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IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

AUSTIN DIVISION

HARMONY HAUS WESTLAKE, L.L.C., §

et al., §

§

Plaintiffs and Counter-Defendants, §

§

v. § CIVIL NO. 1-20-CV-486-XR

§

PARKSTONE PROPERTY OWNERS §

ASSOCIATION, INC., §

§

Defendant and Counter-Plaintiff. §

Parkstone’s Response to Plaintiffs’ Motion for Partial Summary Judgment 

Parkstone Property Association, Inc. (“Parkstone”) files this Response to 

Plaintiffs’ Motion for Partial Summary Judgment and shows: 

I.

FACTS

Harmony Haus residents have violated the parking rules over 1,000 times since

trial.1 They are the most egregious violators of Parkstone’s rules in the past seven years, 

and probably in the entire history of Parkstone.Before Harmony Haus’s arrival, the actual 

or threatened fine was $50 per violation, which issue was previously litigated and which 

sets a floor for Parkstone’s damages.

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1 The numerous parking violations from Harmony Haus residents are attached to 

Parkstone’s Motion for Partial Summary Judgment at ECF 42-2 (Exhibit 2-A, Pye 

Declaration and see his Declaration at Exhibit 2 for evidence used in this Response), 

Parkstone’s violation history can be found at ECF 42-1 (Exhibit 1-A, English Declaration), 

and certain deposition excerpts already cited for this Court from ECF 42-3, 42-4, and 42-

7. Parkstone incorporates these documents by reference herein and asks this Court to take 

judicial notice of such filings to avoid multiple, repetitive exhibit filings.

2 Parkstone’s Motion for Partial Summary Judgment at ECF 42-1 (Exhibit 1-A, English 

Declaration, spreadsheet, 2014 entry, $50 fine for an architectural issue); see also 

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After Harmony Haus’s arrival, traditional enforcement methods were not working

and a proportionate escalating fine structure was adopted.3 If there is any alleged

excessiveness in what Mr. Zhou and Ms. Du owe under this scheme, it comes from 

Harmony Haus residents freely violating the parking restrictions and not from inherent 

problems with the fining scheme itself.

The enforceability of Parkstone’s fining scheme should not turn on extravagantly 

bad conduct by Harmony Haus, as if the worse one’s behavior, the less it should be 

corrected. Harmony Haus has all but admitted that there are no consequences for the 

residents if they do not follow the parking rules, with the owner of Harmony Haus stating 

he is not going to enforce Harmony Haus’s own policies.4 Plaintiffs’ Motion is just an 

attempt to relitigate this Court’s pronouncement from the first lawsuit – that Harmony 

Haus residents mustfollow the parking rules. 

The fines are also permissible and properly viewed as liquidated damages as shown 

below and are separate and apart from the other actual damages Parkstone will present 

at trial. Plaintiffs conflate the lack of mathematical numbers identified in the discovery 

responses with the argument that there is no evidence of damages. Parkstone has actual 

damages. It disclosed at least sixteen homeowner witnesses in the disclosures on this 

topic and produced numerous homeowner complaints about Plaintiffs turning the area in 

front of the sober living residence into a parking lot and how that impacts the Parkstone 

community on safety and aesthetic issues. (Plaintiffs’ Motion at ECF 43, Exhibit 10, 

Findings of Fact and Conclusions of Law, 1:19-cv-01034-XR, ECF No. 29 at p. 3, § II.4 

“Def. Ex. 17 (letter showing potential fine of $50 for parking violation).”).

3 Parkstone’s Motion for Partial Summary Judgment at ECF 42-3 (Ex. 3, Copeland at p. 

13, l. 15 -20) and ECF 42-4 (Ex. 4, Pye at p. 31, l. 15 – 25).

4 Parkstone’s Motion for Partial Summary Judgment at ECF 42-7 (Ex. 7, Ragette at p. 67, 

l. 11-20). 

