### T E X A S C O U R T O F A P P E A L S , T H I R D D I S T R I C T , A T A U S T I N

NO. 03-09-00526- CV

Buttross V., Inc., Appellant

v. Victor ia Sq uare Condom iniu m Hom eowners’ Association, Inc., and Joh n Muhi ch, Ind ividu ally and d/b /a Storcor p Services, LLC, and S torc orp Service s, LLC, App ellees

F ROM TH E DISTRI CT COURT O F TRAVIS CO UNTY, 53RD J UDICIAL DI STRICT NO. D-1 -GN-0 7-0 0272 1, H ONO RAB LE SCO TT H . JENK INS, J UDGE P RESIDING

M E M O R A N D U M O P I N I O N
Appellant Buttross V., I nc. appea ls a distr i ct co u rt j udg ment in favor of appellee s Victoria Squ ar e C o n d o minium Homeowne rs’ Association, I nc., J ohn Muhich, and Storcorp Service s, L L C on Buttross’s c laims for bre ach of contra ct and ne g lige nce. We will af firm the judg ment.

BACK GR OUND The Vi ct o ri a Square Condomini ums are comprised of four buildings, containing a total of forty -eig ht units, located in nor th A ustin, ne ar the intersec tion of Bur net Road and Stec k Avenue . At all rele vant times, the complex has been g overne d by a Dec lara tion and Master Dee d that establishes a condominium reg ime. The Victoria Square Condomini um Hom eowners’ Association (the Association), a non-prof it corpor ation, was established to manag e the condominiums’ common are as under the Dec lara tion.I n J anuar y 2006, the Association contra cted with J ohn Muhich and S torcor p S er v i ces, L L C (Storcorp) to repla ce the roofs on all four buildings, which are common are as of the condominiums. The roofs had sustained hail damag e and wer e leaking

. Storcorp performed the work in J anuar y and Fe bruar

y 2006, addre ssing the problem not by repla cing the exis ting roofs, but by building metal roofs direc tly over the exis ting ones. As ear ly as Marc h 2006, howeve r, the newly installed roofs beg an to leak, causing interior
water damag e. The roofs continued to leak despite Storcorp’s eff orts to repa ir them, and t h e As s o ci ation terminated its re lationship with S torcorp on O ctober 6, 2006. Amidst these ong oing roofing issues, on November 27, 2006, Buttross purcha sed fiftee n units of the condominiums from Suz anne Edson of Housebuy ers, I nc. The seller’ s disclosure descr ibed the exis ting problems with the roofs, indicating that the roofs wer e ineffe ctive and would have to be completely repla ced. The disclosure also indicated that there had been water penetr ation and damag e to the units. After having rea d the seller’ s disclosure, B uttross purchase d the units “as is.”

I n Dec ember 2006, water penetr ated and damag ed four of Buttross’s units. T h e ce i l ing in

one of the units collapsed later that month, and the ceiling s in three additional units collapsed in J anuar y 2007.
Buttross contra cted with a company that it owned to make nece ssary repa irs and ultimately sold all four units by Dec ember 2007. I n the meantime, despite the problems it had encounte red with the units it purcha sed in 2006, Buttross purchased two additional units from differe nt sellers, one on J une 28, 2007, and another on
J uly 2, 2007. By the time trial commence d in April 2009, Buttross had sold six teen of the sevente en units it had purc hased, the sole exception being the unit it bought on J uly 2, 2007.
On J anuar

y 2, 2007, the Association adopted a First Amen d m en t t o its Dec lara tion and
Master Dee d. Of rele vance here , the amendments prohibited a single person or entity , termed an “investorowner ,” from owning more than ten perc ent of the units in Victoria Square. I f, at the time the J anuar y 2007

2Amendment was adopted, a single person or entity alre ady owned more than ten perc ent of the units,

that investor-owne r was prohibited from serving on the Association’s board and from exercising more than

a ten-pe rce nt votin g ri gh t

. These restric tions applied to Buttross, who owned over ten perc ent of Victoria Squar e’s f

orty -eig ht units. Complaining of the water damag e sustained by four of the units it had initially p u rc h as ed,
Buttross broug ht cause s of action ag ainst the Association for brea ch of fiduciar y duty , brea ch of contra ct, and
neg lige nce, and ag ainst Storcorp for neg lige nce. Following a bench trial, the district court ruled that Buttross take nothing on his claims ag ainst the Association. As for Buttross’s claims ag ainst Storcorp, the district court found that the roofs installed by Storcorp wer e defe ctive, but that Storcorp’s acts or omis s i o n s had not proxi mately cause d any

damag e to B uttross. The cour t also awa rded the Association $30,000 in attorney ’s fee s. Buttross appe als.

