Tunad Enterprises, Inc. v. Martin Palma D/B/A Liz Pizza ( 2018 )

REVERSE and REMAND; and Opinion Filed June 27, 2018.
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-17-00208-CV
TUNAD ENTERPRISES, INC., Appellant
V.
MARTIN PALMA D/B/A LIZ PIZZA, Appellee
On Appeal from the 417th Judicial District Court
Collin County, Texas
Trial Court Cause No. 417-00618-2016
MEMORANDUM OPINION
Before Justices Francis, Fillmore, and Whitehill
Opinion by Justice Fillmore
Martin Palma d/b/a/ Liz Pizza (Palma) sued his former landlord, Tunad Enterprises, Inc.
(Tunad), alleging Tunad neither returned a $3,500 security deposit nor provided a written
description and itemized list of the deductions it claimed to have taken from the deposit. See TEX.
PROP. CODE ANN. § 93.011(a) (West 2014). Apparently unaware that Olatunde R. Adio, Tunad’s
president and registered agent, had filed an answer on behalf of Tunad, the trial court granted
Palma’s motion for no-answer default judgment. Upon learning of the default judgment, Adio
filed a motion for new trial on behalf of Tunad, which the trial court also granted. Palma requested
that the trial court reconsider the granting of the new trial and, after hearing evidence, the trial
court ruled Tunad had failed to establish it was entitled to a new trial under Craddock v. Sunshine
Bus Lines, Inc., 133 S.W.2d 124 (1939),1 and reinstated the default judgment.
In this appeal, Tunad argues the trial court erred by granting the default judgment,
determining Tunad was not entitled to a new trial, denying Tunad’s request for findings of fact and
conclusions of law, failing to hold a hearing on Tunad’s motion for reconsideration, and awarding
Palma treble damages. We conclude the trial court erred by granting Palma’s motion for default
judgment without providing notice to Tunad. Accordingly, we reverse the trial court’s judgment
and remand this case for further proceedings.
Background
Palma leased space from Tunad in a commercial building and provided the $3,500 security
deposit required by the lease. The lease terminated on July 31, 2015, and Palma vacated the
premises sometime in August 2015. After Palma failed to receive either the return of the security
deposit or an itemized accounting of amounts withheld from the security deposit, he filed this suit.
After Tunad was served, Adio called the Collin County District Clerk’s office to determine
if Tunad still had time to respond to the lawsuit. Following that conversation, Adio mailed a letter
to the Collin County District Clerk on March 25, 2016, that contained the case number and
indicated it was being filed by Adio for Tunad. The letter stated the lease with Palma ended on
July 31, 2015, Palma refused to return the keys to the property, and on inspecting the property,
“we” discovered Palma “unlawfully removed Fixtures attached to the Structures,” causing roof
damage. Attached to the letter was a September 1, 2015 “Landlord’s Notice to Tenant of Damages
Assessed Against Security Deposit” (Notice of Damages) prepared by Tunad and addressed to
Palma with the notation “Forwarding Address Not Provided”; invoices for repairs to the property;
and pictures of alleged damage to the property. The Notice of Damages described the charges
1
Craddock provides that, following a default judgment, a defendant is entitled to a new trial if (1) it establishes its nonappearance was a result
of an accident or mistake, and was not intentional or the result of conscious indifference; (2) the motion for new trial sets up a meritorious defense;
and (3) granting the motion will not cause undue delay or otherwise injure the plaintiff. 133 S.W.2d at 126.
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against the security deposit as one month of holdover rent and the costs to repair the property due
to the removal of fixtures by Palma, and stated those charges exceeded the amount of the security
deposit. Adio did not serve a copy of the letter on Palma’s attorney. The Collin County District
Clerk’s office stamped the letter as filed on March 31, 2016, and scanned it into Collin County’s
electronic filing system.
