Affirmed in part; Reversed in Part and Opinion Filed August 3, 2022 

S 

In The 

Court of Appeals 

Fifth District of Texas at Dallas 

No. 05-21-00158-CV 

2100 RICCHI, LLC, Appellant and Cross-Appellee 

V. 

HILLIARD OFFICE SOLUTIONS OF TEXAS, LTD. AND 

THE HILLIARD COMPANIES, LLC, Appellees and Cross-Appellants 

On Appeal from the 193rd Judicial District Court 

Dallas County, Texas 

Trial Court Cause No. DC-17-02672 

MEMORANDUM OPINION 

Before Justices Myers, Osborne, and Nowell 

Opinion by Justice Osborne 

This is a cross-appeal arising out of a commercial lease dispute. After a bench 

trial, the trial court rendered judgment awarding damages to each party, with a net 

award to the landlord. Appellant and cross-appellee is the landlord; appellees and 

cross-appellants are the tenant and its general partner. In four issues, Landlord argues 

the trial court erred by failing to award prejudgment and postjudgment interest and 

attorney’s fees and by awarding actual and exemplary damages to Tenant. In two 

issues, Tenant argues the trial court’s award of damages to Landlord was error 
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because of Landlord’s fraudulent inducement and material breaches of the lease. We 

affirm in part and reverse and remand in part. 

BACKGROUND

The trial court’s detailed findings of fact and conclusions of law are wellknown to the parties, and we do not repeat them here. In summary, the parties’ 

dispute arises from a January 29, 2015 “Office Lease Proposal” and a 60-month lease 

the parties signed in April 2015, under which Tenant occupied 27,857 square feet in 

an office building in Farmer’s Branch. The parties agreed to share the construction 

costs incurred to bring the premises to “turnkey” condition; Landlord agreed to pay 

70 percent of the costs and Tenant agreed to pay 30 percent. Under both the proposal 

and the lease, all remodeling would be billed at Landlord’s “book cost” and Tenant 

had a right to audit “any and all records” regarding the construction costs.

The lease required timely monthly rental payments of $32,499.83 for the first 

two years of the lease term. Tenant was required to pay rent “without deduction or 

set off.” Tenant’s obligation to pay rent was “not dependent upon the condition of 

the premises or the performance by Landlord of its obligations hereunder” and 

continued “notwithstanding any breach by Landlord of its duties or obligations 

hereunder, whether express or implied.” The sole exception permitted Tenant to 

abate rent if Tenant was “prevented from making reasonable use of the Premises for 

more than 10 consecutive days” by the unavailability of certain defined “services.” 
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Tenant moved into the premises and the 60-month lease period began on 

November 1, 2015. Tenant paid rent for the first eleven months of the lease term. 

Tenant stopped paying rent for an eight-month period between October 2016 and 

May 2017, but continued to occupy and use the premises. Landlord filed this suit in 

March 2017 for breach of contract and a parallel suit for eviction in justice court in 

June 2017. Tenant resumed paying rent in June 2017 through the time of trial in 

January 2020, and continuously operated its business out of the premises between 

November 2015 and the time of trial. 

Tenant filed a counterclaim alleging that Landlord “knowingly and 

intentionally misrepresented the improvement expenses” it submitted to Tenant for 

payment under the lease. Tenant introduced evidence at trial that Landlord marked 

up remodeling estimates for the premises before sending them to Tenant, did not 

inform Tenant of the markup, never intended to bill Tenant at Landlord’s book cost

as the lease required, included fees and expenses unconnected to the project, and 

failed to provide records when Tenant requested them. 

Because Tenant was unable to conduct its own internal audit without the 

necessary records, it agreed to the appointment of an auditor who would review and 

reconcile the accounting records and report his findings to the trial court. The auditor 

disallowed 157 of the 245 items or categories of construction costs analyzed, and 

calculated a $9,322.85 overpayment by Tenant. Landlord credited this amount to 

Tenant by subtracting it from the amount of rent due. 
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The case proceeded to trial before the court. Leobardo Trevino, Landlord’s 

CEO, and Sterling Hilliard, Tenant’s President, testified, and the “Auditor Report of 

Bradford L. Bright” was admitted into evidence with some fifty other exhibits. Both 

parties filed written closing arguments, proposed findings of fact and conclusions of 

law, affidavits in support of their attorney’s fees, and motions for judgment. 

Landlord also filed a request for amended findings of fact and conclusions of law. 

The trial court rendered judgment awarding Landlord actual damages in the 

amount of $258,257.56, representing the amount of unpaid rent due after crediting 

Tenant’s overpayment of its share of construction costs. The trial court awarded 

Tenant actual damages of $62,077.50 on its fraud claim, representing Tenant’s half 

of the auditor’s fee, and exemplary damages of $90,469.01. The trial court did not 

award attorney’s fees to Landlord, and the judgment does not include an award of 

prejudgment or postjudgment interest. This cross-appeal followed. 

