable—by incorporating the Proposal, which included CEA's seal and the plans drafted by CEA, into the Contract, the parties intended to identify CEA as the Engineer. And the inclusion of CEA's seal and CEA's plans casts some doubt on CRRMA's argument that the Contract is “silent” as to the identity of the Engineer. However, the identity of the Engineer at inception is not the end of the analysis. The Trustee argues that because the Contract identified CEA as the Engineer, and CEA was not involved in the default, the default was improper. Appellant's Br. 34. This argument implies that once identified, the Engineer could never change. But for that to be the case, the Contract must unambiguously prohibit CRRMA from unilaterally changing and appointing a new Engineer.

There is nothing in the Contract that allows this interpretation. First, the Engineer is unambiguously defined as a representative of CRRMA. See AA0195 (defining the Engineer as “[t]he Professional Engineer licensed in Texas who represents the interests of the Owner [, CRRMA].”). A representative is “[s]omeone who stands for or acts on behalf of another.” Savage SE Operations, LLC v. Wartsila N. Am., Inc., 496 F. Supp. 3d 1051, 1060 (S.D. Tex. 2020) (quoting Black's Law Dictionary 1494 (10th ed. 2009)). Generally, unless otherwise provided for, a representative is unilaterally appointed or designated by the person or entity on whose behalf the representative acts. See id. Here, there are no provisions in the Contract that require JAR's input on or approval of the person or entity serving as the Engineer. See generally AA0180–375. There are no limits placed on CRRMA's authority to designate its own representative. See id. Nor are there any procedures to notify JAR of the identity of the Engineer or to change the person or entity serving as the Engineer. See id. Taking the Trustee's interpretation to its logical conclusion, if half-way through the project CEA went out of business and was unable to serve as the Engineer, CEA would still be the Engineer under the Contract, leaving the entire Project in limbo and JAR essentially un-defaultable. Given that the Contract unambiguously defines the Engineer as a representative of CRRMA and no limits are placed on CRRMA's authority to designate its own representative, the Court finds that the Contract unambiguously provides for CRRMA's unilateral authority to change and appoint the Engineer.

Thus, assuming without finding that CEA was identified as the Engineer in the first instance, the operative question is whether CRRMA subsequently designated Atkins and Fino as the Engineer and whether they were serving as the Engineer when JAR defaulted. The bankruptcy court found that Fino “served as the Engineer for all relevant time periods in this dispute.” In re J.A.R. Concrete, Inc., 673 B.R. at 676. Based on “the credible testimony of Mr. Telles of [CRRMA] and Mr. Fino of Atkins,” the bankruptcy court found that although CEA provided design-related engineering services, “there can be no reasonable doubt that Mr. Fino of Atkins was the primary Engineer managing the Project from its inception, including through supervision of CEA's design work.” Id. at 683. Because this is a factual finding, the Court reviews it for clear error. See Perry, 345 F.3d at 309.

The Trustee argues that this finding is erroneous for three reasons: (1) there is no evidence that CRRMA communicated to JAR that Atkins or Fino were the Engineer until after the default, (2) JAR did not communicate with Fino, but with employees of Atkins who were not licensed professional engineers, and (3) CEA responded to JAR's requests for information (“RFIs”) and made design changes. Appellant's Br. 33. As to the first argument, again, there is no requirement under the Contract for CRRMA to notify JAR of the identity of the Engineer. See AA0180–375. Furthermore, the bankruptcy court found that the basis for JAR's owner (“Rosales”) believing that CEA was the Engineer was not compelling, noting that Rosales conceded that he dealt with inspectors from Atkins, not CEA, when inspection of the work was central to the Engineer's role. In re J.A.R. Concrete, Inc., 673 B.R. at 684 & n.178; AA3721–22. Rosales also declined to directly controvert Fino's testimony that Fino identified himself as the area engineer and construction engineer at the pre-construction meeting. In re J.A.R. Concrete, Inc., 673 B.R. at 684 n.178; AA3721. Therefore, even assuming there were some requirement for JAR to be notified of the Engineer's identity, the Court affirms the bankruptcy court's finding that JAR was on notice.

Second, there is no dispute that Fino was a licensed professional engineer, as required under the Contract. See Appellant's Br. Moreover, the Contract expressly contemplates that authorized representatives of the Engineer would inspect the work, and there is no requirement that these representatives themselves be licensed engineers. See AA0675 (“Inspectors are authorized representatives of the Engineer.”); AA0645 (defining “Inspector” as “[t]he person assigned by the Owner to inspect any or all parts of the work and the materials used for compliance with the Contract.”). Therefore, the fact that JAR sometimes communicated with non-engineer employees of Atkins, rather than Fino himself, is of no import.

As for the Trustee's last argument, even though CEA responded to JAR's RFIs and made design changes, the bankruptcy court found that all of this design work was done “under Atkins' authority and supervision.” In re J.A.R. Concrete, Inc., 673 B.R. at 684. And that, any independent work done by CEA was on sub-projects where CEA was contracted by El Paso Water, and these only accounted for two to five percent of the total activities of the Engineer under the Contract. Id.; AA3666–67. The Trustee offers no reason to doubt these factual conclusions, and the Court does not find them to be clearly erroneous. Importantly, the Contract expressly contemplated the use of a licensed professional engineer or engineering firm as a consultant to “provide services through and be subcontracted to the Engineer ․ of record.” AA0641–42. Thus, CEA providing design services, subject to Atkins' supervision, does not undermine the bankruptcy court's conclusion that Fino and Atkins served as the Engineer.

Accordingly, the bankruptcy court did not err in its determination that Fino and Atkins served as the Engineer under the Contract. The Court affirms the bankruptcy court's finding.

2. The bankruptcy court correctly determined that CRRMA properly defaulted JAR under the Contract.

The Trustee argues that, even if the bankruptcy court correctly determined that Atkins and Fino were the Engineer under the Contract, the bankruptcy court erred in finding that JAR was properly defaulted because (1) it applied the wrong standard, (2) under either standard, JAR was not in default, and (3) the default was procedurally defective. Appellant's Br. 34–50. CRRMA argues that the bankruptcy court applied the correct standard, but even if it did not, it made an alternative finding that JAR defaulted under both standards. Appellee's Br. 25–49. And that the bankruptcy court correctly determined that CRRMA substantially complied with the Contract's procedural requirements for default. Id. at 50–58.

a. The default was procedurally proper.

