Opinion issued April 9, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00423-CV
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SOUTHWEST WARREN, INC. AND THOMAS EUGENE MCCAIN,
Appellants
V.
THERESA CRAWFORD, Appellee
On Appeal from the 149th District Court
Brazoria County, Texas
Trial Court Case No. 72986
OPINION
Appellee, Theresa Crawford, obtained a default judgment against appellants,
Southwest Warren, Inc. and Thomas Eugene McCain, for injuries sustained from
an automobile accident between Crawford and McCain. Forty-nine days after the
judgment was entered, Southwest Warren and McCain filed a motion to extend the
post-judgment deadlines and a motion for new trial. The trial court granted the
motions and then, after a motion to reconsider both motions, entered an order
denying both motions. The trial court denied Southwest Warren and McCain’s
subsequent motion to reconsider. In four issues on appeal, Southwest Warren and
McCain challenge the trial court’s ultimate denial of their motions to extend the
post-judgment deadlines and for new trial and challenge the sufficiency of the
evidence supporting the default judgment.
We reverse and remand for a new trial.
Background
Crawford and McCain were involved in a car wreck. The wreck occurred
while McCain was performing work as an employee of Southwest Warren. Some
time later, Crawford sued Southwest Warren and McCain for injuries sustained in
the car wreck. While both were served, neither Southwest Warren nor McCain
filed an answer in the suit. On October 14, 2013, Crawford obtained a default
judgment against Southwest Warren and McCain. The clerk of the court sent
notice of the default judgment to Southwest Warren and McCain at the addresses at
which they had previously been served.
On November 19, 2013, Crawford’s attorney sent a letter to Southwest
Warren’s insurance carrier, notifying the carrier of the default judgment. The
insurance carrier notified Southwest Warren and McCain. On December 2, 2013
2
(49 days after the judgment had been signed), Southwest Warren and McCain filed
a motion to extend the post-judgment deadlines and a motion for new trial.
Following a hearing, the trial court granted both motions.
Afterwards, Crawford filed a motion to reconsider both of Southwest
Warren and McCain’s motions. She also filed a request for findings of fact and
conclusions of law. The trial court requested proposed findings from all parties.
Southwest Warren and McCain did not respond to Crawford’s motion or to the trial
court’s request for proposed findings. Following a hearing on Crawford’s motion,
the trial court granted the motion to reconsider the motion to extend the post-
judgment deadlines and the motion for new trial. In the order, the trial court
“rescind[ed]” its grant of both motions.
Southwest Warren and McCain then filed a “post-answer” motion for new
trial. The motion contained a revised affidavit from Southwest Warren’s owner,
Richard Matise, and an affidavit from McCain. In the motion, Southwest Warren
and McCain claimed that their failure to answer was due to Matise’s mistaken
belief that Matise had forwarded the information of the lawsuit to Southwest
Warren’s insurance agent. They also claimed to have a meritorious defense in that
they alleged that, at the time of the accident, McCain’s car was parked on the side
of the road and outside the lane of moving traffic. Finally, they asserted they were
3
willing to reimburse Crawford for her reasonable attorneys’ fees, and that they
were “ready to proceed forward with the prosecution of this case.”
McCain asserted in his affidavit that, at the time of the accident, “I was
parked on the shoulder of the road and completely out of the moving lane of traffic
when plaintiff collided with the vehicle I was driving.” He further asserted that,
when he received notice of the lawsuit, he turned the documents over to Matise.
Matise told McCain that Southwest Warren would handle having the answer filed
for him and for the company. Matise further stated that he would contact the
insurance agent so that the agent could handle the matter. When he did not hear
anything more about the lawsuit, McCain presumed the matter had been properly
resolved. He did not know otherwise until Crawford’s attorney sent a copy of the
judgment to Southwest Warren’s insurance company.
Matise stated in his affidavit that McCain gave him a copy of the documents
that McCain had received concerning the lawsuit. Matise acknowledged that it
was his responsibility to turn over the documents that Southwest Warren and
McCain had received about the lawsuit to Southwest Warren’s insurance agent.
