Opinion
No. 05-05-00374-CV
Opinion Filed April 7, 2006.
On Appeal from the 68th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 04-11185-C.
Affirmed.
Before Justices RICHTER, LANG, and MAZZANT.
MEMORANDUM OPINION
This is an appeal from a no-answer default judgment rendered in a lawsuit filed by appellees, Shackelford, Melton McKinley, L.L.P.; Bragg Chumlea McQuality; and Joseph G. Chumlea, P.C (collectively, "the law firms"), to collect legal fees and a contingent fee interest allegedly owed to them by appellants, Sol and Dorothea Levine and Mardan Energy Corporation (collectively, "the Levines"). The Levines raise six issues on appeal: (1) the trial court erred in granting a default judgment in favor of the law firms because an answer was on file when the final judgment was signed; (2) the Levines are entitled to a new trial because no hearing was held on the motion for default judgment and the motion was not served on them; (3) the trial court abused its discretion in denying the Levines a new trial because they satisfied the Craddock requirements; (4) the law firms presented no evidence that their attorney's fees were reasonable and necessary; (5) the trial court lacked jurisdiction to award the law firms a contingent fee because the claim was not ripe; and (6) the final judgment grants more relief than was pleaded by the law firms. We affirm the judgment of the trial court.
BACKGROUND
The law firms filed their lawsuit on November 3, 2004, asserting causes of action against the Levines for suit on a sworn account, for breach of contract, and for a debt. The petition alleged that the Levines breached their obligations under a written fee agreement with the law firms in connection with litigation pending in Madison County, Texas. Prior to filing the lawsuit, the trial court allowed the law firms to withdraw from the Madison County litigation, with the consent of the Levines. Shackelford, Melton, McKinley ("SMM") sought $123,081.32 and the other two firms collectively sought $34,777.05 in unpaid legal fees dating back to the summer of 2004.
The record indicates that this litigation was still pending at the time that this appeal was filed.
The record indicates that the Levines' answer was due on November 29, 2004. On November 23, 2004, the Levines' attorney contacted an attorney for SMM, acknowledging the November 29th deadline and requesting a standstill agreement. The next day the SMM attorney advised him to file the answer because no agreement for standstill was possible. The Levines' attorney agreed to file an answer by the deadline. When the answer was not filed as promised, on December 6, 2004, another SMM attorney left a voice mail message advising that the law firms would take a default if no answer was filed. The next day, the Levines' attorney advised that an answer would be filed on December 8, 2004; however, on that day, the Levines' attorney sent by e-mail a draft of the proposed answer with an assurance that he would send the answer to the court "by the end of the week," if there were no changes. The record reflects that no changes were made to the draft.
On December 17, 2004, with no answer from the Levines on file with the court, the law firms filed their motion for default judgment, along with a Soldiers and Sailors Relief Act affidavit and a certificate of last known address. On that same date, the trial court entered the default judgment against the Levines without a hearing.
On January 31, 2005, the trial court held a hearing on the Levines' first amended motion to vacate and set aside default judgment and for new trial. The Levines attached as an exhibit to this motion a copy of the answer to the law firms' petition that their attorney claimed to have placed in the outgoing mail bin in his office on December 13, 2004. After hearing argument, the trial court denied the motion. On February 24, 2005, the Levines filed Defendants' Supplement to Previous Motions to Vacate and Set Aside Default Judgment and for New Trial, and Alternatively, Motion to Dismiss Plaintiffs' Contingent Fee Claim. Additionally, they filed an amended answer to the original petition, as well as a motion for leave to file the amended answer. The supplemental motion was heard by the trial court on March 1, 2005, and denied on March 2, 2005. Leave to file the amended answer was never granted by the court.
On March 2, 2005, the Levines and the law firms entered into a Rule 11 agreement, which was filed with the court. The agreement authorized the court to correct a "clerical error" in the December 17th default judgment by interlineating the word "net" in the provisions concerning the contingent fee recovery. The court made the requested correction the day before it lost plenary power.
