Sedona Pacific Housing Partnership D/B/A Sedona Pacific Properties and Gonzalez Financial Holdings, Inc. v. Alfonso Ventura and Maria Ventura , 2013 Tex. App. LEXIS 6300 ( 2013 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
SEDONA PACIFIC HOUSING
PARTNERSHIP D/B/A SEDONA §
PACIFIC PROPERTIES AND No. 08-11-00208-CV
GONZALEZ FINANCIAL HOLDINGS, §
INC., Appeal from
§
Appellants, County Court at Law No. 1
§
v. of Tarrant County, Texas
§
ALFONSO VENTURA AND (TC # 09-76115-1 )
MARIA VENTURA, §
Appellees. §
OPINION
Sedona Pacific Housing Partnership d/b/a Sedona Pacific Properties and Gonzalez
Financial Holdings, Inc. appeal from a judgment entered in favor of Alfonso Ventura and Maria
Ventura. For the reasons that follow, we affirm.
FACTUAL SUMMARY
On September 30, 2009, Alfonso and Maria Ventura filed suit against Appellants alleging
wrongful foreclosure on the Venturas’ homestead. The suit alleged that the Venturas executed a
tax lien promissory note payable to Gonzalez Financial Holdings, Inc. in the amount of
$9,704.52. Tamir Enterprises, Ltd. held the note and GFH Servicing, Ltd. serviced it. The
Venturas’ mortgage company tendered a check in the amount of $8,041.25 to pay off the tax lien
note and avoid foreclosure, but the loan servicer, GFH Servicing Ltd., refused to accept the
payment because it was not received until after the date of the foreclosure.1 The property was
sold at a non-judicial foreclosure on July 7, 2009 to Sedona Pacific Housing Partnership for
$75,000. The Venturas alleged in their suit that the property had a value of $206,300 and
Appellants had failed to properly account for the surplus money received or convey to the
Venturas their legal share of the proceeds. The Venturas sought to enjoin a wrongful
foreclosure, alleged that Appellants had breached the tax loan contract, and they also sought
declaratory relief and attorney’s fees. The trial court issued a temporary restraining order
prohibiting Appellants from proceeding with the forcible detainer.
Appellants were served with citation and the TRO on October 7, 2009, but they did not
file an answer. The parties, through their attorneys, entered into a Rule 11 agreement to continue
the hearing on the temporary injunction and to suspend the eviction proceedings for sixty days
while the parties attempted to negotiate a settlement. The dispute was not settled and the parties
engaged in discovery. The trial court set the case for trial on March 21, 2011. The Venturas
amended their pleadings prior to trial raising additional causes of action: fraud by non-
disclosure, usury, and failure to account. They also requested exemplary damages. The
Venturas appeared with their attorney for trial, but Appellants failed to appear. The judgment
recites that the trial court, after having read the pleadings and papers on file, and after hearing the
evidence and argument of counsel, found that the allegations in the Venturas’ pleadings had been
admitted and Appellants were indebted to the Venturas in the amount of $66,958 plus post-
judgment interest. The court also awarded to the Venturas attorney’s fees in the amount of
1
An exhibit attached to the petition reflects that GFH Servicing informed the mortgage company that the payoff
amount was good only until July 6, 2009 and the foreclosure occurred on July 7, 2009. The payoff was not received
until July 9, 2009.
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$6,500 for trial plus conditional awards in the event Appellants filed a motion for new trial or
appealed to the court of appeals and the Texas Supreme Court.
Appellants filed a motion for new trial on equitable grounds and alleged that the
procedural default was not intentional or the result of conscious indifference but was due to
accident or mistake. They also alleged a meritorious defense to the Venturas’ claims. Counsel
for Appellants stated in an affidavit that he did not file an answer on behalf of Appellants due to
accident or mistake. His affidavit did not address why Appellants failed to appear for trial. The
trial court denied the motion after a hearing and this appeal follows.
MOTION FOR NEW TRIAL
In their first issue, Appellants complain that the trial court abused its discretion by
denying their motion for new trial made under Craddock v. Sunshine Bus Lines, Inc., 134 Tex.
388, 133 S.W.2d 124, 126 (1939). Before addressing the issue, we must consider the Venturas’
claim that Craddock is inapplicable because the trial court did not enter a default judgment and
instead entered a judgment in their favor following a trial on the merits. We understand
Appellants to argue that Craddock applies because the trial court entered a no-answer default
judgment. We therefore must resolve precisely what type of judgment the trial court entered.
