In The

Court of Appeals

Sixth Appellate District of Texas at Texarkana

No. 06-16-00020-CV

ACTION POWERSPORTS, INC., D/B/A 

WELLS CYCLE, INC., AND CARL M. WELLS, Appellants

V.

1STEL, INC., Appellee

On Appeal from the 413th District Court

Johnson County, Texas

Trial Court No. C201300332

Before Morriss, C.J., Moseley and Burgess, JJ.

Opinion by Justice Moseley
2

O P I N I O N

After Action Powersports, Inc., d/b/a Wells Cycle, Inc. (Action), ceased paying the

monthly invoices for its telephone system, 1STEL, Inc. (1STEL), filed suit against Action and its 

President, Carl Wells (Wells). 1STEL asserted a cause of action for breach of contract against 

Action and Wells, individually, on its Master Service Agreement for Communications Services 

(the Agreement), and against Wells, individually, for breach of the payment guaranty contained in 

the Agreement. Although Action and Wells answered the lawsuit, they failed to appear at trial,

and the 413th Judicial District Court of Johnson County1entered a post-answer default judgment 

in favor of 1STEL. On appeal, Action and Wells complain that the trial court erred (1) in entering 

judgment against Wells, individually, for breaching the payment guaranty, and (2) in failing to set 

a hearing on their motion for new trial and allowing the same to be overruled as a matter of law. 

We find no error by the trial court and affirm its judgment.

I. Background

On or about December 6, 2011, Action entered into the Agreement with 1STEL to install 

a telephone system at its place of business in Ennis and to provide telephone and internet services 

for a term of five years. The Agreement included the following clauses:

13. Governing Law and Exclusive Venue

This Agreement shall be construed under the laws of the State of Texas 

without regard to choice of law principles. Customer further agrees that 

exclusive venue with respect to any dispute between the parties shall be in 

the state and federal courts of Johnson County, Texas.

 

1Originally appealed to the Tenth Court of Appeals, this case was transferred to this Court by the Texas Supreme 

Court pursuant to its docket equalization efforts. See TEX. GOV’T CODE ANN. § 73.001 (West 2013). We are unaware 

of any conflict between precedent of the Tenth Court of Appeals and that of this Court on any relevant issue. See

TEX. R. APP. P. 41.3.
3

. . . .

18. Guaranty

The undersigned hereby (1) personally guarantees all obligations of 

Customer regarding payment for Services and all other amounts owed 

hereunder, and (2) agrees to be bound by the governing law and exclusive 

venue provision in Section 13 hereof.

The signature line indicates that the company entering into the Agreement is Action, and is signed 

by Wells. Beneath his signature, Wells’ name is hand-printed and below that, his title of 

“President” is hand-printed. 

In May 2012, Action stopped paying its monthly invoice for services provided by 1STEL. 

Under the terms of the Agreement, on July 12, 2012, 1STEL sent Action a final bill for $38,680.99, 

which included unpaid invoices and non-recurring charges. After Action failed to pay the final 

bill, 1STEL filed suit on July 23, 2013. 

An original answer to the suit was filed on behalf of Action and Wells by their attorney, 

Don A. Young, on September 26, 2013. Young died October 7, 2014, and no other attorney 

thereafter entered an appearance on behalf of Action or Wells. When the attorney for 1STEL 

learned in May 2015 of Young’s demise, he sent a letter directly to Action and Wells wherein he 

reminded them that the case was still pending and requested that they have another attorney enter 

an appearance on their behalf. When no attorney entered an appearance on their behalf, 1STEL’s 

attorney sent a follow-up letter to Action and Wells July 31, 2015, advising them that he was 

requesting a status conference hearing in light of Young’s death. On August 25, 2015, 1STEL’s 

attorney mailed notice to Action and Wells, advising them that the requested status conference 

hearing would be held September 9, 2015. Despite this action by ISTEL’s attorney, neither Action,
4

nor Wells, nor an attorney representing either attended the hearing. At that hearing, 1STEL’s 

attorney advised the court that he had spoken with Wells, who informed him that he (Wells) was 

talking to some attorneys. 1STEL also introduced its attorney’s correspondence with Action and 

Wells concerning the need for the defendants to retain new counsel. The trial court entered an 

order September 10, 2015, directing Action and Wells to have an attorney enter an appearance on 

their behalf on or before October 9, 2015. By letter dated September 10, 2015, 1STEL’s attorney 

mailed Action and Wells a copy of that order by United States Postal Service certified mail and by 

regular mail. The receipt for the certified mail was signed by Wells. 

