Court Opinion

ID: 4669402
Source: CourtListenerOpinion
Date Created: 2021-03-19 06:15:33.380425+00
Date Added: 2024-06-11T07:59:03.760816
License: Public Domain

In The

                                 Court of Appeals

                     Ninth District of Texas at Beaumont

                                __________________

                                NO. 09-19-00092-CV
                                __________________

  MICHAEL RIESE AND ANGELA RIESE, INDIVIDUALLY AND D/B/A
        MICHAELANGELA CONSTRUCTION, Appellants

                                          V.

                            JAMES STUTTS, Appellee

__________________________________________________________________

            On Appeal from the County Court at Law No. 1
                       Jefferson County, Texas
                       Trial Cause No. 132619
__________________________________________________________________

                           MEMORANDUM OPINION

      Michael and Angela Riese, individually and d/b/a/ MichaelAngela

Construction, appeal from a default judgment, which they suffered in a lawsuit filed

by James Stutts. The Rieses filed a motion for new trial, which the trial court at first

granted but then later decided to withdraw. We conclude the Rieses provided the

trial court with evidence sufficient to show they have a right to prevail on their

motion for new trial. Based on that conclusion, we reverse and remand.

                                           1
                                    Background

      This suit arises out of a construction dispute over work the Rieses’ business,

MichaelAngela Construction, performed after Stutts hired them to repair the

damages caused by a water leak he suffered in his home. In May 2018,

MichaelAngela Construction gave Stutts a bid for $127,800 to repair the damages

caused by the leak. The bid, which is in evidence, reflects it is merely a bid and is

on a form that is not fully integrated, which means it does not contain all the terms

of the agreement the parties made to repair the home. Instead, the bid merely reflects

the charges MichaelAngela Construction expected to charge Stutts should he accept

the bid. The bid describes the repairs MichaelAngela Construction recommended

Stutts needed in several of the rooms in the home. Stutts accepted the bid and

authorized MichaelAngela Construction to start the work. Stutts paid

MichaelAngela Construction $25,000 to start the job.

      MichaelAngela Construction worked on Stutts’ home for twelve days before

a dispute arose between the parties about the terms of the bid. The dispute began

when Michael Riese told Stutts that MichaelAngela Construction could not complete

the work for the amount stated in the bid. When Michael told Stutts about the

increased bid, he also demanded that Stutts pay another advance against the total and

newly projected cost for the repairs.

                                          2
      In response to the news about the increase in the bid and MichaelAngela

Construction’s demand for another advance, Stutts demanded Michael produce the

invoices supporting MichaelAngela Construction’s expenses for the materials it had

used on the job. He also declined to advance additional monies to fund the work in

progress. At that point, MichaelAngela Construction quit working on Stutts’ home.

The defendants also never gave Stutts any invoices to support the expenses they

incurred on the work they completed before the dispute led them to quit working on

the home. Shortly after the dispute over the contract arose, Stutts sued Michael,

Angela, and MichaelAngela Construction and alleged they were negligent,

committed fraud, and breached the contract to repair his home. When the defendants

failed to file a timely answer, Stutts moved to default them. The trial court granted

the motion.

      We note Stutts’ Original Petition contains multiple claims and theories of

recovery, theories sounding in both tort and contract. About three weeks after the

trial court signed the judgment, the defendants filed a motion for new trial. The

defendants filed several affidavits to support their motion, including one from a law

clerk who works for the firm Michael hired to handle the defendants’ dispute with

Stutts. The defendants filed evidence to support their motion for new trial. It shows

that Michael first contacted the law firm to pursue a claim against Stutts over the

value of the work they completed on Stutts’ home before the dispute arose.

                                         3
Michael’s affidavit reflects that he claimed Stutts owes the defendants $5,000 more

for the work than he paid them as an advance against the work.

      To establish their failure was not intentional or due to conscious indifference,

the defendants filed an affidavit from the law clerk the firm assigned to assist the

firm in handling the lawsuit Stutts filed against the defendants suing them for

damages resulting from their failure to complete the work. She explained that she

was assigned the task of calculating when the defendants were required to answer

the suit. The law clerk’s affidavit states that, on September 26, 2018, she was

assigned the task of drafting an answer to Stutts’ suit by the attorney in charge of her

work. In her affidavit, the law clerk states she made an error in calculating the date

the defendants needed to answer and calculated the due date for the answer on a date

later than the one on which it was due. The law clerk, according to her affidavit, did

not learn of her error until after the trail court defaulted the defendants in the suit.

