Sherman Acquisition II Lp v. Garcia

• Court: Texas Court of Appeals
• Writing for the Court: Tom Gray
• Citation: Sherman Acquisition II Lp v. Garcia, 229 S.W.3d 802 (Tex. App. 2007)
• Decision Date: 20 June 2007
• Docket Number: No. 10-06-00013-CV.,10-06-00013-CV.
• Parties: SHERMAN ACQUISITION II LP, Appellant, v. Tonie GARCIA, Appellee.

229 S.W.3d 802

SHERMAN ACQUISITION II LP, Appellant, v. Tonie GARCIA, Appellee.

No. 10-06-00013-CV.

Court of Appeals of Texas, Waco.

June 20, 2007.

Jeffrey J. Chen, Hull & Associates, PC, Houston, for appellant.

Tonie Garcia, Waco, pro se.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

TOM GRAY, Chief Justice.

OVERVIEW

This appeal is from a take nothing judgment after a trial on the merits before the court. Sherman Acquisition II LP sued Tonie Garcia in county court on a sworn account and for quantum meruit¹ to recover an unpaid credit card debt. Garcia did not file an answer or otherwise make an appearance. Sherman requested a default judgment. The trial court did not grant default judgment to Sherman, but rather set the case for a trial on the merits. Garcia did not appear at the trial on the merits. Upon Sherman's request, the trial court took judicial notice of the contents of its file. Sherman presented no live testimonial evidence of its damages but included in the court's file was an attorneys fee affidavit and an affidavit purporting to address the merits of its claim. The trial court rendered a take nothing judgment. This appeal followed.

Sherman vigorously asserts that its case is a suit on a sworn account and that it was entitled to judgment by the rules applicable to suits on sworn account, or alternatively by the rules applicable to default judgments, or finally by the evidence at the trial on the merits on both liability and damages. After a discussion of the background of this appeal, we first address the issue of whether Sherman was entitled to a judgment for a suit on sworn account. Because we determine that it is not, we then move to the question of whether Sherman was entitled to a default judgment, and whether it was error for the trial court to deny or refuse to grant default judgment, on both, or either, liability and damages. Because we determine that the trial court erred in not granting a default judgment on liability, but not on damages, we then must proceed to determine whether the trial court erred by rendering a take nothing judgment after a trial on the merits against Sherman. Because we determine that Sherman conclusively proved its damages, we ultimately conclude that the trial court erred in not rendering judgment for Sherman and, therefore, we reverse the trial court's judgment and render judgment for Sherman.

BACKGROUND

Garcia ran up a debt on his Metris credit card account. He failed to pay. Sherman acquired the debt from Metris and then sued Garcia to collect the debt. In addition to the petition, Sherman included a Request for Disclosures and Request for Admissions in the petition. Garcia did not file an answer or make an appearance. Not surprisingly, Garcia, in addition to not answering the claims in the petition, also did not answer the Requests for Admissions. Service of the petition and the Request for Admissions was reflected on the return of service.

Sherman filed a motion for default judgment on July 18, 2005. Rather than a ruling on the motion for default judgment, on July 18, 2005 the case was set for trial on November 4, 2005.

The trial on the merits was held on November 4, 2005. No jury trial having been requested, the case was tried to the court. At the trial before the court, Sherman did not specifically object to the trial court's failure or refusal to rule on any motion but Sherman did draw the trial court's attention to its entitlement to judgment based on the contents of the court's file. Sherman specifically asked the court to take judicial notice of the court's file and requested a judgment in its favor.

The trial court took judicial notice of the contents of the court's file, which contained the petition, affidavits regarding the claim and attorneys fees, and Request for Admissions to which no response had been filed.

A take nothing judgment was rendered on November 4, 2005.

Sherman requested findings of fact and conclusions of law.

Findings of fact and conclusions of law were filed.

Notice of Appeal was filed.

TRIAL ON THE MERITS

The reporter's record on this entire trial on the merits is as follows:

PROCEEDINGS NOVEMBER 4, 2005

THE COURT: Okay. This is 20050487CV1. Mr. Fisher?

MR. FISHER: Thank you, Your Honor. For the record, my name is John B. Fisher, III, and I am an attorney. I practice law in Waco, McLennan County, Texas. Hull & Associates, the attorneys for the Plaintiffs in this lawsuit, have asked me to appear today solely for the purpose of moving for a judgment, and I have some brief evidence I would like to present to the Court.

THE COURT: All right.

MR. FISHER: I would like to request the Court to take judicial notice of the case file that the Court presently has in his possession.

THE COURT: All right.

MR. FISHER: I would, second, like to be sworn in.