On April 26, 2016, Palma filed a motion for default judgment which stated Tunad’s
deadline to file an answer was March 28, 2016, and Tunad had not, “to [Palma’s] information and
belief, filed an answer or any other pleading constituting an answer.” Attached to the motion for
default judgment was a certificate of last known address for Tunad, Palma’s affidavit stating Tunad
had not returned his security deposit, and Palma’s attorney’s affidavit regarding the fees incurred
in the case. Palma did not serve the motion for default judgment on Tunad, and the trial court’s
docket sheet does not reflect a hearing was held on the motion. The trial court signed a default
judgment on April 28, 2016, awarding Palma judgment for $10,600, consisting of statutory
damages of $100 and three times the withheld security deposit, plus $2,769.71 for attorneys’ fees
and costs.
After receiving notice of the default judgment from the Collin County District Clerk’s
office, Adio filed a motion for new trial on behalf of Tunad on May 20, 2016, stating Tunad
responded to the lawsuit on March 25, 2016. Adio also set out facts relating to the damage to the
property that Tunad alleged constituted a meritorious defense. Adio attached a file-stamped copy
of the March 25th letter to the motion. Adio did not serve the motion for new trial on Palma’s
attorney. Although the docket sheet does not reflect a hearing was held on the motion for new
trial, on June 10, 2016, the trial court granted Tunad’s motion and set the case for trial on
November 7, 2016.
On October 26, 2016, Palma filed a motion requesting the trial court reconsider the granting
of the motion for new trial. Palma stated he had not received notice of the filing of the motion for
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new trial, any hearing on the motion for new trial, or the order granting the new trial. Palma
objected that Tunad was not properly represented in either its answer or the motion for new trial
and that “improper proof” was presented to the trial court pertaining to notice to Palma and the
requirements for granting a new trial. Tunad was represented by counsel at the hearing on Palma’s
motion for reconsideration. After hearing evidence, the trial court ruled Tunad had failed to
establish it was entitled to a new trial based on the Craddock factors. On December 15, 2016, the
trial court signed an order in which it withdrew its prior order granting Tunad’s motion for new
trial, denied Tunad’s motion for new trial, and reinstated the default judgment ab initio.
On December 16, 2016, Tunad requested findings of fact and conclusions of law. Palma
objected that Tunad was not entitled to findings of fact and conclusions of law following a hearing
on a motion for new trial. The trial court sustained Palma’s objection and did not make findings
of fact and conclusions of law. Tunad filed a motion for reconsideration on January 9, 2017.
Despite Tunad’s requests for a hearing, Tunad’s motion for reconsideration was never heard by
the trial court. Tunad filed a notice of appeal on February 27, 2017.
Jurisdiction
Palma initially contends we should dismiss this appeal because Tunad’s notice of appeal
was untimely. Palma specifically argues that, because a motion for new trial filed on behalf of a
corporation by a non-attorney “should be given no effect,” the default judgment rendered by the
trial court on April 28, 2016, became final and Tunad failed to timely file a notice of appeal from
the default judgment.
Generally, a corporation may be represented in litigation only by a licensed attorney.
Kunstoplast of Am., Inc. v. Formosa Plastics Corp., USA, 937 S.W.2d 455, 456 (Tex. 1996) (per
curiam); KSNG Architects, Inc. v. Beasley, 109 S.W.3d 894, 896 (Tex. App.—Dallas 2003, no
pet.). However, that does not mean the acts of a non-attorney on behalf of a corporation are void
ab initio. See Kelly v. Hinson, 387 S.W.3d 906, 912 (Tex. App.—Fort Worth 2012, pet. denied)
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(concluding motion to compel arbitration, signed by non-attorney on behalf of corporation, was
not void ab initio); Rabb Int’l, Inc. v. SHL Thai Food Serv. LLC., 346 S.W.3d 208, 210 (Tex.
App.—Houston [14th Dist.] 2011, no pet.) (concluding motion for new trial signed by non-attorney
on behalf of corporation was not void). The question is whether the motion for new trial filed by
Adio on May 20, 2016, was effective to extend the trial court’s plenary power so that the trial court
had authority to grant a new trial on June 10, 2016.
