TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., Appellant v. LOWELL BURK, LARRY STERN, RICHARD SHAW, AND TOWCON PROPERTIES, INC., Appellee s

Affirmed in part and reversed and rendered in part and Opinion filed December 14, 1989
 
 
S
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-89-00076-CV
............................
TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., Appellant
V.
LOWELL BURK, LARRY STERN, RICHARD SHAW,
AND TOWCON PROPERTIES, INC., Appellee
s
 
 
.................................................................
On Appeal from the 219th District Court
Collin County, Texas
Trial Court Cause No. 219-470-85
.................................................................
O P I N I O N
Before Justices Whitham, Rowe and Whittington
Opinion By Justice Whitham
        In this dispute between a condominium homeowners association and the developer, the appellant, Townbluff Homeowners Association, appeals from a judgment in its favor and against the appellee-developer, Towcon Properties and three of its shareholders, officers and directors, the appellees, Lowell Burk, Larry Stern and Richard Shaw. While the trial court entered judgment in favor of the association and against the appellees, both jointly and severally, in the amount of $2,926.09, the association insists that the trial court erred in failing to award it judgment: (1) against Towcon Properties in the amount of $10,545.02 as the balance of the working capital fund; (2) against Towcon Properties in the amount of $11,549.55 as the difference between the cost of maintenance and the assessments received from unit owners; (3) against Burk, Stern and Shaw in the amount of $22,094.57 for breach of fiduciary duty; (4) against Burk, Stern and Shaw for exemplary damages for breach of fiduciary duties; and (5) against Towcon Properties, Burk, Stern and Shaw for $16,100.12 as attorney's fees and costs. We conclude that the trial court erred in failing to enter judgment in favor of the association and against Towcon:
 
            (a) in the amount of $10,545.02 as the balance of the working capital fund;
 
            (b) in the amount of $11,549.55 as the difference between the cost of maintenance and the assessments received from the unit owners.
We conclude that the trial court erred in failing to enter judgment in favor of the association and against Towcon, Burk, Stern and Shaw in the amount of $16,100.12 as attorney's fees and costs. We conclude that the trial court did not err in failing to enter judgment in favor of the association and against Burk, Stern and Shaw:
 
            (a) in the amount of $22,094.57 for breach of fiduciary duty; and
 
            (b) for exemplary damages.
Since Burk, Stern and Shaw do not appeal the trial court's judgment in favor of the association and against them, both jointly and severally, in the amount of $2,926.09, we affirm that portion of the trial court's judgment against Burk, Stern and Shaw. We reverse the trial court's judgment in favor of the association and against Towcon insofar as it awards the association the amount of $2,926.09. We also reverse the trial court's judgment insofar as it denies the association an award of attorney's fees against Towcon, Burk, Stern and Shaw. We render judgment that the association recover of and from Towcon the amount of $22,094.57. We render judgment that the association recover of and from Towcon, Burk, Stern and Shaw, both jointly and severally, the amount of $16,100.12 as attorney's fees. Accordingly, we affirm in part and we reverse and render in part.
        We begin by noting certain controlling provisions of the condominium declaration governing the relationship between the association and Towcon Properties:
        4.2        DECLARANT CONTROL.
 
* * *
        [F]or the benefit and protection of the Unit Owners and any First Mortgagees of record for the sole purpose of insuring a complete and orderly buildout as well as a timely sellout of the Condominium Project, including any annexations as provided in Paragraph 2.10, the Declarant will retain control of and over the Association for a maximum period not to exceed January 1, 1987, or upon the sale of seventy-five percent (75%) of the Units, including any annexations, or when in the sole opinion of the Declarant, the Project becomes viable, self-supporting and operational, whichever occurs first (1st). It is expressly understood, the Declarant will not use said control for any advantage over the Unit Owners by way of retention of any residual rights or interests in the Association or through the creation of any management agreement with a term longer than one (1) year without majority Association approval upon relinquishment of Declarant control. Should Declarant elect not to annex the adjoining tract, then its control shall extend no longer than three (3) years from the recordation of this Condominium Declaration. In no event shall control extend beyond January 1, 1987, if all proposed phases are annexed and incorporated hereinto by merger. At the end of the Declarant Control Period, the Declarant, through the Board of Directors, shall call the first (1st) annual meeting of the Association.
 
