Folsom Investments, Inc. v. Troutz

• Decision Date: 22 April 1982
• Docket Number: No. 18636,18636
• Citation: 632 S.W.2d 872
• Parties: FOLSOM INVESTMENTS, INC. & Sabre Realty, Inc., Appellants, v. Steve TROUTZ & Laurie Troutz, Appellees.
• Court: Texas Court of Appeals

Page 872

632 S.W.2d 872

FOLSOM INVESTMENTS, INC. & Sabre Realty, Inc., Appellants, v. Steve TROUTZ & Laurie Troutz, Appellees.

No. 18636.

Court of Appeals of Texas, Fort Worth.

April 22, 1982.

Rehearing Denied May 27, 1982.

Geary, Stahl & Spencer and Joseph W. Geary, Dallas, for appellants.

John T. Chidgey, Fort Worth, for appellees.

Before MASSEY, C. J., and SPURLOCK and HOLMAN, JJ.

OPINION

MASSEY, Chief Justice.

Steve and Laurie Troutz brought suit against defendants Folsom Investments, Inc. & Sabre Realty, Inc. to recover damages resulting from the death of their child, Steven Jacob Troutz. Plaintiffs moved for judgment by default when the defendants, although duly served, failed to answer or appear. Following an evidentiary hearing on the issue of plaintiffs' unliquidated damages, the trial court rendered a default judgment against the defendants in the amount of $190,779.80, said sum representing actual and exemplary damages. The trial court overruled the defendants' timely Motion for New Trial, and they appealed.

Affirmed in part and reversed and remanded in part.

Folsom Investments, Inc. is the owner of a large apartment community known as Sotogrande, located in the cities of Hurst and Euless, Tarrant County, Texas. Sabre Realty, Inc. manages the property as agent for the owner.

In October, 1980, Steve and Laurie Troutz resided in apartment # 176 of the Barcelona Apartments, one of many smaller complexes comprising the Sotogrande addition. The Troutz apartment was located directly adjacent to two swimming pools situated on the common boundary of Hurst and Euless; in fact, the Troutz apartment's windows opened directly onto the swimming area. Living with the Troutzes was their 21 month-old son Jacob who, on October 3, 1980, fell into the shallower of the two pools and suffered injuries which resulted in his death on October 9th, 1980.

On February 25, 1981, the Troutzes filed suit against both Folsom Investments and Sabre Realty. Negligence, gross negligence and strict premises liability were the asserted bases of liability; by these theories, plaintiffs asserted entitlement to actual and exemplary damages under the Texas Death Act ¹ and the Texas Survival Act ². The relief prayed for amounted to $840,779.80.

Both Folsom Investments and Sabre Realty employed one Marie Garrison as vice-president and registered agent for the receipt of service of process. On March 11, 1981, Sabre Realty, through Garrison, was served with a citation and a copy of the plaintiffs' petition; Folsom Investments, through Garrison, its agent for the same purpose, was likewise duly served one week later on March 18, 1981. Upon receipt of the first citation, Garrison forwarded same to Duane Nutt, Department Head of Sabre Management, a division of Sabre Realty, Inc. Garrison also attached and forwarded a memorandum to Nutt which stated "(T)his is probably already in the hands of our attorney and insurance company, but we were just served this citation today..."

No answer to the plaintiffs' petition was filed by either defendant. On May 8, 1981, the trial court, following the presentation of evidence of the plaintiffs' damages, rendered judgment by default against Folsom Investments and Sabre Realty. Included in the $190,779.80 judgment was $11,564.80 for medical expenses, $4,215.00 for funeral expenses, $25,000.00 for pecuniary loss to the parents and $150,000.00 in exemplary damages.

On June 1, 1981, the defendants moved in the trial court to set aside the default judgment and for new trial. No testimony was presented to the trial court; instead, the defendants tendered affidavits, letters, memoranda, and other documents as proof of the requirements for relief from default judgments by way of Motion for New Trial.

The trial court denied the defendants' motion and, upon request, filed Findings of Fact and Conclusions of Law regarding its actions in denying said motion. The court found as fact that the defendants, though served on two different occasions, simply ignored the citations, and failed to timely answer. The court concluded that the defendants had not shown that their failure to answer the suit was not the result of willfulness or conscious indifference on their part.

In their first point of error the defendants complain that the trial court erred in refusing to set aside the default judgment because their Motion for New Trial, as well as the evidence submitted in support thereof, established the requirements for relief from default under the rules of Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124 (1939).