Even so, no attorney appeared on behalf of Action and Wells, and by letter dated 

October 14, 2015, 1STEL’s attorney sent Action and Wells notice that a final hearing had been set 

in the case for December 15, 2015, sending it by certified mail. Wells signed the return receipt for 

the notice on October 16, 2015. Neither Action nor Wells appeared at the final hearing (either 

personally or by counsel). The trial court entered its judgment in favor of 1STEL on its breach of 

contract claims,2 wherein it awarded ISTEL judgment jointly and severally against Action and 

Wells, for $45,154.93, together with attorney fees of $3,087.50, costs of court, and post-judgment 

interest.

Action and Wells filed a verified motion for a new trial. In their motion, Action and Wells 

alleged that their attorney had died October 7, 2014, and that no attorney had made an appearance 

on their behalf after that time. Although they acknowledged having received communications 

from 1STEL’s attorney, they laid the cause of their lack of response to the fact that they had 

 

2

In their briefs, both parties interpret the judgment against Wells as a judgment for his breach of the payment guaranty. 
5

received no notice from the trial court itself. They did not deny receiving notice of the final 

hearing, but alleged that they were not aware that a hearing could be set without notice from the 

trial court or its clerk and that their failure to appear was because they were not aware the trial 

court had approved the trial date. They also alleged that they had meritorious defenses of offset 

and failure of performance by 1STEL and that Wells did not personally guarantee payment under 

the Agreement. Finally, they alleged that a new trial would neither cause delay to nor prejudice 

1STEL.

1STEL’s objection to the motion for new trial was supported by the affidavit of its 

president. 1STEL alleged that Action and Wells had received multiple notices regarding the case 

and directed the attention of the trial court to the exhibits introduced at the final hearing evidencing 

its attorney’s efforts to encourage them to retain a new attorney, notices sent to them regarding the 

scheduling of the status conference hearing and the order resulting from it, and the notice of final 

hearing received by Wells. Although Action and Wells filed a response they did not controvert 

any of the allegations made, or evidence presented, by 1STEL. Although Action and Wells 

requested a hearing on their motion, no hearing was held, and the motion was overruled as a matter 

of law. 

II. Wells’ Personal Liability

In their first point of error,

3 Action and Wells assert that the trial court erred in entering 

judgment against Wells, individually, because the petition on its face shows the invalidity of the 

claim against him in his individual capacity. He argues that the Agreement shows that he executed 

 

3The first point of error applies only to Wells.
6

it only in his capacity as president of Action (not in his individual capacity) and that since the 

Agreement was incorporated into the petition, the petition on its face shows that the claim against 

him individually on the guaranty of payment was invalid.4 Wells also argues that there is no 

evidence to show that he is liable in his individual capacity. 1STEL argues first that Wells waived 

this point of error under Rule 33.1 of the Texas Rules of Appellate Procedure. It then argues that 

even if he had not waived the point of error, the Agreement shows him to be personally liable 

under the guaranty of payment as a matter of law.

III. Lack of Waiver

Initially, we address 1STEL’s claim of waiver. It argues that because Wells failed to assert 

in any trial-level pleading before judgment that he was not personally liable, he has preserved 

nothing for our review under Rule 33.1 of the appellate rules. However, Rule 33.1 provides that 

“[i]n a civil case, the overruling by operation of law of a motion for new trial or a motion to modify 

the judgment preserves for appellate review a complaint properly made in the motion, unless taking 

evidence was necessary to properly present the complaint in the trial court.” TEX. R. APP. P.

33.1(b). In this case, Wells asserted his defense that he was not personally liable in his motion for 

new trial, a motion which was overruled by operation of law. As we address below, this defense 

could be determined as a matter of law, so no taking of evidence was necessary to present it to the 

trial court. Thus, this error was preserved for our review under the appellate rules.