      The defendants’ Motion for New Trial also alleges the defendants’ failure to

answer on the date their answer was due was not intentional or the result of any

conscious indifference to the suit, but resulted from an accident or mistake. In the

motion, the defendants alleged they did not breach the agreement they had with

Stutts. To establish they had a defense to Stutts’ claim for breach of contract, the

defendants filed an affidavit signed by Michael Riese. In his affidavit, Michael swore

that Stutts “actually still owes $5,000” to the defendants for the work in progress

                                            4
completed on Stutts’ home when the defendants stopped their work. Additionally,

Michael’s affidavit states the defendants “performed under the contract so

MichaelAngela Construction was not in breach.”

      On January 2, 2019, the trial court considered and then granted the defendants’

Motion for New Trial. Five days later, Stutts, by motion, asked the trial court to

reconsider its ruling granting the defendants’ Motion for New Trial. In his Motion

to Reconsider, Stutts argued the trial court should not have overturned the judgment

based on the defendants motion claiming the return of service failed to adequately

describe what documents the process server gave them when she served them with

the paperwork in Stutts’ suit. In his Motion to Reconsider, Stutts also argued the

defendants’ Motion for New Trial failed to contain sufficient evidence to establish

the defendants have meritorious defenses to both his tort and breach of contract

claims, noting his Original Petition includes more than just a claim for breach of

contract.

      In response to the Motion to Reconsider, the defendants filed a second

affidavit, signed by Michael Riese. In that affidavit, Michael reiterated the

defendants “fully performed under the construction contract.” He also stated that he

was “willing and able to reimburse Mr. Stutts for the expenses he incurred in

obtaining the default judgment.”

                                         5
      In February 2019, the trial court conducted a hearing on Stutts’ Motion to

Reconsider. Less than two weeks later, the trial court signed an order granting Stutts’

motion. The order granting Stutts’ Motion to Reconsider reflects the trial court

withdrew its ruling on defendants’ Motion for New Trial, denied the Motion for New

Trial, and ordered the default judgment of October 2018 reinstated.

      The defendants appealed from the final judgment, as reinstated by the trial

court’s order of March 2019 granting Stutts’ Motion to Reconsider. In the brief they

filed to support their appeal, the defendants raise three issues. In them, they argue

the following: (1) the description in the citation of service on which the default

judgment is based fails to adequately describe the documents with which they were

served when the process server served them with Stutts’ suit; (2) the trial court

abused its discretion in denying their Motion for New Trial; and (3) the evidence is

insufficient to support the amount the trial court awarded Stutts on his claim for

attorney’s fees.

                                 Standard of Review

      We review rulings denying motions for new trial for abuse of discretion.1 A

trial court cannot render a judgment by default against a defendant unless the

defendant is properly served with the plaintiff’s suit. 2 In a direct appeal from a

      1
        Dir., State Employees Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 268
(Tex. 1994).
      2
        Tex. R. Civ. P. 124.
                                        6
judgment by default, there is no presumption of proper service.3 Even so, the

certificate or affidavit of service from the process server who served process is prima

facie evidence of the fact the defendant was served, and the “recitals in a process

server’s return create[] a presumption that service was performed.4 Without the

presumption of proper service, Texas law requires that before the trial court may

default a defendant, the record must show the plaintiff complied with the Rules of

Procedure that control how plaintiffs must serve defendants with a lawsuit. 5

      This appeal involves a case in which the defendants filed a timely motion for

a new trial. When resolving a motion for new trial that assails a default judgment,

the trial court abuses its discretion if the motion for new trial and evidence

supporting it shows the defendant provided the trial court with sufficient evidence

establishing three things: (1) the defendant’s failure to appear was not intentional or

the result of his conscious indifference but resulted from an accident or mistake; (2)

the defendant has a meritorious defense to the plaintiff’s claim; and (3) granting the

motion will not cause undue delay or injure the plaintiff.6 If the motion satisfies these

requirements, the trial court must grant the motion.7

      3
        See Primate Constr. Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994) (per
curiam).
      4
        Sozanski v. Plesh, 394 S.W.3d 601, 604 (Tex. App.—Houston [1st Dist.]
2012, no pet.).
      5
        Id.
      6
        See Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (1939).
      7
        Strackbein v. Prewitt, 671 S.W.2d 37, 39 (Tex. 1984).
                                         7
       To establish the existence of a meritorious defense, the defendant must

produce evidence that, if believed, could cause a factfinder to reach a different result

in another trial. 8 Ultimately, the question is whether the evidence before the trial

court shows the trial court abused its discretion in denying the defendants’ motion.9

