Final Judgments: Be Careful What You Ask For

Posted on July 13, 2010 by Mike Northrup

Sometimes when a party gets a default judgment against another party, there's a rush to make the judgment final.  But as American Express Centurion Bank and American Express Bank found out in In re Daredia, you've got to be careful about what you ask for because there are consequences.

In the trial court, the American Express entities sued two defendants, Pervez Daredia and Map Wireless, Inc.  Map Wireless did not answer, while Daredia did.  American Express took a default judgment that contained language reciting that the "judgment disposes of all parties and all claims in this cause of action and is therefore FINAL."  Oops.  Apparently, American Express forgot that there was another party--Daredia.

American Express realized its mistake only too late--after the trial court's plenary jurisdiction had expired.  At that time, American Express tried to correct the judgment with a motion for judgment nunc pro tunc.  The trial court granted the motion. 

On Petition for Writ of Mandamus, the Texas Supreme Court, in reliance on its opinion in Lehmann v. Har-Con Corp., pointed out that Lehmann did not require that you use the exact language suggested in that opinion--only that the judgment reflect on its face an intent to make it final.  And the court held that this judgment did just that.   The court also reiterated the differences between errors made in entering a judgment, which are clerical, and errors made in rendering a judgment, which are judicial.  All too often state practitioners carelessly mix these concepts, but here we have a prime example of where the distinction is all the difference.  Here, the error was in the rendition of the judgment because the trial court rendered (signed) precisely the judgment American Express asked the trial court to render.

Because Daredia had no adequate remedy by appeal once the trial court set aside the final judgment, the Supreme Court held that mandamus relief was available.  The court's opinion may be found here.

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Dallas DWOP Redux

Posted on September 3, 2009 by Mike Northrup

 

In the wake of the Dallas Court of Appeals' en banc decision last week in Crown Asset Management, L.L.C. v. Loring, there's a handful of other opinions addressing dismissals for want of prosecution using the same "aggressive docket management" procedures as in Crown. 

In Newburyport Capital L.L.C. v. Corrales, the Court affirmed the trial court's dismissal because the Appellant did not bring forward a clerk's record containing documents to support its sole issue on appeal challenging the trial court's error in failing to grant a default judgment. The opinion may be found here.

In AIS Services, LLC v. Mendez, the Court affirmed the trial court's dismissal because it determined that AIS did not preserve error for its single issue on appeal--whether the trial court erred in failing to grant its motion for default judgment. The panel in this case consists of the same 3 justices who dissented from the majority opinion in the Crown case. The panel held that error had not been preserved since no ruling was obtained on the motion for default judgment. The panel distinguished Crown by pointing out that the record in Crown showed that the trial court was aware of Crown's pending motion for default judgment when the trial court dismissed the case for want of prosecution because AIS had filed it motion for default judgment, but nothing in the record showed that the trial court knew the motion for default had been filed. The opinion may be found here.

In Oliphant Financial LLC v. Angiano, the court affirmed the dismissal. Oliphant brought two issues on appeal. In the first, it challenged the dismissal for want of prosecution. The court of appeals held that any error was harmless because Oliphant had not challenged an independent ground supporting the dismissal, which was the failure to attend a trial or hearing of which notice was had. The court does not address the second issue concluding that it was unnecessary to do so in light of its disposition of the first issue. The opinion may be found here.

In Resurgence Financial, LLC v. Taylor, the court affirmed the trial court's dismissal.  On appeal, Resurgence complained that the trial court erred in failing to grant its motion for default judgment and in dismissing for want of prosecution.  Focusing only on the damages portion of the motion for default judgment, the court of appeals concludes that Resurgence did not establish its right to a default judgment because the damages were liquidated.  It is unclear why the court does not address Resurgence's right to default on the issue of liability.   Finally, in reliance on Crown, and on similar facts but with an even shorter time period between dismissal and a third motion for default than that in Crown, the court of appeals summarily concludes that the trial court did not err in dismissing for want of prosecution.  The opinion may be found here.
 

