Joiner v. AMSAV Group, Inc.

GRANT, Justice.

James Joiner appeals from a default judgment based upon a cross-action filed by AMSAY Group, Inc. (hereinafter referred to as AMSAV) and Richard Seib. American Savings and Loan Association of Brazoria County (hereinafter referred to as the Association) filed the initial suit against AMSAV, Seib, and Joiner. AMSAV and Seib filed a cross-action against Joiner seeking full indemnity or contribution from Joiner in the event that the Association prevailed in the original cause of action. The cross-claim also contended that Joiner had breached his fiduciary duty by conveying confidential information to the Association and conspiring with the Association to breach the agreements attached to the Association’s original petition.

Joiner contends that the trial court erred in failing to grant a new trial, in rendering a default judgment even though he had made an appearance in the original suit, and in granting a default judgment against him when the pleadings did not provide fair notice of the nature of the cross-action.

The Association filed a lawsuit against AMSAV and Seib in Cause No. 87R1108 on May 11, 1987. On May 15 of the same year, the Association filed suit against AM-SAV, Seib and Joiner in Cause No. 87R1151. Joiner was served on May 21, and he appeared in person at a combined temporary injunction hearing on both causes, which the trial court consolidated into Cause No. 87R1108. On June 19, AM-SAV and Seib filed their cross-action against Joiner and served him by certified mail. Joiner never filed an answer to the main claim or the cross-action, but on July 1, 1987, Joiner was dismissed from the main action on the plaintiffs motion by the following order:

IT IS HEREBY ORDERED, ADJUDGED and DECREED that the above-styled cause of action, as to the Defendant, JAMES D. JOINER, be dismissed without prejudice.
SIGNED this 1st day of July, 1987.
John D. Rainey (Signature)
JUDGE PRESIDING

On August 4, 1987, default judgment on the cross-action was taken against Joiner in the amount of $1,530,000 by AMSAV and Seib. Joiner filed a motion for new trial on August 25, 1987, filed an amended motion for new trial on September 2,1987, and the trial court denied his motion on September 24, 1987.

We first address Joiner’s contention that the trial court erred in denying his motion for a new trial. A default judgment should be set aside and a new trial ordered when the defendant shows: (1) that the failure to answer was not inten*320tional or the result of conscious indifference but was due to a mistake or accident; (2) that he has a meritorious defense; and (3) that when the motion was filed, granting it would not cause delay or other injury to the plaintiff. Grissom v. Watson, 704 S.W.2d 325 (Tex.1986); Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124 (Tex.Comm’n App.1939, opinion adopted).

Although Joiner’s amended motion for new trial does not detail his contention that his failure to answer was due to a mistake or accident, the motion shows that his mistaken belief was based on the trial court’s order of dismissal, which he believed dismissed him from the lawsuit for all purposes.

Although AMSAV and Seib contend in their motion for rehearing that there was an evidentiary hearing on the motion for new trial, we do not find any indication of such a hearing in the record. We find no statement of facts, no order setting an evidentiary hearing on the motion for new trial, no docket entry indicating that there was an evidentiary hearing on the motion for new trial, and the order overruling the motion for new trial does not indicate that the court heard testimony on the motion for new trial. Therefore, Joiner’s pleading constituted the only evidence before the trial court. It is sufficient that the mov-ant’s motion and affidavits (in this case sworn pleadings) set forth facts which, if true, would negate intentional or consciously indifferent conduct. Cliff v. Huggins, 724 S.W.2d 778 (Tex.1987). Where the factual allegations and affidavits submitted in support of a motion for new trial are not controverted, the conscious indifference question must be determined in the same manner as the claim of a meritorious defense, that is, it is sufficient that the mov-ant’s motion and affidavit set forth facts which, if true, would negate intentional or consciously indifferent conduct. Strackbein v. Prewitt, 671 S.W.2d 37 (Tex.1984). The facts alleged in Joiner’s motion were not controverted by affidavits or sworn pleadings. The only attachment to the response to the first amended motion for new trial was a letter from a Florida lawyer to the attorneys for AMSAV and Seib.1 The contents of the letter demonstrate the confusion and express the mistaken belief on the part of Joiner’s attorney that Joiner was not a party to the lawsuit.

Joiner clearly sets forth facts in his sworn motion that establish a meritorious defense, and he also complies with the requirement of showing that a new trial would not cause delay or prejudice to Seib and AMSAV and offers to reimburse them for their cost in taking the default. The remaining question concerns Joiner’s failure to answer.