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Parkstone’s Amended Disclosures, identifying sixteen homeowners to testify and have 

knowledge about “parking problems in Parkstone” and “Defendant’s counter-claims”; 

Exhibit 1-A, multiple homeowner complaints).

Nor is there any prejudice or harm here to Plaintiffs’ quarrel with the alleged lack 

of discovery detail. See FED.R. CIV. P. 37(C) (evidence does not need to be excluded when 

the issue is harmless or substantially justified). Parkstone’ specifically pleaded the 

damages at issue:

Parkstone and its residents will suffer damages including, without limitation on, 

increased safety issues, higher traffic congestion on the street especially since the 

garage is not being used, a diminution of value of the neighborhood’s property 

rights, and loss of the aesthetic and residential character of the neighborhood. 

Damages also include the fines that are owed under Parkstone’s dedicatory 

instruments. 

(Parkstone’s First Amended Answer to Counterclaims, Case 1:20-cv-486-XR, ECF 35 at 

¶¶ 21-22). The Board is tasked with ensuring rules are followed and enforcing the duties 

of the Association to help ensure the community is protected on these matters. (Plaintiff’s 

Motion at ECF 43-5, Exhibit 5, Parkstone’s Declaration at § 4.4(h) and preamble).

Both the disclosures and interrogatory answers direct Plaintiffs to see the 

pleadings for additional damages details. (Plaintiff’s Motion at ECF 43-5, Exhibits 10 and 

12, Parkstone’s disclosures and interrogatory answers). And the pleadings spell out the 

actual damages. Plaintiffs did not complain that the detail was insufficient until after the 

discovery period ended and the pending Motion was filed. 

Alternatively, and if necessary, Parkstone moves for leave of court to supplement

the damages summaries with similar information already provided during discovery and 

elaborated upon in this Response. 

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At trial, this Court should evaluate the evidence on Parkstone’s counterclaims, and 

thereafter award to Parkstone, amongst other things, actual or other damages, liquidated 

damages concerning fines, nominal damages, and attorneys’ fees.

II.

ARGUMENT: 

Collateral estoppel and waiver establishes a damages floor, Parkstone 

proved actual damages and any lack of detail was harmless, the fines are 

liquidated damages, Plaintiffs waived the penalty argument on the contract 

counter-claim, and Parkstone has other damages not addressed. 

A. Collateral estoppel and waiver bars Plaintiffs’ challenges to a fine 

assessment of at least $50 per violation and establishes damages.

The elements of collateral estoppel are, (1) the issue at stake must be identical to 

the one involved in the prior action; (2) the issue must have been actually litigated in the 

prior action; and (3) the determination of the issue in the prior action must have been a 

part of the judgment in that earlier action. In re Southmark Corp., 163 F.3d 925, 932 (5th

Cir. 1999). Plaintiffs have already challenged whether Parkstone’s parking rules would 

apply with an opportunity to challenge Parkstone’s prior methods of enforcement.After 

trial, the Court ruled in support of its Final Judgment:

The remaining provisions, including the noise and nuisance 

provision (Section 2.8) and parking provision (Section 2.11) 

remain in effect, and Defendant may enforce those if there are 

violations, though any such enforcement must be applied in 

an evenhanded manner that treats handicapped and nonhandicapped residents alike.

(Findings of Fact and Conclusions of Law, 1:19-cv-01034-XR, ECF No. 29 at p. 12, 

Conclusions). Moreover, “[a]ny violation of the Declaration may be enforced by the 

Parkstone board . . . Parkstone has, at times, issued violation notices. Def. Ex. 

17 (showing potential fine of $50 for parking violation).” Id. at p. 3, § II.4 

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(emphasis added). A courtesy copy of Defendant’s exhibit 17 from the first trial is 

attached as Exhibit 1-B. The above collateral estoppel elements are met. To wit, i) the 

parking rules apply to Plaintiffs ii) Parkstone can enforce such rules even-handedly, and 

iii) Parkstone’s prior methods of enforcement consisted of $50 per violation when not 

corrected.Thus, the $50 fine per violation, even without an escalating fine structure being 

enacted, sets a floor on Parkstone’s damages in this lawsuit. 

