Sandalwood Apartments, Inc., Jaikishin S. Bhagia, Individually Jaikskin S. Bhagia D/B/A Woodbridge Management Co., Nanik S. Bhagia, Individually and Woodbridge Properties LLC v. Heritage Gulf Coast Properties, LTD and Sumer S. Pinglia, Individually

Affirmed and Opinion filed September 24, 2013.

In The

Fourteenth Court of Appeals

NO. 14-11-00976-CV
NO. 14-11-00980-CV

HERITAGE GULF COAST PROPERTIES, LTD. AND SUMER S.
PINGLIA, Appellants and Cross-Appellees
V.
SANDALWOOD APARTMENTS, INC., JAIKISHIN S. BHAGIA, NANIK S.
BHAGIA, AND WOODBRIDGE PROPERTIES, LLC,
Appellees and Cross-Appellants

On Appeal from the 11th District Court
Harris County, Texas
Trial Court Cause No. 2008-64342

OPINION

Appellants, Heritage Gulf Coast Properties, Ltd. (“Heritage”) and Sumer S.
Pinglia (“Pinglia”), appeal certain portions of a judgment in favor of appellees,
Sandalwood Apartments, Inc. (“Sandalwood”), Jaikishin S. Bhagia (“Jacky
Bhagia”) and Nanik S. Bhagia (“Nick Bhagia”), on appellants’ claims arising out
of transactions involving certain apartment complexes. By cross-appeal,
Sandalwood contends it is entitled to recover attorney’s fees, and Woodbridge
Properties, LLC (“Woodbridge”) (a cross-appellant only) seeks its litigation
expenses. We affirm.

I. BACKGROUND

The parties have a history of involvement together in multiple transactions
regarding various apartment complexes—as joint owners or in a buyer/seller
relationship. Appellants’ claims in the present case were based on transactions
concerning two such complexes.

A. The Taft Circle Apartments1

In March 2003, Pinglia and the Bhagias purchased the Taft Circle
Apartments at a tax foreclosure sale. Pinglia presented evidence the three
individuals agreed to share equally in the purchase price, expenses, profits, and
losses. Subsequently, Pinglia and the Bhagias formed Woodbridge and transferred
the Taft Circle Apartments to that entity. Woodbridge operated under the same
agreement to share expenses, profits, and losses equally among its members.
Woodbridge sold the Taft Circle Apartments in April 2006.

Pinglia alleges the Bhagias committed the following wrongful actions
relative to the Taft Circle Apartments: (1) overcharged Pinglia by $9,514.93 for his
share of the property taxes; (2) failed to inform Pinglia that the Bhagias received a
payment when the former owner redeemed a portion of the property and withheld

1
Only appellant Pinglia and the Bhagia appellees are parties to appellants’ complaints on
appeal concerning the Taft Circle Apartments. Appellant Heritage and appellee Sandalwood
were not involved in this transaction. Pinglia presents no appellate complaints involving
Woodbridge; it is only a cross-appellant with respect to its counterclaim for litigation expenses
relative to Taft Circle Apartments, which is addressed later in this opinion.

2
Pinglia’s share in the amount of $27,954.24; (3) withheld $25,600 from Pinglia’s
share of the proceeds after Woodbridge sold the Taft Circle Apartments because
the Bhagias believed Pinglia had improperly taken the same amount as a broker’s
commission on the sale. Pinglia pleaded claims against the Bhagias for breach of
fiduciary duty and under the Texas Theft Liability Act (“TLA”).

The trial court submitted a jury question on breach of fiduciary duty but
refused to submit a question under TLA. The jury (1) found a relationship of trust
and confidence existed between Pinglia and the Bhagias, (2) found the Bhagias did
not prove they complied with their fiduciary duties to Pinglia, and (3) assessed
$12,800 against each Bhagia party for Pinglia’s resulting damages.

B. The Sandalwood Apartments2

At relevant times, Pinglia was managing member of the general partner of
Heritage. The Bhagias were officers, directors, and shareholders of Sandalwood.
On March 1, 2005, Heritage agreed by written contract to purchase the
Sandalwood Apartments from Sandalwood for $2.3 million, via a down payment
plus third-party financing. When Heritage could not obtain the third-party
financing, the parties amended the contract to reduce the requisite down payment
and provide for Sandalwood to finance the remainder.

The transaction first closed on February 17, 2006: Heritage signed a note in
the amount of $1.85 million; Pinglia guaranteed the note; Heritage signed a Deed
of Trust with Sandalwood as beneficiary; and Sandalwood signed a Special
Warranty Deed. A second closing, with identical loan documents, occurred on
April 26, 2006, to correct the name of the buyer.3

2
Unlike the Taft Circle Apartments, all appellants (Pinglia and Heritage) and appellees
(the Bhagias and Sandalwood) are parties to the claims concerning the Sandalwood Apartments.
3
The buyer shown on the contract and first closing documents was “Heritaze Houston
3
 Appellants’ complaints concerning the Sandalwood Apartments transaction
can be categorized into two areas.

First, appellants complain that appellees failed to facilitate the subordination
of Sandalwood’s first lien. Specifically, appellants allege the following. The
property was derelict at the time of the sale, and Heritage needed a construction
loan for rehabilitation. The day before the first closing, Pinglia told Jacky Bhagia
during a verbal conversation that Heritage decided not to consummate the sale
because Pinglia was concerned about the inability to obtain a construction loan.
During the conversation, Bhagia replied that, if the sale closed, Sandalwood would
subordinate its lien to enable Heritage to obtain a construction loan, and Bhagia
asked for no material consideration in return.4 Thus, appellants proceeded with the
first closing. Thereafter, Heritage obtained a third-party commitment for a $1.4
million construction loan, contingent on that lender having a first lien and
Sandalwood signing a subordination agreement. However, Sandalwood refused to
subordinate unless Heritage paid considerably more of a down payment, which it
could not afford. Thus, Heritage could not obtain the construction loan. After this
refusal to subordinate, appellants proceeded with the second closing. Pinglia was
forced to personally fund the repairs which delayed the project, causing damages in
excess of $1.2 million.

Second, appellants allege appellees (1) failed to disclose the fact an
insurance company sued the Bhagias for a fraudulent claim concerning the

Properties.” Pinglia was unable to form the entity under that name, and it was changed to
“Heritage Gulf Coast Properties, Ltd.” for the second closing documents. Appellants renamed
the complex “Las Palmas Apartments” and use this name in their brief. Consistent with the jury
charge and the judgment, we will refer to the property as “the Sandalwood Apartments”
throughout this opinion.
4
It is undisputed the contract contained no provision regarding subordination of
Sandalwood’s lien.

4
property, (2) made misrepresentations about the occupancy rate of the complex,
and (3) actively concealed plumbing and sewer problems on the property.
Appellants alleged they would have further investigated before closing, or
refrained from closing, if they had known of these issues that required Pinglia to
spend more than $300,000 on repairs.

Appellants asserted claims for breach of fiduciary duty, statutory fraud in a
real estate transaction, common-law fraud, and conspiracy based on all of the
above alleged actions. Appellants also asserted a claim for breach of contract
based only on the alleged promise to subordinate Sandalwood’s lien.

