Court Opinion

ID: 4426154
Source: CourtListenerOpinion
Date Created: 2019-08-16 08:49:35.696411+00
Date Added: 2024-06-11T14:52:55.764593
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                    NO. 03-18-00657-CV

                    Housing Authority of The City of Austin, Appellant

                                               v.

                                 Ahmed Elbendary, Appellee

    FROM THE COUNTY COURT AT LAW NO. 2 OF WILLIAMSON COUNTY
   NO. 18-0232-CC2, THE HONORABLE LAURA B. BARKER, JUDGE PRESIDING

                                        OPINION

              The Housing Authority of The City of Austin (HACA) appeals a default judgment

against it in favor of Ahmed Elbendary. HACA argues the trial court lacked subject matter

jurisdiction and, in the alternative, that the default judgment should be set aside on equitable

grounds. We will vacate the default judgment and dismiss the case.

                                      BACKGROUND

              This appeal arises out of a family’s lease of Elbendary’s rental property with

federal Section 8 housing assistance. See generally 42 U.S.C. § 1437f. HACA is a municipal

corporation responsible for addressing a shortage of safe and sanitary housing. See generally

Tex. Loc. Gov’t Code § 392.011 (creating municipal housing authorities). In furtherance of that

goal, HACA administers the federal Housing Choice Voucher Program, which provides rental

assistance to low income families. See 24 C.F.R. § 982.1(a)(1) (2019) (explaining that program
“is generally administered by State or local governmental entities called public housing

agencies” with funds provided by Department of Housing and Urban Development). Under that

program, a “family selects a suitable unit” to rent and then applies to the local public housing

agency for approval. Id. § 982.1(b)(2). After approving the tenancy, the agency “enters into a

contract to make rental subsidy payments to the owner to subsidize occupancy by the family.” Id.

              In April 2015, a family requested assistance with leasing a residence Elbendary

owned in the Austin area. HACA approved the request and signed a contract with Elbendary to

pay him monthly rental subsidies.      This family rented the residence from April 2015 to

April 2016 and allegedly caused $35,000 in damages to the property.

              In February 2018, Elbendary sued HACA for breach of contract for allegedly

failing to conduct an adequate background check of the family or to ensure the family

complied with other program requirements. HACA failed to answer the suit, and the trial court

granted Elbendary a default judgment awarding Elbendary $35,796.68 in actual damages on

June 5, 2018. On August 7, 2018, HACA filed a motion to extend post-judgment deadlines, see

Tex. R. Civ. P. 306a, and a motion for new trial. HACA argued in its motion to extend that the

post-judgment deadlines should run from July 19, 2018. In its motion for new trial, HACA

argued that governmental immunity deprived the trial court of subject matter jurisdiction or, in

the alternative, that HACA met the equitable criteria for setting aside a no-answer default

judgment. The trial court denied HACA’s motion to extend following an evidentiary hearing.

HACA filed notice of appeal on October 8, 2018.

                                                2
                                 APPELLATE JURISDICTION

               Elbendary initially argues that we lack jurisdiction over this appeal because

HACA’s notice of appeal was untimely.1 See Texas Entm’t Ass’n v. Combs, 431 S.W.3d 790,

796 (Tex. App.—Austin 2014, pet. denied) (“Timely filing a notice of appeal is necessary to

invoke this Court’s appellate jurisdiction[.]”). Generally, a party perfects appeal by filing written

notice of appeal within thirty days after the judgment is signed. See Tex. R. App. P. 25.1, 26.1.

Timely filing certain post-judgment motions extends the deadline to perfect appeal to

ninety days. See id. R. 26.1(a)(1). The periods to file these post-judgment motions begin on the

date the judgment is signed. Tex. R. Civ. P. 306a(1). Relevant here, a motion for new trial is

due within thirty days. Id. R. 329b(a). There is no dispute that HACA filed its motion for new

trial and its notice of appeal more than sixty days after the judgment was signed. However,

HACA had filed a motion to have the post-judgment deadlines run from the date it learned of the

judgment, July 19, 2018. See id. R. 306a(4), (5). HACA argues in its first issue that the trial

court erred by denying this motion.         Resolution of this issue also resolves Elbendary’s

jurisdictional argument because HACA filed its motion for new trial within thirty days of

July 19, 2018, and its notice of appeal within ninety days.

