Opinion issued June 16, 2026
In The
Court of Appeals
For The
First District of Texas
NO. 01-25-00756-CV
MONTROSE 15, LLC D/B/A IDLE HANDS, ANDREW HUNTER,
CRYSTAL HUNTER, AND MATTHEW WOLSKI, Appellants
V.
MONTROSE COLLECTIVE OWNER, LP, Appellee
On Appeal from the 190th District Court
Harris County, Texas
Trial Court Case No. 2023-75639
MEMORANDUM OPINION
The proceedings below in this landlord-tenant dispute ended in a bench trial.
Montrose 15 (the tenant) signed a retail lease agreement with Montrose Collective
Owner (the landlord) for 2,411 square feet of interior space with another 2,300 square feet of outdoor patio space. The lease has about 46 pages of single-spaced
text, not counting attachments, with many detailed provisions. The lease provides
for a 10-year primary term, running from 2021 to 2031, plus the possibility of
extension terms.
In late 2023, the landlord filed suit alleging that Montrose 15 had fallen behind
on the rent and breached the lease.1 The suit proceeded to a bench trial on the
landlord’s allegations of breach of contract and its plea for money damages and
attorney’s fees.
The trial court found for the landlord and awarded damages. It awarded
$264,146 in damages; prejudgment interest of $81,805; attorney’s fees; and
postjudgment interest at 18% per annum.
Montrose 15 filed a motion to modify the judgment. It assailed the use of 18%
as the rate for prejudgment and postjudgment interest:
In Texas, the rates for pre- and post-judgment interest are the same. See
Tex. Fin. Code §304.103. Because the lease is silent on pre- and postjudgment interest, TEX. FIN. CODE §304.003 controls and the rate is
the prime rate as published by the Board of Governors of the Federal
Reserve System on the date of computation. See TEX. FIN. CODE
§304.003(c)(1). On June 17, 2025, the Daily Prime Rate was 7.5%, not
the 18% the Court awarded.
1
The suit named three individuals (Andrew Hunter, Crystal Hunter, and Matthew
Wolski) as additional defendants on personal guaranty obligations, but we will treat
the case as involving a single defendant for simplicity.
2
The motion concluded by requesting that the trial court modify the final judgment
to impose a 7.5% prejudgment and postjudgment interest rate.
The motion to modify was overruled by operation of law. Montrose 15
appealed. It presents a single issue about the interest rate: “Did the trial court err in
granting 18% pre and post judgment interest that were not contained in the
underlying lease?”
Judgment Interest Rate
The correct interpretation of an unambiguous contract is a question of law that
we review de novo. URI, Inc. v. Kleberg Cnty., 543 S.W.3d 755, 763 (Tex. 2018);
see also Samson Expl., LLC v. Bordages, 694 S.W.3d 195, 200 (Tex. 2024) (applying
de novo review to late charge provision).
The lease contains 26 articles, starting with Articles I (Basic Lease Provisions
and Defined Terms) and II (Demise of Leased Premises). It ends with Article XXVI
(Miscellaneous), which chooses Texas law, provides fees to the prevailing party, and
puts venue in Harris County for any litigation. The pivotal language appears in
Article VII (Rent). Section 7.5 deals with late charges and refers to interest at a rate
that must not exceed 1-1/2% per month:
7.5 Late Charges. Should Tenant fail to pay to Landlord when due
any payment of Rent or other charges provided hereunder, Tenant
agrees to pay to Landlord, in addition to such Rent or other charges, an
administrative charge of $500.00 to defray the additional costs and
expenses that Landlord will incur in handling the late payment, plus
3
interest at the maximum contractual rate which may be legally charged
in the event of a loan of such amount to Tenant (but in no event to
exceed 1-1/2% per month), such interest to accrue continuously on any
unpaid amount due to Landlord by Tenant during the period from the
date due until the date paid. Any late charge or interest payment shall
be payable as additional rent under this Lease, and shall be payable
immediately on demand.
This section of the contract furnishes the clash point between the two sides.
Even so, it bears mention that other provisions of the lease use a similar
scheme for interest by providing for the rate not to exceed 1-1/2% per month. For
example, section 8.4 (Right to Examine Books) gives the landlord a right to audit
Montrose 15’s sales. If the audit reveals that Montrose 15 has understated those
sales, Montrose 15 must pay the landlord “the deficiency in Percentage Rent plus
interest at the maximum contractual rate which may be legally charged (but in no
event to exceed 1-1/2% per month) . . . .” Section 9.2 (Tenant’s Obligations) and
Article XVII (Liens) use comparable language.
