Opinion
07-23-00357-CV
08-05-2024
FOUNDATION SUPPORT SPECIALISTS, APPELLANT v. ROBERT GALVAN, APPELLEE
On Appeal from the 22nd District Court Comal County, Texas Trial Court No. C2022-1652A, Honorable Daniel H. Mills, Presiding
Before QUINN, C.J., and DOSS and YARBROUGH, JJ.
MEMORANDUM OPINION
Lawrence M. Doss Justice
Robert Galvan sued Foundation Support Specialists ("FSS") for alleged violations of the Texas Deceptive Trade Practices Act and negligent misrepresentation due to home repairs. After FSS failed to answer timely, Galvan obtained a default judgment. FSS's motion for a new trial was overruled, leading to this appeal.
Texas Deceptive Trade Practices-Consumer Protection Act, TEX. BUS. & COMM. CODE ANN. §§ 17.41-.63.
This appeal was originally filed in the Third Court of Appeals and was transferred to this Court by a docket-equalization order of the Supreme Court of Texas. See TEX. GOV'T CODE ANN. § 73.001. In the event of any conflict, we apply the transferor court's case law. TEX. R. APP. P. 41.3.
We conclude that FSS is not entitled to set aside the default judgment to contest liability but is entitled to a new trial on damages and attorney's fees. We accordingly reverse and remand.
Background
In his petition, Galvan alleged that in July 2021, he contracted with FSS to repair his home's foundation. He allegedly described his expectations and the underlying foundation problem, and that FSS allegedly assured him they could repair the foundation, addressing both the problem and its symptoms with a comprehensive solution. Despite these assurances, Galvan says he continues to experience the same issues as before FSS completed their work.
Galvan sued FSS in Guadalupe County on July 27, 2022, and FSS timely answered. Galvan then nonsuited the Guadalupe County suit and filed in Comal County, obtaining service three months later. FSS's owner, Brian Holt, emailed the Comal County petition to the company's insurance broker, whom Holt believed confirmed it would be sent to the insurer's claims department.
In the Comal County lawsuit, Galvan alleges FSS violated the DTPA by engaging in false, misleading, and deceptive practices, breaching warranties, and taking advantage of the plaintiff's lack of knowledge. Galvan contends this resulted in ongoing foundation issues and economic damages, and that the acts were performed knowingly, entitling Galvan to seek treble damages. Galvan also claimed FSS negligently misrepresented that their repairs would permanently resolve the foundation issues and prevent future movement. Galvan alleges FSS did not use reasonable care in making these representations, causing Galvan to rely on them and incur additional damages when the foundation issues persisted.
FSS did not answer the Comal County lawsuit, and Galvan filed a second amended motion for default judgment on May 23, 2023. Attached was a one-page FSS invoice showing a "subtotal" of $24,571.28, unsupported by affidavit or testimony. The invoice lacked details such as work performed, service dates, project location, and any information linking the subtotal to the work Galvan claimed was deficiently performed.
The clerk's record includes a notice of an "in person" hearing scheduled for June 13, 2023, but there is no record of the trial court conducting this hearing. The record does reflect that on the same day, the trial court signed a final judgment awarding Galvan $73,713.84 plus prejudgment interest for "violation of the Deceptive Trade Practices Act and Negligent Misrepresentation," along with $5,816.00 in attorney's fees and contingent attorney's fees of $35,000.00.
FSS filed a motion for new trial on July 13, 2023, seeking relief under the standards enunciated in Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124 (Tex. [Comm'n Op.] 1939). Exhibits, including an affidavit from Holt, Galvan's petition, and two emails, were attached to the motion. Galvan responded and the motion was heard on August 22, 2023; no additional evidence was presented. The trial court denied FSS's motion, finding that FSS had not presented sufficient proof of a meritorious defense. This appeal followed.
Analysis
Motion for New Trial
Because it addresses FSS's potential liability, we begin with FSS's second issue, wherein it argues the trial court abused its discretion by refusing to grant a new trial under the Craddock standard. A default judgment should be set aside and a new trial granted when the non-answering party establishes: (1) its failure to appear was not intentional or the result of conscious indifference, but was the result of accident or mistake, (2) the motion for new trial sets up a meritorious defense, and (3) granting the motion for new trial will occasion no delay or otherwise injure plaintiff. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 925 (Tex. 2009) (per curiam); Craddock, 133 S.W.2d at 126. We review a trial court's refusal to grant a motion for new trial for abused discretion. Dolgencorp, 288 S.W.3d at 926; Cliff v. Huggins, 724 S.W.2d 778, 778 (Tex. 1987).
