Court Opinion

ID: 4683214
Source: CourtListenerOpinion
Date Created: 2021-05-03 07:18:39.425693+00
Date Added: 2024-06-11T08:04:13.716564
License: Public Domain

In the
                    Court of Appeals
            Second Appellate District of Texas
                     at Fort Worth
                 ___________________________
                      No. 02-20-00201-CV
                 ___________________________

CENTURY SPORTS WEARS, INC. D/B/A WYNFORD WHOLESALE, PERVEZ
          DAREDIA, AND ASHRAF DAREDIA, Appellants

                                V.

       WALLIS BANK F/K/A WALLIS STATE BANK, Appellee

              On Appeal from the 362nd District Court
                      Denton County, Texas
                   Trial Court No. 19-3906-362

              Before Bassel, Womack, and Wallach, JJ.
              Memorandum Opinion by Justice Wallach
                             MEMORANDUM OPINION

       This is an appeal from the trial court’s denial of Appellants’ motion for new

trial after default judgment. We affirm.

I.     Background

       Wallis Bank f/k/a Wallis State Bank (“Wallis Bank”) as the Plaintiff filed its

Original Petition and Requests for Disclosure on April 26, 2019, and named Century

Sports Wears, Inc. d/b/a Wynford Wholesale, Pervez Daredia, and Ashraf Daredia as

Defendants (“Century Sports” or “Appellants”). On June 26, 2019, Wallis Bank filed a

Motion for Default Judgment against Century Sports. On June 28, 2019, the Court

signed a Final Default Judgment against Century Sports for the sums of $104,488.90,

and $8,630.48, plus $5,723.42 in prejudgment attorney’s fees and expenses,

$8,500.00 in various conditional postjudgment attorney’s fee awards, postjudgment

interest, and court costs.

       Century Sports filed their Original Answer in this matter on July 26, 2019.

Century Sports also filed a Motion to Set Aside Default Judgment or in the

alternative, Motion for New Trial on July 26, 2019. The Motion for New Trial was set

for a hearing on September 26, 2019. At the hearing, the Court granted the motion in

part and denied it in part. Due to the limited time before the expiration of the trial

court’s plenary power and time to timely file a motion to extend with this court, both

of which ended on October 11, 2019, Century Sports filed a Notice of Appeal.

                                           2
        However, in the interim, the trial court signed another order titled “Order

Partially Granting New Trial only as to Paragraph 3 [pertaining to attorney’s fees] of

the Final Default Judgment” from the hearing on the first Motion to Set Aside Final

Default Judgment or in the Alternative, Motion for New Trial and it was signed on

October 9, 2019. Since a new order was signed on October 9, 2019, Century Sports

filed a Motion for Remand with this court seeking guidance about the jurisdiction of

the appeal based on the recent trial court order. On December 5, 2019, this court

dismissed Century Sports’ first appeal.

        Wallis Bank filed a Non-Suit as to its claim for attorney’s fees on February 25,

2020.

        On March 24, 2020, the Court signed its Final Judgment upon the request of

Wallis Bank. As a result, Century Sports filed a Motion to Set Aside Default Judgment

and/or in the alternative, Motion for New Trial on the Final Judgment signed on

March 24, 2020 (“Motion for New Trial”). This Motion was filed on April 22, 2020,

within thirty days after signing of the Final Judgment. The appellate record is devoid

of any attempts by Appellants to have their Motion for New Trial heard by the trial

court. It was eventually overruled by operation of law.

        Century Sports filed a Notice of Appeal on June 19, 2020.

II.     Standards of Review and Craddock Elements

        The decision to grant a new trial after a default judgment is within the

discretion of the trial court. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124,

                                            3
126 (Tex. [Comm’n Op.] 1939); In re E.P.C., No. 02-10-00050-CV, 2010 WL 5187691,

at *1 (Tex. App.—Fort Worth Dec. 23, 2010, no pet.) (mem. op.); Johnson v. Edmonds,

712 S.W.2d 651, 652 (Tex. App.—Fort Worth 1986, no writ). In determining whether

a trial court abused its discretion, we must decide whether the trial court acted without

reference to any guiding rules or principles; in other words, we must decide whether

the act was arbitrary or unreasonable. Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex.