                                        Analysis

       In issue one, the appellants argue the process server’s affidavit accompanying

the return of service fails to sufficiently describe the documents the process server

handed the defendants when she served them with Stutts’ suit. We disagree with the

defendants that the description the process server included in her affidavit

accompanying the return is inadequate for the reasons the defendants rely upon in

their brief. What the process server’s affidavit shows is that she delivered “true

copies” of the Plaintiff’s Original Petition, the Plaintiff’s Request for Jury Trial, and

Exhibit A, an exhibit consisting of MichaelAngela Construction’s bid, when she

served the defendants with the suit. Because the arguments the appellants raise about

the description in the affidavit accompanying the return of service lack merit, their

first issue is overruled.

       In issue two, the appellants argue the trial court abused its discretion in

denying their Motion for New Trial. According to the appellants, the evidence

       8
           Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966).
       9
           See Craddock, 133 S.W.2d at 126.
                                            8
supporting their motion shows their failure to answer resulted from an accident or

mistake, was not intentional or due to conscious disregard of the duty they had to

answer, and shows they have a meritorious defense to Stutts’ claim. On the other

hand, Stutts argues there are several reasons the appellants cannot now show the trial

court abused its discretion in denying their Motion for New Trial. First, Stutts

suggests the trial court could have overruled the motion by finding the defendants’

evidence fails to show they did not consciously disregard or intentionally neglect

their duty to answer his suit. To support that argument, Stutts points to differences

he argues exist by comparing the affidavits Michael filed to support the Motion for

New Trial and compares the statements in his affidavit with his testimony from a

deposition Stutts obtained from Michael after filing his Motion to Reconsider. Stutts

concludes the differences he points to show the trial court could have decided that

the statements in Michael’s affidavit about when and why he first contacted a law

firm to assist him were inconsistent and inferred that Michael’s affidavits were not

credible and gave them no weight.

      While there are relatively minor differences between the deposition testimony

Stutts filed to support his Motion to Reconsider as compared to Michael’s affidavits,

the differences Stutts relied upon are immaterial. None of the claimed differences

support a conclusion that the defendants’ failure to answer was intentional or

resulted from a conscious disregard of Stutts’ suit. The differences Stutts relied on

                                          9
between Michael’s testimony and his affidavits do not support a conclusion that

Michael did not hire lawyers to represent him in Stutts’ suit before the deadline they

were required to file their answers.

      A trial court cannot deny a motion for new trial based on alleged discrepancies

between the evidence the defendant files to support its motion seeking a new trial

and the evidence the plaintiff files by claiming the plaintiff’s evidence shows the

defendant’s evidence is not credible. 10 Here, the evidence supporting the Motion for

New Trial established the defendants have an excuse for failing to timely file their

answer. The defendants’ evidence also shows they did not consciously or

intentionally neglect to answer the suit but that they failed to answer due to an

accident or mistake made by their agent, the law firm they hired to handle the suit.11

      The parties’ briefs also reflect they disagree about whether the evidence is

sufficient to show the defendants have a meritorious defense to Stutts’ suit.

According to the defendants, their evidence is sufficient because it shows Stutts

owes them money. Stutts disagrees, arguing the trial court, based on their motion for

new trial, properly required the defendants to produce evidence responding to their

claims for negligence and fraud, not just their contract claim. And as to the contract

      10
          See Guar. Bank v. Thompson, 632 S.W.2d 338, 340 (Tex. 1982) (explaining
that a “motion for new trial should not be denied on the consideration of counter-
testimony”).
       11
          See In re R.R., 209 S.W.3d 112, 115 (Tex. 2006) (per curiam); Fid. & Guar.
Ins. Co. v. Drewery Constr. Co., Inc., 186 S.W.3d 571, 576 (Tex. 2006) (per curiam).
                                          10
claims, Stutts also argues the statements in Michael’s affidavit are so conclusory

they are incompetent evidence to show that the defendants have a defense to his

claims for breaching the agreement to repair the home.