STANDARDS OF REVIEW

In an appeal from a bench trial, the trial court’s findings of fact have the same 

weight as a jury verdict. Fulgham v. Fischer, 349 S.W.3d 153, 157 (Tex. App.—

Dallas 2011, no pet.). When the appellate record contains a reporter’s record as it 

does in this case, findings of fact are not conclusive and are binding only if supported 

by the evidence. Id. We review a trial court’s findings of fact under the same legal 

and factual sufficiency of the evidence standards used when determining if sufficient 

evidence exists to support an answer to a jury question. Id. The applicable standard 
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of review depends upon which party bore the burden of proof at trial. We will discuss 

the pertinent standard in our consideration of each issue. 

In a bench trial, the trial court, as factfinder, is the sole judge of the credibility 

of the witnesses. Id. As long as the evidence falls “within the zone of reasonable 

disagreement,” we will not substitute our judgment for that of the fact-finder. Id.

(quoting City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005)). 

DISCUSSION

We first address Tenant’s issues regarding enforceability of the Lease before 

considering Landlord’s issues regarding amounts due under the Lease.

A. Tenant’s Cross-Issues 

 1. Standards of review 

Tenant challenges the legal and factual sufficiency of the evidence regarding 

issues on which it had the burden of proof. Accordingly, Tenant must demonstrate 

that the evidence conclusively establishes all vital facts in support of the issue. Dow 

Chem. Co. v. Francis, 46 S.W.3d 237, 241 (Tex. 2001) (per curiam). The appellant 

must show that there is no evidence to support the fact finder’s finding and that the 

evidence conclusively establishes the opposite of the finding. See id. The final test 

for legal sufficiency is whether the evidence would enable a reasonable and fairminded fact finder to reach the verdict under review. City of Keller, 168 S.W.3d at 

827. 
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When a party challenges the factual sufficiency of the evidence supporting a 

finding for which it had the burden of proof, the party must demonstrate that the 

finding is against the great weight and preponderance of the evidence. Dow Chem. 

Co., 46 S.W.3d at 242. In a factual sufficiency review, an appellate court considers 

and weighs all the evidence both supporting and contradicting the finding. See Mar. 

Overseas Corp. v. Ellis, 971 S.W.2d 402, 406–07 (Tex. 1998). We do not set the 

finding aside unless the evidence supporting it is so weak or so against the 

overwhelming weight of the evidence that the finding is clearly wrong and unjust. 

See Dow Chem. Co., 46 S.W.3d at 242. 

We review de novo a trial court’s conclusions of law. Fulgham, 349 S.W.3d 

at 157. We are not bound by the trial court’s legal conclusions, but the conclusions 

of law will be upheld on appeal if the judgment can be sustained on any legal theory 

supported by the evidence. Id. at 157–58. Incorrect conclusions of law will not 

require reversal if the controlling findings of fact will support a correct legal theory. 

Id. at 158. Moreover, conclusions of law may not be reversed unless they are 

erroneous as a matter of law. Id. 

2. Fraud in the inducement 

In its first cross-issue, Tenant contends the trial court erred by awarding 

damages to Landlord because Landlord’s fraud in the inducement precludes 

enforcement of the lease. We construe this cross-issue as a complaint that Tenant 
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established both its counterclaim for fraud in the inducement and its right to the 

remedy of rescission as a matter of law. See Dow Chem. Co., 46 S.W.3d at 241. 

A common-law fraud claim requires “a material misrepresentation, which was 

false, and which was either known to be false when made or was asserted without 

knowledge of its truth, which was intended to be acted upon, which was relied upon, 

and which caused injury.” Zorrilla v. Aypco Constr. II, LLC, 469 S.W.3d 143, 153 

(Tex. 2015) (internal quotation omitted). “Fraudulent inducement is a distinct 

category of common-law fraud that shares the same elements but involves a promise 

of future performance made with no intention of performing at the time it was made.”

Id. 

Fraudulent inducement arises only in the context of a contract. Anderson v. 

Durant, 550 S.W.3d 605, 614 (Tex. 2018). “In a fraudulent-inducement claim, the 

‘misrepresentation’ occurs when the defendant falsely promises to perform a future 

act while having no present intent to perform it.” Int’l Bus. Machines Corp. v. Lufkin 

Indus., LLC, 573 S.W.3d 224, 228 (Tex. 2019). “The plaintiff’s ‘reliance’ on the 

false promise ‘induces’ the plaintiff to agree to a contract the plaintiff would not 

have agreed to if the defendant had not made the false promise.” Id.; Mundheim v. 

Lepp, No. 05-19-01490-CV, 2021 WL 1921122, at *3 (Tex. App.—Dallas May 13, 

2021, pet. denied) (mem. op.). A merger clause, standing alone, does not prevent a 

party from suing for fraudulent inducement. Int’l Bus. Machines Corp., 573 S.W.3d 

at 229. 
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Rescission of a contract is “an equitable remedy that operates to extinguish a 

contract that is legally valid, but must be set aside because of fraud, mistake, or some 

other reason to avoid unjust enrichment.” Neese v. Lyon, 479 S.W.3d 368, 389 (Tex. 