The trial court ultimately heard three motions for summary judgment filed
by appellees: (1) a traditional motion attacking the breach-of-contract claim on
certain grounds; (2) another traditional motion attacking the breach-of-contract
claim on additional grounds and all fraud claims; and (3) a no-evidence motion on
all claims.

On the day trial began, the trial court signed an order granting the motions
with respect to the following claims: (1) all claims based on appellees’ alleged
promise to subordinate Sandalwood’s lien; (2) breach of fiduciary duty based on
the allegation that appellees failed to disclose, made misrepresentations about, or
actively concealed, pre-existing insurance claims, the occupancy rate, and certain
conditions; and (3) conspiracy based on the foregoing dismissed claims.

After the summary judgment, fraud claims remained pertaining to appellees’
alleged failure to disclose certain conditions of the property. The trial court
granted a directed verdict on statutory fraud but submitted a jury question on
common-law fraud. The jury failed to find Jacky Bhagia, while acting on behalf of
Sandalwood, commited fraud.

5
C. Post-Trial Proceedings with Respect to All Claims

By agreement of the parties, the trial court heard issues concerning
attorney’s fees after trial. In a post-trial motion, Sandalwood requested attorney’s
fees for successfully defending against appellants’ claims concerning the
Sandalwood Apartments, and Woodbridge requested litigation expenses
concerning the Taft Circle Apartments. The trial court signed an order denying the
requests. Subsequently, the trial court signed a supplemental order finding
Sandalwood incurred $647,516 in reasonable and necessary attorney’s fees but did
not otherwise modify the previous order denying recovery of the fees.

On August 3, 2011, the trial court signed a final judgment. Consistent with
its previous orders and the jury verdict, the trial court ordered that (1) Pinglia
recover $12,800 each from Jacky Bhagia and Nick Bhagia for breach of fiduciary
duty pertaining to the Taft Circle Apartments, (2) appellants take nothing on all
other claims, (3) Pinglia recover his courts costs incurred in obtaining the judgment
for breach of fiduciary duty, (4) Jacky Bhagia recover his costs incurred in
defending the fraud claim submitted to the jury, and (5) all other requested relief
was denied.

Appellants timely filed a motion for new trial, which was denied by written
order. Appellees timely filed a motion to modify, correct, or reform the judgment,
which was overruled by operation of law. Appellants filed this appeal, and
appellees and Woodbridge filed a cross-appeal.

II. APPELLANTS’ ISSUES

Appellants present three issues on appeal. Their first two issues concern the
Sandalwood Apartments; appellants challenge summary judgment on their claims
for breach of fiduciary duty and fraud based on appellees’ alleged promise to

6
subordinate Sandalwood’s lien.5 Appellants’ third issue concerns the Taft Circle
Apartments; they contend the trial court erred by refusing to submit a jury question
on Pinglia’s claim under TLA.

A. Issue Regarding Fiduciary Relationship – The Sandalwood Apartments

In their first issue, appellants argue the trial court erred by determining there
was no fiduciary relationship between the parties relative to the Sandalwood
Apartments transaction.

1. Standard of Review

In their no-evidence motion for summary judgment, appellees challenged
appellants’ claim for breach of fiduciary duty based on appellees’ alleged promise
to subordinate Sandalwood’s lien. After adequate time for discovery, a party may
move for summary judgment on the ground there is no evidence of one or more
essential elements of a claim or defense on which an adverse party would have the
burden of proof at trial. Tex. R. Civ. P. 166a(i); W. Invs., Inc. v. Urena, 162
S.W.3d 547, 550 (Tex. 2005). Unless the respondent produces summary-judgment
evidence raising a genuine issue of material fact, the trial court must grant the
motion for summary judgment. Tex. R. Civ. P. 166a(i); Urena, 162 S.W.3d at 550.
When, as in the present case, the trial court’s order granting summary judgment
does not specify the basis for its ruling, we must affirm if any of the theories
advanced are meritorious. Urena, 162 S.W.3d at 550. We review a summary
judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211,
215 (Tex. 2003). We take all evidence favorable to the nonmovant as true and
indulge every reasonable inference and resolve any doubts in his favor. Id.
5
Appellants do not attack the take-nothing judgment on (1) their breach-of-contract claim
based on the alleged promise to subordinate, and (2) any claims based on Sandalwood’s alleged
failures to disclose, misrepresentations about, or concealment of insurance claims, occupancy
rate, and conditions on the property.

7
 2. Analysis

The elements of a claim for breach of fiduciary duty are (1) a fiduciary
relationship existed between the plaintiff and the defendant, (2) the defendant
breached its fiduciary duty, and (3) the breach resulted in injury to the plaintiff or
benefit to the defendant. Lundy v. Masson, 260 S.W.3d 482, 501 (Tex. App.—
Houston [14th Dist.] 2008, pet. denied). In their motion, appellees asserted
appellants have no evidence on any of these elements. We conclude appellants
failed to present evidence raising a genuine issue of material fact on the existence
of a fiduciary relationship in connection with the Sandalwood Apartments
transaction.6

In certain formal relationships, such as attorney-client, partnership, or trustee
relationships, a fiduciary duty arises as a matter of law. Meyer v. Cathey, 167
S.W.3d 327, 330–31 (Tex. 2005); Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667,
674 (Tex. 1998). An informal fiduciary duty may arise from “a moral, social,
domestic or purely personal relationship of trust and confidence.” Meyer, 167
S.W.3d at 331. However, such an informal fiduciary relationship will not be
created lightly. Id.; Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 177
(Tex. 1997). “It is well settled that ‘not every relationship involving a high degree
of trust and confidence rises to the stature of a fiduciary relationship.’” Meyer, 167
6
In their stated issue, appellants suggest that, because the trial court erred by determining
there was no fiduciary relationship, it also erred by granting no-evidence summary judgment on
the claims for statutory and common-law fraud. However, appellees did not move for no-
evidence summary judgment on grounds that the absence of a fiduciary relationship foreclosed
fraud claims; rather, appellees asserted there was no evidence on the elements of fraud.
Apparently, appellants construe the trial court’s summary judgment on the fraud claims as based
on no-evidence grounds concerning elements for which existence of a fiduciary relationship
might be relevant. As discussed later herein, the trial court did not express the grounds on which
it granted summary judgment on the fraud claims, and we uphold traditional summary judgment
on those claims on a ground for which existence of a fiduciary relationship has no relevance.
Accordingly, we evaluate the issue regarding existence of a fiduciary relationship as relevant
only to the claim for breach of fiduciary duty.

8
S.W.3d at 330 (quoting Schlumberger Tech. Corp., 959 S.W.2d at 176–77).
“[M]ere subjective trust does not . . . transform arm’s-length dealing into a
fiduciary relationship.” Schlumberger Tech. Corp., 959 S.W.2d at 177; see Meyer,
167 S.W.3d at 331. When the underlying facts are undisputed, determining
whether a fiduciary duty existed is a question of law, exclusively within the
province of the court. Meyer, 167 S.W.3d at 330.