Beginning with those procedural requirements, the Trustee contends that CRRMA's default of JAR was procedurally improper because CRRMA did not (1) strictly comply with the default provisions, (2) apply the working day standard to the cure period, or (3) provide JAR with a reasonable cure period. Appellant's Br. 50–55. CRRMA responds that it was only required to substantially comply with the default provisions and the Contract only provides for a ten-calendar-day cure period, not a reasonable cure period. Appellee's Br. 50–58. And, even if a reasonable cure period was required, the period provided was reasonable. Id. at 55–58.

i. CRRMA substantially complied with the default provisions.

The Trustee argues that the bankruptcy court erred in finding that CRRMA substantially complied with the default provisions because, “[w]hen a default declaration results in the termination and forfeiture of a contract, ․ Texas requires strict compliance with contract terms.” Appellant's Br. 50. Alternatively, if only substantial compliance is required, the Trustee argues that CRRMA did not substantially comply with the default provisions. Reply Br. 19–20. CRRMA contends that “Texas law requires only substantial compliance with a contractual default or termination notice provision.” Appellee's Br. 50. And that the bankruptcy court correctly found that CRRMA substantially complied with the default provisions. Id. at 50–52.

Whether strict or substantial compliance with a contract provision is a question of law, and thus, the Court reviews this issue de novo. See Elmen Holdings, L.L.C. v. Martin Marietta Materials, Inc., 86 F.4th 667, 677–78 (5th Cir. 2023); Perry, 345 F.3d at 309. “[T]he doctrine of substantial compliance is a ‘general principle of Texas law.’ ” WesternGeco, L.L.C., v. Magseis FF LLC, No. 22-cv-3080, 2026 WL 2087404, at *18 (S.D. Tex. July 20, 2026) (citing James Constr. Grp., LLC v. Westlake Chem. Corp., 650 S.W.3d 392, 406 (Tex. 2022)). It “excuses a party's deviations from a contractual requirement ․ if those deviations do not severely impair the purpose of the requirement.” Elmen Holdings, L.L.C., 86 F.4th at 678 (citation omitted). Substantial compliance applies to contractual default notice provisions. See id.

To argue otherwise, the Trustee relies on two old Texas Court of Civil Appeals decisions. Appellant's Br. 50–52. Both cases address contracts with an option to cancel or rescind, which allowed one party, without cause, to cancel or rescind the contract within a specified period of time. See Mayhew v. Vanway, 371 S.W.2d 90, 92 (Tex. Civ. App. 1963); Stretcher v. Gregg, 542 S.W.2d 954, 957 (Tex. Civ. App. 1976). Texas courts have held that such provisions, which are “in the nature of forfeiture,” require strict compliance. Mayhew, 371 S.W.2d at 92. The default provisions at issue here do not include an option to cancel or rescind the contract, nor do they result in a forfeiture. See AA0258–61. They simply identify the bases for default, set out notice and cure procedures, and the remedies available to the owner as a result of the contractor's default, including demanding that the Contractor's Surety complete the remaining work, assessing liquidated damages, and deducting damages and costs from undisbursed funds. Id.; see also TPG (Post Oak) Acquisition, LLC v. Greystone Multi-Fam. Builders, Inc., No. 18-cv-396, 2021 WL 3870130, at *17 (Tex. App. Aug. 31, 2021) (finding default provisions that did not require opportunity to cure to not result in forfeiture where contractual default remedies “delayed and reduced” payment but did not necessarily forfeit payment), vacated, No. 21-1120, 2022 WL 18935634 (Tex. Apr. 1, 2022). Accordingly, because the general rule is substantial compliance and the Trustee has not pointed to any relevant case law that would require strict compliance, the Court finds that the bankruptcy court correctly concluded that CRRMA was only required to substantially comply with the default provisions. See Western Geco, L.L.C., 2026 WL 2087404, at *18.

“[W]hether a party has substantially complied with the terms of a contract presents a pure question of fact that the trier of fact alone may decide.” Elmen Holdings, L.L.C., 86 F.4th at 678 (citation omitted). The Court thus reviews the bankruptcy court's determination that CRRMA substantially complied with the default provisions for clear error. See Perry, 345 F.3d at 309.

The bankruptcy court found that although CRRMA “did not strictly follow the contractual process for declaring a contractor to be in default”—namely that CRRMA provided JAR with the Cure Notice, instead of the Engineer—it “substantially complied with the default provisions.” In re J.A.R. Concrete, Inc., 673 B.R. at 698. The bankruptcy court found that “the extensive and highly credible testimony at both stages of trial, together with significant documentary evidence, showed that the important decisions regarding default were indeed made by the Engineer.” Id. (emphasis in original).

The Trustee disagrees and claims that “Fino simply rubber stamped CRRMA's determinations.” Appellant's Br. 52. In support of this contention, the Trustee claims that “Fino admitted he never made the default determination in the Cure Notice, never performed any field inspection to determine if the items listed in the Cure Notice were actually an issue, and never analyzed whether JAR could complete [the] items during that period.” Id. (citing AA3607, 4025–28, 4035,4050, 4062, 4072–73). And that it was CRRMA that wrote the Cure Notice. Id. (citing AA5301–03).

But Telles testified that, as to the Cure Notice, although he “wrote the language, [ ] the content came from Atkins.” AA3607. And although Fino personally did not perform a field inspection, Adalberto Ordonez (Atkins' construction manager) as well as Fino's chief inspector, inspected the conditions, the results of which Fino relied on in making his default determination. AA4050 (Fino testified that “Mr. Ordonez and [Fino's] chief inspector were out in the field investigating and provided [him] with the information in regards to what work is missing and what work can be done.”); AA4100 (Fino testified that “[his] heavy lifting is done by [his] boots on the ground,” in that he has chief inspectors, their inspectors, and his construction manager “taking care of the details for [him] and [ ] report[ing] back.”). Fino also testified that he determined that JAR was in default due to its failure to prosecute the work and perform the work in accordance with contract requirements, and expressed that opinion to Telles before the notice was sent, even though Telles made the final decision to include those two bases in the notice. AA3904; AA4061.

As for identification of the cure items, the record reveals that Fino and Ordonez were intimately involved in identifying the items and determining that they could be completed within the ten-day cure period. See AA5300–14, 5351–54, 5362–68, 5371–90, 5400–04 (emails between Fino, Ordonez, and Telles discussing cure items to include in the notice and circulating drafts of the notice for editing and comments by Fino and Ordonez as to the cure items); AA4062 (Fino testified that although Telles made final decision to include traffic control as a cure item, that decision was based on a recommendation from him and Ordonez); AA3905 (Fino testified that it was his professional opinion that a reasonably competent contractor could complete all cure items in ten days and that he expressed that opinion to Telles before the notice was sent); AA3960 (Fino testified that he and Ordonez “selected smaller areas in regards to identifying what [JAR] [could] complete for us within the ten days that are doable.”); AA4098 (Fino testified that he and Ordonez determined that laying 2,000 feet of rebar was doable in ten days based on review, which did not require production rate calculation).

