Motion for Summary Judgment in 2100 RICCHI, LLC vs. HILLARD OFFICE SOLUTIONS OF TEXAS, LTD., et al| Trellis.Law

On June 29, 2020 a Motion,Ex Parte was filed involving a dispute between 2100 Ricchi, Llc, and Hillard Office Solutions Of Texas, Ltd., The Hilliard Companies, Llc- Series 2,, for CNTR CNSMR COM DEBT in the District Court of Dallas County.

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FILED
6/9/2023 9:21 AM
FELICIA PITRE
DISTRICT CLERK
DALLAS CO., TEXAS
Margaret Thomas DEPUTY

CAUSE NO. DC-20-08845

RICCHI, LLC, IN THE DISTRICT COURT

§§§§§§§§§§§
2100
Plaintiff,

HILLIARD OFFICE SOLUTIONS 193rd JUDICIAL DISTRICT
OF TEXAS, LTD. and THE
HILLIARD COMPANIES, LLC —
SERIES 2 f/k/a THE HILLIARD
COMPANIES, LLC,
Defendants. DALLAS COUNTY, TEXAS
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDAN TS
Plaintiff 2100 Ricchi, LLC CM” or “Landlord”) ﬁles this motion for summary

judgment against Defendants Hilliard Ofﬁce Solutions of Texas, Ltd. or and

The Hilliard Companies, LLC — Series 2 f/k/a The Hilliard Companies, LLC (“ﬂ”).
I. SUMMARY

This breach of lease case is the mirror-image of a nearly identical case previously litigated

to ﬁnal judgment in this Court. The only difference is that the unpaid rent claim in this case is for

a period later in the lease term. The rest of the facts and issues are exactly the same: In early 2015,

Ricchi, as landlord, and Hilliard, as tenant, signed a 60-month commercial lease. In the summer of

2015, Hilliard claimed it was overcharged in connection with the buildout of the premises. The

lease commenced in November 2015—months after the overcharge issue was raised and discussed.

Hilliard occupied and used the premises for the next ﬁve years. In June 2020, Hilliard abruptly

moved out and paid no further rent until the lease expired in October 2020. Those ﬁve months of

unpaid rent total $171,204.50 and bear interest at the 18% contract rate. Hilliard and its general

partner THC are jointly and severally liable for those amounts plus attorneys’ fees and costs.

Defendants plead one defense: fraudulent inducement, z'.e., that the 2015 construction

overcharge rendered the lease and Hilliard’s obligation to pay rent unenforceable. This is the very
same defense that Defendants pled and litigated in the ﬁrst case. Defendants admit that their sole

defense turns on the same issue already decided by this Court involving the same lease, the same

facts, the same fraud, and the same parties in the same adversarial positions. This Court settled

that issue in the ﬁrst case, concluding that the lease and Hilliard’s obligation to pay rent remain

“valid” and “enforceable” despite the fraud ﬁnding. The Court of Appeals agreed, explicitly

rejected Defendants’ argument that “Landlord’s fraud in the inducement precludes enforcement of

the lease” because “Tenant retained beneﬁts received under the lease by its uninterrupted use of

the premises after learning of Landlord’s fraud,” and modiﬁed the judgment to ﬁirther enforce the

lease by adding awards of contractual interest and attorney fees.

The parties spent six years litigating the facts, claims, and defenses raised in this case all

the way to the Texas Supreme Court. The result was a ﬁnal judgment in Ricchi’s favor enforcing

the lease and awarding unpaid rent. There is no basis to relitigate those issues here. The fraud

defense should be disposed of as a matter of law based on collateral estoppel and summary

judgment entered awarding Ricchi the balance of the unpaid rent owed under the lease.

II. SUMMARY JUDGMENT EVIDENCE

Contemporaneously with this motion, Ricchi is ﬁling an appendix comprised of

25 exhibits (Exs. A-Y) supporting this motion. Ricchi also requests that the Court take judicial

notice of its docket in this case, including the ﬁlings referenced in notes 56-58, 107-08 infra.1

III. VERIFIED & ADMITTED FACTS
The Lease.

In late April 2015, Ricchi, as Landlord, and Hilliard, as Tenant, signed a 60-month lease

(the “Lease”), whereby Hilliard agreed to lease and occupy ofﬁce space in a building located in

1
“The trial court may take judicial notice of its ﬁle at any stage of proceedings with or without a request from a
party.” Kazi v. Sohail, No. 05-20-00789-CV, 2021 WL 5002421, at *3 (Tex.App.—Dallas Oct. 28, 2021, pet. denied).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 2
Farmers Branch, Texas (the “Premises”).2 Brent D. Hilliard signed the Lease on Tenant’s behalf

as Hilliard’s authorized representative.3 THC is Hilliard’s general partner.4

The Lease (Section 3) requires Hilliard to pay rent for each month of the term without

deduction or set off:

Tenant shall timely pay to Landlord Rent, without deduction or setoff Basic
Rental shall be payable monthly in advance (including any partial month). Monthly
installments of Basic Rental shall be due on the ﬁrst day of the ﬁrst calendar month
of the Term with a ﬁve (5) day grace period and continuing on the ﬁrst day of each
succeeding calendar month during the Term.5

Further, the Lease (Section 24(p)) states that Hilliard’s obligation to pay rent is not dependent upon

the condition of the Premises or Ricchi’s performance of its obligations.5

Under the Lease (Section 16), each of the following occurrences constitutes an “Event of

Default”:

(a) Tenant’s failure to promptly pay Rent when due or within ﬁve (5) day grace
period;

(b) Tenant’s failure to perform, comply with, or observe any other agreement
or obligation of Tenant under this Lease and such failure continues for a period
of 30 days after Landlord delivers to Tenant written notice there of . . .;

