In order to grant divorce by default, trial court must still receive sufficient evidence to substantiate the allegations in the petition; i.e. prove-up is required. A default judgment in a divorce suit is subject to attack for insufficient evidence on appeal. In this restricted appeal, the Austin Court of Appeals finds error on the face of the record and concludes that the judgment should be reversed for lack of evidence on the value of the community property. Award of child support for disabled child is also reversed because no evidence on the relevant factors was presented at the final hearing, and because the amount ordered might have been affected by the property division. Finally, the court reversed the award of attorneys fees, for the same reason.
Magdalena Rodriguez Wolk v. Robert E. Wolk, No. 03-06-00595-CV (Tex.App.- Austin, Sep. Mar. 12, 2007)(Opinion by Justice Patterson)(default divorce)(Before Justices Patterson, Pemberton and Waldrop)
03-06-00595-CV
Magdalena Rodriguez Wolk v. Robert E. Wolk--Appeal from 261st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. D-1-FM-05-006965, HONORABLE LORA J. LIVINGSTON, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
This is an appeal from a default judgment granting a final divorce decree. In four issues, appellant Magdalena Rodriguez Wolk contends that (i) she meets the requirements of a restricted appeal; (ii) there is no evidence in the record to support the trial court's setting of the amount of child support; (iii) there is no evidence in the record to support the trial court's division of the marital estate; and (iv) there is no evidence to support the trial court's assessment of attorney's fees and court costs. For the reasons that follow, we affirm the decree in part, and reverse and remand as to the issues raised by appellant.
PROCEDURAL AND FACTUAL BACKGROUND
On October 20, 2005, appellee Robert Wolk filed for divorce from appellant. Appellant did not answer or otherwise appear. A brief hearing was held on April 5, 2006. The record shows that Mr. Wolk was the only witness to testify. He testified that he and appellant have a nineteen-year-old child with Down syndrome, that appellant has always been the primary caretaker for the child, and that appellant had taken care of the child for many years. He presented evidence of his income and asked the court to award appellant child support in the amount of $632 per month. Mr. Wolk testified that he had paid at least $700 to $1,500 per month for the last fifteen years in mortgage payments for the home where appellant and their child reside and asked the court not to grant retroactive child support. Mr. Wolk also testified that he paid $408 per month to provide health insurance for the child.
With regard to the division of property, Mr. Wolk testified that he was asking the trial court to award each of the parties "any and all personal effects in their possession" and "any cash, bank accounts, retirement accounts in their possession . . . in their name"; to require each party "to keep and pay any and all debts in their name"; and to divest Mr. Wolk of his interest in the community homestead and award it to appellant with appellant being responsible for "the mortgage and all other matters relating to the property." He testified to the location and legal description of the community homestead and stated that it was the only real estate that he and appellant both owned, but he did not provide testimony on the property's value or the outstanding debt on the property. The trial court signed a default divorce decree granting the relief sought on the same day as the hearing. The decree specified that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred them. On October 4, 2006, appellant filed a notice of appeal.
ANALYSIS
In her first issue, appellant argues that she is entitled to a restricted appeal. A party filing a restricted appeal must demonstrate he filed the appeal within six months of the date the judgment was rendered; he was a party to the suit; he did not participate at the hearing that resulted in the judgment complained of or file any post-judgment motions or appeals; and error is apparent on the face of the record. Tex. R. App. P. 26.1(c), 30; Alexander v. Lynda's Boutique, 134 S.W.3d 845, 848 (Tex. 2004). The "face of the record" consists of all the papers on file in the appeal, including the reporter's record. Vazquez v. Vazquez, ___ S.W.3d ___, No. 14-05-01257-CV, 2007 Tex. App. LEXIS 4713, at *4 (Tex. App.--Houston [14th Dist.] June 19, 2007, no pet.); see also Norman Commc'ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).
Mr. Wolk concedes that appellant has established the first three requirements of a restricted appeal and that only the fourth requirement, error on the face of the record, is at issue. In her second, third and fourth issues, appellant argues that error is apparent on the face of the record as to the trial court's determinations regarding the division of the marital estate, the amount of child support, and the allocation of attorney's fees and court costs. As to the trial court's determinations on these issues, we agree that error is apparent on the face of the record.
Standard of Review
"In a suit for divorce, the petition may not be taken as confessed if the respondent does not file an answer." Tex. Fam. Code Ann. § 6.701 (West 2006). When a respondent in a divorce case fails to answer, the petitioner must still present proof to support the material allegations in the petition. Vazquez, 2007 Tex. App. LEXIS 4713, at *5-6; see also Barry v. Barry, 193 S.W.3d 72, 75 (Tex. App.--Houston [1st Dist.] 2006, no pet.). Because appellant failed to answer or appear, Mr. Wolk was required to present proof at trial to support the material allegations in his petition.
Most appealable issues in family law cases are subject to evaluation under the abuse of discretion standard, including the division of property and the assessment of child support. Sandone v. Miller-Sandone, 116 S.W.3d 204, 205 (Tex. App.--El Paso 2003, no pet.). The test for abuse of discretion is whether the court acted without reference to any guiding principles and rules. Id. at 206. A default judgment of divorce also is subject to an evidentiary attack on appeal. Vazquez, 2007 Tex. App. LEXIS 4713, at *6. When sufficiency review overlaps the abuse of discretion standard, the inquiry on appeal is two-fold: did the trial court have sufficient information upon which to exercise its discretion and did the trial court err in its application of its discretion. Sandone, 116 S.W.3d at 206. Evidentiary sufficiency review comes into play as to the first question. Id. (1)
Division of Marital Estate
In her third issue, appellant contends that the trial court erred in its division of the marital estate. The trial court awarded the community homestead to appellant, but ordered her to pay the "balance due, including principal, interest, tax, and insurance escrow, on the promissory note executed by [Mr. Wolk and appellant] on the [homestead]." The trial court also awarded all personal effects, cash, bank accounts and retirement accounts to the party in possession and ordered both parties to pay "any and all debt" in his or her name.
The Texas Family Code provides that "[i]n a decree of divorce or annulment, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Tex. Fam. Code Ann. § 7.001 (West 2006). Courts have broad discretion in suits for divorce when dividing the property; but the division must be "just and right." Sandone, 116 S.W.3d at 207.
This case is similar to O'Neal v. O'Neal, 69 S.W.3d 347 (Tex. App.--Eastland 2002, no pet.), also a restricted appeal of a default divorce judgment. In O'Neal, the petitioner was the only witness at the hearing and provided scant testimony. Id. at 348-50. The trial court divided the community property, including real property, cash, bank accounts, retirement accounts, IRA accounts, stocks, bonds and securities between the parties, without evidence of the value of the property. Id. at 348-50. The court of appeals concluded that the trial court had abused its discretion in the division of the estate based on lack of evidence. Id. at 350.
The El Paso court of appeals reached the same conclusion in another case involving a restricted appeal of a default divorce decree. Sandone, 116 S.W.3d at 205. The court reversed the trial court's division of property because there was no evidence of the value of the assets or the amount of the liabilities. Id. at 207-08. Stating that "[w]ithout the ability to determine the size of the community pie, we can make no determination that the slices awarded to each spouse were just and right," the court held "a division of community property cannot be upheld where the record is absolutely devoid of any testimony concerning the value of the property divided by the court." Id. at 205, 207-08; see also Wilson v. Wilson, 132 S.W.3d 533, 538 (Tex. App.--Houston [1st Dist.] 2004, no pet.) (reversing property division due to the "dearth of evidence identifying, describing, and valuing the community estate").
Similarly, this record lacks evidence identifying, describing, and valuing the community estate. Although Mr. Wolk testified as to the location and legal description of the community homestead, and stated that he had made mortgage payments on the home of at least $700 to $1,500 per month for fifteen years, no other evidence was presented as to the value of the property or the outstanding debt on the property. Likewise, no evidence was presented to identify, describe, or value the other assets and liabilities divided in the decree. Instead, Mr. Wolk merely asked that the court allow each party to "keep any cash, bank accounts, retirement accounts in their possession . . . in their name" and that "each party be able to keep and pay any and all debts in their name." Accordingly, we conclude error is apparent on the face of the record and that the trial court abused its discretion in the division of the marital estate based on the lack of evidence. See Sandone, 116 S.W.3d at 208. We sustain appellant's third issue.
Amount of Child Support
In her second issue, appellant contends the trial court erred in its determination of the amount of child support. The trial court applied the child support guidelines, based upon evidence of Mr. Wolk's income, and awarded appellant $632 per month in child support. See Tex. Fam. Code Ann. § 154.130 (West 2002). Because we have remanded the division of the community estate to the trial court, we also remand the determination of child support as such an award may be "materially influenced" by the property division, and we should not substitute our discretion for that of the trial court. See Vazquez, 2007 Tex. App. LEXIS 4713, at *12; see also Wilson, 132 S.W.3d at 539.
The Texas Family Code also specifies four factors that a court "shall determine and give special consideration to" when setting the amount of child support for a disabled child after his eighteenth birthday. Tex. Fam. Code Ann. § 154.306 (West 2002). The factors are:
(1) any existing or future needs of the adult child directly related to the adult child's mental or physical disability and the substantial care and personal supervision directly required by or related to that disability;
(2) whether the parent pays for or will pay for the care or supervision of the adult child or provides or will provide substantial care or personal supervision of the adult child;
(3) the financial resources available to both parents for the support, care, and supervision of the adult child; and
(4) any other financial resources or other resources or programs available for the support, care, and supervision of the adult child. Id.
Though evidence was presented that the child has Down syndrome, that appellant has always been the primary caretaker, and that she has been taking care of the child for years, there was no evidence showing the child's current or future medical needs relating to his disability, the substantial care and supervision required relating to the child's disability, whether appellant pays or will pay for the care or supervision of the child or will provide substantial care, or financial or other resources or programs available for the support and care of the child. We conclude that on the face of the record, the trial court did not have sufficient information "to determine and give special consideration" to the statutorily required factors. See id.; see also Sandone, 116 S.W.3d at 208. We sustain appellant's second issue.
Attorney's fees and court costs
In her fourth issue, appellant contends the trial court erred in its assessment of attorney's fees and court costs. The trial court ordered in the divorce decree that each party was responsible for his or her own attorney's fees, expenses and costs, and that court costs were to be borne by the party that incurred the costs. A court may apportion attorney's fees in a divorce action as part of a just and right division of the property. Sandone, 116 S.W.3d at 208. Mr. Wolk, however, did not present any evidence of incurred attorney's fees. Because we have reversed and remanded the division of the marital estate, and because no evidence was presented on the amount of incurred attorney's fees, we sustain appellant's fourth issue and remand the assessment of fees and costs for further consideration by the trial court in connection with the other remanded issues. See Barry, 193 S.W.3d at 76.
CONCLUSION
We affirm the trial court decree in part, and having sustained appellant's issues, reverse and remand for a new trial on the issues raised by appellant.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed in part; Reversed and Remanded in part
Filed: September 12, 2007
1. Because we conclude that the trial court did not have sufficient information to exercise its discretion in the division of the marital estate, the assessment of child support, or the award of attorney's fees, we only address the first inquiry as to each issue appellant raises.
Showing posts with label default judgment. Show all posts
Showing posts with label default judgment. Show all posts
Friday, September 14, 2007
Friday, September 7, 2007
Post-answer default judgment required evidence - only sworn-account claim damages sustained on appeal
Court rejects defendant's claims that his motion for new trial should have been granted on the ground that he did not have proper notice of trial setting, and that he satisfied the Craddock requirements. Defendant's affidavit testimony about lack of notice was dubious.
Gary Romano v. Gary Newton, No. 03-06-00255-CV (Tex.App.- Austin, Sep. 6, 2007)(Opinion by Justice Pemberton)(breach of contract, post-answer default judgment)(Before Chief Justice Law, Justices Pemberton and Waldrop)
Appeal from 335th District Court of Bastrop County
Disposition: Affirmed conditioned on remittiure
FROM THE DISTRICT COURT OF BASTROP COUNTY, 335TH JUDICIAL DISTRICT
NO. 24,929, HONORABLE TERRY L. FLENNIKEN, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Gary Romano appeals from the district court's post-answer default judgment awarding Gary Newton $176,150.68 in actual damages, $6,216.21 in attorney's fees, interest and costs, and its order overruling his motion for new trial. For the reasons we explain below, we affirm the district court's judgment conditioned on Newton's remittitur of a portion of the judgment that is not supported by the record.
The parties' underlying dispute concerns a written contract, a copy of which is attached to and incorporated into Newton's petition, under which Romano agreed to purchase from Newton an inventory of deli products, a customer list, and distribution rights within a designated area. The contract stated that the sales price was "Twenty Seven Thousand Dollars ($27,000)" for the customer list and distribution rights, plus "Seller's actual cost for inventory conveyed," which Newton alleged was $2,544.47, for a total of $29,544.47. Newton alleged that Romano "took possession of the inventory, and the customer list pursuant to the sale [and] has exercised control over the distribution rights," including servicing of customers along the route and actually selling those rights to others," yet "has failed and refused to pay the purchase prices to [Newton]." Newton pled causes of action for breach of written contract, fraud, quantum merit, breach of oral contract, and sworn account. Regarding the sworn account claim, Newton verified that a total principal balance of $29,544.47, exclusive of interest, was due and payable by Romano to him, was within his personal knowledge, just and true, and that all just and lawful offsets, payments, and credits had been allowed. See Tex. R. Civ. P. 185. (1)
Romano, acting pro se, filed a general denial; he did not file a verified denial of Newton's sworn account claim nor assert affirmative defenses. (2) Newton, who was represented by counsel, obtained some discovery from Romano and later set the case for non-jury trial for the week of January 23, 2006. A pretrial conference was also set for January 12. Romano failed to appear at either the pretrial conference or trial. When the case was called for trial, Newton's counsel announced ready and introduced into evidence copies of two letters on his law office letterhead that were addressed from counsel to Romano: (1) a November 4, 2005, letter notifying Romano of the trial date and pretrial conference; and (2) a January 13, 2006, letter advising Romano that the pretrial conference had been held, conveying (per the judge's instructions) information regarding how the case would be called, and requesting a telephone number where Romano could be reached.