2004); E.P.C., 2010 WL 5187691, at *1. An appellate court cannot conclude that a trial

court abused its discretion merely because the appellate court would have ruled

differently in the same circumstances. E.I. du Pont de Nemours & Co. v. Robinson,

923 S.W.2d 549, 558 (Tex. 1995); see also Low v. Henry, 221 S.W.3d 609, 620 (Tex.

2007). In other words, an appellate court cannot merely substitute its judgment for

that of the trial court. Walker v. Gutierrez, 111 S.W.3d 56, 62 (Tex. 2003).

       An abuse of discretion does not occur when the trial court bases its decisions

on conflicting evidence. In re Barber, 982 S.W.2d 364, 366 (Tex. 1998) (orig.

proceeding). Furthermore, an abuse of discretion does not occur as long as some

evidence of substantive and probative character exists to support the trial court’s

decision. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex. 2002) (op. on reh’g).

       Further, when “no findings of fact and conclusions of law are filed, the denial

of a motion to set aside the default judgment and for new trial must be upheld on any

legal theory supported by the evidence.” Huey-You v. Kimp, No. 02–16–00172–CV,

                                            4
2018 WL 359633, at *5 (Tex. App.—Fort Worth Jan. 11, 2018, pet. denied) (mem. op.

on reh’g); see Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex. 1984).

       To complain that the trial court abused its discretion by failing to grant a

motion for new trial under the Craddock rule, the movant must obtain a hearing on its

motion. Failure to use diligence to obtain a hearing results in waiver of the point on

appeal because the trial court was not given the opportunity to exercise its discretion

before the motion was overruled by operation of law. In re the Marriage of Adamski,

No. 14-16-00099-CV, 2017 WL 3158949, at *3–4 (Tex. App.—Houston [14th Dist.]

June 25, 2017, no pet.) (mem. op.); Seven-Thousand Eight-Hundred Twenty-Six Dollars in

United States Currency v. State, No. 03-16-00089-CV, 2016 WL 4628053, at *2–3 (Tex.

App.—Austin Aug. 31, 2016, pet. denied) (mem. op.); Felt v. Comerica Bank,

401 S.W.3d 802, 808 (Tex. App.—Houston [14th Dist.] 2013, no pet.) (op. on reh’g);

Barrett v. Westover Park Cmty. Ass’n, Inc., No. 01-10-01112-CV, 2012 WL 682342, at

*3 (Tex. App.—Houston [1st Dist.] Mar. 1, 2012, no pet.) (mem. op.); Truong v. Rose,

No. 03-99-00740-CV, 2000 WL 1125245, at *1 (Tex. App.—Austin Aug. 10, 2000, no

pet.) (not designated for publication); Puri v. Mansukhani, 973 S.W.2d 701, 715 (Tex.

App.—Houston [14th Dist.] 1998, no pet.); Fluty v. Simmons Co., 835 S.W.2d 664,

668 (Tex. App.—Dallas 1992, no pet.); Shamrock Roofing Supply, Inc. v. Mercantile Nat’l

Bank, 703 S.W.2d 356, 357 (Tex. App.—Dallas 1985, no writ). If, however, the

movant unsuccessfully exercises diligence in attempting to obtain a hearing by the trial

                                             5
court, the point is not waived on appeal. Cont’l Carbon Co. v. Sea-Land Serv., Inc.,

27 S.W.3d 184, 188 (Tex. App.—Dallas 2000, pet. denied).

         Craddock established the standard for trial courts to use in deciding whether a

default judgment should be set aside and a new trial granted. The movant must

establish (1) that the failure to appear “was not intentional, or the result of conscious

indifference . . . , but was due to a mistake or an accident”; (2) that the movant has a

meritorious defense; and (3) that the granting of the motion for new trial “will

occasion no delay or otherwise work an injury to the plaintiff.” Craddock, 133 S.W.2d

at 126; E.P.C., 2010 WL 5187691, at *1. As stated in LaCombe, “To support the

motion for new trial, the defendant must make factual allegations that are supported

by evidence, such as accompanying affidavits setting forth facts, which, if true, satisfy

the standard.” Ramirez v. LaCombe, No. 01-17-00977-CV, 2019 WL 922058, at *3 (Tex.

