Affirmed in Part; Reversed; Rendered in Part; and Remanded; and Opinion 

filed July 18, 2013.

In The

Fourteenth Court of Appeals

NO. 14-12-00414-CV

CLEAR LAKE CENTER, L.P., Appellant

V.

GARDEN RIDGE, L.P., Appellee

On Appeal from the 215th District Court

Harris County, Texas

Trial Court Cause No. 2009-58038

O P I N I O N

Garden Ridge, L.P. sued Clear Lake Center, L.P. for breach of a commercial

real property lease. Garden Ridge claimed that Clear Lake charged Garden Ridge 

for impermissible management fees under the lease. Garden Ridge moved for 

summary judgment on its affirmative claim and on Clear Lake‘s counterclaim for 

declaratory relief. Clear Lake responded and moved for summary judgment on its 

affirmative defenses of limitations, res judicata, and waiver. The trial court 
2

granted Garden Ridge‘s motion, held a jury trial on the issue of Garden Ridge‘s 

attorney‘s fees, and signed a final judgment awarding Garden Ridge $470,087.53 

on its breach of contract claim, $530,000.00 in attorney‘s fees, conditional 

appellate attorney‘s fees, and contractual interest at a rate of eighteen percent,

among other things.

We affirm in part, reverse the trial court‘s judgment in part and render 

judgment that Garden Ridge‘s claims accruing before September 10, 2005, are 

barred by limitations, and remand for further proceedings.

BACKGROUND

In 1995, Garden Ridge and Fiesta Mart signed a commercial lease for 

Garden Ridge to rent space in Fiesta Mart‘s shopping center. Article VI of the 

lease concerned the common area of the shopping center, in part as follows:

Section 6.1. Common Area. The term ―Common Area‖ is 

defined for all purposes of this Lease as that part of the Shopping 

Center intended for the common use of all tenants, including among 

other facilities (as such may be applicable to the Shopping Center) 

parking area, sidewalks, drainage facilities, lighting facilities, drinking 

fountains, public toilets, and the like but excluding space in buildings 

(now or hereafter existing) designed for rental for commercial 

purposes, as the same may exist from time to time, and further 

excluding streets and alleys maintained by a public authority. . . .

. . . .

Section 6.3. Operation of Common Area. Landlord shall 

operate, manage and maintain the Common Area, the manner of 

operation, management and maintenance and the expenditures 

therefor to be in the sole discretion of Landlord, provided such 

operation, management and maintenance shall be comparable to 

similar shopping centers in Harris County, Texas. Landlord shall 

have the right to select a person to maintain and operate any of the 

Common Area if at any time Landlord determines that the best 

interests of the Shopping Center will be served by having any of the 

Common Area maintained and operated by that person. Landlord 
3

shall have the right to negotiate and enter into a contract with that 

person on such terms and conditions and for such period of time as 

Landlord deems reasonable and proper, both as to services and as to 

cost.

Section 6.4. Common Area Costs. In addition to rentals and 

other charges prescribed in this Lease, Tenant shall pay to Landlord 

Tenant‘s Share of Common Area Costs (as hereinafter defined). 

―Common Area Costs‖, as used herein, means all sums expended by 

Landlord during the Lease Term in operating, managing, policing, 

equipping, lighting, repairing, replacing and maintaining the Common 

Areas, and an allowance to Landlord for Landlord‘s supervision of the 

Common Areas in an amount equal to seven and one-half percent (7-

1/2%) of the total of all Common Area Costs. Common area Costs 

shall include, without limitation, costs of resurfacing and restriping 

the parking and driveway areas; repainting, cleaning, sweeping, and 

other janitorial services, policing, purchase, construction and 

maintenance of refuse receptacles, planting and relandscaping; 

directional signs and other markers; car stops; lighting and other 

utilities; installing, operating and maintaining Shopping Center 

identification signs; premiums on public liability and property damage 

insurance (excluding increases therein due to vacancy in the Shopping 

Center); maintenance, repair and replacement of utility systems, 

including water, sanitary and storm sewer lines and other utility lines, 

pipes and conduits serving the Shopping Center; drainage systems 

serving the Shopping Center; rental charges for machinery and

equipment used in the operation, maintenance and repair of the 

Common Areas; costs of personnel to implement all of the foregoing, 

including wages, unemployment taxes and social security taxes; 

personal property taxes; fees for required licenses and permits; 

supplies; and other costs necessary in Landlord‘s judgment for the 

maintenance, operation and management of the Common Areas, but 

excluding depreciation of the original cost of constructing the 

Common Areas. . . . Tenant shall make such payments to Landlord at 

intervals not more frequent than monthly . . . . Such monthly or other 

periodic charges shall be based upon the Landlord‘s estimated annual 

Common Area Costs, payable in advance but subject to adjustment 

after the end of each calendar year during the term of this Lease on the 

basis of the actual Common Area Costs for such year. Upon the 

computation of such adjustment (which shall be completed within 180 
4

days following the end of the calendar year to which such adjustment 

relates) and notice to Tenant, Tenant shall pay to Landlord the amount 

of any deficiency, or Landlord shall refund to Tenant the amount of 

any excess, as the case may be, such reimbursement or payment to be 

made within thirty days following the Tenant‘s receipt of such 

statement.

Section 6.5. Common Area Costs. Landlord shall keep 

complete books and records for all Common Area Costs, and Tenant, 

at its expense, shall have the right to inspect, audit and copy such 

books and records upon reasonable notice during the business hours of 

Landlord or Landlord‘s property manager. Landlord shall promptly 

refund to Tenant any overpayment and Tenant shall promptly pay to 

Landlord any deficiency (in each case, within 30 days following 

completion of the audit) . . . .

The lease identified Garden Ridge‘s pro rata share of the ―common area 

maintenance‖ (CAM) costs. Pursuant to Section 6.4 of the lease, Garden Ridge 

prepaid estimated CAM costs, and the landlord sent a reconciliation statement to 

Garden Ridge in the following year detailing the remainder of sums owed to the 

landlord for CAM costs.

Edwin Freedman signed the lease as president for the broker, United 

Equities, Inc., which also acted as the management company for the shopping 

center since the inception of the lease.