Appellants concede there was no formal fiduciary relationship created in
conjunction with the Sandalwood Apartments transaction. Rather, appellants argue
they presented evidence of an informal fiduciary relationship. Apparently, they
seek to impose this fiduciary relationship between all parties—the individuals and
the entities who were parties to the contract.

To support this contention, appellants assert that, during the transaction,
Pinglia and the Bhagias had a pre-existing and contemporaneous fiduciary
relationship relative to the Taft Circle Apartments. Pinglia and the Bhagias
purchased the Taft Circle Apartments and transferred that property to Woodbridge
approximately three years before the closings for the Sandalwood Apartments.
Woodbridge sold the Taft Circle Apartments shortly after the closings for the
Sandalwood Apartments. Appellants contend Pinglia and the Bhagias were
partners at all times with respect to the Taft Circle Apartments because (1) they
initially agreed to share equally in the purchase price, expenses, profits, and losses,
and (2) this arrangement continued when they transferred the property to
Woodbridge, although it was an LLC. 7

7
When challenging the summary judgment, appellants cite evidence presented in the
summary-judgment proceeding and at trial. However, we cannot consider evidence presented
solely at trial because appellant bore the burden to raise a fact issue in response to the motion for
summary judgment. See Tex. R. Civ. P. 166a(i); Urena, 162 S.W.3d at 550. Appellants also
note the jury found Pinglia and the Bhagias were fiduciaries relative to Taft Circle Apartments.
However, this finding is not controlling on whether the trial court erred by granting summary
9
 Appellants emphasize the principle that an informal fiduciary relationship
will not be imposed in a business transaction absent proof that a relationship of
trust and confidence existed before, and apart from, the transaction. See id. at 331;
Schlumberger Tech. Corp., 959 S.W.2d at 177. Appellants apparently translate
this principle into the proposition that a fiduciary relationship will necessarily be
imposed in a transaction if a fiduciary relationship existed before and apart from
the transaction. Appellants suggest mere existence of a pre-existing and
contemporaneous fiduciary relationship between Pinglia and the Bhagias relative
to the Taft Circle Apartments automatically created a fiduciary relationship
between all appellants and appellees relative to the Sandalwood Apartments
transaction. We disagree.

We believe appellants have misconstrued the principle articulated by the
Texas Supreme Court on this issue: “[W]hile a fiduciary or confidential
relationship may arise from the circumstances of a particular case, to impose such
a relationship in a business transaction, the relationship must exist prior to, and
apart from the agreement made the basis of the suit.” Schlumberger Tech. Corp.,
959 S.W.2d at 177; see Meyer, 167 S.W.3d at 331. The court did not hold that
existence of a fiduciary relationship between parties in one transaction will always
give rise to a fiduciary relationship in any transaction involving those parties. See
Schlumberger Tech. Corp., 959 S.W.2d at 177; see also Meyer, 167 S.W.3d at 331.
The court made clear that the circumstances of the transaction must justify
imposing a fiduciary relationship but also that the relationship must exist prior to,

judgment on the breach-of-fiduciary-duty claim relative to the Sandalwood Apartments based on
the evidence before the court at the time. Regardless, we recite all evidence relied on by
appellants because assuming it was presented in the summary-judgment proceeding, it failed to
constitute evidence of a fiduciary relationship relative to the Sandalwood Apartments.

10
and apart from the agreement made the basis of the suit. See Schlumberger Tech.
Corp., 959 S.W.2d at 177; see also Meyer, 167 S.W.3d at 331.

Regardless of any fiduciary relationship with respect to the Taft Circle
Apartments, appellants failed to present evidence that the circumstances of the
Sandalwood Apartments transaction justified imposing a fiduciary relationship
on the parties. In this regard, appellants failed to present evidence that the
Sandalwood Apartments transaction was anything but an arm’s length transaction.
Significantly, it is undisputed the nature of the relationship was different than that
involved in the Taft Circle Apartments. Pinglia and the Bhagias, as individuals,
worked together as partners in the Taft Circle Apartments to purchase and develop
the property and share in expenses, profits, and losses. In contrast, the Sandalwood
Apartments transaction involved a buyer-seller and financer-financee relationship
in a complex business transaction worth more than $2 million. Further, the parties
structured the Sandalwood Apartments sale as a transaction between two entities
who were not involved in the Taft Circle Apartment—Sandalwood, a corporation,
and Heritage, a limited liability entity formed to purchase the Sandalwood
property, although Pinglia named himself and the Bhagias as parties to claims
based on the transaction. Accordingly, mere evidence that Pinglia and the Bhagias
may have had a fiduciary relationship in connection with the Taft Circle
Apartments was insufficient to create a fiduciary relationship between any of the
parties in the Sandalwood Apartments transaction.

As additional support for such a fiduciary relationship, appellants also
presented evidence there was a long-term relationship among the parties relative to
not only the Taft Circle Apartments but also two other complexes unrelated to the
present case: (1) ten years before the closings for the Sandalwood Apartments,
Pinglia purchased one such complex from Sandalwood, which twice subordinated

11
its lien to facilitate Pinglia in obtaining third-party construction loans; and (2) less
than three years before the closings for the Sandalwood Apartments, Jacky Bhagia,
Pinglia, and a third-party formed an LLC to purchase a complex, which they sold
several years later. In his summary-judgment affidavits, Pinglia averred that,
because of these other relationships, he trusted and relied on Jacky Bhagia when
Jacky promised Sandalwood would subordinate its lien on the Sandalwood
Apartments.

Again, appellants presented no evidence that the Sandalwood Apartments
transaction was anything but an arm’s length transaction. Consequently, Pinglia’s
mere subjective trust and past dealings with Sandalwood and the Bhagias in
unrelated transactions were insufficient to create a fiduciary relationship between
any parties in the Sandalwood Apartments transaction. See Meyer, 167 S.W.3d at
331; Schlumberger Tech. Corp., 959 S.W.2d at 177; see also Consol. Gas &
Equip. Co. of Am. v. Thompson, 405 S.W.2d 333, 336 (Tex. 1966) (“[T]he fact that
one businessman trusts another, and relies upon his promise to carry out a contract,
does not create” a fiduciary relationship).

In summary, the trial court did not err by determining appellants presented
no evidence of a fiduciary relationship with respect to the Sandalwood Apartments
and granting summary judgment on their claim for breach of fiduciary duty. We
overrule appellants’ first issue.

B. Claim for Fraudulent Inducement – The Sandalwood Apartments

In their second issue, appellants contend the trial court erred by granting
summary judgment on their claim for fraudulent inducement.

Appellants’ claims for common law fraud and statutory fraud in a real estate
transaction were based on fraudulent inducement. According to appellants, they

12
were fraudulently induced into closing the transaction by the alleged promise to
subordinate. Appellees challenged the fraud claims in a traditional motion, entitled
“[Appellees’] Motion for Partial Summary Judgment on [Appellants’] Breach of
Contract Claim based On Waiver, Novation and the Statute of Frauds, and Fraud
and Statutory Fraud Claims Based on Waiver/Ratification.” Appellees asserted the
fraud claims were barred under the doctrine of waiver. Appellees also challenged
the claims in their no-evidence motion for summary judgment, asserting appellants
had no evidence on each element of the claims.