App.—Houston [1st Dist.] Feb. 26, 2019, no pet.) (mem. op.) (citations omitted).

However, conclusory allegations are insufficient. Holt Atherton Indus., Inc. v. Heine,

835 S.W.2d 80, 82 (Tex. 1992). If a party requesting a new trial meets all three

requirements of the Craddock test, the trial court commits an abuse of discretion if it

does not grant a new trial. Old Republic Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex.

1994).

         In determining whether the failure to appear was due to intentional disregard or

conscious indifference, the court “must look to the knowledge and acts of the

defendant.” Strackbein, 671 S.W.2d at 39. If the factual assertions in the defendant’s

                                             6
affidavit are uncontroverted 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. Dir., State Emps. Workers’ Comp. Div. v. Evans, 889 S.W.2d

266, 269 (Tex. 1994).

       The party seeking a new trial has the burden to prove the lack of intent or

conscious indifference by offering some type of excuse for the failure to answer, but

the excuse need not necessarily be a good excuse. Sharpe v. Kilcoyne, 962 S.W.2d 697,

701 (Tex. App.—Fort Worth 1998, no pet.); Liberty Mut. Fire Ins. Co. v. Ybarra,

751 S.W.2d 615, 617–18 (Tex. App.—El Paso 1988, no writ). In other words, a

“failure to appear is not intentional or due to conscious indifference . . . merely

because it is deliberate; it must also be without adequate justification. Proof of such

justification—accident, mistake or other reasonable explanation—negates the intent

or conscious indifference for which reinstatement can be denied.” Smith v. Babcock &

Wilcox Constr. Co., 913 S.W.2d 467, 468 (Tex. 1995) (per curiam).

       When a defendant relies on his agent to file an answer, he must demonstrate

that both he and his agent were free of conscious indifference. Holt, 835 S.W.2d at 83.

A defendant does not relieve himself of this responsibility if the record is silent as to

why the agent acted as it did. See Harris v. Lebow, 363 S.W.2d 184, 186 (Tex. App.—

Dallas 1962, writ ref’d n.r.e.).

                                           7
III.   Analysis

       (a.)   Appellants Failed to Preserve Error

       The trial court signed its Final Judgment, from which this appeal is taken, on

March 24, 2020. Appellants filed their Motion for New Trial on April 22, 2020, within

thirty days of the date of the signing of the Final Judgment. However, the record is

devoid of any hearing on this motion as well as any attempts to set this motion for

hearing. It was ultimately overruled by operation of law. As set forth in the numerous

cases cited above, a prerequisite for preserving error for appeal from denials of

motions to set aside default judgments and grant new trials is that the movant must

exercise diligence in having the motion heard by the court before the motion is

overruled by operation of law. The movant is attempting to complain on appeal of the

trial court’s abuse of discretion, so the trial court must have been given the

opportunity to exercise its discretion before an appellate court can determine if it

abused its discretion. Appellants, having failed to present their Motion for New Trial

to the trial court for determination before it was overruled by operation of law, failed

to preserve error on this point.

       (b.)   Appellants Failed to Meet the First Element of the Craddock Test

       Assuming that Appellants did preserve error for appeal, they failed to satisfy

the first element of the Craddock test. Therefore, we hold that the trial court did not

abuse its discretion in allowing Appellants’ motion to be overruled by operation of

law.

                                           8
      The three elements of the Craddock test are whether the Appellants’ failure to

timely answer was not intentional or the result of conscious indifference but was due

to accident or mistake, whether Appellants set up a meritorious defense to the claims

asserted by Appellee, and whether granting a new trial will cause undue delay or

prejudice to the non-moving party. Craddock, 133 S.W.2d at 126. Failure to establish

any element justifies a denial of the motion for new trial. In this case, the trial court

was not requested to make findings of fact and conclusions of law, and it did not do

so. As a result, we will uphold the denial of the motion for new trial if the evidence in

the appellate record supports the denial based on a failure to satisfy any of the three

Craddock elements. La. C Store Wholesaler, Inc. v. Royal Nett Apparel, LLC, No. 02-17-

00331-CV, 2018 WL 3059966, at *4 (Tex. App.—Fort Worth June 21, 2018, no pet.)