Vice President of Real Estate for Garden Ridge Patrick Willis testified by 

affidavit that Clear Lake purchased the shopping center from Fiesta Mart in 2003, 

and prior to that purchase, Fiesta Mart had never charged Garden Ridge a 

management fee, either as part of CAM costs or any other charge. Beginning in 

2003, after Clear Lake acquired the shopping center, Clear Lake billed Garden 

Ridge for a ―management fee‖ on the reconciliation statements detailing the CAM 

costs. The management fees Garden Ridge paid were as follows for years 2003 

through 2009:
5

2003 — $58,259.14

2004 — $60,095.87

2005 — $75,561.47

2006 — $75,513.31

2007 — $72,947.20

2008 — $69,159.01

2009 — $84,013.87

Willis explained that Garden Ridge also paid the seven and one-half percent

―supervisory fee‖ on top of the management fees, so Garden Ridge paid a total of 

$470.087.53 to Clear Lake in ―management fees plus the supervisory fee applied to 

the management fees.‖ Each year until the 2008 reconciliation payment was due, 

Garden Ridge paid the management fee. For the 2008 and 2009 years, Garden 

Ridge paid ―under protest.‖

In 2009, Garden Ridge‘s auditor conducted an audit of the charges billed 

under the lease for 2004 through 2008 and concluded that Clear Lake ―charged 

exorbitant Management Fees to Tenant in the annual CAM reconciliations.‖ The 

auditor concluded, ―All Management Fees are paid to an affiliate of Landlord 

pursuant to a Property Management and Leasing Agreement dated April 16, 2003 

between Landlord and United Equities Incorporated.‖ Willis testified that the audit 

showed the ―management fee that had been charged by Clear Lake and paid by 

Garden Ridge had predominantly been for non-common area services.‖

In the course of this audit, Garden Ridge received a copy of the property 

management and leasing agreement. Freedman signed the agreement on behalf of 

both entities—as president of United Equities and president of CL Group, Inc., 

general partner of Clear Lake. Freedman testified that he negotiated the terms of 

the agreement for both entities.
6

Under the management and leasing agreement, United Equities managed, 

leased, and operated the entire shopping center property. Clear Lake gave United 

Equities the ―powers and duties‖ to, among other things, bill and collect rents and 

other charges from tenants, maintain the property and common areas of the 

property, make arrangements for utilities, pay taxes, acquire and keep licenses, and 

pay operating expenses. As compensation for United Equities‘ services in 

managing the property, Clear Lake agreed to pay United Equities a ―management 

fee‖ equal to five percent of the monthly gross collections. 

Freedman testified extensively about United Equities‘ management 

activities, both related and unrelated to the common area. He testified that under 

the management agreement, United Equities‘ responsibilities included ―operating, 

overseeing, [and] supervising everything in the common area.‖ He explained 

further:

But to be very honest, my interest and job description, I feel, as a 

company is to be managing the entire shopping center situation. And, 

that would include the rights of tenants among other tenants. If 

somebody was doing something that they were not supposed to be 

selling or doing, that comes under management. And, I‘m not so sure 

that I can define that as being part of standing inside somebody‘s 

space or in the common area. But there‘s no doubt I have to manage 

the common areas. But there‘s so many other issues, just like the 

condemnation. I don‘t know how you define that, but I have to take

care of those as a management company.

Freedman also testified that ―leasing and doing the leases . . . still falls into the 

overall scope of managing a property.‖ He explained that ―trying to get people 

into the center‖ and keeping it ―leased‖ and ―occupied‖ was a ―management duty.‖ 

When asked whether promoting the shopping center was part of managing the 

common area, he testified, ―I don‘t know. I just think it‘s — I don‘t, really, you 

know, separate it out.‖
7

Freedman answered ―no‖ to the question: ―Would you agree with me that 

the management fee that is charged, is charged for supervision of activities related 

to the common area?‖ When asked what the difference was between managing 

and supervising, Freedman answered:

Well, I think that if you‘re supervising, you‘re probably in the 

common area overseeing work that is being done in the common area. 

It might be landscaping. It might be parking lot striping. It might be 

parking situations, signage, et cetera. If you‘re managing the 

property, you are dealing with, and an easy way to say it, everything 

else but the supervision. It could be rent collections. It could be 

having to do with, as I‘ve talked earlier, I think a number of times: 

about making sure the tenants are doing a proper use provision; to 

handle condemnation situations; to handle casualty; to handle the 

hurricane situations; to try and keep the occupancy to an extent that 

Garden Ridge and others have proper co-tenants. So all the items that 

— to decide whether you need some type of promotions in marketing, 

to deal with delinquencies. To collect the rents so you have the 

money to operate the shopping center.

Freedman acknowledged that ―part of what the [United Equities] people do are 

involved in management and part of what they do are involved in supervision,‖ and 

he said that the tenants were paying Clear Lake for ―management and supervision.‖ 

He testified that a ―management duty‖ could be ―within the common area or within 

demised premise[s].‖

The summary judgment record also includes evidence concerning Garden 

Ridge‘s bankruptcy proceeding in 2004 and 2005. As part of this proceeding in 

2005, Garden Ridge signed an amendment to the lease agreeing to pay a ―cure 

amount‖ for 2003 CAM charges. Garden Ridge‘s reorganization plan designated 

the lease as one to be assumed pursuant to the plan, and the bankruptcy court 

confirmed the plan, decreeing that Garden Ridge assumed the lease. Freedman 

testified by affidavit concerning a conversation he had with a representative of 
8

Garden Ridge during the bankruptcy proceeding: ―While I do not recall the 

specific details of the conversation, I know that we discussed each element of the 

increased CAM estimate, with particular emphasis on the management fee. . . .‖

Willis acknowledged in his affidavit that the reconciliation for 2003 included a 

―management fee.‖

Garden Ridge sued Clear Lake for breach of contract and declaratory relief, 

among other things, on September 10, 2009. Clear Lake also sought declaratory 

relief and alleged various affirmative defenses.1 Garden Ridge moved for a 

summary judgment on its breach of contract claim and on Clear Lake‘s claim for 

declaratory relief. Clear Lake filed a response and cross-motion for summary 

judgment ―on the construction of the lease and on the defenses of limitations, res 

judicata and waiver.‖ The trial court ultimately granted Clear Lake‘s motion, 

awarding $470,087.53 in damages and ordering that Clear Lake ―may not charge 

management fees not related to the management or maintenance of the Common 

Areas for the remainder of the subject lease.‖ A jury later awarded attorney‘s fees 

to Garden Ridge, and the trial court entered a final judgment incorporating its 

summary judgment order and the jury‘s verdict.2

Clear Lake filed a timely notice of appeal and challenges the trial court‘s 

decision to grant summary judgment for Garden Ridge and deny Clear Lake‘s 

motion for summary judgment.