When, as in the present case, a movant asserts multiple grounds for
summary judgment, and the trial court does not specify in the order the ground on
which summary judgment was granted, the appellant must negate all grounds on
appeal. See Star–Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995); Lewis
v. Adams, 979 S.W.2d 831, 833 (Tex. App.—Houston [14th Dist.] 1998, no pet.).
If the appellant fails to challenge all grounds on which the judgment may have
been granted, the appellate court must uphold the summary judgment. See Lewis,
979 S.W.2d at 833; Fields v. City of Texas City, 864 S.W.2d 66, 68 (Tex. App.—
Houston [14th Dist.] 1993, writ denied).

In the present case, appellants do not challenge the traditional ground based
on the doctrine of waiver. In the motion, appellees asserted appellants waived any
right to enforce the alleged promise to subordinate, or claim fraud due to the
unfulfilled promise, because appellants’ actions were inconsistent with claiming
the right. Appellants relied on the following provisions in the Deeds of Trust
executed by appellants during the first closing (after appellees’ alleged verbal
promise to subordinate) and the second closing (after Sandalwood’s refusal to
subordinate):

13
 [Heritage] agrees to . . . preserve the lien’s priority as it is established in
this deed of trust . . . .
This lien shall remain superior to liens later created even if the time of
payment of all or part of the note is extended or part of the property is
released.
On appeal, appellants state the following as their issue challenging summary
judgment on the fraud claims: “The trial court erred in holding that the ‘as is’
clause in the earnest money contract and the disclaimer of warranties regarding the
condition of the property in the special warranty deed operated as a bar to
Appellants’ claims for fraudulent inducement.” Appellants present two sub-issues
concerning these two clauses: (1) they did not constitute a valid disclaimer of
reliance; and (2) they concerned the condition of the property and did not extend to
the promise to subordinate. Appellants also present a third sub-issue which
concerns different clauses than those referenced in the stated issue: the merger
clauses in the contract and Special Warranty Deeds cannot bar parol evidence of
fraudulent statements which induced appellees into executing the closing
documents. None of these issues are challenges to the summary-judgment ground
based on waiver by virtue of the two provisions in the Deeds of Trust regarding
priority of Sandalwood’s lien.

In the body of their argument, appellants briefly suggest those two
provisions do not defeat appellants’ claims. However, appellants cite
Sandalwood’s bench brief arguing appellants’ claims were barred by the parol
evidence rule and merger doctrine because the alleged oral promise to subordinate
was inconsistent with the provisions in the Deeds of Trust. Appellants do not
specifically advance any argument or cite any authority on whether these
provisions demonstrated waiver, which was a separate contention. See San Saba
Energy, L.P. v. Crawford, 171 S.W.3d 323, 338 (Tex. App.—Houston [14th Dist.]
2005, no pet.) (concluding that, to adequately brief an appellate contention, the
14
appellant must present some specific argument and analysis showing the record
and the law support the contention); see also Tex. R. App. P. 38.1(i).

Appellants contend the trial court specified in its order it granted summary
judgment on the grounds challenged by appellants. We disagree. Appellants
emphasize the portion of the order in which the trial court listed the claims on
which it was granting summary judgment. However, the trial court did not
expressly state the grounds on which it granted summary judgment for each claim.

Appellants also point to another portion of the order granting a portion of
appellees’ motion in limine. The trial court previously denied a request in the
motion in limine that appellants be precluded from mentioning the alleged promise
to subordinate based on, inter alia, the parol evidence rule and merger doctrine. In
its order, after granting summary judgment, the court ruled:

IT IS FURTHER ORDERED THAT the Court’s order
previously denying request number 8 (regarding the Parol Evidence
Rule and Merger Doctrine) of [Appellees’] Second Amended Motion
in Limine IS HEREBY WITHDRAWN. The Court HEREBY
MODIFIES, IN PART, ITS ORDER granting [Appellees’] Second
Amended Motion in Limine, and GRANTS request number 8 of
[Appellees’] Second Amended Motion in Limine.

Appellants assert this ruling demonstrates the trial court granted summary
judgment on the ground appellants’ claims were barred under the parol evidence
rule and merger doctrine. We disagree.

The quoted paragraph was only a ruling on the motion in limine. The trial
court did not state it was granting the motion in limine based on the parol evidence
rule and merger doctrine because it had also granted summary judgment on those
grounds. Further, it is not implicit from the limine ruling that the trial court
granted summary judgment on those grounds. We cannot foreclose the possibility

15
the trial court granted summary judgment on the waiver ground, yet also excluded
any reference to the alleged promise to subordinate to the extent appellants would
offer it to support claims proceeding to trial—for example, to support the claims
regarding the condition of Sandalwood Apartments or claims pertaining to the Taft
Circle Apartments by suggesting appellees generally engaged in fraudulent
conduct.8

Therefore, appellants were required to challenge all grounds asserted in the
motions for summary judgment. Because appellants do not challenge the waiver
ground, we must uphold the summary judgment.9 Accordingly, we overrule
appellants’ second issue.

C. Claim under TLA – The Taft Circle Apartments

In appellants’ third issue, Pinglia contends the trial court erred by refusing to
submit a jury issue under TLA because Pinglia pleaded and presented evidence to
support this claim.

The trial court must submit a jury question if raised by the pleadings and the
evidence. Tex. R. Civ. P. 278; Grohman v. Kahlig, 318 S.W.3d 882, 888 (Tex.
2010). Under TLA, a person who commits theft is liable for resulting actual
damages, additional damages not to exceed $1,000, courts costs, and attorney’s
fees. Tex. Civ. Prac. & Rem. Code Ann. §§ 134.003(a), 134.005(a)(1), (b) (West

8
Appellees did not move for traditional summary judgment based on the parol evidence
rule and merger doctrine or the other grounds challenged by appellants in their first two sub-
issues—that the “as is” clause and disclaimer of warranties barred appellants’ claims. Rather,
these arguments were presented in appellees’ bench briefs, filed within a week before the trial
court granted summary judgment and trial began.
9
Appellees assert appellants also fail to challenge summary judgment on the grounds of
indefiniteness, lack of essential elements, statute of frauds, and novation rule. Appellees moved
for summary judgment on the breach-of-contract claims on all these grounds, but not the fraud
claims. Thus, appellants are not required to challenge these grounds on appeal.

16
2011). “Theft” includes unlawfully appropriating property—without the owner’s
effective consent—with intent to deprive the owner of the property. See id. §
134.002(2) (West 2011); Tex. Penal Code Ann. § 31.03(a), (b) (West Supp. 2012).