In Rabb International, the corporate plaintiff, Rabb, was represented by counsel throughout
trial. 346 S.W.3d at 209. After the jury returned a verdict in favor of the defendant, Rabb’s owner
and president, who was not a licensed attorney, filed a motion for new trial challenging the
sufficiency of the evidence to support the jury’s findings. Id. Seventy days after the judgment
was signed, the trial court denied the motion for new trial and Rabb, represented by counsel, filed
a notice of appeal. Id.The Houston Fourteenth Court of Appeals sua sponte considered whether the notice of
appeal was timely. Id. at 210 & n.1. After noting the non-attorney could not assert a motion for
new trial on behalf of Rabb, the appellate court considered whether the motion for new trial was
void and therefore ineffective to extend the deadline to perfect appeal. Id. at 209–10. The court
concluded that:
[A] document filed in court by a non-attorney purportedly on behalf of a
corporation is defective but not void, and may be effective for certain purposes,
such as avoiding a default judgment and perfecting appeal.
Id. at 210. The court concluded the motion for new trial filed on behalf of the corporation was
sufficient to extend the deadline to perfect appeal from thirty days after judgment to ninety days
after judgment. Id.; see also TEX. R. APP. P. 26.1(a)(1) (in civil case, notice of appeal must be
filed within ninety days after judgment is signed if any party timely files motion for new trial).
Adio timely filed a motion for new trial on behalf of Tunad. See TEX. R. CIV. P. 329b(a)
(party must file motion for new trial within thirty days from date trial court signed judgment).
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Even though Adio, as a non-attorney, could not represent Tunad, the motion for new trial was not
void. See Rabb Int’l, Inc., 346 S.W.3d at 210; see also Kelly, 387 S.W.3d at 912. Accordingly,
the motion for new trial was effective for purposes of extending the trial court’s plenary power
over the case. See e.g. Rabb Int’l, Inc., 346 S.W.3d at 210; see also TEX. R. CIV. P. 329b(e) (“If a
motion for new trial is timely filed by any party, the trial court, regardless of whether an appeal
has been perfected, has plenary power to grant a new trial or to vacate, modify, correct, or reform
the judgment until thirty days after all such timely-filed motions are overruled, either by a written
and signed order or by operation of law, whichever occurs first.”).
Because Tunad filed a motion for new trial, the trial court had plenary power over the case
on June 10, 2016. While it retained plenary power, the trial court had the authority to modify the
default judgment, with or without a motion for new trial. See TEX. R. CIV. P. 320 (trial court has
authority to set aside judgment while it retains plenary power); In re Brookshire Grocery Co., 250
S.W.3d 66, 72 (Tex. 2008) (orig. proceeding) (noting trial court has authority to grant new trial on
own motion while it retains plenary power); San Sebastian Realty Co., Inc. v. Huerta, No. 14-14-
00819-CV, 2015 WL 9311805, at *5 (Tex. App.—Houston [14th Dist.] Dec. 22, 2015, pet. denied)
(mem. op.) (concluding trial court had authority to sua sponte modify judgment within duration of
its plenary power). After the trial court granted a new trial, thereby vacating the default judgment,
there was no final judgment from which Tunad could have perfected an appeal. See Logan v.
Mullis, 686 S.W.2d 605, 609 (Tex. 1985) (“[Texas Rule of Civil Procedure] 301 provides that
there will be only one final judgment. Once the first judgment . . . was set aside, the cause stood
precisely as if there had been no judgment.”); see also In re Baylor Med. Ctr. at Garland, 280
S.W.3d 227, 230–31 (Tex. 2008) (orig. proceeding) (“When a new trial is granted, the case stands
on the trial court’s docket ‘the same as though no trial had been had.’” (quoting Wilkins v Methodist
Health Care Sys., 160 S.W.3d 559, 563 (Tex. 2005)).