The Court thus does not find that the bankruptcy court clearly erred in finding that CRRMA substantially complied with the default provisions because the Engineer was substantively involved in all major decisions relating to the default. Accordingly, the Court affirms the bankruptcy court's holding that strict compliance was not required and that CRRMA substantially complied with the default provisions of the Contract.

ii. The cure period was ten calendar days.

The Trustee argues that the bankruptcy court incorrectly found that the ten-day cure period was for ten calendar days, not “working days” under the contract. Appellant's Br. 52–53. CRRMA argues that the bankruptcy court properly determined that the contract unambiguously provided for a ten-calendar-day cure period. Appellee's Br. 52–53. And, even if the contract is ambiguous, the term “days” must be interpreted by its plain and ordinary meaning and should not be construed against CRRMA as the drafter. Id. at 53–54. Finally, CRRMA argues that if the contract required a ten-working-day cure period, this was harmless error because “JAR was not even close to curing the six corrective items.” Id. at 55.

The Court reviews the bankruptcy court's interpretation of the cure period provision de novo. See Balfour Beatty Constr., L.L.C. v. Liberty Mut. Fire Ins. Co., 968 F.3d 504, 509 (5th Cir. 2020); Perry, 345 F.3d at 309. The contract provides that, upon notice of intent to default, “[i]f the Contractor does not proceed as directed within 10 days after the notice, the Owner will provide written notice to the Contractor and the Surety to declare the Contractor to be in default of the Contract.” AA0258. Following the maxim that terms “are typically given ‘their plain, ordinary, and generally accepted meaning,’ ” the term “days” ordinarily means calendar days. See Parrott, 167 F.4th at 741 (citation omitted); Okanogan, Methow, San Poelis (or San Poil), Nespelem, Colville, & Lake Indian Tribes or Bands of State of Washington v. United States, 279 U.S. 655, 679, 49 S.Ct. 463, 73 L.Ed. 894 (1929) (“The word ‘days,’ when not qualified, means in ordinary and common usage calendar days.”); City of Lubbock v. Elkins, 896 S.W.2d 346, 350 (Tex. App. 1995) (“The term ‘day,’ as used in the law, ordinarily means a ‘calendar day.’ ”); cf. BP Expl. & Prod., Inc. v. Claimant ID 100262795, 759 F. App'x 249, 253 (5th Cir. 2019) (“the term ‘month’ is not technical and should be read to mean calendar month unless the parties have provided a different definition.”).

The Trustee argues that “days” should be construed as “working days” because the rest of the provision “repeatedly references ‘working days.’ ” Appellant's Br. 53. This, however, counsels the opposite conclusion, as the omission of “working” must be presumed purposeful. See Nexstar Broad., Inc. v. Time Warner Cable, Inc., No. 12-cv-2380, 2012 WL 12872719, at *4 (N.D. Tex. Sept. 5, 2012) (“When construing a contract, [under Texas law], the Court must presume that omissions are purposeful.” (citations omitted)), aff'd, 524 F. App'x 977 (5th Cir. 2013); FPL Energy, LLC v. TXU Portfolio Mgmt. Co., L.P., 426 S.W.3d 59, 68 (Tex. 2014) (refusing to “selectively import terms from other provisions [in the parties' contract] to compensate for the absence of [a] term” in another provision and concluding that the omission of that term was intentional and deliberate).

Moreover, “working days” has a specific meaning under the contract. The contract requires that the Contractor substantially complete the project within 399 working days, and the incorporated Technical Specifications provide for how these working days will be charged, how any additional working days will be added, and how working days will be used to calculate liquidated damages. AA0174, 194, 249–53, 258. The Trustee argues that this indicates that “working days” were used throughout the contract to calculate JAR's performance, and thus, the ten-day cure period must also have been measured by working days. Appellant's Br. 52–53. But other provisions of the contract calculate JAR's performance by calendar days, not working days. For instance, in the final acceptance provision of the contract, upon an unsatisfactory final inspection, the Contractor is provided with “7 calendar days” to “[c]orrect the deficiencies identified.” AA0676. As for the contract's use of “calendar days” in addition to “days,” this imprecision in drafting certainly leaves something to be desired. However, the specification of “calendar days” in some provisions does not change the plain and ordinary meaning of the word “days” in the many other provisions where it appears. See AA0240, 713, 716.

In sum, the parties have drafted their contract to measure some deadlines in “calendar days,” some in “working days,” and others in “days.” The ordinary meaning of “days” is “calendar days.” See, e.g., Elkins, 896 S.W.2d at 350. In this context, the Trustee offers no principled basis on which to read “days” to mean anything other than “calendar days.” The Court thus finds that the contract unambiguously provides for a ten-calendar-day cure period and affirms the bankruptcy court's finding to that effect.

iii. JAR was not entitled to a reasonable cure period.

The Trustee also argues that JAR was entitled to a reasonable cure period, and that the ten-day period was not reasonable. Appellant's Br. 53–55. CRRMA argues that the contract does not provide for a reasonable cure period, and even if it did, the bankruptcy court correctly found that the ten-day cure period was reasonable. Appellee's Br. 55–58.

The Trustee contends that a right to a reasonable cure period is implied into every contract under Texas common law. Appellant's Br. 54. In support of this contention, the Trustee references section 241(d) of the Restatement (Second) of Contracts and the Texas Supreme Court's adoption of section 241 in assessing the materiality of a breach. See id. (citing Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 199 (Tex. 2004)). Section 241 outlines the factors considered when determining whether a breach is material. Restatement (Second) of Contracts § 241 (A.L.I. 1981). One such factor is “the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances.” Id. § 241(d). The Trustee extrapolates that because a breach is not material if it can be cured, then there must be a right to a reasonable cure period. Appellant's Br. 54–55. However, this does not logically follow, as the likelihood of the breaching party's ability to cure is only one factor, albeit a “significant” one, and a breach still may be material even if there is some likelihood of cure. Moreover, even if section 241(d) suggests an implied right to cure, it does not necessarily suggest a reasonable right to cure, especially where, as here, the parties have expressly agreed to a specific cure period. See AA0258. The Trustee does not provide any authority for his argument, and the Court is not aware of any such authority. In fact, the Court has identified at least two Texas courts that have interpreted contracts not to include any implied right to cure a default, much less a reasonable default period. See, e.g., Equistar Chems., LP v. ClydeUnion DB, Ltd., 579 S.W.3d 505, 522 (Tex. App. 2019) (finding no right to cure in contract for the sale of goods where contract only provided for an optional cure remedy); TPG (Post Oak) Acquisition, 2021 WL 3870130, at *12–13 (finding termination without opportunity to cure proper where notice-to-allow-cure requirement in contract only applied to certain defaults and not the default which served the basis of the termination).