On April 4, 2005, the Levines filed Defendants' Motions to Vacate and Set Aside Modified Default Judgment and for New Trial, and Alternatively, Motion to Dismiss Plaintiffs' Contingent Fee Claim. The Levines contended that, by modifying the default judgment on March 2nd, the trial court's plenary power to grant them a new trial had been extended. There is nothing in the record to indicate that the trial court addressed this motion. The Levines subsequently filed this appeal.
ISSUE ONE: PROPRIETY OF THE DEFAULT JUDGMENT
In their first issue, the Levines argue that the trial court erred in granting a default judgment in favor of the law firms because an answer was on file when the final judgment was signed. See Tex. R. Civ. P. 239; Ferguson v. Naylor, 860 S.W.2d 123, 128-29 (Tex.App.-Amarillo 1993, writ denied) (no-answer default judgment cannot be taken when an answer is on file). Specifically, the Levines contend that the trial court created a new final judgment on March 2, 2005 when it made the interlineations. According to the Levines, they had two answers on file with the trial court at that time: (1) their original answer, which was filed January 14, 2005, as Exhibit D to their first amended motion to vacate and set aside default judgment and for new trial, and (2) their amended answer, which was filed on February 24, 2005.
We must first determine if the Levines are correct regarding the date of the final judgment for purposes of default. An appeal can be prosecuted only from a final appealable judgment (with certain statutory exceptions that are not relevant here). See Tex. Civ. Prac. Rem. Code Ann. § 51.012 (Vernon 1997), § 51.014 (Vernon Supp. 2005). As a general rule, any change to a judgment made by a trial court while it retains plenary jurisdiction will restart the appellate timetable. Lane Bank Equip. Co. v. Smith S. Equip., Inc., 10 S.W.3d 308, 313 (Tex. 2000). However, in the case before us, there was also an enforceable Rule 11 agreement signed by the Levines' attorney on their behalf. See Tex. R. Civ. P. 11 (to be enforceable, any agreement touching on a pending suit must be in writing, signed and entered into the court's record). This "contract" specifically provided that "[a]ll deadlines for appeal in this case relating to the date of judgment shall relate to the date of the Default Judgment, namely December 17, 2004." See In re T.M., 33 S.W.3d 341, 347 (Tex.App.-Amarillo 2000, no pet.) (a Rule 11 agreement is nothing more than a contract that satisfies the terms of Rule 11 of the Texas Rules of Civil Procedure).
We also note the provision of Texas Lawyer's Creed: "My word is my bond." See Texas Lawyer's Creed-A Mandate For Professionalism § 1 (adopted November 7, 1989).
By signing the Rule 11 agreement, the Levines' attorney bound them to its terms. Nevertheless, the Levines argue that the interlineation of the default judgment created a new judgment on March 2, 2005 for the purpose of determining default. We conclude that this is not consistent with the Rule 11 agreement's provision that December 17, 2004 be used to determine appellate deadlines.
Because only one final judgment may be rendered in a lawsuit, there cannot be two final default judgments here-one for determining the appellate deadlines and another to determine default. Tex. R. Civ. P. 301; Logan v. Mullis, 686 S.W.2d 605, 609 (Tex. 1985); Ferguson, 860 S.W.2d at 127. Pursuant to the Rule 11 agreement, December 17, 2004 must therefore be considered the date of the final default judgment for all purposes in this case. The trial court did not err in granting the no-answer default judgment. Accordingly, we overrule the Levines' first issue.
ISSUE TWO: NECESSITY OF HEARING AND NOTICE
In their second issue, the Levines argue that they are entitled to a new trial because (a) no hearing was held on the motion for default judgment and (b) the motion was not served on them. We disagree because neither was required in this case.
