Choy v. Graziano Roofing of Texas, Inc. (Tex.App.- Houston [1st Dist.] Oct. 1, 2009)
(
construction law litigation, Trust Fund Act violation alleged)
AFFIRM TC JUDGMENT: Opinion by
Justice Keyes   
Before Justices Jennings, Keyes and Higley   
01-07-00761-CV  Andrew Choy v. Graziano Roofing of Texas, Inc.   
Appeal from 270th District Court of Harris County
Trial Court
Judge: Hon. Brent Gamble

O P I N I O N

In this dispute over construction trust funds, appellant, Andrew Choy, appeals the trial court's judgment
in favor of appellee, Graziano Roofing, Inc. (Graziano). In three issues, Choy argues that the trial court
erred in (1) rendering judgment, because Graziano failed to prove each element to establish a violation
of the Texas Trust Fund Act (the Act) (1); (2) concluding that liability exists under the Act for
intra-company transfers of funds; and (3) awarding pre-judgment interest.

We affirm.

Background

In 1998, Lake Olympia Development Corporation (Lake Olympia) created Windwater Homes, L.L.C.
(Windwater), a wholly owned subsidiary, (2) to build homes in Harris and Fort Bend County. The
companies were owned by Tan Yu, and Choy served as the president of the companies. Windwater
hired Graziano, a roofing contractor, to install roofs on the homes it was building. Pursuant to their
agreement, Graziano performed roofing work and supplied roofing materials on a total of 39 properties
for Windwater and invoiced Windwater $226,336.10 for the work and roofing materials supplied. To pay
for this work, Windwater obtained construction loans from Citibank of Texas ("Citibank") and Frost
National Bank ("Frost Bank").

On December 3, 2002, Graziano sued Lake Olympia and Windwater. In its third amended petition,
Graziano added claims against Choy, individually. Graziano alleged that, instead of paying Graziano
with the construction loan proceeds, Choy had made the decision to misapply or had actually
misapplied the funds received for that purpose by Windwater, which he controlled. This appeal follows
from the bench trial on Graziano's "Third Amended Petition," filed July 23, 2004. For purposes of trial,
Graziano relied on Windwater records it was able to reconstruct following Windwater's bankruptcy. It
sought recovery for only 21 of the properties. The damages sought reflected the total principal amount
of $134,396.09 for these 21 properties--the original total invoice amount of $226,336.10 for all 39
properties reduced to reflect a payment made by the Windwater bankruptcy trustee to Graziano and by
the debt on properties not included in the suit. Graziano also sought its attorney's fees (3) and
pre-judgment (4) and post-judgment interest.

Following Windwater's bankruptcy, the case was tried to the bench. At trial, Citibank's loan service
manager for Windwater, Vernon Facundo, testified that the draw construction sheet included in the
business records was the sheet used by the inspector for each draw request. Facundo testified that
when a draw request was received by Citibank, the inspector used that sheet to go out to the particular
property and document that whatever item was being billed at that time was complete. Facundo also
testified that roofing work was typically completed at 35.5 percent of total completion of the house and
that the draw was then funded. These procedures were followed with regard to Windwater. In addition,
Citibank's loan information sheets were used to annotate all the applicable loan information from
origination through payoff, together with all advances. Citibank relied upon the construction draw
requests to disburse funds to Windwater. Each referenced a percentage of completion. Citibank's wire
transfer form was then used to wire out the construction funds to Windwater's checking account at
another bank.

Choy testified that he started working for Lake Olympia in 1983 as president and that his duties chiefly
consisted of management for land development and sales and marketing. In 1997, the company was
sold to America First Corp., Inc., owned by Tan Yu. Choy retained the title of president. In 1998,
Windwater was created as a wholly-owned subsidiary for the purpose of home building. Choy was
President of Windwater as well. In 1999, Choy discovered that Tan Yu had started removing money
from the Windwater, amounting in the end to $4.732 million. The money was therefore not used for
Lake Olympia or Windwater purposes.

Windwater paid its contractors after they submitted an invoice to Windwater's superintendent, who
initialed and approved payment. The bookkeeper then issued a check, which Choy would look at when
it came to him for signing. Windwater made draw requests on banks in order to pay its contractors.
Choy testified that Tan Yu "possibly" took some of the funds received from these draw requests
overseas. He did not authorize the construction loan proceeds going overseas, but he knew the loan
construction proceeds owed to Graziano were taken overseas because "[t]his particular bank, there's
no separate account. It's just the account for the company."

Choy admitted that if somebody signed a draw request for completed roofing work it would be safe to
say that someone at Windwater thought the roof was complete on the property. He also admitted that
Windwater did not use construction loan proceeds to pay Graziano Roofing for some properties. He
agreed it was "possible" that some of the construction loan home proceeds were sent to Tan Yu. Choy
issued check and wire transfers from Windwater's operating accounts to Tan Yu when Yu directed him
to do so. Choy stated that he did not have a choice as to whether to send money to Tan Yu rather than
to contractors because Tan Yu was the owner of the company, and, if he had refused to comply, he
would have been fired. Choy admitted he knew that Graziano and other contractors did not get paid for
work they had completed. Choy also admitted that bank interest and some payrolls were not paid. Tan
Yu also knew the contractors were not being paid for their work. Approximately $4.723 million was wired
from Windwater to Tan Yu.

Adam Stanford, Vice-President of Graziano, testified that Exhibit 55 was a summary of invoices for
amounts due Graziano for its work for Windwater. The checks Graziano received for payment were
signed by Choy or Brigit Halloran. Stanford further testified that Graziano was seeking $134,396.90 in
damages, reduced by about $2,600 due to the discovery of a mathematical error.

On June 7, 2007, the trial court entered a final judgment that Graziano recover from Choy the sum of
$131,796.09 plus pre-judgment interest and attorney's fees of $65,000, together with costs of
unsuccessful appeal, costs of court, and post-judgment interest. On July 12, 2007, the trial court issued
findings of facts and conclusions of law.

