Ferguson & Co. v. Roll

• Decision Date: 21 August 1989
• Docket Number: No. 05-88-01382-CV,05-88-01382-CV
• Parties: FERGUSON & CO. Appellant, v. Doug ROLL d/b/a Frontline Search, Appellee.
• Court: Texas Court of Appeals

Page 692

776 S.W.2d 692

FERGUSON & CO. Appellant, v. Doug ROLL d/b/a Frontline Search, Appellee.

No. 05-88-01382-CV.

Court of Appeals of Texas,

Dallas.

Aug. 21, 1989.

Michael A. Barragan, Dallas, for appellant.

Timothy E. Malone, Debra D. Daniel, Fort Worth, for appellee.

Before STEWART, BURNETT and WHITTINGTON.

STEWART, Justice.

Appellant, Ferguson & Co., appeals a denial of its motion for new trial, which was filed in an attempt to set aside a default judgment rendered against it and in favor of appellee, Doug Roll d/b/a Frontline Search (Roll). Because we find that the trial court abused its discretion in overruling Ferguson & Co.'s motion for new trial, we sustain Ferguson & Co.'s second point of error and reverse and remand this cause to the trial court for proceedings in accordance with this opinion.

On May 23, 1988, Roll filed suit against Ferguson & Co., alleging that Ferguson & Co. had breached an agreement to compensate Roll for services he had performed in recruiting a job candidate later hired by Ferguson & Co. According to Roll's original petition, Roll, on behalf of his company, Frontline Search, had entered into an agreement with Bill Ferguson, a principal of Ferguson & Co., pursuant to which Roll would attempt to locate and recruit job candidates for Ferguson & Co. It was further allegedly agreed that, if a candidate recruited by Roll was subsequently hired by Ferguson & Co. within one year, Roll would be entitled to receive a commission equal to thirty percent of the candidate's first year compensation. It was Roll's contention that this agreement was entered into at the end of December 1986, that Ferguson & Co. had hired one of the candidates Roll had recruited, Ron Gumz, on December 1, 1987, and that Ferguson & Co. had thereafter failed and refused to pay Roll the agreed upon commission.

It is undisputed that Bill Ferguson of Ferguson & Co. was served with citation as to Roll's suit on June 2, 1988. No answer was ever filed. On August 11, 1988, the trial court entered a default judgment in favor of Roll and awarded him $27,000 in Roll filed a response to Ferguson & Co.'s motion for new trial and, on October 24, 1988, the trial court judge signed an order overruling the motion. Ferguson & Co. then perfected an appeal to this Court, alleging six points of error.

damages, plus attorney's fees and prejudgment interest. Ferguson & Co. filed a motion for new trial on September 9, 1988, accompanied by the affidavits of Bill Ferguson and Ed Townsend, who was president and chief operating officer of Ferguson & Co. at the time the events relating to Roll's suit occurred. The motion and affidavits relied upon the following facts to prove that Ferguson & Co.'s failure to answer was the result of an accident and mistake, rather than conscious indifference. After Bill Ferguson had been served the citation regarding Roll's suit, he attempted to forward it to Townsend by way of the company's inter-office mail. Unbeknown to Ferguson, the citation was somehow lost en route to Townsend, and he never received it. Consequently, Ferguson assumed that Townsend and the company's attorney had taken care of answering the suit, and he did not find out differently until he was notified on August 15, 1988 of the default judgment entered against Ferguson & Co. The company's motion for new trial also set forth various defenses to Roll's cause of action and asserted that a new trial in the cause would neither occasion delay nor cause prejudice to Roll.

CRADDOCK TEST

Ferguson & Co. alleges in its second point of error that the county court abused its discretion in overruling Ferguson & Co.'s motion for new trial. A motion for new trial is addressed to the trial court's discretion and the court's ruling on such will not be disturbed on appeal in the absence of a showing of an abuse of that discretion. Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex.1984). However, as stated in Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (1939), "[w]hile trial courts have some discretion in the matter, as, in truth, they have in all cases governed by equitable principles, it is not an unbridled discretion to decide cases as they might deem proper, without reference to any guiding rule or principle."

In an effort to aid courts in dealing uniformly with cases such as the one currently before us, the Craddock court set forth a standard which has been followed in this state for the past fifty years:

A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or accident; provided the motion sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff.

Craddock, 133 S.W.2d at 126.