Any attacks lodged on the ability to fine at $50 per violation in Plaintiffs’ Motion, 

outside of determining the number of violations that occurred after trial, needed to be 

raised in the last lawsuit when Plaintiffs were holistically attacking the parking 

restrictions. These attacks have independently been waived with respect to the $50 per 

violation floor. Consequently, Plaintiffs’ summary judgment on damages for Parkstone’s 

counter claims should be denied because any attack on actual damages of $50 times the 

number of violations is barred by collateral estoppel and waiver and those damages are 

substantial. 

B. Parkstone pled and provided evidence on actual damages during 

discovery and any complained of lack of detail in the discovery 

responses were harmless or substantially justified.

For the first time in this case, Plaintiffs attack the level of detail in Parkstone’s 

disclosure and interrogatory responses. In evaluating harmless error, the Court considers, 

“(1) the explanation for the failure to disclose; (2) the importance of the information; (3) 

potential prejudice to the opposing party of including the evidence; and (4) the availability 

of a continuance to cure such prejudice.” CQ, Inc. v. TXU Min. Co., L.P., 565 F.3d 268, 

280 (5th Cir. 2009); see FED. R. CIV. P. 37(C) (a party is not allowed to use certain 

information not provided in disclosures “unless the failure was substantially justified or 

is harmless”). These factors support a finding of harmless error.

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With respect to the first element, the damages were disclosed in other documents 

and pleadings. Parkstone’s pleadings assert it is seeking actual and other direct damages. 

Parkstone also sought in its prayer, actual, nominal, and consequential damages. 

(Parkstone’s First Amended Answer to Counterclaims, Case 1:20-cv-486-XR, ECRF 35 at 

¶ 26). The sixteen different homeowners listed as potential witnesses on problems with 

the parking situation, coupled with supporting documentation produced in discovery 

showing problems from Harmony Haus using the area as a parking lot, and the 

description of actual damages described in the pleadings are enough to establish actual 

damages to overcome the summary judgment. (Exhibit 1-A, homeowner complaints). 

That evidence shows the increased safety issues, higher traffic congestion on the street 

especially since the garage is not being used, a diminution of value of the neighborhood’s 

property rights, and loss of the aesthetic and residential character of the neighborhood. 

These are the very issues identified in Parkstone’s pleadings. Moreover, the Board has 

spent countless hours having to track parking violations and in large part because 

Plaintiffs fail to acknowledge and stipulate to the number of violations that are occurring

despite the obviousness of what is happening. (Exhibit 1, Pye Declaration). 

Plaintiffs attacks are also based on the implicit notion that there was not an 

itemization here of damages in the disclosure responses. “[M]athematical precision is not 

required-to establish the extent or amount of one's damages, one must bring forward the 

best evidence of the damage of which the situation admits. . . .” MBM Fin. Corp. v. 

Woodlands Oper. Co., 292 S.W.3d 660, 666 (Tex. 2009). At trial, this Court will need to 

decide the value of actual damages from the parking violations after evaluating the 

credibility of the witnesses and weighing of the evidence. Such damages are not zero. 

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With respect to the other elements, there is no prejudice here given Plaintiffs had 

the same information from other documents, Plaintiffs never complained of such 

prejudice, and the alleged missing detail is easy to supply. If this Court deems the 

responses deficient, Parkstone moves for leave of court to give Parkstone ten (10) days to 

supplement the disclosures and interrogatories on damages. See Burrell v. Crown 

Central Petroleum, Inc., 177 F.R.D. 376, 385 (E.D. Tex. 1997) (suggesting the usual 

approach that parties confer and supplement disclosures if more information is needed 

and if that does not work then court intervention would be appropriate). This should not 

substantially delay any trial proceedings and it is likely the trial may be continued one 

more time as the parties are waiting for a decision from the Fifth Circuit.

C. Parkstone’s breach of contract counter-claim separately survives 

summary judgment for additional reasons.