The parties agree that analysis starts with the Finance Code. Section 304.002
gives the rule for postjudgment interest in breach of contract cases where the contract
provides for interest:
A money judgment of a court of this state on a contract that provides
for interest or time price differential earns postjudgment interest at a
rate equal to the lesser of:
(1) the rate specified in the contract, which may be a variable rate;
or
4
(2) 18 percent a year.
TEX. FIN. CODE § 304.002. For contract cases where the contract does not so provide,
courts fall back to the default rule from section 304.003(a), which relies on a floating
rate that can change every month:
(a) A money judgment of a court of this state to which Section
304.002 does not apply, including court costs awarded in the
judgment and prejudgment interest, if any, earns postjudgment
interest at the rate determined under this section.
Id. § 304.003(a).
Guided by these statutory provisions, as well as by the decision in Johnson &
Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 528 (Tex. 1998) (op.
on reh’g), the courts have tended to conclude that contracts calling for 1.5% interest
per month on unpaid amounts result in an 18% rate of prejudgment and
postjudgment interest. We start with the Cook Composites decision from our sister
court, which laid out the text of the contract before deciding the rate:
In its sixth issue, CCP argues the trial court erred in awarding
prejudgment interest at eighteen percent. According to CCP, the
provision in the Westlake/CCP contract on which the trial court
purportedly relied in arriving at the prejudgment interest rate applies
only to interest charged on overdue invoices and not to the calculation
of prejudgment interest on a damage award. The parties’ contract states:
INVOICE AND PAYMENT. Invoices for Products
purchased by Buyer shall be rendered promptly following
shipment. . . . Buyer shall pay interest on all past due
amounts at the lower of (1) one and one-half percent
(1 ½ %) per month or (2) the maximum non-usurious rate
permitted by applicable law; provided, however, that
5
should Buyer dispute the accuracy of any portion of any
invoice, Buyer may withhold payment of the disputed
amount and shall promptly notify Seller specifying the
amount in dispute and the reasons therefor. . . .
CCP argues that because Westlake stopped sending invoices to CCP
when it stopped shipping product, “there was nothing to trigger the
interest obligation” and the trial court erred in awarding prejudgment
interest at the rate of eighteen percent. We reject this argument.
Cook Composites, Inc. v. Westlake Styrene Corp., 15 S.W.3d 124, 141 (Tex. App.—
Houston [14th Dist.] 2000, pet. dism’d) (footnote omitted). The court went on to say
that this rate on past due “amounts” resulted in an 18% rate for prejudgment interest:
When a contract provides for a specific interest rate, the postjudgment
interest will be the lesser of: (a) the rate specified in the contract or
(b) 18% a year. Here, the parties’ contract provides that 1.5% interest
will be paid a month on amounts that are thirty days past due for goods
delivered. Inasmuch as the Westlake/CCP contract calls for monthly
compounding of interest, the rate specified in the contract exceeds
eighteen percent a year. Westlake is thus entitled to prejudgment
interest at the lesser statutory rate of eighteen percent a year, which is
exactly the rate specified in the final judgment.
Id. (citation omitted).
A similar clause appeared in the contract in DeBoer v. Attebury Grain, LLC,
684 S.W.3d 520 (Tex. App.—Eastland 2024, no pet.). There the contract referred to
an 18% rate on “any balance remaining unpaid” after 30 days:
SELLER may permit BUYER to make purchases on credit from time
to time. The price for goods and services purchased will be due upon
receipt of invoice.
BUYER agrees to pay a finance charge at the rate of 18% per annum
(1.5% per month) on any balance remaining unpaid after the 30th day
following invoice date.
6
Id. at 529–30. The Eastland court found that this language triggered the 18% rate.2
This holding comported with a similar holding from the same court a decade earlier.
See Jones v. R.O. Pomroy Equip. Rental, Inc., 438 S.W.3d 125, 132 (Tex. App.—
Eastland 2014, pet. denied) (applying 18% rate where contract for equipment rental
provided for interest on unpaid balances and stated: “All past due balances subject
to the maximum amount of interest allowed by law”).
The Dallas court reached a similar conclusion in Accent Builders, Inc. v.