App.—Dallas 2015, no pet.). To be entitled to the equitable remedy of rescission, “a 

party must show either (1) that he and the other party are in the status quo, i.e., that 

he is not retaining benefits under the instrument without restoration to the other 

party, or (2) that there are special equitable considerations that obviate the need for 

the parties to be in the status quo.” Boyter v. MCR Constr. Co., 673 S.W.2d 938, 941 

(Tex. App.—Dallas 1984, writ ref’d n.r.e.) (citations omitted).

A contract procured by fraud is voidable, not void. PSB, Inc. v. LIT Indus. 

Tex. Ltd. P’ship, 216 S.W.3d 429, 433 (Tex. App.—Dallas 2006, no pet.). As we 

explained in PSB, Inc., 

If a party fraudulently induced to enter into a contract continues to 

receive benefits under the contract after learning of the fraud or 

otherwise engages in conduct recognizing the agreement as subsisting 

and binding, then the party has ratified the agreement and waived any 

right to assert the fraud as a basis to avoid the agreement. An express 

ratification is not necessary; any act based upon a recognition of the 

contract as subsisting or any conduct inconsistent with an intention of 

avoiding it has the effect of waiving the right of rescission. 

Id. at 433–34 (citations and internal quotations omitted). 

The trial court found that Landlord made material misrepresentations in the 

lease proposal, including that all remodeling would be billed at Landlord’s book cost 

and that Tenant had the right to audit any and all records and costs pertaining to the 
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Tenant Improvements at any time during construction. The trial court also found that 

these representations were false; Landlord knew they were false at the time they 

were made; Landlord intended Tenant to act on the representations; Tenant relied on 

the representations; and Tenant was injured as a result. 

The trial court heard Hilliard’s testimony that without the “book cost”

provision, Tenant would not have executed the lease. The evidence showed that 

Tenant began questioning the construction costs and requesting documentation from 

Landlord in mid-2015, culminating in a July 2015 meeting between the parties to 

discuss at least one estimate from Garcia Remodeling, LLC that, according to the 

subsequent auditor’s report, had been “marked up” by Landlord to include “soft

costs” rather than reflecting Landlord’s “book cost” as provided in the lease. Trevino 

testified that Landlord marked up the invoice from Garcia by $130,813.00, and that 

Landlord intended Tenant to rely on the marked up invoice to make payment. In 

February 2018, Tenant filed its counterclaim alleging Landlord’s knowing and 

intentional misrepresentations regarding construction costs under the lease. 

The trial court found, based on the auditor’s report and Trevino’s testimony, 

that Landlord marked up Garcia’s estimate by $130,813.00 and did not inform 

Tenant of the markup. The trial court also found that the marked-up estimate did not 

represent Landlord’s book cost and that it was a material misrepresentation. Based 

on the same evidence, the trial court also found that Landlord never intended to bill 

Tenant at Landlord’s actual book cost. We conclude there is legally and factually 
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sufficient evidence to support the trial court’s findings and conclusions regarding 

Landlord’s fraud.

Nonetheless, the trial court also found and concluded that Tenant breached the 

lease by failing to pay rent due under the lease from October 2016 to May 2017, and 

did not find or conclude that the lease was void. Tenant argues it is not bound by the 

fraudulently-induced lease. It argues it had no duty to pay rent because it never 

consented to the lease, and Landlord never sought equitable relief to compensate it 

for Tenant’s use of the premises.

Among other arguments, Landlord responds that Tenant ratified the lease. 

Landlord pleaded the affirmative defense of ratification and offered evidence that 

Tenant continued to recognize the lease as valid after becoming aware that 

Landlord’s invoices for the remodeling costs did not represent “book cost” as 

provided in the lease. See PSB, Inc., 216 S.W.3d at 423–44 (continuing receipt of 

benefits after learning of fraud ratifies contract). Landlord relies on the trial court’s

findings, unchallenged by Tenant, that Tenant “consistently and continuously 

occupied, operated its business out of, and otherwise used the Premises through the 

January 2020 trial of this cause”; continuously paid rent pursuant to the lease’s

terms, other than the eight-month period between October 2016 and May 2017; “has

otherwise complied with certain other Lease obligations from the Lease’s

commencement through trial of this matter”; and “has sought legal action to enforce 

the terms of the Lease, including through trial.” 
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Tenant filed its original and amended counterclaims seeking damages, but not 

rescission, for Landlord’s fraudulent inducement. The trial court found that Tenant 

had been damaged by Landlord’s fraud in the amount of $62,077.50, and awarded 

that amount in actual damages to Tenant in its judgment. 