We need not decide whether the trial court erred by refusing to submit a jury
question under TLA because we conclude any error was harmless. If a trial court
errs by refusing to submit a jury question, we do not reverse absent harm. See
4901 Main, Inc. v. TAS Auto., Inc., 187 S.W.3d 627, 631 (Tex. App.—Houston
[14th Dist.] 2006, no pet.); see also G & H Towing Co. v. Magee, 347 S.W.3d 293,
297 (Tex. 2011) (per curiam) (“The [harmless error] rule applies to all errors.”).
Harm occurs when the error in the charge probably caused the rendition of an
improper judgment, or prevented the appellant from properly presenting the case to
the court of appeals. Tex. R. App. P. 44.1(a); 4901 Main, Inc., 187 S.W.3d at 631.
To determine whether harm occurred, we must consider the entire record,
including the pleadings, the evidence, and the charge. 4901 Main, Inc., 187
S.W.3d at 631.

Pinglia asserts he pleaded and presented evidence of the following actions
by the Bhagias which supported liability under TLA: (1) overcharging Pinglia by
$9,514.93 for his share of taxes due on the property; and (2) withholding Pinglia’s
share of the redemption proceeds in the amount of $27,954.24. Our review of the
entire record reflects that, in response to the jury questions regarding breach of
fiduciary duty with respect to the Taft Circle Apartments, the jury rejected
Pinglia’s complaint regarding those two actions. Those actions formed the basis
for both the breach-of-fiduciary-duty and TLA claims. However, Pinglia pleaded a
third action to support breach of fiduciary duty which was not a basis for the TLA
claim—when Woodbridge sold the Taft Circle Apartments, the Bhagias

17
wrongfully withheld $25,600 from Pinglia’s share of the proceeds because they
believed Pinglia had improperly taken the same amount as a broker’s commission.

The jury found liability for breach of fiduciary duty based on only this third
action, despite Pinglia’s urging the jury to find liability for all three actions. In
opening statements, Pinglia mentioned all three actions. Pinglia then presented
evidence to support all of the claims. In closing arguments, Pinglia first
summarized his contentions regarding overpayment of property taxes and the
withholding of his share of the redemption proceeds. He then argued, “The bigger
issue is the commissions.” Further, the jury question on breach of fiduciary duty
would have encompassed all three actions.10

10
The question on breach of fiduciary duty instructed in pertinent part:

To prove they complied with their [fiduciary] duties, Jaikishin Bhagia and/or
Nanik Bhagia must show:

a. the transactions in question were fair and equitable to Sumer
Pinglia;

b. Jaikishin Bhagia and/or Nanik Bhagia made reasonable use of the
confidence that Sumer Pinglia placed in Jaikishin Bhagia and/or
Nanik Bhagia.

c. Jaikishin Bhagia and/or Nanik Bhagia acted in the utmost good
faith and exercised the most scrupulous honesty towards Sumer
Pinglia;

d. Jaikishin Bhagia and/or Nanik Bhagia placed the interests of
Sumer Pinglia before his own, did not use the advantage of his
position to gain any benefit for themselves at the expense of Sumer
Pinglia, and did not place himself in any position where his self-
interest might conflict with his obligations as a fiduciary; and

e. Jaikishin Bhagia and/or Nanik Bhagia fully and fairly disclosed all
important information to Sumer Pinglia concerning the
transactions.

18
 The jury awarded only $25,600 in damages for breach of fiduciary duty
($12,800 against each Bhagia party)—the amount the Bhagias allegedly withheld
from Pinglia’s full share of the sales proceeds because of the dispute over the
commission. Accordingly, the jury rejected Pinglia’s claim for damages pertaining
to his overpayment of property taxes and the Bhagias’ withholding his share of the
redemption proceeds. Therefore, any error in failing to submit a TLA question
based on these same actions was harmless. See Shupe v. Lingafelter, 192 S.W.3d
577, 579 (Tex. 2006) (per curiam) (stating that error in omission of jury issue is
harmless when the findings of the jury in answer to other issues are sufficient to
support the judgment); Flying J Inc. v. Meda, Inc., 373 S.W.3d 680, 688–90 (Tex.
App.—San Antonio 2012, no pet.) (recognizing jury’s answer to one question may
render harmless trial court’s error in refusing to submit another question). We
overrule appellants’ third issue.

III. CROSS-APPEAL

In the cross-appeal, (1) Sandalwood contends it is entitled to recover its
attorney’s fees for successfully defending appellants’ claims related to the
Sandalwood Apartments transaction,11 and (2) Woodbridge contends it is entitled
to recover its litigation expenses from Pinglia.

A. Sandalwood’s Attorney’s Fees

Under Texas law, a party may not recover attorney’s fees unless authorized
by contract or statute. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–
11 (Tex. 2006). Appellees contend they are entitled to recover attorney’s fees (1)
under a provision in the Sandalwood Apartments contract, and (2) as sanctions
authorized by statute because the suit was groundless.
11
Although appellants are now cross-appellees, we will continue to call them
“appellants,” consistent with our previous references.

19
 1. Request for Attorney’s Fees under the Contract

After trial, Sandalwood filed a motion requesting attorney’s fees under the
following provision in the contract:

ATTORNEY’S FEES: If Buyer, seller, any broker, or any escrow
agent is a prevailing party in any legal proceeding brought under or
with relation to this contract or this transaction, such party is entitled
to recover from the non-prevailing parties all costs of such proceeding
and reasonable attorney’s fees. This Paragraph 16 survives
termination of this contract.
There is no dispute this provision would encompass Sandalwood’s
attorney’s fees for successfully defending against appellants’ contract and tort
claims related to the Sandalwood Apartments transaction if Sandalwood is a
“prevailing party” and otherwise entitled to recover such fees. See Chevron
Phillips Chem. Co., L.P. v. Kingwood Crossroads, L.P., 346 S.W.3d 37, 69–70
(Tex. App.—Houston [14th Dist.] 2011, pet. denied); Rich v. Olah, 274 S.W.3d
878, 888–89 (Tex. App.—Dallas 2008, no pet.).

a. Grounds for Trial Court’s Order

As a preliminary matter, we must address an issue regarding the grounds on
which the trial court may have denied the request for fees under the “prevailing
party” contractual provision.

At the hearing on Sandalwood’s motion, appellants objected that (1)
Sandalwood did not plead for recovery of attorney’s fees under the provision, (2)
Sandalwood did not list the theory in response to appellants’ requests for
disclosure, and (3) Sandalwood was not a prevailing party. The trial court orally
remarked it believed the pleading was sufficient and expressed concern about
whether the theory was adequately disclosed. The court did not definitively
comment on whether Sandalwood was a prevailing party.

20
 The trial court stated it would take the disclosures issue under advisement
but hear evidence regarding the amount of Sandalwood’s attorney’s fees, subject to
appellants’ objection. After hearing evidence, the trial court deferred a ruling and
stated it would entertain post-hearing briefing. Subsequently, the trial court signed
its order refusing to award the fees, without expressing a reason. The trial court
then signed its supplemental order, finding the reasonable and necessary fees were
$647,516—an amount within the evidence offered by appellants.

