Dolgencorp of Texas, Inc. v. Lerma

• Decision Date: 03 July 2009
• Docket Number: No. 08-0032.,08-0032.
• Citation: 288 S.W.3d 922
• Parties: DOLGENCORP OF TEXAS, INC., d/b/a Dollar General Store, Petitioner, v. Maria Isabel LERMA, Individually, et al., Respondents.
• Court: Texas Supreme Court

288 S.W.3d 922

DOLGENCORP OF TEXAS, INC., d/b/a Dollar General Store, Petitioner, v. Maria Isabel LERMA, Individually, et al., Respondents.

No. 08-0032.

Supreme Court of Texas.

July 3, 2009.

David M. Gunn, Constance H. Pfeiffer, Kevin D. Jewell, Jessica M. Moore, Clifford L. Harrison, for Petitioner.

Alice Oliver-Parrott, Ediberto Jose Trevino Jr., Maria Teresa Arguindegui, Robert L. Collins, for Respondents.

PER CURIAM.

This appeal arises from a post-answer default judgment entered against Dolgencorp of Texas, Inc., d/b/a Dollar General Store ("Dollar General") when its counsel failed to appear for trial because he was in a preferential trial setting in another county. Because Dollar General established it was entitled to a new trial pursuant to the factors set out in Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (1939), we reverse and remand for a new trial.

On May 9, 2000, a fire damaged several stores at the Palm Village Shopping Center in Brownsville. Four tenants ("Lerma") sued Dollar General, alleging its negligence caused the fire. The case was originally set for trial in Cameron County on Monday, February 24, 2003. At docket call on the preceding Friday, Lerma announced ready. Dollar General's attorney, Clifford Harrison, had called earlier in the week and announced ready, but Harrison's associate, Christopher Sachitano, appeared at docket call and informed the court that Harrison was preferentially set for trial in Harris County on Tuesday, February 25. The trial judge instructed the parties to return on Monday for trial but advised them that he had a full docket and would decide what to do when the case was reached. The court concluded by saying: "We'll see what happens when we get here on Monday. I don't ever object to people going to another Court."

On Monday, February 24, while the original trial court was hearing another matter, Lerma's counsel requested and obtained a transfer of the case to another district court for trial. Sachitano told the new trial judge that Harrison was the attorney prepared to try the case and that Harrison was in a preferential trial setting in another county. Sachitano also told the court that he personally was not qualified or prepared to try the case. Sachitano testified at the motion for new trial hearing that during a discussion in chambers the new trial judge told Sachitano that he would not have to try the case, but he would have to pick a jury that day. The trial judge also said he would work with the attorneys on scheduling.

A jury was selected and instructed to return Wednesday, February 26 at 1:30 p.m. After the jury was dismissed, Sachitano stated he would have the Harris County court coordinator keep in contact with the trial court. The trial judge instructed his staff "to tell the jurors to make sure that we have their correct home and work phone numbers in case anything changes ... in case we have to start the case earlier or later. To be on stand by."

In the two days after jury selection and on the morning of February 26, the trial court's office received numerous calls from the Harris County judge and court coordinator where Harrison was in trial. Sachitano and his secretary also called and advised the trial judge's office that the Harris County suit would not be concluded before Wednesday afternoon.

On Wednesday at 1:30 p.m., the trial court called the case for trial. Neither Harrison nor Sachitano were present. The trial judge told the jury that he had received calls informing him Harrison was still in trial in Harris County, but that he expected Harrison himself to call, and that the "court [did] not take too kindly to their mannerism and the respect for the court system down here in south Texas." The judge discharged the jury, proceeded with a bench trial, and entered judgment against Dollar General.

The next day, the judge in the Harris County case faxed the trial judge a letter stating he had been having "difficulty making contact with [the trial judge]" and advising that Harrison was still in trial in Harris County. The letter provided, in part:

When I first learned there might be conflicting trial settings, I asked my coordinator to contact you and see if we could work on an agreement. She left several messages with your staff, and actually talked with you briefly on Monday. Since then, my staff has attempted to reach you by telephone on numerous occasions and left messages asking you to call me back. For some reason, we are having difficulty making contact with you. Realizing the seriousness of the situation, that justice and fairness were at stake, and out of desperation, I had my staff contact [the regional presiding judge] for advice. It is my understanding that his office has also had difficulty reaching you.