* * *
        5.11 OBLIGATION OF DECLARANT FOR ASSESSMENT AND MAINTENANCE. During the Declarant Control Period, as provided in Paragraph 4.2 hereof, the Declarant shall be responsible for the difference between the cost of maintenance and assessments received from the Unit Owners of each Building until all Units in said Building have been completed, as defined herein, or until the estimated operating expenses are accurately determined, or until Declarant transfers responsibility for said maintenance to the Association, as provided in Paragraph 4.2 hereof, whichever first (1st) occurs. So long as Declarant is responsible for the maintenance of a Building, as provided herein, Declarant shall not be limited to the regular monthly assessment for any Units owned by Declarant in said Building. With respect to the Buildings which Declarant is responsible for maintaining, as provided herein, said maintenance shall be at the level of maintenance established in accordance with Paragraph 5.3 hereof. During the Declarant Control Period, Declarant shall provide any additional funds necessary to pay actual cash outlays required to fund current operating expenses of the Association. Declarant shall not be obligated to fund any reserve accounts until after the Declarant Control Period is terminated. After the Declarant Control Period is terminated, Declarant shall pay the regular monthly assessment for each Unit or Units it owns. In no event shall Declarant's liability for assessments be less than required by the Act.
 
* * *
        7.4        RESERVE FUND. The Association shall establish adequate reserve funds for replacement of Common Element components and fund the same by regular monthly payments rather than by extraordinary special assessments. In addition, there shall be established a working capital fund for the initial operation of the Condominium Project equal to at least three (3) months' estimated Common Assessments charge for each Unit, said deposit to be collected at closing of Unit sale.
(emphasis added).
        Next, we note that the association asserts causes of action for breach of contract (the condominium declaration) by Towcon; and for the tort of breach of fiduciary duty by Burk, Stern and Shaw. The breach of contract cause of action is grounded on the above quoted paragraphs of the condominium declaration. In turn, the breach of contract claim contains two prongs. The first prong involves the working capital fund provided for in paragraph 7.4. The second prong involves the maintenance and assessment provisions of paragraph 5.11. The association addresses the first prong of its breach of contract claim under its first point of error. The association addresses the second prong of its breach of contract claim under its second point of error. The association addresses its tort claim under its third point of error.
        In its first point of error, the association contends that the evidence conclusively establishes as a matter of law that at the termination of the declarant control period appellees failed to turn over to the association the $10,543.02 balance of the working capital fund. The parties stipulated certain facts. We quote the stipulations:
        It is hereby stipulated between the parties hereto, acting by and through their attorneys of record, that:
 
        1.        Attached hereto as Exhibit "A" is a true and correct copy of the Condominium Declaration for Townbluff Condominiums recorded in Volume 3, page 239 of the Condominium Records of Collin County, Texas. Said Declaration shall be admitted into evidence without objection as to its admissibility.
 
        2.        Attached hereto as Exhibit "B" is a true and correct copy of the Articles of Incorporation of Townbluff Homeowners Association, Inc. filed in the office of the Secretary of State on May 7, 1982. Said Articles shall be admitted into evidence without objection as to its admissibility.
 
        3.        Defendants LARRY STERN, LOWELL BURK and RICHARD SHAW signed the Articles of Incorporation, a copy of which is attached hereto as Exhibit "C", and caused the Articles to be filed with the Secretary of State of Texas.
 
        4.        Attached hereto as Exhibit "C" is a true and correct copy of the Certificate of Incorporation of Townbluff Homeowners Association, Inc., Charter No. 607069 issued by the Secretary of State of Texas on May 7, 1982. Said Certificate shall be admitted into evidence without objections as to its admissibility.
 