Each letter had been addressed to Romano at his address of record, the address where he had previously been served. Each reflected that it had been sent via certified mail, return receipt requested, citing a tracking number. With each letter, Newton also introduced the postmarked certified mail receipt, indicating prepayment of postage, and the signed "green card" acknowledging receipt by someone at Romano's address. The tracking number on each certified mail document matched the number stated on each corresponding letter. The green card with the November 2005 letter bore a postmark of November 7 and indicated receipt on the same date. The signature on the card is not clearly legible, and we cannot immediately discern the signer's identity from the record the district court had before it. However, the green card from the January letter, reflecting receipt at the same address on January 17, bears a signature of "Kathy Romano."
Immediately after introducing the letters and certified mail proof into evidence, Newton moved for a default judgment. The district court granted the motion. Newton's counsel advised that he would prepare a judgment for the court's approval, and the district court responded, "That concludes the hearing." Newton did not present other evidence. The district court subsequently signed a "Default Judgment" awarding Newton $176,150.68 "as the amount due in principal and interest on the principal amount to the date of judgment," plus court costs, $6,216.21 in attorney's fees, and post-judgment interest.
Romano filed a motion for a new trial, contending that he had inadequate notice of the trial setting, that he met the elements of Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939), and that the evidence was insufficient to support the judgment. He attached his affidavit testimony, wherein he also verified the factual allegations within his new trial motion. Newton did not file a controverting affidavit. After a hearing at which no evidence was introduced, the district court overruled Romano's motion for new trial. (3)
Romano (now represented by counsel) brings three issues on appeal, contending that (1) the district court abused its discretion in overruling his new trial motion because the evidence established that he did not receive proper notice of the trial setting and, alternatively, met each factor of the Craddock test; (2) the pleadings and evidence were insufficient to support the judgment of $176,150.68 "as the amount due in principal and interest on the principal amount to the date of judgment"; and (3) the evidence was insufficient to support the attorney's fee award. We overrule Newton's first issue but conclude that the latter two are meritorious.
Motion for new trial
Trial courts have broad discretion in ruling on motions for new trial. Limestone Constr., Inc. v. Summit Commercial Indus. Props., Inc., 143 S.W.3d 538, 542 (Tex. App.--Austin 2004, no pet.). We review a trial court's denial of a motion for new trial for an abuse of discretion. Cliff v. Huggins, 724 S.W.2d 778, 778-79 (Tex. 1987); Limestone Constr., Inc., 143 S.W.3d at 542. In matters committed to a trial court's discretion, the test is whether the trial court acted arbitrarily or without reference to guiding legal principles. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). However, a trial court lacks discretion to incorrectly interpret and apply the law, and abuses its discretion in doing so. In re DuPont De Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004).
A trial court abuses its discretion if it refuses to set aside a default judgment and grant a new trial where (1) the failure of the defendant to answer before judgment was not intentional or the result of conscious indifference, but due to a mistake or an accident; (2) the motion for a new trial sets up a meritorious defense; and (3) granting the motion for new trial will occasion no undue delay or otherwise injure the party taking the default judgment. Craddock, 133 S.W.2d at 126; see also Cliff, 724 S.W.2d at 779 (Craddock analysis applies to motions to set aside post-answer default judgments); Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966) (same).
Furthermore, a defendant who has appeared is entitled to notice of a trial setting as a matter of due process. See LBL Oil Co. v. International Power Servs., Inc., 777 S.W.2d 390, 390-91 (Tex. 1989). A party who has been denied due process through lack of notice of a trial setting satisfies the first Craddock factor (as one cannot be consciously indifferent to a trial of which they are unaware), and, in such instances, the supreme court has also dispensed with the second (meritorious defense) factor for constitutional reasons. Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005); Smith v. Holmes, 53 S.W.3d 815, 817 (Tex. App.--Austin 2001, no pet.).
This Court has previously held that a defendant who can establish lack of notice of a trial setting also need not establish the third Craddock factor, lack of prejudice to the plaintiff, id. at 818, but the supreme court more recently left open that question. Mathis, 166 S.W.3d at 744. We need not consider that issue here because Newton does not dispute that Romano satisfied the lack of prejudice element and our disposition is ultimately controlled by other elements.
Here, it is undisputed that Romano did receive notice of the trial setting before trial began--he admits receiving Newton's second letter concerning the upcoming trial on January 19. This was the first trial setting, and rule of civil procedure 245 requires 45 days notice of an initial trial setting. Romano urges that in light of rule 245, proof that he did not receive 45 days notice of the first trial setting (even if he received some advance notice of it) would obviate his need to establish any of the Craddock factors. As Newton does not dispute that proposition and it is ultimately unnecessary for us to address it, we will assume the same.
As noted, Newton introduced evidence that he sent Romano a letter dated November 4, 2005, giving notice of the trial setting to Romano's address of record. Newton's evidence demonstrated compliance with rule of civil procedure 21a. This evidence that Newton sent the notice in compliance with rule 21a gives rise to a presumption that Romano duly received the notice. Cliff, 724 S.W.2d at 780. In the absence of evidence to the contrary, this presumption has the force of a rule of law. Id. The presumption that notice sent in compliance with rule 21a was received by the intended recipient is not evidence, however, and it "vanishes" when opposing evidence is introduced that the letter was not received. Id.
But Newton also introduced evidence that the November notice letter was actually received by someone at Romano's address--the returned, signed, certified mail "green card" dated November 7. See Smith, 53 S.W.3d at 818 (distinguishing between "the presumption that, because notice was mailed, [the opposing party] received it" arising from sending a notice in compliance with rule 21a versus inferences arising from proof that someone at the address actually received it); cf. Limestone Constr., Inc., 143 S.W.3d at 545 (evidence that notice had been returned "unclaimed"). November 7 was over 80 days prior to the trial setting. Exactly who at that address received the letter is unclear from the record before the district court, but that address corresponded to Romano's address of record, where Romano had been successfully served. Moreover, Newton had later mailed his January notice letter to this address, where "Kathy Romano" acknowledged receipt on January 17. Romano admits receiving that notice letter two days later, on January 19.
Romano contends that his affidavit and verified new trial motion establish that he never received Newton's November notice letter and that the first notice he received was Newton's second letter following the pretrial conference. In the relevant portions of his affidavit, Romano testified as follows:
I received notice of a trial setting from counsel for Plaintiff on January 19th, 2006 for a setting during the week of January 23rd, 2006. I have been Pro Se in this litigation for several months and did not know the meaning of the notice, nor the result or consequence of not appearing before the Court during the week of January 23, 2006. At no time was I called to be at the courtroom on January 27th, 2006, the time at which the Court heard Plaintiff's case. Further, Plaintiff sent a personal letter to me on January 23rd advising of the January 27th trial date.[ (4)] . . . .
On January 23rd, 2006 I sent a correspondence to the Court advising that I had previously made travel plans to be out of town during the time in which the case was set. My correspondence, a true and correct copy of which is attached to the Motion for New Trial as Exhibit "D", provided my current phone number and address, but I was not contacted by the Court or Court personnel that I was to appear on the 27th of January, 2006 for a hearing on the merits. I did not have 45 days notice of the trial setting. I though[t] my letter to the Court of January 23rd, 2006 relieved me of any requirement to appear during the week of the 23rd of January.
In the first paragraph, Romano confirms that he received the January notice letter from Newton on January 19. In the second paragraph, Romano explains his response to that letter, addressing Craddock's conscious indifference factor. Nowhere does he squarely address whether he did or did not receive prior notice of the trial setting except in the statement, found in the second paragraph, "I did not have 45 days notice of the trial setting." However, in his new trial motion, Romano does elaborate, "Defendant did not receive notice of the trial setting until January 19th when he received the letter from Plaintiff's counsel attached as Ex. C. [the January notice letter]." Romano verified the contents of his motion, testifying in his affidavit that "I have reviewed Defendant's Motion for New Trial and find the factual allegations therein true and correct." (5)
Romano urges that his assertions that he did not receive notice of the trial setting until January 19 are sufficient to rebut the rule 21a presumption that he received Newton's November notice letter. He adds that because Newton did not controvert this evidence with his own affidavit in opposition to Romano's new trial motion, the district court was required to take his assertions as true and grant him a new trial. See Director, State Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994) (if plaintiff does not controvert the defendant's affidavit in support of new trial motion, trial court must accept as true the affidavit's factual assertions regarding the Craddock elements).
In determining a motion for new trial under the Craddock standard, the trial court may look to all of the evidence in the record. See Walker v. Gutierrez, 111 S.W.3d 56, 64 (Tex. 2003) (in determining whether movant's factual assertions are controverted, court may consider all of the evidence in the record); Evans, 889 S.W.2d at 269 (same); Katin Corp. v. Loesch, No. 03-05-00412-CV, 2007 Tex. App. LEXIS 6352, at *12 (Tex. App.--Austin Aug. 10, 2007, no pet. h.) (mem. op.) (same). We may thus consider the evidence Newton introduced at trial regarding actual receipt of the notice. See Smith, 53 S.W.3d at 818.
In Smith, this Court recognized that mere proof that someone at a party's address of record received a notice intended for that party does not alone support the inference that the party actually received it. Id. at 818 (inmate's denial that he received notice "overcomes" any inferences from green card signed by someone at prison other than inmate; "[a]fter [inmate] denied that he received notice, appellees were required to do something more than show that someone at the prison's address had received the notice"). This case is distinguishable from Smith for two related reasons. First, while the signature on the green card accompanying the November notice letter cannot clearly be determined to have been Gary Romano's, it does not exclude that possibility, either. (6) Second, as Smith acknowledges, other surrounding facts may cause receipt by another person at the address to be probative of the party's actual receipt. Id. (citing Elite Towing, Inc. v. LSI Fin. Group, 985 S.W.2d 635, 642-43 (Tex. App.--Austin 1999, no pet.) (holding that notice to agent was notice to principal)).
We conclude that Newton's evidence was sufficient to enable the district court to infer, in light of surrounding facts, that Romano had personally signed for or otherwise received the November notice letter before the 45th day prior to trial. The address to which the letter was sent was the same one at which he had earlier been served, and the same one at which "Kathy Romano" later acknowledged receipt of the January notice letter that Romano admits he personally received. This address, the pleadings indicate, was Romano's home address. Romano does not dispute that someone at this address acknowledged receipt of the November letter. The signature on the green card is as consistent with it being Romano's signature as that of any other person there.
Our conclusion is further buttressed by Romano's own affidavit and new trial motion. In the face of evidence that someone at his address actually received the November notice, Romano is conspicuously silent regarding an explanation, offering only the bald assertions that "I did not have 45 days notice of the trial setting" and, "Defendant did not receive notice of the trial setting until January 19th when he received [the January notice letter]." In such a context, these statements are conclusory and, by omitting any mention of the signed green card and its implications, could further support the inference that Romano actually received notice. See Katin Corp., 2007 Tex. App. LEXIS 6352, at *20-21 (explaining that while trial courts must take as true uncontroverted affidavit testimony regarding factual allegations concerning the Craddock factors, they may nonetheless draw "conflicting inferences" from those facts); see also Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 82-83 (Tex. 1992) (conclusory allegations are insufficient to establish Craddock factors).
We conclude that the evidence Newton introduced at trial suffices to controvert Romano's factual assertions that he did not receive the November notice letter. Faced with conflicting evidence, the district court would have been within its discretion to conclude that Romano had received Newton's November trial notice letter on or about November 7, and well in advance of the 45th day before trial. We likewise conclude, in light of this evidence, that the district court would not have abused its discretion in determining that Romano had failed to establish lack of conscious indifference. Although Romano presented evidence that he wrote a letter to the district court responding to the January trial notice, Romano offered no explanation for his inaction in the several weeks following the November notice. On this record, the district court did not abuse its discretion in overruling Romano's motion for new trial as to lack of notice and the Craddock equitable grounds.
Sufficiency of the evidence
By contrast, we sustain Romano's other challenges to the judgment in part because the evidence does not support either the $176,150.68 damages award or the attorney's fee award. Unlike the situation with "no answer" default judgments, when a defendant answers but later fails to appear at trial, a default judgment cannot be taken based on the plaintiff's pleading allegations alone. E.g., Karl & Kelly Co., Inc. v. McLerran, 646 S.W.2d 174, 175 (Tex. 1983); Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979). Once a defendant joins issue with a general denial, "A post-answer 'default' constitutes neither an abandonment of defendant's answer nor an implied confession of any issues thus joined by the defendant's answer." Stoner, 578 S.W.2d at 682. Consequently, "the plaintiff in such a case must offer evidence and prove his case as in a judgment upon a trial." Id.
Newton, as we have noted, did not introduce evidence beyond that relevant to Romano's notice of the trial setting. Instead, he followed a procedure resembling that invoked with "no answer" default judgments. (7) On appeal, Newton attempts to invoke the general appellate presumptions favoring the validity of trial court judgments, arguing that because Romano failed to request findings of fact and conclusions of law, we must imply all fact findings necessary to support the judgment. See, e.g., Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex. 2003). However, where, as here, the appellate record includes the clerk's and reporter's record, even such implied findings of fact can be challenged for legal and factual sufficiency. Id. These presumptions, in any event, do not operate in the default judgment context. McKenna v. Edgar, 388 S.W.2d 927, 929 (Tex. 1965).
We have summarized the evidence at trial above. It consists solely of Newton introducing into evidence the two notice letters and accompanying certified mail documentation before requesting and obtaining judgment. (8) On this record, there is legally insufficient evidence to support judgment for Newton on his causes of action for breach of written or oral contract, fraud, and quantum meruit. There is likewise no evidence to support Newton's attorney's fee award. But because a verified suit on sworn account constitutes prima facie proof of liability for the amount owed and Romano did not properly deny the claim, Newton's pleadings were sufficient to support judgment as to that claim. See Tex. R. Civ. P. 185; see also Nguyen v. Short, How, Frels & Heitz, P.C., 108 S.W.3d 558, 562 (Tex. App.--Dallas 2003, pet. denied); Seisdata, Inc. v. Compagnie Generale de Geophysique, 598 S.W.2d 690, 692 (Tex. App.--Houston [14th Dist.] 1980, writ ref'd n.r.e.). The amount of Newton's sworn account, however, was only $29,544.47, and cannot support the full amount of the judgment's $176,150.68 award "as the amount due in principal and interest on the principal amount to the date of judgment."