(mem. op. on reh’g).

      The only proof offered by Appellants in support of their allegation that their

failure to timely answer was not intentional or the result of conscious indifference was

the affidavit of their attorney, Steve Snelson. The only substantive comments

addressing this issue in the Affidavit were

      3. “I was retained by Century Sports Wears, Inc. d/b/a Wynford
      Wholesale, Pervez Daredia and [Ashraf] Daredia, Defendants[,] to file an
      answer in the lawsuit filed against them by Wallis Bank f/k/a Wallis
      State Bank[.]”

      4. “I drafted an answer to be filed with the Court prior to its dues [sic]
      date. I asked my secretary to file the answer prior to her leaving on
      vacation. Evidently, she failed to do so and it was learned that she did
      not file the answer until after the default was taken. The reason for the

                                              9
      failure to answer was due to a mistake and was not intentionally.
      Thought the answer had been timely filed[.]”

      When a defendant relies on an agent or representative to file an answer to a

suit, the defendant must establish that the failure to file an answer was not the result

of the party’s or the agent’s conscious indifference. Estate of Pollack v. McMurrey,

858 S.W.2d 388, 391 (Tex. 1993) (per curiam) (op. on reh’g); Anchor Fumigation & Pest

Control, Inc. v. Cortes, No. 14-02-01252-CV, 2003 WL 22724766, at *2 (Tex. App.—

Houston [14th Dist.] Nov. 20, 2003, no pet.) (mem. op.); Lowe v. Lowe, 971 S.W.2d

720, 723 (Tex. App.—Houston [14th Dist.] 1998, pet. denied). Generally, with proper

proof, misplacing or losing paperwork by an agent may be a valid excuse for failure to

timely answer. BancTexas McKinney, N.A. v. Desalination Sys., Inc., 847 S.W.2d 301,

302 (Tex. App.—Dallas 1992, no pet.). Proper proof includes affidavits from persons

who have personal knowledge of the handling of the documents and who give factual

descriptions of how the loss or misplacement occurred. Id. at 302.

      In BancTexas, the only affidavit supporting the motion for new trial was from

the bank’s vice president, who had no personal involvement with the suit paperwork.

He generally described that the bank was undergoing relocation when it was served

with the citation and concluded that the citation had been misplaced. Neither the

bank president who had been served with citation nor any other employee who had

handled it testified in person or by affidavit to explain “how the citation was lost or

where in the chain of communication a breakdown occurred that led to the failure to

                                          10
answer the citation.” Id. The court held that this was insufficient, conclusory

testimony to establish accident or mistake. Id.

      Motiograph, Inc. v. Matthews, 555 S.W.2d 196, 197 (Tex. App.—Dallas 1977, writ

ref’d n.r.e.), is similarly instructive. Motiograph was sued for breach of employment

contract and failed to answer, and a default judgment was taken. In support of its

motion for new trial, Motiograph alleged,

      There was no negligence or lack of diligence on the part of Defendant in
      permitting Default Judgment to be entered. Service of Plaintiff’s Petition
      was had upon one of the employees, not upon any officer of Defendant,
      and said citation and petition was inadvertently misplaced by said
      employee and was never delivered to any officer of Defendant.
      Immediately upon receiving notice of the entry of the said Default
      Judgment, Defendant retained the undersigned attorney and made this
      Motion to Set Aside Default Judgment.

Id.

      The affidavit attached to the motion recited that the motion’s allegations were

true and correct. The court of appeals concluded that

      [t]he assertion that the citation was “inadvertently misplaced” after
      service upon Motiograph’s employee merely summarizes an undisclosed
      chain of events which purportedly excuse Motiograph’s
      unresponsiveness. Likewise, the affidavit attached to the motion merely
      recites that the motion’s allegations are “true and correct” and does not
      set forth any explanatory facts. Furthermore, there is no record that
      defendant tendered evidence regarding the particular facts surrounding
      service and the alleged loss of citation at any hearing on the motion.
      Under these circumstances, we hold that Motiograph has not shown
      itself entitled to vacation of the default judgment.