The parties devote some portions of their appellate arguments to the dispute
regarding adequacy of the disclosures. However, the trial court’s supplemental
order implicitly reflects it did not deny the request for attorney’s fees because the
“prevailing party” theory was not adequately disclosed. Specifically, the
consequence of a failure to timely disclose a theory of recovery in response to a
proper request is exclusion of the evidence unless an exception is satisfied. See
Tex. R. Civ. P. 193.6(a). However, the order shows the trial court did not exclude
evidence of the attorney’s fees incurred by Sandalwood because it made a fact
finding on an amount of reasonable and necessary fees “based on the evidence of
reasonable and necessary attorneys’ fees incurred by Sandalwood in this case in
relation to the Contract.” Thus, the trial court implicitly overruled appellants’
objection to the evidence of attorney’s fees on the ground the “prevailing party”
theory had not been disclosed. The written order controls over the trial court’s oral
comments questioning adequacy of the disclosures. See In re K.M.B., 148 S.W.3d
618, 622 (Tex. App.—Houston [14th Dist.] 2004, no pet.); Nine Greenway Ltd. v.
Heard, Goggan, Blair & Williams, 875 S.W.2d 784, 787 (Tex. App.—Houston [1st
Dist.] 1994, writ denied). Accordingly, the remaining grounds on which the trial
court may have denied the award of attorney’s fees were the alleged lack of a
pleading or the notion that Sandalwood did not constitute a prevailing party.

21
 Sandalwood emphasizes the trial court’s oral remarks that the pleading was
sufficient. However, the trial court did not issue findings of fact and conclusions
of law. Findings of fact recited in a judgment are probative unless they are
supplanted by separately filed findings. In re C.A.B., 289 S.W.3d 874, 880–81
(Tex. App.—Houston [14th Dist.] 2009, no pet.). We may not consider the trial
court’s oral comments at the hearing as a substitute for findings of fact and
conclusions of law. In the Interest of W.E.R., 669 S.W.2d 716, 716 (Tex. 1984);
Chevron Phillips Chem. Co., 346 S.W.3d at 74. Because the court did not make
findings and conclusions, other than indicating in its order that inadequate
disclosure was not the reason for its decision, we must uphold the judgment on any
valid legal theory supported by the evidence. See In the Interest of W.E.R., 669
S.W.2d at 717; In re J.C., 346 S.W.3d 189, 193 (Tex. App.—Houston [14th Dist.]
2011, no pet.). We conclude Sandalwood did not plead for recovery of attorney’s
fees under the prevailing party provision of the contract.12

b. Sandalwood’s Pleading

A trial court cannot enter judgment on a theory of recovery not sufficiently
set forth in the pleadings or otherwise tried by consent. Herrington v. Sandcastle
Condominium Ass’n, 222 S.W.3d 99, 102 (Tex. App.—Houston [14th Dist.] 2006,
no pet.); see Tex. R. Civ. P. 301 (providing the “judgment of the court shall
conform to the pleadings”); R. Conrad Moore & Assoc., Inc. v. Lerma, 946 S.W.2d
90, 96 (Tex. App.—El Paso 1997,writ denied) (affirming trial court’s refusal to
award attorney’s fees under “prevailing party” provision of real estate contract
because defendant failed to plead that theory). The issue of attorney’s fees under

12
Because of our conclusion regarding Sandalwood’s pleading, we need not address
appellants’ contention regarding “prevailing party” status.

22
the “prevailing party” provision of the contract was not tried by consent; appellants
have objected to the theory since it was raised in Sandalwood’s post-trial motion.

Texas follows a “fair notice” standard for pleading, meaning we consider
whether the opposing party can ascertain from the pleading the nature and basic
issues of the controversy and what testimony will be relevant. Horizon/CMS
Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex. 2000). A petition is sufficient
if it gives fair and adequate notice of the facts upon which the pleader bases his
claim. Id. at 897. The purpose of this rule is to give the opposing party
information sufficient to enable him to prepare a defense. Id. A petition is
construed liberally in favor of the pleader if no special exceptions are filed. Id.
“But, ‘liberally’ does not require a court to read into a petition what is plainly not
there.” Wortham v. Dow Chem. Co., 179 S.W.3d 189, 199 (Tex. App.—Houston
[14th Dist.] 2005, no pet.).

Sandalwood contends its counterclaim sufficiently included a request for
attorney’s fees under the “prevailing party” provision of the contract. Much of
appellants’ live counterclaim was a recitation of its own causes of action against
appellants, including breach-of-contract and tort claims relative to the Sandalwood
Apartments transaction.13 The following are the only paragraphs pertaining to
attorney’s fees:

VIII.
Cause of Action No. 6 – Frivolous Lawsuit

...
54. [Appellants] have filed a lawsuit almost three years after
the sale of the Sandalwood Apartments for an improper purpose,
including to harass [Sandalwood] or cause unnecessary delay or to

13
These substantive causes of action were non-suited or otherwise not submitted to the
jury, leaving only the counterclaim for attorney’s fees.

23
 implicitly threaten [Sandalwood] with increased costs of litigation.
[Appellants’] claims are frivolous and have no likelihood of having
evidentiary support. [Appellants’] affirmative claims are groundless
and were filed in bad faith.

55. Accordingly, [Sandalwood] seek[s] to recover all costs of
inconvenience, harassment and out-of-pocket expenses incurred in
this litigation, including but not limited to court costs, attorneys fees
and all other costs associated with this lawsuit.

XI.
Attorneys’ Fees

59. Pursuant to TEXAS CIVIL PRACTICE AND
REMEDIES CODE chapters 38.001 et. seq. and 10.001, et seq.,
[Sandalwood] may recover reasonable and necessary attorneys’ fees
based on [its] claims for breach the Contract [sic], bad faith pleadings,
and as an element of punitive damages.

60. All conditions precedent to recovery of fees have
occurred or will occur prior to trial.

61. [Sandalwood] retained counsel and [is] entitled to
attorneys’ fees under Texas law. [Sandalwood] [has] incurred and
continue[s] to incur reasonable and necessary attorneys’ fees together
with court costs and litigation expenses. [Sandalwood] seek[s] [its]
attorneys’ fees and investigative costs, together with court costs.

62. Further, [Woodbridge] is entitled to recover 1/3 of its
legal costs associated with defending against [Pinglia’s] claims
pursuant to the organizational documents and division of costs within
[Woodbridge].

Section VIII clearly related to recovery of defense fees because appellants
purportedly filed a groundless suit and did not encompass recovery under the
“prevailing party” provision of the contract. Then, in section XI, Sandalwood
requested attorney’s fees under three express theories: (1) Texas Civil Practice and

24
Remedies Code Chapter 38, which would authorize recovery of fees for
Sandalwood successfully prosecuting its own contract counterclaims but not for
defending against appellants’ claims; see Tex. Civ. Prac. & Rem. Code Ann. §
38.001(8) (West 2008); Chevron Phillips Chem. Co., 346 S.W.3d at 70; (2) as an
element of punitive damages, a request based on Sandalwood successfully
prosecuting its own counterclaims; and (3) as sanctions under Texas Civil Practice
and Remedies Code Chapter 10, which, if appropriate, would encompass fees for
successfully defending against appellants’ purportedly frivolous claims (as
requested in Section VIII); see Tex. Civ. Prac. & Rem. Code Ann. §§ 10.001–.006
(West 2002). Sandalwood did not specifically request attorney’s fees under the
“prevailing party” provision of the contract for successfully defending against
appellants’ claims.

