Court Opinion

ID: 9372220
Source: CourtListenerOpinion
Date Created: 2023-02-19 15:09:19.167887+00
Date Added: 2024-06-11T17:16:33.740907
License: Public Domain

Supreme Court of Texas
                           ══════════
                            No. 21-1104
                           ══════════

              B. Gregg Price, P.C. and B. Gregg Price,
                              Petitioners,

                                   v.

                    Series 1 – Virage Master LP,
                              Respondent

   ═══════════════════════════════════════
              On Petition for Review from the
       Court of Appeals for the First District of Texas
   ═══════════════════════════════════════

                            PER CURIAM

      This appeal arises from a suit on a note and guaranty after a
borrower allegedly defaulted on the loan.       The lender moved for
summary judgment and set the motion for an oral hearing. Public
health announcements from the local trial courts, however, canceled
most oral hearings, including this one. The trial court then unilaterally
moved the canceled hearing to its submission docket and went forward,
without further notice, on the date of the originally scheduled oral
hearing. The borrower discovered as much one day before in a phone
call with the court clerk. The borrower immediately responded to the
summary-judgment motion, but the trial court struck the response as
untimely and granted summary judgment to the lender.
      The borrower moved for a new trial, arguing that he had not
received an amended notice of the hearing date after the original
hearing was canceled. The trial court denied the motion. The borrower
appealed, and the court of appeals affirmed.
      We hold that the borrower is entitled to a new trial because he
did not receive adequate notice of the rescheduled hearing as due
process requires. Accordingly, we reverse the judgment of the court of
appeals.
                                     I
      In 2015, B. Gregg Price’s law firm borrowed $3,250,647.05 from
Series 1 – Virage Master LP and executed a promissory note to repay
the loan. According to Virage, Price personally guaranteed the note.
After the firm failed to remit payments or provide status updates as the
terms of the note required, Virage sued Price and his firm in Harris
County.
      In February 2020, Virage served Price with notice of an oral
hearing on its motion for summary judgment, which Virage had yet to
file. The date for the oral hearing in the notice was April 2, 2020. Virage
later filed the motion and served Price with it on March 12, 2020.
      In March 2020, courts across Texas responded to the emerging
COVID-19 pandemic with modified court proceedings. Relevant here
are two announcements. First, on March 12, the Harris County Board
of District Judges canceled all nonessential court matters on days that
public schools were closed. The board informed the public that “[c]ourts

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that decide to proceed with scheduled court matters must contact all
parties and inform them that the scheduled proceedings will continue.”
      Second, on March 16, the Harris County Civil Division released
“Alternate Scheduling Procedures” that canceled “[a]ll previously set,
non-essential in-person, oral” hearings. Essential court matters could
include temporary restraining orders, temporary injunctions, and
similar proceedings. The announcement did not list summary-judgment
hearings as essential court matters.
      Alan Gerger, Price’s attorney, read these announcements and
concluded that the April 2 oral hearing on Virage’s motion for summary
judgment was canceled. The parties did not communicate further about
the upcoming hearing.
      The trial court’s website reflected some hearings scheduled for
April 2.   Price’s case did not appear on the court’s docket.     Gerger
contacted the court on April 1, one day before the original hearing date,
to confirm the cancellation. The court clerk indicated that the court
planned to hear Virage’s motion on its submission docket. According to
Gerger, the clerk did not tell him that the motion would be submitted
the next day.
      Although Gerger believed he had no impending deadline, he
nevertheless filed a response to Virage’s summary-judgment motion
that day. Virage immediately moved to strike the response as untimely.
      On April 2—the date of the initially scheduled hearing—the trial
court granted Virage’s motion for summary judgment and struck Price’s
response to it. Price moved for a new trial, which the trial court denied.