(d) Tenant shall attempt to remove all or any part of Tenant’s furniture, ﬁxtures,
ﬁles or equipment from the Premises without prior written notice to Landlord, or
Tenant shall desert or vacate any portion of the Premises and Landlord notiﬁes
Tenant in writing that Landlord has elected to treat such event as an Event of
Default ...7

Under the Lease (Section 5):

2
APPX 220, Ex. K at ﬁnding no. 4; see also APPX 6, Ex. A, Treviﬁo Decl. at 1] 2; APPX 8-32, Ex. A-l (the Lease).
3
APPX 73-74, Ex. C at admission nos. 15-16, 21-23; see also APPX 10, 25, Ex. A-l, the Lease at pp. 2, 17; APPX
220, Ex. K at ﬁnding no. 4.
4
APPX 98-99, Ex. C at interrogatory answer no. l8; APPX 103-07, Ex. D (Defendants’ corporate records); see also
APPX 220, Ex. K at ﬁnding no. 3; APPX 121-22, Ex. G at pp. 1-2; APPX 197, Ex. J at proposed ﬁnding no. 1.
5
APPX 11, Ex. A-l, the Lease at § 3; see also APPX 225, Ex. K at ﬁnding no. 35; APPX 411, Ex. R. at p. 2.
6
APPX 24, Ex. A-l, the Lease at § 24(p); see also APPX 225, Ex. K at ﬁnding no. 36; APPX 411, Ex. R. at p. 2.
7
APPX 19, Ex. A-l, the Lease at § 16; see also APPX 427, Ex. R. at p. 18.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 3
A11 payments required of Tenant hereunder shall bear interest from the date due
plus the 5 day grace period until paid at the maximum lawful rate.8

Under the Lease (Section 18(a)):

Upon any Event of Default, Tenant shall pay to Landlord all costs incurred by
Landlord (including court costs and reasonable attorneys’ fees and expenses) in
(Vi) enforcing, or advising Landlord of, its rights, remedies, and recourses arising
out of the Event of Default.9

Ricchi delivered and Hilliard accepted the Premises in November 2015.10 The 60-month

term of the Lease commenced on November l, 2015 and continued through October 2020.11 After

moving into the Premises in November 2015, Hilliard continuously used and occupied the

Premises through May 2020.12 Other than an eight-month hiatus from October 2016 through May

2017 (the subject of the ﬁrst case), Hilliard paid rent for the Premises for every month from

November 2015 through May 2020.13 The rent payable by Hilliard from June 2020 through

October 2020 — the period in issue in this case — was $34,240.90 per month. 14

The First Case.

On March 6, 2017, Ricchi ﬁled Cause No. DC-17-02672, 2100 Ricchi, LLC v. Hilliard

Ofﬁce Solutions of Texas, Ltd. and The Hilliard Companies, LLC (the “First Case”) in this Court. 15
Ricchi’s claims in the First Case were against the same Defendants for breach of the same Lease—

speciﬁcally, Hilliard’s failure to pay rent from October 2016 through May 2017.16

8
APPX 14, Ex. A-1, the Lease at § 5; see also APPX 425-26, EX. R. at pp. 16-17.
9
APPX 20, Ex. A-1, the Lease at § 18(a); see also APPX 427-28, Ex. R. at pp. 18-19.
1°
APPX 74, Ex. C at admission nos. 25-27; see also APPX 7, Ex. A, Treviﬁo Decl. at 1] 4; APPX 225-26, Ex. K at
ﬁnding nos. 33, 38.
11
APPX 74, Ex. C at admission no. 24; see also APPX 6, Ex. A, Treviﬁo Decl. at 1] 3; APPX 9, 11, Ex. A-1, the Lease
at pp. 1, 3 (§ 3); APPX 224, Ex. K at ﬁnding no. 32.
12
APPX 74-76, Ex. C at admission nos. 25-27, 31-40; see also APPX 7, Ex. A, Treviﬁo Decl. at 1] 5; APPX 224-26,
Ex. K at ﬁnding nos. 32-33, 38; APPX 412, 419, 423, Ex. R at pp. 3, 10, 14.
13
APPX 76-78, Ex. C at admission nos. 42-44, 47-53; see also APPX 7, Ex. A, Treviﬁo Decl. at 1] 5; APPX 226-27,
Ex. K at ﬁnding nos. 38-40, 48; APPX 412, 419, 423, Ex. R at pp. 3, 10, 14.
14
APPX 3, Ex. A, Treviﬁo Decl. at 1] 6; APPX 9, Ex. A-l, the Lease at p. 1.
15
APPX 108-15, Ex. E; see also APPX 84, Ex. C at admission nos. 94-95.
16APPX 11-12, Ex. E at1]1] 15, 20.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 4
Defendants contended that Ricchi’s rent claim was precluded by fraudulent inducement

relating to Ricchi’s overcharging construction costs for the Premises’ buildout—speciﬁcally, that

Ricchi failed to invoice the remodeling costs at “Landlord’s book costs” as required by the Lease. 17

In the First Case, Defendants ﬁled a fraud counterclaim based on the same construction charges. 18

In turn, Ricchi asserted the afﬁrmative defenses of ratiﬁcation, election of remedies, and waiver—

both as a defenses to Defendants’ fraud-based claims and also as defenses to their afﬁrmative

defenses of fraud and fraudulent inducement. 19 The parties agreed to the appointment of an auditor

who issued a report (the “Auditor’s Report”): (a) ﬁnding remodeling charges to Tenant “had been

‘marked up’ by Landlord to include ‘soft costs’ rather than reﬂecting Landlord’s ‘book cost’ as

provided in the lease”; and (b) “concluding that Tenant had overpaid Landlord and was due a credit

of $9,322.85?” Ricchi credited that amount to Hilliard before the First Case was tried.”