An appellate court may suggest a remittitur on its own motion when an appellant complains that there is insufficient evidence to support an award and the appellate court agrees, but there is sufficient evidence to support a lesser award. See Tex. R. App. P. 46.3; see also Springs Window Fashions Div. Inc. v. The Blind Maker, Inc., 184 S.W.3d 840, 889-90 (Tex. App.--Austin 2006, pet. granted, remand by agr.); Comstock Silversmiths, Inc. v. Carey, 894 S.W.2d 56, 57 (Tex. App.--San Antonio 1995, no writ); David McDavid Pontiac, Inc. v. Nix, 681 S.W.2d 831, 838-39 (Tex. App.--Dallas 1984, writ ref'd n.r.e.). The party prevailing in the trial court must be given the option of accepting the remittitur or having the case remanded for a new trial. See Larson v. Cactus Util. Co., 730 S.W.2d 640, 641 (Tex. 1987). Accordingly, we suggest a remittitur of $146,606.21, the difference between the $176,150.68 awarded in the judgment and the $29,544.47 supported by the evidence.
CONCLUSION
We affirm the district court's judgment conditioned on the remittitur of $146,606.21. See Tex. R. App. P. 46.3. If Newton files a remittitur of $146,606.21 with the clerk of the district court within thirty days of this opinion and judgment and notifies this Court of such, we will reform the district court's judgment and, as reformed, affirm. See id. Otherwise, we will reverse the district court's judgment and, as Romano prays, remand the cause to the district court for a new trial on unliquidated damages and attorney's fees.
__________________________________________
Bob Pemberton, Justice
Before Chief Justice Law, Justices Pemberton and Waldrop
Affirmed Conditioned on Remittitur
Filed: September 6, 2007
1. Newton also attached and authenticated documentary proof of these amounts and his demand for payment.
2. The record reflects that Romano had trial-level counsel for a time but that counsel withdrew in September 2005.
3. From the record, it appears that the Honorable John L. Placke, rather than Judge Flenniken, presided over this hearing.
4. This letter, which is dated January 23, 2006, and addressed from Newton to Romano, is attached as an exhibit to Romano's motion for new trial. The letter states: "Dear Mr. Romano: The Court Coordinator stated the above case has been set for 9:00AM Friday January 27, 2006 at [the 335th District Court of Bastrop County, Texas]." The words "Received Jan 26" are handwritten on the letter.
5. Newton urges that Romano's verification is impermissibly conclusory because he states that he "finds" the facts to be true and correct, rather than that the facts "are" true and correct. As Romano also testified that he had personal knowledge of the facts stated in his affidavit, we reject Newton's distinction as merely semantic.
6. We disagree with Romano's assertions on appeal that "[t]he name signing for the card is clearly not Gary Romano."
7. Such confusion is understandable amid Texas's often unclear case law regarding default judgments. See generally Katin Corp. v. Loesch, No. 03-05-00412-CV, 2007 Tex. App. LEXIS 6352 (Tex. App.--Austin Aug. 10, 2007, no pet. h.) (mem. op.) (navigating some of these issues).
8. The clerk's record reflects that Romano's appellate counsel requested from the official court reporter, the record, if any, from the trial and hearing on motion for new trial. Only a brief record from the trial was prepared, and the parties concur that no evidence was presented at the new trial hearing. Nor does the court's docket sheet reflect any additional evidentiary hearings.
Gary Romano v. Gary Newton, No. 03-06-00255-CV (Tex.App.- Austin, Sep. 6, 2007)(Opinion by Justice Pemberton)(breach of contract, post-answer default judgment)(Before Chief Justice Law, Justices Pemberton and Waldrop)
Appeal from 335th District Court of Bastrop County
Disposition: Affirmed conditioned on remittiure
FROM THE DISTRICT COURT OF BASTROP COUNTY, 335TH JUDICIAL DISTRICT
NO. 24,929, HONORABLE TERRY L. FLENNIKEN, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Gary Romano appeals from the district court's post-answer default judgment awarding Gary Newton $176,150.68 in actual damages, $6,216.21 in attorney's fees, interest and costs, and its order overruling his motion for new trial. For the reasons we explain below, we affirm the district court's judgment conditioned on Newton's remittitur of a portion of the judgment that is not supported by the record.
The parties' underlying dispute concerns a written contract, a copy of which is attached to and incorporated into Newton's petition, under which Romano agreed to purchase from Newton an inventory of deli products, a customer list, and distribution rights within a designated area. The contract stated that the sales price was "Twenty Seven Thousand Dollars ($27,000)" for the customer list and distribution rights, plus "Seller's actual cost for inventory conveyed," which Newton alleged was $2,544.47, for a total of $29,544.47. Newton alleged that Romano "took possession of the inventory, and the customer list pursuant to the sale [and] has exercised control over the distribution rights," including servicing of customers along the route and actually selling those rights to others," yet "has failed and refused to pay the purchase prices to [Newton]." Newton pled causes of action for breach of written contract, fraud, quantum merit, breach of oral contract, and sworn account. Regarding the sworn account claim, Newton verified that a total principal balance of $29,544.47, exclusive of interest, was due and payable by Romano to him, was within his personal knowledge, just and true, and that all just and lawful offsets, payments, and credits had been allowed. See Tex. R. Civ. P. 185. (1)
Romano, acting pro se, filed a general denial; he did not file a verified denial of Newton's sworn account claim nor assert affirmative defenses. (2) Newton, who was represented by counsel, obtained some discovery from Romano and later set the case for non-jury trial for the week of January 23, 2006. A pretrial conference was also set for January 12. Romano failed to appear at either the pretrial conference or trial. When the case was called for trial, Newton's counsel announced ready and introduced into evidence copies of two letters on his law office letterhead that were addressed from counsel to Romano: (1) a November 4, 2005, letter notifying Romano of the trial date and pretrial conference; and (2) a January 13, 2006, letter advising Romano that the pretrial conference had been held, conveying (per the judge's instructions) information regarding how the case would be called, and requesting a telephone number where Romano could be reached.
Each letter had been addressed to Romano at his address of record, the address where he had previously been served. Each reflected that it had been sent via certified mail, return receipt requested, citing a tracking number. With each letter, Newton also introduced the postmarked certified mail receipt, indicating prepayment of postage, and the signed "green card" acknowledging receipt by someone at Romano's address. The tracking number on each certified mail document matched the number stated on each corresponding letter. The green card with the November 2005 letter bore a postmark of November 7 and indicated receipt on the same date. The signature on the card is not clearly legible, and we cannot immediately discern the signer's identity from the record the district court had before it. However, the green card from the January letter, reflecting receipt at the same address on January 17, bears a signature of "Kathy Romano."
Immediately after introducing the letters and certified mail proof into evidence, Newton moved for a default judgment. The district court granted the motion. Newton's counsel advised that he would prepare a judgment for the court's approval, and the district court responded, "That concludes the hearing." Newton did not present other evidence. The district court subsequently signed a "Default Judgment" awarding Newton $176,150.68 "as the amount due in principal and interest on the principal amount to the date of judgment," plus court costs, $6,216.21 in attorney's fees, and post-judgment interest.
Romano filed a motion for a new trial, contending that he had inadequate notice of the trial setting, that he met the elements of Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939), and that the evidence was insufficient to support the judgment. He attached his affidavit testimony, wherein he also verified the factual allegations within his new trial motion. Newton did not file a controverting affidavit. After a hearing at which no evidence was introduced, the district court overruled Romano's motion for new trial. (3)
Romano (now represented by counsel) brings three issues on appeal, contending that (1) the district court abused its discretion in overruling his new trial motion because the evidence established that he did not receive proper notice of the trial setting and, alternatively, met each factor of the Craddock test; (2) the pleadings and evidence were insufficient to support the judgment of $176,150.68 "as the amount due in principal and interest on the principal amount to the date of judgment"; and (3) the evidence was insufficient to support the attorney's fee award. We overrule Newton's first issue but conclude that the latter two are meritorious.
Motion for new trial
Trial courts have broad discretion in ruling on motions for new trial. Limestone Constr., Inc. v. Summit Commercial Indus. Props., Inc., 143 S.W.3d 538, 542 (Tex. App.--Austin 2004, no pet.). We review a trial court's denial of a motion for new trial for an abuse of discretion. Cliff v. Huggins, 724 S.W.2d 778, 778-79 (Tex. 1987); Limestone Constr., Inc., 143 S.W.3d at 542. In matters committed to a trial court's discretion, the test is whether the trial court acted arbitrarily or without reference to guiding legal principles. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). However, a trial court lacks discretion to incorrectly interpret and apply the law, and abuses its discretion in doing so. In re DuPont De Nemours & Co., 136 S.W.3d 218, 223 (Tex. 2004).
A trial court abuses its discretion if it refuses to set aside a default judgment and grant a new trial where (1) the failure of the defendant to answer before judgment was not intentional or the result of conscious indifference, but due to a mistake or an accident; (2) the motion for a new trial sets up a meritorious defense; and (3) granting the motion for new trial will occasion no undue delay or otherwise injure the party taking the default judgment. Craddock, 133 S.W.2d at 126; see also Cliff, 724 S.W.2d at 779 (Craddock analysis applies to motions to set aside post-answer default judgments); Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966) (same).
Furthermore, a defendant who has appeared is entitled to notice of a trial setting as a matter of due process. See LBL Oil Co. v. International Power Servs., Inc., 777 S.W.2d 390, 390-91 (Tex. 1989). A party who has been denied due process through lack of notice of a trial setting satisfies the first Craddock factor (as one cannot be consciously indifferent to a trial of which they are unaware), and, in such instances, the supreme court has also dispensed with the second (meritorious defense) factor for constitutional reasons. Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005); Smith v. Holmes, 53 S.W.3d 815, 817 (Tex. App.--Austin 2001, no pet.).
This Court has previously held that a defendant who can establish lack of notice of a trial setting also need not establish the third Craddock factor, lack of prejudice to the plaintiff, id. at 818, but the supreme court more recently left open that question. Mathis, 166 S.W.3d at 744. We need not consider that issue here because Newton does not dispute that Romano satisfied the lack of prejudice element and our disposition is ultimately controlled by other elements.
Here, it is undisputed that Romano did receive notice of the trial setting before trial began--he admits receiving Newton's second letter concerning the upcoming trial on January 19. This was the first trial setting, and rule of civil procedure 245 requires 45 days notice of an initial trial setting. Romano urges that in light of rule 245, proof that he did not receive 45 days notice of the first trial setting (even if he received some advance notice of it) would obviate his need to establish any of the Craddock factors. As Newton does not dispute that proposition and it is ultimately unnecessary for us to address it, we will assume the same.
As noted, Newton introduced evidence that he sent Romano a letter dated November 4, 2005, giving notice of the trial setting to Romano's address of record. Newton's evidence demonstrated compliance with rule of civil procedure 21a. This evidence that Newton sent the notice in compliance with rule 21a gives rise to a presumption that Romano duly received the notice. Cliff, 724 S.W.2d at 780. In the absence of evidence to the contrary, this presumption has the force of a rule of law. Id. The presumption that notice sent in compliance with rule 21a was received by the intended recipient is not evidence, however, and it "vanishes" when opposing evidence is introduced that the letter was not received. Id.
But Newton also introduced evidence that the November notice letter was actually received by someone at Romano's address--the returned, signed, certified mail "green card" dated November 7. See Smith, 53 S.W.3d at 818 (distinguishing between "the presumption that, because notice was mailed, [the opposing party] received it" arising from sending a notice in compliance with rule 21a versus inferences arising from proof that someone at the address actually received it); cf. Limestone Constr., Inc., 143 S.W.3d at 545 (evidence that notice had been returned "unclaimed"). November 7 was over 80 days prior to the trial setting. Exactly who at that address received the letter is unclear from the record before the district court, but that address corresponded to Romano's address of record, where Romano had been successfully served. Moreover, Newton had later mailed his January notice letter to this address, where "Kathy Romano" acknowledged receipt on January 17. Romano admits receiving that notice letter two days later, on January 19.
Romano contends that his affidavit and verified new trial motion establish that he never received Newton's November notice letter and that the first notice he received was Newton's second letter following the pretrial conference. In the relevant portions of his affidavit, Romano testified as follows:
I received notice of a trial setting from counsel for Plaintiff on January 19th, 2006 for a setting during the week of January 23rd, 2006. I have been Pro Se in this litigation for several months and did not know the meaning of the notice, nor the result or consequence of not appearing before the Court during the week of January 23, 2006. At no time was I called to be at the courtroom on January 27th, 2006, the time at which the Court heard Plaintiff's case. Further, Plaintiff sent a personal letter to me on January 23rd advising of the January 27th trial date.[ (4)] . . . .
On January 23rd, 2006 I sent a correspondence to the Court advising that I had previously made travel plans to be out of town during the time in which the case was set. My correspondence, a true and correct copy of which is attached to the Motion for New Trial as Exhibit "D", provided my current phone number and address, but I was not contacted by the Court or Court personnel that I was to appear on the 27th of January, 2006 for a hearing on the merits. I did not have 45 days notice of the trial setting. I though[t] my letter to the Court of January 23rd, 2006 relieved me of any requirement to appear during the week of the 23rd of January.
In the first paragraph, Romano confirms that he received the January notice letter from Newton on January 19. In the second paragraph, Romano explains his response to that letter, addressing Craddock's conscious indifference factor. Nowhere does he squarely address whether he did or did not receive prior notice of the trial setting except in the statement, found in the second paragraph, "I did not have 45 days notice of the trial setting." However, in his new trial motion, Romano does elaborate, "Defendant did not receive notice of the trial setting until January 19th when he received the letter from Plaintiff's counsel attached as Ex. C. [the January notice letter]." Romano verified the contents of his motion, testifying in his affidavit that "I have reviewed Defendant's Motion for New Trial and find the factual allegations therein true and correct." (5)
Romano urges that his assertions that he did not receive notice of the trial setting until January 19 are sufficient to rebut the rule 21a presumption that he received Newton's November notice letter. He adds that because Newton did not controvert this evidence with his own affidavit in opposition to Romano's new trial motion, the district court was required to take his assertions as true and grant him a new trial. See Director, State Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994) (if plaintiff does not controvert the defendant's affidavit in support of new trial motion, trial court must accept as true the affidavit's factual assertions regarding the Craddock elements).