 

4A default judgment may be erroneous “if (1) the petition . . . does not attempt to state a cause of action within the 

jurisdiction of the court, or (2) the petition . . . does not give fair notice to the defendant of the claim asserted, or (3) the 

petition affirmatively discloses the invalidity of such claim.” Stoner v. Thompson, 578 S.W.2d 679, 684–85 (Tex, 

1979); see McLeod v. Gyr, 439 S.W.3d 639, 651 (Tex. App.—Dallas 2014, pet. denied).
7

A. Standard of Review 

Wells’ assertion that there is no evidence supporting his individual liability amounts to a 

challenge to the legal sufficiency of the evidence. In our legal sufficiency review, we determine

“whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict 

under review.” Petrohawk Props., L.P. v. Jones, 455 S.W.3d 753, 770 (Tex. App.—Texarkana 

2015, pet. dism’d) (quoting City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Basley v. 

Adoni Holdings, LLC, 373 S.W.3d 577, 582 (Tex. App.—Texarkana 2012, no pet.)). We will find 

that the evidence is legally insufficient only if 

(1) there is a complete absence of evidence of a vital fact; (2) the rules of law or of 

evidence bar the court from giving weight to the only evidence offered to prove a 

vital fact; (3) there is no more than a mere scintilla of evidence offered to prove a 

vital fact; or (4) the opposite of the vital fact is conclusively established by the 

evidence.

Id. (citing Jelinek v. Casas, 328 S.W.3d 526, 532 (Tex. 2010)). There is more than a scintilla of 

evidence “when the evidence reaches a level enabling reasonable and fair-minded people to differ 

in their conclusions.” Id. (citing Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 

1997)). “Less than a scintilla of evidence exists when the evidence is ‘so weak as to do no more 

than create a mere surmise or suspicion’ of a fact.” Id. (quoting King Ranch, Inc. v. Chapman,

118 S.W.3d 742, 751 (Tex. 2003) (quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 

1983))).

It is undisputed that the only evidence of Wells’ individual liability is the Agreement. In 

addition, the Agreement is the basis of Wells’ argument that the petition shows on its face that 

1STEL’s claim against him is invalid. Therefore, the resolution of this point of error requires us 
8

to construe the Agreement. “The construction of an unambiguous contract is a question of law 

which we review de novo.” Id. at 765 (citing Tawes v. Barnes, 340 S.W.3d 419, 425 (Tex. 2011)). 

If the wording of a contract can be given “a certain or definite legal meaning or interpretation,” it 

is not ambiguous. Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). When the contract is 

unambiguous, “the instrument alone will be deemed to express the intention of the parties for it is 

objective, not subjective, intent that controls.” City of Pinehurst v. Spooner Addition Water Co.,

432 S.W.2d 515, 518 (Tex. 1968). “A contract is not ambiguous simply because the parties 

disagree over its meaning.” Dynegy Midstream Servs., Ltd. P’ship v. Apache Corp., 294 S.W.3d 

164, 168 (Tex. 2009). Only when a contract’s “meaning is uncertain and doubtful or is reasonably 

susceptible to more than one interpretation” is it deemed ambiguous. Craig Sessions, M.D., P.A. 

v. TH Healthcare, Ltd., 412 S.W.3d 738, 743 (Tex. App.—Texarkana 2013, no pet.) (quoting 

Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996)). In construing a contract, 

“we assume the parties intended ‘every clause to have some effect and in some measure to evidence 

their agreement.’” Petrohawk Props., 455 S.W.3d at 775 (quoting City of Pinehurst, 432 S.W.2d 

at 518).

B. Analysis

Several of our sister courts of appeals have construed language similar to that found in the 

Agreement to make the corporate signatory personally liable under a guaranty agreement 

contained in a credit application. See 84 Lumber Co., L.P. v. Powers, 393 S.W.3d 299 (Tex. 

App.—Houston [1st Dist.] 2012, pet denied); Taylor–Made Hose, Inc. v. Wilkerson, 21 S.W.3d 

484 (Tex. App.—San Antonio 2000, pet. denied); Austin Hardwoods, Inc. v. Vanden Berghe, 917 
9

S.W.2d 320 (Tex. App.—El Paso 1995, writ denied). In Wilkerson, Wilkerson signed an 

application for a credit account with Taylor-Made on behalf of North American Transit, Inc. 