Standard of Review

In an appeal of a judgment rendered after a bench trial, the trial court's findings of fact have the same
weight as a jury's verdict, and we review the legal and factual sufficiency of the evidence used to
support them just as we would review a jury's findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex.
1994); In re K.R.P., 80 S.W.3d 669, 673 (Tex. App.--Houston [1st Dist.] 2002, pet. denied). When
challenged, a trial court's findings of fact are not conclusive if, as in the present case, there is a
complete reporter's record. In re K.R.P., 80 S.W.3d at 673; Amador v. Berrospe, 961 S.W.2d 205, 207
(Tex. App.--Houston [1st Dist.] 1996, writ denied). When a party without the burden of proof at trial
challenges the legal sufficiency of the evidence, we consider all of the evidence in the light most
favorable to the prevailing party, indulging every reasonable inference in that party's favor. Associated
Indem. Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex. 1998). If there is any evidence of
probative force to support the finding, i.e., more than a mere scintilla, we will overrule the issue.
Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). An
omitted finding, supported by the evidence, may be supplied by a presumption that it supports the
judgment. Black v. Dallas County Child Welfare Unit, 835 S.W.2d 626, 630 n.10 (Tex. 1992). In our
review of the factual sufficiency of the evidence, we must consider and weigh all of the evidence, and
we will set aside a verdict only if the finding is so against the great weight and preponderance of the
evidence that it is clearly wrong and unjust. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). We
review a trial court's conclusions of law de novo. In re Moers, 104 S.W.3d 609, 611 (Tex. App.--Houston
[1st Dist.] 2003, pet. ref'd). We independently evaluate a trial court's conclusions to determine their
correctness, and we will uphold conclusions on appeal if the judgment can be sustained on any legal
theory supported by the evidence. Id.

I. Failure to Prove Each Element of Violation of the Trust Fund Act

In his first issue, Choy argues that the trial court erred in rendering judgment because Graziano failed
to prove each element necessary to establish a violation of the Act. Specifically, Choy contends that
Graziano was required to prove (1) the existence of trust funds, as defined by the Act, related to
CitiBank and Frost Bank; (2)(a) Choy's duty to Graziano as a trustee under the Act to pay out funds to
Graziano as a beneficiary under the Act, and (b) the tracing of funds from any loan proceeds to the
timing of the receipt and disbursement of the funds; and (3) the misapplication of trust funds by Choy,
rendering him personally liable under the Act. Choy argues that the trial court's findings with respect to
those elements were not supported by legally and factually sufficient evidence.

The Texas Supreme Court has indicated that the Act should be construed liberally in favor of laborers
and materialmen. RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex. 1985). The Act
was specifically enacted to serve as a special protection for subcontractors and materialmen, when
contractors refuse to pay the subcontractor or materialman for labor and materials. Taylor Pipeline
Constr., Inc. v. Directional Road Boring, Inc., 438 F. Supp. 2d 696, 715 (E.D. Tex. 2006); Herbert v.
Greater Gulf Coast Enters., Inc., 915 S.W.2d 866, 870-71 (Tex. App.--Houston [1st Dist] 1995, writ
denied).

A. Existence of Trust Funds as Defined by the Act Related to Citibank and Frost Bank

Choy first argues that legally insufficient evidence supports the existence of "trust funds" within the
meaning of the Act. Specifically, he argues that "there is no evidence, or insufficient evidence to
support Findings of Fact Nos. 13-23, 27-34 and 40." Choy contends that Graziano was required to
prove "as to each Windwater loan, that loan receipts were received by Windwater or Mr. Choy, (2) that
the loan receipts were from a loan for the improvement of specific real property, and (3) that the loan
was secured by a lien on that same property." He contends the evidence is legally and factually
insufficient to satisfy these requirements.

The findings of fact challenged in this section state:

13. Windwater obtained construction loans to finance the construction of the homes made the basis of
this lawsuit.

14. The loans were for the improvement of specific real property in Texas.

15. Construction loans were obtained from First American Bank, SSB, now known as Citibank of Texas
("Citibank") for twelve (12) properties, as set forth in Exhibits 180-193, which are incorporated herein
for all purposes.

16. The construction loans obtained by Windwater from Citibank and Frost Bank were secured in whole
or in part by a lien on real property upon which Graziano Roofing supplied materials and performed
labor.

17. Citibank distributed construction loan proceeds to Windwater Homes for roofing work because
according to Citibank's draw schedule (Exhibit 100) roofing work was completed by the 35.5% mark.
See Exhibit 100 (Construction Lending Department Inspection Sheet).

18. Windwater received the loan proceeds from Citibank. See Exhibits 140-176. Exhibits 110-120 (Prop.
Info. Sheets showing percentage of completion and amounts disbursed), Exhibits 140-176 (Draw
Requests and Wire Transfers), Exhibits 180-193 (Summary of Citibank Records). These documents
show that construction work on the properties were at the 35.5% mark or higher. The construction loan
proceeds for these properties were trust funds.

19. According to Citbank's draw schedule roofing work was done between the 30.0% and 35.5% marks.
The property at 7110 Harmony Cove was only 33.5% complete according to the draw schedule, thus,
the amount of trust funds would be only $3,232.00.

20. Loan proceeds of $57,719.35 for construction work, were disbursed for 7110 Harmony Cove as
shown on Exhibits 120B and 182 which are incorporated herein as if set out verbatim. None of the loan
proceeds for 7110 Harmony Cove were distributed to Graziano Roofing.

21. Citibank's records show construction loan proceeds for roofing work and materials and other
construction work were disbursed or distributed to Windwater for the properties listed on Exhibits
180-193 total $1,840,782.85 (excluding the money disbursed for 7110 harmony cove). See Exhibit 193.
These exhibits are incorporated herein as if set out verbatim.

22. None of the construction loan proceeds of $1,840,782.85 disbursed by Citibank to Windwater were
applied to pay for the roofing work done by Graziano Roofing.

23. Based on the loan proceeds received from Citibank by Windwater, the amount of the loan proceeds
or trust funds owed to Graziano Roofing is $81,584.20[. T]his figure includes a 7.905% reduction from
the figure of $88,587.00 because 7.905% of the original principal debt was paid by the Bankruptcy
Trustee.
. . . .
27. Construction loan proceeds for roofing work done by Graziano Roofing were received by Windwater
and were not disbursed or paid to Graziano.

28. Construction loans were obtained from Frost Bank to build upon or improve nine (9) properties, as
set forth in Exhibits 210-215 and 220, which are incorporated herein for all purposes.

29. The construction loans obtained by Windwater from Frost Bank were secured in whole or in part by
a on real property upon which Grazaiano Roofing supplied materials and performed labor in
constructing an improvement on the property, namely a roof.