        5.        LARRY STERN, LOWELL BURK and RICHARD SHAW were the initial directors of Townbluff Homeowners Association, Inc.
 
        6.        TOWCON PROPERTIES, INC. was the developer of Townbluff Condominiums.
 
        7.        From April 15, 1982, through October 31, 1983, LOWELL BURK, LARRY STERN and RICHARD SHAW were directors of TOWCON PROPERTIES, INC.
 
        8.        From April 15, 1982, through October 31, 1983, LOWELL BURK, LARRY STERN and RICHARD SHAW were owners of TOWCON PROPERTIES, INC.
 
        9.        From April 15, 1982, through October 31, 1983, LOWELL BURK, LARRY STERN and RICHARD SHAW were officers of TOWCON PROPERTIES, INC.
 
        10.        LOWELL BURK, LARRY STERN and RICHARD SHAW were the directors of TOWNBLUFF HOMEOWNERS ASSOCIATION, INC. from May 7, 1982 until October 31, 1983.
 
        11.        TOWCON PROPERTIES, INC. caused the Condominium Declaration, a true copy of which is attached hereto as Exhibit "A", to be recorded in the Condominium Records of Collin County, Texas.
 
        12.        LOWELL BURK, LARRY STERN and RICHARD SHAW were directors of TOWNBLUFF HOMEOWNERS ASSOCIATION, INC.
 
        13.        TOWCON PROPERTIES, INC. relinquished "Declarant control" over TOWNBLUFF HOMEOWNERS ASSOCIATION, INC. on October 31, 1983.
 
$10,545.02 Claim
        14.        At the time         TOWCON PROPERTIES, INC. relinquished "Declarant control" over TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., Defendants, as managing agent [sic] of TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., had collected the sum of $15,900.00 for the working capital fund required by Article VII, Section 7.4 of the Declaration, a true copy of which is attached hereto as Exhibit "A".
 
        15.        Defendants turned over to TOWNBLUFF HOMEOWNERS ASSOCIATION, INC. the sum of $5,354.98 as the balance of the sum collected as "working capital fund" under Article VII, Section 7.4 of the Declaration, a true copy of which is attached hereto as Exhibit "A".
 
        16.        Before TOWCON PROPERTIES, INC. relinquished "Declarant control" over TOWNBLUFF HOMEOWNERS ASSOCIATION, INC. and LOWELL BURK, LARRY STERN and RICHARD SHAW resigned as directors of TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., TOWNBLUFF HOMEOWNERS ASSOCIATION INC. had not made demand upon Defendants for the sum of $10,545.02 (the difference between $15,900.00 collected under Section 7.4 of the Declaration as the "working capital fund" and $5,354.98 received from Defendants).
 
        17.        After TOWCON PROPERTIES, INC. relinquished "Declarant control" over TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., TOWNBLUFF HOMEOWNERS ASSOCIATION, INC. made demand upon Defendants to pay the sum of $10,545.02 (the difference between the $15,900.00 collected under Article VII, Section 7.4 of the Declaration as the "working capital fund" and the sum of $5,354.98 received from Defendants) to TOWNBLUFF HOMEOWNERS ASSOCIATION, INC., but Defendants all failed to pay said sum or any portion thereof to TOWNBLUFF HOMEOWNERS ASSOCIATION, INC.
 
        18.        On July 19, 1985, and July 20, 1985, Defendants received a letter, a true and correct copy of which is attached hereto as Exhibit "E", from Mike Gibbs.
Exhibits "A", "B" and "C" are not important to our disposition of this appeal. The "Mike Gibbs" referred to in paragraph 18 of the stipulations is the attorney for the association. Since the association relies upon this letter as a "demand letter," we quote Gibbs' letter of July 17, 1985, addressed to Towcon, Stern, Burk and Shaw (exhibit "E" to the stipulations):
        Re:        Townbluff Homeowners Association, Inc.
 