Matise testified that he thought he had contacted the insurance agent and sent him
the relevant documents when, in fact, Matise had not. Based on the mistaken
belief that he had properly notified the insurance agent, Matise asserted that, when
he did not hear anything more about the lawsuit, he presumed the matter had
4
already been properly resolved. He did not know otherwise until Crawford’s
attorney sent a copy of the judgment to Southwest Warren’s insurance company.
Crawford filed a response to the motion. During the hearing on the motion,
the trial court acknowledged it was considering the substance of Southwest Warren
and McCain’s motion. The court expressed some doubt that Southwest Warren
and McCain had carried its burden under the law and asked for case law to support
both sides’ positions. In its order, the trial court explicitly stated that it
“considered [the motion for new trial], the response, the pleadings, and arguments
of counsel.” Based upon these considerations, the trial court denied the motion.
Motion to Extend Post-Judgment Deadlines
In their second issue, Southwest Warren and McCain argue that the trial
court erred by rescinding its original grant of their motion to extend the post-trial
deadlines. We do not need to resolve this because we hold that the order did not
harm Southwest Warren and McCain.
Rule 306a of the Texas Rules of Civil Procedure requires a clerk of the court
to immediately give notice to the parties to a suit when a judgment is signed. TEX.
R. CIV. P. 306a(3). Typically, a trial court’s plenary power over a suit—including
the trial court’s authority to substantively change the judgment—expires following
30 days after the judgment is signed, unless a plenary-power-extending motion is
timely filed. See TEX. R. CIV. P. 329b. If a party does not receive the notice of a
5
signed judgment sent by the clerk of the court, however, the party may file a
motion to reset the relevant deadlines for filing post-trial motions. TEX. R. CIV. P.
306a(4). The party seeking to reset the deadlines for filing post-trial motions must
establish that it did not acquire (1) notice or (2) actual knowledge of the judgment
within 20 days of—and not later than 90 days after—the signing of the judgment.
Id. If the trial court grants the motion, the court’s plenary power is reinstated and
all relevant post-judgment time periods begin to run as though the date of the
parties’ notice were the date the judgment had been signed. Id.
Forty-nine days after the judgment had been signed, Southwest Warren and
McCain filed their motion to extend the post-trial motion and motion for new trial.
In their motion to extend the post-trial deadlines, Southwest Warren and McCain
alleged that they did not know about the judgment until 37 days after the judgment
had been signed. The trial court granted the motion to extend, designating “the
new date for the judgment” as the date that Southwest Warren and McCain alleged
in their motion that they obtained knowledge of the default judgment. The trial
court simultaneously granted their motion for new trial.
Crawford filed a motion for the trial court to reconsider its granting both
motions. More than six months after the original judgment had been signed, the
trial court signed an order “rescinding both Orders . . . granting [Southwest Warren
and McCain’s] Motion to Extend Post-Judgment Deadlings and . . . Motion for
6
New trial.” Southwest Warren and McCain filed another motion for new trial,
which the trial court denied.
In Baylor Medical, the Supreme Court of Texas considered whether a trial
court can reconsider a grant of a motion for new trial. In re Baylor Med. Ctr. at
Garland, 280 S.W.3d 227, 229–232 (Tex. 2008). In its analysis, the court held that
a trial court can reconsider a grant of a motion for new trial. Id. at 231 (holding
trial court has power to set aside new trial order). The reasoning employed by the
court to reach this conclusion, however, compels us to conclude that, even if a trial
court has the authority to reconsider a grant of a motion to extend the post-
judgment deadlines, such a reconsideration does not have the legal effect of setting
the post-judgment deadlines back to their original deadlines.
In Baylor Medical, the trial court rendered a take-nothing judgment based on
the jury’s verdict. Id. at 228. Later, the trial court granted a motion for new trial.
Id. After the trial court judge was succeeded, the new trial court judge reinstated
the judgment on the jury verdict. Id. Another motion to reconsider was filed, and
the trial court once again granted the motion for new trial. Id. at 228–29. At the
time, the law in Texas provided that a new trial could not be “ungranted.” Id. at
229. The Supreme Court of Texas determined that this ruling was based on
language in a rule of civil procedure that had since been modified. Id. at 230.