Session, No. 05-23-00675-CV, 2024 WL 3100696 (Tex. App.—Dallas June 24,
2024, no pet.) (mem. op.). There the contract spoke of an 18% rate on “amounts”
past due:
3. All invoices submitted by Company to the Customer for the Project
are due immediately upon receiving a pay request of value of work
completed. Any invoices not paid by Customer to Company within
thirty days are considered past due. Interest and finance charges on any
amounts past due will be charged at the maximum allowable by law, or
at 18% per annum whichever is less.
2
The court explained: “[T]he credit agreement does not appear to be confined to a
single specific transaction. For example, it references ‘future purchases,’ ‘purchases
on credit from time to time,’ and raising or lowering credit limits ‘from time to time.’
Thus, the credit agreement’s terms are continuing and applicable to future
transactions between the parties. With no amendment or similar document of
differing terms subsequently entered into by the parties, the trial court as the finder
of fact was free to conclude that Appellant, and a buyer under the circumstances,
would have understood the continuing terms upon which credit would be extended
in any transaction for goods and services to be at eighteen percent interest on all
outstanding balances, under which the parties had, from the outset, agreed to do
business.” DeBoer v. Attebury Grain, LLC, 684 S.W.3d 520, 530 (Tex. App.—
Eastland 2024, no pet.). “We conclude that the parties agreed to a rate of eighteen
percent for prejudgment interest.” Id.
7
4. Should default be made in payment of this contract, charges shall be
added from date thereof at the maximum allowable by law, or at 18%
per annum whichever is less and if placed in the hands of an attorney
for collection, all attorney’s fees, and legal filing fees shall be paid by
Customer accepting said contract.
Id. at *5.
Citing the Eastland court’s DeBoer decision, the Dallas court found an 18%
rate to be appropriate: “Accent secured a money judgment against Teklu, and the
contract with Teklu set an eighteen percent interest rate as interest finances charges
for any amounts past due or in the event of payment default. We conclude the parties
agreed to a rate of eighteen percent for pre-judgment interest.” Id.
For the reasons stated in Cook Composites and essentially reiterated in
DeBoer, Accent, and Jones, we hold that the trial court was correct when it found
the rate to be 18%.3
Supersedeas
Intertwined with the interest rate dispute is a dispute over the amount of the
supersedeas bond. Montrose 15 initially superseded the judgment by posting a bond
for $274,000, which equaled the amount of compensatory damages awarded in the
3
At oral argument, appellants approached the interest rate issue from a fresh vantage
point, namely that the late payment fees were already assessed in the damages
awarded in the judgment. We acknowledge this argument and have considered it
fully, but we remain convinced that the outcome is controlled by the legal rule found
in cases like Cook Composites and Jones.
8
judgment plus about $10,000. On the landlord’s motion, the trial court increased the
required security amount to $447,044.73.
Montrose 15 filed an emergency motion in this Court to stay the trial court’s
order increasing security and to order the trial court to reconsider the amount of
security. Montrose 15 asserted that the increased amount erroneously included
prejudgment interest and set a rate of 18% for postjudgment interest. The landlord
responded and disputed both assertions. We temporarily stayed enforcement of the
trial court’s order pending a final review of the emergency motion or final disposition
of this appeal.
While the stay was pending, the landlord filed a motion in this Court to
increase the amount of security by about $30,000 to cover postjudgment interest that
had accrued beyond the amount of Montrose 15’s posted bond. In short, both sides
dispute how much security is required to suspend enforcement of the judgment.
This dispute over the amount of security primarily turns on our resolution of
Montrose 15’s appellate issue. Central to both sides’ supersedeas issues is the proper
rate of prejudgment and postjudgment interest. We concluded above that the proper
rate is 18%. This conclusion on the merits should allow the parties to resolve the
dispute over the proper amount of security. To the extent any party desires to modify
the amount of security required to suspend execution of the judgment, the trial court
retains jurisdiction after its plenary power expires to do so. TEX. R. APP. P.
9
24.3(a)(2). The trial court’s ruling is reviewable by motion filed in the court of
appeals. TEX. R. APP. P. 24.4(a)–(b). We lift the stay and dismiss any pending Rule
24 motions without prejudice to refiling in the trial court.
Conclusion
We affirm the judgment, lift the stay on the trial court’s November 3, 2025
order to increase security, and dismiss any pending Rule 24 motions without
prejudice.
David Gunn
Justice
Panel consists of Justices Guerra, Gunn, and Morgan.
10