1. The fines are recoverable as contractual liquidated damages.

The fines are liquidated damages because they set out the amount of damages for 

a breach in advance. “[T]o be enforceable, the fee charged must be a reasonable estimate 

of damages, and those damages must be incapable of precise calculation.” BMG Direct 

Mktg. v. Peake, 178 S.W.3d 763, 766 (Tex. 2005); see also Exhibit 1, Pye Declaration.An 

excellent decision evaluating fine structures in the context of homeowner associations is 

Brown v. Spring Valley Homeowners Assoc., Inc., No. 2016–UP–343, 2016 WL 3595791 

at *1 (S.C. Ct. App. June 29, 2016) (copy provided in Exhibit 2). 

In Spring Valley,the Court discusses how fines are permissible as long as it follows 

basic non-profit business law and is not inconsistent with its governing documents. The 

meeting of the minds arguments are completely off the mark (Plaintiffs’ Motion at p. 8) 

as the fine process is part of the enforcement of the restrictive covenants that run with the 

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land and the homeowners agreed to follow the rules along with granting broad powers of 

the Parkstone Board to enforce the deed restrictions as a condition to live in and use the 

residence located within the confines of Parkstone.

5 (See Plaintiffs’ Motion, Exhibit 5 at 

pp. 1, 4, 18, property is subject to the restrictions in the Declaration and Section 4.4(c) 

gives the Board broad powers to change the By-laws; the fines enforce the parking 

restrictions and is consistent);6 Spring Valley Spring Valley, 2016 WL at *3 (restrictive 

covenants require the homeowner to become a member of the association and can 

indirectly authorize the imposition of fines); Exhibit 1-B, By-laws amendment on Board 

enforcement powers). 

As confirmed by Spring Valley, when discussing whether the fines are viewed are 

a penalty versus a liquidated damages clause, it is helpful to examine the intention of the 

parties as well as the actual fine structure itself. Spring Valley, 2016 WL at *4. In Spring 

Valley, there was a $100 weekly escalating fine structurewith a cap of $1,500 per violation 

per year, which the Court permitted as liquidated damages despite fines being 

synonymous with the word “penalty.” Spring Valley, 2016 WL at *4-5 

Parkstone’s escalating fine structure and situation is similar in many respects. As 

already proven, Parkstone is a non-profit Texas corporation. (Findings of Fact and 

Conclusions of Law, 1:19-cv-01034-XR, ECF No. 29 at p. 1). Under Texas’s non-profit act,

the Board for Parkstone has broad discretion to amend and change the by-laws as long as 

5 While Harmony Haus residents are creating the violations, and the property is burdened 

with the parking restrictions, the recovery for the violations comes against the “members” 

of the Association, in this case, Zhou and Du as the homeowners. Consequently, any 

agreements or meeting of the minds with Harmony Haus are irrelevant. 

6 See also section 4.1 of the By-laws gives the Board the powers to exercise broad powers 

to manage and control the property like a corporation at Def. Ex. 2, 1:19-cv-01034-XR, 

ECF No. 22-2. 

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not inconsistent with the certificate of formation and applicable law. TEX. BUS. ORGS.

CODE § 22.102(C). Parkstone’s Declaration in Section 4.4(c) gives the Board the power to 

change the By-laws not in conflict with the Declaration and the By-laws would permit the 

power to fine. (Plaintiffs’ Motion, Exhibit 5; Exhibit 2, By-laws amendment and see 

footnote six above). The fines are also consistent with Parkstone’s Declaration, to help 

enforce the parking rules. 

The fine structure itself is a reasonable estimate of damages and it is tied to 

damages that are not capable of precise calculation. (Ex. 1, Pye Declaration). For instance, 

there is a distinction between curable and incurable violations. Because incurable 

violations are more severe, for things that can “pose a threat to public health or safety” 

such as shooting fireworks, the fine structure starts with a $100 fine and escalates to $150 

and then in $25 dollar increments. (Plaintiffs’ Motion, Exhibit 3, at pp. 4-5 of the 

amended rules). For curable violations, such as maintenance issues or parking type 

issues, there is an optional courtesy letter, a $25 fine, then a $50 fine, then a $100 fine, 

and so forth in $25 dollar increments. Id. Because these violations are comparatively less 

severe (but still should not occur), the dollar amounts of the fines are less.

