The Moving Co. v. Whitten

• Decision Date: 07 August 1986
• Docket Number: No. C14-85-780-CV,C14-85-780-CV
• Citation: 717 S.W.2d 117
• Parties: THE MOVING COMPANY, et al., Appellants, v. John C. WHITTEN and Susie Whitten, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 117

717 S.W.2d 117

THE MOVING COMPANY, et al., Appellants, v. John C. WHITTEN and Susie Whitten, Appellees.

No. C14-85-780-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Aug. 7, 1986.

Rehearing Denied Sept. 18, 1986.

Robert Scott, Susan L. Bickley, Houston, for appellants.

Michael Phillips, Houston, for appellees.

Before DRAUGHN, MURPHY and ELLIS, JJ.

OPINION

DRAUGHN, Justice.

This is an appeal from a denial to set aside a post-answer default judgment and grant a new trial. We reverse and remand.

John and Susie Whitten sued The Moving Company, Accurate Moving & Storage Co., Lowell Douglas, R.H. McCool and Buddy Boek for damages resulting from services performed. The Whittens' contend that in the course of moving their possessions from Dallas to Houston, appellants damaged and lost much of their home furnishings and personal belongings. In their original petition, the Whittens prayed for relief under two theories of recovery, negligence and the Texas Deceptive Trade Practices Act. (DTPA) Appellants filed a general denial followed by an amended original answer raising several defenses including, but not limited to, noncompliance with DTPA notice procedures and lack of corporate status of the named corporate defendants. On June 21, 1985, during docket call at which both parties were present, after a hearing on a discovery dispute, the trial court ordered the case set for trial on June 24, 1985. Appellants' failed to appear for trial at the designated time. The trial court entered judgment in favor of the Whittens. Actual damages were assessed at $36,024.71 and pursuant to the DTPA trebling provision, the Whittens were awarded $108,072.13 in exemplary damages plus attorney's fees. Appellants filed a motion to set aside the default judgment or alternatively, for new trial, which, after hearing, was overruled.

In their first point of error, appellants contend the trial court abused its discretion in denying their motion for new trial as they met the requirements of the Craddock test. We agree.

It is well established that a default judgment should be set aside and a new trial granted when: (1) the failure to appear was not intentional or due to conscious indifference, but due to an accident or mistake; (2) the motion sets up a meritorious defense; and (3) the granting of the motion will not delay or otherwise work an injury to the plaintiff. Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124 (1939). See also Ivy v. Carrell, 407 S.W.2d 212 (Tex.1966); Lind v. Gresham, 672 S.W.2d 20, 22 (Tex.App.--Houston [14th Dist.] 1984, no writ). It is equally well settled that it is within the discretion of the trial court to decide whether the facts of the case warrant the granting of a new trial. Grissom v. Watson, 704 S.W.2d 325 (Tex.1986).

I. ACCIDENT OR MISTAKE

In reviewing the Whittens' brief we note they do not dispute that appellants' failure to appear for trial was the result of mistake. However, at oral argument, the Whittens stated they do not concede the issue. Therefore, we must carefully review the facts and circumstances before we are able to fairly characterize appellants' conduct.

We note at the outset that a review of the numerous appellate decisions applying Craddock reveals that no single formula for distinguishing accident or mistake from intentional failure or conscious indifference has been promulgated. See generally Pohl & Hittner, Judgments By Default In Texas, 37 S.W.L.J. 421, 443-47 (1983). It is clear, however, that the courts have liberally interpreted this element. Harlen v. Pfeffer, 693 S.W.2d 543, 545 (Tex.App.--San Antonio 1985, no writ). See also Strackbein v. Prewitt, 671 S.W.2d 37 (Tex.1984).

The Whittens' filed their Original Petition on July 28, 1983. By November 1984, pre-trial discovery was complete except appellants had not had an opportunity to take photographs and inspect the Whittens' property allegedly damaged in the move. Several motions for continuances were granted at appellants' request as they continued to try and obtain access to the property. By order dated May 28, 1985, the trial court ruled appellants be given access to the property on or before five o'clock June 20, 1985, for the purpose of taking photographs. The Whittens attempted to avoid the ordered discovery by filing a Motion to Quash. The Motion was heard and denied. Meanwhile, appellants were still precluded from inspecting the property. On June 21, 1985, at docket call, appellants filed a Motion to Dismiss and the Whittens filed an "Arrangement for On-Site Inspection." ¹ According to appellants, the trial court once again ordered the Whittens to allow appellants access to the property. The docket sheet indicates the court also ordered the case set for trial on June 24, 1985. Appellants state that after docket call, their counsel discussed the possibility of scheduling photographs both before and after June 24, 1985 with the Whittens' counsel, contributing to their mistaken belief trial was set for a date other than June 24. Finally, the record shows that when appellants failed to appear for trial, court personnel did not attempt to contact appellants' counsel, believing he was aware of the trial setting.