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On December 15, 2016, the trial court set aside its order granting the new trial and
reinstated the default judgment, beginning the running of the appellate deadlines. See In re Baylor
Med. Ctr. at Garland, 280 S.W.3d at 231 (“Thus, if a new trial is granted and later withdrawn, the
appellate deadlines run from the later order granting reinstatement rather than the earlier order.”);
Garg v. Pham, 485 S.W.3d 91, 100–01 (Tex. App.—Houston [14th Dist.] 2015, no pet.). Tunad
timely filed a request for findings of facts and conclusions of law on December 16, 2016,2 and a
motion for reconsideration on January 9, 2017,3 extending the time for filing a notice of appeal
until ninety days after the judgment was rendered. See TEX. R. APP. P. 26.1(a)(4) (request for
findings of fact and conclusions of law extends appellate deadlines if findings and conclusions
either are required by rules of civil procedure or, if not required, could properly be considered by
appellate court);4 id. 26.1(a)(1),(2) (motion for new trial or motion to modify judgment extends
appellate deadlines); Padilla v. LaFrance, 907 S.W.2d 454, 458–59 (Tex. 1995) (concluding
motion for reconsideration that was equivalent of motion to modify judgment extended appellate
deadlines); Lushann Energy Int’l, Inc. v. Gen. Elec. Energy Rentals, Inc., No. 14-04-00652-CV,
2004 WL 1899795, at *1 (Tex. App.—Houston [14th Dist.] Aug. 26, 2004, pet. denied) (per
curiam) (mem. op.) (“A motion for reconsideration is the equivalent of a motion for new trial.”).
On February 27, 2017, Tunad timely filed a notice of appeal from the trial court’s December 15,
2016 order. Accordingly, we have jurisdiction over this appeal.
2
Tunad was required to request findings of fact and conclusions of law within twenty days after the December 15th order was signed. See
TEX. R. CIV. P. 296.
3
Tunad was required to file a motion for new trial within thirty days after the December 15th order was signed. See TEX. R. CIV. P. 329b(a).
4
Although not required to do so, a trial court may make findings of fact and conclusions of law following an evidentiary hearing on a motion
for new trial. My Three Sons, Ltd. v. Midway/Parker Med. Ctr., L.P., No. 05-15-01068-CV, 2017 WL 2351082, at *7 (Tex. App.—Dallas May 31,
2017, no pet.) (mem. op.). Accordingly, findings of fact are “appropriate” after an evidentiary hearing on a motion for new trial and may properly
be considered by the appellate court. Puri v. Mansukhani, 973 S.W.2d 701, 707 (Tex. App.—Houston [14th Dist.] 1998, no pet); see also
Higginbotham v. Gen. Life & Acc. Ins. Co., 796 S.W.2d 695, 695, 697 (Tex. 1990) (reviewing findings of fact made by trial court following hearing
on motion for new trial).
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Default Judgment
In its first issue, Tunad asserts it timely filed an answer and, therefore, the trial court erred
by rendering a default judgment without providing notice to Tunad. There are two types of default
judgments: a no-answer default judgment and a post-answer default judgment. Dolgencorp of
Tex., Inc. v. Lerma, 288 S.W.3d 922, 930 (Tex. 2009) (per curiam). A no-answer default judgment
is “caused by a defendant’s failure to answer after service[.]” Paradigm Oil, Inc. v. Retamco
Operating, Inc., 372 S.W.3d 177, 183 (Tex. 2012); see also TEX. R. CIV. P. 239. A post-answer
default judgment, however, “occurs when a defendant who has answered fails to appear for trial.”
Lerma, 288 S.W.3d at 925.
The plaintiff has different burdens in seeking a no-answer and a post-answer default
judgment. In a no-answer default, “a defaulting defendant admits all facts properly pled in the
plaintiff’s petition” and the plaintiff is required to prove only its claim for unliquidated damages.
Lerma, 288 S.W.3d at 930. If, however, the defendant has filed an answer, the “trial court may
not render judgment on the pleadings and the plaintiff is required to offer evidence and prove all
aspects of its claim” before the trial court may render a post-answer default judgment. Id.