Hearing
Here, the trial court found that the law firms' claim on the sworn account was liquidated pursuant to Rule 185 of the Texas Rules of Civil Procedure. See Tex. R. Civ. P. 185. A claim is liquidated under Rule 185 if the amount of damages can be accurately calculated by the trial court from the factual allegations, as opposed to the conclusory allegations, in the plaintiff's petition and from the instrument in writing evidencing the account. Pine Trail Shores Owners' Ass'n, Inc. v. Aiken, 160 S.W.3d 139, 144 (Texas App.-Tyler 2003, no pet.). If the trial court was correct in its assessment, then it did not need to hear evidence as to damages. See Tex. R. Civ. P. 241 (the trial court can assess the damages for a liquidated claim that is proved by an instrument in writing); Rizk v. Financial Guardian Ins. Agency, 584 S.W.2d 860, 862 (Tex. 1979) (in the absence of a sworn denial meeting the requirements of Rule 185, the account is received as prima facie evidence against the defendant). The Levines, however, contend that the law firms did not present the written fee agreement as the instrument in writing to the trial court in support of the account and that, as a result, a hearing was required.
Rule 185 sets forth the criteria for a suit on account and defines an open account to include any claim for personal services rendered. Nguyen v. Short, How, Frels Heitz, P.C., 108 S.W.3d 558, 562 (Tex.App.-Dallas 2003, pet. denied). Under this rule, a plaintiff's petition on sworn account must contain a systematic, itemized statement of the services rendered, reveal offsets made to the account, and be supported by an affidavit stating that the claim is within the affiant's knowledge and that it is "just and true." Id. If there is a deficiency in the plaintiff's sworn account, the account will not constitute prima facie evidence of the debt. Id.
On the day of the default judgment, the trial court had before it the following:
(1) An original verified petition on sworn account alleging that the law firm performed services by representing the Levines in the Madison County litigation pursuant to a written fee agreement; that services were performed at the Levines' request and in the regular course of business; that the basis for charging legal fees was an hourly rate of $350 plus expenses, plus a contingent bonus of ten percent of any net recovery in the litigation; that the law firms maintained a systematic record of all charges, credits, payments and offset; that the law firms made demand of the Levines in writing, orally, and by means of e-mail; and that after all just and lawful offsets, payments, and credits have been allowed, there remained past due and owing the sum of at least $123,081.32 to Shackleford, Melton McKinley plus the sum of $34,777.05 collectively to the other two firms, plus interest on the account balances at the rate of 18% per annum, per the fee agreement;
(2) Verifications of sworn account by affidavit signed by representatives of the law firms; and
(3) A delinquent account summary of the outstanding invoices by date, detailing the amounts paid and applicable credits to the appropriate law firm.
Although the law firms did not attach the written fee agreement to the petition, our review of the record indicates that the trial court could have accurately calculated the amount of damages from the factual allegations in the petition and from the attached written summary evidencing the account. The trial court was correct in its assessment that the law firms' claim was liquidated under Rule 185. And, the trial court did not have before it a sworn denial from the Levines. No hearing was necessary because the account presented to the trial court was prima facie evidence of the claim being asserted against the defendant.
Notice
The Levines also complain that they were not served with the motion for default judgment. However, there is no obligation for notice or service of a motion for default in a no-answer default case if citation and petition were served on the defendant. Continental Carbon Co. v. Sea-Land Service, Inc., 27 S.W.3d 184, 188-89 (Tex.App.-Dallas 2000, pet. denied). The Levines did not complain that they were not served with the citation and petition. Notice to the Levines was not required prior to the law firms taking a default judgment against them.
Conclusion
The Levines are not entitled to a new trial based on the lack of hearing or notice because neither was required in this case. Accordingly, we overrule the Levines' second issue.
ISSUE THREE: SATISFACTION OF THE CRADDOCK TEST
In their third issue, the Levines contend that the trial court abused its discretion in denying them a new trial because they satisfied the requirements of the Craddock test. See Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939). We disagree.