We will first consider whether it is a judgment upon trial. Counsel for the Venturas, John
Gamboa, stated in his affidavit that the case was set on the court’s jury trial docket with proper
notices to all parties. He also stated: “This was not a default hearing but a properly called jury
trial . . . .” At the hearing, Gamboa stated several times, including once under oath, that the court
had conducted a trial on the merits, not a default judgment hearing, and he recounted the
evidence admitted at the trial. The appellate record does not include the court reporter’s
transcript of the trial. The Venturas’ assertion that the trial court did not enter a default judgment
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is contradicted by the following recitations in the judgment:
The Defendants, although having been duly and legally cited to appear and
answer, failed to appear and answer, and wholly made default. Citation was
served according to law and returned to the clerk where it remained on file for the
time required by law. The Court has read the pleadings and the papers on file and
after hearing the evidence and argument of counsel, is of the opinion that the
allegations in Plaintiffs’ Petition have been admitted and Defendants are indebted
to Plaintiff in the sum of $66,958.00.
Counsel for the Venturas approved the judgment as to both form and content. The recitations in
the judgment indicate that the trial court rendered a default judgment rather than a judgment
upon trial.
Under the presumption of regularity of judgments, we are required to presume recitations
in the final judgment are correct absent any evidence to the contrary. Vernon v. Perrien, 390
S.W.3d 47, 58 (Tex.App.--El Paso 2012, pet. denied); Southern Insurance Company v. Brewster,
249 S.W.3d 6, 12-14 (Tex.App.--Houston [1st Dist.] 2007, pet. denied). Given that the appellate
record does not include a reporter’s record, we must also presume that the evidence supports the
recitations regarding entry of a default judgment. See Sandoval v. Commission for Lawyer
Discipline, 25 S.W.3d 720, 722 (Tex.App.--Houston [14th Dist.] 2000, pet. denied). Based on
the record before us and applying the required presumptions to the judgment, we conclude that
the trial court entered a default judgment.
There are several types of default judgments. They generally fit into pre- or post-answer
default judgments, but other variations exist which do not fit neatly into either category.
Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d 177, 184 (Tex. 2012).2 In Stoner v.
Thompson, 578 S.W.2d 679, 682 (Tex. 1979), the Supreme Court discussed three types of default
judgments in contrast to “a judgment upon trial:” (1) the no-answer default judgment; (2) the
2
In Paradigm Oil, the Supreme Court addressed another type of default judgment which did not fit in the pre- or
post-answer default judgment categories: a default judgment entered as a discovery sanction. Paradigm Oil, 372
S.W.3d at 184-85.
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judgment nihil dicit; and (3) the post-answer default judgment.
A traditional no-answer default judgment can be taken when the defendant is properly
served with citation but fails to answer or appear. TEX.R.CIV.P. 239. A defendant who has not
answered or otherwise appeared in the case is not entitled to notice of a default judgment
proceeding. Wilson v. Wilson, 132 S.W.3d 533, 536 (Tex.App.--Houston [1st Dist.] 2004, pet.
denied). A judgment nihil dicit is usually “limited to situations in which either (1) the defendant
has made a plea, usually dilatory in nature, but the pleading has not placed the merits of the
plaintiff’s case in issue before it is overruled, or (2) the defendant has placed the merits of the
case in issue by filing an answer, but has withdrawn that answer.” Paradigm Oil, 372 S.W.3d at
184 n.8, quoting 7 William V. Dorsaneo III, TEXAS LITIGATION GUIDE § 100.01[3] at 100–11
(2011). A no-answer default and a judgment nihil dicit are so similar that the same rules apply to
each with respect to the effect and validity of the judgment. Stoner, 578 S.W.2d at 682. In both
instances, the non-answering party has “admitted” the facts properly pled and the justice of the
opponent’s claim, although a judgment nihil dicit carries an even stronger confession than the
no-answer default judgment. Id.
A post-answer default occurs when the defendant has filed an answer but fails to appear
for trial. It differs from the no-answer default and the judgment nihil dicit in that it does not
constitute an abandonment of the defendant’s answer and it is not an implied confession of any
issues joined by the defendant’s answer. Stoner, 578 S.W.2d at 682. Consequently, judgment
cannot be entered on the pleadings, and the plaintiff is required to offer evidence and prove his
case as in a judgment upon a trial. Id.
The Supreme Court had also recognized a fourth category of default judgment: a post-
appearance default judgment. LBL Oil Co. v. International Power Services, Inc., 777 S.W.2d
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390 (Tex. 1989). This type of default judgment occurs when the defendant makes a general
appearance but fails to answer or appear for trial. Once a defendant has made an appearance, he
is entitled to notice of the trial setting as a matter of due process under the Fourteenth
Amendment. Peralta v. Heights Medical Center, Inc., 485 U.S. 80, 108 S. Ct. 896, 99 L. Ed. 2d
75 (1988); LBL Oil, 777 S.W.2d at 390-91; In re Brilliant, 86 S.W.3d 680, 693 (Tex.App.--El
Paso 2002, orig. proceeding). A party enters a general appearance when he (1) invokes the
judgment of the court on any question other than the court’s jurisdiction, (2) recognizes by his
acts that an action is properly pending, or (3) seeks affirmative action from the court. Exito
Electronics Co., Ltd. v. Trejo, 142 S.W.3d 302, 304 (Tex. 2004); Dawson-Austin v. Austin, 968
S.W.2d 319, 322 (Tex. 1998).