30. Frost Bank distributed construction loan proceeds to Windwater Homes for roofing work on nine (9)
properties as set forth in Exhibits 210-215 and 220. These Exhibits are incorporated herein as if set out
verbatim.

31. Frost's documents, including the draw requests submitted by Choy and others, shows the roofing
work was completed.


32. Windwater received the loan proceeds from Frost Bank to pay for roofing work done by Graziano
Roofing. See Exhibit 220, which is incorporated herein for all purposes.

33. Thus, with regard to Frost Bank, construction draws or loan proceeds for roofing work and materials
for the properties listed on Exhibit 220 total $87,517.72.

34. The construction loan proceeds of $87,517.72 disbursed by Frost Bank to Windwater for roofing
work were not paid to Graziano Roofing, Inc. See Exhibit 220, which is incorporated herein for all
purposes.
. . . .
40. Windwater failed to pay Graziano Roofing for the roofing work that Graziano Roofing performed
even though Windwater received construction loan proceeds from Frost Bank to pay for the roofing
work.

2. "Trust Funds" Under the Act

Section 162.001 of the Act, entitled "Construction Payments and Loan Receipts as Trust Funds,"
provides,

(a) Construction payments are trust funds under this chapter if the payments are made to a contractor
or subcontractor or to an officer, director, or agent of a contractor or subcontractor, under a
construction contract for the improvement of specific real property in this state.

(b) Loan receipts are trust funds under this chapter if the funds are borrowed by a contractor,
subcontractor, or owner or by an officer, director, or agent of a contractor, subcontractor, or owner for
the purpose of improving specific real property in this state, and the loan is secured in whole or in part
by a lien on the property.

Tex. Prop. Code Ann. § 162.001(a), (b) (Vernon 2007).

The loan documents introduced into the record show that Windwater received home construction loan
funds borrowed from Citibank and Frost Bank for the purpose of improving the specific real property in
Texas for which Graziano seeks damages. The loan documents further show that each loan was
secured by a deed of trust, which is a type of lien. (5) Exhibits 210 through 215 document draw
requests made by Windwater on Frost Bank specifying the amount requested and the date of the
request for nine different properties. Exhibit 220 contains a summary of the disbursed funds from Frost
Bank for the various properties, showing the draw amount for the roofing work, the funding of the draw,
and the amount of Graziano's invoices. Exhibits 180 through 191 document Windwater's draw requests
to Citibank (6) and Citibank's wire transfers to Windwater's account of funds for 12 different properties.
Exhibit 192 contains a summary of the properties, the amount drawn, and the amount invoiced.
Specifically, according to Citibank's "Construction Lending Department Inspection Sheet," Citibank
considered roofing work complete for the purpose of disbursing construction loan proceeds to
Windwater at the 35.5% completion point. In addition, Citibank's representative, Vernon Facundo,
testified that Exhibit 100 is the sheet that is used by the inspector for each draw request. When a draw
request is received the inspector uses this sheet to go out to the particular property and document that,
whatever item is being billed at that time according to the inspection sheet that it has been complete.

The record of Citibank's construction lending to Windwater shows, through the draw requests, wire
transfer forms, and confirmations entered in the record by Graziano, that Graziano did roofing work on
the 11 homes whose roofing was more than 35% complete and for which Graziano seeks recovery in
this suit; that Graziano invoiced Windwater in a specific amount for its completed work on each of those
homes; that Windwater promptly sent a draw request to Citibank in response to each invoice; and that,
upon receipt of the draw requests, Citibank immediately funded each request by wire to Windwater for
the invoiced roofing work. The 11 Citibank properties on which more than 35% of the roofing was
completed by Graziano and for which draws were made, were 7138 Turtle Lagoon Row (89%
complete); 7126 Turtle Lagoon Row (84% complete); 7106 Harmony Cove (74% complete); 7139
Windwater Lagoon (41.5% complete); 150 Palm Boulevard (78% complete); 6023 Arrowana Lane (89%
complete); 6027 North Arrowana Lane (75.5% complete); 7118 Harmony Cove (47.5% complete); 7114
Harmony Cove (46.5% complete); 7110 Laguna Villas Lane (36.5% complete); and 226 Flamingo Island
Drive (90.5% complete). The property at 7110 Harmony Cove was listed as being only 33.5% complete,
rather than a minimum of 35% complete. Therefore, Graziano allowed for a $2600 reduction of the
amount that would be due for complete roofing for 7110 Harmony Cove. The amount due Graziano for
labor and materials on the property at 7110 Harmony Cove was likewise properly invoiced, and funds to
pay Graziano's invoice were requested and received by Windwater.

Frost Bank records show that Windwater submitted six Construction Draw Requests to Frost Bank.
These Construction Draw Requests encompassed the nine Frost Bank properties on which Graziano
had done the roofing. Each of the Construction Draw Requests was signed by Choy or Halloran as an
officer and agent of Windwater, and each stated "Roof Complete." Choy also testified that if somebody
at Windwater signed a draw request it would be safe to say that someone at Windwater thought the roof
was complete on the property. Frost Bank records show the roofing work complete at 5935 Turtle
Beach Lane, 5927 Turtle Beach Lane, 7110 Turtle Lagoon Row, 7114 Turtle Lagoon Row, 7122 Turtle
Lagoon Row, 5931 Turtle Beach Lane, 5923 Turtle Beach Lane, 7118 Turtle Lagoon Row, and 7106
Turtle Lagoon Row. The "Summary of Completion and Funds Disbursed from Frost Bank" shows that
draw requests were made by Windwater at the time the roofing was completed and that each was
immediately funded by Frost Bank. These exhibits were admitted without objection. Choy submitted no
contrary evidence.

Viewing the evidence in the light most favorable to Graziano and indulging every reasonable inference
in its favor, we conclude that the evidence is legally sufficient to support the challenged findings. See
Associated Indem. Corp., 964 S.W.2d at 285-86. Considering and weighing all of the evidence, we
further conclude that the challenged findings are not so against the great weight and preponderance of
the evidence as to be clearly wrong and unjust, and therefore the evidence is factually sufficient. Ortiz,
917 S.W.2d at 772. Accordingly, after reviewing the exhibits, we conclude that the trial court correctly
classified the funds obtained from Frost Bank and Citibank as construction trust funds requested by
Windwater to pay its obligations to Graziano for completed roofing work on the properties at issue in
this suit and wire transferred to Windwater's account by Citibank and Frost Bank for that purpose. See
Tex. Prop. Code Ann. § 162.001(b).