A party that has filed an answer is entitled to notice of the trial setting as a matter of due
process under the Fourteenth Amendment to the United States Constitution. LBL Oil Co. v. Int’l
Power Servs., Inc., 777 S.W.2d 390, 390–91 (Tex. 1989) (per curiam); see also In re K.M.L., 443
S.W.3d 101, 118–19 (Tex. 2014) (If defendant has timely filed an answer, “due process rights are
violated when a judgment is subsequently entered without the party receiving notice of the setting
of the case.”). Rule of civil procedure 245 requires that parties in a contested case be given no less
than forty-five days’ notice of the first trial setting. TEX. R. CIV. P. 245. The notice requirements
of rule 245 are mandatory. In re I.L.S., 339 S.W.3d 156, 159 (Tex. App.—Dallas 2011, no pet.);
In re RPH Capital Partners, LP, No. 04-16-00424-CV, 2017 WL 2561562, at *2 (Tex. App.—
San Antonio June 14, 2017, orig. proceeding [mand. denied]). A trial court’s failure to provide
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notice pursuant to rule 245 in a contested case deprives a party of its constitutional right to be
present at the hearing and to voice its objections in an appropriate manner, “resulting in a violation
of fundamental due process.” In re K.M.L., 443 S.W.3d at 119.
Because a hearing on a motion for default judgment can be dispositive of the case, it is
effectively a trial setting. LBL Oil Co., 777 S.W.2d at 391; Bradford v. Bradford, 971 S.W.2d 595,
597 (Tex. App.—Dallas 1998, no pet.). Rule 245’s notice requirement, therefore, applies to a
hearing on a motion for a post-answer default judgment. Smith v. Lippman, 826 S.W.2d 137, 138
(Tex. 1992) (per curiam). A post-answer default judgment is valid only if the defendant received
notice of the default judgment hearing. Id; In re Marriage of Villa, No. 05-12-00233-CV, 2013
WL 1838620, at *2 (Tex. App.—Dallas Mar. 25, 2013, no pet.) (mem. op.) (“If the party does not
have notice of the hearing during which the trial court granted a default judgment as required by
rule 245, the default judgment should be set aside because it is ineffectual.”); A&A Constr. Servs.,
LLC v. Blevins, No. 07-13-00251-CV, 2014 WL 1691515, at *3 (Tex. App.—Amarillo Apr. 24,
2014, no pet.) (mem. op).
Tunad argues it timely answered the lawsuit and was entitled to notice prior to the rendition
of default judgment against it. An answer to a lawsuit does not necessarily have to follow a
standard form. See Rhojo Enters., LLC v. Stevens, 540 S.W.3d 621, 624 (Tex. App.—Beaumont
2018, no pet.) (“Texas appellate courts have been reluctant to uphold default judgments where
some response is found in the record, even if the response is in the form of the letter.”). A letter
that is signed by the defendant providing the name of the parties, the cause number, and the
defendant’s current address constitutes an answer which prevents the taking of a default judgment.
Lippman, 826 S.W.2d at 138; Cox v. Nat’l Collegiate Student Loan Trust 2006-2, No. 07-14-
00253-CV, 2014 WL 6656977, at *1 (Tex. App.—Amarillo Nov. 24, 2014, no pet.) (mem. op.).
Further, a letter containing some, but not all, of the information set out in Lippman may also qualify
as an answer. Rhojo Enters., LLC, 540 S.W.3d at 624; Beard v. Uriostegui, 426 S.W.3d 178, 182
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(Tex. App.—Houston [1st Dist.] 2012, no pet.) (concluding letter omitting defendant’s current
address constituted answer when return address appeared on envelope containing letter).
Adio’s March 25, 2016 letter to the district clerk indicated it was filed on behalf of Tunad,
was signed and dated, and contained the trial court cause number. Attached to the letter was the
Notice of Damages that contained Tunad’s address.5 The letter and the attachments stated facts
that could constitute a defense to Palma’s claim. We conclude Adio’s March 26, 2016 letter
constituted an answer on behalf of Tunad. See Lippman, 826 S.W.2d at 138; Custom-Crete, Inc.
v. K-Bar Servs., Inc., 82 S.W.3d 655, 657–58 (Tex. App.—San Antonio 2002, no pet.).