Finally, in Unifund CCR Partners v. Smith, the court holds that Unifund did not preserve error on its complaint that the trial court erred in failing to grant its second motion for default judgment.  The facts are strikingly similar to those in Crown but with a different result.  It is surprising that the Unifund panel does not cite Crown to explain the difference.  It appears that the difference is that the last act at the time of the dismissal was Unifund's filing of its second motion for default and there is nothing in the record to show the court was aware of it, so there was no "ruling" under Crown.  One must wonder what the result would be if Unifund were to have complained that the trial court erred in failing to grant its first motion for default judgment after which the trial court returned Unifund's proposed order unsigned--as in Crown. The opinion may be found here.
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Dallas Court Reviews "Aggressive Docket Administration"

Posted on August 27, 2009 by Mike Northrup

The end of the courts of appeals' fiscal year is upon us and as a result we are seeing a stream of opinions.   One recent opinion that was of particular note is Crown Asset Management, L.L.C. v. Loring.  It is noteworthy for at least two reasons: (1) it was issued by the Dallas Court of Appeals sitting en banc--a rare occurrence, and (2) its holdings are surprising, if not controversial--controversial enough to draw a three-justice dissent, another rarity   This case may merit watching in the event it proceeds further.  Because of its importance, all three of Reverse & Render's bloggers have decided to review this case en banc, and therefore join the following summary.

Bottom line, the Court held that a trial court did not abuse its discretion by dismissing a case for want of prosecution four months after it was filed while the plaintiff was actively attempting to secure a default judgment.   Readers may want to read the majority and dissenting opinions for themselves.  We summarize and briefly discuss the three holdings below.

Crown filed suit to collect on an alleged deficiency following foreclosure on collateral securing a contract with Loring.   Embedded in the petition were requests for admission.  Almost immediately after the suit was filed, the trial court sent a letter to Crown's counsel advising that the case had been placed on the dismissal docket and it would be dismissed within approximately 4 months unless Crown took one of several alternatives, one of which was to prove up a default judgment if no answer was filed.  We recently blogged on an opinion with similar procedural treatment from the same trial court judge.   In compliance with the court's notice, Crown timely moved for default judgment and sent a proposed order of default to the trial court.  The trial court returned the proposed judgment unsigned stating that the motion was defective for several reasons, including that the petition did not give fair notice of the claim.  Crown filed an amended motion, which received a similar response.   The trial court then dismissed the case for want of prosecution and Crown appealed, raising two issues: (1) whether the trial court erred in failing to grant its motion for default judgment and (2) whether the trial court erred in dismissing for want of prosecution. 

The threshold question addressed by both majority and dissent is whether error was preserved as to the complaint that the trial court should have granted Crown's motion for default judgment.   Appellate Rule 33.1 requires a party to obtain a ruling as a predicate to complaint and if the court will not rule, the complaining party must object to the refusal to rule.   Here's the first BIG holding: The majority treated the trial court's refusal to sign the proposed judgment as a denial of the requested relief and overruled unnamed previous opinions to the contrary.  The dissent argued that error was not preserved because there was no ruling and Crown did not object to the failure to rule.  It now appears that if a party submits a proposed order and the trial court does not sign it, that may be sufficient to preserve error.

Next, the majority opinion held that the "denial" of the default judgment was not error because Crown's pleading failed to give fair notice of the claim asserted.  The dissent took issue with this "fair notice" holding and also discussed each of  the trial court's other listed reasons for refusal to grant the default and systematically determined the reasons given were invalid for one reason or another.  Of note is the majority's implicit approval of the trial court's refusal to give effect to the admissions contained in, and served with, the plaintiff's petition.  With no explanation, the trial court stated that the admissions must be served after the petition.  The dissent opined, without comment from the majority, that there is no authority for the proposition that admissions cannot be served with the petition and that the admissions supported the plaintiff's request for default judgment. 