Accordingly, JAR was only entitled to the ten-calendar-day cure period, as provided for in the contract, and not a reasonable cure period.³

b. The default was substantively proper.

As an initial matter, the parties disagree as to whether the bankruptcy court applied the correct standard of review in determining whether the default was substantively proper. Appellant's Br. 34–37; Appellee's Br. 25–31. The Trustee argues that the reasonableness standard applies, whereas CRRMA argues that the bankruptcy court correctly applied the gross error standard. Appellant's Br. 34–37; Appellee's Br. 25–31. And even if the reasonableness standard applies, CRRMA argues that the bankruptcy court's alternative finding that the default was proper under the reasonableness standard was also correct. Appellee's Br. 26.

Where a construction contract requires performance by one party to be subject to the satisfaction of the other party or a designated third party such as an architect or engineer, “[t]here are two different standards for reviewing [such] decisions.” Tex. Dep't of Transp. v. Jones Bros. Dirt & Paving Contractors, 92 S.W.3d 477, 481 (Tex. 2002) (citations omitted). In the case of the former, “when the party to the contract has the ultimate authority to determine whether a satisfaction clause has been satisfied,” that decision is reviewed under a reasonableness standard. Id. (citation omitted). In the case of the latter, “[w]hen parties ․ agree to submit questions ․ to the decision of the engineer, [and that] decision is final and conclusive,” a gross error standard applies. Id. (citation omitted). Under the gross error standard, an engineer's decision can only be overturned upon a showing that the engineer “is guilty of fraud, misconduct, or [ ] gross mistake.” Id. (citation omitted). “The objective reasonableness standard ․ is less onerous to prove.” Id. (citation omitted).

Here, the bankruptcy court held that “[e]ven if Gross Error were not the standard, the Court would still uphold the default because ․ [CRRMA] has shown not just that the decisions were all reasonable but that it was correct by a preponderance of the evidence that JAR was in default for all of the reasons stated above, that the cure items were appropriately chosen, that compliance with them was correctly assessed, and that the default was not wrongful.” In re J.A.R. Concrete, Inc., 673 B.R. at 714.

Under Texas law, “[q]uestions of reasonableness are inherently issues for the jury.” Dall. City Limits Prop. Co., L.P. v. Austin Jockey Club, Ltd., 376 S.W.3d 792, 800 (Tex. App. 2012) (citation omitted); accord Energy Dev. Corp. v. Lowmar Expl. Co., No. 14-98-619-CV, 2000 WL 795893, at *9 (Tex. App. June 22, 2000) (“[I]n a contract case, a question about the reasonableness of an action is ordinarily a fact question.”) (citations omitted)); Commc'ns Transmission, Inc. v. TriStar Commc'ns, Inc., 798 F. Supp. 406, 409 (W.D. Tex. 1992) (citation omitted) (“Whether a party acted in good faith [and thus reasonably] in exercising its termination power [under a contract] is a question of fact.”). Therefore, assuming that the reasonableness standard applies, the Court reviews the bankruptcy court's finding that CRRMA's decision to default JAR was reasonable for clear error. See Perry, 345 F.3d at 309. Again, CRRMA declared JAR in default for two reasons: due to JAR's failure to “prosecute the work to assure completion within the number of days specified” and to “perform the work in accordance with the Contract requirements.” AA0859–60.

i. The bankruptcy court did not err in finding that delay was a reasonable basis to default JAR.

As to the first basis, delay, the Trustee argues that CRRMA both expressly and impliedly waived its right to default JAR for that reason. Appellant's Br. 38–39. CRRMA argues that it did not waive its default right because it “consistently objected to JAR's contractual delays” and was assessing liquidated damages for the delay. Appellee's Br. 33–34. But even if waiver did occur, CRRMA posits, the waiver was limited and still required JAR to complete the work within a reasonable period, which JAR did not. Id. at 35.

Under Texas law, “[w]aiver is ordinarily a question of fact, but when the surrounding facts and circumstances are undisputed, ․ the question becomes one of law.” Addicks Servs., Inc. v. GGP-Bridgeland, LP, 596 F.3d 286, 299 (5th Cir. 2010) (quoting Jernigan v. Langley, 111 S.W.3d 153, 156–57 (Tex. 2003) (per curiam)). Thus, the Court “review[s] whether [CRRMA's] conduct amount[ed] to a waiver ․ de novo, but [ ] review[s] any factual findings underlying the [bankruptcy] court's waiver determination for clear error.” Forby v. One Techs., L.P., 13 F.4th 460, 464 (5th Cir. 2021) (citation omitted) (emphasis in original); accord Hogg v. Lynch, Chappell & Alsup, P.C., 480 S.W.3d 767, 780 (Tex. App. 2015).

Waiver is the “intentional relinquishment of a known right,” which “can occur either expressly, through a clear repudiation of the right, or impliedly, through conduct.” G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 511 (Tex. 2015). “Waiver is largely a matter of intent, and for implied waiver to be found through a party's actions, intent must be clearly demonstrated by the surrounding facts and circumstances.” Addicks Servs., 596 F.3d at 298 (citation omitted).

The Trustee argues that CRRMA expressly waived its right to default JAR for delay “when it admitted delay was not a basis for JAR's default” in its January 30, 2023, response to JAR's Notice of Claim for Wrongful Default. Appellant's Br. 38 (citing AA5564) (“The default is not related to the fact that JAR has expended all contract time ․ JAR was declared in default because JAR did not complete the corrective actions.”). CRRMA's characterization of the default, however, occurred after CRRMA had already invoked its right to default JAR on December 22, 2022. Compare AA0404, with AA5564. Thus, even assuming that the January 30, 2023, letter was an express waiver of CRRMA's right to default JAR for delay, of which the Court is doubtful, it cannot act to retroactively waive CRRMA's right and previous invocation of that right. In short, the Court does not find that CRRMA's subsequent characterization of the basis for its default of JAR to be a “clear repudiation of [that] right.” See G.T. Leach Builders, LLC, 458 S.W.3d at 511.