ANALYSIS

I n its first is s u e, Buttross arg ues that the J anuar y 2007 Amendment to the Dec lara tion was
not validly adopted, as it was not app roved by the Victoria Square owner s, in violation of proper ty code section 81.111. See Tex. Prop. Code Ann. § 81.111 (West 2007). As Buttross repe atedly acknow ledg es on
appea l, it asser

ted these alleg ed statutory violations solely as a basis for relief under a brea ch-of -contra ct cause of action. The Association arg ues that Buttross failed to prese rve err or as to its brea ch-of -contra ct theory by failing to prese nt it to the district court, whether throug h its pleading s, evidenc e, or arg ument, and by failing
to reque st finding s of fac t. And, even if err or wer e prese rved, the Association contends, Buttross’s claim fails, as it cannot show ha

rm.

3We ag ree with the Association that, even assuming that Buttross prese rved err or on this issue, 1

his brea ch of contra ct claim fails, as he cannot show that he sustained any damag es as a result of the Association’s alleg ed bre ach.

I n the “F acts” section of its pe tition, Buttross asserts that the following provisions of the 1 J anuar y 2007 Amendment wer e “ar bitrary and capr icious” and af fe ct ed no other Association member:
any sale resulting in a single -entity purcha ser’ s owning more than 5 units (10% of the VSCs) is null and void;
any single entity owning more than 5 units (10% of the VSCs) cannot vote more than a 10% ow nership intere st; and
any single entity

owning more than 5 units (10% of the VSCs) cannot be e lected to the B oard of

Direc tors.
Ba sed on these a lleg ations, Buttross asse rted a cause of ac tion for bre ach of contra ct: VSCHO brea ched the Contr ac t with Buttross by amending the Dec lara tion. The Boa rd and its Direc tors exceede d their authority by deny ing ex post facto Buttross’ rig ht to buy units or to s el l t h em t o whomever it wished, or to sell them all to a s ingle investor; reduc ing ex post fac to Buttross’ 34% owner ship voting i n t er es t to 10% impair i n g Yo u s s ef L ahlou’s voting rig hts as a Direc tor; and (4) barr ing David Buttross from serving as a member of the Boa rd. The Boa

rd further brea ched the Contract by amending the Dec lara tion by way s other than to comply with FNMA g uidelines without a 67% owne rship interest vote.
T h ese asser

tions in Buttross’s petition expressly state that it challeng es the Association’s 2007 Amendment as a br eac h of contra ct. B uttross has not, the ref ore, waived this issue by failing to plead it, as the Assoc iation contends.

The Association also arg ues that the absenc e of—and Buttross’s failure to reque st—a specific finding of fac t that the Association violated the Dec lara tion by illega lly amending it waived any err or on this point. However , as we will discuss, such a finding —whether

made in B uttross’s favor or not—would have had no eff ect on the district court’s ruling , which deter mined that Buttross had incurre d no damag e as a result of the Association’s alleg ed brea ch. Thus, whether or not Buttross was require d to obtain a specific finding as to the alleg edly invalid amendment is irrele vant as, in any case , Buttross cannot show that such a finding would have had any eff ect on his ability to preva il on his breach- of-c ontrac t cause of ac tion. 4To preva il on its brea ch-of -contra ct claim, Buttross was require d to show (1) the exis tence of

a valid contra ct; (2) perf ormanc e or tentative perf ormanc e by Buttross; (3) brea ch of the co n t ra ct by the
As s o ci at i o n ; and (4) damag e to Buttross as a result of the Association’s brea ch. See Roundville Partner s , L.L.C . v. Jone

s , 118 S.W .3d 73, 82 (Tex. App.—Austin 2003, pet. denied). T he district cour t found that:

Plaintiff has not shown, by a preponde ranc e of the evidenc e, that it sustained any compensa ble damag es proximately

cause d by

the conduc t of Victoria Squar e.