Choy argues, however, that, in addition, Graziano failed to introduce "any documentary evidence of the
dates when Graziano supplied labor and/or materials to each property. . ., the dates any invoices were
issued to Windwater, or the dates any obligations owed to Graziano by Windwater were due and
payable under the terms of any invoice issued to Windwater under the terms of any contract with
Windwater." Choy provides no argument or authority for the inclusion of the requirements he seeks to
add to the proof of the existence of trust funds under § 162.001(b) of the Act. It is cardinal law in Texas
that a court construes a statute, "first, by looking to the plain and common meaning of the statute's
words" and, if the language is unambiguous, adopting the interpretation supported by the plain
meaning of the provision's words and terms. Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996
S.W.2d 864, 865 (Tex. 1999); see Tex. Gov't Code Ann. §§ 311.011; 312.002 (Vernon 2005). Courts
"may add words into a statutory provision only when necessary to give effect to clear legislative intent,"
and "[o]nly truly extraordinary circumstances showing unmistakable legislative intent should divert us
from the enforcing the statute as written." Fitzgerald, 996 S.W.2d at 867. We find no support in the
statute, the case law, or the rules of statutory construction for the requirements Choy seeks to add to
the proof of "trust funds" under section 162.001(b) of the Act, and we decline to add them.

B. Duty of Choy as Trustee to Pay Out Funds to Graziano as Beneficiary Under the Act and Evidence
Tracing Funds Received and Disbursed

1. Duty of Choy as Trustee to Pay Out Funds to Graziano as Beneficiary Under the Act

Choy also argues that the evidence is legally and factually insufficient to show that he was a trustee
and that Graziano was a beneficiary of trust funds. Specifically, he argues that Graziano "failed to
establish that Windwater and Mr. Choy had a duty to pay out any trust funds to Graziano; nor did
Graziano offer evidence tracing funds from any loan proceeds or bank accounts to establish the timing
of the receipt and alleged disbursement of funds." He argues that there was no evidence or insufficient
evidence to support findings of fact 3, 7-8, 18-19, 21, 23, 31-33, 35, 40-41. Thus, he argues that
conclusions of law 8-11, 13-14, and 16 were erroneous because they were based upon findings of fact
for which there was no evidence or insufficient evidence.

The challenged findings state:

3. Windwater contracted with Graziano Roofing of Texas, Inc. ("Graziano Roofing") to furnish and install
Monier Lifetile roofs on homes built by Windwater.
. . . .

7. The properties for which roofing materials and roofing service were provided and not paid as of the
last invoice date on November 11, 2002 are listed on Exhibits 57 and 57A. (7) Those Exhibits are
incorporated into these findings as if set out verbatim.

8. The total principle amount owed to Graziano Roofing as of November 11, 2002 was $226,336.10.
. . . .

18. Windwater received the loan proceeds from Citibank. See Exhibits 140-176. Exhibits 110-120 (Prop.
Info. Sheets showing percentage of completion and amounts disbursed), Exhibits 140-176 (Draw
Requests and Wire Transfers), Exhibits 180-193 (Summary of Citibank Records). These documents
show that construction work on the properties were at the 35.5% mark or higher. The construction loan
proceeds for these properties were trust funds.

19. According to Citibank's draw schedule roofing work was done between the 30.0% and 35.5% marks.
The property at 7110 Harmony Cove was only 33.5% complete according to the draw schedule, thus,
the amount of trust funds would only be $3,232.00.
. . . .
21. Citibank's records show construction loan proceeds for roofing work and materials and other
construction work were disbursed or distributed to Windwater for the properties listed on Exhibits
180-193 total $1,840,782.85 (excluding the money disbursed for 7110 Harmony Cove). See Exhibit
193. These exhibits are incorporated herein as if set out verbatim.
. . . .

23. Based on the loan proceeds received from Citibank by Windwater, the amount of the loan proceeds
or trust funds owed to Graziano Roofing is $81,584.20[. T]his figure includes a 7.905% reduction from
the figure of $88,587.00 because 7.905% of the original principal debt was paid by the Bankruptcy
Trustee.
. . . .

31. Frost's documents, including the draw requests submitted by Choy and others, [show] the roofing
work was completed.

32. Windwater received the loan proceeds from Frost Bank to pay for roofing work done by Graziano
Roofing. See Exhibit 220, which is incorporated herein for all purposes.

33. Thus, with regard to Frost Bank, construction draws or loan proceeds for roofing work and materials
for the properties listed on Exhibit 220 total $87,517.72.
. . . .

35. The amount owed for the roofing work after the 7.905% reduction is $52,811.89. The reduction
results from the bankrutpcy trustee paying 2.905% of the original debt.

. . . .

40. Windwater failed to pay Graziano Roofing for the roofing work that Graziano Roofing performed
even though Windwater received construction loan proceeds from Frost Bank to pay for the roofing
work.

41. Graziano Roofing is owed the principal sum of $131,796.09 for the roofing work that it performed for
Windwater on properties where there were construction loans secured by liens on real property from
Citibank and Frost Bank. See Exhibits 57A and 57C (The total due of $134,396.09 was reduced by
$2,600.00 because Citibank's records show only 60% of the roofing work was completed at 7110
Harmony Cove.).

The challenged conclusions of law state:

8. Andrew Choy as a fiduciary or trustee of the construction trust funds had a duty to act for the benefit
of any artisan, laborer, mechanic, contractor, subcontractor or materialman who labored or furnished
labor or material for the construction (or repair) of an improvement on specific real property.

9. Andrew Choy as a fiduciary or trustee of construction trust funds, was obligated to ensure that the
construction trust funds were properly distributed to the beneficiaries of the construction trust funds, in
this case--Graziano Roofing.

10. Andrew Choy breached his duty to Graziano Roofing and he did not ensure that the construction
trust funds were properly distributed to the beneficiary of the construction trust funds, in this
case--Graziano Roofing.

11. Graziano Roofing, as a subcontractor of Windwater, furnished labor or material for the construction
or repair of an improvement on specific real property in Texas and is a beneficiary of the construction
trust funds.
. . . .
13. A corporate officer who has signature authority on a corporation's bank accounts and abides by
instructions from another person or corporate entity to deliver construction trust funds has misapplied
construction trust funds. Andrew Choy misapplied construction trust funds.