The Trustee also argues that CRRMA impliedly waived its right to default JAR for delay “by allowing JAR to continue working past the Contract deadline.” Appellant's Br. 39. According to CRRMA, however, this position “is unequivocally contradicted by the evidence presented at trial.” Appellee's Br. 31.

An owner waives time for performance under a construction contract, “[i]f, after the time for completion of the work has expired, ․ the owner assents to the continuance of the work without objection to the delay.” Ryan v. Thurmond, 481 S.W.2d 199, 206 (Tex. Civ. App. 1972). In SP Terrace, L.P. v. Meritage Homes of Texas, LLC, the First Texas Court of Appeals found a genuine issue of fact as to waiver of a substantial completion deadline, and thus the right to terminate on that basis, where (1) a developer directed a builder to delay filing a subdivision plat, which the builder advised would require a six-month extension of the substantial completion deadline; (2) the developer never objected to the builder's mailed written extension request; and (3) the parties continued to work together on the development after the substantial completion deadline had passed. 334 S.W.3d 275, 284–85 (Tex. App. 2010). This finding was “particularly in light of the contract provision that the substantial completion deadline ‘would be extended’ to the extent of any delay caused by [the developer].” Id. at 285. In another construction contract case addressing waiver of a right to an unconditional loan approval letter, the Fifth Texas Court of Appeals found a genuine fact issue as to whether a builder waived its right to the letter when the builder failed to raise the issue until a year after the purchaser was required to furnish the letter, and in that time, continued working closely with the purchaser on construction of the home. Rodriguez v. Classical Custom Homes, Inc., 176 S.W.3d 928, 932 (Tex. App. 2005).

Here, the bankruptcy court found that although “JAR had already been in default as to the time of performance [for] a very long time, and [CRRMA] had continued to work with JAR and encourage progress on the Project,” CRRMA “by no means accepted the delay or agreed to extend JAR's deadlines.” In re J.A.R. Concrete, Inc., 673 B.R. at 715. The court found that CRRMA “consistently prodded JAR to submit appropriate paperwork if there were reasons to extend the deadline per the terms of the Contract, and in the meantime, it assessed liquidated damages and pressured JAR to get back on schedule.” Id. at 715–16. At the regular partnering meetings with JAR, CRRMA consistently reiterated the contractual deadline and showed openness to a goal date of January 31, 2023, all the while indicating that JAR would need to provide appropriate paperwork to support any further extensions. Id. at 716. The bankruptcy court also found that the partnering meetings increased in frequency in mid-to late 2023 “due to JAR's failure to progress” and that the Surety was invited to one of these meetings, “showing heightened urgency.” Id.

JAR does not contest any of these factual findings. See Appellant's Br. 38–43. And the Court does not find any error with the bankruptcy court's findings based on its review of the record. JAR does, however, challenge the bankruptcy's holding that, based on these facts, CRRMA did not waive its right to default JAR for delay. Id. at 39–41.

Here, although CRRMA continued to meet with JAR and work towards JAR's completion of the Project, continuance of work only amounts to waiver “without objection to the delay.” Ryan, 481 S.W.2d at 206. Unlike in SP Terrace and Rodriguez, CRRMA continued to object to JAR's failure to substantially complete the Project within the contractual deadline, and thus, JAR was on notice of CRRMA's objection to its delay. See SP Terrace, 334 S.W.3d at 284–85; Rodriguez, 176 S.W.3d at 932. As the bankruptcy court found, CRRMA expressed its objection to JAR's delay in several ways, both before and consistently after the substantial completion deadline lapsed.

In the regular partnering meetings, CRRMA reiterated the contractual deadline. See AA3926–28; see, e.g., AA9296 (June 14, 2022, partnering meeting minutes reflecting contract end date); AA9302 (October 11, 2022, partnering meeting minutes reflecting contract end date). CRRMA also consistently requested that JAR submit the required paperwork to justify additional extensions of the substantial completion deadline, beyond those already granted pursuant to the Contract. See AA3914–15. If JAR had submitted the required paperwork in support of its requested extensions under the Contract, the substantial completion deadline would have been extended to January 2023. AA3955–56. Thus, in the months after July 21, 2022, while CRRMA continued to meet with JAR to work towards completion of the project, it was still possible that the substantial completion deadline would be extended beyond the July 2022 date. The Court thus finds that CRRMA's insistence that JAR submit the supporting paperwork to be a strong demonstration of CRRMA's intent to enforce the contractual provisions governing the substantial completion deadline.

CRRMA also pressured JAR to complete the Project as quickly as possible, including by requesting that JAR provide a “recovery schedule,” demonstrating a reduction in working days to complete the Project. AA3947–48. As the delay got longer and JAR's performance slowed, CRRMA increased the frequency of the partnering meetings and even invited the Surety to one such meeting. AA4459–60.

As for assessing liquidated damages, the Trustee is correct that CRRMA's assessment of liquidated damages does not necessitate the finding that CRRMA did not waive its right to default JAR for delay. This is so because even if an owner waives its right to default for delay, it is still entitled to damages for that delay. See Ryan, 481 S.W.2d at 206. But it also does not necessitate the finding that by assessing liquidated damages, CRRMA waived its right to default for delay. As detailed above, beyond assessing liquidated damages, CRRMA consistently objected to JAR's delay, and thus did not waive its right to default JAR for that delay by continuing to work with JAR on completion of the Project.

The Trustee relies on Baker Marine Corp. v. Weatherby Engineering Co., 710 S.W.2d 690 (Tex. App. 1986), to argue that CRRMA waived its right to default JAR for delay because it sent the Cure Notice approximately four and a half months after the substantial completion deadline. Appellant's Br. 40–41. However, Baker is factually distinguishable. There, the owner issued a notice of default with a five-day cure period, after which the contractor provided a letter outlining the steps it was taking to remedy the problems, and, for the following three months, the parties continued to work toward completion of the project, before the owner terminated the contract for delay. Baker Marine Corp., 710 S.W.2d at 693. The court found that “[t]he span of three months between notice of default and termination coupled with the continuing efforts to complete the project constitute[d] sufficient evidence of waiver.” Id. at 694.

