Jim Coleman Company v. Rainer Randles Investments, LLC ( 2014 )

Opinion issued July 3, 2014.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00764-CV
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JIM COLEMAN COMPANY, Appellant
V.
RAINER RANDLES INVESTMENTS, LLC, Appellee
On Appeal from the County Civil Court at Law No. 3
Harris County, Texas
Trial Court Cause No. 1018914
MEMORANDUM OPINION
In this breach–of–contract dispute, Rainer Randles Investments, LLC sued
the Jim Coleman Company for damages stemming from its purchase of a defective
ice machine. When Coleman failed to appear for trial, the trial court awarded a
default judgment to Rainer. On restricted appeal, Coleman complains that (1) it
did not receive notice of the trial setting; and (2) legally insufficient evidence
supports the trial court’s default judgment. We agree with the second contention;
therefore, we reverse and remand.
Background
In July 2009, Rainer purchased an ice machine from Coleman for $109,975.
Rainer paid Coleman $5,000 for installation of the machine. In February 2011, the
machine ceased operating properly. Despite Rainer’s requests, Coleman refused to
repair the machine.
Course of proceedings
In August 2012, Rainer sued Coleman for breach of contract and breach of
warranty, among other claims, alleging that (1) Coleman promised to service the
ice machine for its lifetime; and (2) the machine was defective. Coleman timely
answered. In December 2012, the trial court granted Coleman’s counsels’ motion
to withdraw. The trial court set a trial for March 4, 2013. After the withdrawal,
the trial court clerk did not mail a notice of the trial setting to Coleman’s correct
address, but Rainer’s counsel sent a notice by certified mail, return receipt
requested. On January 11, 2013, a person at Coleman’s correct address signed in
receipt of the notice.
On March 4, 2013, Coleman did not appear for trial. Robert Rainer, a
corporate representative, and his counsel testified. The trial court awarded to
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Rainer $150,975 in damages, $30,000 for attorney’s fees, and conditional appellate
attorney’s fees. On September 4, 2013, Coleman filed a notice of restricted appeal.
Discussion
To prevail on restricted appeal, Coleman must establish that: (1) it filed a
notice of restricted appeal within six months after the judgment was signed; (2) it
was a party to the underlying lawsuit; (3) it did not participate in the hearing that
resulted in the complained–of judgment and did not timely file any post–judgment
motions or requests for findings of fact and conclusions of law; and (4) error is
apparent on the face of the record. See Alexander v. Lynda’s Boutique, 134
S.W.3d 845, 848 (Tex. 2004) (citing TEX. R. APP. P. 26.1(c), 30). Rainer
acknowledges the first three elements; only the fourth element is at issue here.
Coleman asserts that two errors are apparent on the face of the record: insufficient
notice of the trial setting and legally insufficient evidence to support the judgment.
I. Notice
Rainer proffered evidence that it notified Coleman of the trial when its
counsel mailed a copy of the notice with a cover letter to Rainer at its address; it
adduced evidence that Rainer’s agent received the certified letter. Coleman
contends that there is no proof that Rainer’s counsel attached the actual notice of
the trial setting to the transmittal letter. Nothing from the face of the record,
however, indicates that the attachment was lacking, and counsel introduced the
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notice and transmittal letter into evidence at the default–judgment hearing.
Coleman also observes that the signature on the receipt of the notice is illegible,
but nothing in the record contradicts the inference that the signature is genuine and
that Coleman’s agent received the letter. These arguments are unavailing; when
nothing on the face of the record contradicts effective notice, appellate courts
presume that it was given. Id. at 849–50; Ginn v. Forrester, 282 S.W.3d 430, 432–
33 (Tex. 2009) (per curiam); see also Welborn–Hosler v. Hosler, 870 S.W.2d 323,
328 (Tex. App.—Houston [14th Dist.] 1994, no writ) (“The law presumes that a
trial court will hear a case only after proper notice to the parties.”). Because the
record indicates that Coleman received notice of the trial setting, Coleman’s first
contention is without merit. See Ginn, 282 S.W.3d at 432–33; Alexander, 134
S.W.3d at 849–50.
II. Legal Sufficiency
Standard of review
If challenged, a review of the record on a restricted appeal includes a review
of legal and factual insufficiency claims. Wilson v. Wilson, 132 S.W.3d 533, 536
(Tex. App.—Houston [1st Dist.] 2004, pet. denied) (citing Norman Commc’ns v.
Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam)).