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      The court of appeals affirmed. ___ S.W.3d ___, 2021 WL 3204753
(Tex. App.—Houston [1st Dist.] July 29, 2021).         In considering the
summary judgment, the court confined itself to the evidence available to
the trial court at the time of its ruling. Id. at *6, *11. Because the trial
court had struck Price’s response to the motion for summary judgment
as untimely, the court of appeals did not consider it, nor Price’s attached
affidavit denying that he had signed or personally guaranteed the note.
Id. As to Price’s claim that he had not received notice of the rescheduled
hearing, the court of appeals concluded that the original notice of the
hearing set for April 2 was sufficient. Id. at *14. It held that Price
should have filed an objection to the hearing going forward by
submission to preserve his complaint that he did not receive adequate
notice. Id. at *13, *15.
      Finally, the court of appeals held that the trial court did not abuse
its discretion in denying Price’s motion for new trial because Price failed
to move to continue the April 2 hearing before it took place and did not
request leave to file a late response. Id. at *17. Relying on Carpenter v.
Cimarron Hydrocarbons Corp., 98 S.W.3d 682 (Tex. 2002), the court of
appeals declined to determine the effect of the COVID-19 closure orders
because, in its view, Price had an opportunity to present this argument
before the trial court granted summary judgment. 2021 WL 3204753,
at *17. The Court in Carpenter held that a complaining party who has
redress under the rules of civil procedure before a summary-judgment
hearing cannot avail itself of the equitable new-trial remedy found in
Craddock v. Sunshine Bus Lines Inc., 133 S.W.2d 124 (Tex. [Comm’n

                                     4
Op.] 1939), and its progeny. 98 S.W.3d at 686. Price petitioned this
Court for review.
                                    II
      Notice is “[a]n elementary and fundamental requirement of due
process.” Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314
(1950). The United States Constitution’s Due Process Clause and the
Texas Constitution’s Due Course of Law Clause require adequate
procedural due process for parties to a judgment, including notice of trial
court proceedings. Mitchell v. MAP Res., Inc., 649 S.W.3d 180, 188-89
(Tex. 2022). Such notice must be “reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the
action and afford them an opportunity to present their objections.”
Mullane, 339 U.S. at 314. That opportunity “must be granted at a
meaningful time and in a meaningful manner.” Armstrong v. Manzo,
380 U.S. 545, 552 (1965). When parties are not afforded a meaningful
opportunity to be heard, “the remedy for a denial of due process is due
process.” Univ. of Tex. Med. Sch. at Hous. v. Than, 901 S.W.2d 926, 933
(Tex. 1995).
      Our rules of civil procedure prescribe guidelines to ensure the
parties receive notice and a meaningful opportunity to be heard. A
motion for summary judgment must be served on the opposing party at
least twenty-one days before the time specified for a hearing. TEX. R.
CIV. P. 166a(c). Notice of a summary-judgment hearing must inform the
nonmovant of the exact date of hearing or submission. Martin v. Martin,
Martin & Richards, Inc., 989 S.W.2d 357, 359 (Tex. 1998). A trial court

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that grants summary judgment without notice of the hearing to the
nonmovant errs in granting it. Id.
        A new hearing requires a new notice. In this case, COVID-19
closures canceled the originally scheduled oral hearing, thus nullifying
Virage’s initial notice of hearing. Virage had a renewed obligation to
provide notice of any rescheduled hearing, which it failed to do. The
Harris County Board of District Judges’ March 12 announcement also
placed a burden on the court to notify the parties of a rescheduled
hearing date, which it failed to do. Nothing in the record evidences a
rescheduled hearing date and time, by submission or otherwise.
        Parties are entitled to rely on a court’s published announcement
canceling upcoming proceedings. They are further entitled to rely on an
announcement that the courts would notify the parties of a later hearing
date.   Given the public announcement that all oral hearings were
canceled, we hold that Price did not have adequate notice of a
rescheduled hearing by submission.
        We cannot agree with Virage’s argument that its April 1 motion
to strike sufficiently notified Price that a summary-judgment hearing
would go forward by submission on April 2 despite the cancellation
notices.   The motion to strike says no such thing, and such an
interpretation conflicts with published court announcements to the
contrary. Absent further written amended notice of a hearing date from
either Virage or the trial court, Price was entitled to rely on the courts’
published statements that in-person court proceedings were canceled.
        All interested parties must receive notice and a meaningful
opportunity to respond when a court reschedules a previously canceled