The first element of the Craddock test requires a defaulting defendant to prove that its failure to answer was not intentional or the result of conscious indifference on its part, but was due to accident or mistake. Some slight excuse is the test, but only if the failure to file an answer was unintentional or not the result of conscious indifference. See Dorsey v. Aquirre, 552 S.W.2d 576, 577 (Tex.Civ.App.-Waco 1977, writ ref'd n. r. e.).

Basically, defendants' contention is: an excuse was alleged, so therefore there could be no finding of intent or conscious indifference on their part. The test is not so simple. Firstly, the decision to grant or deny a new trial is one within the province of the trial court, subject to review by this court for abuse of discretion. Secondly, the trial court findings of fact and conclusions of law are in direct conflict with appellants' contentions. Finally, an appellate court will not substitute its opinion for that of the trial court when there is evidentiary support for a trial court's conclusion, in this case that Folsom Investments and Sabre Realty were consciously indifferent to the citation and petition served upon them.

The following facts constitute some evidence tending to support the trial court's conclusion of intent and conscious indifference on the part of defendants. One of them, the owner, and the other, managing agent of a large apartment community, employed the same agent for service of process. This agent received citations and copies of the petition on two different occasions. The agent then sent the papers thus served to another senior officer, along with a cover memorandum which provided that a carbon copy was to be forwarded to Robert Folsom, the sole shareholder of both appellant corporations. The trial court was entitled to believe that three different persons, all with presumably high degrees of responsibility, had received notice of the Troutzes' suit and consciously neglected to file answers.

Defendants, in their motion for new trial, attacked the preceeding factual background with two affidavits and one letter which they contend was sufficient evidence of excuse to preponderate against the finding by the trial court. The affidavit of Marie Garrison states that she presumed something was being done by the defendants' insurance company and attorneys. The affidavit of Duane Nutt similarly attempts to provide some explanation for appellants' inaction; Nutt also presumed something was being done in regard to defending a lawsuit in which claimants were making a substantial prayer for relief. Finally, in support of both affidavits defendants offered a letter from Ben Gomez, (agent of appellants' insurance carrier) which was sent to an attorney employed by the Troutzes. This letter, dated almost two months prior to the date suit was filed, states that the insurer had completed its investigation of the incident and that "should you be willing to discuss this matter further, you may contact us ...".

After proper service on a registered agent on two different occasions, only at his peril could a defaulting defendant be indifferent to notice duly provided. He could not be entitled to reversal of a discretionary act on the part of a trial court in refusing to find absence of intent to disregard such service. Justice Life Insurance Company v. Walker, 508 S.W.2d 434, 437 (Tex.Civ.App.-Fort Worth 1974, writ ref'd n. r. e.). Conclusory allegations of no intent or conscious indifference do not suffice, nor do unbelievable and internally inconsistent excuses meet the burden of proof. See Munson v. State, 576 S.W.2d 440, 442 (Tex.Civ.App.-Austin 1978, writ ref'd n. r. e.). If the bare assumption that an insurer "probably already" has notice of a suit were to be held any excuse at all, then every lawsuit would require two trials. Harris v. Lebow, 363 S.W.2d 184, 186 (Tex.Civ.App.-Dallas 1962, writ ref'd n. r. e.). (Similar to case at bar, held: no abuse of discretion to overrule Motion for New Trial). Appellants' first point of error is overruled.

Defendants complain of the failure of the trial court to make findings regarding the issue of their meritorious defenses. We hold that they did prove prima facie defenses to the action against them which, taken as true, would produce a different result. See Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex.1966). Furthermore, we preface our limited discussion of appellants' defenses by construing the term "different result" to mean any different result and not a totally opposite result. For example, in this case, any defense to a portion of appellees' damages might produce the different result of a lesser amount of damages. The opposite result of total non-liability need not be proved. See Gardner v. Jones, 570 S.W.2d 198, 201 (Tex.Civ.App.-Houston (1st Dist.) 1978, no writ).

Folsom Investments, Inc., through the affidavit of Robert S. Folsom, proved prima facie that the corporation's non-ownership of the Sotogrande addition (ownership allegedly being in Mr. Folsom in his individual capacity) would a fortiori mean Folsom Investments, Inc. could not be liable for acts or omissions occurring on premises it did not own. Although controverting evidence was presented by the Troutzes in this regard, the law does not allow such evidence to vitiate a meritorious defense otherwise properly set up. See Cragin v....