An appellate court reviews a trial court's ruling on a motion for new trial for an abuse of discretion. Director, State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994); Lowe v. Townview Watersong, L.L.C., 155 S.W.3d 445, 447 (Tex.App.-Dallas 2004, no pet.). A trial court abuses its discretion by not granting a new trial when all three elements of the Craddock test are met. Director, 889 S.W.2d at 268; Craddock, 133 S.W.2d at 126. Under the Craddock test, a trial court should set aside a default judgment and order a new trial in any case in which: (1) the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; (2) provided the motion for a new trial sets up a meritorious defense; and (3) is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff. Director, 889 S.W.2d at 268; Craddock, 133 S.W.2d at 126. The defaulting defendant has the burden of proving that all three elements of the Craddock test are met before a trial court is required to grant a motion for new trial. Scenic Mountain Medical Center v. Castillo, 162 S.W.3d 587, 590 (Tex.App.-El Paso 2005, no pet.); Padrino Maritime, Inc. v. Rizo, 130 S.W.3d 243, 247 (Tex.App.-Corpus Christi 2004, no pet.).The first prong: Intent or conscious indifference
In determining whether the failure to answer was due to intentional conduct or conscious indifference, we must look to the knowledge and acts of the defendant as shown by all the evidence contained in the record before the court. Director, 889 S.W.2d at 269; Strackbein v. Prewitt, 671 S.W.2d 37, 38-39 (Tex. 1984). "Conscious indifference" can be defined as the failure to take some action that would seem indicated to a person of reasonable sensibilities under the same or similar circumstances. Young v. Kirsch, 814 S.W.2d 77, 81 (Tex.App.-San Antonio 1991, no writ). If the factual assertions in the defendant's affidavits are not controverted by the plaintiff, the defendant satisfies his burden if his affidavit sets forth facts that, if true, negate intentional or consciously indifferent conduct by the defendant. Strackbein, 671 S.W.2d at 38-39. However, conclusory allegations are insufficient. Holt Atherton Industries, Inc. v. Heine, 835 S.W.2d 80, 82 (Tex. 1992); Folsom Investments, Inc. v. Troutz, 632 S.W.2d 872, 875 (Tex.App.-Ft. Worth 1982, writ ref'd n.r.e.). To determine if the defendant's factual assertions are controverted, the court looks to all the evidence in the record. Director, 889 S.W.2d at 269. When the non-movant presents evidence at the hearing for new trial tending to show intentional or consciously indifferent conduct, it becomes a question for the trial court to determine. Young, 814 S.W.2d at 80-81; Jackson v. Mares, 802 S.W.2d 48, 50 (Tex.App.-Corpus Christi 1990, writ denied).
The Supreme Court of Texas has held that the trier of fact may draw inferences from evidence presented, but only reasonable and logical ones. Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 392 (Tex. 1997). An ultimate fact may be established by circumstantial evidence when the fact may be fairly and reasonably inferred from other facts in the case. Blount v. Bordens, Inc., 910 S.W.2d 931, 933 (Tex. 1995). But an ultimate fact may not be inferred by the trier of fact if the evidence is only "meager circumstantial evidence" that could give rise to any number of inferences, none more probable than another. Hammerly Oaks, 958 S.W.2d 387, 392 (quoting Litton Indus. Prods. v. Gammage, 668 S.W.2d 319, 324 (Tex. 1984)).
1. The first denial of new trial
The trial court denied two motions for new trial after conducting a hearing on each. The first hearing was held on the first amended motion to vacate and set aside default and for new trial. The affidavit of the Levines' attorney and its exhibits reflect that (1) the attorney was aware of the November 29, 2004 deadline for the Levines' answer, (2) he had agreed to file a general denial "for the present answer date," reserving his right to amend at a later date, and (3) on Wednesday, December 8, 2004, about a week after the deadline, he e-mailed a draft of the proposed answer to the law firms with an assurance that he would send the answer to the court for filing "by the end of week," assuming there were no changes to be made. At the hearing, the attorney informed the trial court that no changes had been made to the draft.
In his affidavit, the Levines' attorney advanced one reason for his failure to file the answer before the default was granted-that the answer was apparently lost in the mail. The attorney first contended that he "placed the Answer in the U.S. mail along with a transmittal letter requesting filing" with the court on Monday, December 13, 2004. He subsequently qualified that statement to say that he had left the envelope containing the answer and transmittal letter to the clerk in the "outgoing mail bin" in his office. The attached copy of the transmittal letter to the clerk shows that the attorney requested a file-marked copy returned to him in the "enclosed, stamped, addressed envelope." His affidavit also states that he did not know until December 23, 2004 when his client informed him of the default judgment, that the clerk had not received the answer for filing. Only at that point did he contact the clerk regarding receipt of the answer.