      The trial court apparently agreed with Stutts since it granted his Motion to

Reconsider. In his Motion to Reconsider, Stutts made the same arguments he makes

here. Yet, the default judgment is not based on Stutts’ claims for negligence or for

fraud. Instead, the judgment is based solely on Stutts’ breach of contract claim.

      When Stutts moved for the default, he provided the trial court with the

defendants’ bid to support his motion. In his motion, Stutts argued the bid

established the defendants agreed to repair his home in return for the sum of

$127,800. He supported his motion with another estimate from another contractor.

That bid, from A. Olivo Construction, reflects that A. Olivo bid $128,000 to

complete the work described in its bid. Relying on the A. Olivo bid, Stutts then

argued the evidence in his motion for default shows the work the defendants

completed has no value.

      The trial court accepted that argument and awarded Stutts $25,000 in

damages—the same amount Stutts paid the defendants in advance. Stated simply,

the trial court used an out-of-pocket measure of Stutts’ loss in deciding how much

to award. The evidence Stutts submitted with his motion for default shows that he

asked the trial court for a reliance damages award for his alleged out-of-pocket loss

                                         11
of $25,000 because that was the amount he lost when the defendants failed to

complete the repairs they started on his home. 12

      Stutts submitted no evidence of damages to support his claims for negligence

or for fraud. The $25,000 thus represents Stutts’ economic loss, a loss Stutts’ own

evidence ties to the advance he paid the defendants to get them to start the work.

Since Stutts’ evidence is based on an economic loss he claims he suffered from the

defendants’ breach, his action against the defendants sounds in contract, not in tort.13

      Finally, we note that the trial court awarded Stutts attorney’s fees. Of Stutts’

claims, awards for attorney’s fees are unavailable on claims alleging negligence or

fraud. 14 We conclude the trial court abused its discretion by accepting Stutts’

argument claiming the defendants had to produce evidence to show they had

      12
          See Atrium Med. Ctr., L.P. v. Houston Red C LLC, 595 S.W.3d 188, 193
(Tex. 2020) (explaining American law traditionally recognizes three types of
recovery in breach of a contract cases, one of which is reliance damages that
compensate the plaintiff “for out-of-pocket expenses”).
       13
          Sw. Bell Tel. Co. v. DeLanney, 809 S.W.2d 493, 495 (Tex. 1991) (“When
the injury is only the economic loss to the subject of a contract itself the action
sounds in contract alone.”).
       14
          See Tex. Prac. & Rem. Code Ann. § 38.001(8) (authorizing a plaintiff to
recover reasonable attorney’s fees in addition to the amount of a valid claim if the
claim arises from an oral or written contract); Rohrmoos Venture v. UTSW DVA
Healthcare, LLP, 578 S.W.3d 469, 487 (Tex. 2019) (noting that Texas follows the
American Rule, which “proves that a prevailing party has no inherent right to recover
attorney’s fees from the non-prevailing party unless there is a specific statutory or
contractual authority allowing it”); MBM Fin. Corp. v. Woodland Operating Co.,
L.P., 292 S.W.3d 660, 667 (explaining that “fees are not allowed for torts like
fraud”).
                                         12
defenses to his claims for negligence and fraud given that he did not take a judgment

against Stutts based on those claims and the claims are unsupported by the

allegations of fact that are in his petition.

       The remaining question is whether the defendants’ evidence is sufficient to

show a meritorious defense exists to Stutts’ breach of contract claim. Looking to the

evidence the defendants filed to support their motion for new trial, Michael’s

affidavits assert Stutts owes the defendants an additional $5,000 for the work the

defendants completed before stopping the work. On retrial, Michael’s testimony

would require the factfinder in a trial to decide what value, if any, to assign the work

MichaelAngela Construction completed before stopping work and to then decide

whether the value of that work was more (or less) than the $25,000 Stutts paid the

defendants in advance.15 Should the factfinder agree with Michael’s testimony, the

ultimate outcome in the case when compared to the result obtained by default could

change.

       Stutts also argues Michael’s affidavits are conclusory and therefore

insufficient to demonstrate that a meritorious defense exists to his breach of contract

claim. We agree that Michael’s affidavits could have included more detail about the

circumstances of the negotiations and the breach. But that’s not the question, the

       15
            See West v. Quintanilla, 573 S.W.3d 237, 244 (Tex. 2019).
                                            13
question is whether the facts stated in the affidavits are so conclusory that nothing

in them shows a retrial could produce a different result.