Appellants' counsel learned of his mistake regarding the date of the trial setting when he received the default judgment signed June 25, 1985. On June 27, 1985, appellants' counsel obtained a hearing and an opportunity to explain his mistake. At the hearing, the trial judge indicated he was not inclined to set aside the default judgment, but he would consider a motion for new trial. Such was filed, alternatively styled as a Motion to Set Aside Default Judgment, and overruled. We find, in light of the particular series of events surrounding appellants' failure to appear for trial, such failure was not intentional or the result of conscious indifference.

II. MERITORIOUS DEFENSE

We next address whether appellants have satisfied the second prong of Craddock by "setting up" a meritorious defense. A meritorious defense is one that, if proved, would cause a different result upon a retrial of the case, although it need not be a totally opposite result. Harlen v. Pfeffer, supra at 546. For example, in this case any defense to a portion of appellees' damages might produce the different result of a lesser amount of damages. Gardner v. Jones, 570 S.W.2d 198, 201 (Tex.Civ.App.--Houston [1st Dist.] 1978, no writ). Additionally, a defendant against whom a default judgment has been rendered need not conclusively prove a meritorious defense to be entitled to a new trial; he need only "set up " such a defense. Aero Mayflower Transit Co., Inc. v. Spoljaric, 669 S.W.2d 158 (Tex.App.--Fort Worth 1984, writ dism'd). The facts of the meritorious defense may be set forth by affidavit or other competent evidence. Ivy v. Carrell, supra.

In determining whether the defendant has "set up" a meritorious defense, only the legal sufficiency of the facts necessary to set up the defense may be contested by the plaintiff; the factual basis of defendant's meritorious defense may not. If the plaintiff can show the defendant has failed to allege facts supporting an element of its meritorious defense, then the motions may be properly overruled. In other words, once a meritorious defense has been set up, supported by evidence which prima facie entitles the defaulting defendant to a new trial, the new trial should not be denied upon consideration of contradictory testimony offered in resistance to the motion. ² Ivy v. Carrell, supra at 214; Harlen v. Pfeffer, supra at 546; National Rigging Inc. v. City of San Antonio, 657 S.W.2d 171, 173 (Tex.App.--San Antonio 1983, writ ref'd n.r.e.). However, while the trial court may not consider contradictory evidence offered by the opposing party, the court should consider whether the facts asserted in the affidavits appear true and whether the affiant believes them to be true. St. Paul Fire & Marines Ins. Co. v. Earnest, 293 S.W. 677, 686-87 (Tex.Civ.App.--Amarillo) (on motion for rehearing), aff'd in part per curiam, 116 Tex. 565, 296 S.W. 1088 (1927). The facts of this case demonstrate the soundness of this latter principle.

A review of appellants' pleadings and affidavits raise the following defenses: (1) Accurate Moving & Storage Co. and The Moving Company are not corporations; (2) the individual defendants are not liable in the capacity in which sued; and (3) plaintiffs failed to comply with the DTPA notice provisions. If any one of these defenses qualifies as a "meritorious defense," the second prong of Craddock is satisfied.

A. LACK OF CORPORATE STATUS AND INDIVIDUAL CAPACITY

The Whittens strenuously argue that the facts asserted by appellants in their sworn affidavits concerning corporate status and individual capacity are controverted by appellants' own testimony obtained through pre-trial discovery and introduced during the default judgment trial. They ask us to hold that a trial court does not abuse its discretion by overruling a motion for new trial following a default judgment where the only evidence of the meritorious defense is completely in conflict with the offering party's own sworn testimony. In order to fully appreciate the Whittens' argument, it is necessary to compare the affidavits attached to appellants' Motion for New Trial with their earlier sworn deposition testimony admitted into evidence.

For purposes of clarity, the relevant portion of the deponents' testimony will be immediately followed by excerpts from the same party's sworn affidavit attached to the Motion for New Trial.

APPELLANT BUDDY BOEK

Deposition Testimony

Q. First, lets go to the question of August the 12th of 1981. Were you either a part owner or operator of Accurate Moving & Storage?

A. Yes. I was part owner.

* * *

Q. Was your ownership in the form of stock?

A. Yes.

Q. Approximately what percentage did you own in August of 1981?

A. Twenty-five.

* * *

Affidavit

*...