        Gentlemen:
 
        This firm has been retained to represent Townbluff Homeowners Association, Inc.
 
        It is my understanding that Towcon Properties, Inc. developed (was the Declarant in the Condominium Declaration) Townbluff Condominiums, that Towcon controlled the Association for a period of time pursuant to Paragraph 4.2 of the Declaration, that Larry Stern, Lowell Burk, and Richard Shaw were the sole directors of the Association during this period of control, and that during this period of control Condominium Realty Corporation managed the property. Upon Towcon relinquishing control, Mr. Stern, Mr. Burk, and Mr. Shaw resigned and the Association retained an independent management company, and the Association had the books and records audited by an independent auditor. The auditor's findings and my analysis are as follows:
 
        1.        Paragraph 7.4 of the Declaration (entitled "Reserve Fund") requires the Association to collect a "deposit" equal to at least three months' estimated Common Assessments charge at the time each unit is sold for working capital fund. Pursuant to this paragraph the Association should have received from Condominium Realty Corporation the sum of $15,900.00 ($5,300.00 per months for three months). The Association received the sum of $5,4354.98 [sic], leaving a deficit of $10,545.02 plus interest. Failure to maintain such fund is breach of each director's fiduciary duty to the Association and is a breach of the terms of the Declaration by Towcon and Condominium Realty Corporation.
 
        2.        Paragraph 7.4 of the Declaration requires the Association to establish adequate reserve funds for replacement of common elements and fund the same by regular monthly payments. Paragraph 5.11 of the Declaration states that during the Declarant Control Period Declarant shall pay the difference between the cost of maintenance and assessments received and shall provide additional funds necessary to pay actual cash outlays required to fund current operating expenses of the association. This paragraph requires Towcon to pay the difference between the assessments received (not the three month reserve fund provided in Paragraph 7.4) and the cost of maintenance. The audit indicates that during the period of Declarant Control Towcon, the Association, Condominium Realty Company, and the directors improperly used these reserve funds for maintenance or ordinary operating expenses, depleting the Association's funds of $8,784.00 that Towcon was required to fund. These actions by the directors breached their fiduciary duty to the Association, and the actions of Towcon and Condominium Realty Corporation breached their duties and the terms of the Declaration. Said actions have damaged the Association in the amount of $8,784.00 plus interest.
 
        3.        The budget prepared by the directors at the instruction of Towcon indicated that approximately 11% of the monthly assessments were for reserves. Paragraph 7.4 of the Declaration requires the Association to fund the reserves by regular monthly assessments. The records indicate that $3,423.67 should have been placed in the reserve funds, but no reserve funds were turned over to the Association at the termination of Declarant Control. Failure to maintain such reserves was a breach of each director's fiduciary duty to the Association and a breach of Condominium Realty Corporation's duty to the Association. Furthermore, the budget was prepared during the time Towcon controlled the Association, and Towcon represented to prospective buyers of the condominiums that the budget was valid. If such funding did not occur or if the funds were used for maintenance or operating expense, such representation was false and fraudulent and constitutes a deceptive trade practice under the Texas Deceptive Trade Practice Act. The Association and the individual owners have been damaged in the amount of $3,423.67 plus interest.
 
        4.        Paragraph 5.3(k) of the By-Laws requires the Board to "keep and Maintain full and accurate books and records. . ." During the period of Declarant control, full and accurate books and records were not maintained. As a result of the failure to keep and maintain accurate records, the Association incurred an expense of $237.50 to organize and prepare the records. Towcon, the directors, and Condominium Realty Corporation should reimburse the Association for this additional expense.
 
        5.        In the fiscal year ending June 30, 1983 the Association incurred a tax loss of $10,147.00. The directors, Condominium Realty Corporation, and/or Towcon incorrectly filed a tax return for the Association, causing the Association to lose the tax loss carry-forward. This misfiling damaged the Association by an amount in excess of $1,522.05.
 