We conclude Tenant did not establish its right to the remedy of rescission as 

a matter of law. See Dow Chem. Co., 46 S.W.3d at 241. Tenant retained benefits 

received under the lease by its uninterrupted use of the premises after learning of 

Landlord’s fraud. See Boyter, 673 S.W.2d at 941; PSB, Inc., 216 S.W.3d at 433–34. 

We decide Tenant’s first cross-issue against it.

3. Landlord’s breach of contract

In its second cross-issue, Tenant contends the trial court erred by awarding 

damages to Landlord because Landlord committed a prior material breach excusing 

Tenant from performance. Tenant argues Landlord committed a material breach of 

the lease by “(1) submitting invoices which reflected expenses outside of the 

Landlord’s book costs for the improvements, and (2) by interfering with [Tenant’s] 

audit rights.”

“[W]hen one party to a contract commits a material breach of that contract, 

the other party is discharged or excused from further performance.” BartushSchnitzius Foods Co. v. Cimco Refrigeration, Inc., 518 S.W.3d 432, 436 (Tex. 2017) 

(per curiam) (internal quotation omitted). “By contrast, when a party commits a 
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nonmaterial breach, the other party is not excused from future performance but may 

sue for the damages caused by the breach.” Id. (internal quotation omitted). 

The contention that a party is excused from its contract performance by the 

other party’s prior material breach is an affirmative defense. 701 Katy Bldg., L.P. v. 

John Wheat Gibson, P.C., No. 05-16-00193-CV, 2017 WL 3634335, at *5 (Tex. 

App.—Dallas Aug. 24, 2017, pet. denied). Tenant pleaded “prior material breach” 

as an affirmative defense in its first supplemental answer. Accordingly, Tenant bore 

the burden of proof at trial, and on appeal must show that the evidence conclusively 

established all vital facts in support of the issue or that the trial court’s findings are 

against the great weight and preponderance of the evidence. See Dow Chem. Co., 46 

S.W.3d at 241–42. 

A party asserting an affirmative defense in a bench trial must request findings 

in support of that defense in order to avoid waiver on appeal. Trelltex, Inc. v. Intecx, 

L.L.C., 494 S.W.3d 781, 785 (Tex. App.—Houston [14th Dist.] 2016, no pet.). 

Tenant did so, requesting findings that Landlord’s actions in marking up invoices 

and sending them to Tenant for payment, as well as Landlord’s intent to preclude 

Tenant from auditing construction costs or knowing actual costs, were material 

breaches of the lease. 

The trial court’s findings of fact and conclusions of law, however, did not 

include Tenant’s proposals regarding material breaches of the lease. If the trial 

court’s findings do not do not include any of the elements of the affirmative defense 
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asserted, the party must specifically request additional findings relevant to the 

defense. Cooper v. Cochran, 288 S.W.3d 522, 531 (Tex. App.—Dallas 2009, no 

pet.). Tenant did not request additional findings. Instead, Tenant filed a motion to 

enter judgment requesting that the trial court “enter a judgment consistent with the 

Findings of Fact and Conclusions of Law.” Consequently, Tenant has waived any 

error with respect to his affirmative defense of a prior material breach. See id.

Even if Tenant has not waived its complaint, however, we conclude there was 

legally and factually sufficient evidence to support the trial court’s failure to find, 

for purposes of Tenant’s breach of contract claim, that the breach was material. 

Whether a breach is material is ordinarily a fact question. Bartush-Schnitzius Foods 

Co., 518 S.W.3d at 436. The supreme court recognizes five factors relevant to the 

materiality determination; most notably here, “the extent to which the injured party 

can be adequately compensated for the part of that benefit of which he will be 

deprived.” Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 

199 (Tex. 2004) (per curiam).1

 

1

 The materiality factors include: (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. Mustang Pipeline, 134 S.W.2d at 199. 
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The evidence relevant to these factors supports the trial court’s decision to 

award damages to Tenant for Landlord’s fraud rather than rescinding the lease. The 

trial court’s finding of fact 38 provided:

Since November 1, 2015, [Tenant] has continuously occupied the 

Premises; had continuously kept company property on the Premises; 

has continuously worked and had employees present on a regular basis 

at the Premises; (other than the below-described eight month rent 

abatement at issue in this case) has continuously paid rent pursuant to 

the terms of the Lease; and has otherwise complied with certain other 

Lease obligations from the Lease’s commencement through trial of this 

matter. Additionally, by way of its counterclaims discussed below, 

[Tenant] has sought legal action to enforce the terms of the Lease, 

including through trial. 

The trial court also found that from October 2016 to May 2017, Tenant “continued 

to occupy and use the Premises without paying rent.”

The evidence supports the trial court’s findings that despite Landlord’s fraud 

regarding billing at book cost and Tenant’s right to audit, Tenant had uninterrupted 

possession and use of the premises under the Lease. Although Tenant was not able 

to undertake its own audit as it contracted to do, the independent auditor chosen by 

the parties ultimately determined the amount of damages Tenant incurred, and 

Tenant accepted the auditor’s findings as conclusive. 