In determining a motion for new trial under the Craddock standard, the trial court may look to all of the evidence in the record. See Walker v. Gutierrez, 111 S.W.3d 56, 64 (Tex. 2003) (in determining whether movant's factual assertions are controverted, court may consider all of the evidence in the record); Evans, 889 S.W.2d at 269 (same); Katin Corp. v. Loesch, No. 03-05-00412-CV, 2007 Tex. App. LEXIS 6352, at *12 (Tex. App.--Austin Aug. 10, 2007, no pet. h.) (mem. op.) (same). We may thus consider the evidence Newton introduced at trial regarding actual receipt of the notice. See Smith, 53 S.W.3d at 818.
In Smith, this Court recognized that mere proof that someone at a party's address of record received a notice intended for that party does not alone support the inference that the party actually received it. Id. at 818 (inmate's denial that he received notice "overcomes" any inferences from green card signed by someone at prison other than inmate; "[a]fter [inmate] denied that he received notice, appellees were required to do something more than show that someone at the prison's address had received the notice"). This case is distinguishable from Smith for two related reasons. First, while the signature on the green card accompanying the November notice letter cannot clearly be determined to have been Gary Romano's, it does not exclude that possibility, either. (6) Second, as Smith acknowledges, other surrounding facts may cause receipt by another person at the address to be probative of the party's actual receipt. Id. (citing Elite Towing, Inc. v. LSI Fin. Group, 985 S.W.2d 635, 642-43 (Tex. App.--Austin 1999, no pet.) (holding that notice to agent was notice to principal)).
We conclude that Newton's evidence was sufficient to enable the district court to infer, in light of surrounding facts, that Romano had personally signed for or otherwise received the November notice letter before the 45th day prior to trial. The address to which the letter was sent was the same one at which he had earlier been served, and the same one at which "Kathy Romano" later acknowledged receipt of the January notice letter that Romano admits he personally received. This address, the pleadings indicate, was Romano's home address. Romano does not dispute that someone at this address acknowledged receipt of the November letter. The signature on the green card is as consistent with it being Romano's signature as that of any other person there.
Our conclusion is further buttressed by Romano's own affidavit and new trial motion. In the face of evidence that someone at his address actually received the November notice, Romano is conspicuously silent regarding an explanation, offering only the bald assertions that "I did not have 45 days notice of the trial setting" and, "Defendant did not receive notice of the trial setting until January 19th when he received [the January notice letter]." In such a context, these statements are conclusory and, by omitting any mention of the signed green card and its implications, could further support the inference that Romano actually received notice. See Katin Corp., 2007 Tex. App. LEXIS 6352, at *20-21 (explaining that while trial courts must take as true uncontroverted affidavit testimony regarding factual allegations concerning the Craddock factors, they may nonetheless draw "conflicting inferences" from those facts); see also Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 82-83 (Tex. 1992) (conclusory allegations are insufficient to establish Craddock factors).
We conclude that the evidence Newton introduced at trial suffices to controvert Romano's factual assertions that he did not receive the November notice letter. Faced with conflicting evidence, the district court would have been within its discretion to conclude that Romano had received Newton's November trial notice letter on or about November 7, and well in advance of the 45th day before trial. We likewise conclude, in light of this evidence, that the district court would not have abused its discretion in determining that Romano had failed to establish lack of conscious indifference. Although Romano presented evidence that he wrote a letter to the district court responding to the January trial notice, Romano offered no explanation for his inaction in the several weeks following the November notice. On this record, the district court did not abuse its discretion in overruling Romano's motion for new trial as to lack of notice and the Craddock equitable grounds.
Sufficiency of the evidence
By contrast, we sustain Romano's other challenges to the judgment in part because the evidence does not support either the $176,150.68 damages award or the attorney's fee award. Unlike the situation with "no answer" default judgments, when a defendant answers but later fails to appear at trial, a default judgment cannot be taken based on the plaintiff's pleading allegations alone. E.g., Karl & Kelly Co., Inc. v. McLerran, 646 S.W.2d 174, 175 (Tex. 1983); Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979). Once a defendant joins issue with a general denial, "A post-answer 'default' constitutes neither an abandonment of defendant's answer nor an implied confession of any issues thus joined by the defendant's answer." Stoner, 578 S.W.2d at 682. Consequently, "the plaintiff in such a case must offer evidence and prove his case as in a judgment upon a trial." Id.
Newton, as we have noted, did not introduce evidence beyond that relevant to Romano's notice of the trial setting. Instead, he followed a procedure resembling that invoked with "no answer" default judgments. (7) On appeal, Newton attempts to invoke the general appellate presumptions favoring the validity of trial court judgments, arguing that because Romano failed to request findings of fact and conclusions of law, we must imply all fact findings necessary to support the judgment. See, e.g., Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex. 2003). However, where, as here, the appellate record includes the clerk's and reporter's record, even such implied findings of fact can be challenged for legal and factual sufficiency. Id. These presumptions, in any event, do not operate in the default judgment context. McKenna v. Edgar, 388 S.W.2d 927, 929 (Tex. 1965).
We have summarized the evidence at trial above. It consists solely of Newton introducing into evidence the two notice letters and accompanying certified mail documentation before requesting and obtaining judgment. (8) On this record, there is legally insufficient evidence to support judgment for Newton on his causes of action for breach of written or oral contract, fraud, and quantum meruit. There is likewise no evidence to support Newton's attorney's fee award. But because a verified suit on sworn account constitutes prima facie proof of liability for the amount owed and Romano did not properly deny the claim, Newton's pleadings were sufficient to support judgment as to that claim. See Tex. R. Civ. P. 185; see also Nguyen v. Short, How, Frels & Heitz, P.C., 108 S.W.3d 558, 562 (Tex. App.--Dallas 2003, pet. denied); Seisdata, Inc. v. Compagnie Generale de Geophysique, 598 S.W.2d 690, 692 (Tex. App.--Houston [14th Dist.] 1980, writ ref'd n.r.e.). The amount of Newton's sworn account, however, was only $29,544.47, and cannot support the full amount of the judgment's $176,150.68 award "as the amount due in principal and interest on the principal amount to the date of judgment."
An appellate court may suggest a remittitur on its own motion when an appellant complains that there is insufficient evidence to support an award and the appellate court agrees, but there is sufficient evidence to support a lesser award. See Tex. R. App. P. 46.3; see also Springs Window Fashions Div. Inc. v. The Blind Maker, Inc., 184 S.W.3d 840, 889-90 (Tex. App.--Austin 2006, pet. granted, remand by agr.); Comstock Silversmiths, Inc. v. Carey, 894 S.W.2d 56, 57 (Tex. App.--San Antonio 1995, no writ); David McDavid Pontiac, Inc. v. Nix, 681 S.W.2d 831, 838-39 (Tex. App.--Dallas 1984, writ ref'd n.r.e.). The party prevailing in the trial court must be given the option of accepting the remittitur or having the case remanded for a new trial. See Larson v. Cactus Util. Co., 730 S.W.2d 640, 641 (Tex. 1987). Accordingly, we suggest a remittitur of $146,606.21, the difference between the $176,150.68 awarded in the judgment and the $29,544.47 supported by the evidence.
CONCLUSION
We affirm the district court's judgment conditioned on the remittitur of $146,606.21. See Tex. R. App. P. 46.3. If Newton files a remittitur of $146,606.21 with the clerk of the district court within thirty days of this opinion and judgment and notifies this Court of such, we will reform the district court's judgment and, as reformed, affirm. See id. Otherwise, we will reverse the district court's judgment and, as Romano prays, remand the cause to the district court for a new trial on unliquidated damages and attorney's fees.
__________________________________________
Bob Pemberton, Justice
Before Chief Justice Law, Justices Pemberton and Waldrop
Affirmed Conditioned on Remittitur
Filed: September 6, 2007
1. Newton also attached and authenticated documentary proof of these amounts and his demand for payment.
2. The record reflects that Romano had trial-level counsel for a time but that counsel withdrew in September 2005.
3. From the record, it appears that the Honorable John L. Placke, rather than Judge Flenniken, presided over this hearing.
4. This letter, which is dated January 23, 2006, and addressed from Newton to Romano, is attached as an exhibit to Romano's motion for new trial. The letter states: "Dear Mr. Romano: The Court Coordinator stated the above case has been set for 9:00AM Friday January 27, 2006 at [the 335th District Court of Bastrop County, Texas]." The words "Received Jan 26" are handwritten on the letter.
5. Newton urges that Romano's verification is impermissibly conclusory because he states that he "finds" the facts to be true and correct, rather than that the facts "are" true and correct. As Romano also testified that he had personal knowledge of the facts stated in his affidavit, we reject Newton's distinction as merely semantic.
6. We disagree with Romano's assertions on appeal that "[t]he name signing for the card is clearly not Gary Romano."
7. Such confusion is understandable amid Texas's often unclear case law regarding default judgments. See generally Katin Corp. v. Loesch, No. 03-05-00412-CV, 2007 Tex. App. LEXIS 6352 (Tex. App.--Austin Aug. 10, 2007, no pet. h.) (mem. op.) (navigating some of these issues).
8. The clerk's record reflects that Romano's appellate counsel requested from the official court reporter, the record, if any, from the trial and hearing on motion for new trial. Only a brief record from the trial was prepared, and the parties concur that no evidence was presented at the new trial hearing. Nor does the court's docket sheet reflect any additional evidentiary hearings.
Tuesday, August 21, 2007
Trial court should have DWOPPED case, rather than entering a default judgment against no-show plaintiff
Austin Court of Appeals holds that court should not have reached the merits and reforms judgment to reflect a dismissal for want of prosecution (DWOP).
Edith Fontenot v. Margaret Hanus, Michael Hanus, and William S. Carver, III, No. 03-05-00551-CV (Tex.App.- Austin, Aug. 17, 2007)(Opinion by Justice Puryear )(default judgment improperly granted for plaintiff's failure to appear)(Before Chief Justice Law, Justices Puryear and Pemberton)
Appeal from 201st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. GN403516, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant Edith Fontenot, representing herself pro se, sued appellees Margaret Hanus, Michael Hanus, and William S. Carver, III, seeking a judgment declaring that she had the right to use a road on appellees' property to access her land. The case was set for a jury trial on May 23, 2005, but on May 11, 2005, appellees filed a motion for continuance and to strike the May 23 setting, stating that Fontenot had not met the requirements for a jury trial or paid the jury fee and that the case had not been referred to pretrial mediation as required by the Travis County Local Rules. On May 19, a hearing was held on the motion, and the trial court denied the motion for continuance; it appears that Fontenot paid the jury fee that same day.
On May 23, Fontenot did not appear at the 9:00 a.m. docket call, and the trial court signed a default judgment against her, denying Fontenot access to her property across appellees' property.
On June 22, thirty days after the default judgment was signed, Fontenot filed a motion for new trial, asserting that she had arrived late to court on May 23, only to learn that the docket had been called promptly at 9:00 a.m. and that a default judgment had been granted in her case.
She explained that she misunderstood the docket-call process and asked to have her case reinstated. Appellees filed a response to Fontenot's motion, and after a hearing, the trial court denied Fontenot's motion for new trial. It is from the denial of her motion for new trial that Fontenot appeals, complaining largely that the trial court erred in refusing to grant her a new trial. (1) We modify the trial court's default judgment to reflect instead a dismissal for want of prosecution and affirm the judgment as modified.
The trial court entered a "default judgment" purporting to decide the merits of the case. See Tex. R. Civ. P. 239. However, when a plaintiff fails to appear, the trial court may not enter a default judgment against her and may only dismiss the cause without prejudice. Freeman v. Freeman, 327 S.W.2d 428, 431 (Tex. 1959) ("The law of this state does not authorize a defendant to take a default judgment which adjudicates against the plaintiff the merits of his suit."); Smock v. Fischel, 207 S.W.2d 891, 892 (Tex. 1948) ("It is a well-established rule that when a plaintiff fails to appear and prosecute his case, the court can not try the plaintiff's cause of action, but the only remedy is to dismiss the same."); State v. Herrera, 25 S.W.3d 326, 328 (Tex. App.--Austin 2000, no pet.).
Because Fontenot failed to appear at the May 23 docket call, the trial court could have dismissed her case for want of prosecution. See Tex. R. Civ. P. 165a(1). The court was not, however, authorized to enter a default judgment against her. Therefore, we modify the default judgment to reflect a dismissal under rule 165a(1). See Tex. R. App. P. 43.2(b), 43.3.
As for Fontenot's issues on appeal, we note that Fontenot's brief does not comply with the rules of appellate procedure. Aside from referring to Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939), for its discussion of when a motion for new trial should be granted, she cites no authority and presents virtually no argument. We recognize that Fontenot is representing herself pro se, and we therefore will attempt to read her brief liberally to address the arguments she presents. However, pro se litigants must comply with the same procedural rules followed by represented parties, and we cannot hold pro se litigants to a different standard than applied to represented parties. Mansfield State Bank v. Cohn, 573 S.W.2d 181, 184-85 (Tex. 1978).
Fontenot lists nine "issues presented," but does not present argument on all issues, instead focusing what little argument she makes on whether the trial court should have granted her motion for new trial. However, Fontenot did not present any evidence before the trial court to support her assertions that her failure to appear was unintentional and not the result of conscious indifference, either in an affidavit attached to her motion or through sworn testimony at the hearing. Thus, the trial court did not abuse its discretion in denying Fontenot's motion for new trial. See Director, St. Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 269 (Tex. 1994).
As for Fontenot's unbriefed issues, we will briefly address them as best we understand them. Fontenot asserts that the trial court used inconsistent docket call procedures, but does not explain how the trial court erred and has not shown any inconsistent practices. (2) Instead, the hearing before the trial court shows that Fontenot admitted to misunderstanding the docket call process. Fontenot further complains that the trial court should not have allowed appellees to rely on an unpublished case from this Court. However, the case to which appellees referred, Limestone Construction, Inc. v. Summit Commercial Industrial Properties, Inc., is a published opinion. See 143 S.W.3d 538 (Tex. App.--Austin 2004, no pet.). (3) As for Fontenot's complaints related to the trial court's allowing appellees to present evidence of Fontenot's alleged conduct during the lawsuit and its refusal to allow her to present evidence of appellees' conduct, she has not briefed this issue or shown that the trial court erred in its management of the hearing on her motion for new trial.