The First Case was tried to the bench on January 21-22, 2020. At trial, the validity and

enforceability of the Lease was very much at issue. During opening statements, Defendants’

counsel argued:

We’ve pled fraud in the inducement [T]here was no consent to enter into a
lease that means there was no lease ... [T]hey [Ricchi] can’t recover on their rent
claim because there is no lease. They vitiated it with fraud ...22

Defendants’ sole witness Sterling Hilliard testiﬁed that Defendants learned of the “mark up” of

construction invoices as early as June 2015, at which time Hilliard requested a July 28, 2015

meeting to “ask [Ricchi] about it,
3’ “
requested an audit” of the build-out construction accounting

including “backup for all Garcia’s Remodeling invoices,” and stopped paying Ricchi’s

17
APPX 116-19, Ex. F; APPX 122-25, Ex. G at pp. 2-5; see also APPX 85, Ex. C at admission nos. 98-101.
18
Id.
19
APPX 129-30, Ex. H at 1H] 2, 5, 7, 11; see also APPX 85, Ex. C at admission nos. 102-03; APPX 419, Ex. R at p.
10.
20
APPX 418-19, 423, 431, EX. R at pp. 9-10, l4, 22.
21APPX 462-63, EX. V at 84:8 — 85:3.
22
APPX 481-82, Ex. W at 21:22-23, 25: 1 1-22 (emphasis supplied).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 5
construction invoices due to its “mark up” concerns.” “Mr. Hilliard admitted at trial that

[Defendants’] February 2018 counterclaim was the ﬁrst time that Hilliard had raised the

construction accounting issues since they were resolved at the July 28, 2015 meeting between the

parties and their representatives.”24

Mr. Hilliard admitted that Defendants continued to recognize the Lease as valid and

effective after becoming aware that Ricchi’s invoices for the remodeling costs did not represent

“book cost” as provided in the Lease, e. g.:

Q. Hilliard moved in November 2015, started paying rent that month and has
consistently occupied the premises to this day, correct?
A.

Yes, sir.
*****

Except for an []8-month period we’ll get into, Hilliard has paid rent on that
Q.

lease?
Yes.
A.Q.A.Q.

Including the December 2019, correct?
Correct.
And you recognize sitting here today that Hilliard has obligations under the
lease to pay rent which is why you were paying rent through December
2019, correct?
A.Q.A.Q.A.Q.A.Q.A.Q.A.

Yes, sir.
*****
You’ve sued in this case, pursuant to the lease, correct?
Yes, sir.
Okay. You’re relying on the lease provisions to bring a lawsuit afﬁrmatively
through today, correct?
Yes, sir.
And when you pay rent, what are you relying on when you’re doing that,
the terms of the lease, correct?
Yes, sir.
When you use and occupy the premises, the rights that you’re entertaining
arise under the lease, correct?
Yes, sir.25
*****
After that eight-month hiatus from October 2016 through May 2017 Hilliard
started paying rent again as of June 2017, correct?
Yes, sir.

23
APPX 465-70, Ex. V at 107:9 — 109:7, 128:3 —
130:7; see also APPX 90, Ex. C at admission no. 135.
24
APPX 227, Ex. K at ﬁnding no. 50.
25
APPX 458-59, EX. V at 13:17 — 14:24.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 6
And Hilliard has continued to do s[o] from June [20]17 through
December of 2019, correct?
Yes, sir.26
And when you Hilliard cuts the check and it needs to know how much rent
is due, What the amount is and when to pay it, they use they’re using the
lease provisions on Section 3 that we looked at and Page l with the rental
rates, correct?
A. Yes, sir.

Despite this testimony, Defendants made clear at trial that they were litigating the validity

and effectiveness of the Lease:

Q. So you are not here today to rip up the lease, are you?
A. Yes, sir.
Q. You are here to rip up the lease, to rescind it?
A. Yes, sir.
Q. Even though you have been in the premises consistently using the premises
for four years and two months?
A. Yes, sir.
Q. And that’s based on occurrences that happened when, 2015 time frame?
A. Yes, sir. I believe that’s right.”

After trial, Defendants continued litigating the enforceability of the Lease in their Closing

Argument Brief:

Ricchi, because it fraudulently induced Hilliard to enter into the Lease, is
barred by the fraud from collecting rent Ricchi fraudulently induced Hilliard
to enter into the Lease, thereby negating Hilliard’s consent and thus the Lease
Hilliard pray that the Court cancel the Lease and that Ricchi take nothing by
way of its breach of contract claim against Hilliard.”

Both sides submitted proposed ﬁndings and conclusions, including speciﬁc (but opposite) ﬁndings

as to the enforceability of the Lease. Defendants proposed the following ﬁndings: “HOS did not

consent to the Lease terms as a result of Ricchi’s material misrepresentations”; “Ricchi

fraudulently induced HOS to enter into the Lease”; and “The Lease is ineffective because HOS

26
APPX 461, Ex. V at 26:11-24; see also APPX 464, Ex. V at 86:19-22 (Sterling Hilliard’s clariﬁcation that Hilliard
had paid rent for the month of the trial (January 2020) as recently as “Friday of law week”).
27
APPX 459-60, Ex. V at 14:24 — 15:12.
28
APPX 495, 506, Ex. X at pp. 11, 22 (emphasis supplied).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 7
did not consent to the terms of the Lease?” Ricchi, in turn, submitted proposed ﬁndings that

“The Lease is a valid, enforceable contract”; and:

Hilliard has ratiﬁed the Lease by its conduct recognizing the Lease as valid in a
myriad of other ways and While haying knowledge of all relevant facts Hilliard
may not now withdraw its ratiﬁcation and rescind or otherwise avoid its obligations
under the Lease. Despite its efforts, Hilliard is bound by the terms of its
agreement and cannot tear up the Lease.”