        As a result of the breaches of fiduciary duties to the Association, breaches of the provisions of the Declaration and By-Laws, fraud and/or deceptive trade practices, the Association has been damages by you in the amount of $24,512.24 plus interest. This letter constitutes a formal demand for the payment of said $24,512.24 plus interest. If said amount is not received in this office within thirty (30) days from the date of receipt of this letter, suit shall be filed against you for said amount plus interest, attorneys' fees, exemplary damages, and costs of court.
        With all of this before us, we return to the merits of the association's claim under the first point of error urging recovery of the $10,545.02 balance of the working capital fund as "working capital fund" was provided for in paragraph 7.4 of the declaration. It is undisputed that Towcon wrote the declaration. Under the association's first point of error, we must interpret the declaration. If the contract is unambiguous, its terms will be enforced as written. Exum v. Lamb, 87 F.2d 73, 74 (5th Cir. 1937). But if the contract is ambiguous, the court will consider the entire instrument so that none of its provisions will be rendered meaningless. R & P Enterprises v. LaGuarta, Gavrel & Kirk, 596 S.W.2d 517, 519 (Tex. 1980). All parties agree that the declaration is unambiguous. In harmonizing contractual provisions, terms stated earlier in an agreement must be favored over subsequent terms. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Further, a contract will be generally construed against the maker. Temple-Eastex, Inc. v. Addison Bank, 672 S.W.2d 793, 798 (Tex. 1984). Section 7.4 of the Declaration states:
        7.4.        RESERVE FUND. The Association shall establish adequate reserve funds for replacement of Common Element components and fund the same by regular monthly payments rather than by extraordinary special assessments. In addition, there shall be established a working capital fund for the initial operation of the Condominium Project equal to at least three (3) months' estimated Common Assessments charge for each Unit, said deposit to be collected at closing of Unit sale."
(emphasis added). It is stipulated that Towcon, Burk, Stern and Show collected the sum of $15,900.00 as the working capital fund and that Towcon, Burk and Shaw delivered to the association the sum of $5,354.98 as the balance of the working capital fund. Thus, it is undisputed that Towcon, Burk and Shaw did not turn over to the association the balance of $10,545.02.
        Pointing to the language in paragraph 7.4 of the declaration reading "a working capital fund for the initial operation of the Condominium Project," Towcon argues in its brief that this language "exists for purposes of paying initial operating expenses which any new operation would anticipate." (emphasis in original). While Towcon does not cite to the record any evidence that it used all or any part of the $10,545.02 balance of the working capital fund for initial operating expenses, it maintains in its brief that it did so and, therefore, that should be the end of the inquiry because otherwise paragraph 7.4 of the declaration becomes meaningless as it pertains to the establishment of a working capital fund. We disagree. We conclude that Towcon cannot be heard to say that they had the right to use the $10,545.02 for initial operating expenses. We reach this conclusion because Towcon was already contractually obligated to fund the current operating expenses of the association and to pay the difference between the cost of maintenance and the assessments received from the unit owners. Paragraph 5.11 of the declaration states, in pertinent part:
        5.11 OBLIGATION OF DECLARANT FOR ASSESSMENTS AND MAINTENANCE. During the Declarant Control Period, as provided in Paragraph 4.2 hereof, the Declarant shall be responsible for the difference between the cost of maintenance and assessments received from the Unit Owners of each Building . . . . During the Declarant Control Period, Declarant shall provide any additional funds necessary to pay actual cash outlays required to fund current operating expenses of the Association. Declarant shall not be obligated to fund any reserve accounts until after the Declarant Control Period is terminated.
We conclude that paragraph 5.11 of the declaration is unambiguous and requires Towcon to pay the difference between assessments received from the unit owners and the cost of maintenance and to fund the reserve accounts after the declarant control period is terminated. We reason that to construe Section 7.4 to allow Towcon to use the working capital fund to satisfy Towcon's obligations under Section 5.11 would be to nullify the clear intent and purpose of paragraph 5.11 and would be improper. We conclude therefore, that the undisputed evidence establishes as a matter of law that Towcon is indebted to the association in the amount of $10,545.02 as of October 31, 1983, the stipulated termination date of the "Declarant Control Period." We sustain the association's first point of error.
        Next, we consider the second prong of the association's claim for breach of contract. In its second point of error, the association contends that the evidence conclusively establishes as a matter of law that during the declarant control period Towcon failed to pay to the association the $11,549.55 difference between the cost of maintenance and the assessments received from the unit owners of each building. Under this point of error, we focus on paragraph 5.11 of the declaration and its requirement that during the declarant control period Towcon be responsible for the difference between the cost of maintenance and assessments received form the unit owners. The record gives us these figures to be used in arriving at the difference:
        Assessments:                         34,001.87
        Towcon payments                 9,803.00
        Total Receipts                 43,804.87         43,804.87
            Maintenance outlays:                        <55,354.42>
                Difference                                          <11,549.55>
We take these amounts from the association's exhibit No. 3 which was admitted without objection. The sponsoring witness was Ms. Haase. Towcon, Burk, Stern and Shaw did not object to any of Haase's testimony as to each of the above amounts when she testified as to what the association's exhibit No. 3 showed. Indeed, Towcon, Burk, Stern and Shaw do not challenge the accuracy of the above amounts or the "difference" calculation. Instead, they argue in their brief that "[t]here was no evidence as to any amount that the appellees actually owed and the evidence offered through Ms. Haase clearly indicates by her own testimony that her boss Mr. Gibbons had actual knowledge of these facts and amounts and not Ms. Haase." Towcon, Burk, Stern and Shaw proceed to assert in their brief that "[b]ased upon the only witness of [the association], the Trial Court had no alternative but to find as it did based upon the evidence." We emphasize that the above amounts were admitted into evidence without objection. Under such circumstances, we conclude that the "knowledge" argument of Towcon, Burk, Stern and Shaw is without merit. It follows that we disagree that based upon the association's only witness, the trial court had no alternative but to find as it did based upon the evidence.
        As noted above, paragraph 5.11 provides that during the declarant control period Towcon is required to "provide any additional funds necessary to pay actual outlays required to fund current operating expenses of the Association." We conclude that the evidence conclusively establishes as a matter of law that during the declarant control period Towcon failed to pay to the association the $11,549.55 difference between the cost of maintenance and the assessments received from the unit owners of each building. We sustain the association's second point of error.
Breach of Fiduciary Duty
        In its third point of error, the association contends that the evidence conclusively establishes as a matter of law that Burk, Stern and Shaw breached their fiduciary duties to the association. In its fourth point of error, the association contends that the evidence conclusively establishes as a matter of law that the association is entitled to exemplary damages against Burk, Stern and Shaw for their intentional breach of their fiduciary duties to the association. The association grounds its asserted fiduciary duty against Burk, Stern and Shaw as follows. As stipulated, Burk, Stern and Shaw were directors of the association from May 7, 1982, until October 31, 1983 (the stipulated date on which Towcon relinquished "Declarant control" over the association). Paragraph 4.1 of the declaration states "[t]hat the administration of this Condominium Property shall be governed by the By-Laws of [the association]." Article V of the association's by-laws, applicable from May 7, 1982, until October 31, 1983, deals with the board of directors. Paragraph 5.3 of the by-laws provides that the board of directors shall have the following duties: "a. To administer and enforce the covenants, conditions, restrictions, uses, limitations, obligations and all other provisions set forth in the Condominium Declaration." Therefore, the association maintains that, during the period when Burk, Stern and Shaw were directors, Burk, Stern and Shaw breached their fiduciary duties to the association by failing to enforce the declaration. The association argues that Burk, Stern and Shaw did not require Towcon to be responsible for and pay the difference between the cost of maintenance and the amount of assessments received from unit owners, did not require Towcon to provide any additional funds necessary to pay actual cash outlays required to fund the current operating expenses of the association and did not require Towcon to pay over to the association all of the working capital. The association reasons that if Burk, Stern and Shaw had enforced the contractual obligations of Towcon and required Towcon to make payments as required by the declaration, they would have been making the payments themselves since at that time they were the owners FN:1 of Towcon. Instead, the association further asserts, Burk, Stern and Shaw intentionally chose to breach the association's by-laws and their fiduciary duties to the association and to use the association's reserves and working capital for their own and Towcon's benefit. Thus, the association argues that as owners, directors and officers of Towcon, Burk, Stern and Shaw intentionally caused Towcon to breach the declaration.