Beside her signature, it indicated that she was vice-president of the company. Above her signature 

was a provision stating, “I, [sic] personally agree to pay all invoices and cost of collection 

including, but not limited to[,] collections agency fees, court costs, and reasonable attorney’s fees 

on any amount remaining unpaid after 90 days.” Wilkerson, 21 S.W.3d at 486. After the company 

failed to pay its account and filed for bankruptcy, Taylor-Made filed suit against Wilkerson on the 

guaranty agreement. Id. at 486–87. After summary judgment was entered in favor of TaylorMade, Wilkerson appealed, asserting that there was no evidence that she was individually liable 

for the debt and that there was no evidence that the contract was enforceable against her since there 

was no writing signed by her in her individual capacity. Id. at 487. Taylor-Made argued that the 

credit application itself established Wilkerson’s liability. Id. The San Antonio Court of Appeals 

agreed with Taylor-Made, finding that under the unambiguous language of the guaranty contract, 

Wilkerson had personally agreed to pay the company’s delinquent account and that she “made 

herself personally liable for the corporation’s debt.” Id. at 488.

Similarly, in 84 Lumber Co., Powers signed a credit application on behalf of his corporation 

as its president. Above his signature, a paragraph provided, “I DO UNCONDITIONALLY AND 

IRREVOCABLY PERSONALLY GUARANTEE THIS CREDIT ACCOUNT AND []ENTS OF 

ANY AND ALL AMOUNTS DUE BY THE ABOVE BUSINESS.” 84 Lumber Co., 393 S.W.3d 

at 302. The Houston Court of Appeals reversed a summary judgment in favor of Powers and 

rendered judgment for 84 Lumber, finding that, notwithstanding the missing language, the contract 
10

was clear and unambiguous and that by signing the contract Powers had created his individual 

liability for the debt of the corporation. Id. at 305, 308.

As in Wilkerson and 84 Lumber Co., Wells signed the Agreement on behalf of Action as 

its president. This was required in order to bind the corporation to the Agreement. Under the 

Agreement, Action was obligated to pay all invoices for the services rendered by 1STEL for a 

period of five years. If it defaulted on payment of the invoices, it would also be obligated for 

additional charges as provided in the Agreement. Section 18 of the Agreement also provides that 

by signing the Agreement, Wells “personally guarantee[d] all obligations of [Action] regarding 

payment for Services and all other amounts owed [t]hereunder.” The purpose of the guaranty was 

to secure any debt owed by Action. See Vince Poscente Int’l, Inc. v. Compass Bank, 460 S.W.3d 

211, 219 (Tex. App.—Dallas 2015, no pet.). Under Wells’ interpretation, Action would be 

guaranteeing its own debt, which would render this provision meaningless. Further, Section 18 

also states that “the undersigned . . . . agrees to be bound by the governing law and exclusive venue 

provision in Section 13 hereof.” In Section 13, Action agreed that Texas law would be controlling 

and venue of any dispute between the parties would be in the courts of Johnson County, Texas. 

Since “we assume the parties intended ‘every clause to have some effect and in some measure to 

evidence their agreement,’” Petrohawk Props., 455 S.W.3d at 775 (quoting City of Pinehurst, 432 

S.W.2d at 518), this section clearly evidences that Wells, individually, was agreeing to be bound 

by the governing law and venue provisions in any dispute between Wells and 1STEL. Likewise, 

Section 18 clearly and unambiguously provides that Wells, individually, guaranteed the payment 

of any amounts owed by Action under the Agreement. 
11

Since the Agreement was attached to the original petition, we find that the petition did not 

show on its face the invalidity of 1STEL’s claim against Wells. Further, since the Agreement was 

introduced into evidence at the final hearing, we find that sufficient evidence supported the trial 

court’s judgment against Wells individually. We overrule this point of error.

IV. Motion for A New Trial

In their second point of error, Action and Wells assert that the trial court erred in failing to 

conduct a hearing on their motion for new trial, thereby allowing their motion to be overruled as a 

matter of law. They argue that their verified motion for new trial established the Craddock5

requirements for a new trial after default judgment and therefore that the trial court was required 

to have a hearing on its motion and to grant a new trial. We disagree.

A. Standard of Review

We review the denial of a motion for new trial under an abuse-of-discretion standard. 