14. Andrew Choy knowingly misapplied the construction trust funds.
. . . .

16. The amount of construction loan proceeds (principal and interest) misapplied by Choy total
$131,796.09, as of April 5, 2003. Section 162.002, entitled, "Contractors as Trustees," provides, "A
contractor, subcontractor, or owner or an officer, director, or agent of a contractor, subcontractor, or
owner, who receives trust funds or who has control or direction of trust funds, is a trustee of the trust
funds." Tex. Prop. Code Ann. § 162.002 (Vernon 2007).

Choy testified that he was the President of Windwater and that he had control over the funds received
from Frost Bank and Citibank. Furthermore, Adam Stanford, the Vice-President of Graziano, testified
that he received checks from Windwater and that the checks were signed by Choy. Choy produced no
contrary evidence. Based on this evidence, we conclude that Choy was a trustee of construction trust
funds. See C&G, Inc. v. Jones, 165 S.W.3d 450, 455-56 (Tex. App.--Dallas 2005, pet. denied)
(concluding that officers of company had control or direction of trust funds); see also Nuclear Corp. of
America v. Hale, 355 F. Supp. 193, 197 (N.D. Tex. 1973), aff'd, 479 F.2nd 1045 (5th Cir. 1973) (holding
that company's president was trustee of trust funds because he had control and direction over funds).

Likewise, Graziano was properly classified as a beneficiary of trust funds. A subcontractor who
furnishes labor or material for the construction or repair of an improvement on specific real property in
this state is a beneficiary of any trust funds paid or received in connection with the improvement. Tex.
Prop. Code Ann. § 162.003 (Vernon 2007). The evidence established that Graziano, a subcontractor,
installed roofs on a number of homes for Windwater, including those homes for which recovery was
sought. Choy produced no contrary evidence. We thus conclude that Graziano was a beneficiary of any
trust funds paid or received in connection with its roofing services. See id.

Choy contends, however, that, as a trustee under the Act, he had no duty to pay out trust funds to a
subcontractor who furnished labor or materials for the construction or repair of specific real property
"unless and until certain events occur in a particular sequence." Specifically, Choy contends that
Graziano had to submit "evidence that the labor and/or materials were provided prior to the receipt of
trust funds and that the payment obligation arising therefrom is due and payable within 30 days of
receipt of the trust funds." (Emphasis in original). He contends that section 162.031 of the Act, entitled
"Misapplication of Trust Funds," "permits a recipient of loan proceeds to use such proceeds for any
purposes whatsoever provided they do not have at the time such loan proceeds are received any
outstanding 'current or past due obligations' as defined under Property Code Section 162.005(2)." He
further contends that Graziano ignored the definition of "current or past due obligations" in section
162.005(2) and that there is a "complete absence of any evidence that complies with Act's definition of
'current and past due obligations.'" Choy states that the term "due and payable" "is limited to 'no later
than 30 days following receipt of the trust funds.'" He contends that "[i]f an obligation is not due and
payable within 30 days of receiving the trust funds then those funds are not trust funds under the
definitions of the Trust Fund Act." Finally, Choy claims that "there is no evidence in the record to prove"
that Windwater was obligated to Graziano for labor or materials furnished in the direct prosecution of
work under a construction contract prior to the receipt of trust funds and that "such obligations were
due and payable 30 days from the receipt of trust funds."

Section 162.031(a) of the Property Code provides,

(a) A trustee who, intentionally or knowingly or with intent to defraud, directly or indirectly retains, uses,
disburses, or otherwise diverts trust funds without first fully paying all current or past due obligations
incurred by the trustee to the beneficiaries of the trust funds, has misapplied the trust funds.

Tex. Prop. Code Ann. § 162.031(a) (Vernon 2007).

Section 162.005 of the Property Code defines "current or past due obligations" as used in section
162.031 as "those obligations incurred or owed by the trustee for labor or materials furnished in the
direct prosecution of the work under the construction contract prior to the receipt of the trust funds and
which are due and payable by the trustee no later than 30 days following receipt of the trust funds."
Tex. Prop. Code Ann. § 162.005 (Vernon 2007).

Under the Code Construction Act, it is presumed that in enacting a statute the Legislature intended that
the entire statute be effective, that the result be just and reasonable, and that it be feasible of
execution and in the public interest. Tex. Gov't Code Ann. § 311.021 (Vernon 2005). In construing a
statute, the court considers the object sought to be attained and the consequences of a particular
construction. Id. § 311.023 (Vernon 2005). Also, words are given their ordinary meaning. Id. § 312.002;
Fitzgerald, 996 S.W.2d at 865. Therefore, in construing a statute, we generally focus on and will follow
the plain language of the statute unless following the plain language would lead to absurd and
unintended consequences. Fleming Foods, Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex. 1999).

As a trustee of the funds borrowed by Windwater from First American Bank and Frost Bank for the
improvement of specific real property secured in whole or in party by a lien, Choy clearly had a duty
under the Act to pay out trust funds for all "current and past due obligations" owed for labor or
materials furnished by Graziano under the construction contract for work completed on specific
properties. See Tex. Prop. Code Ann. §§ 162.001, 162.002, 162.003, 162.031. To misapply trust funds
under the Act, the trustee must have disbursed or otherwise diverted trust funds without first fully
paying all "current or past due obligations," namely "those obligations incurred or owed by the trustee
for labor or materials furnished in the direct prosecution of the work under the construction contract
prior to the receipt of the trust funds and which are due and payable by the trustee no later than 30
days after receiving the trust funds." Tex. Prop. Code Ann. §§ 162.005, 162.031.

That section 162.005(2) defines "due and payable" obligations" to include all obligations "due and
payable by the trustee no later than 30 days following receipt of the trust funds" does not mean, as
Choy contends, that "[i]f an obligation is not due and payable within 30 days of receiving the trust funds
then those funds are not trust funds under the definitions of the Trust Fund Act." Nor does it mean that
the trustee has no obligation to pay out trust funds it has requested from a bank pursuant to a
construction loan to pay an obligation unless the beneficiary of the funds proves that the "obligations
were due and payable 30 days from the receipt of trust funds," and that the trustee has no obligation to
pay obligations already due and payable when an invoice was sent to the trustee triggering the
trustee's draw request for construction loan funds, as here. An obligation that is due and payable by
the trustee at the time he requests construction loan funds to pay an invoice he has received for
"obligations incurred or owed by the trustee for labor or materials furnished in the direct prosecution of
the work under the construction contract prior to the receipt of the trust funds" is necessarily "due and
payable by the trustee no later than 30 days following receipt of the trust funds," because it was
already due and payable when the trust funds were requested by the trustee from the bank and was
the cause for the transfer of the funds by the bank so that the obligation could be paid.

