Sedona Pacific Housing P'ship v. Ventura

• Decision Date: 22 May 2013
• Docket Number: No. 08–11–00208–CV.,08–11–00208–CV.
• Parties: SEDONA PACIFIC HOUSING PARTNERSHIP d/b/a Sedona Pacific Properties and Gonzalez Financial Holdings, Inc., Appellants, v. Alfonso VENTURA and Maria Ventura, Appellees.
• Court: Texas Court of Appeals

408 S.W.3d 507

SEDONA PACIFIC HOUSING PARTNERSHIP d/b/a Sedona Pacific Properties and Gonzalez Financial Holdings, Inc., Appellants,

v.Alfonso VENTURA and Maria Ventura, Appellees.

No. 08–11–00208–CV.

Court of Appeals of Texas,

El Paso.

May 22, 2013.

John L. Gamboa Jr., Acuff & Gamboa, L.L.P., Fort Worth, TX, for Appellants.

Adrian A. Spears II, San Antonio, TX, for Appellees.

Before McCLURE, C.J., RIVERA, and ANTCLIFF, JJ.

OPINION

ANN CRAWFORD McCLURE, Chief Justice.

Sedona Pacific Housing Partnership d/b/a Sedona Pacific Properties and Gonzalez Financial Holdings, Inc. appeal from a judgment entered in favor of Alfonso Ventura and Maria Ventura. For the reasons that follow, we affirm.

FACTUAL SUMMARY

On September 30, 2009, Alfonso and Maria Ventura filed suit against Appellants alleging wrongful foreclosure on the Venturas' homestead. The suit alleged that the Venturas executed a tax lien promissory note payable to Gonzalez Financial Holdings, Inc. in the amount of $9,704.52. Tamir Enterprises, Ltd. held the note and GFH Servicing, Ltd. serviced it. The Venturas' mortgage company tendered a check in the amount of $8,041.25 to pay off the tax lien note and avoid foreclosure, but the loan servicer, GFH Servicing Ltd., refused to accept the payment because it was not received until after the date of the foreclosure.¹ The property was sold at a non-judicial foreclosure on July 7, 2009 to Sedona Pacific Housing Partnership for $75,000. The Venturas alleged in their suit that the property had a value of $206,300 and Appellants had failed to properly account for the surplus money received or convey to the Venturas their legal share of the proceeds. The Venturas sought to enjoin a wrongful foreclosure, alleged that Appellants had breached the tax loan contract, and they also sought declaratory relief and attorney's fees. The trial court issued a temporary restraining order prohibiting Appellants from proceeding with the forcible detainer.

Appellants were served with citation and the TRO on October 7, 2009, but they did not file an answer. The parties, through their attorneys, entered into a Rule 11 agreement to continue the hearing on the temporary injunction and to suspend the eviction proceedings for sixty days while the parties attempted to negotiate a settlement. The dispute was not settled and the parties engaged in discovery. The trial court set the case for trial on March 21, 2011. The Venturas amended their pleadings prior to trial raising additional causes of action: fraud by nondisclosure, usury, and failure to account. They also requested exemplary damages. The Venturas appeared with their attorney for trial, but Appellants failed to appear. The judgment recites that the trial court, after having read the pleadings and papers on file, and after hearing the evidence and argument of counsel, found that the allegations in the Venturas' pleadings had been admitted and Appellants were indebted to the Venturas in the amount of $66,958 plus post-judgment interest. The court also awarded to the Venturas attorney's fees in the amount of $6,500 for trial plus conditional awards in the event Appellants filed a motion for new trial or appealed to the court of appeals and the Texas Supreme Court.

Appellants filed a motion for new trial on equitable grounds and alleged that the procedural default was not intentional or the result of conscious indifference but was due to accident or mistake. They also alleged a meritorious defense to the Venturas' claims. Counsel for Appellants stated in an affidavit that he did not file an answer on behalf of Appellants due to accident or mistake. His affidavit did not address why Appellants failed to appear for trial. The trial court denied the motion after a hearing and this appeal follows.

MOTION FOR NEW TRIAL

In their first issue, Appellants complain that the trial court abused its discretion by denying their motion for new trial made under Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (1939). Before addressing the issue, we must consider the Venturas' claim that Craddock is inapplicable because the trial court did not enter a default judgment and instead entered a judgment in their favor following a trial on the merits. We understand Appellants to argue that Craddock applies because the trial court entered a no-answer default judgment. We therefore must resolve precisely what type of judgment the trial court entered.

