Opinion
No. 01-08-00017-CV
Opinion issued June 18, 2009.
On Appeal from the 189th District Court Harris County, Texas, Trial Court Cause No. 2006-27390.
Panel consists of Justices KEYES, HANKS, and BLAND.
MEMORANDUM OPINION
Appellants Gerald and Michaeline Cantu ("the Cantus") appeal a post judgment default judgment entered against them on a claim of breach of contract. In their sole issue, the Cantus argue that the trial court erred in denying their motion for new trial because they did not receive reasonable notice of the trial resetting and, therefore, they were not required to establish a meritorious defense in their motion for new trial.
We affirm.
Background
On March 15, 2000, the Cantus signed a lease to rent property located at 1512 West Alabama in Houston, Texas. The Cantus agreed to a one-year lease and also agreed to pay the property owner and trustee, appellee Shawki Salameh ("Salameh"), $4,000 per month in rent. The Cantus agreed to make "all necessary repairs" and alterations to the property at their expense. The Cantus also agreed to pay all property insurances and property taxes.
After the Cantus acquired the lease, they opened and operated a restaurant throughout the lease term. At the end of the original lease term, the Cantus did not renew the lease. Instead, they held over until October 2004 and continued to operate the restaurant. After the Cantus vacated the property in October 2004, they failed to pay rent, insurance, and tax obligations, assessed at $70,592.04.
On May 3, 2006, Salameh filed an original petition alleging that the Cantus had committed breach of contract in failing to pay their obligations under the holdover lease. In the petition, Salameh assessed damages at $108,285.44, but he also stated that the Cantus were entitled to an offset of $10,000 because the Cantus had regularly furnished meals to Salameh without charge. Salameh also requested attorneys' fees. The Cantus timely filed an answer, but the document is not present in the appellate record.
On May 14, 2007, the trial court of the 190th Judicial District of Harris County set the trial for the two-week period beginning August 13, 2007. Both parties received notice of the trial setting. The Cantus, through their attorney of record, received notice from the trial court letter addressed to their attorney. The Cantus' attorney discovered that the date of the trial setting conflicted with his vacation period, and he requested that the parties file a joint motion for continuance to reset the trial. On August 2, 2007, the parties filed a joint motion for continuance because the Cantus' attorney "will be in Hawaii from the date of this pleading until the day before trial begins, and is unable to prepare for trial." On August 16, 2007, the trial court granted the motion and signed an order resetting the trial for the two-week period beginning October 8, 2007.
On August 21, 2007, the trial court mailed a postcard to the parties, notifying them that the trial court signed an order resetting the trial. However, the postcard did not state the date on which the trial had been reset. The Cantus' attorney failed to contact the court to obtain a copy of the signed order resetting the trial for the two-week October docket beginning October 8, 2007.
On October 9, 2007, the trial court called the Cantus' attorney to remind the Cantus that trial had been set for October 10, 2007 and to notify him that because of the appointment of Judge Elrod, judge of the 190th District Court of Harris County, to the United States Court of Appeals for the Fifth Circuit, the case had been reassigned to the 189th District Court. On the same date, the trial court sent an e-mail to the Cantus' attorney with the same information.
On October 10, 2007, the trial court of the 189th Judicial District convened the trial. Salameh announced his presence, but the Cantus and their counsel were absent. The trial coordinator of the 190th Judicial District testified that "on October 9, 2007 at approximately 4:23 I left [the Cantus' attorney of record] a message, voice mail message that this case had been assigned to trial Wednesday, October 10, at 4:30 p.m. I secondly followed that up with an e-mail to his current e-mail address. . . .That e-mail went out on Tuesday, October 8, at 4:30 p.m. advising that the Salameh versus Cantu case had been assigned to trial."
The trial court stated that "given what you said, and I notice here the trial setting mailed out August — looks like it was mailed out around August 16th by Judge Elrod to [Cantus' attorney of record]." The trial court requested that the trial coordinator for the 189th Judicial District search for the Cantus in the courtroom of the 190th Judicial District. The trial coordinator for the 189th Judicial District confirmed that the Cantus were absent from the courtroom of the 190th Judicial District.