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The court reasoned that the continuance of this ruling despite the change in
the language of the rules of civil procedure could have been “to prevent a situation
where reinstatement of a previous judgment would prevent a party from having
time to file an appeal.” Id. at 231. The court recognized that, if an order reversing
the grant of a motion for new trial were considered to reinstate the original
judgment—effectively rendering the grant of the new trial a nullity—then this
procedural effect would deprive the party filing the motion the ability to appeal
either order or any other preserved complaints. See id.
The court held this was not a concern, however, because the court had
previously “clarified that ‘a trial judge who modifies a judgment and then
withdraws the modification has modified the judgment twice rather than never.’”
Id. (quoting Arkoma Basin Exploration Co. v. FMF Assocs. 1990–A, Ltd., 249
S.W.3d 380, 391 (Tex. 2008)). Accordingly, the order reinstating the original
judgment does not void or otherwise render the grant of a new trial a nullity. See
id. It, in effect, creates a new judgment that is identical to the original judgment in
all ways except for the date of signing. See id.; Gathe v. Gathe, 376 S.W.3d 308,
315 (Tex. App.—Houston [14th Dist.] 2012, no pet.) (holding “ungranting” new
trial does not reinstate original judgment but requires trial court to enter new
judgment). Accordingly, the appellate deadlines started to run from the order
8
reinstating the original judgment, not from the date of the original judgment. See
Baylor Med., 280 S.W.3d at 231.
Here, the trial court granted the motion to extend the post-judgment
deadlines. This had the effect of establishing the new date of the judgment—for
post-judgment deadline purposes—as the date that Southwest Warren and McCain
learned of the default judgment. TEX. R. CIV. P. 306a(4). Applying the logic of
Baylor Medical, the order “rescinding” the grant of the motion to extend did not
void or otherwise render the extension order a nullity. See Baylor Med., 280
S.W.3d at 231. Because the extension order still had effect, the post-judgment
deadlines continued to run from the date set by that order. See id. To the degree
that the order rescinding the grant of the extension has any legal effect, that effect
cannot be to set the post-judgment deadlines at an earlier time. See id.
The prejudicial effect of a contrary ruling can be established by the facts of
this case. Southwest Warren and McCain filed their motion to extend the post-
judgment deadlines 49 days after the judgment, a time within the period allowed to
file a restricted appeal. See TEX. R. APP. P. 26.1(c) (setting deadline to file
restricted appeal for within six months of trial court’s judgment). The trial court
granted the motion a little more than three months after the original judgment had
been signed. The order “rescinding” the extension, however, was issued more than
six months after the original judgment had been signed, that is, after the time to file
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a restricted appeal had passed. See id. To give the rescission order the legal effect
of nullifying the extension of the post-judgment deadlines would deprive
Southwest Warren and McCain of their right to file a restricted appeal. 1
We hold that the order “rescinding” the extension of the post-judgment
deadlines did not negatively affect Southwest Warren and McCain’s post-judgment
deadlines.2 Additionally, when the trial court granted the motion to extend the
post-judgment deadlines, it also granted Southwest Warren and McCain’s motion
for new trial. It subsequently signed an order rescinding the grant of the motion
for new trial. This order had the effect of creating a new judgment. See Baylor
Med., 280 S.W.3d at 231; Gathe, 376 S.W.3d at 315. Accordingly, post-judgment
deadlines were once again reset to run from the date of this last judgment. See
1
Southwest Warren and McCain could still file a bill of review. See TEX. R. CIV. P.