The Trustee thus argues that because CRRMA waited for four and a half months, it too waived its right to default for delay. But importantly, here, there was no delay between CRRMA's issuance of the Cure Notice and the Default Notice. The Default Notice was issued promptly after the cure period expired without JAR completing the cure items. Moreover, although the court in Baker noted that the owner continued to complain to the contractor about delays, it found that no other written notice of default was given before termination of the contract, which weighed in favor of finding waiver. See id. Thus, the Baker court makes clear that its decision relates to waiver of the right to default upon an essentially stale notice to cure, and, that an owner can revive its right to terminate for default by issuing a subsequent notice to cure. Thus, Baker does not support the Trustee's argument that CRRMA waived its right to default JAR on the basis of delay. As for the other case law cited by the Trustee in support of this argument, none are controlling, as they do not apply Texas law. See Appellant's Br. 40.

Accordingly, because CRRMA consistently objected to JAR's failure to substantially complete the Project by the deadline, the Court finds that CRRMA did not waive its right to default JAR for its delay by continuing to work with JAR towards completion of the Project. See Ryan, 481 S.W.2d at 206–07.

Even if CRRMA did not waive its right to default JAR for delay, the Trustee argues that CRRMA could not default JAR for delay because “the Project was significantly delayed due to CRRMA's failure to obtain necessary rights of way and easements, a national cement shortage, CRRMA's failure to have utilities remove poles, lines, and boxes, and design changes.” Appellant's Br. 42 (citing AA3934, 4116–18, 4028–30, 4036, 4234, 4238, 4245, 4287, 5370). And that the bankruptcy court erred in determining otherwise because it “focused on JAR's purported failure to submit TIAs,” but JAR could not submit TIAs for delays that were ongoing. Id.

As to the Trustee's latter point, the Court does not find that the bankruptcy court erred. Based on the credible testimony of Fino, as well as the admission of Rosales, the bankruptcy court determined that extensions could be awarded for delays that were ongoing when the required paperwork was submitted to the Engineer, and that such extensions were in fact awarded for the Project on that basis. In re J.A.R. Concrete, Inc., 673 B.R. at 703 & n.250; AA3995 (“You don't need resolution to submit a TIA.”); AA4385 (“You can submit something but you can't get total days until the event closes.”); AA4387 (Rosales testified that Atkins gave additional days based on a submitted TIA for ongoing delays). Thus, there was no error in the bankruptcy court finding that JAR could have and failed to submit TIAs for the delays.

As for the causes of the delays, the bankruptcy court found that despite the rights of way and utilities issues that were caused by CRRMA, “JAR could have made progress on numerous parts of the Project.” In re J.A.R. Concrete, Inc., 673 B.R. at 704. The map and video evidence demonstrated that “the vast majority of the project area was not affected by right-of-way issues—and yet those areas were left incomplete.” Id. As for the concrete shortage, the bankruptcy court found JAR's evidence “insufficient.” Id. at 706. Rosales testified that there “was [a] well known nationwide ․ cement shortage.” AA4286. But see AA3934 (Fino testified that he did not believe there was a shortage). And that he submitted letters from a supplier in Arizona to that effect. AA4286. But see AA3925 (Fino testified that JAR only submitted one statement from a supplier in Arizona attesting to the shortage). But Rosales also testified that multiple suppliers would not sell cement to him because he owned a materials supply company and was a competitor to other suppliers in the area. See AA4286–87. The Court thus does not find any clear error in the bankruptcy court's determination that JAR's inability to procure cement was not due to a national cement shortage, but rather, due to the “particularities of JAR's position in the market” as a competitor to other suppliers. In re J.A.R. Concrete, Inc., 673 B.R. at 706.

Overall, the bankruptcy court determined that “JAR had pervasive financial, staffing, and operational problems,” including “cycling through project managers and superintendents, struggling to pay subcontractors on time, failing to obtain necessary materials including rebar and cement, missing documentation requirements for payment and project management, and inadequately staffing the Project.” Id. at 705.

In sum, the Trustee does not demonstrate any error in the bankruptcy court's finding that, although a small fraction of the delay was attributable to CRRMA, JAR was unable to prosecute the work within the specified time as a result of its own failures. And, as only fifty percent of the project was completed in December 2022, approximately four and a half months after the substantial completion deadline, the Court does not find any error in the bankruptcy court's finding that it was reasonable for CRRMA to default JAR for delay. See id. at 716; AA3949–50.

ii. The bankruptcy court did not err in finding that failure to perform work in accordance with contractual requirements was a reasonable basis to default JAR.

The Trustee next argues that the bankruptcy court erred in finding that JAR was properly defaulted for failure to perform work in accordance with contractual requirements because (1) JAR provided proof of purchase of the water meter enclosure, and (2) there were no issues with the strength of the concrete.⁴ Appellant's Br. 43–44.

Beginning with the water meter, CRRMA counters that JAR only provided an unexecuted purchase order for the water meter enclosure and, to date, neither CRRMA nor Atkins have received delivery of the meter. Appellee's Br. 38. The Trustee replies that even if the purchase order was unexecuted, Rosales testified that he was in communication with the supplier and just had not received the signed purchase order back within the cure period. Reply Br. 13; AA4354. But there is no evidence in the record that an executed purchase order was ever provided. And the Court does not find any error in the bankruptcy court's finding that the purchase order was only valid if executed. See In re J.A.R. Concrete, Inc., 673 B.R. at 706–07, 712; AA4799. Nor in the bankruptcy court's finding that JAR failed to purchase the water meter, which it claimed to have purchased, for months after it was required to do so. In re J.A.R. Concrete, Inc., 673 B.R. at 706–07, 712; AA3929 (Fino testified that JAR was supposed to purchase the water meter enclosure in June 2022 but failed to do so); AA3936 (Fino testified that JAR represented it had purchased the water meter enclosure in August 2022).

As for the concrete, according to CRRMA, the evidence demonstrates that JAR's concrete consistently failed strength tests. Id. at 38–40. JAR significantly mischaracterizes the testimony of Fino by claiming that he “admitted ․ there were no issues with the strength of JAR's concrete.” Appellant's Br. 44. The testimony cited refers to one testing site for the cement where the cement eventually reached the contractually required strength of 4,000 psi after fifty-six days, well beyond the traditional twenty-eight days used for testing. AA3931. The evidence relied on by the bankruptcy court demonstrated persistent and unresolved problems with the concrete. See In re J.A.R. Concrete, Inc., 673 B.R. at 705–06. Of the nine samples taken across June and August 2022, only one attained 4,000 psi at the twenty-eight-day mark. Id.; AA10849–50.