The test for legal sufficiency is “whether the evidence at trial would enable
reasonable and fair–minded people to reach the verdict under review.” City of
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Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). In making this determination,
we credit favorable evidence if a reasonable fact–finder could, and disregard
contrary evidence unless a reasonable fact–finder could not. Id. If the evidence
falls within the zone of reasonable disagreement, then we may not substitute our
judgment for that of the fact–finder. Id. at 822. In making credibility
determinations, however, the fact–finder “cannot ignore undisputed testimony that
is clear, positive, direct, otherwise credible, free from contradictions and
inconsistencies, and could have been readily controverted.” Id. at 820.
Analysis
If a defendant files an answer, a trial court may not render judgment on the
pleadings; rather, the plaintiff is required to offer evidence and prove all aspects of
its claim. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 930 (Tex. 2009)
(per curiam); Bradley Motors, Inc. v. Mackey, 878 S.W.2d 140, 141 (Tex. 1994)
(per curiam); Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979). A
conclusory statement cannot support a judgment even when the opposing party
fails to object to it at trial. City of San Antonio v. Pollock, 284 S.W.3d 809, 816
(Tex. 2009). A conclusory statement expresses “a factual inference without stating
the underlying facts on which the inference is based.” Arkoma Basin Exploration
Co. v. FMF Assocs. 1990–A, Ltd., 249 S.W.3d 380, 389 n.32 (Tex. 2008) (quoting
BLACK’S LAW DICTIONARY 308 (8th ed. 2004)) (internal quotation omitted).
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The testimony in support of the judgment adduced at the trial court default
hearing was limited to a recitation of Rainer’s causes of action as alleged in its
petition:
Rainer’s counsel: At the time was it represented to you that they would
service the machine down at that location and they would warrant and
maintain the machine for you?
Robert Rainer: Yes.
Rainer’s counsel: Have they done that?
Robert Rainer: No.
...
Rainer’s counsel: Did they fraudulently induce you into that agreement?
Robert Rainer: Yes.
Rainer’s counsel: Did they violate the contract?
Robert Rainer: Yes.
Rainer’s counsel: Did they breach the implied and expressed warranties of
the agreement?
Robert Rainer: Yes.
Rainer’s counsel: Did they violate the Texas Deceptive Trade Practices
Act?
Robert Rainer: Yes.
Rainer’s counsel: And were your damages the $114,975 that you paid?
Robert Rainer: Yes.
Rainer’s counsel: Did you also have damages—has it been 18 months that
the machine has not worked?
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Robert Rainer: Correct, yes.
Rainer’s counsel: What are your lost profits monthly for the amount that
you would have made had the machine worked?
Robert Rainer: 2,000 a month.
...
Rainer’s counsel: Is that what your lawsuit was for was $150,975 in
principal?
Robert Rainer: Yes.
Mere recitation of the pleadings is insufficient for a post–answer default
judgment to survive a challenge on restricted appeal. See Lerma, 288 S.W.3d at
930. Rainer proffered testimony, but that testimony did not offer any specific facts
supporting its recitations of liability, nor, in particular, any evidence that the
claimed breaches and fraud caused its damages. Coleman filed an answer
generally denying the allegations in Rainer’s petition. Thus, it was incumbent
upon Rainer to adduce adequate proof of causation, together with all of the other
elements required to prove its claims. See Stoner, 578 S.W.2d at 682 (holding that
post–answer default judgment constitutes neither abandonment of defendant’s
answer nor implied confession of any issues joined by that answer). Because the
testimony supporting the judgment is bereft of specific liability facts, and contains
no evidence of causation in particular, we hold that legally insufficient evidence
supports the trial court’s default judgment. See Pollock, 284 S.W.3d at 816;
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Morgan v. Compugraphic Corp., 675 S.W.2d 729, 732 (Tex. 1984) (holding that it
is incumbent on party seeking default judgment to present competent evidence of
causal nexus between event sued upon and party’s alleged damages, even when no
answer is filed and liability is uncontested).
When legally insufficient evidence supports a post–answer default judgment,
we remand the case for a new trial. See Lerma, 288 S.W.3d at 930–31 (remanding
for new trial when post–answer default evidence is insufficient, because “the
uncontested proceedings are often abbreviated and perfunctory . . . [and] less likely
to result in a fully–developed factual record”); Bennett v. McDaniel, 295 S.W.3d
644, 645 (Tex. 2009) (per curiam) (applying Lerma in restricted appeal). We hold
that the trial court erred in granting a default judgment based on legally insufficient
evidence; thus, we remand the case for a new trial on the merits.
Conclusion
We reverse the judgment of the trial court and remand the case for a new
trial.
Jane Bland
Justice
Panel consists of Justices Keyes, Bland, and Brown.
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