329b(f); TEX. CIV. PRAC. & REM. CODE ANN. § 16.051 (Vernon 2015); PNS
Stores, Inc. v. Rivera, 379 S.W.3d 267, 275 (Tex. 2012). Given that the burden for
a bill of review is more onerous than for a restricted appeal, however, we must
conclude that Southwest Warren and McCain would be harmed by being deprived
of review by restricted appeal. Compare Pike-Grant v. Grant, 447 S.W.3d 884,
886 (Tex. 2014) (requiring party seeking restricted appeal to establish it did not
participate in trial proceedings) with Mabon Ltd. v. Afri-Carib Enterprises, Inc.,
369 S.W.3d 809, 812 (Tex. 2012) (requiring party seeking bill of review to
establish failure to participate in trial proceedings was unmixed with any fault or
negligence of that party).
2
On appeal, Crawford argues the trial court properly granted her motion to
reconsider, which contained additional evidence from her response to the motion
to extend post-judgment deadlines. She does not argue on appeal, however, that
the trial court erred by granting the original motion. We do not need to determine,
then, whether the grant of a motion to extend the post-judgment deadlines is
reviewable under the procedural posture of this case or, if so, whether error exists.
10
Baylor Med., 280 S.W.3d at 231. There is no indication, then, that Southwest
Warren and McCain were harmed by the order rescinding the extension order.
Accordingly, we overrule Southwest Warren and McCain’s second issue.
Motion for New Trial
In their first issue, Southwest Warren and McCain argue that the trial court
abused its discretion by denying their request for new trial.
A. Standard of Review
Denial of a motion for new trial is reviewed for abuse of discretion. Waffle
House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010); Sozanski v. Plesh, 394
S.W.3d 601, 604 (Tex. App.—Houston [1st Dist.] 2012, no pet.). A trial court
abuses its discretion if it acts without reference to any guiding rules or principles or
fails to correctly analyze or apply the law. Celestine v. Dep’t of Family &
Protective Servs., 321 S.W.3d 222, 235 (Tex. 2010).
B. Analysis
In Craddock, the Texas Supreme Court set forth three requirements that a
defendant must satisfy to set aside a default judgment and obtain a new trial: (1)
the failure to file an answer or appear at a hearing was not intentional or the result
of conscious indifference, but was a mistake or accident; (2) a meritorious defense;
and (3) a new trial will not result in delay or prejudice to the plaintiff. Craddock v.
Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939).
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As an initial matter, there is some question as to which motion and
accompanying evidence we are considering in reviewing the trial court’s ruling on
whether Southwest Warren and McCain satisfied the Craddock elements. In all,
three motions addressed whether Southwest Warren and McCain satisfied their
burden under Craddock. After the trial court granted Crawford’s motion to
reconsider, Southwest Warren and McCain filed their final motion for new trial.
The evidence they presented with this motion was more detailed than what they
presented with the first motion. There is at least some question as to whether the
trial court was obligated to entertain for a third time whether Southwest Warren
and McCain satisfied the Craddock elements.
We do not need to resolve this question, however. Even assuming the trial
court was not obligated to consider the substance of Southwest Warren and
McCain’s third opportunity to show it satisfied the Craddock elements, the record
shows that the trial court did consider the substantive arguments. At the hearing,
the trial court asked questions about the parties’ substantive proof and requested
submissions of case law on whether Southwest Warren and McCain had satisfied
the first element. Additionally, in its order denying the final motion for new trial,
the trial court explicitly stated that it “considered [the motion for new trial], the
response, the pleadings, and arguments of counsel.” See Stephens v. Dolcefino,
126 S.W.3d 120, 133 (Tex. App.—Houston [1st Dist.] 2003), pet. denied, 181
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S.W.3d 741 (Tex. 2005) (holding trial court can consider late-filed evidence, but
record must affirmatively show evidence considered by trial court); Fed. Home
Loan Mortg. Corp. v. Pham, 449 S.W.3d 230, 236–37 (Tex. App.—Houston [14th
Dist.] 2014, no pet.) (holding when record shows trial court considered motion and
attached evidence, appellate courts can consider them as well on review). Because
the trial court undertook this substantive determination, it is part of our review on
appeal.