However, Sandalwood contends paragraph 61 was sufficient to constitute a
pleading under such theory. Sandalwood relies on authority recognizing that a
general allegation seeking recovery of attorney’s fees is sufficient to place the
opposing party on notice the pleader seeks such fees and it is incumbent on the
opposing party to object, by special exception, to the lack of specificity. See, e.g.,
Bullock v. Regular Veterans Ass’n of U.S., Post No. 76, 806 S.W.2d 311, 314 (Tex.
App.—Austin 1991, no writ). More specifically, Sandalwood relies on Smith v.
Deneve, 285 S.W.3d 904, 916–17 (Tex. App.—Dallas 2009, no pet.), holding the
following general paragraph was sufficient to support recovery of fees under any
applicable theory:

It was necessary for Respondent to secure the services of an
attorney to prepare and defend this suit. Judgment for attorney’s fees,
expenses, and costs through final judgment after appeal should be
granted against Petitioner and in favor of Respondent for the use and
benefit of Respondent’s attorney; or in the alternative, Respondent
requests that reasonable attorney’s fees, expenses, and costs through

25
 final judgment after appeal be taxed as costs to be ordered paid
directly to Respondent’s attorney, who may enforce the order in the
attorney’s own name. Respondent requests post-judgment interest as
allowed by law.
However, we must cite the entire principle recognized by the Smith court.
Although a general pleading is sufficient to support recovery of fees under any
applicable theory, “‘[w]hen a party pleads a specific ground for recovery of
attorney’s fees, the party is limited to that ground and cannot recover attorney’s
fees on another, unpleaded ground.’” Id. at 916 (quoting Kreighbaum v. Lester,
No. 05–06–01333–CV, 2007 WL 1829729, at *2 (Tex. App.—Dallas June 27,
2007, no pet.) (mem. op.). Additionally, in a petition, “[t]he specific allegation
controls over the general allegation.” Monsanto Co. v. Milam, 494 S.W.2d 534,
536 (Tex. 1973); see Park v. Mem. Health Sys. of E. Tex., 397 S.W.3d 283, 288
(Tex. App.—Tyler 2013, pet. filed); A.G. Servs., Inc. v. Peat, Marwick, Mitchell &
Co., 757 S.W.2d 503, 507 (Tex. App.—Houston [1st Dist.]1988, writ denied).14

Sandalwood’s contention depends on reading paragraph 61 in isolation
instead of in context. Sandalwood did not make solely a general request for
attorney’s fees. Rather, paragraph 61 is contained within an entire section of the
14
The above-cited cases from sister courts did not articulate a standard of review
applicable to determining whether a pleading sufficiently requested attorney’s fees. See Smith,
285 S.W.3d at 916–17; Kreighbaum, 2007 WL 1829729, at *1–4; R. Conrad Moore & Assoc.,
Inc., 946 S.W.2d at 96; Bullock, 806 S.W.2d at 314–15. Additionally, in Monsanto Co., the
court did not recite a standard of review applicable to sufficiency of pleadings in general. See
494 S.W.2d at 536. In other contexts, several courts have reviewed a trial court’s decision
regarding sufficiency of pleadings for abuse of discretion. See, e.g., Montes v. Filley, 359
S.W.3d 260, 264 (Tex. App.—El Paso 2011, no pet.) (reviewing whether pleading requested
certain child support order); Ross v. Goldstein, 203 S.W.3d 508, 512 (Tex. App.—Houston [14th
Dist.] 2006 no pet.) (reviewing ruling on special exceptions). We need not decide the definitive
standard of review because our conclusion would be the same under the de novo or abuse of
discretion standards, based on the law holding the specific controls over the general. See
Monsanto Co., 494 S.W.2d at 536; Kreighbaum, 2007 WL 1829729, at *2–3; see also In re
Poly–America, L.P., 262 S.W.3d 337, 349 (Tex. 2008) (orig. proceeding) (recognizing that,
because trial court has no discretion to determine what the law is or apply the law incorrectly, its
clear failure to properly analyze or apply the law constitutes an abuse of discretion).

26
pleading requesting attorney’s fees under specific theories. Sandalwood first set
forth those specific theories in paragraph 59, which allegations control over the
more general paragraph 61. See Monsanto Co., 494 S.W.2d at 536 (holding
plaintiff pleaded defendant’s negligence based only on one specific act and
pleading did not support recovery based on other acts; plaintiff set forth
specifically the one act, and subsequent general allegation that “incident made the
basis of this suit was proximately caused by the negligence of the defendants” was
referable to and controlled by the preceding specific allegation); Park, 397 S.W.3d
at 288; A.G. Servs., Inc., 757 S.W.2d at 507.

In this regard, the present case is more akin to Kreighbaum (which was
distinguished in Smith) than to Smith. In Smith, the court held a pleading
sufficiently supported a request for attorney’s fees under a Family Code provision
permitting a court to award costs in a divorce. 285 S.W.3d at 916–18. The court
rejected the opposing party’s suggestion that the pleading requested fees only
under Texas Rule of Civil Procedure 13. Id. at 916–17. The court relied on the
following: (1) a provision in the “COUNTERCLAIM” section of the pleading
requesting fees for a groundless claim was not specifically based on Rule 13 and
resembled other statutory fee-shifting provisions; and (2) there was a separate
section entitled “ATTORNEY’S FEES, EXPENSES, COSTS, AND
INTEREST,” containing only the general request for attorney’s fees quoted
above. See id. In contrast, as discussed above, Sandalwood’s pleading included an
“Attorneys’ Fees” section containing express theories for recovery of attorney’s
fees before the more general paragraph on which Sandalwood relies.
In Kreighbaum, the court rejected the defendants’ argument that they
pleaded for recovery of attorney’s fees under the “prevailing party” provision of

27
the parties’ contract. 2007 WL 1829729, at *2–3. The pleading contained the
following sections:

IV.
Counterclaim for Groundless DTPA Lawsuit

10. Defendants would show that Plaintiff’s claims are groundless in
fact or law, brought in bad faith, or brought for the purpose of
harassment. Pursuant to Section 17.50(c) of the Texas Business &
Commerce Code, Defendants are entitled to recover their attorney’s
fees and costs incurred in the defense of this lawsuit.

V.
Prayer for Relief

11. WHEREFORE, Defendants respectfully pray that upon final trial
of this lawsuit, the Court (a) dismiss Plaintiff’s Original Petition with
prejudice, (b) deny all relief requested by Plaintiff, (c) award
Defendants their attorney’s fees and costs, and (d) award Defendants
such other and further relief to which they show themselves entitled.

Id. at *2. Citing Monsanto Co., among other authority, the court emphasized that,
although the defendants’ prayer for relief contained a general request for attorney’s
fees, their preceding counterclaim section specifically set forth the DTPA
provision as the basis for the request. See id. at *2–3. Therefore, the court held (1)
an opposing attorney would read the request in the prayer as based on the
statement in the counterclaim that the defendants were entitled to recover fees
under the DTPA; and (2) an opposing attorney would not interpret the pleading as
seeking attorney’s fees under the contract because the pleading did not mention
that theory. Id. at *3.

