Utz v. McKenzie

• Decision Date: 12 April 2013
• Docket Number: No. 05–11–01647–CV.,05–11–01647–CV.
• Citation: 397 S.W.3d 273
• Parties: Christopher UTZ; Evans Environmental Contracting, LLC; Utz Environmental Services of Dallas, LLC; and Utz Environmental Services of Austin, Inc., Appellants v. Duffy McKENZIE, Appellee.
• Court: Texas Court of Appeals

397 S.W.3d 273

Christopher UTZ; Evans Environmental Contracting, LLC; Utz Environmental Services of Dallas, LLC; and Utz Environmental Services of Austin, Inc., Appellants

v.Duffy McKENZIE, Appellee.

No. 05–11–01647–CV.

Court of Appeals of Texas, Dallas.

March 1, 2013.

Reconsideration En Banc and Rehearing Overruled April 12, 2013.

John Thomas Wilson, Myers Wilson, P.C., Kandace Dekeshia Walter, Dallas, TX, for Appellants.

Thomas Urquidez, Urquidez Law Firm, LLC, Dallas, TX, for Appellee.

Before Justices MOSELEY, FRANCIS, and LANG.

OPINION

Opinion by Justice LANG.

This appeal arises from a default judgment rendered by the trial court in favor of appellee Duffy McKenzie against appellants Christopher Utz; Evans Environmental Contracting, L.L.C.; Utz Environmental Services of Dallas, L.L.C.; and Utz Environmental Services of Austin, Inc. Appellants filed a motion for new trial, which the trial court denied. Additionally, the trial court denied appellants' subsequent motion to reconsider their motion for new trial.

In two issues on appeal, appellants contend the trial court abused its discretion by denying their motion for new trial and motion to reconsider. Further, appellants have filed a motion in this Court for sanctions against McKenzie's counsel for alleged misrepresentations in McKenzie's appellate brief. We decide appellants' two issues against them and deny appellants' motion for sanctions. The trial court's judgment is affirmed.

I. FACTUAL AND PROCEDURAL BACKGROUND

In his petition, which was filed on July 11, 2011, McKenzie asserted he had been employed by appellants and was seeking to recover payment for his work. On August 17, 2011, each appellant was served with citation and a copy of the petition.

On September 13, 2011, McKenzie filed a motion for partial default judgment in which he sought a default judgment as to liability. He contended a default judgment was proper because “the deadline for Defendants to file an answer or other pleading has passed and the citation and proof of service have been on file with this Court for at least ten days.” The trial court rendered judgment in favor of McKenzie as to liability in an order dated September 14, 2011. Subsequently, McKenzie filed a motion for final default judgment. The trial court signed a “Final Judgment” in favor of McKenzie dated September 21, 2011, and awarded him $33,933.20 in damages and attorney's fees, plus post-judgment interest and additional amounts in the event of unsuccessful appeals by appellants.

Appellants filed a “Motion to Set Aside Default Judgment and Motion for New Trial” on October 21, 2011 (the “motion for new trial”). Appellants stated in part that their failure to answer was “due to a mistaken belief that both parties were interested in and actively pursuing a settlement of the Plaintiff's claims.” Additionally, appellants asserted their failure to answer was “unintentional, accidental, and not a result of conscious indifference.” Attached to appellants' motion was an October 21, 2011 affidavit of Christopher Utz. In his affidavit, Utz stated, in part, (1) he was appearing on behalf of himself and the three other appellants described above and (2) on August 17, 2011, he “called attorney Thomas Urquidez, counsel for Plaintiff, regarding this suit filed against me and my companies” and “indicated” to Urquidez that he was “interested in pursuing settlement negotiations.” According to Utz, “Mr. Urquidez indicated that he would consult with his clients and get back to me,” but Utz “never heard from Mr. Urquidez again.” Utz stated, “1 was not aware that the litigation was proceeding without my involvement. I was under the impression that attorney Thomas Urquidez would contact me regarding further settlement negotiations.”

McKenzie filed a response to appellants' motion for new trial on November 9, 2011. McKenzie argued, inter alia, that appellants “cannot show their failure to answer was not intentional or the result of conscious indifference” and therefore cannot satisfy the standard for granting a new trial. Attached as an exhibit to McKenzie's response was an affidavit of Urquidez in which he testified he (1) is McKenzie's attorney in this case, (2) “never spoke with Christopher Utz in this case,” and (3) “never represented to Christopher Utz that we were engaging in settlement discussions in this case.”