On May 12, 2020, this Court issued its Findings of Fact and Conclusions of Law (the

“MU. While ﬁnding that “Ricchi committed fraud against HOS both in inducing HOS into

the Lease and under the Lease,” this Court agreed with Ricchi on the enforceability issue,

concluding in no uncertain terms: “The Lease is a valid, enforceable contract.”31 Additionally,

this Court made ﬁndings conﬁrming Hilliard’s post-fraud ratiﬁcation of the Lease:

After accepting and moving into the Premises in November 2015, Hilliard
consistently and continuously occupied, operated its business out of, and otherwise
used the Premises through the January 2020 trial of this cause Since November
1, 2015, Hilliard has continuously occupied the Premises; has continuously kept
company property on the Premises; has continuously worked and had employees
present on a regular basis at the Premises; (other than the below-described eight-
month rent abatement at issue in this case) has continuously paid rent pursuant to
the terms of the Lease; and has otherwise complied with certain other Lease
obligations from the Lease’s commencement though trial of this matter.
Additionally, by way of its counterclaims discussed below, Hilliard has sought
legal action to enforce the terms of the Lease, including through trial.”

After this Court issued its FF&CL, Defendants ﬁled a Motion to Enter Judgment,

continuing to argue that Ricchi’s fraud “absolv[ed]” them of any liability under the Lease: “The

[FF&CL] establish that Plaintiff, 2100 Ricchi, LLC, fraudulently induced Defendants to enter into
the Lease A ﬁnding of fraud in the inducement of a contract is fatal to a contract and is a

29
J
APPX 198-99, Ex. at proposed ﬁnding nos. 11-12, 14-15 (emphasis supplied); see also APPX 86, Ex. C at
admission nos. 106-07.
3°
APPX 157, 175, Ex. I at proposed conclusion nos. 3, 99 (emphasis supplied); see also APPX 86, Ex. C at admission
nos. 104-05.
31
APPX 228-29, Ex. K at ﬁnding no. 55 and conclusion no. 2 (emphasis supplied); see also APPX 71, Ex. C at
admission nos. 1-2; APPX 229, Ex. K at conclusion nos. 3, 10-11.
32
APPX 225-27, Ex. K at ﬁnding nos. 33, 38, 49-50.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 8
good defense t0 enforcement of such a contract The Defendants afﬁrmatively pled

fraudulent inducement in their First Supplemental Answer ...”33 In response, Ricchi

continued to argue that Hilliard was wrong and this Court was right with respect to the ongoing

validity and effectiveness of the Lease:

Defendants ask the Court to disregard the unambiguous and mandatory terms of a
Lease that the Court has ruled is a valid and enforceable contract To be clear,
the Court rejected Defendants’ proposed conclusion that “the Lease is ineffective”
and, instead, found the Lease to be “valid, enforceable” and Defendants to be liable
thereunder to Plaintiff for $25 8,257.56 in back-rent. Defendants do not now get to
pick and choose which terms of the Lease are enjoyed or enforced W34

On February 4, 2021, this Court signed its Final Judgment and, just as it said it would in its

FF&CL, enforced the “valid, enforceable” Lease by awarding Ricchi $287,257.56 in back-rent.”

The Aegeal.

Both sides appealed the Final Judgment to the Court of Appeals for the Fifth District of

Texas (the “Court of Appeals”) in Appeal No. 05-21-00158-CV (the “WU. As in the trial

court, the issue of the enforceability of the lease in light of the fraudulent-inducement ﬁnding was

heavily litigated in the Appeal. Ricchi argued, inter alia, that the trial court erred by failing to

award Ricchi interest and attorney fees pursuant to the terms of the “valid, enforceable Lease.”36

Hilliard’s ﬁrst point of error in the Appeal was:

POINT OF ERROR NO. l: THE TRIAL COURT ERRED IN GRANTING
RICCHI DAMAGES BECAUSE RICCHI ENGAGED IN FRAUD IN THE
INDUCEMENT WHICH PRECLUDES ENFORCEMENT OF THE LEASE . . .37

33
APPX 233-34, Ex. L at pp. 1-2 (emphasis supplied); see also APPX 71, Ex. C at admission nos. 3-4.
34
APPX 251, Ex. M at p. 13 (emphasis in original).
35
APPX 283-86, Ex. N.
at p. 1; see also APPX 86-87, Ex. C at admission nos. 110-11.
36
See APPX 410, Ex. R at p. 1 (“Landlord argues the trial court erred by failing to award prejudgment and
postjudgment interest and attorney’s fees ...”); see also APPX 71, Ex. C at admission nos. 5-6.
37
APPX 305, Ex. O at p. l2 (emphasis in original); see also APPX 87, Ex. C at admission nos. 112-13; APPX 410,
Ex. R at p. l (“Tenant argues the trial court’s award of damages to Landlord was error because of Landlord’ s fraudulent
inducement . . .”).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 9
Defendants argued that: “Ricchi committed fraud and fraud in the inducement and therefore the

Lease Agreement is Vitiated. Ricchi is precluded from recovering its alleged damages because

HOS did not consent to the Lease.”38 Defendants continued:

Without consent, there is no Lease and thus no duty to pay rent. Therefore,
Ricchi, because it fraudulently induced HOS to enter into the Lease, is barred
by that fraud from collecting rent Ricchi is precluded from enforcing the
lease and recovering under the lease as a result of its fraudulent inducement
of Hos . . .39

On appeal, Defendants also continued to dispute their post-fraud ratiﬁcation of the Lease:

Hilliard never ratiﬁed the agreement or waived any right to assert fraud ... HOS
did not and could not have discovered the fraud prior to the publication of the audit
report. Therefore, HOS did not ratify the Lease, because it did not know of the
fraud.“