(Witness duly sworn)

THE COURT: All right. Proceed.

JOHN B. FISHER, III

having been first duly sworn, testified as follows:

DIRECT EXAMINATION

BY MR. FISHER:

I will testify as follows: That I am John B. Fisher, III, and that I am an attorney and I practice law in Waco, McLennan County, Texas, and the following testimony is not of personal knowledge. It is based strictly on information and belief.

And that testimony would be that it is my understanding that the Defendant incurred a credit card debt to a company called Metris, and that that debt was subsequently bought by the Plaintiff herein, Sherman Acquisition. And it is my understanding, based on information and belief, that that debt is a legitimate debt that is unpaid and that the Plaintiff is entitled to recover the money that they have sued for.

Also, I would like to testify, based on information and belief, that included in the Plaintiff's Original Petition are Requests for Admissions that have not been responded to as of this date, in any manner.

And that's all the testimony I have, Your Honor.

THE COURT: Anything else, Mr. Fisher?

MR. FISHER: Did the Court want to hear any type of argument?

THE COURT: I will hear anything you want to present, Mr. Fisher.

MR. FISHER: Thank you, Your Honor.

FINAL ARGUMENT

MR. FISHER: I would like to say to the Court that I believe that Rule 241 of the Texas Rules of Civil Procedure is applicable in this situation because we have a liquidated amount that is proven by an instrument in writing, and I believe that the pleadings are sufficient to give the Defendant notice of what they were sued for and why they were sued and I think the Requests for Admissions certainly bolster those other reasons, and therefore, believe that when the Defendant hasn't appeared and in any way contested the charges, which constitutes a type of tacit admission, that it's a legitimate claim, that the Plaintiff is entitled to the judgment requested.

Thank you, Your Honor.

THE COURT: Mr. Fisher, I am going to deny the relief prayed for and order that the Plaintiff take nothing for this suit. Anything further?

MR. FISHER: No, Your Honor.

THE APPEAL

Sherman brings three issues. The issues are as follows:

1. The trial court erred in ordering that the Plaintiff take nothing by way of its suit.

2. The trial court erred in not granting the Plaintiff's Default Judgment; and

3. The trial [court] improperly set the matter for trial.

All three issues are somewhat interrelated, and will be discussed as necessary, as described above.

SWORN ACCOUNT

If Sherman properly pleaded a suit on a sworn account, it is entitled to judgment, not so much because of the default of Garcia, but because Garcia did not file a sworn denial of the account. See TEX.R. CIV. P. 185. But as the trial court properly noted, a suit on a sworn account must be based upon a transaction involving "a sale on one side and a purchase on the other whereby title to personal property passes from one to another." Tully v. Citibank (S.D.), N.A., 173 S.W.3d 212, 216 (Tex.App.-Texarkana 2005, no pet.). This case involves the extension of credit. Some credit extensions were to fund the purchase of goods or services at the point of purchase; others are alleged to have been cash advances. Sherman has not properly pleaded a claim upon which a suit on a sworn account for these types of transactions can be based.

DEFAULT JUDGMENT

Ordinarily, the denial of a default judgment is an interlocutory order not subject to appeal. Aguilar v. Livingston, 154 S.W.3d 832, 833 (Tex.App.Houston [14th Dist.] 2005, no pet.). This is the natural result of the denial of a motion that does not result in a judgment because the refusal to rule on, or the denial of, a dispositive motion, does not normally result in a ruling or other final judgment about which complaint can be made. Usually, after the denial, or refusal to rule, the proceedings progress and are ultimately resolved and the denial or refusal to rule on the motion becomes moot because other events in the proceeding have resulted in a judgment.

We have previously reviewed the denial of a motion for default judgment which was filed and ultimately denied after an answer was filed. Aguilar v. Alvarado, 39 S.W.3d 244, 248 (Tex.App.Waco 1999, pet. denied) ("Rather, Aguilar's first request for a default judgment occurred in his motion, filed after Alvarado filed his answer, in which he asked the trial court to strike Alvarado's answer and enter a default judgment."). And at least one other appellate court, citing our Aguilar case, has considered the denial of a default judgment when, as here, the denial is challenged in an appeal from a final judgment or order. Aguilar v. Livingston, 154 S.W.3d 832, 833 (Tex.App.Houston [14th Dist.] 2005, no pet.). Review of the denial of a motion for default judgment is under the abuse of discretion standard. Id.

Initially we must determine whether the trial court's failure or refusal to grant a default judgment was properly preserved. In Aguilar v. Alvarado, the motion was made and specifically denied after the answer had been filed. Thus, as...