               To ensure that parties can timely file post-judgment motions, Rule 306a directs

trial court clerks to “immediately give notice to the parties or their attorneys of record by first-

class mail advising that the judgment or order was signed.” Id. R. 306a(3). If a party adversely

affected by a judgment learns of it more than twenty but less than ninety-one days after it is

       1
          Elbendary appears here pro se. We construe pro se filings liberally and with patience
“so as to obtain a just, fair and equitable adjudication of the parties’ rights.” Veigel v. Texas Boll
Weevil Eradication Found., 549 S.W.3d 193, 195 n.1 (Tex. App.—Austin 2018, no pet.).
However, pro se litigants must comply with the same rules and standards as those represented by
attorneys. Mathis v. Lockwood, 166 S.W.3d 743, 745 (Tex. 2005).
                                                  3
signed, the post-judgment deadlines begin on the earlier of the date the party received notice

from the clerk or acquired actual knowledge of the judgment. Id. R. 306a(4). To invoke this

exception, the party alleging late notice must file a sworn motion with the trial court establishing

the date the party or its attorney first learned of the judgment. Id. R. 306a(5). The sworn motion

“establishes a prima facie case that the party lacked timely notice and invokes a trial court’s

otherwise-expired jurisdiction for the limited purpose of holding an evidentiary hearing to

determine the date on which the party or its counsel first received notice or acquired knowledge

of the judgment.” In re Lynd Co., 195 S.W.3d 682, 685 (Tex. 2006) (orig. proceeding).

               HACA filed a sworn motion asserting it first learned of the judgment on

July 19, 2018, when Elbendary emailed Lisa Garcia, Vice President of HACA, seeking payment

of the judgment. The court denied HACA’s motion following an evidentiary hearing, impliedly

finding HACA received notice within twenty days after the judgment was signed. See id. at 686

(explaining denial of Rule 306a motion implies finding movant received timely notice). HACA

challenges the legal sufficiency of that finding.2 See LDF Constr., Inc. v. Texas Friends of

Chabad Lubavitch, Inc., 459 S.W.3d 720, 724 (Tex. App.—Houston [14th Dist.] 2015, no pet.)

(holding that appellate courts have power to review trial court findings of date party received

notice for legal and factual sufficiency); Hot Shot Messenger Serv., Inc. v. State, 798 S.W.2d
413, 414–15 (Tex. App.—Austin 1990, writ denied) (same). In conducting a legal-sufficiency

review, we credit favorable evidence if a factfinder could reasonably do so and disregard

contrary evidence unless a reasonable factfinder could not. Shields Ltd. P’ship v. Bradberry,

       2
           HACA also challenges the factual sufficiency of the finding. We do not reach that
challenge because we conclude the evidence is legally insufficient. See Tex. R. App. P. 47.1
(directing appellate courts to “hand down a written opinion that is as brief as practicable but that
addresses every issue raised and necessary to final disposition of the appeal”).
                                                 4
526 S.W.3d 471, 480 (Tex. 2017). A party attacking the sufficiency of an adverse finding on

which it had the burden of proof at trial must demonstrate on appeal that “the record conclusively

establishes all vital facts in support of the issue.” Id.

                In support of its motion, HACA offered sworn affidavits from Garcia;

Michael Gerber, HACA’s President; and Thomas Bleich, HACA’s trial counsel. The trial court

admitted the affidavits without objection. All three testified they had no actual knowledge of the

judgment prior to Elbendary’s email to Garcia on July 19, 2018, and did not receive notice of the

judgment before that time. Garcia and Gerber explained that if HACA had received the notice it

would have been filed in one of two locations: the file for the tenants who rented Elbendary’s

property or the file for Elbendary himself. They examined both files but did not find the clerk’s

notice. Similarly, Bleich averred that the notice was not filed in his law firm’s file for HACA.

HACA contends these affidavits conclusively establish that it learned of the judgment on

July 19. Elbendary responds that he presented evidence showing HACA likely received notice

of the judgment much earlier. Specifically, he presented an affidavit from Regina Brown,

assistant Chief Deputy County Clerk of Williamson County, who swears that the notice of

judgment was mailed to HACA on June 5, 2018, and that it has not been returned. Elbendary

attached Brown’s affidavit to his response to HACA’s motion to extend but did not offer it into

evidence. With exceptions not relevant here, “[e]xhibits attached to pleadings are not evidence

in a case until the exhibits are properly introduced and admitted by the presiding authority.”