Moreover, when it was realized that the Plaintiffs were committing an 

astronomical number of violations, the Board passed a $300 cap per violation to minimize 

the amount of fines assessed, which creates proportionality with actual damages. 

(Plaintiffs’ Motion, Exhibit 2, September 2020 meeting minutes; Findings of Fact and 

Conclusions of Law, 1:19-cv-01034-XR, ECF No. 42-1, Exhibit 1-B to Parkstone’s Motion 

for Partial Summary Judgment).As noted from the meeting minutes:

The board hereby determines that fines will be capped at $300/violation 

with, as stated in the rules, each instance of/day of the violation being a 

separate violation) and will not be incrementally increased past $300 for 

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ongoing violations without further vote of the board. This cap shall apply 

to all violations . . . .

Id. As indicated, if the total fines are high it is because it is completely unprecedented to 

have over 1,000 violations to address in less than a year, not because the fine structure 

itself is flawed. As shown in Parkstone’s Motion for Partial Summary Judgment, most 

homeowners do not have that many violations and comply after being warned so the fine 

numbers should never be excessive.

Moreover, the Court in Spring Valley held that fines of “$1,500 per year, per 

violation” represented a “reasonable, if not modest” estimate of damages and are 

permissible “primarily due to the attorney’ fees but also any possible diminution in value 

of the subdivision’s homes.” Spring Valley, 2016 WL at *5 (emphasis added). In short, an 

evaluation of attorneys’ fees can be a factor for determining the proportionality of the 

fines and should be here when Parkstone has had to deal with two separate TRO hearings 

in this matter, a Motion to Dismiss (most of which was successful), and thousands of 

photographs because Plaintiffs will not stipulate the 12 hours parking violations are 

occurring and have challenged Parkstone’s ability to use such evidence despite it being 

the best evidence of the violations. Moreover, diminution in homeowner value is also a 

factor to consider on proportionality as the violations occur almost daily with great 

frequency, are ongoing, and numerous homeowners have complained in writing about 

the parking problems and potential loss of value with twelve adults regularly violating the 

restrictions. (Exhibit 1-A, homeowner complaints). These are not isolated or limited 

situations. 

Overall, these damages calculations are best addressed after a trial. 

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2. Plaintiffs waived the defense that the fines are an illegal penalty.

Plaintiffs assert the fines are not liquidated damages because they are an 

unenforceable penalty. (Motion at pp. 8-9). However, arguing the fines are penalties is an 

affirmative defense against a breach of contract claim that must be pled or it is waived. 

Phillips v. Phillips, 820 S.W.2d 785, 789 (Tex. 1992) (the “penalty” argument is an 

avoidance or affirmative defense that should be asserted or it is waived); Urban TV 

Network Corp. v. Liquidity Solutions, L.P., 277 S.W.3d 917, 919 (Tex. App.—Dallas 2009, 

no pet.) (Plaintiffs burden to “plead” and prove it is a penalty). Plaintiffs do not attack the 

fines on “penalty” grounds on the breach of contract claim. Instead, they pled:

Plaintiffs further assert that the fines imposed by Defendant exceed the 

statutory limits imposed under applicable statutory provisions, that 

Defendant has failed to provide the notice required by the applicable 

statutory provisions, that Defendant’s actions in this regard constitute a 

breach of fiduciary duty, and that the fines imposed exceed constitutional 

limits.

(Plaintiffs’ First Amended Answer to Counterclaim, Case 1:20-cv-486-XR, ECRF 29 at ¶ 

29) (emphasis added). Parkstone’s breach of contract claim is not a “statutory” claim and 

the other defenses do not indicate Plaintiffs are arguing the fines are penalties and not 

liquidated damages on the breach of contract claim.Consequently, the breach of contract 

claim survives Plaintiffs’ Motion on this ground alone. 