Any construction of the statute such as that Choy urges upon the Court would be absurd. First, it would
remove from the definition of "current and past due obligations" all past due obligations, rendering the
statutory definition of "past due obligations" meaningless. Second, it would mean that borrowers like
Windwater could request construction loan funds on the basis of an invoice for completed work, as
here, and not have to pay the beneficiary whose invoice supported the borrower's draw request
because the beneficiary invoiced the borrower before it requested the funds and did not specify that it
required payment within 30 days after the borrower received the funds that were released by the bank
to the borrower on the basis of the invoice. We find no basis for adding this requirement to the
language of the statute. See Fitzgerald, 996 S.W.2d at 867.

We hold that, by the plain language of the Act, the words "due and payable . . . no later than 30 days"
after a trustee's receipt of construction trust funds include invoices already due and payable at the time
trust funds are requested by a trustee. See Tex. Prop. Code Ann. §§ 162.005, 162.031.

The evidence supports the challenged findings under the proper construction of the statute.
Specifically, the Citibank and Frost Bank records admitted into evidence and cited above in response to
the first part of Choy's first issue establish that at the time Frost Bank and Citibank disbursed funds to
Windwater for construction costs for the 21 properties identified in Graziano's petition Graziano had
supplied roofing materials and performed roofing services on those properties; the roofing was counted
as complete on 20 of those 21 properties and 33.5% complete out of the necessary 35% required by
Citibank for work to be counted as complete on the 21st house; Windwater made draws upon Citibank
and Frost Bank for roofing supplies and services as the work was completed; and Citibank and Frost
Bank immediately funded each draw request by wire transfer to Windwater.

Graziano also produced a "Summary of Draw Request, Wire Transfer Form and Wire Transfer
Confirmation" for Citibank, summarizing this information, as well as a "Summary of Completion and
Dollars Disbursed or Funded for Citibank and Graziano Roofing's Invoice Amount," referencing exhibits
and summarizing the percentage of completion of each property, the amount drawn, the amount of
Graziano's invoice for the property, the amount of reduction from the original invoice, and the funds
wired to Windwater. Similarly, it produced a "Summary of Completion and Funds Disbursed from Frost
Bank," stating the date of the draw request for roofing work on each property, the Windwater agent
making the request, the draw amount, the status of the roof as complete, the source exhibits showing
the draws funded, the amount of Graziano's invoice, and the amount of the invoice reduction. No
objection was made to any of these exhibits.

These exhibits show that Windwater's obligation to pay Graziano for the properties for which Graziano
seeks recovery under the construction contract was owed by the trustee for labor and materials
furnished in Graziano's direct prosecution of the work on those properties prior to the receipt of the
trust funds; that Graziano invoiced Windwater for its completed roofing work that was due and payable
in specified amounts recited in the invoices, triggering Windwater's draw requests for specified amounts
of construction funds to pay those obligations; and that, promptly upon receipt of Windwater's draw
requests for construction loan funds, Citibank and Frost Bank transferred the requested funds to
Windwater's account at Frost Bank so that it could pay the obligations it had incurred and that were due
and payable to Graziano.

Choy produced no evidence to the contrary.

Viewing the evidence in the light most favorable to Graziano and indulging every reasonable inference
in its favor, we conclude that the evidence is legally sufficient to support the challenged findings. See
Associated Indem. Corp., 964 S.W.2d at 285-86. Considering and weighing all of the evidence, we
further conclude that the challenged findings are not so against the great weight and preponderance of
the evidence as to be clearly wrong and unjust, and therefore the evidence in support of the
challenged findings is factually sufficient. Ortiz, 917 S.W.2d at 772.

Choy contends, however, that even when obligations are current or past due under the statue, the Act
"does not prioritize what beneficiaries get paid first from loan proceeds when there are several
beneficiaries," nor does it "provide that a trustee has misapplied trust funds where the loan receipts are
simply insufficient to satisfy all then current or past due obligations." This argument is inapplicable in
this case because there is no evidence of additional beneficiaries entitled to the same draw proceeds
whom Choy failed to pay or whom Choy paid instead of paying Graziano from "simply insufficient" funds.
Rather, the record evidence shows that Windwater made draws on Citibank and Frost Bank pursuant to
its contracts with them to pay invoices received from Graziano for completed roofing work on specified
properties and that it did not pay Graziano. Choy testified that, Tan Yu, the owner of Windwater, of
which Choy was president, and Lake Olympia, started removing money from the commingled funds of
the two companies, amounting ultimately to $4.732 million; that Tan Yu "possibly" took overseas some
of the funds received from the draw requests Windwater made on the banks to pay its contractors; and
that he, Choy, knew the loan construction proceeds owed to Graziano were taken overseas because
"[t]his particular bank, there's no separate account. It's just the account for the company." Choy
admitted he knew that Graziano did not get paid for work it had completed.

Choy also attempts to inject into the proof of a violation of section 162.031(a), governing the
misapplication of construction trust funds, a requirement that the beneficiary--here, Graziano--must
provide direct evidence of the specific dates on which it performed work on each property "establishing
precisely when labor or materials were furnished by a beneficiary to a particular property and the
precise terms of payment agreed to with the owner." Choy also contends that Graziano had to
introduce into evidence its contract with Windwater "with specific payment terms." Choy's attempt to add
to the requirements supported by the plain language of section 162.031(a) is no more supportable
here than his attempt to add requirements to the interpretation of sections 162.001 and 162.005(2) of
the Act. See Fitzgerald, 996 S.W.2d at 865; Tex. Gov't Code Ann. §§ 311.023; 312.002. We decline to
impose additional requirements to the proof of a violation of section 162.031(a) of the Act beyond those
supported by the plain language of the statute.

2. Evidence Tracing Funds Received and Disbursed

Although there is no tracing requirement in the language of the statute, Choy also contends that
"Graziano [had to] offer evidence tracing funds from any loan proceeds or bank accounts to establish
the timing of the receipt and alleged disbursement of funds." Choy relies on Kirschner v. State, 997
S.W.2d 335 (Tex. App.--Houston [1st Dist.] 1999, pet. ref'd), as support for his claim.