Considering the evidence in light of the Mustang Pipeline factors, we 

conclude there was legally and factually sufficient evidence to support a finding that 

Tenant failed to establish a material breach of the lease by Landlord that discharged 

Tenant’s contractual duty to pay rent. See Mustang Pipeline Co., Inc., 134 S.W.3d 

at 199. Instead, there was legally and factually sufficient evidence to support a 
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finding of a nonmaterial breach by Landlord, for which Tenant was awarded 

damages. See Bartush-Schnitzius Foods Co., 518 S.W.3d at 436. 

We also note that the lease explicitly addresses the effect of a breach by 

Landlord on Tenant’s obligation to pay rent. Lease paragraph 24(p) provides in 

relevant part, 

Tenant’s obligation to pay rent hereunder is not dependent upon the 

condition of the premises or the performance by Landlord of its 

obligations hereunder, and, except as otherwise expressly provided 

herein, Tenant shall continue to pay the rent, without abatement, setoff, 

[or] deduction, notwithstanding any breach by Landlord of its duties or 

obligations hereunder, whether express or implied. 

This unambiguous language provides that Landlord’s failure to perform any of its 

obligations does not excuse Tenant’s failure to timely pay rent. See Barton Food 

Mart, Inc. v. Botrie, No. 03-17-00292-CV, 2018 WL 5289538, at *7 (Tex. App.—

Austin Oct. 25, 2018, pet. denied) (prior material breach defense not available to 

tenant where lease included unambiguous provision that landlord’s failure to 

perform its obligations did not excuse tenant’s failure to pay rent). 

For these reasons, we conclude that Tenant did not conclusively establish its 

affirmative defense that its performance was excused by Landlord’s prior material 

breach and the trial court’s findings on the issue are not against the great weight and 

preponderance of the evidence. See Dow Chem. Co., 46 S.W.3d at 241–42. We 

decide Tenant’s second cross-issue against it. 
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B. Landlord’s issues

1. Interest 

In its first issue, Landlord contends the trial court erred by failing to award 

prejudgment and postjudgment interest on the $258,257.56 the trial court found as 

Landlord’s actual damages. We review the trial court’s decision regarding the 

assessment of prejudgment and postjudgment interest for an abuse of discretion. 

DeGroot v. DeGroot, 369 S.W.3d 918, 926 (Tex. App.—Dallas 2012, no pet.). 

In its operative petition, Landlord pleaded for “pre- and post-judgment interest 

to the maximum extent allowed by contract or law.” Paragraph 5 of the Lease 

provides that “[a]ll payments required of Tenant hereunder shall bear interest from 

the date due plus the 5 day grace period until paid at the maximum lawful rate . . . .”

“Prejudgment interest and postjudgment interest compensate judgment 

creditors for their lost use of the money due them as damages.” Phillips v. Bramlett, 

407 S.W.3d 229, 238 (Tex. 2013). “Prejudgment interest performs this function for 

the time period from the date the damages are incurred through the date of judgment; 

postjudgment interest, from the date of judgment through the date the judgment is 

satisfied.” Id. “In a breach of contract case, the prejudgment interest rate is the same 

as the postjudgment interest rate.” E.F. Johnson Co. v. Infinity Global Tech., No. 05-

14-01209-CV, 2016 WL 4254496, at *11 (Tex. App.—Dallas Aug. 11, 2016, no 

pet.) (mem. op.). 
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“A money judgment of a court in this state must specify the postjudgment 

interest rate applicable to that judgment.” TEX. FIN. CODE § 304.001. Postjudgment 

interest accrues beginning on the date the judgment is rendered. Id. § 304.005(a); 

see also Phillips, 407 S.W.3d at 238; TEX. FIN. CODE § 304.002. 

The trial court found and concluded that the lease was “a valid, enforceable 

contract,” that Landlord “performed or tendered performance of its contractual 

obligations under the Lease,” and that Tenant breached the lease “by failing to pay 

rent for the time period October 2016 to May 2017 and thereby caused damages to 

[Landlord], totaling $258,257.56 before interest.” The trial court’s judgment, 

however, does not include an award of either prejudgment or postjudgment interest 

to either party. In its request for amended findings of fact and conclusions of law, 

Landlord objected to the trial court’s failure to award interest on the sum due from 

Tenant. 

Because the parties’ valid contract requires payment of prejudgment interest 

and the finance code requires payment of postjudgment interest, we conclude the 

trial court erred by failing to award prejudgment and postjudgment interest to 

Landlord. See E.F. Johnson Co., 2016 WL 4254496, at *11 (“Postjudgment 

interest—and therefore prejudgment interest—in a case in which the contract 

provides for interest is the lesser of the interest rate specified in the contract or 

eighteen percent a year.”). We sustain Landlord’s first issue.
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2. Attorney’s fees

In its second issue, Landlord contends the trial court erred by failing to award 

its attorney’s fees. Landlord relies on the trial court’s findings that (1) the lease is a 

valid, enforceable contract, (2) Tenant breached the lease by failing to pay rent from 

October 2016 to May 2017, (3) as a direct and proximate result of Tenant’s breach, 

Landlord incurred $258,257.56 in actual damages “comprised of eight months’ rent 

improperly withheld” by Tenant, and (4) Landlord is entitled to recover $258,257.56 

in actual damages from Tenant. 