Assessment under Craddock necessarily involves reviewing the evidence FSS uses to support its motion for new trial. After providing introductory information, Holt's affidavit states in relevant part:
On October 24, 2022, I was served with Plaintiff Robert Galvan's Original Petition and Citation in this cause. Prior to that date, I had previously been served with an Original Petition and Citation that had been filed by Robert Galvan on July 27, 2022 in the 456th Judicial District of Guadalupe County, Cause No. 22-1543- CV that was also styled as Robert Galvan v[.] Foundation Support Specialists. That Guadalupe County lawsuit was answered by Foundation Support Specialists on August 3, 2022.
When the process server handed me the Plaintiff's Original Petition and Citation that was filed in this cause, I inspected the document and because it looked identical to the Plaintiff's Original Petition and Citation that I had been served in the Guadalupe County litigation, I was under the assumption that it pertained to the Guadalupe County case. In any event, on the next day, October 25, 2022, I emailed the document to my company's insurance
broker, Blake Walsh, Vice President of Independent Insurance Center and in an email, I said the following:
"Blake, attached is the lawsuit I was just served. This the same lawsuit we turned into you a while ago. I'm not [s]ure why there [sic] serving me again. Please respond to this email letting me know you [are] getting it over to the carrier."
True and correct copies of the October 25, 2022 email I sent to Blake Walsh as well as his October 26, 2022 response to me are attached hereto. These two emails were composed and/or received by me and the copies were made and kept in the regular course of my company's business.
At the time I was served with the Plaintiff's Original Petition and Citation in this cause, I was not aware that Mr. Galvan had dismissed the lawsuit he had filed in Guadalupe County and filed a pleading in Comal County to replace the Guadalupe County. It is my understanding that Mr. Walsh forwarded the attached pleading to my liability insurer Berkley Aspire to the claims department on October 26, 2022. On or about June 16, 2023, I received a notice from the District Clerk of Comal County informing me that the Plaintiff had obtained a default judgment against Foundation Support Specialists on June 13, 2023.
I am, of course familiar with the foundation work performed at Mr. Galvan's residence located at 3517 Charleston Lane, Cibolo, Texas. I adamantly dispute each and every allegation Mr. Galvan has made against my company and shall certainly be presenting vigorous defense should the Court set aside the default judgment that was rendered in favor of the plaintiff and grant the Motion for New Trial that shall be filed in this cause.(alterations added).
Regarding the first prong of Craddock, we hold that FSS demonstrated its failure to answer was not intentional or the result of conscious indifference. The evidence shows that Holt believed the pleading served on him was related to the Guadalupe County lawsuit in which an answer had already been filed. FSS then forwarded the pleading to its liability insurance broker, who allegedly sent it to FSS's insurance carrier. This evidence provides some excuse for FSS's failure to answer and shows that it was not due to conscious indifference or intent but the result of accident or mistake. Smith v. Babcock &Wilcox Const. Co., Inc., 913 S.W.2d 467, 468 (Tex. 1995) (holding that proof of accident, mistake or other reasonable explanation "negates the intent or conscious indifference for which reinstatement can be denied.").
Per the second Craddock prong, we assess whether FSS presents evidence to set up a meritorious defense. Craddock, 133 S.W.2d at 126. Texas law does not require FSS to prove it would ultimately prevail at trial but to show that it would receive a different result than originally ordered. See Comanche Nation v. Fox, 128 S.W.3d 745, 751 (Tex. App.-Austin 2004, no pet.). Setting up a meritorious defense requires the moving party to "allege[] facts which in law would constitute a defense to the plaintiff's cause of action and is supported by affidavits or other evidence providing prima facie proof that the defendant has such a defense." Dolgencorp, 288 S.W.3d at 928 (cleaned up).
Holt's affidavit only mentions (1) he is familiar with the work performed at Galvan's home, and (2) disputes all allegations and intends to present a vigorous defense if the default judgment is set aside. However, the affidavit lacks facts that, if taken as true, would constitute a legal defense to Galvan's causes of action. Stating one's disagreement with a lawsuit's allegations fails to meet Craddock's second prong. See Ivy v. Carrell, 407 S.W.2d 212, 214-15 (Tex. 1966) (holding allegations in motion for new trial that defendant "has good and valid deed to said land" and "has a valid and meritorious defense to said case" constituted mere "allegations of conclusions" rather than facts). Cf. Green Tree Servicing, LLC v. Travis Cnty., No. 03-10-00709-CV, 2011 Tex.App. LEXIS 7272, at *13-16 (Tex. App.-Austin Aug. 31, 2011, no pet.) (mem. op.) (distinguishing facts from Ivy given the context set by the pleadings because statement that defendant was not the owner of the mobile homes, if true, would constitute a defense to the assessment of taxes). Nothing in Holt's affidavit shows specific facts that would constitute a defense, even if proven true.