In Kirschner, the contractor, Kirschner, was building a home for the buyers and sending bills for labors
and materials. Once the buyers believed that Kirschner was billing them for materials that they had
already paid for and labor that had never been performed, they fired him. It was later determined that
Kirschner had not paid 17 subcontractors, prompting an indictment by the State. After he was
convicted, Kirschner appealed, arguing that the evidence was legally insufficient to show that he
misappropriated trust funds. This Court concluded that the State offered no evidence as to "when ten
of the twelve subcontractors and vendors named in the indictment furnished the labor or materials for
which they were not paid by Krischner. Absent this evidence, the State failed to prove that there was a
current or past due obligation owed these ten alleged beneficiaries at the time Kirschner received trust
funds." Id. at 341. However, the State introduced into evidence copies of invoices submitted by the two
remaining subcontractors listed in the indictment, together with evidence that Kirschner had made
draws on loan proceeds committed to those projects and had not used the trust funds he received to
pay those obligations. Id. at 341-42. Bank records and Kirschner's own cost documentation showed
that he wrote many checks against trust funds after the obligations to the two sub-contractors became
payable, most of them payable to beneficiaries of the trust, but one payable to his wife and one to
himself. Id. at 342. Because Kirschner paid himself before paying his obligations to trust beneficiaries,
the court held that the subcontractors had established a misapplication of trust funds. Id. The court
rejected Kirschner's argument that the State was required to trace the flow of funds and prove that any
questionable payments were not, in fact, payments directly related to the project. Id. at 342-43.

Here, the record contains ample, unrebutted evidence that Graziano provided labor and materials for
the roofing work on the 21 projects for which he sought recovery in this lawsuit; that it invoiced the work
on each of these properties upon completion for specific amounts of money, (8) which then became
due and owing, triggering construction loan draw requests by Windwater to Citibank and Frost Bank;
that Citibank and Frost Bank promptly responded to each draw request by Windwater and wire
transferred the money to its account; and that Choy, as trustee for Windwater with control over its
funds, did not pay the invoices. We conclude that Choy's argument that Graziano was required to trace
the funds received by Windwater and disbursed is an attempt to add requirements to the statute without
support in the plain language of the statute or in case law and is without merit. See Fitzgerald, 996
S.W.2d at 865.

C. Misapplication of Trust Funds

Finally, Choy argues that no evidence, or factually insufficient evidence, shows that he misapplied any
of the alleged trust funds so as to be personally liable under section 162.031(a) of the Act. He
contends that "[t]o prove a misapplication, Graziano needed to establish that some amount of a
particular loan draw was not used to pay suppliers to the property securing the loan whose obligations
were due and payable by Windwater within 30 days after Windwater's receipt of the loan proceeds."
Thus, Choy argues that findings of fact 25, 26, 37-39 were supported by insufficient evidence and that
conclusions of law 12-14 and 16 were erroneous.

The findings of fact challenged in this section state:

25. Andrew Choy directed that the construction loan proceeds from Citibank be directed or paid to
someone other than Graziano Roofing.

26. Andrew Choy knowingly used, disbursed, or otherwise diverted the construction trust funds owed to
Graziano Roofing, so that Graziano Roofing did not receive the trust funds.
. . . .

37. Andrew Choy directed that the construction loan proceeds from Frost Bank be directed or paid to
someone other than Graziano Roofing.

38. Andrew Choy knowingly used, disbursed, or otherwise diverted the construction trust funds from
Frost Bank owed to Graziano Roofing, so that Graziano Roofing did not receive the trust funds from
Frost Bank.

39. When the Frost Bank construction loan proceeds were received by Windwater, Andrew Choy
decided to utilize the loan proceeds for purposes other than to pay the construction costs on the homes
made the basis of this lawsuit.

The conclusions of law challenged in this section state:

12. Andrew Choy knowingly retained, used, disbursed, or otherwise diverted the construction trust
funds without first fully paying all current or past due obligations incurred by Windwater and owed to the
beneficiary of the construction trust funds, Graziano Roofing.
. . . .
14. Andrew Choy knowingly misapplied the construction trust funds.
. . . .

16. The amount of construction loan proceeds (principal and interest) misapplied by Choy total
$131,796.09 as of April 5, 2003.

Choy contends that "[a]lthough the phrase 'directly or indirectly retains, uses, disburses, or otherwise
diverts trust funds' is not statutorily defined, case law provides guidance on evidence need to prove this
element under Property Code [section] 162.031(a)." Specifically, he contends that, in Kirshner, the
court found that checks paid to non-beneficiaries at the time current and past due obligations remained
outstanding evinced a misapplication of trust funds by the trustee. See Kirshner, 997 S.W.2d at 342.
Choy also cites Morelli v. State, 9 S.W.3d 909, 912 (Tex. App.--Austin 2000, pet. ref'd), for the
proposition that no segregation of funds by construction projects is required and that the intent to
defraud must be shown to establish the misapplication of funds. We find both Kirschner and Morelli to
be inapplicable because they do not correspond to the circumstances of this case.

Here, Choy testified that he wired over $4.3 million to Tan Yu. He testified that he wired money that
should have gone to contractors and that he and Tan Yu knew that contractors were not getting paid.
He admitted that, on some properties, Graziano was not getting paid. There is no evidence that trust
funds received from Frost Bank and Citibank in response to Windwater's draw requests for funds to pay
Graziano's invoices were used to pay any of those invoices.

To prove the misapplication of construction trust funds, the plain language of the statute required only
that (a) a trustee "intentionally or knowingly or with intent to defraud directly or indirectly" (b) "retain[],
use[], disburse[], or otherwise divert[] trust funds" (c) "without first fully paying all current or past due
obligations incurred by the trustee to the beneficiaries." Tex. Prop. Code Ann. § 162.031(a). Viewing
the evidence in the light most favorable to Graziano and indulging every reasonable inference in its
favor, we conclude that the evidence is legally sufficient to support the challenged findings. See
Associated Indem. Corp., 964 S.W.2d at 285-86. Considering and weighing all of the evidence, we
further conclude that the challenged findings are not so against the great weight and preponderance of
the evidence as to be clearly wrong and unjust, and therefore the evidence in support of the
challenged findings is factually sufficient. Ortiz, 917 S.W.2d at 772.