The lease provides that “Tenant’s failure to promptly pay Rent when due or 

within [a] five (5) day grace period” is an “Event of Default,” and “[u]pon any Event 

of Default, Tenant shall pay to Landlord all costs incurred by Landlord (including 

court costs and reasonable attorneys’ fees and expenses) in . . . enforcing, or advising 

Landlord of, its rights, remedies, and recourses arising out of the Event of Default.”

In its operative petition, Landlord pleaded for its reasonable and necessary attorney’s 

fees “through trial and any appeal pursuant to the Lease, . . . Chapter 38 of the Texas 

Civil Practice & Remedies Code, or other applicable law.”

Landlord’s CEO Leobardo Trevino testified that as a result of Tenant’s failure 

to pay rent, Landlord was required to engage an attorney to represent it in enforcing 

its rights under the lease. Tenant’s President Sterling Hilliard acknowledged that 

“[a]s it reads here,” the lease provided for payment of Landlord’s attorney’s fees if 

the court found that Tenant failed to pay rent when it was due under the lease. Both 
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parties filed affidavits in support of their attorneys’ fees after trial along with their 

post-trial briefing, requested findings, and motions for judgment. 

An appellate court reviews a trial court’s decision to award attorney’s fees for 

an abuse of discretion. Blackstone Med., Inc. v. Phoenix Surgicals, L.L.C., 470 

S.W.3d 636, 657 (Tex. App.—Dallas 2015, no pet.). A trial court has discretion to 

fix the amount of attorney’s fees, but it does not have discretion to deny attorney’s 

fees entirely if an award of fees is required under the terms of the parties’ agreement 

or by statute. Scott Pelley P.C. v. Wynne, No. 05-15-01560-CV, 2017 WL 3699823, 

at *31 (Tex. App.—Dallas Aug. 28, 2017, pet. denied) (mem. op.). 

Here, Landlord established that an award of fees was required under the lease. 

Consequently, the trial court erred by failing to include an award of attorney’s fees 

in its judgment. See id. We sustain Landlord’s second issue.

3. Auditor’s fees

In its third issue, Landlord argues the award of auditor’s fees to Tenant should 

have been designated as “costs” under civil procedure rule 172, not as actual 

damages. Rule 172 provides that “[w]hen an investigation of accounts or 

examination of vouchers appears necessary for the purpose of justice between the 

parties to any suit, the court shall appoint an auditor or auditors to state the accounts 

between the parties and to make report thereof to the court as soon as possible.” TEX.

R. CIV. P. 172. The rule includes requirements for the report and a date for filing 

exceptions. See id. The rule concludes, “The court shall award reasonable 
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compensation to such auditor to be taxed as costs of suit.” Id. Landlord argues that 

the auditor’s fees, as costs of court, are not “damages.” See In re Nalle Plastics 

Family Ltd. P’ship, 406 S.W.3d 168, 173 (Tex. 2013) (although court costs, like 

attorney’s fees and prejudgment interest, “make a claimant whole,” they do not 

“qualify as compensatory damages”).

Landlord contends that we review this issue de novo because it requires 

construction of rule 172. See Shook v. Shook, No. 01-09-00649-CV, 2010 WL 

2025772, at *1 (Tex. App.—Houston [1st Dist.] May 20, 2010, no pet.) (mem. op.) 

(“The dispositive issue in this appeal deals with the application of the rules of civil 

procedure to undisputed facts, which is a question of law we review de novo.”). We 

conclude, however, that the issue presents a mixed question of law and fact, that is, 

given the circumstances under which the audit was agreed to, ordered, and occurred, 

does the rule preclude the trial court from awarding damages equivalent to the half 

of the auditor’s fee that was paid by Tenant?2

 Consequently, in our review we defer 

to the trial court’s factual determinations supported by the record and review legal 

conclusions de novo. See Henry v. Smith, 637 S.W.3d 226, 239 (Tex. App.—Fort 

Worth 2021, pet. denied) (“Where the trial court’s findings involve mixed questions 

2 “Whether an auditor should be appointed is left to the discretion of the trial court, and its action is 

revised only on a showing of gross abuse.” Padon v. Padon, 670 S.W.2d 354, 360 (Tex. App.—San Antonio 

1984, no writ) (internal quotation omitted). Further, although the parties’ agreed motion and the trial court’s 

order referenced rule 172, neither included any provision about payment of the auditor’s fees, and the 

evidence admitted at trial showed that the parties had agreed to split the auditor’s fees, in contrast to rule 

172’s provision to tax the fees as costs. 
–21–

of law and fact, we defer to the trial court’s factual determinations if supported by 

the evidence.”).