The attorney further stated in his affidavit that he never received "any inquiry from any of the Plaintiffs or any of their representatives, about the Answer not being filed." At the hearing, the law firms specifically disputed that statement: "That is just blatantly untrue. We had many discussions, e-mails and lots of contact . . ." The trial court also heard from the law firms that a voice mail message had been left for the attorney on December 6, 2004, informing him that if he did not file an answer, the law firms would take a default. And, although each law firm should have been served with the answer, none received a copy other than the draft that had been e-mailed on December 8, 2004.
The trial court had before it evidence of more than just a possible lost mailing. Instead, the evidence showed a pattern of conduct that disregarded deadlines, promises, procedures, and simple steps that a person of reasonable sensibilities would have taken to ensure that the answer was properly and timely filed. The Levines did not satisfy the first prong of the Craddock test.
2. The second denial of new trial
Defendants' Supplement to Previous Motions to Vacate and Set Aside Default Judgment and for New Trial, and Alternatively, Motion to Dismiss Plaintiffs' Contingent Fee Claim, although raising some new issues, merely repeated the original arguments under the Craddock test. The trial court had the same basic evidence before it at the hearing on this motion as it had during the prior hearing. For the same reasons cited above, we conclude that the Levines did not satisfy the first prong of the Craddock test.
Conclusion
The trial court did not abuse its discretion in denying the Levines' motions because it could have concluded, based on the evidence before it at each hearing, conscious indifference on the part of the Levines' attorney . Because we conclude that the Levines did not prove that they met all three prongs of the Craddock test, we overrule their third issue.
ISSUE FOUR: EVIDENCE OF ATTORNEYS' FEES
In their fourth issue, the Levines claim that the law firms presented no evidence that the attorneys' fees claimed pursuant to the fee agreement were "reasonable and necessary." Specifically, they contend that the law firms' claim for the attorneys' fees was not supported by a written instrument, was unliquidated, and required presentation of evidence to the trial court at a hearing. The law firms argue that there was no need for evidence of "reasonable and necessary" because the Levines defaulted. We agree with the law firms.
The Levines do not complain of the attorneys' fees claimed for prosecuting the underlying case.
A no-answer default judgment operates as an admission of material facts alleged in the plaintiff's petition except for unliquidated damages. Novosad v. Cunningham, 38 S.W.3d 767, 773 (Tex.App.-Houston [14th Dist.] 2001, no pet.). "Unliquidated damages" are damages that cannot be accurately calculated from the factual allegations in the petition or from the attached instruments. Atwood v. B R Sup. Equip. Co., 52 S.W.3d 265, 268 (Tex.App.-Corpus Christi 2001, no pet.). As we discussed above, the law firms' claims were liquidated and proved by an instrument in writing. See Tex. R. Civ. P. 241.
The essential elements to prove a sworn account are: (1) there was a sale and delivery of merchandise or performance of services; (2) the amount of the account was just, that is, the prices were either charged in accordance with an agreement or in accordance with the usual, customary, and reasonable prices for that merchandise or service; and (3) the amount is unpaid. Adams v. H H Meat Prods. Inc., 41 S.W.3d 762, 773 (Tex.App.-Corpus Christi 2001, no pet.). Here, regarding the "justness" element of their sworn account claim, the law firms pleaded that the fees were earned under a written contract and specifically detailed the contracted rates and amounts due and owing. The Levines admitted these facts by their default. This admission therefore obviated the need for further evidence.
Accordingly, we overrule the Levines' fourth issue.
ISSUE FIVE: JURISDICTION
In their fifth issue, the Levines contend that the trial court erred when it failed to dismiss the law firms' claim for a contingent fee in the Madison County litigation for want of jurisdiction. We disagree.
In Defendants' Supplement to Previous Motions to Vacate and Set Aside Default Judgment and for New Trial, and Alternatively, Motion to Dismiss Plaintiffs' Contingent Fee Claim, the Levines argued that the trial court did not have subject matter jurisdiction over the contingent fee because the issue was not ripe. The ripeness doctrine involves a determination of whether a dispute has matured to a point that warrants judicial intervention, and its central concern is whether the case involves uncertain or contingent future events that may not occur as anticipated or may not occur at all. Perry v. Del Rio, 66 S.W.3d 239, 249 (Tex. 2001). If a plaintiff's injury is not concrete and depends upon contingent or hypothetical facts, the trial court does not have jurisdiction to hear the dispute. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851-52 (Tex. 2000).