Moreover, we disagree with FSS that any defensive facts can be found in Galvan's petition attached to the motion for new trial. In 2016, the Fifth Court of Appeals found the meritorious defense prong satisfied when a plaintiff alleged she "was pushing a cart down an aisle when her cart tapped against a lower shelf, causing the shelf to fall on Plaintiff's foot." J &M Sales of Tex., LLC v. Sams, No. 05-15-00837-CV, 2016 Tex.App. LEXIS 7909, at *7 (Tex. App.-Dallas July 26, 2016, no pet.) (mem. op.). The defaulting defendant pointed to this allegation in its motion for new trial, arguing that the statement gave rise "to a viable contributory negligence defense." Id. at *7. On appeal, the court of appeals agreed that the pleaded statement "sets forth the facts necessary for [defendant] to allege that [plaintiff] was arguably wholly or partially responsible for the accident." Id. at *7-8. To the extent that the Third Court would follow the approach in Sams, we note there is no statement in Galvan's pleading that would suggest a different litigation result even if FSS had the opportunity to prove it. Nor did FSS's motion for new trial identify any statement as a basis for a potential viable defense to the DTPA or negligent misrepresentation claims. Because FSS did not set up a meritorious defense, the trial court did not err in finding that FSS did not satisfy the Cradock requirements. FSS's second issue is overruled.
Sufficiency of the Evidence on Damages and Fees
Having found that the trial court's finding of liability remains intact, we consider FSS's first issue, wherein it contends Galvan's evidence of damages and attorney's fees was legally or factually insufficient. Galvan argues his damage and attorney's fees claims are "liquidated" and therefore admitted when FSS made default. We agree with FSS.
Our standard for reviewing evidence for legal and factual sufficiency are well established and do not require reiteration here. See also City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Argyle Mech., Inc. v. Unigus Steel, Inc., 156 S.W.3d 685, 687 (Tex. App.-Dallas 2005, no pet.). However, there is one notable distinction regarding the review's effect: when a default judgment is granted and the hearing on unliquidated damages is uncontested, the remedy is a new trial on the issue of unliquidated damages. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 86 (Tex. 1992).
"Once a default judgment is taken on an unliquidated claim, all allegations of fact set forth in the petition are deemed admitted, except the amount of damages." Holt Atherton, 835 S.W.2d at 83 (emphasis added). The trial court must hear evidence of unliquidated damages. Id.; see also TEX. R. CIV. P. 243 (defining unliquidated damages as those that cannot be proved by a written instrument). Liquidated damages "fix in advance the compensation to be paid to a party" for an alleged act or omission. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 664 (Tex. 2005) (defining liquidated damages provision in contract). A claim for damages is liquidated when the amount is not contingent, is ascertainable by usual means of evidence, and does not depend on jury discretion. Cleveland v. San Antonio Bldg. &Loan Ass'n, 148 Tex. 211, 215, 223 S.W.2d 226, 228 (1949); Gregory v. Graves, No. 06-23-00005-CV, 2023 Tex.App. LEXIS 9107, at *20 (Tex. App.-Texarkana Dec. 6, 2023, no pet.) (mem. op.).
Galvan's claim for damages was neither agreed to nor proved by an instrument in writing. See TEX. R. CIV. P. 241, 243. It was therefore incumbent on the trial court to hear evidence of damages. The FSS invoice attached to Galvan's motion for default judgment is not a written instrument and amounts to no evidence of the damages sustained. Under the DTPA, an uncontested allegation of funds owed does not constitute proof of actual damages. Besides the submitted invoice apparently related to FSS's foundation repairs, Galvan also claimed damages for needed repairs due to FSS's allegedly deficient work. We hold that the trial court's award of actual damages and additional damages are unsupported by legally sufficient evidence. We sustain FSS's first issue, and accordingly reverse the default judgment and remand the cause for a new trial only on the issue of unliquidated damages, and additional damages and attorney's fees if necessary for the finder of fact to consider these issues. See Bloom, 1993 Tex.App. LEXIS 766, at *14-15.
See Alvarado v. Reif, 783 S.W.2d 303, 305 (Tex. App.-Eastland 1989, no writ).
Gen. Elec. Capital Auto Lease, Inc. v. Bloom, No. C14-92-00834-CV, 1993 Tex.App. LEXIS 766, at *11-12 (Tex. App.-Houston [14th Dist.] Mar. 18, 1993, no writ) (not designated for publication) ("The actual damages recoverable under the DTPA is determined by the loss sustained as a result of the deceptive trade practice," and the amount must be proven with evidence).
Conclusion
We reverse the default judgment, including the award of all damages, treble damages, attorney's fees, and contingent attorney's fees. We remand the cause for a new trial only on the issue of unliquidated damages, and additional damages and attorneys' fees should it become necessary for the finder of fact to consider these issues.