      Under Texas law, deciding whether the defendant has a meritorious defense

must be based on the evidence the defendant includes with his motion, regardless of

whether the plaintiff controverts those facts. 16 “A meritorious defense is one that, if

proved, would cause a different result upon a retrial of the case, although it need not

be a totally opposite result.”17 While the factfinder might rely on Stutts’ evidence

and find upon retrial that the work the defendants completed has no value, it could

also choose not to do so and accept Michael’s testimony that the work the defendants

completed was worth $30,000. Given the testimony in Michael’s affidavit, it was not

up to the trial court to act as a finder of fact and resolve the disputed issue of fact

over the value of the defendants’ work. 18

      The cases that Stutts relies on to argue the defendants’ evidence are inapposite

to the circumstances shown by the record before us here. Unlike those cases, the

record in this case contains evidence sufficient to create a fact issue over the amount

      16
          Evans, 889 S.W.2d at 270.
      17
          Ferguson & Co. v. Roll, 776 S.W.2d 692, 698 (Tex. App.—Dallas 1989, no
writ) (citing The Moving Co. v. Whitten, 717 S.W.2d 117, 120 (Tex. App.—Houston
[14th Dist.] 1986, writ ref’d n.r.e.)).
       18
          Ivy, 407 S.W.2d at 214 (explaining that once the defendant submits evidence
that shows the defendant has a meritorious defense to the plaintiff’s claim, “it is
improper to try the defensive issue” in the defendant’s motion).
                                          14
at issue in the dispute. In Abuzaid v. Modjarrad & Associates., P.C. 19 and Equinox

Enterprises, Inc. v. Associated Media Inc.,20 the cases on which Stutts relies, those

courts affirmed default judgments based on affidavits that did no more than contain

a sworn statement that the defendant was not in breach and asserting the plaintiff is

the party who breached. In contrast to the evidence before the courts in those cases,

the evidence in this case incudes Michael’s evaluation assigning a dollar value to the

work.

        Last, under Craddock, a defendant seeking to overturn default judgment must

establish that setting aside the judgment will not cause undue delays or injury to the

plaintiff.21 The record shows the appellants satisfied the last prong of Craddock by

providing the trial court with Michael’s affidavit since he offered to pay the expenses

Stutts incurred to obtain the judgment by default. By offering to reimburse Stutts,

the burden shifted to Stutts to present evidence sufficient to establish he would be

injured by any undue delays resulting from a ruling overturning the judgment. Stutts

        19
          See Abuzaid v. Modjarrad & Assocs., P.C., No. 05-16-00777-CV, 2017 Tex.
App. LEXIS 10688, at *26 (Tex. App.—Dallas Nov. 14, 2017, no pet.) (holding that
the defendants, in a default judgment case arising from the plaintiff’s suit on a sworn
account, failed to allege sufficient facts to show they paid all the sums due under the
terms of the sworn account).
       20
          Equinox Enters., Inc., v. Associated Media Inc., 730 S.W.2d 872, 876 (Tex.
App.—Dallas 1987, no writ) (finding the defendant’s affidavit overly conclusory on
a breach of contract claim when the affidavit the defendant filed merely alleged the
plaintiff breached the parties’ agreement and failed to perform).
       21
          See Craddock, 133 S.W.2d at 126.
                                            15
did not meet his burden because he provided the trial court with no evidence to show

he would suffer damages from overturning the default judgment now at issue in the

appeal. 22

       For the reasons explained above, we hold the trial court abused its discretion

by failing to grant the defendants’ Motion for New Trial. Because addressing the

appellants’ third issue assailing the trial court’s award of attorney’s fees would not

provide the appellants any greater relief, we need not address that issue.

                                     Conclusion

       We sustain the appellants’ second issue. Accordingly, we render the judgment

the trial court should have rendered: we reverse the trial court’s judgment and grant

the defendants’ motion for new trial. We remand the case to the trial court for further

proceeding consistent with the opinion.23

       REVERSED AND REMANDED.

                                                     _________________________
                                                          HOLLIS HORTON
                                                               Justice

Submitted on January 25, 2021
Opinion Delivered March 18, 2021

Before Golemon, C.J., Horton and Johnson, JJ.

       22
          See Evans, 889 S.W.2d at 279 (“Once a defendant has alleged that granting
a new trial will not injure the plaintiff, the burden of going forward with proof of
injury shifts to the plaintiff.”).
       23
          Tex. R. App. P. 43.2(c).
                                           16