The record reflects that Appellants did not file an answer but they entered into a Rule 11
agreement which reads as follows:
1. The parties agree to continue the hearing regarding the injunctive relief set for
Tuesday, October 13, 2009 at10:00 a.m. until further order of the Court.
2. The parties agree to extend the injunctive Bond filed until further order of the
Court.
3. The parties agree there will be no attempt to proceed with enforcement or
eviction proceedings until further order of the Court.
4. The parties will attempt a settlement of this matter. If no settlement is
reached within sixty (60) days from the date of this agreement, the parties will
notify the Court whether a hearing will be necessary on this matter or
mediation will be requested.
Consistent with paragraph 4 of the Rule 11 agreement, the Venturas made a written request for
the case to be submitted to mediation. The trial court ordered the parties to mediation on
February 26, 2010.
The Supreme Court held in Exito Electronics that a Rule 11 agreement extending a
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defendant’s time to file an initial responsive pleading did not constitute a general appearance in
the context of a special appearance. Exito Electronics, 142 S.W.3d at 306. Likewise, the
Fourteenth Court of Appeals held in Angelou v. African Overseas Union that a Rule 11
agreement extending the answer date did not constitute a general appearance. Angelou v. African
Overseas Union, 33 S.W.3d 269, 275 (Tex.App.--Houston [14th Dist.] 2000, no pet.). In both
Exito and Angelou, the defendants contested the trial court’s jurisdiction by filing a special
appearance and the question was whether the defendants made a general appearance and waived
their special appearance by entering into a Rule 11 agreement to extend the time to file their
initial responsive pleading.
The instant case is distinguishable because the Rule 11 agreement was not made in the
context of a special appearance. Appellants did not merely agree to continue the temporary
injunction hearing, continue the injunction bond, and cancel the pending eviction proceeding,
they specifically made their agreement subject to further order of the trial court. The parties
agreed to notify the Court if they were unable to reach a settlement and to advise the court if a
hearing was necessary or mediation would be requested. By taking these actions, Appellants
recognized that the case was properly pending in the trial court. We hold that Appellants made a
general appearance in the case but failed to file an answer. Under these circumstances, the
judgment entered by the court is not a no-answer default judgment, a judgment nihil dicit, or a
post-answer default judgment. It is instead a post-appearance default judgment.
Standard of Review
We review a trial court’s decision on a motion for new trial for an abuse of discretion.
Rivas v. Rivas, 320 S.W.3d 391, 393 (Tex.App.--El Paso 2010, no pet.); Munoz v. Rivera, 225
S.W.3d 23, 26 (Tex.App.-El Paso 2005, no pet.), citing Cliff v. Huggins, 724 S.W.2d 778, 778
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(Tex. 1987). A trial court must set aside a default judgment when the movant satisfies the
requirements articulated in Craddock v. Sunshine Bus Lines. Director, State Employees
Workers’ Compensation Division v. Evans, 889 S.W.2d 266, 268 (Tex. 1994); Rivas, 320 S.W.3d
at 393. Appellants must demonstrate that: (1) their failure to appear for trial was not intentional
or the result of conscious indifference; (2) they have a meritorious defense; and (3) the granting
of a new trial will not operate to cause delay or injury. Milestone Operating, Inc. v. ExxonMobil
Corporation, 388 S.W.3d 307, 309 (Tex. 2012); Evans, 889 S.W.2d at 268; Ivy v. Carrell, 407
S.W.2d 212, 213 (Tex. 1966). If the Craddock elements are satisfied, it is an abuse of discretion
for the trial court to deny a motion for new trial. Evans, 889 S.W.2d at 268; Rivas, 320 S.W.3d
at 393.
Conscious Indifference
The burden of proof is on Appellants to show that their failure appear for trial was not the
result of conscious indifference. Munoz, 225 S.W.3d at 28; Rivas, 320 S.W.3d at 393. We look
to the knowledge and acts of the defendant to determine whether the defendant satisfied its
burden as to the first Craddock element. Milestone Operating, 388 S.W.3d. at 309; Evans, 889
S.W.2d at 269; Rivas, 320 S.W.3d at 393-94. Conscious indifference has been defined as failing
to take some action which would seem obvious to a person of reasonable sensibilities under the
same circumstances. Evans, 889 S.W.2d at 269; Rivas, 320 S.W.3d at 393-94; Johnson v.