D. Parkstone also has nominal and attorneys’ fees damages and a global 

dismissal on damages is unwarranted. 

Harmony Haus’s proposed order7 asks this Court to dismiss the counterclaims for 

“damages” but the proposed order is overly broad because Parkstone has damages claims 

7 The Motion does not explicitly say there are no attorneys’ fees damages but Plaintiffs 

instead provided a broad proposed order on “damages.” And the Motion did not seek a 

ruling on Parkstone’s request for nominal damages and attorneys’ fees. 

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that Plaintiffs have not addressed. Parkstone pled nominal damages and seeks attorneys’ 

fees on its breach of contract claim. (Parkstone’s First Amended Answer to 

Counterclaims, ECF 35 at p. 21). Nominal damages are permissible without proof of actual 

damages. See MBM Fin. Corp. v. Woodlands Oper. Co., 292 S.W.3d 660, 664-65 (Tex. 

2009) (nominal damages can be recovered for breach of contract). 

In the homeowner association context, an award of attorneys’ fees has been made 

easier by the Texas legislature, presumably in recognition that damages from deed 

restriction violations can be difficult to quantify precisely and should not be a barrier to 

the recovery of such fees. For instance, Parkstone can recover for “collecting amounts, 

including damages, due the association for enforcing restrictions or the bylaws or rules of 

the association.” TEX.PROP.CODE 209.008; see also Intercontinental Group Partnership, 

295 S.W.3d at 653 (parties can even contract for a more lenient standard to receive 

attorneys’ fees). Consequently, the collection of any fines can trigger an attorneys’ fees 

award under Chapter 209.008 of the Texas Property Code. The language used is broader

than the “prevailing party” standard in other situations. The standard simply is if 

someone collects any amounts owed “due the association.” 

Separately, Section 5.006 of the Texas Property Code, creates another lenient 

standard for associations to receive fees and costs, this time, as a prevailing party “in an 

action based on breach of a restrictive covenant.” TEX. PROP. CODE 5.006; see Garden 

Oaks Maint. Org. v. Chang, 542 S.W.3d 120, 140 (Tex. App.—Houston [14th Dist.] 2017, 

no pet.) (a party successfully defending such a claim cannot recover such fees). Attorneys’ 

fees can also be awarded to a “prevailing party” with a nominal damages finding of $1. See 

Intercontinental Group Partnership v. KB Home Lone Star L.P., 295 S.W.3d 650, 654 

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(Tex. 2009), citing Farrar v. Hobby, 506 U.S. 103, 111-12 (1992) (a party “prevails” with 

a nominal fee award although it may reduce the amount of attorneys’ fees). 

These damages claims survive for trial separate and apart from the argumentation 

in Plaintiffs’ Motion and the proposed Order is overly broad. 

CONCLUSION AND PRAYER

For the reasons set out above Plaintiffs’ Motion for Partial Summary Judgment 

should be denied. If this Court deems the damages responses as insufficient, Parkstone

requests leave of court to add more details to the disclosures and interrogatory responses

on damages and Parkstone seeks such other relief to which it may be entitled. 

 Respectfully submitted,

NIEMANN & HEYER, LLP

Westgate Building, Suite 313

1122 Colorado Street

Austin, Texas 78701

Telephone: (512) 474-6901

Fax: (512) 474-0717

/s/ Eric J. Hansum 

Eric J. Hansum, Of Counsel

Texas State Bar No.: 24027225

erichansum@niemannlaw.com

ATTORNEYS FOR THE 

PARKSTONE PROPERTY

OWNERS ASSOCIATION, INC.

CERTIFICATE OF SERVICE

I certify that on February 12, 2021, I electronically filed the foregoing with the 

clerk of the court using the CM/ECF system, which will send notification of such filing to 

all counsel of record.

/s/ Eric J. Hansum

Eric J. Hansum

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