Finally, Fontenot asserts that the trial court erred in telling her she could not refile her lawsuit, which she states amounted to a dismissal with prejudice. Because we have modified the judgment to reflect a dismissal for want of prosecution, rather than a default judgment, any error in the trial court's statement has been addressed.
The trial court erred in granting a default judgment in favor of appellees, rather than simply dismissing the suit under rule 165(a). We therefore modify the judgment to reflect a dismissal for want of prosecution. Fontenot has not shown reversible error on the trial court's part, and we therefore affirm the judgment as modified.
__________________________________________
David Puryear, Justice
Before Chief Justice Law, Justices Puryear and Pemberton
Modified and, as Modified, Affirmed
Filed: August 17, 2007
1. Appellees have not filed a brief in this case.
2. Fontenot has attached to her brief an affidavit attempting to explain what she characterizes as inconsistent practices. However, she did not present this affidavit before the trial court, and we therefore may not consider it. See Cherqui v. Westheimer St. Festival Corp., 116 S.W.3d 337, 342 n.2 (Tex. App.--Houston [14th Dist.] 2003, no pet.). We note, however, that the affidavit does not show any improper or inconsistent practices by the trial court.
3. Under the rules of appellate procedure, opinions are no longer "published" or "unpublished." Instead, they are designated "memorandum opinions" or "opinions." See Tex. R. App. P. 47.2(a).
Edith Fontenot v. Margaret Hanus, Michael Hanus, and William S. Carver, III, No. 03-05-00551-CV (Tex.App.- Austin, Aug. 17, 2007)(Opinion by Justice Puryear )(default judgment improperly granted for plaintiff's failure to appear)(Before Chief Justice Law, Justices Puryear and Pemberton)
Appeal from 201st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. GN403516, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant Edith Fontenot, representing herself pro se, sued appellees Margaret Hanus, Michael Hanus, and William S. Carver, III, seeking a judgment declaring that she had the right to use a road on appellees' property to access her land. The case was set for a jury trial on May 23, 2005, but on May 11, 2005, appellees filed a motion for continuance and to strike the May 23 setting, stating that Fontenot had not met the requirements for a jury trial or paid the jury fee and that the case had not been referred to pretrial mediation as required by the Travis County Local Rules. On May 19, a hearing was held on the motion, and the trial court denied the motion for continuance; it appears that Fontenot paid the jury fee that same day.
On May 23, Fontenot did not appear at the 9:00 a.m. docket call, and the trial court signed a default judgment against her, denying Fontenot access to her property across appellees' property.
On June 22, thirty days after the default judgment was signed, Fontenot filed a motion for new trial, asserting that she had arrived late to court on May 23, only to learn that the docket had been called promptly at 9:00 a.m. and that a default judgment had been granted in her case.
She explained that she misunderstood the docket-call process and asked to have her case reinstated. Appellees filed a response to Fontenot's motion, and after a hearing, the trial court denied Fontenot's motion for new trial. It is from the denial of her motion for new trial that Fontenot appeals, complaining largely that the trial court erred in refusing to grant her a new trial. (1) We modify the trial court's default judgment to reflect instead a dismissal for want of prosecution and affirm the judgment as modified.
The trial court entered a "default judgment" purporting to decide the merits of the case. See Tex. R. Civ. P. 239. However, when a plaintiff fails to appear, the trial court may not enter a default judgment against her and may only dismiss the cause without prejudice. Freeman v. Freeman, 327 S.W.2d 428, 431 (Tex. 1959) ("The law of this state does not authorize a defendant to take a default judgment which adjudicates against the plaintiff the merits of his suit."); Smock v. Fischel, 207 S.W.2d 891, 892 (Tex. 1948) ("It is a well-established rule that when a plaintiff fails to appear and prosecute his case, the court can not try the plaintiff's cause of action, but the only remedy is to dismiss the same."); State v. Herrera, 25 S.W.3d 326, 328 (Tex. App.--Austin 2000, no pet.).
Because Fontenot failed to appear at the May 23 docket call, the trial court could have dismissed her case for want of prosecution. See Tex. R. Civ. P. 165a(1). The court was not, however, authorized to enter a default judgment against her. Therefore, we modify the default judgment to reflect a dismissal under rule 165a(1). See Tex. R. App. P. 43.2(b), 43.3.
As for Fontenot's issues on appeal, we note that Fontenot's brief does not comply with the rules of appellate procedure. Aside from referring to Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939), for its discussion of when a motion for new trial should be granted, she cites no authority and presents virtually no argument. We recognize that Fontenot is representing herself pro se, and we therefore will attempt to read her brief liberally to address the arguments she presents. However, pro se litigants must comply with the same procedural rules followed by represented parties, and we cannot hold pro se litigants to a different standard than applied to represented parties. Mansfield State Bank v. Cohn, 573 S.W.2d 181, 184-85 (Tex. 1978).
Fontenot lists nine "issues presented," but does not present argument on all issues, instead focusing what little argument she makes on whether the trial court should have granted her motion for new trial. However, Fontenot did not present any evidence before the trial court to support her assertions that her failure to appear was unintentional and not the result of conscious indifference, either in an affidavit attached to her motion or through sworn testimony at the hearing. Thus, the trial court did not abuse its discretion in denying Fontenot's motion for new trial. See Director, St. Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 269 (Tex. 1994).
As for Fontenot's unbriefed issues, we will briefly address them as best we understand them. Fontenot asserts that the trial court used inconsistent docket call procedures, but does not explain how the trial court erred and has not shown any inconsistent practices. (2) Instead, the hearing before the trial court shows that Fontenot admitted to misunderstanding the docket call process. Fontenot further complains that the trial court should not have allowed appellees to rely on an unpublished case from this Court. However, the case to which appellees referred, Limestone Construction, Inc. v. Summit Commercial Industrial Properties, Inc., is a published opinion. See 143 S.W.3d 538 (Tex. App.--Austin 2004, no pet.). (3) As for Fontenot's complaints related to the trial court's allowing appellees to present evidence of Fontenot's alleged conduct during the lawsuit and its refusal to allow her to present evidence of appellees' conduct, she has not briefed this issue or shown that the trial court erred in its management of the hearing on her motion for new trial.
Finally, Fontenot asserts that the trial court erred in telling her she could not refile her lawsuit, which she states amounted to a dismissal with prejudice. Because we have modified the judgment to reflect a dismissal for want of prosecution, rather than a default judgment, any error in the trial court's statement has been addressed.
The trial court erred in granting a default judgment in favor of appellees, rather than simply dismissing the suit under rule 165(a). We therefore modify the judgment to reflect a dismissal for want of prosecution. Fontenot has not shown reversible error on the trial court's part, and we therefore affirm the judgment as modified.
__________________________________________
David Puryear, Justice
Before Chief Justice Law, Justices Puryear and Pemberton
Modified and, as Modified, Affirmed
Filed: August 17, 2007
1. Appellees have not filed a brief in this case.
2. Fontenot has attached to her brief an affidavit attempting to explain what she characterizes as inconsistent practices. However, she did not present this affidavit before the trial court, and we therefore may not consider it. See Cherqui v. Westheimer St. Festival Corp., 116 S.W.3d 337, 342 n.2 (Tex. App.--Houston [14th Dist.] 2003, no pet.). We note, however, that the affidavit does not show any improper or inconsistent practices by the trial court.
3. Under the rules of appellate procedure, opinions are no longer "published" or "unpublished." Instead, they are designated "memorandum opinions" or "opinions." See Tex. R. App. P. 47.2(a).
Friday, August 10, 2007
Default judgment against corporate defendant whose registered agent refused service of citation affirmed
Katin Corp. v. Bea Loesch, No. 03-05-00412-CV (Tex.App.- Austin, Aug. 10, 2007)(Opinion by Justice Puryear)(default judgment affirmed)(Before Justices Puryear, Pemberton and Smith)
Appeal from 261st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. GN400773, HONORABLE DARLENE BYRNE, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE DAVID PURYEAR
Katin Corp. has filed a motion for rehearing. We withdraw our opinion and judgment dated August 24, 2006, and substitute this opinion. We deny Katin's motion for rehearing.
Bea Loesch sued Katin Corp. for negligence in a premises liability claim. Katin did not answer, and a default judgment was entered awarding Loesch $100,000 in damages. Katin filed a motion for new trial, which the trial court denied. Katin appeals, contending that the court abused its discretion in denying Katin's motion for new trial. We affirm the default judgment.
FACTS
Loesch brought a premises liability claim against Katin for personal injuries arising from her employment at a restaurant allegedly owned by Katin. She claimed that while in the course and scope of her employment, she injured her knee, requiring knee surgery. She also claimed that, other than her initial appointment, Katin did not pay for her medical treatment and terminated her employment because she could no longer work as a waitress. Loesch alleged that the wrongful acts and omissions of Katin and its agents caused her to suffer lost wages, impaired earning capacity, and past and future physical pain and suffering, mental anguish, reasonable and necessary medical expenses, physical impairment, and physical disfigurement. She sought actual damages, interest, costs of court, and mental anguish damages.
Loesch attempted to serve citation on Katin's registered agent, Martin P. Adler, three times in three different ways. First, on March 23, 2004, Loesch attempted service by certified mail; on April 17, 2004, this certified mail was returned and marked "REFUSED," and the process server stated in his sworn affidavit that he believed Katin was attempting to evade service.
Next, on April 23, 2004, Loesch attempted to effect personal service, using a different process server. In his affidavit, the second process server stated that he left a business card after being told Adler was not in. When Adler failed to respond, the process server attempted service again on May 21, 2004, when he was told that Adler was in but "would not come out to accept the process that [he] was trying to deliver." He averred that he believed Adler was avoiding service of process.
Finally, on September 15, Loesch served Katin through the Texas Secretary of State pursuant to article 2.11 of the Texas Business Corporation Act. See Tex. Bus. Corp. Act Ann. art. 2.11, § B (West Supp. 2006). Under article 2.11, if a corporation's registered agent cannot be found with reasonable diligence, then an individual attempting service on the corporation may serve citation with the Secretary of State. Id. Upon receipt of service, the Secretary of State forwards a copy of the citation by registered mail, addressed to the corporation at its registered office, to be returned within thirty days. Id. To show that a court may properly exercise jurisdiction over a defendant who has been served through the Secretary of State, plaintiff may produce a certificate issued by the Secretary stating that copies of the citation and petition were forwarded to the defendant. See Whitney v. L & L Realty Corp., 500 S.W.2d 94, 96 (Tex. 1973). In accordance with his statutory duty, the Secretary of State issued a certificate stating that a copy of the citation and petition were forwarded to Adler on September 20, 2004. The certificate states that on September 28, 2004, the process was returned to the Secretary of State "bearing the notation Refused."
After Katin failed to answer, a default judgment was entered against it. Twenty-eight days later, Katin filed a motion for new trial asserting that its failure to answer was the result of accident and mistake, attaching Adler's affidavit, which disavowed knowledge of refusal of service:
It is not my custom, practice, or intent to avoid service of process on behalf of the corporations for which I am the registered agent. It was not my intention to avoid service of process in the above entitled and numbered cause. . . .
I did not receive [the second process server's] business card. . . . Had I received [his] business card I would have contacted him as I have done on many occasions in the past to arrange to receive the citation.
While I have no personnel [sic] knowledge as to who may have made [the statement that I would not accept service], I can state without reservation that I did not direct or authorize anyone to tell [the process server] that I would not come out to accept service of process. I was not told on May 21, 2004 that [the process server] was at my office attempting service of process. But, it is possible that I was either in a meeting or on the telephone and had instructed my staff not to disturb or interrupt me.
My office . . . is located in a building which I share with an IHOP franchisee restaurant. In the past, we have had problems with certified mail being accepted and signed for by restaurant employees and then misplaced or mishandled and not being passed on to the proper recipient.
As a result, it has become necessary to instruct the restaurant cashiers and wait staff not to accept certified mail on behalf of Katin Corp. When we receive notice that there is certified mail for Katin Corp. or the other corporations for which I am the registered agent, I go to our Post Office to sign for and retrieve our certified mail. I did not consciously disregard or intentionally refuse receipt of certified mail from a process server of the Texas Secretary of State. If I had received notice that there was certified mail for Katin Corp. at the time service was being attempted by certified mail in this case, I would have sent someone to retrieve the mail from the Post Office. . . .
The trial court denied Katin's motion for new trial, and Katin filed its notice of appeal.
DISCUSSION
On appeal, Katin argues that the trial court erred in denying its motion for new trial and that the default judgment order should be reversed, citing to Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939). Katin asserts that any refusal of service was not intentional or the result of conscious indifference. Katin asserts that it had no actual knowledge of the lawsuit before the entry of the default judgment, and, therefore, that its failure to answer was not intentional or the result of conscious indifference. See id. at 126. Katin further claims that it has a meritorious defense because it neither employed Loesch nor owned or controlled the premises where she was injured. See id. Finally, Katin asserts that, because it offered to reimburse Loesch's costs of obtaining a default judgment, she would suffer no delay or prejudice by the court's granting the motion for new trial. See id. Accordingly, Katin asserts, it has satisfied the elements of the Craddock test and is entitled to a new trial.
We review a trial court's decision on a motion for new trial for an abuse of discretion. See Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex. 1984). The test for an abuse of discretion is not whether we believe the facts present an appropriate case for the trial court's decision, but rather whether the trial court's ruling was arbitrary or unreasonable. Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004). Trial courts do not have "unbridled discretion to decide cases as they might deem proper, without reference to any guiding rule or principle." Craddock, 133 S.W.2d at 126. The defaulting party must prove that its failure to appear was not negligent, intentional, or the result of conscious indifference. Ataya v. State, No. 14-05-01264-CV, 2007 Tex. App. LEXIS 895, at *10 (Tex. App.--Houston [14th Dist.] Feb. 8, 2007, pet. denied) (mem. op.); see Estate of Pollack v. McMurrey, 858 S.W.2d 388, 391 (Tex. 1993); Ward v. Nava, 488 S.W.2d 736, 738 (Tex. 1972). "Conscious indifference means failing to take some action which would seem indicated to a person of reasonable sensibilities under similar circumstances." State v. Sledge, 982 S.W.2d 911, 914 (Tex. App.--Houston [14th Dist.] 1998, no pet.); see Padrino Maritime, Inc. v. Rizo, 130 S.W.3d 243, 248 (Tex. App.--Corpus Christi 2004, no pet.).