The decisions are not harmonious concerning the type of mistake which is sufficient to show that the failure to answer was not intentional or due to conscious indifference. In the case of Dupnik v. Aransas County Navigation District No. 1, 732 S.W.2d 780, 782 (Tex.App.—Corpus Christi 1987, no writ), the court held that a conscious decision not to file an answer based upon a mistaken belief that being in bankruptcy alleviated the need for filing an answer was not the type of mistake which negates conscious indifference. In the case of Carey Crutcher v. Mid-Coast Diesel Services, 725 S.W.2d 500 (Tex.App.-Cor*321pus Christi 1987, no writ), the court held that an attorney’s failure to file an answer because he mistakenly believed that the action was stayed by bankruptcy proceeding was not the type of mistake that negated conscious indifference. The weight of authority, however, is contrary to these holdings.

In the following cases the courts have held that the mistaken belief was sufficient to show that the failure to answer was not intentional or due to conscious indifference: Dowell v. Winters, 20 Tex. 793 (1858) (a mistaken reliance on the prayer for an injunction in another cause to be a sufficient answer);2 Texas State Board of Pharmacy v. Martinez, 658 S.W.2d 277 (Tex.App.-Corpus Christi 1983, writ ref’d n.r.e.) (a mistaken belief that jurisdiction was proper only in another county and that an action, taken in suit in another county relieved the party of his duty to answer); Nava v. Nationwide Financial Corporation, 601 S.W.2d 478 (Tex.Civ.App.-San Antonio 1980, writ ref’d n.r.e.) and Hughes v. Jones, 543 S.W.2d 885 (Tex.Civ.App.-El Paso 1976, no writ) (misunderstandings between attorneys); Spears v. Brown, 567 S.W.2d 544 (Tex.Civ.App.-Texarkana 1978, writ ref’d n.r.e.) (a mistaken belief that the attorneys representing one entity were also representing the defendant); Baen-Bec, Inc. v. Tenhoopen, 548 S.W.2d 799 (Tex.Civ.App-Eastland 1977, no writ) (a mistaken belief that no answer was required); Texas Iron & Metal Co. v. Utility Supply Co., 493 S.W.2d 545 (Tex.Civ.App.-Houston [1st Dist.] 1973, writ ref’d n.r.e.) (an agent’s misunderstanding of the deadline for answering along with labor shortages that prevented him consulting with an attorney).

In the present case, the basis set forth for the failure to file an answer shows that it was due to a mistake and was not intentional or due to conscious indifference. Thus amended, verified motion for a new trial is sufficient to fulfill the three requirements set forth in Grissom v. Watson, supra, and Craddock v. Sunshine Bus Lines, supra, and the failure to grant Joiner’s amended motion for new trial was an abuse of discretion.

Because this ruling resolves the case, we do not address the other two points of error.3 The judgment of the trial court is reversed, and the cause is remanded to the trial court for a new trial.

BLEIL, J., dissented and filed an opinion.

. Re: American Savings and Loan Association of Brazoria County v. Amsav Group, Inc. and Richard P. Seib, individually and James D. Joiner, individually — Case No. 87-R-1108 — 149th Judicial Circuit of Texas

Dear Mr. Gilbert:

I am in receipt of a copy of the Cross-Action that your clients have filed against my client, James D. Joiner, in the above-referenced litigation. Please be advised that Mr. Joiner has never been a party to this particular litigation and that, therefore, your Cross-Action is a nullity. Please also be advised that Mr. Joiner is no longer a party to Case No. 87R1151, American Savings and Loan Association of Brazoria County v. Amsav Group, Inc., Richard Seib, individually and James D. Joiner, individually. Therefore, he is not susceptible to being named as a Cross-Defendant in that litigation.

By copy of this letter to the Clerk of the Court, I am so informing the Court of our position in this matter.

Yours truly,

MICHAEL H. DAVIDSON, ESQ.

For the Firm

. In Dowell v. Winters, 20 Tex. 793 (1858), the court held that counsel had acted under a mistake of law, and while the excuse was certainly very slight, a new trial should be granted.

. In what appears to be a matter of first impression, Joiner makes an argument concerning the meaning of the word “appearance” as used in Tex.RXiv.P. 92. He contends that by making an appearance in the original cause, which is undisputed and is recited in the pleadings, he was automatically deemed to have pleaded a general denial of the cross-claim. He further contends that this fulfills the requirement under Tex.R.Civ.P. 239 that he file an answer to prevent a default. This involves a recently added provision of Rule 92, which became effective in 1985.