Palma argues that, even if the letter constituted an answer, it was nullity because it was
filed by a non-attorney on behalf of a corporation, was not properly served on Palma’s attorney,
and was not electronically filed as required by the Collin County Rules. However, a non-attorney’s
answer on behalf of a corporation is a “curable defect” and does not make the answer ineffective.
Wuxi Taihu Tractor Co., Ltd. v. York Grp., Inc., No. 01-13-00016-CV, 2014 WL 6792019, at *8
(Tex. App.—Houston [1st Dist.] Dec. 2, 2014, pet. denied). Although the answer is defective, it
is sufficient to prevent the trial court from granting a no-answer default judgment against the
corporate defendant. See KSNG Architects, Inc., 109 S.W.3d at 897, 899 n.5; Wuxi Taihu Tractor
Co., Ltd., 2014 WL 6792019, at *9.
As to Palma’s complaint that he was not served with the answer, an answer that lacks a
certificate of service is defective. Morganfield v. Lopez, No. 04-04-00165-CV, 2005 WL 236675,
at *1 (Tex. App.—San Antonio Feb. 2, 2005, no pet.) (mem. op.). The defendant’s failure to
properly serve the answer, however, does not render it a nullity. Dougherty v. Brewer, No. 03-12-
00445-CV, 2012 WL 6097320, at *1 (Tex. App.—Austin Dec. 6, 2012, no pet.) (mem. op.).
5
The Collin County District Clerk later corresponded with Tunad at the address on the notice of damages, indicating she knew Tunad’s
address. See In re R.K.P., 417 S.W.3d 544, 550 (Tex. App.—El Paso 2013, no pet.) (concluding letter’s failure to contain defendant’s address did
not preclude it from constituting answer because record reflected court clerk mailed orders to defendant, indicating she had notified court of her
address).
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Finally, we have found no authority that the failure to file an answer electronically renders it a
nullity, particularly when, as in this case, the answer has been accepted and filed by the district
clerk.
We conclude Tunad timely filed an answer in this case and, therefore, was entitled to
forty-five days’ notice before the trial court rendered default judgment. See Lippman, 826 S.W.2d
at 138 (concluding defendant who timely files answer “deserves notice of any subsequent
proceedings in the case”); see also TEX. R. CIV. P. 245. The record reflects Palma filed his motion
for default judgment on April 26, 2016, and the trial court signed the default judgment on April
28, 2016. Accordingly, regardless of whether the trial court held a hearing on Palma’s motion for
default judgment, Tunad could not have received the forty-five days’ notice of the hearing required
by rule 245. Because Tunad did not receive the required notice of the motion for default judgment,
the trial court erred by granting the default judgment. See Lippman, 826 S.W.2d at 138; In re
Marriage of Villa, 2013 WL 1838620, at *2; Dougherty, 2012 WL 6097320, at *2.
We resolve Tunad’s first issue in its favor. Based on our resolution of this issue, we need
not consider Tunad’s remaining issues. See TEX. R. APP. P. 47.1. We reverse the trial court’s
judgment and remand this case for further proceedings.
/Robert M. Fillmore/
ROBERT M. FILLMORE
JUSTICE
170208F.P05
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
TUNAD ENTERPRISES, INC., Appellant On Appeal from the 417th Judicial District
Court, Collin County, Texas,
No. 05-17-00208-CV V. Trial Court Cause No. 417-00618-2016.
Opinion delivered by Justice Fillmore,
MARTIN PALMA D/B/A LIZ PIZZA, Justices Francis and Whitehill participating.
Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and this cause is REMANDED to the trial court for further proceedings consistent
with this opinion.
It is ORDERED that appellant Tunad Enterprises, Inc. recover its costs of this appeal
from appellee Martin Palma d/b/a Liz Pizza.
Judgment entered this 27th day of June, 2018.
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