After two unsuccessful attempts to serve citation, Loesch served Katin with citation pursuant to the Business Corporation Act. (1) See Tex. Bus. Corp. Act Ann. art. 2.11. Under the Act, if a corporation's registered agent cannot "with reasonable diligence be found at the registered office, then the Secretary of State shall be an agent of such corporation upon whom any such process, notice, or demand may be served." Id. art. 2.11, § B. Once process is served on the Secretary of State, he is statutorily required to immediately forward the documents by registered mail to the corporation at its registered office. Id. "When substituted service on a statutory agent is allowed, the designee is not an agent for serving but for receiving process on the defendant's behalf." Campus Invs., Inc. v. Cullever, 144 S.W.3d 464, 466 (Tex. 2004) (emphasis added).
A certificate from the Secretary of State "conclusively establishes that process was served," that there has been proper citation and service. Id. Katin does not attack the Secretary's certificate or argue that the Secretary failed in his statutory duties regarding the handling of Loesch's petition upon receipt, (2) see Tex. Bus. Corp. Act Ann. art. 2.11, §§ B, C, nor does Katin argue that Loesch did not use reasonable diligence before turning to substituted service through the Secretary of State. See Ingram Indus., Inc. v. U.S. Bolt Mfg., Inc., 121 S.W.3d 31, 34-35 (Tex. App.--Houston [1st Dist.] 2003, no pet.).
Thus, although it never received the petition, Katin was served with citation. See Tex. Bus. Corp. Act Ann. art. 2.11, § B; Campus Invs., 144 S.W.3d at 466, BLS Limousine Serv., Inc. v. Buslease, Inc., 680 S.W.2d 543, 546 (Tex. App.--Dallas 1984, writ n.r.e.) ("[a]lthough the citations were returned to the Secretary bearing the notation 'refused,' appellants were served in accordance with the requirements" of article 2.11's predecessor).
Therefore, the default judgment will stand unless Katin can show that its failure to answer was unintentional and not the result of conscious indifference, but due to mistake or accident; set out a meritorious defense; and show that setting aside the default would not cause delay or otherwise injure Loesch. See Craddock, 133 S.W.2d at 126; see also Fidelity & Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 574-75 (Tex. 2006) (applying Craddock where registered agent received citation but failed to forward it to party).
Katin asserts that it did not own the restaurant at which Loesch worked, thereby describing a meritorious defense, and it has offered to pay Loesch's expenses, thus setting aside the judgment arguably would not harm Loesch other than delaying her possible recovery. See Craddock, 133 S.W.2d at 126. Thus, the only question is whether Katin showed that its failure to answer was not intentional or the result of conscious indifference, but rather due to mistake or accident. See id. Katin asserts that because Loesch did not request an evidentiary hearing, Adler's affidavit must be taken as true and negates any conscious indifference or intentional evasion of service.
If a plaintiff does not controvert the defendant's affidavit in support of its motion for new trial, the trial court should accept all as true the affidavit's factual assertions regarding the elements of the Craddock test. See Director, St. Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 269 (Tex. 1994); see also Strackbein, 671 S.W.2d at 38 ("Where factual allegations in a movant's affidavit are not controverted, a conscious indifference question must be determined in the same manner as a claim of meritorious defense.").
Further, even if the plaintiff controverts the defendant's affidavit, the trial court should accept as true the defendant's factual assertions about its meritorious defense. Evans, 889 S.W.2d at 270; Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966). (3) However, the court is not bound to accept the defendant's controverted assertions related to accident or mistake and may decide the issue based on the evidence in the record before the court. See Walker v. Gutierrez, 111 S.W.3d 56, 64 (Tex. 2003) ("If the factual assertions in the claimant's testimony are not controverted by the opposing party, the claimant satisfies his or her burden if the testimony sets forth facts that, if true, negate intentional or consciously indifferent conduct by the claimant. In determining if the claimant's factual assertions are controverted, we look to all the evidence in the record." (citations omitted)); see also Evans, 889 S.W.2d at 269 ("If the factual assertions in the defendant's affidavit are not controverted by the plaintiff, the defendant satisfies his burden if his affidavit sets forth facts that, if true, negate intentional or consciously indifferent conduct by the defendant. In determining if the defendant's factual assertions are controverted, the court looks to all the evidence in the record." (citations omitted)); Ataya, 2007 Tex. App. LEXIS 895, at *11-13 (defendants argued that trial court erred in basing fact finding on affidavits, without hearing testimony; court held that because hearing was held and parties had opportunity to present testimony, court did not abuse its discretion by basing its ruling on affidavit evidence before it).
To support its contention that Adler's affidavit must be taken as true, Katin cites to Smith v. Holmes, 53 S.W.3d 815 (Tex. App.--Austin 2001, no pet.), and Averitt v. Bruton Paint & Floor Co., 773 S.W.2d 574 (Tex. App.--Dallas 1989, no writ). Having carefully reviewed this line of cases, we believe they are consistent with our affirmance of the trial court's judgment.
In considering whether the defendant's motion for new trial set up a meritorious defense, the Averitt court stated that "[o]n a motion for new trial, the trial court is bound to accept as true the affidavits of the movant, unless the opponent requests an evidentiary hearing." 773 S.W.2d at 576. The court noted that, with regard to the defendant's assertion of facts showing an excuse for his failure to appear, the "uncontroverted allegation" showed that the defendant negated intentionally or consciously indifferent conduct. Id. In Smith, this Court cited Averitt for the proposition that the trial court must accept a movant's affidavits as true unless the opponent requests an evidentiary hearing. 53 S.W.3d at 818. We held that although the plaintiffs showed that notice of the trial setting was delivered to the prison where Smith was incarcerated, they "did not introduce any other evidence to show that" notice was delivered, and Smith's uncontroverted affidavit established that he never actually received the notice. Id.
To support its holding that the trial court must accept a movant's affidavit as true unless the opponent requests an evidentiary hearing, the Averitt court cited Healy v. Wick Building Systems, Inc., 560 S.W.2d 713 (Tex. Civ. App.--Dallas 1977, writ ref'd n.r.e.), and Dallas Heating Co. v. Pardee, 561 S.W.2d 16 (Tex. Civ. App.--Dallas 1977, writ ref'd n.r.e.). 773 S.W.2d at 576. In Healy, the court considered competing affidavits on the issue of conscious indifference. 560 S.W.2d at 721 (op. on reh'g). The Healy court stated that although a trial court may not consider contrary evidence in determining whether the defendant set up a meritorious defense, a trial court may determine disputed fact issues with respect to conscious indifference if it hears evidence. Id. Because the defendants' allegations of accident or mistake were disputed by the plaintiff's affidavit but no evidentiary hearing was requested or held, the court held that "under these circumstances, . . . a court cannot make findings of fact solely from the record on file without hearing evidence and . . . is bound to accept as true the affidavits of the movant unless his opponent requests an evidentiary hearing," citing Pardee as support. Id.
Pardee, however, is not so broad in its statement of the law. Instead, the Pardee court stated:
We recognize that the trial court filed numerous findings of fact in this case, and that these findings have been relied upon to support, among other arguments, Pardee's contention regarding Dallas Heating's conscious indifference. However, we cannot consider these findings because the recitals in Dallas Heating's affidavit were not controverted by Pardee. No fact issue was drawn regarding the allegations and in the absence of disputed facts, findings of fact are unauthorized. In such a case, the conscious indifference question must be determined in the same manner as the issue of meritorious defense, and it is sufficient that the motion and affidavit set forth facts which, if true, would negate intentional or consciously indifferent conduct. 561 S.W.2d at 19-20 (citations omitted); see also Cragin v. Henderson County Oil Dev. Co., 280 S.W. 554, 555-56 (Tex. 1926) (allegations of meritorious defense taken as true, but allegations of excuse for failure to appear may be controverted and determined by trial court).
Further, the supreme court has held that a trial court may determine controverted fact issues based on all the evidence contained in the record. See Walker, 111 S.W.3d at 64; Evans, 889 S.W.2d at 269. Thus, controverted assertions related to a defendant's excuse for its default need not be taken as true, even if the plaintiff does not request an evidentiary hearing. Only when factual allegations of excuse are not controverted by the plaintiff may a trial court determine the issue "in the same manner as the issue of meritorious defense." Pardee, 561 S.W.2d at 20.
Katin filed its motion for new trial, along with Adler's affidavit. Loesch filed a response, including affidavits and other evidence, asserting that Katin had evaded service by refusing the certified mail and refusing to speak to the process server when he called on Adler. The trial court then held a hearing at which attorneys for both parties presented arguments based on the affidavits but neither party called any witnesses.
We hold that Loesch's failure to explicitly request an evidentiary hearing did not require the trial court to take as true Katin's controverted statements of fact regarding accident or mistake. See Ataya, 2007 Tex. App. LEXIS 895, at *12. The trial court was entitled to consider Loesch's evidence related to Katin's factual allegations of mistake or accident, as well as any conflicting inferences that arose from Adler's affidavit. See Averitt, 773 S.W.2d at 576-77 (Kinkeade, J., dissenting) ("Even when an affidavit is taken as true, the affidavit may permit conflicting inferences.").
Adler averred that Katin had in the past had trouble receiving mail due to confusion at the nearby restaurant, going so far as to instruct employees "not to accept certified mail" for Katin. Despite that history, Katin continued to use that office for its registered agent, who has a statutory duty to accept service of process, and Adler did not describe a reliable process that was put into place to ensure that he would receive notice of delivery attempts. He averred that he had no knowledge of any refusal, but admitted that he might have told his staff not to disturb him and did not aver that he investigated and learned that no one in his office refused any mail or said that he "would not come out to accept the process." In other words, beyond stating that he did not personally tell anyone to "refuse" service and that he did not know of the attempts to serve Katin, Adler did not explain why certified mail addressed to Katin was twice returned as "Refused" or why one process server was told that Adler would not accept service.
Adler, as Katin's agent for service, was responsible for what happened in his office, for what process servers were told, and for ensuring that notice of certified mail would make its way to him.
Conscious indifference is the failure to act in a way that a reasonable person would act under similar circumstances. Sledge, 982 S.W.2d at 914. A registered agent is required to "accept service of process and otherwise perform the functions of a registered agent" during normal business hours. Tex. Bus. Corp. Act Ann. art. 2.09(A)(2) (West Supp. 2006).
Despite Adler's disavowal of any knowledge of refusal, the Secretary of State's certificate and an affidavit by one of the first two process servers stated that certified mail to Katin was returned "refused," the other process server averred that Adler seemed to be "avoiding" service, and Adler acknowledged having difficulty receiving certified mail in the past. The Secretary of State's certificate is "prima facie evidence of the facts recited therein," G.F.S. Ventures, Inc. v. Harris, 934 S.W.2d 813, 818 (Tex. App.--Houston [1st Dist.] 1996, no writ), and thus is prima facie evidence that the United States Postal Service returned the certified mail with a "refused" notation. This is supported by the process server's affidavit stating that his attempt at service through certified mail was returned "refused." Katin has not cited and we have not found any cases where a default judgment was set aside after service has been refused, as opposed to "unclaimed" or returned for lack of a forwarding address.
"Conflicting inferences" may be drawn from Adler's affidavit, and the trial court's interpretation of the affidavit in view of Loesch's evidence is not contrary to the only permissible view of the evidence. See In re Barber, 982 S.W.2d 364, 366 (Tex. 1998) (trial court does not abuse its discretion if it bases its decision on conflicting evidence and some evidence supports decision, but it does abuse its discretion if its decision is "contrary to the only permissible view of the evidence"). We cannot hold that the trial court's resolution of the evidentiary conflicts or denial of Katin's motion for new trial was an abuse of discretion. We overrule Katin's sole issue on appeal.
CONCLUSION
Having overruled Katin's sole issue on appeal, we affirm the trial court's judgment.
__________________________________________
David Puryear, Justice
Before Justices Puryear, Pemberton and B. A. Smith*
Affirmed on Motion for Rehearing
Filed: August 10, 2007
Appeal from 261st District Court of Travis County
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
NO. GN400773, HONORABLE DARLENE BYRNE, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE DAVID PURYEAR
Katin Corp. has filed a motion for rehearing. We withdraw our opinion and judgment dated August 24, 2006, and substitute this opinion. We deny Katin's motion for rehearing.
Bea Loesch sued Katin Corp. for negligence in a premises liability claim. Katin did not answer, and a default judgment was entered awarding Loesch $100,000 in damages. Katin filed a motion for new trial, which the trial court denied. Katin appeals, contending that the court abused its discretion in denying Katin's motion for new trial. We affirm the default judgment.
FACTS
Loesch brought a premises liability claim against Katin for personal injuries arising from her employment at a restaurant allegedly owned by Katin. She claimed that while in the course and scope of her employment, she injured her knee, requiring knee surgery. She also claimed that, other than her initial appointment, Katin did not pay for her medical treatment and terminated her employment because she could no longer work as a waitress. Loesch alleged that the wrongful acts and omissions of Katin and its agents caused her to suffer lost wages, impaired earning capacity, and past and future physical pain and suffering, mental anguish, reasonable and necessary medical expenses, physical impairment, and physical disfigurement. She sought actual damages, interest, costs of court, and mental anguish damages.
Loesch attempted to serve citation on Katin's registered agent, Martin P. Adler, three times in three different ways. First, on March 23, 2004, Loesch attempted service by certified mail; on April 17, 2004, this certified mail was returned and marked "REFUSED," and the process server stated in his sworn affidavit that he believed Katin was attempting to evade service.
Next, on April 23, 2004, Loesch attempted to effect personal service, using a different process server. In his affidavit, the second process server stated that he left a business card after being told Adler was not in. When Adler failed to respond, the process server attempted service again on May 21, 2004, when he was told that Adler was in but "would not come out to accept the process that [he] was trying to deliver." He averred that he believed Adler was avoiding service of process.