Likewise, an opposing party would construe the request in paragraph 61 of
Sandalwood’s pleading as based on the specific theories previously listed in
paragraph 59. Paragraph 61 refers to recovery of fees under “Texas law,” i.e., a

28
summary of the statutes cited in paragraph 59, and does not mention fees under the
contract. Moreover, an opposing party would construe paragraph 61, as well as 60,
as providing support for the specific theories listed in paragraph 59. Paragraphs 60
and 61 allege the elements a party must satisfy to recover fees under Civil Practice
and Remedies Code Chapter 38 for successfully prosecuting its own claims. See
Tex. Civ. Prac. & Rem. Code Ann. §§ 38.001, .002 (providing party must, inter
alia, be represented by counsel and present the claim to the opposing party, and the
fees must be reasonable and necessary).

Considering Sandalwood expressly set forth specific theories under which it
was seeking attorney’s fees, an opposing party would not ascertain Sandalwood
was seeking fees under a theory omitted from the list. An opposing party would
conclude Sandalwood would have expressly mentioned the “prevailing party”
provision of the contract if it were seeking fees for successful defense under that
theory. This conclusion is further supported by the fact that (1) Sandalwood
expressly pleaded one theory for recovering fees for successful defense of
appellants’ claims; and (2) in paragraph 62, Woodbridge pleaded a specific
contractual provision under which it was seeking attorney’s fees concerning the
Taft Circle Apartments. Consequently, we reject the contention that paragraph 61
functioned as a “catch-all” pleading for recovery of attorney’s fees under any
applicable theory.

Finally, we also disagree with Sandalwood’s suggestion that appellants were
required to specially except if appellants sought further specificity regarding the
theories on which Sandalwood requested attorney’s fees. Again, such contention is
contingent on an incorrect conclusion that Sandalwood made merely a general
request for attorney’s fees, to which appellants needed to specially except if they
wished to narrow the theories for recovery. Similarly, there was no defect in the

29
pleading calling for special exceptions. See Auld, 34 S.W.3d at 896 (stating an
opposing party should use special exceptions to identify defects in a pleading so
that they may be cured, if possible, by amendment). Instead, once Sandalwood
pleaded three specific theories, appellants were entitled to rely on those allegations
as notice of the theories on which fees were sought. Appellants had no reason to
specially except and, adverse to their own interest, alert Sandalwood to another
possible theory.

In summary, because Sandalwood did not plead for recovery of attorney’s
fees under the “prevailing party” provision of the contract, the trial court did not
err by refusing to award attorney’s fees under that theory.

2. Request for Attorney’s Fees as Sanctions

Sandalwood also contends it was entitled to its attorney’s fees as sanctions
under sections 10.001 and .002 of the Texas Civil Practice and Remedies Code
because appellants’ claims were allegedly groundless. In its counterclaim and
post-trial motion, Sandalwood requested attorney’s fees under these sections.

Section 10.001 provides, in pertinent part:

The signing of a pleading or motion as required by the Texas Rules of
Civil Procedure constitutes a certificate by the signatory that to the
signatory’s best knowledge, information, and belief, formed after
reasonable inquiry:
...
(2) each claim, defense, or other legal contention in the
pleading or motion is warranted by existing law or by a
nonfrivolous argument for the extension, modification, or
reversal of existing law or the establishment of new law;

(3) each allegation or other factual contention in the pleading or motion has evidentiary support
or, for a specifically identified allegation or factual contention, is likely to have evidentiary
support after a reasonable opportunity for further investigation or discovery[.]

30
Tex. Civ. Prac. & Rem. Code Ann. § 10.001(2), (3). Section 10.002 provides a
party may move for sanctions, describing the specific conduct violating section
10.001. Id. § 10.002(a). The court may award to a party prevailing on a motion
under section 10.002 “if no due diligence is shown . . . all costs for inconvenience,
harassment, and out-of-pocket expenses incurred or caused by the subject
litigation.” Id. § 10.002(c). We review a trial court’s ruling on a request for
sanctions under section 10.002 for abuse of discretion. Low v. Henry, 221 S.W.3d
609, 614 (Tex. 2007).

Sandalwood generally asserts that appellants’ claims based on the alleged
promise to subordinate were groundless in law because the trial court granted
summary judgment. Sandalwood generally suggests appellants’ claims for fraud
regarding the condition of the property were groundless because they were not
supported by the evidence.

We disagree that the mere fact a trial court granted summary judgment, or a
jury rejected, a plaintiff’s claims justifies sanctions under sections 10.001 and
10.002. The inquiry under section 10.001 is not whether the claim was groundless
in law or evidence. See Tex. Civ. Prac. & Rem. Code Ann. § 10.001. Rather, the
inquiry is whether “to the signatory’s best knowledge, information, and belief,
formed after reasonable inquiry . . . [the] claim . . . is warranted by existing law
or by a nonfrivolous argument for the extension, modification, or reversal of
existing law or the establishment of new law” or “has evidentiary support or . . . is
likely to have evidentiary support after a reasonable opportunity for further
investigation or discovery.” See id. § 10.001(2)–(3) (emphasis added).
Sandalwood cites no evidence, and presents no analysis, regarding appellants’
counsel’s “best knowledge, information, and belief, formed after reasonable
inquiry” concerning the legal basis and evidentiary support for appellants’ claims.

31
See id. Accordingly, Sandalwood fails to demonstrate the trial court abused its
discretion by refusing to award attorney’s fees as sanctions.

B. Woodbridge’s Litigation Expenses

Finally, in appellants’ post-trial motion, Woodridge sought to recover one-
third of its litigation expenses from Pinglia under Woodbridge’s governing
regulations. According to Woodbridge, the regulations provide that all allocations
of income, gain, deduction, loss and credit shall be made in accord with the interest
of each member. Therefore, Woodbridge contends Pinglia, who held a 33.33%
interest in Woodbridge, is responsible for one third of its litigation expenses.

It is unclear what expenses Woodbridge seeks. Pinglia’s claims against
Woodbridge sought access to its books. In his post-trial filings, Pinglia asserts he
successfully obtained such relief via this litigation. Nonetheless, at the hearing on
attorney’s fees, Woodbridge presented no evidence of any expenses it incurred, for
which Pinglia was purportedly responsible under the regulations. When the trial
court confirmed the issues to be addressed, counsel for Sandalwood and
Woodbridge made the following statement regarding Woodbridge’s request: “That
is our last argument. We are not really here to make that one today.” No evidence
or argument was thereafter presented on Woodbridge’s request. Consequently, the
trial court did not err by denying the request.

In summary, we overrule the issues presented by Sandalwood and
Woodbridge in their cross-appeal.

32
 IV. CONCLUSION

Having overruled all issues in the appeal and cross-appeal, we affirm the
trial court’s judgment in its entirety.

/s/ John Donovan
Justice

Panel consists of Justices Boyce, Donovan, and Simmons.15

15
Senior Justice Rebecca Simmons sitting by assignment.

33