 

1

Part of Clear Lake‘s request included a declaration that ―the Landlord is entitled to 

charge both a Management Fee and a Supervision Fee.‖

2

The court decreed that for the remainder of the lease, Clear Lake ―may not charge 

management fees not related to the management or maintenance of the Common Areas.‖
9

STANDARD OF REVIEW

We review de novo the trial court‘s decision to grant a summary judgment. 

Ferguson v. Bldg. Materials Corp. of Am., 295 S.W.3d 642, 644 (Tex. 2009). 

When reviewing cross-motions for summary judgment, we consider both motions 

and render the judgment that the trial court should have rendered. Coastal Liquids

Transp., L.P. v. Harris Cnty. Appraisal Dist., 46 S.W.3d 880, 884 (Tex. 2001); see 

also Mid-Continent Cas. Co. v. Global Enercom Mgmt., Inc., 323 S.W.3d 151, 

153–54 (Tex. 2010).

The movant for a traditional summary judgment must show that there is no 

genuine issue of material fact and that it is entitled to judgment as a matter of law. 

TEX. R. CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 

289 S.W.3d 844, 848 (Tex. 2009). In particular, a plaintiff moving for summary 

judgment on its own claim must conclusively prove all essential elements of its 

claim. Cullins v. Foster, 171 S.W.3d 521, 530 (Tex. App.—Houston [14th Dist.] 

2005, pet. denied) (citing MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex. 1986)). 

Likewise, a defendant moving for summary judgment on its affirmative defense 

must conclusively prove each element of that defense. Shah v. Moss, 67 S.W.3d 

836, 842 (Tex. 2001).

Evidence is conclusive only if reasonable people could not differ in their 

conclusions. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005); see also 

Appleton v. Appleton, 76 S.W.3d 78, 83 (Tex. App.—Houston [14th Dist.] 2002, 

no pet.). We review the summary judgment evidence in the light most favorable to 

the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors 

could, and disregarding contrary evidence unless reasonable jurors could not. 

Mann Frankfort, 289 S.W.3d at 848.
10

ANALYSIS

In three issues Clear Lake contends the trial court erred (1) by granting 

summary judgment to Garden Ridge on its breach of contract claim because 

Garden Ridge failed to conclusively prove (a) breach and (b) damages;3(2) 

denying Clear Lake‘s motion for summary judgment on its affirmative defenses of 

(a) res judicata, (b) estoppel, (c) waiver, and (d) limitations; and (3) awarding 

eighteen percent pre- and post-judgment interest instead of a lower statutory rate.

We agree with Clear Lake that Garden Ridge failed to conclusively prove 

damages, and the trial court should have granted summary judgment in part to 

Clear Lake on its affirmative defense of limitations.

1. Garden Ridge’s Motion for Summary Judgment

a. Breach & Construction of the Lease4

Relying on the phrase ―sole discretion‖ in Section 6.3 of the lease, Clear 

Lake argues that Garden Ridge has ―no enforceable claim unless it can show that 

the fees charged were not comparable to similar shopping centers in Harris 

County, Texas.‖ Garden Ridge presents two potential theories of recovery. First, 

Garden Ridge claims that the lease does not allow for any ―management fee‖ to be 

charged for CAM because such a fee would be duplicative of the seven and onehalf percent ―allowance‖ provided for in Section 6.4. Second, Garden Ridge 

 

3

In the argument section of Issue (1)(b), Clear Lake also contends that we should reverse 

the award of attorney‘s fees if reversing the damages award.

4 As discussed below, we hold that Garden Ridge failed to conclusively prove damages, 

and therefore, we must reverse the trial court‘s summary judgment on liability. See TEX. R. APP.

44.1(b); Rancho La Valencia, Inc. v. Aquaplex, Inc., 383 S.W.3d 150, 151–52 (Tex. 2012); 

Okorafor v. Lewis, No. 14-08-00130-CV, 2010 WL 1343125, at *4 (Tex. App.—Houston [14th 

Dist.] Apr. 6, 2010, no pet.) (mem. op.). We address liability only to the extent it informs our 

resolution of the damages issue because any ruling on liability would be advisory. See Buc-ee’s, 

Ltd. v. Hribek, No. 03-08-00120-CV, 2009 WL 5149922, at *3 (Tex. App.—Austin Dec. 31, 

2009, no pet.) (mem. op.).
11

contends that if the lease indeed authorizes a management fee for CAM, Clear 

Lake charged Garden Ridge for non-CAM expenditures, and this was a breach of 

the lease. We reject Garden Ridge‘s first theory (no management fee) but agree 

with the second (no non-CAM expenditures).

The lease unambiguously authorizes Clear Lake to charge a separate fee, in 

addition to the ―allowance‖ or ―supervisory fee,‖ for the management of the 

common area. Section 6.3 of the lease requires the landlord to ―operate, manage 

and maintain the Common Area‖ with ―the expenditures therefor to be in the sole 

discretion of the Landlord.‖ This section also allows Clear Lake to ―select a 

person to maintain and operate any of the Common Area‖ and ―enter into a 

contract with that person on such terms and conditions . . . as Landlord deems 

reasonable and proper, both as to services and as to cost.‖ Further, Section 6.4 of 

the lease requires Garden Ridge to pay its share of ―common area costs,‖ with that 

term defined as ―all sums expended by Landlord . . . in operating, managing, . . . 

and maintaining the Common Areas, and an allowance to Landlord‖ (emphasis 

added). The ―allowance‖ or ―supervisory fee‖ is clearly an additional fee and not 

duplicative of any other management costs expended by the landlord, which may 

include costs of another person maintaining the common area. See McDonald’s 

Corp. v. Goler, 560 N.W.2d 458, 461 (Neb. 1997) (similar lease unambiguously 

required tenant to pay landlord‘s fees paid to a management company in addition 

to an administrative fee of fifteen percent of all common area costs).