The trial court ordered Salameh to present evidence. Salameh presented his own testimony stating that the Cantus had breached the holdover lease by failing to pay rent, insurance, and taxes totaling $166,932.64. Salameh also testified that, after accounting for the statute of limitations, the Cantus were liable for approximately $70,592.00. He also testified that the Cantus' liability should be offset by $10,000 due to the free meals the Cantus provided to him during the period the Cantus were in possession of the property. Salameh also presented several documents, including a copy of the lease, spreadsheets calculating the Cantus' alleged liability, and copies of cancelled checks made to Salameh showing the Cantus' rent payments beginning in March 2000. He also presented testimony from his attorney stating that his fees totaled $28,000. Salameh also presented several fee statements from his attorney detailing his attorney's trial preparation and other work related to the case.
On October 11, 2007, the trial court issued a default judgment in favor of Salameh, which stated in relevant part,
Therefore, it is hereby ORDERED, ADJUDGED and DECREED that Shawki Salameh, Trustee, Plaintiff, is awarded $60,000 against Defendants, Mickaeline [ sic] and Gerald Cantu, the $60,000 being the total of $70,000 of unpaid rent, insurance, and taxes under the Lease on the premises, less a $10,000 offset for meals eaten at Defendant's restaurant by Plaintiff. In addition, Plaintiff is awarded $25,000 for reasonable and necessary attorney's fees earned by Dabney Pappas as counsel for Plaintiff.
On October 26, 2007, the Cantus filed a timely motion for new trial, arguing that they were deprived of due process because the service of notice of the trial resetting was unreasonable. On November 2, 2007, the trial court denied the Cantus' motion for new trial.
Motion For New Trial
In their sole issue, the Cantus argue that the trial court erred in denying their motion for new trial because they did not receive reasonable notice of the trial resetting and, therefore, they were not required to establish a meritorious defense in their motion for new trial.
Standard of Review
A trial court's decision to overrule a motion to set aside a default judgment and grant a new trial is subject to review for abuse of discretion. Interconex v. Ugarov, 224 S.W.3d 523, 536 (Tex.App.-Houston [1st Dist.] 2007, no pet.) (citing Old Republic Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex. 1994)). "While trial courts have some measure of discretion in the matter, as, in truth, they have in all cases governed by equitable principles, it is not an unbridled discretion to decide cases as they might deem proper, without reference to any guiding rule or principle." Id. (quoting Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 393, 133 S.W.2d 124, 126 (1939)).
A post-answer default judgment occurs when a timely answer that puts the merits of plaintiff's claims at issue is on file, but the defendant fails to appear at trial. Sharif v. Par Tech, Inc., 135 S.W.3d 869, 872 (Tex.App. 2004, no pet.) (citing Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979)). If a defendant has filed such an answer, the defendant's failure to appear at trial is neither an abandonment of the defendant's answer nor is it an implied confession of any issues thus joined by the defendant's answer. Id. Post-answer default judgments cannot be entered on the pleadings, but, rather, a plaintiff must offer evidence and prove his case as in a judgment at trial. Id. at 873. This Court must have a record of the evidence in order to determine if sufficient evidence was submitted to support the judgment. Id. When a default judgment is attacked by motion for new trial in the trial court, the parties may introduce affidavits, depositions, testimony, and exhibits to explain what happened. Fidelity and Guaranty Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 574 (Tex. 2006) (citing Gold v. Gold, 145 S.W.3d 212, 214 (Tex. 2004)).
A post-answer default judgment should be set aside when the defendant establishes that (1) nonappearance at trial was not intentional or the result of conscious indifference, but 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 undue delay or otherwise injure the plaintiff. Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005); Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 685 (Tex. 2002); Craddock, 133 S.W.2d at 126. In determining whether a claimant acted intentionally or with conscious indifference in not appearing at trial, but rather failed to appear due to accident or mistake, we look to the claimant's knowledge or acts. Hunsucker v. Fustok, 238 S.W.3d 421, 430-31 (Tex.App. 2007, no pet.). In this context, an accident or mistake is characterized by inadequate knowledge of the facts or an unexpected happening that precludes compliance. Id. Conscious indifference is the failure to take action that would seem indicated to a person of reasonable sensibilities under similar circumstances. Id. When a defendant has no actual or constructive notice of a trial setting and a default judgment is entered against him, he is not required to show that he had a meritorious defense because such a requirement violates his due process rights under the Fourteenth Amendment to the United States Constitution. Peralta v. Heights Medical Center, 485 U.S. 80, 96, 108 S. Ct. 896, 900 (1988); Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex. 1988); Lorentzen v. Kliesing, 810 S.W.2d 16, 19 (Tex.App.-Houston [14th Dist.] 1991, no writ).
