Opinion
NUMBER 13-16-00576-CV
06-07-2018
HIDALGO COUNTY EMERGENCY SERVICE FOUNDATION AND ROSBEL SALINAS, Appellants, v. RACHEL MEJIA AND JUAN LUEVANO, Appellees.
On appeal from the 93rd District Court of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Contreras and Hinojosa
Memorandum Opinion by Chief Justice Valdez
This appeal follows the rendition of a default judgment entered against appellants Hidalgo County Emergency Service Foundation ("HCESF") and Rosbel Salinas and in favor of appellees Rachel Mejia and Juan Luevano. Appellants contend on appeal that the default judgment should be set aside and a new trial ordered under Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 125 (Tex. 1939). We reverse and remand.
I. BACKGROUND
A. Appellees file lawsuit and move for default judgment
Appellees sued HCESF and its driver, Salinas, after Salinas rear-ended appellees' vehicle while driving a HCESF vehicle in non-emergency circumstances. Appellee Mejia was a passenger in the car with her father, appellee Luevano, who was driving. Appellees subsequently moved for a default judgment after no answer to the lawsuit was filed. Following a default-judgment hearing, the trial judge rendered a judgment awarding damages to each appellee.
B. Appellants file motion for new trial following default judgment
After learning of the entry of the default judgment, appellants filed a motion for new trial. In their motion and supporting affidavits, appellants alleged facts regarding their failure to answer the lawsuit. Three witnesses testified via affidavit: (1) Jimmy Pittman, the Assistant Chief Administration Officer for HCESF, who explained what actions he took when he received the lawsuit; (2) Greg Klement, HCESF's insurance agent, who testified to what he did when HCESF forwarded the suit to him; and (3) Katherine Herrington, a claims manager for HCESF's insurer, Scottsdale Insurance Company (Scottsdale), who testified about her investigation into why no answer to the lawsuit was filed.
1. Pittman's affidavit
Pittman swore that all the facts in his affidavit were true and correct and within his personal knowledge. As Assistant Chief Administration Officer, Pittman was responsible for receiving lawsuits and forwarding them to the company's insurance agent. He received a copy of the lawsuit on June 6, 2016. That same day, Pittman forwarded the suit to Greg Klement with the expectation that Klement forward same to the appropriate person at Scottsdale. Pittman testified that, as far as he knew, Klement did so—as evidenced by a carbon copy email he received from Klement that forwarded the suit papers to an adjuster with Scottsdale, Barbara Paul. Pittman testified that any failure to answer the lawsuit was a mistake on HCESF's part, not the result of conscious indifference.
2. Klement's affidavit
Klement testified that Scottsdale informed him that the adjuster for the case would be Barbara Paul. Klement testified that he emailed the suit papers to Paul, expecting that Paul would take care of the matter by retaining appropriate counsel to answer the lawsuit on appellants's behalf. Klement further testified that he routinely forwards lawsuits filed against his clients to the appropriate insurance company and that he normally does not require confirmation from the insurance company that an answer has been filed. Klement also testified that, upon forwarding the suit, he assumed that Scottsdale had taken the appropriate steps to protect appellants's interests. Klement testified that, on August 17, 2016, he received a copy of the default judgment that appellees had taken against appellants.
Klement testified that he received suit papers only for Salinas, not HCESF itself. However, Klement testified that, had he received suit papers from HCESF, he would have forwarded the papers to Scottsdale just as he did for Salinas.
3. Herrington's affidavit
Herrington, a claims manager at Scottsdale, testified that, although Paul was the adjuster handling the case when appellees filed a pre-suit claim, she was no longer working at Scottsdale when Klement emailed the suit papers to Paul. Herrington further testified that a different adjuster was assigned to handle the case after Paul left. Herrington also testified that she checked Scottsdale's computer system for any emails that Klement sent to Paul, but found nothing. Although there was no trace of any emails, Herrington explained that Scottsdale's system generally retains emails only for a certain period and that she was not able to search the system before that period.
C. Opposition to motion for new trial
Appellees opposed the motion for new trial on two fronts. First, appellees objected to some of the assertions made by Pittman, Klement, and Herrington. The trial judge sustained appellees' objections, excluding some (but not all) of the evidence offered by appellants to support their motion for new trial.