T h i s fi n d i n g is sufficie nt to support the district court’s judgme nt on Buttross’s brea ch of contra ct claim (which r equire s that Buttross be damag ed as a result of the A ssociation’s bre ach) reg ardle ss of whethe r the Association bre ache d the contra ct by means of illeg ally

adopting the Amendment. Whil e not entirely clea

r, we understand Buttross’s arg ument to also challeng e the sufficie ncy of the evidenc e to supp o rt t h e d i strict court’s finding that Buttross sustained no damag es as a result of the Association’s co nduct. When a party challeng es the leg al sufficie ncy of the evidenc e supporting an adver se finding on an issue on which it has the burden of proof, that party can preva il only if it demonstrates that the evidenc e conclusively establishes all vital f acts in suppor

t of the issue. Dow Chem. Co. v. Francis , 46 S.W .3d 237, 241 (Tex. 2001). When conducting a leg al-suff iciency revie w, we must view the evidenc e in the light most favor able to the district court’s finding s, “cr editing favor able evidenc e if rea sonable jurors could, and disreg arding contra ry evidenc e unless rea sonable jurors could n ot.” City of Keller v. W ilson , 168 S.W .3d 802, 807 (Tex. 2005). Moreove r, we must indulge ever y rea sonable infere nce that would support the district court’s finding s. Id. at 822. The ultimate test for leg al sufficie ncy is whether the evidenc e at trial would enable rea sonable a nd fair- minded people to re ach the verdic t under re view. See id. at 827.

5When a party challeng es the fac tual sufficie ncy of the evidenc e supporting an adver se finding

on an issue on which that party had the burden of proof, we consider whether th e fi n d i n g i s s o against the
g rea t weig ht and preponde ranc e of the evidenc e that it is clea rly wrong and unjust. Francis , 46 S.W .3d at 241.
I n either case , we mu s t consider, weig h, and examine all of the evidenc e in the rec ord, both in support of and ag ainst the finding , to decide whether the finding should be set aside. See id. ; Plas-Tex, Inc. v. U.S. Steel Corp. , 772 S.W .2d 442, 445 (Tex. 1989); Pool v. Ford Motor Co., 715 S.W .2d 629, 635 (Tex. 1986).

Buttross’ s co m p laints are as to the provisions in the 2007 Amendment that preve nted its principal, Da v i d Bu t t ro ss, from serving on the board and that allowed Buttross V. to vote only five of the fiftee n units it owned. Howeve r, g iven the structure of the board and the voting provisions, Buttross cannot show that it suffe red any damag e as a result of these amendments. Under the De cl ar at i o n, the board is made up of five members, who are elec ted by a majority of the condominium owner s. Eac h of the forty -eig ht condominium owner s has one vote. Even if Buttross had been able to vote more than five of its fiftee n units, it cannot show that it would have been able to e lect a board member of its c hoosing. And, even if someone of its choosing

—presumably David Buttross—we re elec ted, Buttross cannot show that i t s o n e v o te would have ha d any

eff ect on boa

rd dec isions.
I n its petition, Buttross claimed damag es we re for phy sical damag e to its condos, l ost rents, loss of value of the sold condos, monthly mortg ag e cre dits to some condo buy ers pending the repla ceme nt of the roofs, and Association assessments and char g es ag ainst Buttross’s condo units from J anuar y 2007 throug h the sales dates. Given the structure of the board and the voting provisions, Buttross has prese nted no evidenc e
to show that David Buttross’s p re s en ce on the board—e ven if elec ted—would have had any impact on these alleg ed damag es. Thus, Buttross cannot preva il on either its leg al sufficie ncy or its fac tual sufficie ncy challeng e. See F

rancis , 46 S.W .3d at 241.

6Buttross conte nds that, whether it ha s shown economic damag es or not, it can r ecove r on its brea ch-of -contra ct claim as a par

ty “adve rsely

aff ecte d” by the Association’s a ctions. See Tex. P rop. Code
Ann. § 82.161(a) (West 2007). Although Buttross broug ht its action solely as a brea ch-of -contra ct claim, it cites to the proper

ty code as support fo r i t s ar gu ment that it had standing to challeng e the J anuar y 2007
Am en d m en t as a “per son[] adver sely aff ecte d” by it. See id. Howeve r, as Buttross repe atedly conce des, it broug ht its claim as a brea ch-of -contra ct cause of action, not as a statutory cause of action. Thus, reg ardle ss of the statutory provisions cited, Bu t t ro s s must not simply show that it was “adve rsely aff ecte d” by the Association’s action, as it contends, but, rathe r, must satisfy each element of a brea ch-of -contra ct claim—including proving that it incurre d damag es resulting from the Association’s brea ch—to rec over. See Roundville Partners, L.L.C. , 118 S.W .3d at 82.