Shah v. Star Anesthesia, P.A., No. 04-18-00465-CV, ___ S.W.3d ___, ___, 2019 WL 2194544,

at *4 (Tex. App.—San Antonio May 22, 2019, no pet.); see Shor v. Pelican Oil & Gas Mgmt.,

LLC, 405 S.W.3d 737, 751 n.3 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (“[A]bsent the

parties’ agreement, affidavits attached to pleadings and not admitted into evidence do not

                                                   5
constitute evidence.” (quoting Ahmed v. Shimi Ventures, L.P., 99 S.W.3d 682, 684 n.2 (Tex.

App.—Houston [1st Dist.] 2003, no pet.))).        On this record, we cannot consider Brown’s

affidavit as evidence HACA received the notice.

               In the absence of affirmative evidence of receipt, Elbendary argues we should

hold HACA had constructive notice of the judgment. Constructive notice is a “legal device” in

which “a person is deemed to have actual knowledge of certain matters.” HECI Expl. Co.

v. Neel, 982 S.W.2d 881, 887 (Tex. 1998). In some circumstances, “[a] person is charged with

constructive notice of the actual knowledge that could have been acquired by examining public

records.” Brown v. Arenson, 571 S.W.3d 324, 334 (Tex. App.—Houston [1st Dist.] 2018, no

pet.) (quoting Mooney v. Harlin, 622 S.W.2d 83, 85 (Tex. 1981)). Elbendary argues that HACA

was on constructive notice because its lawyers could have discovered the judgment by tracking

the case through the website of the Williamson County Clerk. However, Rule 306a expressly

provides that the post-judgment deadlines start on the date the party “acquired actual knowledge

of the signing” of the judgment. Tex. R. Civ. P. 306a(4). We will not read a constructive

knowledge component into Rule 306a without support in the plain language of the rule. See In

re Christus Spohn Hosp. Kleberg, 222 S.W.3d 434, 437 (Tex. 2007) (orig. proceeding) (“When a

rule of procedure is clear and unambiguous, we construe the rule’s language according to its

plain or literal meaning.”).

               Reviewing the evidence under the applicable standard, we conclude the record

conclusively establishes that HACA and its counsel first learned of the judgment on

July 19, 2018. The trial court’s contrary finding is therefore legally insufficient. HACA filed its

motion for new trial within thirty days, extending the deadline to perfect appeal to

October 17, 2018, and filed notice of appeal on October 8. By timely filing notice of appeal,

                                                6
HACA successfully invoked our appellate jurisdiction. See Combs, 431 S.W.3d at 796. We

sustain HACA’s first issue.3

                               GOVERNMENTAL IMMUNITY

               HACA argues in its second issue that the trial court erred by permitting its motion

for new trial to be overruled by operation of law because governmental immunity deprived the

court of jurisdiction over Elbendary’s claim. See Marrot Commc’ns v. Town & Country P’ship,

227 S.W.3d 372, 376 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (explaining default

judgment is proper only if record “reflects[s] that the trial court has jurisdiction of the

subject matter and the parties and that the case is ripe for judgment” (citing Finlay v. Jones,

435 S.W.2d 136, 138 (Tex. 1968))).

               We review the denial of a motion for new trial for an abuse of discretion. Waffle

House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010). Under this standard, reviewing

courts defer to the trial court’s factual determinations but review legal questions de novo.

Van Ness v. ETMC First Physicians, 461 S.W.3d 140, 142 (Tex. 2015). The existence of

subject matter jurisdiction is an issue of law. Harris County v. Annab, 547 S.W.3d 609, 612

(Tex. 2018).

               Governmental immunity defeats a trial court’s subject matter jurisdiction over a

claim unless the State consents and waives immunity.         City of Houston v. Houston Mun.