Second, appellees opposed the motion for new trial by filing an affidavit from attorney Thomas Rayfield. Rayfield stated that he handled complex litigation, including first party insurance cases, for twenty-six years. He stated that, during law school, he interned for in-house counsel for Liberty Mutual Insurance Company where he "interacted with insurance adjusters and employees." He testified that this experience made him "familiar" with the insurance industry and the duties of its insurance agents and adjusters. He was not designated or accepted by the trial court as an expert witness on any subject. Rayfield addressed Klement's affidavit and summarized the actions Klement took in handling the lawsuit. Rayfield opined that Klement acted with conscious indifference, because a reasonably prudent insurance agent would have contacted the insurance company if he received no response to an email forwarding lawsuit papers. Rayfield also testified as to what he believed Herrington's responsibilities were, opining that it was her responsibility to make sure that her adjusters responded to emails and that the insurance company answered lawsuits. He further opined on the veracity of fact witnesses, stating: "It is not believable that the email simply disappeared from [Scottsdale's] server." According to Rayfield, insurance companies must have procedures to ensure that emails sent to email addresses of employees no longer with the company should be delivered to a proper supervisor, or that an undelivered email notice should be sent to the sender. He offered his opinion that the failure to do these things demonstrated conscious indifference.
The trial court denied appellants' motion for new trial, and this appeal followed.
II. DISCUSSION
Appellants contend that the trial court should have granted a new trial because appellants satisfied the requirements for a new trial under Craddock. See id.
A. Standard of Review and Applicable Law
We review a trial court's denial of a motion for new trial under Craddock for an abuse of discretion. Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex. 1984); Moya v. Lozano, 921 S.W.2d 296, 298 (Tex. App.—Corpus Christi 1996, no writ). Under Craddock, a default judgment should be set aside and a new trial ordered if: "(1) the defendant's failure to answer [the plaintiff's lawsuit] was not intentional, or the result of conscious indifference, but was due to mistake or accident; (2) the motion sets up a meritorious defense; and (3) the granting of the motion will not occasion delay or otherwise work an injury to the plaintiff." Padrino Mar., Inc. v. Rizo, 130 S.W.3d 243, 247 (Tex. App.—Corpus Christi 2004, no pet.) (citing Craddock). A defendant seeking a new trial under Craddock must prove all three elements. Id. (citing Freeman v. Pevehouse, 79 S.W.3d 637, 641 (Tex. App.—Waco 2002, no pet.)). It is an abuse of discretion to deny a motion for new trial when the defendant satisfies all three elements of the Craddock test. See Old Republic Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex. 1994) (per curiam).
B. Analysis
1. First Craddock Element: No Conscious Indifference
The critical question under Craddock's first element is: "Why did the defendant not appear?" Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex. 2012). To set aside a default judgment, the defendant must establish that its reason for not appearing was due to a mistake or accident and was not the result of conscious indifference. Levine v. Shackelford, Melton & McKinley, L.L.P., 248 S.W.3d 166, 168 (Tex. 2008). This is not a negligence standard but instead one of intentional or conscious indifference—i.e., that the defendant knew it was sued but did not care. Id. The defendant must provide some excuse, but not necessarily a good excuse, to show that its failure to answer was accidental. Rizo, 130 S.W.3d at 248 (citing Moya, 921 S.W.2d at 300). The inquiry into conscious indifference also extends to the defendant's agents; consequently, when a defendant relies on an agent to file an answer, the defendant must establish that its agent was not consciously indifferent to the lawsuit. See Estate of Pollack v. McMurrey, 858 S.W.2d 388, 391 (Tex. 1993); see also Carey Crutcher, Inc. v. Mid-Coast Diesel Servs., 725 S.W.2d 500, 502 (Tex. App.—Corpus Christi 1987, no writ).