Lack of Reasonable Notice of Trial Resetting
Once a defendant has made an appearance in a cause, he is entitled to notice of the trial setting as a matter of due process under the Fourteenth Amendment. In re $475,001, 96 S.W.3d 625, 627 (Tex.App.-Houston [1st Dist.] 2002, no pet.) (citing Peralta, 485 U.S. at 86, 108 S. Ct. at 899-900). A post-answer default judgment is valid only if the defendant has received notice of the default judgment hearing. Id. (citing $429.30 In U.S. Currency v. State, 896 S.W.2d 363, 366 (Tex.App. 1995, no pet.)). Notice may be either actual or constructive. See Lopez, 757 S.W.2d at 723.
In Texas, a trial court may schedule contested cases on its own motion, provided it gives the party "reasonable notice of not less than 45 days" before the first scheduled trial setting. Tex. R. Civ. P. 245; Raines v. Gomez, 118 S.W.3d 875, 876 (Tex.App.2003, no pet.). When a case has been previously set for trial, the trial court may reset the case to a later date on reasonable notice to the parties, which may be less than 45 days. Tex. R. Civ. P. 245; O'Connell v. O'Connell, 843 S.W.2d 212, 215 (Tex.App.1992, no writ). To determine what constitutes reasonable notice for resetting a case to a later date, we must look to the facts of the individual case rather than be guided by an arbitrary time period. O'Connell, 843 S.W.2d at 215. The Texas Rules of Civil Procedure also require notice of the trial setting to be sent by personal service, courier-receipted delivery, certified or registered mail, fax, or by any other manner as the trial court in its discretion may direct. Tex. R. Civ. P. 21a; Raines, 118 S.W.3d at 876. A party is generally charged with notice of all orders that are rendered affecting the case. See Continental Casing Corp. v. Siderica Corp., 38 S.W.3d 782, 791 (Tex.App. 2001, no pet.) (counsel chargeable with notice of court order where copy of court order in court files had particular date stamped on it, court's docket sheet indicated that order was signed on that date, and notice of order and date it was entered was mailed to all counsel of record).
Here, the Cantus, through their attorney, received notice of the first trial setting more than 45 days prior to the date of trial. The Cantus and Salameh filed a joint motion to continue the case because the Cantus' attorney had a vacation schedule conflict at the time of the first trial setting. The docket sheet reflects that, on August 16, 2007, the trial court signed an order resetting the trial to the October 8, 2007 docket. The record also reflects that, on August 16, 2007, the district clerk of Harris County certified the copy of the court order and mailed a postcard notice to the parties that it had signed an order resetting the trial. The Cantus concede that they received the postcard notice. On October 9, 2007, the trial court called the Cantus' attorney to remind him of the trial resetting date. The trial court also e-mailed the Cantus' attorney to remind him of the trial resetting date.
The Cantus concede that they received reasonable notice of the first trial setting. The trial court reset the trial date to accommodate a vacation schedule conflict of the Cantus' attorney at the behest of the Cantus. The Cantus, through their attorney of record, received a postcard notice that the trial court had signed an order resetting the trial 54 days prior to trial. The Cantus did not contact the trial court to obtain the date of the trial reset. Nor did the Cantus review the record prior to trial to determine whether the trial court had set a trial date. The Cantus concede that, in addition, the trial court contacted their counsel by e-mail to inform them of the trial setting.
Because the Cantus received the postcard notice of the trial resetting and the record reflects that, on August 16, 2007, the trial court signed the court order and mailed notice of the court order to the parties, we conclude that the Cantus had notice of the trial court order resetting the trial date. Continental Casing, 38 S.W.3d at 791. Based on the record before us, we further conclude that the notice of the trial resetting was reasonable. Tex. R. Civ. P. 245; O'Connell, 843 S.W.2d at 215. We further conclude that the Cantus' failure to appear at trial was due to the Cantus' conscious indifference regarding the date of the trial reset. See Hunsucker, 238 S.W.3d at 430-31. Because the Cantus' failed to establish one prong of the Craddock test, we hold that the trial court did not abuse its discretion in denying the Cantus' motion for new trial. See Mathis, 166 S.W.3d at 744.
We overrule the Cantus' sole issue.
Conclusion
We affirm the judgment of the trial court.