However, a trial court does have subject matter jurisdiction over a dispute concerning compensation to a law firm when a contingent fee contract is prematurely terminated. Mandell Wright v. Thomas, 441 S.W.2d 841, 847 (Tex. 1969); Law Offices of Wendall Turley, P.C. v. French, 140 S.W.3d 407, 413 (Tex.App.-Fort Worth 2004, no pet.). We have carefully reviewed the record before us and conclude that the trial court did not err in refusing to dismiss the contingent fee claim for want of jurisdiction. Because the law firms' original petition alleged that the Levines, through their breach of the fee contract with its provision for a contingent fee, caused the premature termination the contract, the trial court correctly determined that it had jurisdiction over the claim. See Texas Dept. of Parks and Wildlife v. Miranda, 133 S.W.3d 217, 226, 228 (Tex. 2004) (whether a pleading alleges facts that affirmatively demonstrate a trial court's subject matter jurisdiction is a question of law that we review de novo).
Accordingly, we overrule the Levines' fifth issue.
ISSUE SIX: RELIEF PLEADED AND AWARDED
In their final issue, the Levines argue that the final judgment does not conform with the law firms' pleadings. See Tex. R. Civ. P. 301. We conclude that this issue is inadequately briefed.
In the original petition, the law firms described the basis of the legal fees as: "an hourly rate of $350.00 plus expenses, plus a contingent bonus of ten percent (10%) of any net recovery in the litigation by settlement, judgment, or otherwise." With respect to the contingent fee, the law firms specifically requested "a ten percent (10%) interest in any net recovery" in the Madison County litigation. The final default judgment with the interlineations pursuant to the Rule 11 agreement provide: "an assignment to Shackleford, Melton McKinley, LLP of Five Percent (5%) of any and all net recovery in any and property and monies recovered" in the Madison County litigation and "an assignment to Bragg Chumlea McQuality and Joseph G. Chumlea, P.C., of Two and One-Half Percent (2.5%) of any and all net recovery in any and all property and monies recovered" in the Madison County litigation.
In Defendants' Supplement to Previous Motions to Vacate and Set Aside Default Judgment and for New Trial, and Alternatively, Motion to Dismiss Plaintiffs' Contingent Fee Claim, the Levines argued that the law firms pleaded a "contingent bonus" of ten percent of the net recovery without pleading on what the bonus was contingent and that the default judgment converted the contingent bonus into an assignment without any legal basis. They also complained of the omission of the word "net" in the default judgment. This last complaint was remedied pursuant to the Rule 11 agreement, with the trial court's interlineations.
On appeal, the Levines again argue that the trial court's judgment converted the contingent fee bonus pleaded by the law firms into an assignment of the Levines' recovery in the Madison County litigation. According to the Levines, the judgment exceeded the relief pleaded and was invalid. However, the Levines provide no substantive legal arguments, analysis, or cites to authorities to support their assertion of error. See Tex.R.App.P. 38.1 (h) (requiring appellate briefs to contain clear and concise arguments for the contentions made with appropriate citations to authorities and to the record). We conclude that this issue is inadequately briefed and presents nothing for our review. See Kang v. Hyundai Corp. (USA), 992 S.W.2d 499, 503 (Tex.App.-Dallas 1999, no pet.) (bare assertions of error without citations to authority are insufficient to preserve error for our review); see also, Fredonia State Bank v. Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284 (Tex. 1994) (appellate courts have discretion to waive points of error due to inadequate briefing).
The Levines provide cites with respect to the concept that the default judgment must conform to the pleadings, but they provide nothing to discuss their assertions regarding "assignment" and "bonus."
Accordingly, we overrule the Levines' final issue as inadequately briefed.
CONCLUSION
Having overruled all of the Levines' issues, we affirm the trial court's judgment.