The lease unambiguously limits the allowable fee, however, to sums 

expended for the management and maintenance of the common area—not the 

property as a whole. Contrary to Clear Lake‘s argument, the ―sole discretion‖ 

phrase in Section 6.3 does not alter the fact that the ―expenditures therefor‖ relates 

to Clear Lake‘s duty to ―operate, manage and maintain the Common Area.‖ The 
12

―all sums expended‖ language in Section 6.4 is limited to costs for operating, 

managing, and maintaining (among other things), ―the Common Areas.‖

Clear Lake suggests that its construction of the lease, based on the ―sole 

discretion‖ language, is mandated by our decision in T.F.W. Management, Inc. v. 

Westwood Shores Property Owners Association, 79 S.W.3d 712 (Tex. App.—

Houston [14th Dist.] 2002, pet. denied). In that case, the plaintiff sued for an 

equitable accounting although the contract clearly gave the plaintiff no such right. 

See id. at 718. This court did not hold that the lease‘s ―sole discretion‖ language 

would somehow bar an action for breach of contract. See id. at 718–19.5 T.F.W. 

Management is not instructive, and we do not follow Clear Lake‘s construction of 

the lease.

Having determined that Clear Lake does not have discretion to charge nonCAM expenses, we turn to the question of whether summary judgment was proper 

on the issue of damages. We review the damages issue under the theory that the 

lease authorizes Clear Lake to charge a management fee, but not a fee unrelated to 

CAM. For purposes of this appeal, we assume without deciding that Garden Ridge 

conclusively established Clear Lake‘s breach of the lease by charging non-CAM 

management fees.

b. Damages

Clear Lake contends that ―Garden Ridge did not meet its burden to prove an 

amount of compensable damages, and it certainly did not prove it was entitled to 

all management fees paid.‖ Clear Lake argues that Garden Ridge is not entitled to 

recovery of the entire management fee paid because at least some fees are allowed 

 

5

In particular, both the majority and concurring justices reasoned than an equitable 

accounting was not proper, in part, because standard discovery procedures (presumably for a 

breach of contract claim) would have been adequate. See 79 S.W.3d at 717–18 & n.5; id. at 721 

(Brister, C.J., concurring).
13

under the lease, and the record contains evidence that some of United Equities‘ 

management activities were related to the common area. Garden Ridge responds 

that it was entitled to recover the entire management fee for three reasons:

―First, there was no material dispute of fact that the Management Fee 

as a whole was not a  ̳Common Area Cost‘ because it was incurred in 

managing the entire Center, not the Common Area.‖

―Second, even if some sort of apportionment would have been 

appropriate, Clear Lake failed to produce any evidence demonstrating 

what portion, if any, of the Management Fee was incurred in 

managing the Common Areas. In fact, Clear Lake admitted that it 

kept no such records.‖

―Third, the entirety of the Management Fee was Improper because 

that Fee duplicated the 7.5% allowance already paid under the lease 

for supervision of the Common Areas.‖

We will address each in turn.

i. Garden Ridge’s First Argument

This argument is essentially that proving breach entitles Garden Ridge to the 

whole amount of the management fee paid, yet Garden Ridge‘s own authorities

contradict such a broad assertion. See Goler, 560 N.W.2d at 940 (concluding that 

the trial court erred by granting summary judgment to the plaintiff for the entire 

amount of a management fee when the parties did not dispute that some of the 

management company‘s duties ―were not performed in conjunction with the 

common area, while others were so related‖); see also Sheplers, Inc. v. Kabuto 

Int’l (Nev.) Corp., 63 F. Supp. 2d 1306, 1313–14 (D. Kan. 1999) (ruling that 

―management costs related specifically to the common area are included in the 

CAM expenses‖ and the defendant could charge such management expenses to the 

tenant). Garden Ridge provides no substantive analysis or citation to authority to 

support its position.
14

The summary judgment evidence raises a genuine issue of material fact 

because at least some of United Equities‘ management activities, for which the 

management fee was paid, were for the common area of the shopping center. 

Garden Ridge‘s own witness testified by affidavit that the management fee was 

―predominantly‖—not exclusively—for non-CAM services. The management 

agreement described United Equities‘ duty to maintain ―the property and common 

areas thereof.‖ Freedman testified that at least part of United Equities‘ 

responsibilities under the management agreement was ―operating, overseeing, 

[and] supervising everything in the common area.‖

We hold that the mere fact of breach does not entitle Garden Ridge to 

recover the entire management fee. By only submitting evidence regarding the 

total management fee paid, Garden Ridge failed to conclusively prove its measure 

of damages. Cf. Aquaplex, Inc. v. Rancho La Valencia, Inc., 297 S.W.3d 768, 

776–77 (Tex. 2009) (requiring remand or remittitur when some evidence supported 

an award of damages entered on the jury‘s verdict, but ―just not at the level 

awarded by the trial court‖; damages award failed to reflect offset for the plaintiff‘s 

interest in a joint venture).

ii. Garden Ridge’s Second Argument

Garden Ridge relies exclusively on the Sheplers decision, in which the 

United States District Court for the District of Kansas, without citing any authority, 

―shift[ed] the burden to defendant to show that the challenged expenses [were] 

CAM-related‖ because the defendant had ―complete control over all the records

related to CAM expenditures.‖ 63 F. Supp. 2d at 1314. Garden Ridge has cited no 

Texas authority shifting the burden on summary judgment, and generally, a 

plaintiff bears the burden of proving his or her measure of damages. See, e.g., ERI 

Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 878 (Tex. 2010); McLane v. 
15

Maurer, 66 S.W. 693, 695 (Tex. Civ. App. 1902, writ ref‘d).