Citing Craddock, Dollar General filed a motion for new trial. In it, Dollar General asserted that Harrison's failure to appear was not intentional nor the result of conscious indifference and the default judgment should be set aside. After conducting an evidentiary hearing, the trial court denied the motion. The court of appeals affirmed. 241 S.W.3d 584.

Dollar General now petitions this Court for review. It asserts (1) its motion for a new trial satisfied the Craddock test and the trial court abused its discretion by denying the motion; and (2) there is legally insufficient evidence to support the judgment. Lerma counters that Craddock is inapplicable because this was a trial on the merits rather than a default judgment and because Dollar General waived its right to equitable relief by not filing a motion for continuance. Even if Craddock applies, Lerma asserts Dollar General has not met the Craddock elements. Lerma also asserts there is legally sufficient evidence to support the judgment.

Initially, we disagree with Lerma's assertion that because Dollar General participated in jury selection, this is an appeal from a trial on the merits rather than a default judgment. A post-answer default judgment occurs when a defendant who has answered fails to appear for trial. Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex.1979). Even though Dollar General participated in jury selection, there is no evidence it intended to later abandon the proceedings. Its failure to attend trial when the case was called on Wednesday afternoon cannot realistically be classified as anything other than a failure to appear. The judgment against Dollar General is a default judgment.

In Craddock, we held that a default judgment should be set aside and a new trial granted when the defaulting party establishes that (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. 133 S.W.2d at 126. In Ivy v. Carrell, 407 S.W.2d 212, 213 (Tex.1966), we extended Craddock to post-answer default judgments.

We review a trial court's refusal to grant a motion for new trial for abuse of discretion. Cliff v. Huggins, 724 S.W.2d 778, 778 (Tex.1987). When a defaulting party moving for new trial meets all three elements of the Craddock test, then a trial court abuses its discretion if it fails to grant a new trial. Old Republic Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex.1994).

Dollar General references Smith v. Babcock & Wilcox Construction, Co., 913 S.W.2d 467 (Tex.1995), to support its position that its failure to appear was not intentional or the result of conscious indifference. There, the Smiths' attorney sought continuance of a trial setting because he was set for trial in another county. Id. at 467. After the court denied the motion, the attorney stated in a letter to the court that he understood the court would reconsider his motion for continuance on the date of trial if the other case actually went to trial at the same time. Id. The court, however, did not share this understanding and dismissed the case for lack of prosecution when the attorney failed to appear on the trial date. Id. at 468. The trial court later denied the Smiths' motion to reinstate the case. Id. Applying the Craddock standard, we held that

failure to appear is not intentional or due to conscious indifference within the meaning of the rule merely because it is deliberate; it must also be without adequate justification. Proof of such justification—accident, mistake or other reasonable explanation—negates the intent or conscious indifference for which reinstatement can be denied.

Id. Accordingly, we held the attorney's failure to appear was not intentional or due to conscious indifference because "[h]e was actually in trial in another county and believed, based upon his credible explanation, that the court would grant a continuance for that reason." Id.

We distinguished the facts in Smith from those in Smock v. Fischel, 146 Tex. 397, 207 S.W.2d 891, 892 (1948). In Smock, we held that a trial court did not abuse its discretion by proceeding to trial when defendant's counsel was in trial in another county because, among other things, the attorney had made no effort to resolve the conflicting trial settings and had failed to contact the judge on the day of trial to tell him of the attorney's whereabouts. Id. In contrast, the Smiths' attorney attempted to resolve the conflict before trial and provided a credible explanation for why he believed a continuance would be granted. Smith, 913 S.W.2d at 468.

In the present case, Harrison was actually in trial in Harris County when he failed to appear in Cameron County for the Dollar General suit. At the motion for new trial hearing, Harrison testified that when he realized he had a conflicting preferential trial setting, he sent his associate, Sachitano, to announce the conflict at docket call for the Dollar General suit. In addition, while he was in trial in Harris County, he asked the Harris County...