Ricchi countered, inter alia: “‘Once a party ratiﬁes an agreement, that party may not later Withdraw

its ratiﬁcation and seek to avoid the contract’ [T]he evidence is clear that Hilliard ratiﬁed the

Lease by—in myriad ways, on multiple occasions—acting and performing under the Lease and

accepting beneﬁts thereunder, all the way through trial ...”41

The Court of Appeals—after “conclud[ing] there is legally and factually sufﬁcient

evidence to support the trial court’s ﬁndings and conclusions regarding Landlord’s fraud”42—

agreed with Ricchi and this Court that the Lease remained valid and effective due to Defendants’

ratiﬁcation thereof, thereby rejecting Defendants’ ﬁrst issue on appeal:

If a party fraudulently induced to enter into a contract continues to receive beneﬁts
under the contract after learning of the fraud or otherwise engages in conduct
recognizing the agreement as subsisting and binding, then the party has ratiﬁed the

38
APPX 304, Ex. O at p. 11.
39
APPX 306-07, 322, Ex. O at pp. 13-14, 29 (emphasis supplied); APPX 400, Ex. Q at p. 2; see also APPX 87-88,
Ex. C at admission nos. 116-17.
4°
APPX 307, Ex. O at p. 14 (emphasis supplied); APPX 406, Ex. Q at p. 8.
41
APPX 337-39, 358-59, 366, 387-88, Ex. P at pp. 11-13, 32-33, 40, 61-62 (citations omitted); see also APPX 87, EX.
C at admission nos. 114-15.
42
APPX 418-19, Ex. R at pp. 9-10; 2100 Ricchi LLC v. Hilliard Office Solutions of Tex. Ltd., No. 05-21-00158-CV,
2022 WL 3053872, at *4 (Tex.App.—Dallas Aug. 3, 2022, pet. denied).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 10
agreement and waived any right to assert the fraud as a basis to avoid the
agreement. . .

[T]he trial court found and concluded that Tenant breached the lease by failing
to pay rent due under the lease from October 2016 to May 2017, and did not ﬁnd
or conclude that the lease was void. Tenant argues it is not bound by the
fraudulently-induced lease. It argues it had no duty to pay rent because it never
consented to the lease

Landlord responds that Tenant ratiﬁed the lease. Landlord pleaded the afﬁrmative
defense of ratiﬁcation and offered evidence that Tenant continued to recognize the
lease as valid after becoming aware that Landlord’s invoices for the remodeling
costs did not represent “book cost” as provided in the lease Landlord relies on
the trial court’s ﬁndings, unchallenged by Tenant, that Tenant “consistently and
continuously occupied, operated its business out of, and otherwise used the
Premises through the January 2020 trial of this cause”

We conclude Tenant did not establish its right to the remedy of rescission as a
matter of law. Tenant retained beneﬁts received under the lease by its
uninterrupted use of the premises after learning of Landlord’s fraud. We
decide Tenant’s ﬁrst cross-issue against it.43

Defendants moved for rehearing, arguing (again, in their “Point One”) that “the Court of Appeals

erred when it found that Tenant ratiﬁed the lease by its continued occupancy.”44 On August

30, 2022, the Court of Appeals denied Defendants’ motion.“ On March l7, 2023, the Court of

Appeals issued its mandate.“ On May 9, 2023, this Court signed its Modified Final Judgment,

carrying out the mandate and modifying its original Final Judgment to award Ricchi interest and

attorney fees under the Lease (in addition to the rent awarded in the original judgment)“

Hilliard ’s Abandonment of the Premises and Failure t0 Pav the Last Five Months of Rent.

Less than three weeks after this Court issued its FF&CL on May 12, 2020 making clear

43
APPX 417, 419-20, 423, Ex. R at pp. 8, 10-11, l4 (emphasis supplied); 2100 Ricchi LLC, 2022 WL 3053872, at
*3-5 (emphasis supplied).
44
APPX 439, Ex. S at p. i; see also APPX 71-72, Ex. C at admission nos. 7-8.
45
APPX 448-49, Ex. T; see also APPX 72, Ex. C at admission no. 9. Defendants went on to petition the Texas Supreme
Court for review of the Court of Appeals’ judgment, again arguing that Tenant was discharged from its obligation to
pay rent under the Lease. The Texas Supreme Court denied review.
46
APPX 450-52, Ex. U; see also APPX 90, Ex. C at admission nos. 133-34.
47
APPX 509-13, EX. Y.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 11
that “[t]he Lease is a valid, enforceable contract,” Hilliard vacated the Premises.“ By letter from

its counsel dated June 1, 2020 (the “Termination Letter”), Hilliard announced that it had

purportedly “terminate[d]” the Lease and “vacated the lease premises.”49 The Termination Letter

references this Court and the First Case and states that is being sent “[i]n accordance with the

Findings of Fact and Conclusions of Law, in particular that 2100 Ricchi, LLC induced

Hilliard Ofﬁce Solutions of Texas, Ltd. (‘HOS’) to enter into the Lease through the exercise

of fraud.”5° According to the Termination Letter:

HOS has determined to terminate the Lease as a result of the fraud in the
inducement which occurred on the part of 2100 Ricchi, LLC.“

When Hilliard vacated the Premises and purported to “terminate the Lease” (May 31,

2020), ﬁve months remained on the Lease term.52 Accordingly, on June 2, 2020, Ricchi responded

to Hilliard’s Termination Letter:

Tenant’s abandonment of the Premises and wrongful termination of the Lease are
events of default under the Lease by Tenant. Landlord demands payment of all
damages suffered as a result of the Tenant’s breach, including unpaid rent in the
amount of $34,240.90 per month for the six-month [sic] balance of the Lease term
and all other costs or losses that the Landlord incurs because of the Tenant’s breach,
together with attorneys’ fees under the Lease and CPRC 38.001 and pre-judgment
interest at the default rate set out in the Lease.”