Garden Ridge suggests the burden should be shifted to Clear Lake because 

―Clear Lake claimed to have no time records or any other basis for determining the 

amount of time spent by United Equities employees on managing the Common 

Areas.‖ Garden Ridge bases its request for a burden shift on several responses that 

United Equities personnel gave in depositions concerning the lack of recordkeeping.

6

 

But even assuming that Clear Lake had a duty to preserve the evidence 

necessary to establish the correct calculation of Garden Ridge‘s damages,7and that 

Clear Lake failed in this duty, Garden Ridge did not ask the trial court to award 

discovery sanctions or to apply a spoliation presumption.

8

 Under some 

circumstances, a defendant may be barred from contesting the amount of damages 

as a discovery sanction,9or the trial court may apply an evidentiary presumption in 

 

6

Freedman was not ―aware of‖ any records detailing how much time administrative staff 

spent on particular tasks or any one of the twenty-seven shopping centers managed by United 

Equities. William Corrigan testified that there were no records providing any information on 

how much time employees at United Equities spent on managing the Clear Lake shopping 

center. Corrigan also was unable to provide an estimate of how much time any employees spent 

providing services for the Clear Lake shopping center. Corrigan had no estimate of how much 

time the primary employee working on the Clear Lake shopping center spent on various tasks, 

such as supervising CAM costs or tenant relations.

7 Clear Lake has a contractual duty to ―keep complete books and records for all Common 

Area Costs,‖ but we do not decide today whether this is the type of ―duty‖ that would give rise to 

a spoliation presumption or discovery sanction. Compare Wal-Mart Stores, Inc. v. Johnson, 106 

S.W.3d 718, 722 (Tex. 2003) (―Such a duty arises only when a party knows or reasonably should 

know that there is a substantial chance that a claim will be filed and that evidence in its 

possession or control will be material and relevant to that claim.‖), with Trevino v. Ortega, 969 

S.W.2d 950, 955 (Tex. 1998) (Baker, J., concurring) (―A party may have a statutory, regulatory, 

or ethical duty to preserve evidence.‖).

8

See Trevino, 969 S.W.2d at 954 (Baker, J., concurring) (―When a party believes that 

another party has improperly destroyed evidence, it may either move for sanctions or request a 

spoliation presumption instruction.‖).

9

See Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 177, 186 (Tex. 2012) 
16

the plaintiff‘s favor for the spoliation of evidence.10

Without Garden Ridge pursuing a proper remedy in the trial court, however, 

we will not ―transform a presumption or sanctionable event into a conclusively 

established fact for summary judgment purposes.‖ Kang v. Hyundai Corp. 

(U.S.A.), 992 S.W.2d 499, 502 (Tex. App.—Dallas 1999, no pet.); accord Meru v. 

Huerta, 136 S.W.3d 383, 389 (Tex. App.—Corpus Christi 2004, no pet.). The 

burden remained on Garden Ridge to conclusively establish its damages for a 

summary judgment. Given that the record is replete with evidence that some of 

United Equities‘ management activities—for which the fee was paid—concerned 

management of the common areas, we must conclude Garden Ridge failed to 

conclusively prove its damages were equal to the entire management fee paid.

iii. Garden Ridge’s Third Argument

We have already rejected Garden Ridge‘s interpretation of the contract that 

would allow it to recover the entirety of the management fee as being duplicative 

of the ―allowance‖ or ―supervisory fee.‖ Under the unambiguous terms of the 

contract, Clear Lake is not prohibited from contracting with a third party for 

management of the common area and passing on to Garden Ridge a pro rata share 

of those expenses.

Accordingly, Garden Ridge failed to conclusively prove that its

compensable damages amounted to the entire management fee paid to Clear Lake, 

 

(―The destruction of evidence that directly and significantly impairs a party‘s ability to prove 

damages might reasonably justify a sanction like the one in this case‖—barring the other party 

from contesting damages); see also TEX. R. CIV. P. 215.2(b)(4) (providing that a sanction for 

failure to comply with a proper discovery request may include an order that ―designated facts 

shall be taken to be established for the purposes of the action in accordance with the claim of the 

party obtaining the order‖).

10 See, e.g., Walker v. Thomasson Lumber Co., 203 S.W.3d 470, 477 (Tex. App.—

Houston [14th Dist.] 2006, no pet.) (spoliation ―may give rise to a presumption that the missing 

evidence was unfavorable to the spoliator‖).
17

and the trial court should not have granted summary judgment on the damages 

issue.

Clear Lake‘s first issue is sustained.

2. Clear Lake’s Motion for Summary Judgment

a. Res Judicata

Clear Lake contends it conclusively established all elements of its 

affirmative defense of res judicata based on the bankruptcy court‘s confirmation of 

Garden Ridge‘s Chapter 11 plan in 2005, and the trial court erred by not rendering 

judgment for Clear Lake. We disagree.

Federal law controls the determination of whether a federal court‘s judgment 

should bar a state court action. Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 

718 (Tex. 1990). ―Under federal law, the doctrine of res judicata will apply if: (1) 

the parties are identical in both suits; (2) the prior judgment is rendered by a court 

of competent jurisdiction; (3) there is a final judgment on the merits; and (4) the 

same cause of action is involved in both cases.‖ Id.

The primary issue in this case concerns the fourth element of res judicata.11 

This element is satisfied if the two actions are based on ―the same nucleus of 

operative facts.‖ In re Howe, 913 F.2d 1138, 1144 (5th Cir. 1990). Under this test, 

the same action includes ― ̳all the remedial rights of the plaintiff against the 

defendant growing out of the relevant transaction (or series of connected 

transactions).‘‖ Id. at 1144 n.10 (quoting Nilsen v. City of Moss Point, Miss., 701 

F.2d 556, 560 n.4 (5th Cir. 1983)). ―A party may not avoid the preclusive [e]ffect 

 

11 The parties do not dispute the first two elements, and it is clear from federal decisions 

that a bankruptcy court‘s order confirming a plan of reorganization is a final judgment on the 

merits. See, e.g., In re Justice Oaks II, Ltd., 898 F.2d 1544, 1550 (11th Cir. 1990) (citing Stoll v. 