Employs. Pension Sys., 549 S.W.3d 566, 575 (Tex. 2018). Courts defer to the Legislature to

waive governmental immunity through “clear and unambiguous language.” Annab, 547 S.W.3d

at 613 (quoting Tex. Gov’t Code § 311.034). Elbendary argues Section 271.152 of the Local

       3
         Elbendary filed a separate motion to dismiss this appeal on the same jurisdictional
ground. We deny the motion for the reasons discussed.
                                                7
Government Code waives HACA’s immunity.4           That section creates “a limited waiver of

immunity for local governmental entities that enter into certain contracts.” Sharyland Water

Supply Corp. v. City of Alton, 354 S.W.3d 407, 412 (Tex. 2011).           Specifically, a local

governmental entity that is legally authorized “to enter into a contract and that enters into a

contract subject to this subchapter waives sovereign immunity to suit for the purpose of

adjudicating a claim for breach of the contract, subject to the terms and conditions of this

subchapter.” Tex. Loc. Gov’t Code § 271.152. A contract “subject to this subchapter” is in

writing, properly executed, and states “the essential terms of the agreement for providing goods

or services to the local governmental entity that is properly executed on behalf of the local

governmental entity.” Id. § 271.151(2)(A). The parties focus on whether Elbendary agreed in

the Contract to provide a service to HACA.

              The Texas Supreme Court has explained that the term “services,” as used in

Section 271.151, “includes generally any act performed for the benefit of another under some

arrangement or agreement whereby such act was to have been performed,” but does not extend to

“contracts in which the benefit that the local governmental entity would receive is an indirect,

attenuated one.” Kirby Lake Dev., Ltd. v. Clear Lake City Water Auth., 320 S.W.3d 829, 839

(Tex. 2010) (first quoting Van Zandt v. Fort Worth Press, 359 S.W.2d 893, 895 (Tex. 1962);

then quoting Berkman v. City of Keene, 311 S.W.3d 523, 527 (Tex. App.—Waco 2009, pet.

denied)). Elbendary contends he provided a service directly to HACA by agreeing to lease his

       4
           Elbendary also contends that the Legislature has waived the immunity of housing
authorities generally by providing those entities “may sue and be sued.” Tex. Loc. Gov’t Code
§ 392.065(1). We reject this argument because the Texas Supreme Court has held that this
provision does not “reflect a clear and unambiguous legislative intent to waive immunity from
suit.” Abilene Hous. Auth. v. Gene Duke Builders, Inc., 226 S.W.3d 415, 416–17 (Tex. 2007)
(per curiam) (citing Tooke v. City of Mexia, 197 S.W.3d 325, 342 (Tex. 2006)).
                                               8
property to HACA’s “approved family.” We disagree. Elbendary expressly represented in the

Contract that he signed a separate contract with the tenant family agreeing to lease the property

with “assistance under the Section 8 voucher program.” The central purpose of the agreement

between Elbendary and HACA was to funnel federal funds to him to subsidize that family’s

choice of housing. HACA served as the conduit of those funds and did not directly receive the

benefits of Elbendary’s services in leasing his property. See San Antonio Hous. Auth. v. Serento

Apartments, LLC, 478 S.W.3d 820, 826 (Tex. App.—San Antonio 2015, no pet.) (concluding

that similar contract did not waive immunity of San Antonio Housing Authority because it “was

merely the conduit of federal funds and did not directly receive the benefit of services”); see also

East Hous. Estate Apartments, L.L.C. v. City of Houston, 294 S.W.3d 723, 736 (Tex. App.—

Houston [1st Dist.] 2009, no pet.) (holding loan agreement where City provided federal funds to

enable corporation to rehabilitate apartment complex to provide low income housing did not

waive immunity because “no services were provided directly to the City”). Persuaded by these

authorities, we conclude Section 271.152 does not waive HACA’s governmental immunity from

suit. We sustain HACA’s second issue.

               HACA argues in its third issue that it established the three equitable factors for

setting aside a default judgment. See Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124,

126 (Tex. [Comm’n Op.] 1939). We do not reach this argument because it is unnecessary to

fully dispose of this appeal. See Tex. R. App. P. 47.1.

                                         CONCLUSION

               We vacate the trial court’s judgment and dismiss the case. See id. R. 43.2(e).

                                                 9
                                            __________________________________________
                                            Edward Smith, Justice

Before Chief Justice Rose, Justices Kelly and Smith

Vacated and Dismissed

Filed: August 15, 2019

                                              10