The first Craddock element is the failure to file an answer or appear at a
hearing was not intentional or the result of conscious indifference, but was a
mistake or accident. 133 S.W.2d at 126. “Where factual allegations in a movant’s
affidavits are uncontroverted, it is sufficient that the motion for new trial and
accompanying affidavits set forth facts which, if true, would satisfy the Craddock
test.” Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 82 (Tex. 1992). While
Crawford challenges whether the evidence presented in Southwest Warren and
McCain’s final motion for new trial satisfy the first Crawford element, nothing in
her evidence controverts Southwest Warren and McCain’s evidence. Accordingly,
if the evidence is sufficient to establish the first element, we must take it as true.
See id.
McCain asserted in his affidavit that, when he received notice of the lawsuit,
he turned the documents over to Matise. Matise told McCain that Southwest
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Warren would handle having the answer filed for him and for the company.
Matise further stated that he would contact the insurance agent so the agent could
handle the matter. When he did not hear anything more about the lawsuit, he
presumed the matter had been properly resolved. He did not know otherwise until
Crawford’s attorney sent a copy of the judgment to Southwest Warren’s insurance
company.
Matise asserted in his affidavit that McCain gave him a copy of the
documents that McCain had received concerning the lawsuit. Matise
acknowledged that it was his responsibility to turn the documents that Southwest
Warren and McCain had received about the lawsuit over to Southwest Warren’s
insurance agent. Matise testified that he thought he had contacted the insurance
agent and sent him the relevant documents when, in fact, Matise had not. Based on
the mistaken belief that he had properly notified the insurance agent, Matise
asserted that, when he did not hear anything more about the lawsuit, he presumed
the matter had already been properly resolved. He did not know otherwise until
Crawford’s attorney sent a copy of the judgment to Southwest Warren’s insurance
company.
The evidence in both of these affidavits establish that the failure to answer
was not intentional or the result of conscious indifference. McCain followed
company procedure. Matise thought he followed company procedure and notified
14
the insurance agent, but mistakenly failed to do so. We hold this is sufficient to
satisfy the first element of Craddock. See Republic Bankers Life Ins. Co. v. Dixon,
469 S.W.2d 646, 647 (Tex. Civ. App.—Tyler 1971, no writ) (holding attorney
forgetting to file answer is sufficient to satisfy Craddock); see also Dir., State
Employees Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 269 (Tex. 1994)
(citing Republic Bankers as example of no conscious indifference).
Crawford argues that the evidence is conclusory because Matise did not
testify about when he forgot to notify the insurance agent. Matise testified,
however, that it was company policy to turn over documents about a lawsuit to the
insurance agent “so that appropriate action can be taken to defend the lawsuit.”
This could only happen if Matise turned over the documents within the time to file
the answer. By asserting that he thought he had done what was required of him
under company policy, it follows that Matise thought he had done what was
required of him in the time for the insurance company to hire an attorney to file an
answer. There is no other evidence in the record suggesting that Matise
intentionally waited until it was time to file a lawsuit and then accidentally forgot
to send the documents to the insurance agent after the proper time to file an answer
had expired.
Crawford also argues that Holt Atherton establishes that Matise’s affidavit
was insufficient to satisfy Craddock’s first prong. In Holt Atherton, the court held
15
that, “[w]hen a defendant relies on his agent to file an answer, he must demonstrate
that both he and his agent were free of conscious indifference.” 835 S.W.2d at 83.
That requirement has been satisfied here. McCain properly turned over the
documents to Matise, and Matise asserted that he thought he had notified his
insurance agent, but never actually did. There could not have been conscious
indifference on the part of the insurance agent who was not actually informed of
the suit until after judgment was entered. 3
The second Craddock element is a meritorious defense. 133 S.W.2d at 126.
Unlike the first element, this is not a matter that can be controverted by the
opposing party. Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966). Instead, as long
as the party asserts a defense that could prevent the plaintiff’s recovery and
presents prima facie evidence of that defense, the second Craddock element is
satisfied. Id.