Gottlieb, 305 U.S. 165, 170–71 (1938); Miller v. Meinhard-Commercial Corp., 462 F.2d 358, 

360 (5th Cir. 1972)).
18

of res judicata by asserting a new theory or a different remedy.‖ Id. Res judicata 

will bar ―all claims that were or could have been advanced in support of the cause 

of action on the occasion of its former adjudication.‖ Id. at 1144 (quotation 

omitted).

It is undisputed Garden Ridge is not suing Clear Lake for a breach of 

contract related to the 2003 CAM charge that Garden Ridge actually agreed to pay 

Clear Lake in the reorganization plan as a ―cure‖ amount. This lawsuit concerns 

Clear Lake‘s alleged breaches after the confirmation of the Chapter 11 plan—each 

year from 2005 onward. Clear Lake cites no authority for applying res judicata to 

bar a breach of contract claim that arose after confirmation of the plan, and there is 

authority to the contrary. See TransAmerican Nat. Gas Corp. v. Finkelstein, 933 

S.W.2d 591, 596 (Tex. App.—San Antonio 1996, writ denied) (res judicata did not 

bar a royalty interest holder‘s claim for royalties accruing after the date of the 

bankruptcy court‘s confirmation of the debtor‘s plan, by which prior claims were 

settled, because the holder‘s claim arose after confirmation of the plan). Further, 

there is no evidence in this record that Garden Ridge knew at the time of the plan‘s

2005 confirmation that Clear Lake had charged or intended to charge Garden 

Ridge for management of the entire shopping center property unrelated to the 

common areas. There is no evidence that the parties or the bankruptcy court 

construed the lease to require Garden Ridge‘s payment of non-CAM management 

expenses. Given that Garden Ridge‘s claims had not arisen and were not 

foreseeable before confirmation of the plan, the claims could not have been 

advanced in the bankruptcy litigation.

Clear Lake relies on the Fifth Circuit‘s decision in Howe, where the 

subsequent suit arose out of the same nucleus of operative facts concerning an 

earlier bankruptcy proceeding. In Howe, the debtors brought a lender liability 
19

action against a creditor—claiming violations of fiduciary and contractual duties, 

state securities laws, and state law fraud—based on a loan transaction that had 

been previously contested, settled, and confirmed in a prior Chapter 11 bankruptcy 

plan. See 913 F.2d at 1140–41. During adversary proceedings in the bankruptcy 

court, the debtors contested the validity of the lien and contended that the loan was 

usurious. Id. at 1144. The creditor‘s loan had been the ―only major claim against

the estate‖ in the bankruptcy court, id., and ―[e]very facet of [the creditor‘s] loan 

was the subject of litigation and negotiation‖ in the bankruptcy court, id. at 1147. 

Further, the debtors had been ―aware of the basic facts underlying their claims‖ at

the time the bankruptcy court confirmed the plan. Id. The same cannot be said 

about Garden Ridge. As mentioned above, there is no evidence Garden Ridge 

knew that part of the management fee paid as part of the 2003 CAM cure amount 

was for non-CAM expenses. Garden Ridge‘s current claims are not based on a 

nucleus of operative facts litigated in the bankruptcy proceeding.

Accordingly, we conclude the trial court correctly denied Clear Lake‘s 

motion on this ground.

b. Estoppel

Clear Lake contends it conclusively proved its affirmative defenses of 

judicial estoppel and equitable estoppel. Garden Ridge argues that Clear Lake 

waived these defenses by not raising them in the summary judgment motion or 

response.

12

In the summary judgment context, ―Issues not expressly presented to the 

trial court by written motion, answer or other response shall not be considered on 

 

12 In its reply brief on appeal, Clear Lake ―limits its reply to the affirmative defenses of 

res judicata, waiver, and limitations‖ because ―of Garden Ridge‘s complaint that certain 

affirmative defenses were not preserved for appeal.‖
20

appeal as grounds for reversal.‖ TEX. R. CIV. P. 166a(c); see also, e.g., McConnell 

v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993). Clear Lake did 

not raise any estoppel defenses in its motion for summary judgment. Accordingly, 

we may not reverse on these grounds.

c. Waiver

Clear Lake contends it conclusively proved its affirmative defense of waiver, 

whereby ―Garden Ridge [1] waived any claim that the Lease does not authorize a 

management fee and [2] waived any right to question the calculation of the fee.‖ 

Given our construction of the lease above—that the lease indeed allows Clear Lake 

to charge a management fee—we need not address Clear Lake‘s first point. We 

disagree with Clear Lake‘s second point.

―Waiver is the intentional relinquishment of a right actually known, or 

intentional conduct inconsistent with claiming that right.‖ Ulico Cas. Co. v. Allied 

Pilots Ass’n, 262 S.W.3d 773, 778 (Tex. 2008). ―The elements of waiver include 

(1) an existing right, benefit, or advantage held by a party; (2) the party‘s actual 

knowledge of its existence; and (3) the party‘s actual intent to relinquish the right, 

or intentional conduct inconsistent with the right.‖ Id. And even if a party to a 

contract could be charged with notice of its right and then acts inconsistent with 

the right, waiver cannot be asserted to create a new contractual liability. See id.

Clear Lake cites no case holding that a party to a contract waived a right 

when the plaintiff did not actually know facts pertinent to the breach. For 

example, in Tenneco Inc. v. Enterprise Products Co., the Texas Supreme Court 

found waiver established as a matter of law for a contractual provision prohibiting 

assignment of an ownership interest in a fractionation plant unless the assignee 

agreed to deliver 31,000 barrels of natural gas liquids per day to the plant. 925 

S.W.2d 640, 642–43 (Tex. 1996). The assignee never agreed to the delivery 
21

requirement and failed to meet the quota for three years. Id. The evidence showed 

that the plaintiffs actually knew that the assignor had transferred its ownership 

interest to the assignee, and the plaintiffs accepted the assignee‘s delivery of less 

than 31,000 barrels per day for three years. Id. at 643. Thus, actual knowledge 

was key to establishing waiver.