In this case, the evidence presented to the trial court showed that the lawsuit went unanswered because a turnover in staff at Scottsdale precipitated a communication breakdown between HCESF's insurance agents—specifically, Klement emailed the lawsuit to Paul after Paul had already left Scottsdale, so the lawsuit was never received by the adjuster who inherited Paul's file. According to HCEDS's agents, the lawsuit went unanswered not because of any conscious indifference on their part but instead because the lawsuit was never sent to the correct person by accident. As appellants point out, Texas courts have held that mistakes like the one made here did not show conscious indifference. See Fid. & Guar. Ins. Co. v. Drewery Const. Co., Inc., 186 S.W.3d 571, 575 (Tex. 2006) (suit papers were misplaced, though no one knew precisely how); Old Republic Ins. Co., 873 S.W.2d at 382 (citation was inadvertently included among transferred files and was misplaced); Strackbein v. Prewitt, 671 S.W.2d 37, 39 (Tex. 1984) (secretary was told to mail documents, but did not do so because she thought defendant had mailed them); In re A.P.P., 74 S.W.3d 570, 575 (Tex. App.—Corpus Christi 2002, no pet.) (co-worker delivered citation to attorney, which then got misfiled); State Farm Life Ins. Co. v. Mosharaf, 794 S.W.2d 578, 581 (Tex. App.—Houston [1st Dist.] 1990, writ denied) (insurance company made an internal routing mistake and file was never received by correct person); Southland Paint Co. v. Thousand Oaks Racquet Club, 724 S.W.2d 809, 811 (Tex. App.—San Antonio 1986, writ ref'd n.r.e.) (answer filed late due to staff shortage at defendant's insurance broker's office); Evans v. Woodward, 669 S.W.2d 154, 155 (Tex. App.—Dallas 1984, no writ) (failure to file answer was due to confusion in attorney's office rather than indifference on the defendant's part); Drake v. McGalin, 626 S.W.2d 786, 788 (Tex. Civ. App.—Beaumont 1981, no writ) (answer prepared by secretary was lost by other personnel in defendant's attorney's office); Dallas Heating Co. v. Pardee, 561 S.W.2d 16, 19 (Tex. Civ. App.—Dallas 1977, writ ref'd n.r.e.) (suit papers inadvertently misplaced in the defendant's office); Leonard v. Leonard, 512 S.W.2d 771, 773 (Tex. Civ. App.—Corpus Christi 1974, writ dism'd w.o.j.) (attorney misplaced file); Cont'l Airlines, Inc. v. Carter, 499 S.W.2d 673, 674 (Tex. Civ. App.—El Paso 1973, no writ) (secretary inadvertently failed to note answer date on calendar and misplaced file); Republic Bankers Life Ins. Co. v. Dixon, 469 S.W.2d 646, 647 (Tex. Civ. App.—Tyler 1971, no writ) (attorney forgot to file answer); Reynolds v. Looney, 389 S.W.2d 100, 101 (Tex. Civ. App.—Eastland 1965, writ ref'd n.r.e.) (citation misplaced in insurance company's office); see also Dir. State Empls. Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 270 n.3 (Tex. 1994) (attorney missed trial because her predecessor misdated the trial setting on his calendar and conveyed the wrong date to her); Craddock, 133 S.W.2d at 126 (press of business resulting from storm was excuse for oversight of misrouted letter and citations); Cervantes v. Cervantes, No. 03-07-00381, 2009 WL 3682637, at *2, *6-8 (Tex. App.—Austin Nov. 5, 2009, no pet.) (mem. op.) (defendant delivered the original petition to the defendant's attorney's office where a paralegal failed to enter it into an internal docketing system); Norton v. Martinez, 935 S.W.2d 898, 902 (Tex. App.—San Antonio 1996, no writ) (claim was sent to the wrong office after insurance coverage was denied and the city attorney assumed the claim had been forwarded to outside counsel); Gen. Life & Accident Ins. Co. v. Higginbotham, 817 S.W.2d 830, 832 (Tex. App.—Fort Worth 1991, writ denied) (citation and petition discovered in claim file); Triad Contractors, Inc. v. Kelly, 809 S.W.2d 683, 684 (Tex. App.—Beaumont 1991, writ denied) (citation and petition lost in insurer's office). As these cases illustrate, Texas courts apply the first element of the Craddock test liberally. See Gotcher v. Barnett, 757 S.W.2d 398, 402 (Tex. App.—Houston [14th Dist.] 1988, no writ). We similarly hold that the actions of HCESF's agents do not rise to the level of conscious indifference. See Sutherland, 376 S.W.3d at 756.
Appellees maintain that appellants showed conscious indifference to the lawsuit because they failed to follow up with Scottsdale to check on the status of the answer. However, appellants' mistaken belief that Scottsdale had been notified of the lawsuit and was handling it does not constitute conscious indifference to the lawsuit. See In re R.R., 209 S.W.3d 112, 115 (Tex. 2006); Strackbein, 671 S.W.2d at 39; Ward v. Nava, 488 S.W.2d 736, 738 (Tex. 1972); In re A.P.P., 74 S.W.3d at 574 (holding that questions regarding why appellant did not follow up with her attorney to ensure that an answer had been filed were not relevant because they do not controvert the factual assertion that the notice was delivered to appellant's attorney's office and that it was inadvertently misplaced in appellant's old file); see also Drever Waterstone, L.P. v. Rhodes, No. 14-12-00130-CV, 2013 WL 776272, at *4 (Tex. App.—Houston [14th Dist.] Feb. 28, 2013, pet. denied) (mem. op.); Serranos at Symphony Square, Inc. v. Rutledge, No. 03-09-00351-CV, 2010 WL 1170248, at *3 (Tex. App.—Austin Mar. 26, 2010, no pet.) (mem. op.); Cervantes, 2009 WL 3682637, at *7 (concluding that "by delivering a copy of the petition to their attorney, appellants took sufficient action to negate conscious indifference on their part").