CONSCIOUS INDIFFERENCE

Considering each prong of the Craddock test separately, we will first determine whether Ferguson & Co.'s failure to file an answer to Roll's suit was due to a mistake or accident, or was, instead, intentional or the result of conscious indifference. "Some excuse, but not necessarily a good excuse," Craddock, 133 S.W.2d at 125, is enough under the Craddock rationale to warrant setting aside a default judgment, so long as the act or omission causing the defendant's failure to answer was, in fact, accidental. See Cadena v. Dicker, 383 S.W.2d 73, 75 (Tex.Civ.App.--Dallas 1964, no writ); Beard v. McKinney, 456 S.W.2d 451, 453 (Tex.Civ.App.--Houston [1st Dist.] 1970, no writ).

The excuse of a citation having been misplaced or inadvertently lost was upheld in Craddock itself. Craddock, 133 S.W.2d at 126. For other cases holding that a misplaced or lost citation successfully met the first prong of the Craddock test, see Dallas Heating Co., Inc. v. Pardee, 561 S.W.2d 16, 19 (Tex.Civ.App.--Dallas 1977, writ ref'd n.r.e.), Continental Airlines, Inc. v. Carter, 499 S.W.2d 673, 674 (Tex.Civ.App.--El Paso 1973, no writ), and Republic Bankers Life Ins. Co. v. Dixon, 469 Despite the foregoing case law, Roll contends that Ferguson & Co. has failed to sustain its burden to show that its agents (Ferguson, Townsend, and the company attorney) were free of negligence or conscious indifference. In support of his argument, Roll cites the Texas Supreme Court case of Grissom v. Watson, in which the court quotes the opinion in Harris v. Lebow, 363 S.W.2d 184 (Tex.Civ.App.--Dallas 1962, writ ref'd n.r.e.), as follows: "A party who has been duly served with citation to appear and defend a cause asserted against him may not relieve himself of the judgment rendered unless he thoroughly demonstrates that he and his agent were free of negligence or conscious indifference." Grissom v. Watson, 704 S.W.2d 325, 327 (Tex.1986).

S.W.2d 646, 647 (Tex.Civ.App.--Tyler 1971, no writ).

To explain our rejection of the "rule" set forth above, it may be illustrative to consider the case law cited by the Harris court as authority for its requirement that a defendant must show himself and/or his agent to be free of negligence in a Craddock context. The two supporting cases cited in Harris, Grammar v. Hobby, 276 S.W.2d 311 (Tex.Civ.App.--San Antonio 1955, writ ref'd n.r.e.) and Brothers Dept. Store, Inc. v. Berenzweig, 333 S.W.2d 445 (Tex.Civ.App.--San Antonio 1960, writ ref'd n.r.e.), both deal with defendants entrusting their citations to a third person, who failed to perform a certain task which was necessary for the lawsuit to be timely answered. In Grammar, the defendant gave his citation to a man who was supposed to deliver it to the defendant's attorney. Although the defendant's agent informed the attorney as to his possession of the citation, the agent did not deliver it to the attorney until the same day that a default judgment was rendered against the defendant. Under those facts, the court in Grammar held that the defendant's failure to timely file an answer was due to the conscious indifference of the defendant, his agent, and, perhaps, his counsel. Grammar, 276 S.W.2d at 313. The term "negligence" is never used in the Grammar opinion.

In Berenzweig, one of the defendants entrusted the citation for all the defendants to his attorney's secretary who, he later testified, assured him that the attorney would properly handle the matter. The defendant subsequently called his attorney five or six times to check on the suit, but was never able to reach him. The two men finally encountered each other on the street and the defendant asked about his case. The attorney promised to look into the matter and, later that day, informed the defendant that the suit was filed in another county and, therefore, he would be unable to handle it. A default judgment was, coincidentally, taken against all of the defendants on the same day that they received notice that they were not represented by counsel. The court in Berenzweig found that the defendants had not shown that their failure to file answers was due to a mistake or accident, and cited the Grammar opinion for the proposition that "[f]ailure to employ an attorney and make sure that he understands he is to file an answer, unless he expects to represent himself, is ordinarily inexcusable negligence." Berenzweig, 333 S.W.2d at 447 (emphasis added). The court further held that even if the defendants could prove that their attorney was negligent, such negligence was not a justification for their failure to answer. Id. Interestingly, the cases cited by the Berenzweig court to support this latter statement of law are all pre-Craddock, except two, both of which make no mention of negligence on the part of thedefendant.

It is clear from this review that the Harris court took a quantum leap from the holdings in Grammar and Berenzweig to reach its "free of negligence" rule. Furthermore, the holdings in Harris and Grissom do not appear to truly stand...