Edmonds, 712 S.W.2d 651, 652 (Tex.App.--Fort Worth 1986, no writ). If the factual assertions
in a movant’s affidavit are not controverted, the movant satisfies his burden if his affidavit sets
forth facts that, if true, negate intentional or consciously indifferent conduct. Evans, 889 S.W.2d
at 269; Rivas, 329 S.W.3d at 394. In determining if the factual assertions are controverted, the
court looks to all the evidence in the record. Evans, 889 S.W.2d at 269; Rivas, 320 S.W.3d at
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394.
The Venturas filed suit on September 30, 2009 and Appellants were served on October 7,
2009. Appellants’ attorney, Nathan Cace, stated in his affidavit that he mistakenly believed he
had filed an answer in the suit when he had not done so. Appellants’ motion for new trial does
not address why they failed to appear for trial. On August 24, 2010, Gamboa requested a jury
trial setting for December 2010 and faxed a copy of the request to Cace. The case was set for
jury trial on March 21, 2011 and the Venturas appeared for trial with counsel. Since Cace had
never filed an answer on behalf of Appellants or entered an appearance as counsel, the notices of
the trial setting were sent directly to Appellants. Gamboa’s affidavit asserts that proper notices
of the trial setting were sent to Appellants but they did not appear for trial. In its written letter
order denying the motion for new trial, the court found that notices of the trial setting were
mailed to Sedona Pacific Housing Partnership and Gonzalez Financial Holdings. None of the
affidavits attached to Appellants’ motion for new trial addresses their failure to appear for trial.
Accordingly, we find that Appellants failed to prove that their failure appear for trial was not the
result of conscious indifference. Because the trial court did not abuse its discretion by overruling
the motion for new trial, we overrule Issue One.
PROOF OF DAMAGES
In Issue Two, Appellants contend that the trial court erred by awarding damages in the
amount of $66,958 and attorney’s fees because the Venturas failed to present any evidence in
support of these awards. The Venturas respond that the issue should be overruled because
Appellants filed a partial reporter’s record without complying with Rule 34.6(c)(1) of the Texas
Rules of Appellate Procedure.
The record does not include a court reporter’s record from the default judgment hearing.
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It is unclear whether there is no reporter’s record or whether Appellants did not request that the
court reporter prepare the record of that hearing. In either case, the absence of the record
precludes our review of this issue.
Generally, in an appeal with only a partial reporter’s record, we must presume the
omitted portions of the record are relevant and support the trial court’s judgment. Feldman v.
Marks, 960 S.W.2d 613, 614 (Tex. 1996). Rule 34.6(c) provides an exception to the general
rule. See TEX.R.APP.P. 34.6(c). Under Rule 34.6(b) of the Rules of Appellate Procedure, an
appellant must request in writing that the official court reporter prepare the reporter’s record and
designate the portions of the portions of the proceedings to be included. TEX.R.APP.P. 34.6(b).
If the appellant requests a partial reporter’s record, the appellant must include in the request a
statement of the points or issues to be presented on appeal and will then be limited to those
points or issues. TEX.R.APP.P. 34.6(c)(1). This gives other parties the opportunity to designate
additional exhibits and portions of the testimony to be included in the reporter’s record.
TEX.R.APP.P. 34.6(c)(2). If the appellant complies with these requirements, the appellate court
must presume that the partial reporter’s record constitutes the entire record for purposes of
reviewing the stated points or issues. TEX.R.APP.P. 34.6(c)(4). If the appellant fails to comply
with Rule 34.6(c), we will apply the general presumption that the missing portions of the record
support the trial court’s judgment. See Bennett v. Cochran, 96 S.W.3d 227, 229 (Tex. 2003).
The record does not include a statement of the points or issues Appellants intended to
present on appeal. Consequently, we will not apply Rule 34.6(c)(4)’s presumption that the
partial reporter’s record designated by the parties constitutes the entire record for purposes of
reviewing the stated points or issues. TEX.R.APP.P. 34.6(c)(4); see El Paso Accent Homes,
L.L.C. v. Preferred Group Properties, Inc., 387 S.W.3d 810 (Tex.App.--El Paso 2012, no pet.).
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We will instead apply the presumption that the omitted portions of the record are relevant and
support the judgment on appeal. See Bennett, 96 S.W.3d at 229; Christiansen v. Prezelski, 782
S.W.2d 842 (Tex. 1990). We overrule Issue Two and affirm the judgment of the trial court.
May 22, 2013
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rivera, and Antcliff, JJ.
Antcliff, J., not participating
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