Accordingly, the Court does not find any error in and thus affirms the bankruptcy court's finding that JAR failed to work in accordance with the contractual requirements and thus it was reasonable for CRRMA to find JAR in default.

iii. The bankruptcy court did not err in finding that JAR failed to complete the cure items.

The Trustee's next argument is based on his observation that the Default Notice only identified two cure items that were not completed as the basis for default. See Appellant's Br. 43–48; AA0404–05. Namely, the failure to place rebar at certain locations and the failure to implement and maintain a traffic control plan. AA404–05. The Trustee argues that the bankruptcy court erred by considering other bases for default in its reasonableness determination. Appellant's Br. 43–44. However, the bankruptcy court held that JAR's failure to place the rebar or complete the required traffic control measures each “would be sufficient to support the default.” In re J.A.R. Concrete, Inc., 673 B.R. at 711. Thus, the Court need only determine whether the bankruptcy court clearly erred in its finding that CRRMA's decision to default JAR on either of these bases was reasonable.

The Trustee first argues that the Cure Notice did not notify JAR that it was required to complete placing the rebar within the ten-day cure period—only that it was required to commence placing the rebar within that time. Appellant's Br. 46. Moreover, the Trustee argues, JAR was unable to place the rebar as directed “for reasons beyond its control,” including the presence of utility poles, boxes, and wires in the cure period, as well as exposed dirt without compacted subgrade. Id. at 46–47. Finally, the Trustee claims that neither CRRMA nor Fino determined whether the rebar could be placed within the cure period. Id. at 47, 136 S.Ct. 463. Thus, the Trustee argues that the bankruptcy court erred in finding default on this basis proper.

CRRMA counters that that bankruptcy court correctly found that any obstructions were minimal and did not prevent JAR from substantially completing the rebar placement. Appellee's Br. 44–45. And thus, that it was reasonable for CRRMA to default JAR for failing to place the rebar as directed. Id.

As an initial matter, the Court does not find any error in the bankruptcy court's determination that the cure notice, which required JAR to “place [rebar] between STA 131+00 and 151+50,” see AA0177, was “clear in its instructions—not to begin placing rebar, but to place the rebar, over this area,” In re J.A.R. Concrete, Inc., 673 B.R. at 711–12. The Contract provides for a declaration of default “[i]f the Contractor does not proceed as directed,” AA0525. “Proceed” is ordinarily defined as “to begin and carry on an action, process, or movement,” or “to go on and do something.” Matter of L.H., 733 S.W.3d 55, 68 (Tex. App. 2024) (emphasis added) (citations omitted). Thus, it does not simply mean to commence or begin, but rather, to continue the action, and here, to continue the action “as directed.” Thus, there is nothing in the language of the contractual default provision that supports the Trustee's argument that JAR was only required to commence placing the rebar.

Rather, JAR was required to place the rebar as directed and the Court finds no clear error in the bankruptcy court's finding that it was reasonable for CRRMA to default JAR on this basis when JAR did not even come close to completing placement of the required rebar. See In re J.A.R. Concrete, Inc., 673 B.R. at 709–13.

As for the Trustee's argument that JAR could not place the rebar due to obstacles beyond its control, the bankruptcy court determined that these obstacles “were not particularly substantial and could be dealt with while still making much more progress on the Project than JAR was making.” Id. at 710. Rosales testified that, in all, JAR only installed rebar over approximately nineteen percent of the prescribed area. AA4455. Based on videos, pictures, maps, and the testimony of Fino, Ordonez, and Rosales, the bankruptcy court found that JAR's failure to place the rebar had “more to do with JAR's supply issues and personnel unavailability than drainage or rights of way or dirt onsite or any other field conditions.” In re J.A.R. Concrete, Inc., 673 B.R. at 711. Upon review of the record, the Court does not find any clear error in this determination.

The Trustee separately argues that the default was improper because Fino's determination that the rebar could be placed within the cure period was unreasonable. Appellant's Br. 47. But, as detailed above, the evidence in the record shows that Fino and Ordonez were intimately involved in identifying the cure items, including placement of the rebar, and determining that the cure items could be completed within the cure period. As for the rebar, Fino testified that he and Ordonez “selected smaller areas in regards to identifying what [JAR] [could] complete for us within the ten days that are doable.” AA3960. And the bankruptcy court found Fino and Ordonez's credibly testified that a reasonably competent contractor could complete the cure items within the ten-day cure period. In re J.A.R. Concrete, Inc., 673 B.R. at 710. The Trustee argues that the bankruptcy court erred in its determination, because Fino did not analyze production rates or investigate whether JAR could get its subcontractor on site and get the rebar manufactured and delivered during the cure period. Appellant's Br. 47. But Fino testified that, based on his decade of experience, he did not need to conduct a production rate analysis to determine that 2,000 feet of rebar could be laid in ten days. See AA4098. As for JAR's subcontractor and the manufacture and delivery of the rebar, the bankruptcy court found that JAR's “lack of preparedness,” in that it “had neither the personnel nor the materials available to do the work,” “[did] not mean the requirements [to lay the rebar] were unreasonable.” In re J.A.R. Concrete, Inc., 673 B.R. at 710. This was particularly true since the rebar had been a priority item since at least October 2022. Id.; see also AA9847.

Accordingly, the bankruptcy court did not err in finding that JAR failed to place the rebar as directed and thus CRRMA's decision to default JAR on this basis was reasonable.

Turning to traffic control, the bankruptcy court found that JAR failed to comply with only one of the required traffic control measures—to fill the water barriers as directed. See In re J.A.R. Concrete, Inc., 673 B.R. at 711–12. The Trustee appears to argue that default on this basis was improper because CRRMA failed to inform JAR of this cure item prior to its declaration of default. See Appellant's Br. 45. But the bankruptcy court found that after JAR requested clarification on the traffic control measures, Atkins sent an e-mail to JAR on December 12, 2022, expressly identifying the water barriers as a cure item. In re J.A.R. Concrete, Inc., 673 B.R. at 711; see also AA9929. And that Ordonez credibly testified that, when he inspected at the end of the cure period, he found eighty-eight water barriers that were not adequately filled with water. In re J.A.R. Concrete, Inc., 673 B.R. at 712; AA4164.

Based on its review of the record, the Court does not find any error in the bankruptcy court's finding that JAR failed to fill the water barriers as a traffic control measure and as directed by the Cure Notice, and thus, that the default on this basis was reasonable.

iv. The bankruptcy court did not err in finding JAR's breaches material.