Citi ng MBM Financial Corp. v. W oodlands Operating Co., L.P. , 292 S.W .3d 6 6 0 , 6 64-65 (Tex. 2009), Buttross also arg ues t hat, even if we ag ree with the di strict co u rt ’s n o -damag e determination,
Buttross is still entitled to nominal damag es resulting from the Association’s brea ch. Whil e nominal damag es

are rec overa

ble for brea ch of contra ct, they are only available wher e a brea ch has cause d only non-ec onomic harm, and not wher e, as here , the damag es alleg ed are entirely economic and subject to proof. See id. at 665-
66. As noted, Buttross claimed purely economic damag es—for phy si ca l damag e to its condos, lost rents, loss of value of the sold condos, monthly mortg ag e cre dits to some condo buy ers pending the repla ceme nt of the roofs, and Association assessments and char g es ag ainst Buttross’s condo units from J anuar y 2007 throug h the sales dates. Eac h of those measure s of damag es repr esent actua l economic damag es, and Buttross broug ht forth no proof that it had incurre d any economic loss as a result of the Association’s alleg ed brea ch. See id. Although But t ro s s now alleg es harm to its proper ty rig hts, at trial it soug ht to rec over purely economic

7damag es and has, there fore , not prese rved its arg ument that it is entitled to nominal, non-ec onomic damag es

for our revie w. See Tex. R. App. P . 33.1.
Buttross’s claim for attorney ’s fee s depends on its preva iling on its brea ch-of -contra ct claim.
As we have conclude d that Buttross has not preva iled on its brea ch-of -contra ct claim, as it has not established damag es, it is not entitled to rec over attorne y ’s fe es on this claim. Acc ording ly , we overr ule Buttross’s first issue.
I n its second issue, Buttross arg ues that the district court err ed in rende ring a take-n o t hing judgme nt on its neg lige nce claim ag ainst Storcorp. To preva il o n i t s n egl i gence cause of action ag ainst Storcorp, Buttross was required to show that Storcor p owed it a leg al duty

and bre ache d that duty , and that
Buttross suffe red damag es proxi mately cause d by Storcorp’s brea ch. See D. Houston, Inc. v. Love , 92 S.W .3d 450, 454 (Tex. 2002) (citing El Chico Corp. v. Poole , 732 S.W .2d 306, 311 (Tex. 1987)).

Although Buttross corr ectly asser ts that the district court found that “the cause of the leaking roofs, including interior water damag e to the units boug ht by Plaintiff, was the defe ctive Storcorp roofs,” the district court did not find that Buttross sustained any damag es proxi mately cause d by Storcorp. I ndeed, it found the c ontrary :

Pla intiff has not shown, by a preponde ranc e of the evidenc e, that it sustained any damag es proxi mately

cause d by

Victoria Squar e, John Muhi ch, or Storcor p.

The c ourt also found:

Plaintiff failed to meet its burden of proof in proving by a preponde ranc e of the evidenc e that any claimed damag es for

proper ty damag e re pairs we re r easona ble and ne cessa

ry .

8Plaintiff f ailed to meet its burden of proof in proving by a preponde ranc e of the evidenc e its claimed da

mag es. 2

Consist ent with the district court’s finding s, the rec ord shows that, althoug h the roofs installed by Storcorp wer e defe ctive and the cause of water damag e to the units boug ht by Buttross, there is no evidenc e that any damag e to Buttross was proxi mately cause d by Storcorp. The evidenc e s h o ws that the seller expressly disclosed to Buttross that the roofs wer e defe ctive and would need to be repla ced entirely and that
water had penetr ated the units. Be cause Buttross boug ht the units “as is,” we assum e— an d the evidenc e shows that—the purcha se price acc ounted for these defe cts. Given that the units wer e in a damag ed condition 3
when purcha sed—a d a

ma g e d c o n d it io n th a

t w a s f u ll y d is c lose d—Buttross would have had to prese nt evidenc e showing that damag es it incurre d afte r the purc hase w ere above an bey ond the damag es about which it wa s alre ady awa re. This it has not done a nd, indeed, it is difficult to see how it could be done. The disclosure, along with th r e e e n g in e e r in g r e p o r