Finally, on September 15, Loesch served Katin through the Texas Secretary of State pursuant to article 2.11 of the Texas Business Corporation Act. See Tex. Bus. Corp. Act Ann. art. 2.11, § B (West Supp. 2006). Under article 2.11, if a corporation's registered agent cannot be found with reasonable diligence, then an individual attempting service on the corporation may serve citation with the Secretary of State. Id. Upon receipt of service, the Secretary of State forwards a copy of the citation by registered mail, addressed to the corporation at its registered office, to be returned within thirty days. Id. To show that a court may properly exercise jurisdiction over a defendant who has been served through the Secretary of State, plaintiff may produce a certificate issued by the Secretary stating that copies of the citation and petition were forwarded to the defendant. See Whitney v. L & L Realty Corp., 500 S.W.2d 94, 96 (Tex. 1973). In accordance with his statutory duty, the Secretary of State issued a certificate stating that a copy of the citation and petition were forwarded to Adler on September 20, 2004. The certificate states that on September 28, 2004, the process was returned to the Secretary of State "bearing the notation Refused."
After Katin failed to answer, a default judgment was entered against it. Twenty-eight days later, Katin filed a motion for new trial asserting that its failure to answer was the result of accident and mistake, attaching Adler's affidavit, which disavowed knowledge of refusal of service:
It is not my custom, practice, or intent to avoid service of process on behalf of the corporations for which I am the registered agent. It was not my intention to avoid service of process in the above entitled and numbered cause. . . .
I did not receive [the second process server's] business card. . . . Had I received [his] business card I would have contacted him as I have done on many occasions in the past to arrange to receive the citation.
While I have no personnel [sic] knowledge as to who may have made [the statement that I would not accept service], I can state without reservation that I did not direct or authorize anyone to tell [the process server] that I would not come out to accept service of process. I was not told on May 21, 2004 that [the process server] was at my office attempting service of process. But, it is possible that I was either in a meeting or on the telephone and had instructed my staff not to disturb or interrupt me.
My office . . . is located in a building which I share with an IHOP franchisee restaurant. In the past, we have had problems with certified mail being accepted and signed for by restaurant employees and then misplaced or mishandled and not being passed on to the proper recipient.
As a result, it has become necessary to instruct the restaurant cashiers and wait staff not to accept certified mail on behalf of Katin Corp. When we receive notice that there is certified mail for Katin Corp. or the other corporations for which I am the registered agent, I go to our Post Office to sign for and retrieve our certified mail. I did not consciously disregard or intentionally refuse receipt of certified mail from a process server of the Texas Secretary of State. If I had received notice that there was certified mail for Katin Corp. at the time service was being attempted by certified mail in this case, I would have sent someone to retrieve the mail from the Post Office. . . .
The trial court denied Katin's motion for new trial, and Katin filed its notice of appeal.
DISCUSSION
On appeal, Katin argues that the trial court erred in denying its motion for new trial and that the default judgment order should be reversed, citing to Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939). Katin asserts that any refusal of service was not intentional or the result of conscious indifference. Katin asserts that it had no actual knowledge of the lawsuit before the entry of the default judgment, and, therefore, that its failure to answer was not intentional or the result of conscious indifference. See id. at 126. Katin further claims that it has a meritorious defense because it neither employed Loesch nor owned or controlled the premises where she was injured. See id. Finally, Katin asserts that, because it offered to reimburse Loesch's costs of obtaining a default judgment, she would suffer no delay or prejudice by the court's granting the motion for new trial. See id. Accordingly, Katin asserts, it has satisfied the elements of the Craddock test and is entitled to a new trial.
We review a trial court's decision on a motion for new trial for an abuse of discretion. See Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex. 1984). The test for an abuse of discretion is not whether we believe the facts present an appropriate case for the trial court's decision, but rather whether the trial court's ruling was arbitrary or unreasonable. Cire v. Cummings, 134 S.W.3d 835, 838-39 (Tex. 2004). Trial courts do not have "unbridled discretion to decide cases as they might deem proper, without reference to any guiding rule or principle." Craddock, 133 S.W.2d at 126. The defaulting party must prove that its failure to appear was not negligent, intentional, or the result of conscious indifference. Ataya v. State, No. 14-05-01264-CV, 2007 Tex. App. LEXIS 895, at *10 (Tex. App.--Houston [14th Dist.] Feb. 8, 2007, pet. denied) (mem. op.); see Estate of Pollack v. McMurrey, 858 S.W.2d 388, 391 (Tex. 1993); Ward v. Nava, 488 S.W.2d 736, 738 (Tex. 1972). "Conscious indifference means failing to take some action which would seem indicated to a person of reasonable sensibilities under similar circumstances." State v. Sledge, 982 S.W.2d 911, 914 (Tex. App.--Houston [14th Dist.] 1998, no pet.); see Padrino Maritime, Inc. v. Rizo, 130 S.W.3d 243, 248 (Tex. App.--Corpus Christi 2004, no pet.).
After two unsuccessful attempts to serve citation, Loesch served Katin with citation pursuant to the Business Corporation Act. (1) See Tex. Bus. Corp. Act Ann. art. 2.11. Under the Act, if a corporation's registered agent cannot "with reasonable diligence be found at the registered office, then the Secretary of State shall be an agent of such corporation upon whom any such process, notice, or demand may be served." Id. art. 2.11, § B. Once process is served on the Secretary of State, he is statutorily required to immediately forward the documents by registered mail to the corporation at its registered office. Id. "When substituted service on a statutory agent is allowed, the designee is not an agent for serving but for receiving process on the defendant's behalf." Campus Invs., Inc. v. Cullever, 144 S.W.3d 464, 466 (Tex. 2004) (emphasis added).
A certificate from the Secretary of State "conclusively establishes that process was served," that there has been proper citation and service. Id. Katin does not attack the Secretary's certificate or argue that the Secretary failed in his statutory duties regarding the handling of Loesch's petition upon receipt, (2) see Tex. Bus. Corp. Act Ann. art. 2.11, §§ B, C, nor does Katin argue that Loesch did not use reasonable diligence before turning to substituted service through the Secretary of State. See Ingram Indus., Inc. v. U.S. Bolt Mfg., Inc., 121 S.W.3d 31, 34-35 (Tex. App.--Houston [1st Dist.] 2003, no pet.).
Thus, although it never received the petition, Katin was served with citation. See Tex. Bus. Corp. Act Ann. art. 2.11, § B; Campus Invs., 144 S.W.3d at 466, BLS Limousine Serv., Inc. v. Buslease, Inc., 680 S.W.2d 543, 546 (Tex. App.--Dallas 1984, writ n.r.e.) ("[a]lthough the citations were returned to the Secretary bearing the notation 'refused,' appellants were served in accordance with the requirements" of article 2.11's predecessor).
Therefore, the default judgment will stand unless Katin can show that its failure to answer was unintentional and not the result of conscious indifference, but due to mistake or accident; set out a meritorious defense; and show that setting aside the default would not cause delay or otherwise injure Loesch. See Craddock, 133 S.W.2d at 126; see also Fidelity & Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 574-75 (Tex. 2006) (applying Craddock where registered agent received citation but failed to forward it to party).
Katin asserts that it did not own the restaurant at which Loesch worked, thereby describing a meritorious defense, and it has offered to pay Loesch's expenses, thus setting aside the judgment arguably would not harm Loesch other than delaying her possible recovery. See Craddock, 133 S.W.2d at 126. Thus, the only question is whether Katin showed that its failure to answer was not intentional or the result of conscious indifference, but rather due to mistake or accident. See id. Katin asserts that because Loesch did not request an evidentiary hearing, Adler's affidavit must be taken as true and negates any conscious indifference or intentional evasion of service.
If a plaintiff does not controvert the defendant's affidavit in support of its motion for new trial, the trial court should accept all as true the affidavit's factual assertions regarding the elements of the Craddock test. See Director, St. Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 269 (Tex. 1994); see also Strackbein, 671 S.W.2d at 38 ("Where factual allegations in a movant's affidavit are not controverted, a conscious indifference question must be determined in the same manner as a claim of meritorious defense.").
Further, even if the plaintiff controverts the defendant's affidavit, the trial court should accept as true the defendant's factual assertions about its meritorious defense. Evans, 889 S.W.2d at 270; Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966). (3) However, the court is not bound to accept the defendant's controverted assertions related to accident or mistake and may decide the issue based on the evidence in the record before the court. See Walker v. Gutierrez, 111 S.W.3d 56, 64 (Tex. 2003) ("If the factual assertions in the claimant's testimony are not controverted by the opposing party, the claimant satisfies his or her burden if the testimony sets forth facts that, if true, negate intentional or consciously indifferent conduct by the claimant. In determining if the claimant's factual assertions are controverted, we look to all the evidence in the record." (citations omitted)); see also Evans, 889 S.W.2d at 269 ("If the factual assertions in the defendant's affidavit are not controverted by the plaintiff, the defendant satisfies his burden if his affidavit sets forth facts that, if true, negate intentional or consciously indifferent conduct by the defendant. In determining if the defendant's factual assertions are controverted, the court looks to all the evidence in the record." (citations omitted)); Ataya, 2007 Tex. App. LEXIS 895, at *11-13 (defendants argued that trial court erred in basing fact finding on affidavits, without hearing testimony; court held that because hearing was held and parties had opportunity to present testimony, court did not abuse its discretion by basing its ruling on affidavit evidence before it).
To support its contention that Adler's affidavit must be taken as true, Katin cites to Smith v. Holmes, 53 S.W.3d 815 (Tex. App.--Austin 2001, no pet.), and Averitt v. Bruton Paint & Floor Co., 773 S.W.2d 574 (Tex. App.--Dallas 1989, no writ). Having carefully reviewed this line of cases, we believe they are consistent with our affirmance of the trial court's judgment.
In considering whether the defendant's motion for new trial set up a meritorious defense, the Averitt court stated that "[o]n a motion for new trial, the trial court is bound to accept as true the affidavits of the movant, unless the opponent requests an evidentiary hearing." 773 S.W.2d at 576. The court noted that, with regard to the defendant's assertion of facts showing an excuse for his failure to appear, the "uncontroverted allegation" showed that the defendant negated intentionally or consciously indifferent conduct. Id. In Smith, this Court cited Averitt for the proposition that the trial court must accept a movant's affidavits as true unless the opponent requests an evidentiary hearing. 53 S.W.3d at 818. We held that although the plaintiffs showed that notice of the trial setting was delivered to the prison where Smith was incarcerated, they "did not introduce any other evidence to show that" notice was delivered, and Smith's uncontroverted affidavit established that he never actually received the notice. Id.
To support its holding that the trial court must accept a movant's affidavit as true unless the opponent requests an evidentiary hearing, the Averitt court cited Healy v. Wick Building Systems, Inc., 560 S.W.2d 713 (Tex. Civ. App.--Dallas 1977, writ ref'd n.r.e.), and Dallas Heating Co. v. Pardee, 561 S.W.2d 16 (Tex. Civ. App.--Dallas 1977, writ ref'd n.r.e.). 773 S.W.2d at 576. In Healy, the court considered competing affidavits on the issue of conscious indifference. 560 S.W.2d at 721 (op. on reh'g). The Healy court stated that although a trial court may not consider contrary evidence in determining whether the defendant set up a meritorious defense, a trial court may determine disputed fact issues with respect to conscious indifference if it hears evidence. Id. Because the defendants' allegations of accident or mistake were disputed by the plaintiff's affidavit but no evidentiary hearing was requested or held, the court held that "under these circumstances, . . . a court cannot make findings of fact solely from the record on file without hearing evidence and . . . is bound to accept as true the affidavits of the movant unless his opponent requests an evidentiary hearing," citing Pardee as support. Id.
Pardee, however, is not so broad in its statement of the law. Instead, the Pardee court stated:
We recognize that the trial court filed numerous findings of fact in this case, and that these findings have been relied upon to support, among other arguments, Pardee's contention regarding Dallas Heating's conscious indifference. However, we cannot consider these findings because the recitals in Dallas Heating's affidavit were not controverted by Pardee. No fact issue was drawn regarding the allegations and in the absence of disputed facts, findings of fact are unauthorized. In such a case, the conscious indifference question must be determined in the same manner as the issue of meritorious defense, and it is sufficient that the motion and affidavit set forth facts which, if true, would negate intentional or consciously indifferent conduct. 561 S.W.2d at 19-20 (citations omitted); see also Cragin v. Henderson County Oil Dev. Co., 280 S.W. 554, 555-56 (Tex. 1926) (allegations of meritorious defense taken as true, but allegations of excuse for failure to appear may be controverted and determined by trial court).
Further, the supreme court has held that a trial court may determine controverted fact issues based on all the evidence contained in the record. See Walker, 111 S.W.3d at 64; Evans, 889 S.W.2d at 269. Thus, controverted assertions related to a defendant's excuse for its default need not be taken as true, even if the plaintiff does not request an evidentiary hearing. Only when factual allegations of excuse are not controverted by the plaintiff may a trial court determine the issue "in the same manner as the issue of meritorious defense." Pardee, 561 S.W.2d at 20.
Katin filed its motion for new trial, along with Adler's affidavit. Loesch filed a response, including affidavits and other evidence, asserting that Katin had evaded service by refusing the certified mail and refusing to speak to the process server when he called on Adler. The trial court then held a hearing at which attorneys for both parties presented arguments based on the affidavits but neither party called any witnesses.
We hold that Loesch's failure to explicitly request an evidentiary hearing did not require the trial court to take as true Katin's controverted statements of fact regarding accident or mistake. See Ataya, 2007 Tex. App. LEXIS 895, at *12. The trial court was entitled to consider Loesch's evidence related to Katin's factual allegations of mistake or accident, as well as any conflicting inferences that arose from Adler's affidavit. See Averitt, 773 S.W.2d at 576-77 (Kinkeade, J., dissenting) ("Even when an affidavit is taken as true, the affidavit may permit conflicting inferences.").
Adler averred that Katin had in the past had trouble receiving mail due to confusion at the nearby restaurant, going so far as to instruct employees "not to accept certified mail" for Katin. Despite that history, Katin continued to use that office for its registered agent, who has a statutory duty to accept service of process, and Adler did not describe a reliable process that was put into place to ensure that he would receive notice of delivery attempts. He averred that he had no knowledge of any refusal, but admitted that he might have told his staff not to disturb him and did not aver that he investigated and learned that no one in his office refused any mail or said that he "would not come out to accept the process." In other words, beyond stating that he did not personally tell anyone to "refuse" service and that he did not know of the attempts to serve Katin, Adler did not explain why certified mail addressed to Katin was twice returned as "Refused" or why one process server was told that Adler would not accept service.