The Court's resolution of the third and final issue is perhaps the most startling.   The majority held that there was no abuse of discretion in dismissing the suit for want of prosecution.   It appears that the majority concluded there was no abuse of discretion because Crown did not respond to either a September 10th or September 15th notice that returned the default judgment before the case was dismissed the following October 2nd.  The majority characterized this as "aggressive administration of the court's docket timetable" and concluded there was no abuse of discretion, but it cautioned that "such aggressive administration in other cases may result in an injustice."  This phrasing implies that there was no injustice in this case, and it appears that the majority equates injustice with abuse of discretion.  The dissent pointed out that "the majority takes no position as to whether appellant acted with due diligence in prosecuting its case."  The dissent also questioned how the case could be dismissed for want of prosecution in the face of Crown's attempts to obtain a default judgment.  Finally, the dissent argued that to the extent the majority treated the dismissal for want of prosecution as proper under the trial court's inherent power to sanction, it erred by doing so.

 
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Waiver of Special Appearances in Default Challenges

Posted on March 23, 2009 by Mike Northrup

The San Antonio Court of Appeals has held that a party challenging a default judgment may well risk losing the opportunity to challenge the exercise of personal jurisdiction over him unless special precautions are taken.

In Boyd v. Kobierowski, Kobierowski, a Texas resident, sued Boyd, a California resident, in Texas for breach of contract, fraud, misrepresentation and DTPA violations.  All causes of action arose from the sale of a vehicle  Boyd sold to Kobierowski. 

Boyd did not answer the suit and Kobierowski took a default judgment against Boyd.  Boyd subsequently filed a restricted appeal to challenge the default judgment.  He prevailed on appeal because of a defect in personal service.  See Appeal No. 04-06-0041-CV. 

On remand, Kobierowski repeatedly tried to get Boyd to answer the suit, but Boyd did not respond.  Kobierowski then took a second default judgment.  Boyd subsequently filed a special appearance and a motion for new trial subject to the special appearance.  The trial court denied the special appearance, but granted the motion for new trial.  In a second (interlocutory) appeal, Boyd argued that it was error to deny his special appearance.

The court of appeals reviews the history of the special appearance rules in Texas, pointing out that historically Texas' special appearance rules put a defaulting defendant to an election of either collaterally attacking the default judgment or making a general appearance and attempting to directly set aside the default.  The San Antonio Court of Appeals holds that the present special appearance practice in Texas creates a ppresumption of a general appearance, but that Rule 120a establishes an exception to the presumption if the exception is properly employed.   The court holds that a non-resident defendant may enter a special appearance after a judgment is reversed for defective or no service, but the failure to file a special appearance following a remand results in a general appearance.   Because Boyd filed nothing for the five months following remand, the court of appeals holds that Boyd made a general appearance.

The court's opinion may be found here.  One question raised by the court's opinion is whether the result would have been different had there been no evidence that Kobierowski made numerous attempts to get Boyd to file an answer?  Or, would the result have been different if the elapsed time between remand and the filing of the special appearance were one month or one week?
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The Letter and the Law Regarding No-Answer Defaults

Posted on December 2, 2008 by David Oliveros

Cleantech filed a suit on sworn account on July 10, 2007, against Eugene Owens.  On August 13, 2007, Mr. Owens handwrote and signed a letter to the court that stated "Please be advised I am employing an attorney for case number 07-1267-336."  Mr. Owens included his address on the letter, but he did not include a verfied affidavit as Tex. R. Civ. P. 93(10) requires.  Cleantech moved for a no-answer default judgment, which the court granted.

Did the handwritten and signed letter without the verified affidavit constitute an answer sufficient to defeat the no-answer default judgment?

According to the Dallas Court of Appeals, yes.

In Owens v. Sumola Investments, Inc., the court held that the letter was defective, but still constituted an answer sufficient to preclude a no-answer default judgment.  The Court did note that such a letter (without the verified affidavit) is ripe for summary judgment because it is prima facie evidence of a debt.  Nevertheless, Texas law indicates that "a letter from a pro se defendant to the district clerk that confirms receipt of the citation and provides the defendant's current address is sufficient to constitute an answer."  A copy of the court's opinion can be found at this link.

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