Here, Southwest Warren and McCain alleged in their final motion for new
trial that the vehicle McCain had been driving at the time of the incident had been
parked on the side of the road, outside the lane of moving traffic. Accordingly, by
3
Crawford points out in her briefs that she served Southwest Warren’s documents
on an agent of service, suggesting there was no evidence about that agent’s
actions. There is no indication in the record, however, that Southwest Warren
relied on that agent to file an answer. See Holt Atherton Indus., Inc. v. Heine, 835
S.W.2d 80, 83 (Tex. 1992). (“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.” (emphasis added)).
16
this defense, they claim that any fault in the accident must have been Crawford’s.
McCain asserted the same in his affidavit. Specifically, he asserted, “I was parked
on the shoulder of the road and completely out of the moving lane of traffic when
plaintiff collided with the vehicle I was driving.” We hold this is sufficient to
establish a meritorious defense.
The third Craddock element is a new trial will not result in delay or
prejudice to the plaintiff. 133 S.W.2d at 126. “[O]nce the defendant has alleged
that the granting of a new trial will not delay or otherwise injure the plaintiff, the
burden of going forward with proof of injury shifts to the plaintiff.” Cliff v.
Huggins, 724 S.W.2d 778, 779 (Tex. 1987). Such a burden is carried by the
plaintiff by showing the loss of witnesses or other valuable evidence. Evans, 889
S.W.2d at 270.
Southwest Warren and McCain asserted that the grant of the new trial would
not cause unreasonable delay, thereby shifting the burden to Crawford to disprove
this assertion. See Cliff, 724 S.W.2d at 779. Crawford asserted in her response to
the final motion for new trial and accompanying affidavit that (1) she had not been
able to find out from Southwest Warren and McCain whether they knew of any
witnesses from the accident, (2) it would be “difficult or impossible” for her to
locate witnesses that long after the accident, (3) it would be “difficult or
impossible” to examine the condition of her car, (4) her own memory of the of the
17
accident has diminished because the experience was traumatic and “she did not
want to remember the frightening collision again,” and (5) she would be burdened
by the expense of further attorneys’ fees.
For the first four assertions, even taking all of these assertions as true,
however, Crawford has not carried her burden. Once the burden is on the plaintiff
to show undue delay or prejudice, she carries this burden by showing the loss of
witnesses or other valuable evidence. Evans, 889 S.W.2d at 270. None of the
assertions presented by Crawford show an actual loss. Even if the trial court
accepted as true that it would be impossible to locate witnesses or examine the
condition of her car, to show an actual loss, Crawford first needed to establish that
the evidence was previously available but then lost due to the delay caused by
Southwest Warren and McCain’s failure to answer. See id. That is, Crawford
would need to show that she had evidence available to her at the time she filed suit
but that the evidence has been lost in the time since she filed the motion for new
trial. See id.; see also Wiseman v. Levinthal, 821 S.W.2d 439, 441 (Tex. App.—
Houston [1st Dist.] 1991, no writ) (“Trial courts generally should rule in favor of
giving a defendant his day in court when a motion for new trial is filed after a
default judgment.”).
For Crawford’s assertion that the new trial would cause her financial
hardship by having to pay even more attorneys’ fees, Southwest Warren and
18
McCain have offered to reimburse Crawford for the attorneys’ fees she incurred in
obtaining the default judgment. We hold this is sufficient to rebut Crawford’s
claim of financial hardship. See Cliff, 724 S.W.2d at 779 (holding, though not
precondition to obtaining new trial, offer to reimburse fees incurred in obtaining
default judgment is important consideration for third element of Craddock test).
We hold that Southwest Warren and McCain satisfied their burden on this
third element and that Crawford failed to carry her burden of establishing undue
delay or prejudice. We sustain Southwest Warren and McCain’s first issue.4
Conclusion
We reverse the trial court’s judgment and remand the case for a new trial
and for a hearing on Crawford’s reasonable attorneys’ fees incurred in seeking the
default judgment to be assessed against Southwest Warren and McCain.
Laura Carter Higley
Justice
Panel consists of Justices Jennings, Higley, and Huddle.
4
Because we sustain this issue, we do not need to reach Southwest Warren and
McCain’s remaining issues, which cannot provide them with greater relief. See
TEX. R. APP. P. 47.1.
19