Defendants ignored Ricchi’s demand and failed to pay any rent due under the Lease thereafter,

including for the months of June 2020 through October 202054 (totaling $171,204.50 for ﬁve

48
APPX 7, Ex. A, Treviﬁo Decl. at 1] 6; APPX 80-81, 97, Ex. C at admission nos. 69, 71 and interrogatory answer no.
10.
49
APPX 40, Ex. B, Blakley Aff. at 1] 18; APPX 63-64, Ex. B-2 (Termination Letter); APPX 80-81, 97, EX. C at
admission nos. 69, 7l and interrogatory answer no. 10.
5°
APPX 64, Ex. B-2 (emphasis supplied).
51
Id.
52
APPX 7, Ex. A, Treviﬁo Decl. at 1] 6; APPX 9, ll,
Ex. A-l, Lease at pp. l, 3 (§ 2); APPX 80-81, EX. C at admission
nos. 69, 7l.
53
APPX 40-41, Ex. B, Blakley Aff. at 1] 19; APPX 65-67, Ex. B-3 (Demand Letter); APPX 72-73, 82, Ex. C at
admission nos. 13, 78-81.
54
APPX 7, Ex. A, Treviﬁo Decl. at 1] 6; APPX 41, Ex. B, Blakley Aff. at 1] l9; APPX 78-80, 82, EX. C at admission
nos. 54-63, 82-83.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 12
months’ rent at $34,240.90 per monthss).

This Second Lawsuit.

On June 20, 2020, as a result of Hilliard’s new defaults, Ricchi ﬁled this second action to

recover unpaid rent for the last ﬁve months of the term of the Lease that this Court had concluded

was “valid” and “enforceable” a mere month earlier.“ Defendants plead a single defense to

Ricchi’s claims: “Plaintiff s claims are barred by fraud in the inducement committed by

Plaintiff.”57 In turn, Ricchi asserts the afﬁrmative defenses of, inter alia, res judicata, collateral

estoppel, claim preclusion, issue preclusion, ratiﬁcation, waiver, and election of remedies—

including as defenses to Defendants’ afﬁrmative defense of fraudulent inducement.”

When asked through discovery in this case for the basis of their fraud defense,

Defendants—as they did in the contemporaneous Termination Letter—point solely to the fraud

that was litigated to ﬁnal judgment in the First Case and found not to render the Lease invalid:

Request for Interrogatory No. ll:
What is the basis for the following defense pleaded by You in the Second Lawsuit:
“Plaintiff’ s claims are barred by fraud in the inducement committed by Plaintiff’?

Answer:
See the Auditor’s Report and all documents and interviews referenced therein and
the FF&CL, both of which are incorporated herein by reference. See documents
bates labeled HOSOOOOl-HOSZ771.

Request for Interrogatorv No. 12:
State all the facts supporting the following defense pleaded by You in the Second
Lawsuit: “Plaintiff s claims are barred by fraud in the inducement committed by
Plaintiff”?

Answer:

55
APPX 9, Ex. A-l, Lease at p. 1; APPX 78-80, Ex. C at admission nos. 54-63.
56
See Plaintiff’s Original Petition and Request for Disclosure (RICCHI 2487-90; ﬁled June 29, 2020); APPX 7, Ex.
A, Trevino Decl. at 1H 6-7; APPX 91, Ex. C at admission nos. 136-37.
57
See Defendants’ Hilliard Oﬁice Solutions of Texas, Ltd. and The Hilliard Companies, LLC — Series 2, f/k/a The
Hilliard Companies, LLC ’s Original Answer (RICCHI 25 52-54; ﬁled July l6, 2020); APPX 92-93, Ex. C at admission
nos. 148-49.
58 ’
See Plaintiﬂ's Defenses to Defendants Aﬂirmative Defenses (ﬁled April 3, 2023).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT l3
See the Auditor’s Report and all documents and interviews referenced therein and
the FF&CL, both of which are incorporated herein by reference. See documents
bates labeled HOSOOOOl-HOSZ771.59

Likewise, when asked for the basis of their decision to vacate the Premises and not pay the

last ﬁve months’ rent (226., the breaches wholly comprising Ricchi’s claims in this case),

Defendants again point solely to matters already litigated and decided in the First Case:

Request for Interrogatorv No. 13:
[I]dentify and explain the basis of Your decision to vacate the Premises.

Answer:
See the Auditor’s Report and all documents and interviews referenced therein and
the FF&CL, both of which are incorporated herein by reference.

Request for Interrogatorv No. 14:
[I]dentify and explain the basis of Your decision to not pay rent for the Premises
for the months of June 2020 through October 2020.

Answer:
See the Auditor’s Report and all documents and interviews referenced therein and
the FF&CL, both of which are incorporated herein by reference.“

Elsewhere in their discovery responses, Defendants make clear their intent to try and use this case

to relitigate whether the fraudulent inducement found in the First Case invalidated the Lease and

Tenant’s obligations thereunder, claiming—in clear deﬁance of the explicit ﬁndings of this Court

’9 ‘5
and the Court of Appeals—that they “did not accept the premises, the lease is void and there is

no [Lease] term,” and “there is no expiration” of the Lease “[d]ue to the fraud and fraud in the

inducement?“ All these issues have already been litigated and decided.