                                     6
hearing. Price did not receive the adequate notice that due process
requires.   The trial court therefore erred in granting summary
judgment.
                                   III
      The trial court further erred in refusing to grant a new trial upon
Price’s request. We review a trial court’s denial of a motion for new trial
for abuse of discretion. In re R.R., 209 S.W.3d 112, 114 (Tex. 2006). The
rule of Craddock v. Sunshine Bus Lines entitles a defaulting party to a
new trial when: “(1) the failure to appear was not intentional or the
result of conscious indifference, but was the result of an accident or
mistake, (2) the motion for new trial sets up a meritorious defense, and
(3) granting the motion will occasion no delay or otherwise injure the
plaintiff.” Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 925 (Tex.
2009) (citing Craddock, 133 S.W.2d at 126). The Craddock rule applies
to post-answer default judgments, Dolgencorp, 288 S.W.3d at 926, and
to summary judgments, Wheeler v. Green, 157 S.W.3d 439, 444 (Tex.
2005). If a defaulting party moves for a new trial and satisfies Craddock,
then the trial court abuses its discretion in failing to grant a new trial.
Dolgencorp, 288 S.W.3d at 926.
      Price argues that he and his law firm satisfied Craddock. The
failure to present his defense for the hearing on submission was not
intentional or due to conscious indifference.     Price’s burden on this
element is satisfied when “the factual assertions, if true, negate
intentional or consciously indifferent conduct by the defendant and the
factual assertions are not controverted by the plaintiff.” In re R.R., 209
S.W.3d at 115.        Price’s attorney relied on the trial courts’

                                    7
announcements when he concluded that the hearing was canceled. He
did not receive an amended notice from the court or from Virage that
the hearing had been reset.
      When the nonmovant does not receive notice, “we have dispensed
with the second element [of Craddock] for constitutional reasons.”
Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005).            When the
defaulting party fails to appear due to a lack of proper notice, the
subsequent judgment is constitutionally infirm. Peralta v. Heights Med.
Ctr., Inc., 485 U.S. 80, 84 (1988). In that situation, the meritorious
defense element of Craddock is not required. Mathis, 166 S.W.3d at 744.
      Price was not required to present a meritorious defense at the
motion-for-new-trial stage because he did not receive notice of the
hearing.   We therefore do not assess the merits of his defenses to
Virage’s claims.
      As to the third Craddock element, Price asserts that any delay
would have been caused by the ongoing pandemic disruptions, not by
granting a new trial. Further, the initial trial date permitted a discovery
period through December 31, 2020, providing ample time for a
rescheduled summary-judgment hearing.           At that early stage of
litigation, a new trial would not have caused undue delay or injury to
Virage, and Virage did not otherwise adduce evidence of injury from a
delayed hearing.
      Virage responds that Carpenter applies here, and the court of
appeals agreed. In Carpenter, an energy company received timely notice
of a summary-judgment hearing, but the attorney neglected to calendar
the date. 98 S.W.3d at 684. The company realized the mistake two days

                                    8
before the hearing and moved for leave to file an untimely response and
for a continuance. Id. at 684-85. The trial court denied the company’s
motions and granted the contractor’s motion for summary judgment. Id.
at 685. Our Court declined to apply Craddock in those circumstances
because the nonmovant had an opportunity to seek other remedies
under the rules of civil procedure before the court granted summary
judgment. Id. at 686.
      Virage argues that Price, like the company in Carpenter, had the
opportunity to move for a continuance or for leave to file a late response.
Virage’s April 1 motion to strike gave Price notice that the April 2
hearing date would go forward by submission, it argues, and thus Price
had the opportunity, if only for a few hours, to move for a continuance
or for leave to file a late response to the motion for summary judgment.
      The hearing, however, was canceled. The trial court could not go
forward absent an amended notice of hearing. Neither the trial court
nor Virage gave such notice.
      In such circumstances, Carpenter does not apply. Price had no
duty to object or to seek a continuance of a canceled summary-judgment
hearing.    Craddock, not Carpenter, provides the applicable rule.
Craddock’s purpose is to “alleviate unduly harsh and unjust results at a
point in time when the defaulting party has no other remedy available.”
Carpenter, 98 S.W.3d at 686. Unlike the facts presented in this case,
the defaulting party in Carpenter undisputedly had proper notice of the
hearing. We refuse to impose a duty to seek a continuance of a canceled
hearing on a party who relied upon the trial courts’ announcements to
his detriment.

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      We hold that the trial court abused its discretion by denying the
motion for new trial.
                             *       *      *
      Price and his law firm were denied due process when the trial
court proceeded with a canceled hearing without renewed notice to the
parties. The trial court thus erred in striking the summary-judgment
response as untimely, in granting summary judgment, and in denying
the motion for new trial.        Accordingly, and without hearing oral
argument, see TEX. R. APP. P. 59.1, we grant Price’s petition for review,
reverse the court of appeals’ judgment, and remand to the trial court for
proceedings consistent with this opinion.

OPINION DELIVERED: February 17, 2023

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