Landlord relies on the parties’ “Agreed Motion for Appointment of Rule 172 

Auditor” in support of its argument. As background in the motion, the parties recited 

that Landlord filed suit for “failure to pay rent, construction costs, and related 

charges,” that Tenant filed a counterclaim alleging that Landlord “misrepresented 

and failed to properly account for expenses incurred for improvements made on the 

Premises,” and that as part of its counterclaim, Tenant requested an audit of 

Landlord’s records regarding improvements to the premises. 

The parties explained that after an unsuccessful mediation, Landlord produced 

“a large volume of accounting records relating to the project.” The parties agreed 

that “the best and most efficient method” for resolving their dispute was to engage 

“an independent CPA with expertise in forensic construction accounting” to review 

and reconcile the records and report to the court. The parties agreed to recommend 

Bradford L. Bright, CCA, CCP of Veritas Advisory Group, Inc. to serve as auditor. 

Accordingly, the trial court signed the agreed order appointing Bright to serve 

as auditor on August 14, 2018. Neither the motion nor the order, however, addressed 

payment of Bright’s fees or their assessment as costs under rule 172. In finding of 

fact 51, the trial court found that “The parties agreed to the appointment [of an 

auditor] and [to the] audit process, and to accept the Auditor’s findings as 

conclusive.” And in finding of fact 53, the trial court found that “At the time of his 
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appointment—and as not only reflected in correspondence from the Auditor himself 

confirmed by Mr. Hilliard’s trial testimony—the parties agreed to split the Auditor’s 

fees and costs.”

Bright undertook the audit and filed his report several months later, 

concluding that Tenant had overpaid Landlord and was due a credit of $9,322.85. 

Bright’s report was offered as an exhibit by both parties and was admitted into 

evidence at trial. Neither party disputed Bright’s conclusions. Bright ultimately 

charged a fee of $124,155.00 for his services, of which Tenant paid half. Landlord 

argues that under rule 172, Tenant’s $62,077.50 payment to the auditor constituted 

costs, not damages. 

Tenant responds that the auditor’s appointment became necessary only 

because Landlord breached its obligations under the lease. Exhibit C to the lease, 

entitled “Landlord’s Work,” provided in relevant part:

Landlord shall provide “turnkey” improvements to the Premises. . . . 

Landlord and Tenant shall share the cost of tenant improvements (at 

Landlord’s book cost) as follows: Seventy percent (70%) to Landlord; 

and thirty percent (30%) to Tenant. . . . All remodeling will be billed at 

Landlord’s book cost. Each invoice shall be paid in the preceding 

proportions by Landlord and Tenant within ten (10) days of receipt of 

the invoice. Tenant shall have the right to audit any and all records 

regarding costs pertaining to the improvements at any time during 

construction. (Emphasis added) 

The auditor’s report reflects that Tenant “activated the audit clause” in the 

lease in June 2015, and “requested access to the backup documentation for costs 

incurred.” As support, the auditor attached emails between Landlord and Tenant in 
–23–

which Tenant requested invoices and other supporting information regarding 

remodeling work on the premises. 

Hilliard also testified at trial that Tenant requested supporting documents from 

Landlord in June 2015. He explained that Tenant had ten to twenty of its own 

accounting personnel, including a CFO, an accounting manager, and a CPA, who 

could perform an audit internally. He testified, however, that Tenant was unable to 

utilize its own personnel to conduct the audit because Landlord failed to provide the 

requested documentation as the lease required. 

Hilliard testified in detail about the expenses for which Tenant was unable to 

obtain the necessary documentation from Landlord. Hilliard explained that Tenant 

filed its counterclaim to force Landlord to provide the documents for an audit as 

required by the Lease. 

The auditor explained the “disconnect between the parties” that led to the need 

for the audit: 

It was not [Landlord’s] intention to provide any supporting 

documentation for its soft costs or for payments [Landlord] made to 

Garcia or its other contractors. Instead, [Landlord] intended to provide 

[Tenant] only invoices for Garcia’s work based upon a completion 

percentage of Garcia’s marked up estimate and percentage completion 

for invoices from Aire Design and PAC. This approach by [Landlord] 

was directly inconsistent with the audit language contained in the 

Lease. [Tenant] in turn expected and requested backup documentation 

for all costs incurred by [Landlord] consistent with the audit language 

contained in the Lease. This disconnect between the parties is the basis 

for the final audit conducted by [Bright] to establish what costs were 

incurred by [Landlord] consistent with the Lease Agreement and to be 

shared by [Tenant]. 
–24–

The trial court made detailed findings of fact about retaining and paying the 

auditor, and about the auditor’s investigation and fees charged. We have quoted 

finding of fact 53 above, regarding the parties’ agreement to split the auditor’s fees 

and costs. Findings of fact 54 and 55 also addressed these issues, and were supported 

by the auditor’s report: 

54. The Auditor and his staff spent hundreds of hours on the project and 

charged $124,155.00 in fees conducting a detailed, months-long audit 

process by which—through comprehensive review of project-related 

financial records and multiple in-person meetings with representatives 

of the parties—the Auditor reconstructed the accounting from the threeyear old construction project. 