Appellees further argue that Herrington's assertion that Klement's email could not be found in Scottsdale's server supports a finding of conscious indifference. According to Rayfield, appellees' proffered expert, the email had to be "somewhere" in Scottsdale's server if it was emailed to Paul. However, the fact that Herrington could not find the email on Scottsdale's server does not establish conscious indifference. "People often do not know where or how they lost something—that is precisely why it remains 'lost.'" Drewery Constr. Co., 186 S.W.3d at 575. For this reason, the Texas Supreme Court has set aside default judgments when papers were misplaced, though no one knew precisely how. See id. (citing Scott, 873 S.W.2d at 382 (reversing default when investigator averred that she believed suit papers were inadvertently included among files transferred to another adjustment company), McMurrey, 858 S.W.2d at 391 (reversing default when unidentified person signed for papers and never delivered them to executrix), Hanks v. Rosser, 378 S.W.2d 31, 32, 36 (Tex. 1964) (reversing default when druggist testified he placed suit papers "on his prescription counter," that he "just lost them" and "never did find them")). To negate conscious indifference, it suffices that Herrington provided "some explanation of the efforts [she] made to find" Klement's email. See id.; see also Mem'l Hosp. Sys. v. Fisher Ins. Agency, Inc., 835 S.W.2d 645, 652 (Tex. App.—Houston [14th Dist.] 1992, no writ), disapproved on other grounds by Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777 (Tex. 2005).
Finally, appellees contend that Rayfield's affidavit controverted appellants' evidence and showed that Scottsdale was consciously indifferent to the lawsuit. Specifically, appellees point to Rayfield's opinion that Herrington, Paul's supervisor, displayed conscious indifference by failing to ensure that emails addressed to Paul would be rerouted to Paul's replacement after Paul left Scottsdale. We agree that Herrington should have taken such action to prevent the breakdown in communication that occurred in this case. However, as previously mentioned, the Craddock standard is one of intentional or conscious indifference—not mere negligence. See Levine, 248 S.W.3d at 168. Herrington's failure to take such action, while perhaps negligent, did not demonstrate conscious indifference. It did not demonstrate that Herrington failed to inform Paul's replacement about the lawsuit knowing that the lawsuit had been emailed to Paul. See id. Furthermore, there is no evidence that Scottsdale had repeatedly failed to answer lawsuits on previous occasions because of a breakdown in communication precipitated by a turnover in staff.
Appellees finally assert that there was no evidence in play to negate conscious indifference because the trial court excluded most of the affidavit testimony from Pittman, Klement, and Herrington by sustaining their objections. However, the record shows that the trial court did not exclude other affidavit testimony from these witnesses, which conveyed the facts necessary to negate conscious indifference, including: (1) that Klement emailed the lawsuit to Paul; (2) that Klement received no indication that the email failed to reach Paul; and (3) that Paul left Scottsdale before Klement sent the lawsuit to Paul. Because unchallenged evidence was before the trial court that negated conscious indifference, we need not address the propriety of the trial court's evidentiary rulings. See TEX. R. APP. P. 47.1. We conclude that appellants have satisfied the first element of Craddock, and we proceed to consider whether appellants satisfied the remaining elements.
Accordingly, we need not address appellants' issue complaining about the trial court's evidentiary rulings.
2. Second Craddock Element: Meritorious Defense
To satisfy the second element of Craddock, "the defaulting party must set up a meritorious defense by alleging facts, supported by an affidavit or other evidence, which in law would constitute a defense to the cause of action pled by the plaintiff." In re A.P.P., 74 S.W.3d at 574. A meritorious defense is one that, if proven, would cause a different result on the retrial of the case. See id. "Once such requirements are met, controverting evidence offered by the nonmovant should not be considered." Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 928 (Tex. 2009). A party is not required to prove the "truth of a meritorious defense before the party is entitled to a new trial." In re A.P.P., 74 S.W.3d at 574.