IV. SUMMARY JUDGMENT STANDARD

The purpose of a traditional motion for summary judgment is to permit the trial court to

promptly dispose of cases that involve unmeritorious claims or untenable defenses62—like

59
APPX 72, Ex. C at interrogatory answer nos. 11-12.
5° APPX 72-73, Ex. C at interrogatory answer nos. 13-14.
61
APPX 71-72, Ex. C at interrogatory answer nos. 7-9.
62
City ofHouston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 n. 5 (Tex. 1979).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 14
Defendants’ already-litigated fraudulent-inducement defense. “A coult is entitled to decide an

issue as a matter of law when there is no conﬂict in the evidence.”63 “To prevail on a summary-

judgment motion brought under Texas Rule of CiVil Procedure 166a(c), a movant must show that

there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of

law.”64 “Once the movant establishes a right to summary judgment, the burden shifts to the

nonmovant to raise a genuine issue of material fact in order to defeat summary judgment?“

“Whether collateral estoppel applies in a particular case is a question of 1aw”66—and, therefore,

“a question for the court.”67 “The trial court has broad discretion in determining Whether or not to

apply the doctrine of collateral estoppel?“

V. ARGUMENT

The summary judgment evidence conclusively establishes: (A) all essential elements of

Ricchi’s breach-of-lease claim, entitling Ricchi to (1) actual damages of $171,204.50 comprised

of unpaid rent, (2) contractual interest (both pre- and post-judgment) at 18% per annum, and (3)

reasonable attorney fees and legal expenses and court costs; (B) THC is jointly and severally liable

for the foregoing amounts as Hilliard’s general partner; and (C) Hilliard is collaterally estopped

from asserting its sole defense of fraudulent inducement.

A. Ricchi is entitled to summary judgment on its breach-of—lease claim.

“To prevail in an action for breach of lease, the lessor must prove that (i) a valid contract

existed between the lessor and lessee; (ii) that the lessor had a right under the contract to receive

rental payments from the lessee; (iii) that the lessee breached the contract; and (iv) that because of

63
Covington v. Travelers Indem. Co. ofR.I./C0nn., 122 S.W.3d 330, 334-35 (Tex.App.—F0rt Worth 2003, no pet.).
64
Jane Doe 1 v. Pilgrim Rest Baptist Church, 248 S.W.3d 831, 834 (Tex.App.—Dallas 2008, pet. denied).
65
Jane Doe 1, 248 S.W.3d at 834, citing Centeq Realty Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.l995).
66
In re J.A.C., No. 05-17-00768-cv, 2018 WL 2191604, at *3 (Tex.App.—Da11as May 14, 2018, no pet).
67
Domingues v. City of San Antonio, 985 S.W.2d 505, 508 (Tex.App.—San Antonio 1998, pet. denied).
68
Upjohn Co. v. Freeman, 906 S.W.2d 92, 101 (Tex.App.—Dallas 1995 no writ).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 15
that breach the lessor suffered damages?” The summary judgment evidence conclusively

establishes each element of Ricchi’s claim:

(a) Existence of the Valid Lease. Both Plaintiff and Defendants have authenticated

Exhibit A-l (APPX 9-32; HOS 35 -5 8 ; RICCHI 0001-24) as a true and correct copy of the Lease.7°

Hilliard admits that it executed the Lease.“ What’s more, this Court—upheld by the Court of

Appeals—already determined the Lease to be a valid and enforceable contract”, commencing in

November 2015 with a 60-month term (through October 2020).”

(b) Ricchz' ’s Right to Receive Rentfrom Hilliard. Hilliard admits that: Ricchi delivered,

and Hilliard accepted and moved into, the Premises in November 201574, the month of the Lease’s

commencement. Under the terms of the Lease, Hilliard was obligated to pay rent of $34,240.90

per month for the time period at issue (June 2020 through October 2020).75 Indeed, the Lease

makes clear that Ricchi’s right to receive rent is not subject to deduction or setoff and is not

dependent upon the condition of the Premises or Ricchi’s performance of any duties or obligations

under the Lease.” What’s more, this Court—upheld by the Court of Appeals—already enforced

Ricchi’s right to receive rent (and interest and attorney fees and expenses) under the Lease.”

perform an act that it has expressly or impliedly promised to perform.”78 The uncontroverted

evidence establishes that Hilliard vacated the Premises ﬁve months early and failed to pay rent as

69
Curtis v. AGF Spring Creek/Coit IILtd., 410 S.W.3d 511, 518 (Tex.App.—Dallas 2013, no pet).
7°
APPX 6, Ex. A, Treviﬁo Decl. at 1] 2; APPX 72, Ex. C at admission no. ll.
71
APPX 73-74, Ex. At admission nos. 15-16, 21-23; see also APPX 220, Ex. K at ﬁnding no. 4.
72
APPX 229, Ex. K. at conclusion no. 2; APPX 419-20, 426, Ex. R at pp. 10-11, l7.
73
APPX 224, Ex. K at ﬁnding no. 32; APPX 412, Ex. R at p. 3.
74
APPX 74, Ex. C at admission nos. 24-27.
75
APPX 3, Ex. A, Treviﬁo Decl. at 1] 6; APPX 9, Ex. A-l, the Lease at p. 1.
76
APPX ll, 24, Ex. A-l, the Lease at §§ 3, 24(p); APPX 225, Ex. K at ﬁnding nos. 35-36; APPX 411, Ex. R at p. 2.
77
APPX 229, Ex. K at conclusions 5, 10-11; APPX 426, 428, Ex. R at pp. l7, l9; APPX 511-12, Ex. Y at pp. 2-3.
78
Hackberry Creek Country Club Inc. v. Hackberry Creek Home Owners Assoc, 205 S.W.3d 46, 55 (Tex.App.—
Dallas 2006, pet. denied).

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 16
promised under the Lease.” Indeed, Hilliard admits it vacated the Premises on May 31, 2020 and

failed to pay any rent for every month at issue (June 2020 — October 2020).8° In the First Case,

this Court already found that Hilliard’s failure to pay rent is a breach of the Lease.“

(d) Hilliard ’s Breaches Caused Damages t0 Ricchi. Hilliard’s breaches of the Lease

have indisputably given rise to damages to Ricchi, calculated and detailed below.