55. [Landlord’s] conduct in marking-up Garcia’s estimates and 

invoices and Aire Designs invoices and forwarding those marked-up 

invoices to [Tenant] for payment without informing [Tenant] of the 

mark-up along with the fact that the marked-up invoices totaled 

$234,147.80, further compounded by [Landlord’s ] scheme to mask its 

actions by moving $130,813 to Garcia in October and November 2016 

only to have the funds returned in eight days constitutes a course of 

action on the part of [Landlord] which clearly and convincingly 

establishes that [Landlord] committed fraud against [Tenant] both in 

inducing [Tenant] into the Lease and under the Lease. (Defendant’s 

Exhibits 1, 2, 3, 4, 5, 8 and 9). 

The trial court’s conclusions of law 6 through 9 addressed fraud by Landlord. 

The court concluded that Landlord made material misrepresentations in both the 

lease proposal and the lease regarding Tenant’s right to audit and the improvements 

being billed at Landlord’s book cost; Landlord committed fraud under the lease “by 

marking-up the Garcia invoices”; and Tenant had been damaged as a result of the 

fraud “in the amount of $62,077.50 paid to Veritas for the audit services.”
–25–

Deferring to the trial court’s factual determinations supported by the evidence, 

see Henry, 637 S.W.3d at 239, we conclude that there was legally and factually 

sufficient evidence to support the trial court’s findings and conclusions that the 

auditor’s fees were damages resulting from Landlord’s fraud rather than costs 

incurred under rule 172. We decide Landlord’s third issue against it.

4. Exemplary damages 

In its fourth issue, Landlord contends the trial court’s judgment should be 

modified to remove the award of exemplary damages to Tenant3

 because there are 

no actual damages to support the award. See, e.g., Van Voris v. Team Chop Shop, 

LLC, 402 S.W.3d 915, 925 (Tex. App.—Dallas 2013, no pet.) (“We agree with the 

proposition that exemplary damages generally are recoverable only upon proof of 

actual damages.”); see also TEX. CIV. PRAC. & REM. CODE § 41.004(a) (exemplary 

damages may be awarded only if damages other than nominal damages are 

awarded). Landlord contends that neither the $9,322.85 accounting overpayment 

that Landlord credited to Tenant before trial nor the auditor’s fees were actual 

damages that could serve as a basis for an exemplary damages award. 

As we have discussed, however, we conclude that Tenant incurred actual 

damages in the amount of $62,077.50, as found by the trial court to have resulted 

3 The trial court concluded that Tenant incurred “$90,469.01 in reasonable and necessary attorney’s 

fees to pursue its causes of action for fraud and fraudulent inducement” and that Tenant was entitled to 

recover this amount in exemplary damages against Landlord. As we have noted, both parties filed evidence 

of their attorney’s fees by affidavit after trial.
–26–

from Landlord’s fraud. Because there are actual damages to support the exemplary 

damages awarded to Tenant, we decide Landlord’s fourth issue against it. See TEX.

CIV. PRAC. & REM. CODE § 41.004(a). 

CONCLUSION

The portions of the trial court’s judgment awarding actual damages to 

Landlord and actual and exemplary damages to Tenant are affirmed. We reverse the 

portion of the trial court’s judgment denying awards of prejudgment interest, 

attorney’s fees, and postjudgment interest to Landlord, and remand the case to the 

trial court for determination of these amounts. 

210158f.p05 

/Leslie Osborne// 

LESLIE OSBORNE 

JUSTICE
–27–

S 

Court of Appeals 

Fifth District of Texas at Dallas 

JUDGMENT 

2100 RICCHI, LLC, Appellant 

No. 05-21-00158-CV V. 

HILLIARD OFFICE SOLUTIONS 

OF TEXAS, LTD. AND THE 

HILLIARD COMPANIES, LLC, 

Appellee

On Appeal from the 193rd Judicial 

District Court, Dallas County, Texas 

Trial Court Cause No. DC-17-02672. 

Opinion delivered by Justice 

Osborne. Justices Myers and Nowell 

participating.

In accordance with this Court’s opinion of this date, the judgment of the trial 

court is AFFIRMED in part and REVERSED in part. We REVERSE that portion 

of the trial court’s judgment denying awards of prejudgment interest, attorney’s fees, 

and postjudgment interest to 2100 Ricchi, LLC. In all other respects, the trial court’s 

judgment is AFFIRMED. We REMAND this cause to the trial court for further 

proceedings consistent with this opinion. 

 It is ORDERED that appellant 2100 Ricchi, LLC recover its costs of this 

appeal from appellees Hilliard Office Solutions of Texas, Ltd. and The Hilliard 

Companies, LLC. 

Judgment entered this 3rd day of August, 2022.