Here, appellants presented Pittman's affidavit to set out their meritorious defense. As the Assistant Chief Administration Officer, Pittman was responsible for the day-to-day operation of HCESF. After investigating the vehicle accident, Pittman made the following findings:
This is an accident with a three car collision and our investigation suggested that the accident was the result of a sudden-stop by a party not involved in this litigation which created a sudden emergency. That sudden emergency made this accident unavoidable.
The defense of sudden emergency has three elements: "(1) an emergency situation arose suddenly and unexpectedly; (2) the emergency situation was not proximately caused by the negligent act or omission of the person whose conduct is under inquiry; and (3) after the emergency situation arose, the person acted as a person of ordinary prudence would have under the same or similar circumstances." Jordan v. Sava, Inc., 222 S.W.3d 840, 847 (Tex. App.—Houston [1st Dist.] 2007, no pet.). Pittman's description of the accident investigation is sufficient to raise a fact issue to set up the defense of sudden emergency. Additionally, as appellants point out, several courts—including the Texas Supreme Court—have found that affiants set out meritorious defenses in automobile accident cases by asserting facts like Pittman's findings quoted above. See Evans, 889 S.W.2d at 270; Sw. Warren, Inc. v. Crawford, 464 S.W.3d 822, 830 (Tex. App.—Houston [1st Dist.] 2015, no pet.); Lara v. Rosales, 159 S.W.3d 121, 124 (Tex. App.—Corpus Christi 2004, pet. denied); see also Russell v. Carley, No. 08-01-00024-CV, 2002 WL 125609, at *3 (Tex. App.—El Paso 2002, no pet.) (mem. op., not designated for publication); Neal v. Spears, No. 12-01-00188-CV, 2002 WL 452372, at *2 (Tex. App.—Tyler 2002, pet. denied) (mem. op., not designated for publication). The testimony proffered by Pittman is no less effective in setting up a meritorious defense than that presented by the defendants in these cases.
Appellees argue that Pittman's affidavit is merely conclusory and does not set forth specific facts to establish the defense of sudden emergency. However, Pittman averred that the accident involved a three-car collision and was the result of a sudden stop caused by a party not involved in the litigation that could not be avoided. We hold that Pittman's affidavit is not conclusory and that the trial court erred in ruling otherwise. See Mosharaf, 794 S.W.2d at 585 (rejecting appellee's argument that the affidavit of appellant's claims adjuster was conclusory regarding the defense of sole cause in a negligence action, stating: "[the claims adjuster] investigated the fire at the Northwood complex, and concluded that it was started by [a third party] . . . . Appellant alleged and presented a prima facie defense that the conduct of a third party was the sole cause of the accident.").
Appellees further argue that the trial court could have rejected the result of Pittman's investigation because it relied upon hearsay and because appellees offered contradictory affidavits concerning how the accident occurred. However, to satisfy Craddock's second element, appellants were not required to prove the truth of their meritorious defense, see In re A.P.P., 74 S.W.3d at 574, nor were they required to rebut controverting evidence offered by the non-movant appellees, see McMurrey, 858 S.W.2d at 392 (citing Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966)).
We conclude that appellants successfully set up a meritorious defense to appellees's lawsuit, satisfying Craddock's second element. We now consider whether appellants satisfied Craddock's third and final element.
3. Third Craddock Element: No Delay or Injury to Plaintiff
The third element of Craddock is satisfied if a defendant can show that granting a new trial will "occasion no delay or otherwise work an injury to the plaintiff." Evans, 889 S.W.2d at 270. "Once a defendant has alleged that granting a new trial will not injure the plaintiff, the burden of going forward with proof of injury shifts to the plaintiff." Id. The purpose of the third element of Craddock is to "protect the plaintiff against the sort of undue delay or injury that would disadvantage her in presenting the merits of her case at a new trial, such as a loss of witnesses or other valuable evidence." Id.
Here, appellants stated in their motion for new trial that they were "ready, able and willing to go to trial immediately," and stated that they were willing to reimburse appellees for reasonable expenses incurred in obtaining the default judgment. By alleging that the granting of a new trial would cause no injury to appellees, and by unequivocally representing that they were willing to go to trial immediately and to reimburse appellees for any costs incurred in obtaining the default judgment, appellants shifted the burden to appellees to present the trial court with evidence that a new trial would cause them delay or injury. Id. Appellees presented nothing to the trial court to show they would suffer any injury, such as lost witnesses or lost evidence that would harm the presentation of their case. See id.