As a matter of law, Garden Ridge did not relinquish its right to pay only 

CAM expenses under the lease by simply paying Clear Lake the management fee 

within the bankruptcy proceeding or afterward. Garden Ridge paid the 

management fee without actually knowing that the fee was in part a non-CAM 

expense. Garden Ridge‘s lack of knowledge is crucial. See Enterprise-Laredo 

Assocs. v. Hachar’s, Inc., 839 S.W.2d 822, 836 (Tex. App.—San Antonio 1992) 

(settlement agreement whereby parties agreed to ―waive any other violations of the 

Lease‖ occurring before a particular date did not establish affirmative defense of 

waiver when the plaintiff ―was not aware of the CAM overcharges at the time it 

signed the agreement‖; thus, the plaintiff did not waive the right to sue for CAM 

overcharges), writ denied, 843 S.W.2d 476 (Tex. 1993) (per curiam). Indeed, 

Clear Lake included the management fee on the CAM reconciliation statements, 

thereby suggesting that the entirety of the fee was a proper CAM expense.

The trial court correctly denied Clear Lake‘s motion on this ground.

d. Limitations

Clear Lake contends it conclusively proved that ―any damages that accrued 

prior to September 10, 2005, were barred by limitations.‖ Garden Ridge 

acknowledges that the four-year statute of limitations ―implicates‖ the 2004 

management fee because suit was not filed until September 10, 2009, but Garden 

Ridge contends that the claim is not barred because of the discovery rule and 

―Clear Lake‘s own misrepresentations delayed prosecution of this claim.‖ We 
22

agree with Clear Lake that any claims accruing prior to September 10, 2005, are

barred by the statute of limitations, including Garden Ridge‘s claim for the 2004 

management fee.

A breach of contract claim accrues when the contract is breached. Via Net v. 

TIG Ins. Co., 211 S.W.3d 310, 314 (Tex. 2006). But accrual may be deferred by 

the discovery rule if ― ̳the nature of the injury incurred is inherently undiscoverable 

and the evidence of injury is objectively verifiable.‘‖ Id. at 313 (quoting Computer 

Assocs. Int’l, Inc. v. Altai, Inc., 918 S.W.2d 453, 456 (Tex. 1996)). The Texas 

Supreme Court has ―restricted the discovery rule to exceptional cases to avoid 

defeating the purposes behind the limitations statutes.‖ Id. The discovery rule 

may apply to a breach of contract claim, but ―those cases should be rare, as diligent 

contracting parties should generally discover any breach during the relatively long 

four-year limitations period provided for such claims.‖ Id. at 315. 

― ̳An injury is inherently undiscoverable if it is, by its nature, unlikely to be 

discovered within the prescribed limitations period despite due diligence.‘‖ Id. at 

313–14 (quoting Wagner & Brown, Ltd. v. Horwood, 58 S.W.3d 732, 734–35 

(Tex. 2001)). Due diligence requires that contracting parties protect their own 

interests. Id. at 314. Thus, due diligence ―may include asking a contract partner 

for information needed to verify contractual performance.‖ Id. ―If a contracting 

party responds to such a request with false information, accrual may be delayed for 

fraudulent concealment.‖ Id. ―But failing to even ask for such information is not 

due diligence.‖ Id. Whether an injury is inherently undiscoverable is a ―legal 

question . . . decided on a categorical rather than case-specific basis; the focus is on 

whether a type of injury rather than a particular injury was discoverable.‖ Id.13

 

13 And similar to the discovery rule, fraudulent concealment will delay the statute of 

limitations only until the fraud is actually discovered or ― ̳could have been discovered by the 
23

Garden Ridge‘s injury is not of the type that is inherently undiscoverable

because the injury could have been discovered with the exercise of due diligence. 

Garden Ridge paid the 2004 CAM charge without question and without requesting 

an audit, for which it had a contractual right under Section 6.5 of the lease. Garden 

Ridge could have inquired about the management fee as soon as Clear Lake sent 

the reconciliation, but Garden Ridge did not do so. Instead, Garden Ridge waited 

four years to request an audit, and there is no evidence Clear Lake provided false 

information during the course of the audit—indeed, the management agreement 

that Clear Lake provided during the audit is precisely how Garden Ridge learned of 

the breach. See TH Healthcare Ltd. v. Patino, No. 13-06-602-CV, 2007 WL 

2128909, at *5 (Tex. App.—Corpus Christi July 26, 2007, pet. denied) (mem. op.) 

(injury was not inherently undiscoverable because the contract allowed for 

reconciliation of overpayments to be conducted, and if the plaintiff had conducted 

its reconciliation and audit, it would or should have known of the injury at that 

time); see also HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998) 

(declining to apply discovery rule and fraudulent concealment exceptions when the 

defendant gave the plaintiffs ―whatever information they wanted‖).

Further, unlike in Enterprise-Laredo Associates, where the discovery rule 

tolled the limitations until the tenant was put on notice by a substantial increase in 

the CAM charge for one year, see 839 S.W.2d at 826, 838, it is undisputed that 

Garden Ridge first learned of the new management fee outside the limitations 

period. Specifically, Willis testified by affidavit that Fiesta Mart had never 

charged a management fee, and Clear Lake began charging a management fee in 

2003. We hold as a matter of law that a tenant acting with due diligence could 

have discovered this type of injury by asking Clear Lake for information needed to 

 

defrauded party by exercise of reasonable diligence.‘‖ Computer Assocs. Int’l, 918 S.W.2d at 

456 (quoting Estate of Stonecipher v. Estate of Butts, 591 S.W.2d 806, 809 (Tex. 1979)).
24

verify contractual performance. To apply the discovery rule exception in this type 

of case would frustrate the purpose of limitations, given that Garden Ridge had a 

contractual right to audit and declined to exercise that right for many years despite 

a new and substantial fee being charged. Cf. HECI Exploration Co., 982 S.W.2d at 

887–88 (―A royalty owner who makes no inquiry for years on end cannot then sue 

for breaches of contract that could have been discovered within the limitations 

period if reasonable diligence had been exercised.‖).