1. Actual Damages of $171,204.50 (Unpaid Rent).

As set forth above, Hilliard vacated the Premises as of May 31, 2020 and failed to pay the

following ﬁve months’ rent due under the Lease:

Rent Due Date Unpaid Rent
Month (w/ 5-day grace period) Amount

June 2020 June 6, 2020 $34,240.90

July 2020 July 6, 2020 $34,240.90

Aug. 2020 Aug. 6, 2020 $34,240.90

Sept. 2020 Sept. 6, 2020 $34,240.90

Oct. 2020 Oct. 6, 2020 $34,240.90

Total Unpaid Rent: $171,204.50

There being no genuine issue of material fact as to Hilliard’s liability to Ricchi for

$171,204.50 in unpaid rent under the Lease, Ricchi is entitled to summary judgment against

Hilliard for such amount as actual damages.

2. Contractual Interest of $87,553.51 (as of today’s date, June 9, 2023) and
Continuing to Accrue at 18% per annum (or $84.40 per day).

As set forth above, the Lease provides that unpaid rent “shall bear interest from the date

79
APPX 7, Ex. A, TreviﬁO Decl. at 6; APPX, 9, 11, Ex. A-l, the Lease at pp. 1, 3 (§ 2): APPX 63-64, Ex. B-2;
11

APPX 78-82, 97, Ex. C at admission nos. 54-63, 69, 71, 82-83 and interrogatory no. 10.
8° APPX
78-81, 97, Ex. C at admission nos. 54-58, 67-69, 71 and interrogatory no. 10.
81
APPX 229, Ex. K at conclusion nos. 5, 10.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 17
due until paid at the maximum lawful rate.”82 “Texas law authorizes a maximum lawful rate of 18

percent to be applied to a written contract”83, like the Lease.

“When plaintiff is entitled to judgment on the contract, plaintiff is also entitled to interest

thereon as provided in the contract, and judgment of the court therefor shall be rendered

accordingly.”84 “Prejudgment interest and postjudgment interest compensate judgment creditors

for their lost use of the money due them as damages?“ “Prejudgment interest performs this

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

postjudgment interest, from the date of judgment through the date the judgment is satisﬁed?“

“In a breach of contract case, the prejudgment interest rate is the same as the postjudgment

interest rate.”87 Award of post-judgment interest—and its rate—is mandated by statute:

A money judgment of a court in this state must specify the postjudgment interest
rate applicable to that judgment

A money judgment of a court in this state on a contract that provides for interest ...
earns postjudgment at a rate equal to the lesser of: (l) the rate speciﬁed in the
contract, which may be a variable rate; or (2) l8 percent a year ...

Postjudgment interest on a judgment of a court in this state compounds annually-88

“The trial court ha[s] no discretion to deviate from the interest rate proscribed [sic] by the Finance

82
APPX l4, Ex. A-l, the Lease at § 5; see also APPX 425-26, Ex. R at pp. 16-17.
83
Kenneth D. Eichner PC v. Jester, No. 01-17-00118-CV, 2017 WL 4638295, at *2 (Tex.App.—Houston [lst Dist.]
Oct. 17, 2017, no pet); see also TEX.FIN.CODE § 303.002 (“The parties to a written agreement may agree to an interest
rate that does not exceed the applicable weekly ceiling”); TEX.FIN.CODE § 303.009(a) (“the ceiling is 18 percent
a year”); All Seasons Window & Door Mfg. v. Red Dot Corp, 181 S.W.3d 490, 497-98 (Tex.App.—Texarkana 2005,
no pet.) (contract language “maximum rate permitted by law” supports application of 18% ceiling rate under
TEX.FIN.CODE § 303.009(a)).
84
Triton Oil & Gas Corp. v. W. W. Moran Drilling Co., 509 S.W.2d 678, 687-88 (Tex.App.—F0rt Worth 1974, writ
ref’ d n.r.e.); see also 2100 Ricchi LLC v. Hilliard Oﬂice Solutions of Texas Ltd, N0. 05-21-00158-CV, 2022 WL
3053872, at *8 (Tex.App.—Dallas Aug. 3, 2022, pet. denied) (“Because the parties’ valid contract requires payment
of prejudgment interest and the ﬁnance code requires payment of postjudgment interest, we conclude the trial court
erred by failing to award prejudgment and postjudgment interest to Landlord”).
85
2100 Ricchi LLC, 2022 WL 3053872, at *7, quoting Phillips v. Bramlett, 407 S.W.3d 229, 238 (Tex.2013).
86
Id.
87
2100 Ricchi LLC, 2022 WL 3053872, at *7, quoting E.F. Johnson C0. v. Inﬁnity Global Tech., No. 05-14-01209-
CV, 2016 WL 4254496, at *11 (Tex.App.—Dallas Aug. 11, 2016, no pet.)
88
TEX.FIN.CODE §§ 304.001, 304.002, 304.006. Here, the rate speciﬁed in the Lease is 18 percent a year.

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 18
Code.”89 “The tn'al court does not have discretion to increase or reduce prejudgment interest?”

There being no dispute that interest “shall” accrue on Hilliard’s unpaid rent at 18 percent

per annum (indeed, the Court of Appeals already interpreted the very Lease at issue and determined

that failure to award interest on unpaid rent is reversible error”), Ricchi is entitled to such amounts

as a matter of law, and calculated as follows through the date of this motion (June 9, 2023):

Due Date # 0f days Interest
Daﬂy
Rent (w/ 5-day Unpaid Rent past due Int. Accrued

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Motion,Ex Parte: 2100 RICCHI, LLC vs. HILLARD OFFICE SOLUTIONS OF TEXAS, LTD., et al

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