Despite offering nothing to the trial court to show they would suffer any injury, appellees argue on appeal that appellants' counsel wavered on his readiness for trial during the hearing on the motion for new trial, which prevented appellants from satisfying Craddock's third element. Specifically, appellees point to a statement made by counsel in passing that "[appellants would] be ready, once we conduct a short amount of discovery, to go to trial[.]" (emphasis added). Appellees assert that counsel's reference to discovery amounted to a judicial admission that appellants were not "immediately" ready to go to trial. However, appellees provide no authority from the Texas Supreme Court that Craddock's third element is satisfied only if the defendant states that he or she is immediately ready for trial with no second to spare. Instead, the Texas Supreme Court has stated simply that courts look more favorably upon defendants who are ready to go to trial "almost immediately." See Angelo v. Champion Rest. Equip. Co., 713 S.W.2d 96, 98 (Tex. 1986); see Jackson v. Mares, 802 S.W.2d 48, 52 (Tex. App.—Corpus Christi 1990, writ denied) (citing Angelo and stating: "the defendant should be ready . . . to go to trial almost immediately"). Furthermore, the Texas Supreme Court has observed that, although a defendant's readiness for trial is an important factor in evaluating Craddock's third element, courts should deal with the facts on a case-by-case basis to do equity, and the defendant's readiness for trial should not be the "sine qua non of granting the motion [for new trial]." Angelo, 713 S.W.2d at 98.
Nevertheless, appellees cite O'Connell v. O'Connell, 843 S.W.2d 212 (Tex. App.—Texarkana 1992, no writ) to support their position that counsel needed to be immediately ready for trial to satisfy Craddock's third element. In O'Connell, counsel for the defaulting defendant asked the trial court to set the case for a new trial "at any time after the expiration of [thirty] days." Id. at 220. The Texarkana court of appeals held that defendant failed to satisfy Craddock's third element because counsel was not immediately ready for trial but instead requested at least thirty days to prepare for trial. Id.
O'Connell is factually distinguishable. O'Connell is a post-answer default judgment case. This distinction is significant because the defaulting defendant in O'Connell initially filed an answer and was afforded almost an entire year to conduct discovery before the default judgment was taken. See id. Nonetheless, the defendant failed to appear for trial at the scheduled trial date and still requested at least thirty days to prepare for a new trial should the trial court grant one. Therefore, it is quite understandable why the Texarkana court concluded that counsel's lack of immediate readiness for trial was fatal to Craddock's third element, which is designed to protect the plaintiff against undue trial delay. See id.
In contrast to the procedural facts in O'Connell, this case involves a no-answer default judgment taken a mere forty-six days after service of the lawsuit upon appellants. Understandably, appellants' counsel requested a "short amount of discovery" because, unlike O'Connell, there had been no opportunity to conduct discovery prior to entry of the default judgment. Given the timing of the default judgment in this case, we cannot conclude, as did the Texarkana court in O'Connell, that counsel's lack of immediate readiness for trial was fatal to Craddock's third element—particularly when appellees advanced no argument to the trial court that permitting a short amount of discovery would unduly delay the trial or otherwise do harm to the presentation of their case. See Evans, 889 S.W.2d at 270.
O'Connell is factually distinguishable for yet another reason. In O'Connell, the Texarkana court correctly held that the defendant failed to satisfy Craddock's third element because the defendant did not offer to pay the plaintiff's default judgment expenses. Id.; Jackson, 802 S.W.2d at 52 (observing that courts of appeals have held that it is often necessary for the defendant to offer to reimburse the plaintiff for the costs involved in obtaining the default judgment when seeking to satisfy Craddock's third element). Here, appellees do not dispute that appellants will reimburse them for default judgment expenses. Therefore, we are not persuaded by appellees' reliance on O'Connell.
We conclude that appellants satisfied the third element of Craddock.
4. Summary
Because appellants have satisfied all three elements of the Craddock test, we find the trial court abused its discretion in overruling appellant's motion for new trial and in failing to set aside the default judgment. Our holding comports with the policy recently reiterated by the Texas Supreme Court in Sutherland that "an adjudication on the merits is preferred in Texas." Sutherland, 376 S.W.3d at 756. We sustain appellants' first issue.
By sustaining appellants' issue under Craddock, we need not address any other issue, except for the trial court's evidentiary ruling regarding the sudden emergency defense discussed in Part II(B)(2) of this opinion.
III. CONCLUSION
We reverse the trial court's judgment and remand this case for a trial on the merits.
/s/ Rogelio Valdez
ROGELIO VALDEZ
Chief Justice Delivered and filed the 7th day of June, 2018.