Appellants filed a reply to McKenzie's response on November 11, 2011. In their reply, appellants asserted that in addition to speaking with Utz by phone on August 17, 2011, “Urquidez communicated electronically with attorney Steve Norris, settlement counsel only.” Specifically, appellants described an October 18, 2011 email from Urquidez to Norris. Attached to appellants' response was, inter alia, an undated affidavit of Norris. Norris stated in part in his affidavit that he “did not serve Defendants as litigation counsel,” but “contacted Plaintiff's counsel, Thomas J. Urquidez, on Defendants' behalf to discuss possible settlement of this matter.”

At the hearing on appellants' motion for new trial, McKenzie objected to the trial court considering the evidence attached to appellants' reply. McKenzie argued appellants' reply had been filed more than thirty days after the judgment and was therefore untimely and “an absolute nullity.” McKenzie's objection was sustained by the trial court.

The trial court took judicial notice of the affidavits attached to appellants' motion for new trial and McKenzie's response. Then, appellants called Urquidez as a witness. Urquidez testified on cross-examination that in 2010, he represented three individuals in cases against Utz for unpaid wages and settlements were reached in each case. Urquidez testified he did not engage in settlement negotiations in the present case and had “never spoken to [Utz] about this case.” Additionally, in response to a question pertaining to his negotiation of settlements in prior cases with Utz, Urquidez testified that after obtaining the default judgment in this case, he was contacted by an attorney “calling on behalf of a Mr. Charles Utz, who is Chris' dad.” According to Urquidez, that attorney “knew that I'd gotten a default on one of the cases, he knew that I had other pending cases.” Urquidez testified the attorney told him “Chris had put the cases in his desk, you know, and did not want to respond to them.” Appellants objected to Urquidez's testimony as “nonresponsive.” The trial court overruled that objection.

On direct examination, Urquidez testified the default judgment in this case was “entered well before I had any contact with Mr. Norris.” Further, Urquidez asked the trial court to admit into evidence two email exchanges between him and Norris, dated October 11, 2011, and October 18, 2011, respectively, for the purpose of showing that “Mr. Utz admitted that he knew of the default being already entered as of October the 11th.” On voir dire examination, appellants objected to the proffered emails “on the basis of hearsay.” Urquidez responded, “Your Honor, that's a party admission, Your Honor, so it goes against the hearsay rule.” The trial court overruled appellants' objection and admitted the proffered emails into evidence. Then, on redirect examination, Urquidez testified, in part, as follows:

On or about October 11th, I was contacted by Mr. Steve Norris. He told me he was contacting me on behalf of Charles Utz, who is Chris Utz's dad, and Mr. Utz. He said, you know, Chris put these things in a drawer, he didn't want to deal with them.

Additionally, Urquidez testified he spoke by phone with Utz on August 17, 2011, but that phone conversation was not in regard to the present case “or any way regarding settlement.”

The trial court denied appellants' motion for new trial. Appellants filed a motion to reconsider in which they, inter alia, restated their previous arguments respecting their failure to answer. Specifically, appellants contended Utz's October 21, 2011 affidavit demonstrated appellants “were not indifferent to having been sued but were attempting to resolve the situation.” Appellants' motion to reconsider was deniedby the trial court. ¹ Additionally, the trial court denied a request by appellants for findings of fact and conclusion of law. This appeal timely followed.

II. DENIAL OF MOTION FOR NEW TRIAL

A. Standard of Review and Applicable Law

“[A] default judgment should be set aside and a new trial granted when the defaulting party establishes that (1) the failure to appear was not intentional or the result of conscious indifference, but was the result of an accident or mistake, (2) the motion for new trial sets up a meritorious defense, and (3) granting the motion will occasion no delay or otherwise injure the plaintiff.” Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 925 (Tex.2009) (citing Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (1939)); see Sutherland v. Spencer, 376 S.W.3d 752, 754 (Tex.2012). We review a trial court's refusal to grant a motion for new trial for abuse of discretion. See, e.g., Dolgencorp, 288 S.W.3d at 926;Cliff v. Huggins, 724 S.W.2d 778, 778 (Tex.1987). A trial court abuses its discretion if it fails to grant a new trial when all three elements of the Craddock test are met. Dolgencorp, 288 S.W.3d at 926;Old Republic Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex.1994). The defaulting defendant has the burden of proving all three elements of the Craddock test before a trial court is required to grant a motion for new trial. Scenic Mountain Med. Ctr. v. Castillo, 162 S.W.3d 587, 590 (Tex.App.-El Paso 2005, no pet.); Freeman v. Pevehouse, 79 S.W.3d 637, 641 (Tex.App.-Waco 2002, no pet.).

“Consciously indifferent conduct occurs when ‘the defendant knew it was sued but did not care.’ ” Sutherland, 376 S.W.3d at 755 (citing Fid. & Guar. Ins. v. Drewery Constr. Co., Inc., 186 S.W.3d 571, 576 (Tex.2006)). “Generally, ‘some excuse, although not necessarily a good one, will suffice...