Finally, Clear Lake contends that the statute of limitations should bar not 

only the 2004 fee, but also a ―pro-rated share of the 2005 management fee prior to 

suit being filed.‖ Clear Lake contends that Garden Ridge is barred from 

recovering any money that Garden Ridge paid as estimated CAM charges before 

September 10, 2005, and thus implicitly contends that Garden Ridge‘s claims for 

breach accrued each month as it made estimated CAM payments, rather than when 

Clear Lake determined the actual CAM charges during the reconciliation process 

in 2006. But see Patino, 2007 WL 2128909, at *3 (parties agreed that a 

reconciliation requirement in the contract triggered the accrual date for any claim 

for breach). This particular argument was not made to the trial court in Clear 

Lake‘s motion for summary judgment, and Clear Lake pointed to no evidence and 

made no argument concerning the accrual date of Garden Ridge‘s claims.14 We 

cannot reverse on this basis. See, e.g., TEX. R. CIV. P. 166a(c); McConnell, 858 

S.W.2d at 341.

Accordingly, the trial court should have granted Clear Lake‘s motion for 

summary judgment on its affirmative defense of limitations regarding Garden 

Ridge‘s claim for the 2004 management fee.

 

14 The defendant has the burden to ―conclusively establish when the action accrued.‖ 

Morriss v. Enron Oil & Gas Co., 948 S.W.2d 858, 867 (Tex. App.—San Antonio 1997, no pet.).
25

Clear Lake‘s second issue is sustained in part.

3. Interest

Clear Lake contends that the trial court erred in awarding pre- and postjudgment interest at a rate of eighteen percent because Garden Ridge is not entitled 

to this rate based on any language found in the lease. Because we reverse the trial 

court‘s award of damages, we also reverse the award of interest. See, e.g., Soon 

Phat, L.P. v. Alvarado, 396 S.W.3d 78, 112 (Tex. App.—Houston [14th Dist.] 

2013, pet. filed) (reversing interest when damages reversed); Total E & P USA, 

Inc., v. Mo-Vac Serv. Co., No. 13-10-00021-CV, 2012 WL 3612505, at *10 (Tex. 

App.—Corpus Christi Aug. 23, 2012, pet. denied) (mem. op.) (same).

15

4. Attorney’s Fees

Clear Lake contends that we must reverse the trial court‘s judgment 

regarding attorney‘s fees if we reverse the damages award. We agree. One

important factor is the ―results obtained,‖ and ―we are not reasonably certain that 

the jury was not significantly affected by the error.‖ See, e.g., Barker v. Eckman, 

213 S.W.3d 306, 314 (Tex. 2006) (reversing the jury‘s award of attorney‘s fees 

when the correct measure of damages was one-seventh of the erroneously awarded 

amount).

5. Reversal of Liability

Finally, although we do not hold that the trial court erred by granting 

summary judgment to Garden Ridge on the issue of liability, ―we are compelled, 

under current Texas Law, to reverse the judgment and remand for a new trial on 

liability and damages.‖ Okorafor, 2010 WL 1343125, at *1.

 

15 We decline to address what rate, if any, would be applied if Garden Ridge ultimately 

prevails.
26

Rule 44.1 of the Texas Rules of Appellate Procedure states that even if error 

affects only part of the trial court‘s judgment, we ―may not order a separate trial 

solely on unliquidated damages if liability is contested.‖ TEX. R. APP. P. 44.1(b); 

see also Rancho, 383 S.W.3d at 151–52. This rule applies when we reverse a 

summary judgment because of the plaintiff‘s failure to conclusively prove 

damages. Okorafor, 2010 WL 1343125, at *4; see also Rosales v. Williams, No. 

01-09-00454-CV, 2010 WL 457536, at *6 (Tex. App.—Houston [1st Dist.] Feb. 

11, 2010, no pet.) (mem. op.) (reversing the whole summary judgment for landlord 

because damages were not conclusively established for breach of a residential 

lease, liability was contested by filing a general denial, and damages were 

unliquidated).

Clear Lake contested liability by filing a general denial. See, e.g., Estrada v. 

Dillon, 44 S.W.3d 558, 562 (Tex. 2001). And the damages in this case are 

unliquidated because they cannot be determined from reviewing the petition and 

written instruments on file. See Freeman v. Leasing Assocs., Inc., 503 S.W.2d 

406, 408 (Tex. Civ. App.—Houston [14th Dist.] 1973, no writ) (holding that a 

―claim is liquidated if the amount of damages can be accurately calculated by the 

court, or under its direction, from the allegations contained in plaintiff‘s petition 

and the instrument in writing‖; noting that a ―seemingly liquidated claim‖ for 

breach of an equipment lease may actually be ―unliquidated . . . when the petition 

alleges insufficient facts‖).16

 

16 See also Ingram Indus., Inc. v. U.S. Bolt Mfg., Inc., 121 S.W.3d 31 (Tex. App.—

Houston [1st Dist.] 2003, no pet.) (damages had ―the appearance of being liquidated,‖ but the 

damages ―should have been treated as unliquidated‖ because ―written instruments, such as 

invoices or receipts, were not produced along with the affidavit‖); Arnold v. Allen Ctr. Co. No. 2, 

747 S.W.2d 17, 18–19 (Tex. App.—Houston [14th Dist.] 1988, writ denied) (damages were 

―clearly unliquidated‖ for breach of a commercial real property lease when the petition alleged 

the monthly rental rate and the amount that the tenant was ―presently indebted‖ to the landlord).
27

Accordingly, we must reverse the trial court‘s judgment on liability as well 

as damages.

CONCLUSION

The trial court erred by granting summary judgment to Garden Ridge and 

denying Clear Lake‘s motion for summary judgment in part on the limitations 

defense.

We affirm in part, reverse the trial court‘s judgment in part and render 

judgment that Garden Ridge‘s claims accruing before September 10, 2005, are 

barred by limitations, and remand for further proceedings.

/s/ Sharon McCally

Justice

Panel consists of Justices Christopher, Jamison, and McCally.