Finally, JAR argues that, even if it failed to place the rebar and maintain traffic controls, neither were material breaches. Appellant's Br. 48–50. This argument, however, conflates the bases for default—failure to prosecute the work to assure completion within the number of days specified and perform the work in accordance with contractual requirements—with the identified cure items which JAR failed to complete—placing the rebar and filling traffic barriers with water. Compare AA0177–178, with AA0404–05.

To determine whether a breach is material, the Texas Supreme Court “follows the restatement of contracts.” Allied Cap. Partners, LP v. Proceed Tech. Res., Inc., 313 S.W.3d 460, 464 (Tex. App. 2010) (citing Mustang Pipeline Co., Inc., 134 S.W.3d at 196). And considers the following factors: (a) “the extent to which the injured party will be deprived of the benefit which he reasonably expected;” (b) “the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived;”(c) “the extent to which the party failing to perform or to offer to perform will suffer forfeiture;” (d) “the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of the circumstances including any reasonable assurances;” and (e) “the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.” Bartush-Schnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 436–37 (Tex. 2017) (citing Restatement (Second) of Contracts § 241 (A.L.I. 1981)).

“The materiality of a contract breach generally is a fact question ․” BigCommerce, Inc. v. Cover Genius Warranty Servs., LLC, No. 1:23-cv-298-DAE, 2025 WL 1270110, at *7 (W.D. Tex. Feb. 27, 2025) (citing Bartush-Schnitzius Foods Co., 518 S.W.3d at 436). Thus, the Court reviews the bankruptcy court's finding that the defaults were material for clear error. See Perry, 345 F.3d at 309.

The bankruptcy court found that the defaults—“namely, being far behind on the Project and not performing up to obligations”—were “substantial” and “obviously sufficient.” See In re J.A.R. Concrete, Inc., 673 B.R. at 709. Moreover, the bankruptcy court found that the cure items that JAR failed to complete themselves were material. Specifically, that placement of the rebar was “an important aspect of the core of the Project—moving the roadway toward completion.” Id. And filling the water barriers was “an important safety feature,” but also a measure of whether “the Contractor could and would take care of important ancillary matters with proper attention to detail as required by the Contract.” Id. Although the bankruptcy court did not address each individual factor for materiality, “such precision is not required,” as the bankruptcy court “was entitled to ․ tailor its findings to the facts of the case, accounting for the flexible and fact-bound nature of the materiality determination.” Turner v. Young, 753 F. App'x 267, 271 (5th Cir. 2018) (citing Restatement (Second) of Contracts § 241 cmt. a (A.L.I. 1981)).

Regardless, the Trustee does not even argue that the delay, which resulted in the Project being only fifty percent complete four and a half months after the substantial completion deadline, was not material. See generally Appellant's Br.; Reply Br. Nor would any such argument carry water. See In re Heritage Hotels Rockport LLC, No. 24-20201, 2026 WL 568403, at *5–9 (Bankr. S.D. Tex. Feb. 27, 2026) (finding breach for failure to prosecute work in timely manner material under Texas law). And the Court does not find any error in the bankruptcy court's finding that JAR's delay was a material breach.

Similarly, the Trustee does not argue that JAR's failure to place concrete in compliance with the strength requirements under the Contract was not a material breach. See Appellant's Br.; Reply Br. And it takes little analysis to find that sufficiently sturdy concrete is material to the construction of a roadway. Cf. J.R.'s Landscaping & Sprinkler Sys., Inc. v. Crosbyton, No. 7-14-19, 2015 WL 5560002, at *3 (Tex. App. Sep. 21, 2015) (finding exposed aggregate and spalling concrete was a material breach).

As for JAR's failure to purchase the water meter enclosure, the other basis on which CRRMA determined that JAR was in default for failing to perform work in accordance with contractual requirements, the Trustee argues that this default was not material. Appellant's Br. 43; Reply Br. 13–14. Specifically, that JAR's failure to purchase the enclosure was immaterial because JAR had created a temporary solution that CRRMA agreed was sufficient, and the enclosure was only worth $16,821.39. Reply Br. 13–14. However, even assuming that the Trustee is correct as to the immateriality of the water meter enclosure, the bankruptcy court's finding that JAR's failure to perform the work in accordance with the contractual requirements was a material breach is still supported by the materiality of JAR's failure to properly place concrete.

III. CONCLUSION

For the foregoing reasons, the decision of the bankruptcy court is AFFIRMED in full.

IT IS FURTHER ORDERED that, because the Court affirms the bankruptcy court's Order and thus adjudicates this case in CRRMA's favor, without considering CRRMA's proposed sur-reply, the Motion for Leave to File Sur Reply, ECF No. 45, is DENIED as moot.

The Clerk shall close the case.

SO ORDERED.

FOOTNOTES

1.   Excerpts from the evidentiary record have been filed in multiple places on the docket. The evidence appears most comprehensively and well organized as Appellant's Appendix, ECF Nos. 17–39. Citations to “AA” pagination refer to documents as they are filed in Appellant's Appendix.

2.   The Trustee also argues that CRRMA has waived any argument in opposition to this point because CRRMA failed to respond, in its response brief, to the Trustee's argument that the Contract was not silent, but instead, identified CEA as the Engineer in the proposal and the plans. Reply Br. 1–2. The Court does not find that CRRMA waived its opposition to this argument, as CRRMA generally opposes the Trustee's interpretation that CEA was the Engineer and advances its own argument that Atkins and Fino were the Engineer. See Appellee's Br. 20–25.

3.   As CRRMA notes, even assuming that JAR was entitled to a reasonable cure period, reasonableness is a question of fact, and thus the Court would review the bankruptcy court's finding that the ten-day cure period was reasonable for clear error. Appellee's Br. 31; see Perry, 345 F.3d at 309. The bankruptcy court found Fino and Ordonez's testimony that a competent contractor could have completed all the cure items in the ten-day cure period to be credible. In re J.A.R. Concrete, Inc., 673 B.R. at 709–10. In reviewing this alternative determination, the Court does not find that the bankruptcy court clearly erred.

4.   The Trustee also takes issue with the default notice failing to specifically identify the water meter and concrete issues as bases for default. Appellant's Br. 43–44. But the Contract only requires that the Engineer give notice “of the intent to declare the Contractor in default,” not to identify each sub-issue that makes up the contractual basis for default. See AA0258. And indeed, CRRMA did identify JAR's failure to work in accordance with the contractual requirements as a basis for default. The water meter and concrete were among such requirements.

Judge Kathleen Cardone