Id.

                                            11
      In Anchor Fumigation, the company president, who was served with citation,

testified that she instructed an employee to fax the suit to appellant’s insurance agent,

expecting the agent to hire an attorney to answer the suit, but the agent mistakenly

misplaced or lost the citation and petition. 2003 WL 22724766, at *2. She further

stated that the agent was not consciously indifferent in failing to file an answer. Id.

The court held this to be insufficient to establish accident or mistake, holding that

      the only proof appellant’s agent lost the citation was [the company
      president’s] conclusory statement that the agent had done so. Other than
      this statement, appellant presented no evidence regarding what became
      of the petition beyond the employee’s faxing it to the agent. Specifically,
      appellant presented no evidence with respect to the agent’s handling of
      the petition. There is no evidence from anyone at the insurance agency
      verifying that the petition was lost, explaining how it was lost, or
      explaining what led to the failure to file an answer. [The company
      president’s] conclusory statement was not competent proof that the
      agent failed to file an answer due to mistake or accident.

Id.

      Other cases offer similar guidance. See, e.g., In re P.J., No. 02-13-00052-CV,

2013 WL 6727879, at *2 (Tex. App.—Fort Worth Dec. 19, 2013, no pet.) (mem. op.)

(lack of details of mother’s activities which allegedly precluded her from being able to

file a timely answer to child custody case brought by child’s father precluded finding

of accident or mistake); Ybarra, 751 S.W.2d at 617–18 (affidavits of two of defendants’

employees which lacked details regarding who transmitted faxes and how they were

allegedly directed to wrong office resulting in failure to timely answer were insufficient

to establish accident or mistake).

                                           12
      Like the proof in the aforementioned cases, Snelson’s affidavit is factually

insufficient and conclusory and will not support a finding of abuse of discretion in

this case. The affidavit concludes that Snelson prepared the answer before its due

date, which itself is conclusory in the absence of details of when he received the

citation, what date(s) he prepared the answer, and when he signed it. The affidavit also

fails to identify the secretary to whom he allegedly gave the answer for filing, when

and where he gave it to her, and what she did with it. There is also no evidence about

what she did with the answer, which would be necessary to decide if what she did or

did not do was an accident or mistake, and whether that may or may not have led to

the answer not being filed. There is no evidence that Snelson had knowledge of what

happened to the answer after he allegedly gave it to his secretary, so whatever he

concluded about her action or inaction was sheer speculation. In short, the affidavit

provided insufficient factual proof to establish accident or mistake or the absence of

conscious indifference which would justify a conclusion that the trial court abused its

discretion in denying the motion for new trial, albeit by operation of law. In the words

of the Motiograph court,

      [T]hese statements are merely conclusory and do not set forth
      sufficiently specific facts from which the trial court or this court can
      determine whether the conscious indifference standard has been met.

555 S.W.2d at 197.

      Having found that Appellants failed to preserve error on the trial court’s

overruling of the Motion for New Trial, or alternatively, that they failed to satisfy the

                                           13
first element of the Craddock test, we need not address the remaining elements of the

Craddock test. See Tex. R. App. 47.1. Appellants’ sole issue on appeal is overruled.

IV.   Conclusion

      Appellants’ sole issue on appeal is whether the trial court properly granted the

default judgment in favor of Wallis Bank when Appellants met the Craddock standards

outlined for setting aside a no-answer default judgment. This issue is overruled.

Appellants failed to preserve error on this issue by failing to obtain a hearing on their

Motion for New Trial before the Motion was overruled by operation of law.

Alternatively, assuming the issue was properly preserved for appeal, Appellants failed

to satisfy the first element of the Craddock test, i.e., that the failure to answer was not

intentional, or the result of conscious indifference, but was due to a mistake or

accident. The judgment of the trial court is affirmed.

                                                         /s/ Mike Wallach
                                                         Mike Wallach
                                                         Justice

Delivered: April 29, 2021

                                            14