        We disagree with the association's premise upon which it grounds its asserted fiduciary duty on the part of Burk, Stern and Shaw. The association bases its premise on the theory that Burk, Stern and Shaw as directors of the association must cause Towcon to perform Towcon's contractual obligations by vote as a Towcon stockholder, officer and director. We conclude that such is not the "director duty" imposed upon Burk, Stern and Shaw by the association's by-laws. Instead, we interpret Burk, Stern and Shaw's director duty under the association's by-laws to vote as association directors as will enable the association to enforce the covenants, conditions, obligations and provisions in the declaration. In short, the association's by-laws require Burk, Stern and Shaw to vote as directors of the association to sue Towcon for breach of the declaration. The by-laws impose no requirement on Burk, Stern and Shaw to move to their seats at the Towcon board of directors and vote to pay the association. The record contains no evidence that Burk, Stern and Shaw, or any of them, ever refused to vote as association directors to sue Towcon for breach of the declaration or to otherwise enforce the declaration. It follows that the evidence does not conclusively establish that as a matter of law that Burk, Stern and Shaw breached their fiduciary duties to the association. We overrule the association's third point of error. It follows that the association is not entitled to exemplary damages against Burk, Stern and Shaw for the intentional breach of their fiduciary duties to the association. We overrule the association's fourth point of error.
        In its fifth point of error, the association contends that the evidence conclusively establishes as a matter of law that the association is entitled to a judgment against Towcon, Burk, Stern and Shaw for attorney's fees and costs in the amount of $16,100.12. As we have concluded above, Towcon was contractually obligated to the association by the terms of the declaration and by-laws. It is undisputed that the association was and is represented by an attorney; that the association presented a claim to Towcon, Burk, Stern and Shaw; and that the Association did not receive payment of the just amount owed before the expiration of the 30th day after the claim was presented. Further, the association prevailed in the court below (as well as herein). FN:2
        The award of reasonable attorney's fees to a plaintiff recovering on a valid claim founded on a written or oral contract preceded by proper presentment of the claim is mandatory. Caldwell & Hurst v. Myers, 714 S.W.2d 63, 65 (Tex. App.--Houston [14th Dist.] 1986, writ ref'd n.r.e.); Kimbrough v. Fox, 631 S.W.2d 606 (Tex. App.--Fort Worth 1982, no writ). In order to recover attorney's fees under Chapter 38 of the Texas Civil Practice & Remedies Code, the claimant must be represented by an attorney, present the claim to the opposing party, and have received no payment of the just amount owed before the expiration of the 30th day after the claim is presented. Essex Crane Rental Corp. v. Strickland Const. Co., 753 S.W.2d 751, 753 (Tex. App.--Dallas 1988, writ denied); Tex. Civ. Prac. & Rem. Code Ann. § 38.002 (Vernon 1986). As noted above, the association complied with all of these conditions. While the trial court has discretion in fixing the amount of attorney's fees, it does not have discretion in denying attorney's fees entirely under the Code. Essex Crane Rental Corp., 753 S.W.2d at 753. Therefore, we conclude that the trial court abused its discretion in denying recovery of attorney's fees by the association.
        Section 38.003 of the Texas Civil Practice and Remedies Code provides:
        It is presumed that the usual and customary attorney's fees for a claim of the type described in Section 38.001 are reasonable. The presumption may be rebutted.
Counsel for the association, Mike Gibbs, testified without objection as to the amount and reasonableness of the attorney's fees. Gibbs further testified without objection that these fees comported with the usual and customary attorney's fees in Collin County for this type of case. This testimony was not rebutted and Towcon, Burk, Stern and Shaw do not assert on appeal that it was rebutted. In the absence of any controverting evidence as to the reasonableness of attorney's fees, no fact issue is raised. See Gifford v. Old Republic Ins. Co., 613 S.W.2d 43, 46 (Tex. Civ. App.--Houston [14th Dist.] 1981, no writ). Thus, we conclude that the association is entitled to recover their attorney's fees as a matter of law. We sustain the association's fifth point of error, and award the association the sum of $16,100.12 in attorney's fees and costs against all of the appellees for the reason stated above.
        Burk, Stern and Shaw do not appeal the trial court's judgment in favor of the association and against them, both jointly and severally, in the amount of $2,926.09. We affirm that portion of the trial court's judgment against Burk, Stern and Shaw. We reverse the trial court's judgment in favor of the association and against Towcon insofar as it awards the association the amount of $2,926.09. We also reverse the trial court's judgment insofar as it denies the association an award of its attorney's fees against Towcon, Burk, Stern and Shaw. We render judgment in favor of the association and against Towcon in the sum of $22,094.57 together with prejudgment interest thereon from January 13, 1986, FN:3 at the rate of ten percent (10%) per annum until November 29, 1988, the date of the trial court's judgment, in the amount of $6,983.70. FN:4 We render judgment in favor of the association and against Towcon, Burk, Stern and Shaw, both jointly and severally, in the sum of $16,100.12 as attorney's fees. We render judgment in favor of the association and against Towcon for interest on $29,078.27 at the rate of ten percent (10%) per annum from the 29th day of November 1988, the date of the trial court's judgment. FN:5 We render judgment in favor of the association and against Towcon, Burk, Stern and Shaw, both jointly and severally, for interest on $16,100.12 at the rate of ten percent (10%) per annum from the 29th day of November 1988, the date of the trial court's judgment. FN:6
 