ts, showed that the roofs on all four buildings had been leaking and had been repla ced but tha t the repla ceme nt r oofs had also failed and would have to be completely repla ced. One of the eng ineer ing r eports stated tha t the roof wa s “bey ond salvag e or r epair and
must be removed as soon as poss ible to mitigate additional water damag e to the bui ldings.” Knowing that the roofs wer e defe ctive and neede d to be completely repla ced, Buttross acc epted the risk that, g iven the rig ht conditions, the roofs, or por tions of the roofs, c ould fail completely , causing additional water damag e.
Although these finding s are sty led “conc lusions of law,” the desig nation is not controlling , 2 and we may trea t them as findings of fact. Ray v. Farmers’ State Bank , 576 S.W .2d 607, 608 n.1 (T ex . 1979); see El Chico Corp. v. Poole , 732 S.W .2d 306, 313-14 (Tex.1987) (dete rminatio n o f proxi mate cause is g ener ally a question of fac t); Tarrant Reg’l W ater Dist. v. Gragg , 43 S.W .3d 609, 625 (Tex. App.—Waco 2001) (a mount of damag es is question of fac t for jury ), aff’d , 151 S.W .3d 546 (Tex. 2004). Buttross, likewise, neither obtained nor purcha s ed an assig nment of any claim that the 3 seller mig ht have ha d ag ainst Storcorp or pr ior owner s. 9Despite this evidenc e, Buttross relies on Kraft v. Langford , 565 S.W .2d 223, 227 (Tex. 1978),

arg uing that the seller’ s disclosure is irrele vant, as the damag es Buttross claims are for perma nent damag es,
not temporar

y damag es. Kraft applies the temporar y /permane nt distinction, initially established to deter mine when a nuisance claim acc rues, to deter mine the appropr iate measure of proper ty damag e cause d by flooding

. Id. ; see Schneide r Nat’l Carriers, Inc. v. Bates , 147 S.W .3d 264, 270 (Tex. 2004). As explained in Kraft , the temporar y /permane nt damag e distinction is used to deter mine whether

the appr opriate me asure of prope rty damag e is repa ir cost and lost rent (te mporary ) or lost marke t value (pe rmane nt). 565 S.W .2d at 227. B ut,

even assuming that Kraft applies here , Buttross cannot claim that its damag es wer e temporar y in nature , and, 4
there fore , that it should continu e to acc rue damag es for repa ir costs or lost rent, when it elec ted to rec over damag es based on lost marke t value by purcha sing the units for a reduc ed price based on damag e to the roof.
As noted, there was evidenc e, in the form of David Buttross’s own testimony , t h at Buttross paid what it thought was a fair price , g iven its ful l k n o wl ed ge o f t he condition of the roof and the risk it was taking

. Buttross wa s—in this m anner —alre ady compensa ted for a

ny later da mag es that mig ht result.
Ba sed on our revie w of the rec ord, we conclude that Buttross cannot meet its burden of showing either that the evidenc e conclusively establishes that it sustained any damag es proxi mately cause d by Storcorp or that the district court’s finding s wer e s o aga i n s t t h e g rea t weig ht and preponde ranc e of the

I n Schneide r National Carriers, Inc. v. Bates , the Supreme Court explained that apply ing 4 the temporar

y /permane nt distinction to desig nate the appropr iate measure of proper ty damag e as either cost of repa ir and lost rent (tempora ry ) o r l ost marke t value (per manent) “re sults from confla ting g ener al proper

ty damag e case s with nuisance s, and would be better serve d by addre ssing direc tly which measure of proper ty damag e is rea sonable, as the temporar y /permane nt t est ‘is a rela tively crude one, and it may

be misleading .’” 147 S.W.3d 264, 270 n.12 (Tex. 2004) (quoting 1 Dan B. Dobbs, Dobbs L aw of Remedies: Damag es-Eq u i t y -R est itution § 5.2(2), at 716-18 (2d ed. 1993)

. 10evidenc e that they are clea rly wrong and unjust. See F rancis , 46 S.W .3d at 241. Acc ording ly , we overr ule
Buttross’s se cond issue.

CONCLUSION

Having overr uled ea ch of B uttross’s issues, we af firm the district cour

t’s judgme nt.

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Bob Pembe rton, J ustice
Be fore Chief J ustice Jones, J ustices Pemberton a nd Waldrop
Affir med Filed: Aug ust 18, 2010

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