Director, State Employees Workers’ Compensation Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 

1994). After a default judgment, the “trial court abuses its discretion by not granting a new trial 

when all three elements of the Craddock test are met.” Id. (citing Bank One, Tex., N.A. v. Moody,

830 S.W.2d 81, 85 (Tex. 1992)). Craddock provides that a new trial should be granted after a 

default judgment when

[1] the failure of the defendant to answer before judgment was not intentional, or 

the result of conscious indifference on his part, but was due to a mistake or an 

accident; [2] provided the motion for a new trial sets up a meritorious defense and 

[3] is filed at a time when the granting thereof will occasion no delay or otherwise 

work an injury to the plaintiff.

 

5See Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939).
12

Id. (quoting Craddock, 133 S.W.2d at 126). The Craddock requirements are applicable to postanswer default judgments. Id.; Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966).

The defaulting party has the burden of setting forth facts establishing all three elements of 

the Craddock test. Scenic Mountain Med. Ctr. v. Castillo, 162 S.W.3d 587, 590 (Tex. App.—

El Paso 2005, no pet.). When no hearing is held, we look to the motion for new trial and any 

accompanying affidavits to determine if this burden is met. See In re Marriage of Woods, No. 06-

13-00123-CV, 2014 WL 4437795 (Tex. App.—Texarkana Apr. 25, 2014, no pet.) (mem. op.). If 

the motion and accompanying affidavits fail to establish any prong of the Craddock test, then the 

trial court’s denial of a new trial will be upheld. See Holt Atherton Indus., Inc. v. Heine, 835 

S.W.2d 80, 83 (Tex. 1992); Ivy, 407 S.W.2d at 215.

B. Analysis

Craddock requires that the motion for new trial set up a meritorious defense. We determine 

here whether Action and Wells met this burden “based on the facts alleged in the motion and the 

supporting affidavit, regardless of whether those facts are controverted.” Woods, 2014 WL 

4437795, at *4 (citing Evans, 889 S.W.2d at 270). Setting up a meritorious defense “means ‘[t]he 

motion must allege facts which in law would constitute a defense to the cause of action asserted 

by the plaintiff, and must be supported by affidavits or other evidence proving prima facie that the 

defendant has such meritorious defense.’” Estate of Pollack v. McMurrey, 858 S.W.2d 388, 392 

(Tex. 1993) (quoting Ivy, 407 S.W.2d at 214). This is required “to prevent the reopening of cases 

to try out fictitious or unmeritorious defenses.” Ivy, 407 S.W.2d at 214. Therefore, “conclusory 
13

allegations are insufficient.” Heine, 835 S.W.2d at 82 (citing Folsom Invs., Inc. v. Troutz, 632 

S.W.2d 872, 875 (Tex. App.—Fort Worth 1982, writ ref’d n.r.e.)).

In their motion for new trial, Action and Wells alleged

8. The Plaintiff’s cause of action is based upon a Contract alleged to 

have been breached by the Defendants and to this cause of action the Defendants 

can and do set up a meritorious defense as follows: [Action] alleges that it is 

entitled to offsets for any claims presented by the Plaintiff in that the Plaintiff did 

not provide the services as promised. [Wells] alleges that he is not responsible in 

his individual capacity as he did not provide any personal guarantee of the Contract.

The only other allegation in their motion relevant to a claimed meritorious defense was that the 

Agreement was not signed by Wells in his individual capacity. Action and Wells filed no 

supporting affidavits, although Wells verified under oath that the statements contained in the 

motion for new trial were within his personal knowledge and that they were true and correct. 

As we have previously discussed, the Agreement established that Wells provided a 

personal guarantee and was liable in his individual capacity. Therefore, the motion for new trial 

set up no meritorious defense for Wells. Further, the allegations that Action is entitled to offsets 

and that 1STEL failed to provide the promised services are conclusory. There are no facts alleged 

showing what services 1STEL failed to provide or establishing that Action was entitled to an offset. 

Therefore, the motion did not set up a meritorious defense for Action. Since the motion for new 

trial did not contain allegations of fact that constituted a meritorious defense for either Action or 

Wells, we find that the trial court did not err in overruling the motion for new trial. See Ivy, 407 

S.W.2d at 215. We overrule this point of error.
14

We affirm the judgment of the trial court. 

Bailey C. Moseley

Justice

Date Submitted: August 2, 2016

Date Decided: August 5, 2016