 
 
                                                          
                                                          WARREN WHITHAM
                                                          JUSTICE
 
Do Not Publish
Tex. R. App. P. 90
 
890076F.U05
 
FN:1 The parties stipulated and have referred to Burk, Stern and Shaw as "owners" rather than "shareholders."
FN:2 The question arises as to why Burk, Stern and Shaw are liable for attorney's fees when the liability for breach of contract is determined by this opinion to be that of Towcon. The answer lies in the fact that the trial court determined that Burk, Stern and Shaw were liable for breach of contract and awarded damages for that breach in the amount of $2,926.09 and in the fact that Burk, Stern and Shaw do not appeal from judgment against them in the amount of $2,926.09. Consequently, we conclude that Burk, Stern and Shaw must suffer imposition of the attorney's fees award.
FN:3 This date is 180 days after the date written notice was given by the association, July 17, 1985. Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 6(a) (Vernon Supp. 1989).
FN:4 The rate of prejudgment interest shall be the same as the rate of postjudgment interest at the time of judgment. Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 6(g) (Vernon Supp. 1989). Thus, the rate for prejudgment interest is determined in the same manner as postjudgment interest. See footnote 5 below.
FN:5 Computation of judgment rate by the consumer credit commissioner for month of November, 1988, 13 Tex. Reg. 5843 (1988), pursuant to Tex. Rev. Civ. Stat. Ann. art. 5069-1.05, § 2 (Vernon Supp. 1989). The contents of the Texas Register are to be judicially noticed and constitute prima facie evidence of the text of the documents and of the fact that they are in effect on and after the date of the notation. Tex. Rev. Civ. Stat. Ann. art. 6252-13a, § 4(c) (Vernon Supp. 1989).
FN:6 See Footnote 5 above.
File Date[12-14-89]
File Name[890076F]