We will first consider whether it is a judgment upon trial. Counsel for the Venturas, John Gamboa, stated in his affidavit that the case was set on the court's jury trial docket with proper notices to all parties. He also stated: “This was not a default hearing but a properly called jury trial....” At the hearing, Gamboa stated several times, including once under oath, that the court had conducted a trial on the merits, not a default judgment hearing, and he recounted the evidence admitted at the trial. The appellate record does not include the court reporter's transcript of the trial. The Venturas' assertion that the trial court did not enter a default judgment is contradicted by the following recitations in the judgment:

The Defendants, although having been duly and legally cited to appear and answer, failed to appear and answer, and wholly made default. Citation was served according to law and returned to the clerk where it remained on file for the time required by law. The Court has read the pleadings and the papers on file and after hearing the evidence and argument of counsel, is of the opinion that the allegations in Plaintiffs' Petition have been admitted and Defendants are indebted to Plaintiff in the sum of $66,958.00.

Counsel for the Venturas approved the judgment as to both form and content. The recitations in the judgment indicate that the trial court rendered a default judgment rather than a judgment upon trial.

Under the presumption of regularity of judgments, we are required to presume recitations in the final judgment are correct absent any evidence to the contrary. Vernon v. Perrien, 390 S.W.3d 47, 58 (Tex.App.-El Paso 2012, pet. denied); Southern Insurance Company v. Brewster, 249 S.W.3d 6, 12–14 (Tex.App.-Houston [1st Dist.] 2007, pet. denied). Given that the appellate record does not include a reporter's record, we must also presume that the evidence supports the recitations regarding entry of a default judgment. See Sandoval v. Commission for Lawyer Discipline, 25 S.W.3d 720, 722 (Tex.App.-Houston [14th Dist.] 2000, pet. denied). Based on the record before us and applying the required presumptions to the judgment, we conclude that the trial court entered a default judgment.

There are several types of default judgments. They generally fit into pre- or post-answer default judgments, but other variations exist which do not fit neatly into either category. Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 177, 184 (Tex.2012).² In Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex.1979), the Supreme Court discussed three types of default judgments in contrast to “a judgment upon trial:” (1) the no-answer default judgment; (2) the judgment nihil dicit; and (3) the post-answer default judgment.

A traditional no-answer default judgment can be taken when the defendant is properly served with citation but fails to answer or appear. Tex.R.Civ.P. 239. A defendant who has not answered or otherwise appeared in the case is not entitled to notice of a default judgment proceeding. Wilson v. Wilson, 132 S.W.3d 533, 536 (Tex.App.-Houston [1st Dist.] 2004, pet. denied). A judgment nihil dicit is usually “limited to situations in which either (1) the defendant has made a plea, usually dilatory in nature, but the pleading has not placed the merits of the plaintiff's case in issue before it is overruled, or (2) the defendant has placed the merits of the case in issue by filing an answer, but has withdrawn that answer.” Paradigm Oil, 372 S.W.3d at 184 n. 8,quoting 7 William V. Dorsaneo III, Texas Litigation Guide § 100.01[3] at 100–11 (2011). A no-answer default and a judgment nihil dicit are so similar that the same rules apply to each with respect to the effect and validity of the judgment. Stoner, 578 S.W.2d at 682. In both instances, the non-answering party has “admitted” the facts properly pled and the justice of the opponent's claim, although a judgment nihil dicit carries an even stronger confession than the no-answer default judgment. Id.

A post-answer default occurs when the defendant has filed an answer but fails to appear for trial. It differs from the no-answer default and the judgment nihil dicit in that it does not constitute an abandonment of the defendant's answer and it is not an implied confession of any issues joined by the defendant's answer. Stoner, 578 S.W.2d at 682. Consequently, judgment cannot be entered on the pleadings, and the plaintiff is required to offer evidence and prove his case as in a judgment upon a trial. Id.

The Supreme Court had also recognized a fourth category of default judgment: a post-appearance default judgment. LBL Oil Co. v. International Power Services, Inc., 777 S.W.2d 390 (Tex.1989). This type of default judgment occurs when the defendant makes a general appearance but fails to answer or appear for trial. Once a defendant has made an appearance, he is entitled to notice of the trial setting as a matter of due process under the Fourteenth Amendment. Peralta v. Heights Medical Center, Inc., 485 U.S. 80, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988); LBL Oil, 777 S.W.2d at 390–91;In re Brilliant, 86 S.W.3d 680, 693 (Tex.App.-El Paso 2002, orig. proceeding). A party enters a general appearance when he (1) invokes the judgment of the court on any question other than the court's jurisdiction, (2) recognizes by his acts that an action is properly pending, or (3) seeks affirmative action from the court. Exito Electronics Co., Ltd. v. Trejo, 142 S.W.3d 302, 304 (Tex.2004); Dawson–Austin v....