We overrule Choy's first issue. (9)II. Intra-Company Transfers of Funds

In his second issue, Choy argues that the "trial court erred in concluding that liability exists under the
Trust Fund Act of intra-company transfers of funds."

Choy does not challenge a specific finding of fact or conclusion of law. Rather, he states that although
Choy testified that he and others had the authority to and did wire money to Tan Yu, the owner of lake
Olympia and Windwater, of which Choy was president, "there was no testimony or documentary
evidence indicating exactly when these transfers were made, the sources of the transferred funds, the
amount of each transfer, and who made the individual transfers." Choy contends that Graziano failed to
carry its burden of proving that funds were "diverted, disbursed, or misapplied." He further contends
that "the fact that the funds were never disbursed by Mr. Choy, but remained within the corporate
structure, should not cause Mr. Choy to be held personally liable under the Trust Fund Act."

Choy again attempts to add requirements of proof not contemplated by the plain language of the case
law, contrary to the canons of code construction. See Fitzgerald, 996 S.W.2d at 865; Tex. Gov't Code
Ann. §§ 311.023; 312.002. Moreover, the authorities he cites are inapplicable under the circumstances
of this case. There is no evidence that construction trust funds received from Frost Bank and Citibank
to pay Graziano's invoices "remained within the corporate structure." Rather, there is unrefuted
evidence that they were received by Windwater in response to draw requests made by Windwater to
the banks to pay Graziano's invoices for completed roof work, that they were not used to pay Graziano,
that they were commingled with all corporate funds, and that $4.3 million of corporate funds were
transferred overseas to Tan Yu, the owner of Windwater, and were not used for any corporate
purpose. Proof of liability for misapplication of trust funds under the plain language of section
163.931(a) of the Act requires no more. In particular, there is no requirement that the beneficiary of
trust funds must prove "exactly when these transfers of trust funds were made" by the company to a
recipient other than the plaintiff, "the sources of the transferred funds, the amount of each transfer, and
who made the individual transfers."

Again, we "may add words into a statutory provision only when necessary to give effect to clear
legislative intent," and "[o]nly truly extraordinary circumstances showing unmistakable legislative intent
should divert us from the enforcing the statute as written." Fitzgerald, 996 S.W.2d at 867. There is no
such intent expressed here, and increasing the beneficiary's burden of proof of the misapplication of
trust funds by requiring him to prove the exact method by which a trustee's disposed of trust funds not
used to pay the beneficiary--proof within the trustee's control--is plainly contrary to the legislative intent
that the beneficiary prove only that the trustee "intentionally or knowingly or with intent to defraud,
directly or indirectly retain[ed], use[d], disburse[d], or otherwise divert[ed] trust funds without first fully
paying all current or past due obligations incurred by the trustee to the beneficiaries of the trust funds."
Tex. Prop. Code Ann. § 162.031(a).

We overrule Choy's second issue.

III. Pre-judgment Interest

In his third issue, Choy argues that the trial court erred in awarding Graziano prejudgment interest
based on the interest rate contained in the Texas Prompt Pay Act. Choy contends that conclusions of
law 15 and 17 are erroneous.

The relevant conclusions of law provide,

15. Interest on debts owed to beneficiaries of the construction trust fund statute runs at ONE AND
ONE-HALF (1.5%) percent per month.
. . . .
17. Pre-judgment interest continues to accrue to the date of judgment at the per diem rate of $5,4162
from April 5, 2003 to the date of judgment, that date being June 7, 2007.

Graziano responds that Choy never raised this argument at trial and that therefore the issue is waived.
(10) In his reply brief, Choy does not respond to Graziano's waiver argument.

To make these claims on appeal, Choy was required to present these complaints to the trial court. See
Tex. R. App. P. 33.1 (preserving error); see also Allright, Inc. v. Pearson, 735 S.W.2d 240, 240 (Tex.
1987) (error regarding award of prejudgment interest must be preserved); Miller v. Kendall, 804 S.W.2d
933, 945 (Tex. App.--Houston [1st Dist.] 1990, no writ) (motion to amend or correct judgment or motion
for new trial is proper vehicle for preserving error in judgment); Wohlfahrt v. Holloway, 172 S.W.3d 630,
639 (Tex. App.--Houston [14th Dist.] 2005, pet. denied) (error regarding postjudgment interest is
waived if not complained of at trial level). We conclude that by failing to object to the award of
prejudgment interest at trial, the complaint has been waived.

We overrule Choy's third issue.

Conclusion

We affirm the judgment of the trial court.

Evelyn V. Keyes

Justice

Panel consists of Justices Jennings, Keyes, and Higley.

Justice Jennings, concurring in the judgment only.

1. See Tex. Prop. Code Ann. § 162.001-162.033 (Vernon 2007).

2.
Windwater and Lake Olympia filed for bankruptcy on April 4, 2003 and are not parties to this appeal.
Graziano filed a claim of proof in that proceeding and it received $54,000 from the bankruptcy.

3. See Tex. Civ. Prac. & Rem. Code Ann. § 38.001 (Vernon 2008).

4. See Tex. Prop. Code Ann. § 28.001 (Vernon 2000).

5.
Thus, Choy's assertion that the word "lien" is not present in the trial record and Graziano failed to prove
the existence of a lien on each property is without merit.

6. The draw requests are in the name of First American Bank, which is now Citibank.

7.
Exhibit 57A is not in the record. However, the properties are specifically identified in record exhibits 193,
194, and 220, which, in turn, reference backup materials in the record.

8.
Or, in the case of 7110 Harmony Cover, just prior to completion.

9.
In a sub-point of his first issue, Choy argues that Graziano did not plead a claim relating to 7126 Turtle
Lagoon Row in its petition and therefore the trial court should not have awarded damages on this
property. Graziano responds that the issue was tried by consent. See Tex. R. Civ. P. 67 (trial by
consent occurs when issues not raised by pleadings are tried without objection). We agree. Graziano
introduced evidence that 7126 Turtle Lagoon Row was one of the properties where it furnished labor
and materials and that it had not received payment. Choy did not object to Graziano's evidence and
thus tried this issue by consent.

10.
In its third amended petition, Graziano pled for prejudgment interest pursuant to section 28.001 et seq
of the Texas Property Code. See Tex. Prop. Code Ann. § 28.001 (Vernon 2000). Section 28.004
provides, "An unpaid amount required under this chapter begins to accrue interest on the day after the
date on which the payment becomes due." Id. § 28.004(a) (Vernon 2000).