Adler, as Katin's agent for service, was responsible for what happened in his office, for what process servers were told, and for ensuring that notice of certified mail would make its way to him.
Conscious indifference is the failure to act in a way that a reasonable person would act under similar circumstances. Sledge, 982 S.W.2d at 914. A registered agent is required to "accept service of process and otherwise perform the functions of a registered agent" during normal business hours. Tex. Bus. Corp. Act Ann. art. 2.09(A)(2) (West Supp. 2006).
Despite Adler's disavowal of any knowledge of refusal, the Secretary of State's certificate and an affidavit by one of the first two process servers stated that certified mail to Katin was returned "refused," the other process server averred that Adler seemed to be "avoiding" service, and Adler acknowledged having difficulty receiving certified mail in the past. The Secretary of State's certificate is "prima facie evidence of the facts recited therein," G.F.S. Ventures, Inc. v. Harris, 934 S.W.2d 813, 818 (Tex. App.--Houston [1st Dist.] 1996, no writ), and thus is prima facie evidence that the United States Postal Service returned the certified mail with a "refused" notation. This is supported by the process server's affidavit stating that his attempt at service through certified mail was returned "refused." Katin has not cited and we have not found any cases where a default judgment was set aside after service has been refused, as opposed to "unclaimed" or returned for lack of a forwarding address.
"Conflicting inferences" may be drawn from Adler's affidavit, and the trial court's interpretation of the affidavit in view of Loesch's evidence is not contrary to the only permissible view of the evidence. See In re Barber, 982 S.W.2d 364, 366 (Tex. 1998) (trial court does not abuse its discretion if it bases its decision on conflicting evidence and some evidence supports decision, but it does abuse its discretion if its decision is "contrary to the only permissible view of the evidence"). We cannot hold that the trial court's resolution of the evidentiary conflicts or denial of Katin's motion for new trial was an abuse of discretion. We overrule Katin's sole issue on appeal.
CONCLUSION
Having overruled Katin's sole issue on appeal, we affirm the trial court's judgment.
__________________________________________
David Puryear, Justice
Before Justices Puryear, Pemberton and B. A. Smith*
Affirmed on Motion for Rehearing
Filed: August 10, 2007
Tuesday, July 10, 2007
Statute of Limitations Defense Was Waived By Failure to Plead It
Winkle v. Vallejo (Tex.App.- Austin, July 10, 2007)(Patterson)(op. on r'hrg)(restricted appeal, default judgment, statute of limitations defense)
AFFIRMED ON REHEARING: Opinion by Justice Patterson
Before Justices Patterson, Pemberton and Waldrop
FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 277TH JUDICIAL DISTRICT
NO. 04-1104-C277, HONORABLE KEN ANDERSON, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N BY PATTERSON
Upon consideration of appellant's motion for rehearing, we deny the motion; however, we withdraw our opinion and judgment of June 12, 2007, and substitute the following.
This is a restricted appeal from the trial court's entry of a default judgment in favor of appellees Blanca Vallejo and Juan R. Vallejo. Barry S. Winkle appeals, contending that the lawsuit was barred by the statute of limitations and that the trial court abused its discretion in holding the trial four days earlier than the date on which the trial was noticed. For the reasons that follow, we affirm the judgment.
A restricted appeal is available to a party who did not participate, either in person or through counsel, in a proceeding that resulted in a judgment against the party. Tex. R. App. P. 30. It constitutes a direct attack on a default judgment. Id.; General Elec. Co. v. Falcon Ridge Apartments Joint Venture, 811 S.W.2d 942, 943 (Tex. 1991).
A party filing a restricted appeal must demonstrate that (1) he appealed within six months after the judgment was rendered, (2) he was a party to the suit, (3) he did not participate in the actual trial of the case, and (4) error appears on the face of the record. See Tex. R. App. P. 30; Quaestor Invs., Inc. v. Chiapas, 997 S.W.2d 226, 227 (Tex. 1999). The face of the record includes all papers on file in the appeal, including the clerk's record and any reporter's record. DSC Fin. Corp. v. Moffitt, 815 S.W.2d 551, 551 (Tex. 1991). Otherwise, a restricted appeal affords an appellant the same scope of review as an ordinary appeal. Norman Commc'ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).
In 1999, the Vallejos offered their home for sale after they fell behind in paying their property taxes. In exchange for the Vallejos placing their home in trust with Bentley Capital LLC, Winkle, a licensed real estate agent, offered to pay their back taxes and mortgage payments, rent the house for two years, and then sell the house. Winkle immediately began renting the home to James and Leah Benton, but convinced them he was selling the home. (1) When the Vallejos attempted to buy another home in 2003, they discovered that the mortgage on their former home was still in their name and that Winkle had ceased to make the mortgage payments as agreed.
The mortgage company eventually foreclosed on their home.
The Vallejos sued Winkle for deceptive trade practices, fraud, and breach of contract. Citation was served on Winkle in state prison on January 20, 2005. By his answer, February 10, 2005, Winkle sought the appointment of an attorney or, in the alternative, a continuance. Trial was scheduled for September 26, 2005. Winkle was served with notice of the trial date on August 2, 2005. A trial was held on September 26, 2005. Winkle did not attend or participate in the trial. The trial court rendered judgment in favor of the Vallejos. This appeal followed.
Winkle first asserts that the four-year statute of limitations for the conveyance of real estate and fraud or the two-year statute of limitations for deceptive trade practices bars the Vallejos' lawsuit because they did not file the lawsuit until November 2004. See Tex. Civ. Prac. & Rem. Code Ann. § 16.004(1), (4) (West 2002) (conveyance of real estate and fraud); Tex. Bus. & Com. Code Ann. § 17.565 (West 2002) (deceptive trade practices). Limitations, however, is an affirmative defense that is waived if not pleaded. G.R.A.V.I.T.Y. Enters. v. Reece Supply Co., 177 S.W.3d 537, 544 (Tex. App.--Dallas 2005, no pet.); see Tex. R. Civ. P. 94 (listing statute of limitations as affirmative defense that party "shall set forth affirmatively"); Frazier v. Havens, 102 S.W.3d 406, 411 (Tex. App.--Houston [14th Dist.] 2003, no pet.) ("A party waives the affirmative defense of statute of limitations if it is not pleaded or tried by consent.").
Here, Winkle did not plead a limitations defense at any point in the proceedings. Accordingly, we conclude that Winkle has waived any limitations defense, and the trial court did not err in entering a default judgment. See Reece Supply Co., 177 S.W.3d at 544 (holding that limitations defense was waived because, once party's pleading was struck, "it had no pleading asserting the affirmative defense of limitations"); Phifer v. Nacogdoches County Cent. Appraisal Dist., 45 S.W.3d 159, 173 (Tex. App.--Tyler 2000, pet. denied) (rejecting appellant's argument that trial court erred in allowing appellee to recover on claim that was barred by statute of limitations, since appellant had failed to plead limitations defense). We overrule Winkle's first issue.
In his second issue, Winkle complains that the trial occurred on September 22, four days earlier than the notice date of September 26, 2005. Winkle contends that the trial court abused its discretion in changing the date of the hearing without informing Winkle. The original judgment was signed on September 26, 2005. The reporter's record reflects that the hearing occurred on September 26; the docket sheet shows that the hearing occurred on September 26.
Any confusion as to the date of the hearing appears to arise from a handwritten entry on the original judgment that a hearing was held on September 22. Winkle appears to attribute this error to deceit on the part of the Vallejos' counsel. This error appears to be a clerical error; there is no showing that any proceeding occurred on September 22 or any date other than the date for which the trial was properly noticed. The record does not reflect that the trial judge abused his discretion. We overrule Winkle's second issue.
Having overruled Winkle's issues on appeal, we affirm the trial court's judgment.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed on Motion for Rehearing
Filed: July 10, 2007
1. The Bentons also sued Winkle. See Winkle v. Benton, No. 03-05-00684-CV, 2006 Tex. App. LEXIS 8450 (Tex. App.--Austin 2006, no pet.) (mem. op.).
AFFIRMED ON REHEARING: Opinion by Justice Patterson
Before Justices Patterson, Pemberton and Waldrop
FROM THE DISTRICT COURT OF WILLIAMSON COUNTY, 277TH JUDICIAL DISTRICT
NO. 04-1104-C277, HONORABLE KEN ANDERSON, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N BY PATTERSON
Upon consideration of appellant's motion for rehearing, we deny the motion; however, we withdraw our opinion and judgment of June 12, 2007, and substitute the following.
This is a restricted appeal from the trial court's entry of a default judgment in favor of appellees Blanca Vallejo and Juan R. Vallejo. Barry S. Winkle appeals, contending that the lawsuit was barred by the statute of limitations and that the trial court abused its discretion in holding the trial four days earlier than the date on which the trial was noticed. For the reasons that follow, we affirm the judgment.
A restricted appeal is available to a party who did not participate, either in person or through counsel, in a proceeding that resulted in a judgment against the party. Tex. R. App. P. 30. It constitutes a direct attack on a default judgment. Id.; General Elec. Co. v. Falcon Ridge Apartments Joint Venture, 811 S.W.2d 942, 943 (Tex. 1991).
A party filing a restricted appeal must demonstrate that (1) he appealed within six months after the judgment was rendered, (2) he was a party to the suit, (3) he did not participate in the actual trial of the case, and (4) error appears on the face of the record. See Tex. R. App. P. 30; Quaestor Invs., Inc. v. Chiapas, 997 S.W.2d 226, 227 (Tex. 1999). The face of the record includes all papers on file in the appeal, including the clerk's record and any reporter's record. DSC Fin. Corp. v. Moffitt, 815 S.W.2d 551, 551 (Tex. 1991). Otherwise, a restricted appeal affords an appellant the same scope of review as an ordinary appeal. Norman Commc'ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997).
In 1999, the Vallejos offered their home for sale after they fell behind in paying their property taxes. In exchange for the Vallejos placing their home in trust with Bentley Capital LLC, Winkle, a licensed real estate agent, offered to pay their back taxes and mortgage payments, rent the house for two years, and then sell the house. Winkle immediately began renting the home to James and Leah Benton, but convinced them he was selling the home. (1) When the Vallejos attempted to buy another home in 2003, they discovered that the mortgage on their former home was still in their name and that Winkle had ceased to make the mortgage payments as agreed.
The mortgage company eventually foreclosed on their home.
The Vallejos sued Winkle for deceptive trade practices, fraud, and breach of contract. Citation was served on Winkle in state prison on January 20, 2005. By his answer, February 10, 2005, Winkle sought the appointment of an attorney or, in the alternative, a continuance. Trial was scheduled for September 26, 2005. Winkle was served with notice of the trial date on August 2, 2005. A trial was held on September 26, 2005. Winkle did not attend or participate in the trial. The trial court rendered judgment in favor of the Vallejos. This appeal followed.
Winkle first asserts that the four-year statute of limitations for the conveyance of real estate and fraud or the two-year statute of limitations for deceptive trade practices bars the Vallejos' lawsuit because they did not file the lawsuit until November 2004. See Tex. Civ. Prac. & Rem. Code Ann. § 16.004(1), (4) (West 2002) (conveyance of real estate and fraud); Tex. Bus. & Com. Code Ann. § 17.565 (West 2002) (deceptive trade practices). Limitations, however, is an affirmative defense that is waived if not pleaded. G.R.A.V.I.T.Y. Enters. v. Reece Supply Co., 177 S.W.3d 537, 544 (Tex. App.--Dallas 2005, no pet.); see Tex. R. Civ. P. 94 (listing statute of limitations as affirmative defense that party "shall set forth affirmatively"); Frazier v. Havens, 102 S.W.3d 406, 411 (Tex. App.--Houston [14th Dist.] 2003, no pet.) ("A party waives the affirmative defense of statute of limitations if it is not pleaded or tried by consent.").
Here, Winkle did not plead a limitations defense at any point in the proceedings. Accordingly, we conclude that Winkle has waived any limitations defense, and the trial court did not err in entering a default judgment. See Reece Supply Co., 177 S.W.3d at 544 (holding that limitations defense was waived because, once party's pleading was struck, "it had no pleading asserting the affirmative defense of limitations"); Phifer v. Nacogdoches County Cent. Appraisal Dist., 45 S.W.3d 159, 173 (Tex. App.--Tyler 2000, pet. denied) (rejecting appellant's argument that trial court erred in allowing appellee to recover on claim that was barred by statute of limitations, since appellant had failed to plead limitations defense). We overrule Winkle's first issue.
In his second issue, Winkle complains that the trial occurred on September 22, four days earlier than the notice date of September 26, 2005. Winkle contends that the trial court abused its discretion in changing the date of the hearing without informing Winkle. The original judgment was signed on September 26, 2005. The reporter's record reflects that the hearing occurred on September 26; the docket sheet shows that the hearing occurred on September 26.
Any confusion as to the date of the hearing appears to arise from a handwritten entry on the original judgment that a hearing was held on September 22. Winkle appears to attribute this error to deceit on the part of the Vallejos' counsel. This error appears to be a clerical error; there is no showing that any proceeding occurred on September 22 or any date other than the date for which the trial was properly noticed. The record does not reflect that the trial judge abused his discretion. We overrule Winkle's second issue.
Having overruled Winkle's issues on appeal, we affirm the trial court's judgment.
__________________________________________
Jan P. Patterson, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed on Motion for Rehearing
Filed: July 10, 2007
1. The Bentons also sued Winkle. See Winkle v. Benton, No. 03-05-00684-CV, 2006 Tex. App. LEXIS 8450 (Tex. App.--Austin 2006, no pet.) (mem. op.).
----------------
Case cite and link to docket: Winkle v. Vallejo, No. 03-06-00133-CV (Tex.App.- Austin, Jul. 10, 2007)(Patterson)(opinion on motion for rehearing)
Full case style: Barry S. Winkle v. Blanca Vallejo and Juan R. Vallejo
Appeal from 277th District Court of Williamson County
Subscribe to:
Posts (Atom)