Almanara World Class Restaurant, Inc. A/K/A Almanara, Inc. v. Caspian Enterprises, Inc. D/B/A Caspian Homes ( 2003 )

Affirmed as Modified and Opinion filed March 6, 2003

Affirmed as Modified and Opinion filed March 6, 2003.

In The

Fourteenth Court of Appeals

____________

NO. 14-02-00347-CV

____________

ALMANARA WORLD CLASS RESTAURANT, INC.

A/K/A ALMANARA, INC., Appellant

V.

CASPIAN ENTERPRISES, INC. D/B/A CASPIAN HOMES, Appellee

On Appeal from the 133rd District Court

Harris County, Texas

Trial Court Cause No. 00-39497

O P I N I O N

Appellant failed to appear either in person or through counsel when this case was called to trial.  In two points of error, appellant maintains the trial court abused its discretion in: (1) granting a take nothing judgment against appellant for a failure to appear at trial; and (2) denying appellant=s AMotion to Set Aside Default, or Alternatively, Motion for New Trial.@  We affirm as modified.

PROCEDURAL BACKGROUND

This appeal arises from a multi-party dispute over a restaurant lease.  The commercial real estate tenant, Haysam Alia, leased the property in question from MGA Interests, Inc.  In violation of the lease, Alia subleased the property to Al Alya, who operated the Almanara Restaurant on the site.  Alya later subleased the property to Bahzad Aradghani.  In 2000, appellant sought injunctive relief against Aradghani, who in turn filed a counterclaim as well as third party claims against Alya and Manar Saah, who were also plaintiffs in the action. When MGA learned of the subleases, it put Alia on notice of default under the terms of the lease and subsequently obtained a final judgment in the justice court for possession.  During the underlying litigation, MGA sold both the property and leasehold estate rights to appellee.  Appellee was named as a defendant in appellant=s First Amended Petition.

On January 7, 2002, the trial court called the case to trial.  Present were appellee and Aradghani.  No other parties appeared.  Appellee appeared through counsel, Robert A. Axelrad, while Aradghani appeared pro se. Neither appellant nor appellant=s attorneys, James C. Plummer and Ray L. Shackelford, appeared at the trial setting.  The record reflects that the trial court telephoned Shackelford, who refused the opportunity to appear and stated that he was no longer counsel of record.  The following exchange then took place between the trial court and counsel for appellee:

MR. AXELRAD:  I would ask the Court to grant the Default Judgment in this case.

THE COURT:  Well, you=re the Defendant, so a default probably would not be the case, but if you=re asking me to strike the pleadings or deny relief, I=m not quite sure which it is you=re asking me.

MR. AXELRAD:  I=m asking you for a Judgment Nihil Dicit which is a judgment that the Court renders that the Plaintiff take nothing for failure to appear in this case today, Your Honor.^[1]

THE COURT:  Granted.

The next day, the trial court signed its order of final judgment.  The order states that plaintiffs failed to appear when the case was called to trial despite the fact they were properly notified of the trial setting.  Citing the failure to appear as grounds for the requested relief, the order recited that Athe Plaintiffs take nothing on all their causes of action.@  The order did not state that the case was being dismissed for want of prosecution.

On January 22, the plaintiffs, through Plummer, filed their AMotion to Set Aside Default or, Alternatively, Motion for New Trial.@  In relevant parts, the motion set forth the following:

On or about January 7, 2002, [the action] was called to trial, and upon the failure of the plaintiffs to appear, judgment was entered dismissing the action. This is the plaintiffs' request to set aside the judgment, and reinstate this matter on the court's docket or, alternatively, for new trial.

.   .   .

Unless reinstated or granted a new trial, plaintiffs will be harmed by any final judgment that has been or might be entered. Accordingly, plaintiffs request that the judgment entered in this matter be set aside or, alternatively, that they have a new trial on the merits of this claim.^[2]

Appended to the motion were two single sentence verifications signed by Plummer and Shackelford.  Both verifications were identical and in their entirety read: AAffiant upon oath swears that the foregoing statements are true.@  The verifications did not state whether or not they were made upon personal knowledge of the affiant.^[3] 

The document did not direct the court=s attention to any authority, nor did it address the issue of whether there had been  a dismissal for want of prosecution.  At the hearing on this motion, however, appellant recharacterized it as a motion to reinstate brought under Rule 165a.  In making this argument, counsel for appellee stated:

MR. PLUMMER:  We have filed a Motion to Set Aside Default or Alternatively for a New Trial. And I want to call the Court=s attention to a sudden realization that I think what we=re addressing is not a Motion to Set Aside a Default or a Motion B in that sense.

I think this is really a Rule 166(a) motion asking that this matter be reinstated. Under the rules it seems to me 166(a) is the appropriate rule for Plaintiff in this context where the matter is dismissed for want of prosecution.^[4]

After testimony and argument, the trial court denied appellee=s AMotion to Set Aside Default, or Alternatively, Motion for New Trial@ on March 20, 2002.  In that order, the trial court noted that Aafter reviewing the motions, the pleadings, and arguments of counsel, [the court] is of the opinion that the [motion] should be denied@ and is Ahereby denied in its entirety.@  This appeal, perfected by appellant but no other parties, ensued.

PRESERVATION OF ERROR

Appellant contends the trial court could not grant a take nothing judgment for failure to appear at trial but could only dismiss the claims for want of prosecution.  Appellant did not advance this argument in its original motion.  Thus, we must first ascertain whether appellant sufficiently preserved error for our review.  Cf. Labrie v. Kenney, No. 07‑02‑0018‑CV, 2003 WL 122377, at *4 (Tex. App.CAmarillo Jan. 13, 2003, no pet. h.) (stating error in improper dismissal for want of prosecution is Asubject to waiver if the trial court is not given an opportunity to correct it or if the question is not properly raised on appeal@); Andrews v. ABJ Adjusters, Inc., 800 S.W.2d 567, 568 (Tex. App.CHouston [14th Dist.] 1990, writ denied) (noting argument that dismissal for want of prosecution Awith prejudice@ was improper but argument could be waived on appeal).

Though the motion was styled as a AMotion to Set Aside Default, or Alternatively, Motion for New Trial,@ appellant abandoned that characterization at the hearing and argued it as a Motion to Reinstate brought under Rule 165a.^[5]  Although he now contends that a take nothing judgment was inappropriate under the circumstances, Plummer repeatedly informed the court that he was arguing a motion to reinstate.  At the hearing, he stated:

The issue is a . . . 165(a) issue on a Motion to Reinstate.  We have made the appropriate allegations in our motion improperly characterized as a Motion to Set Aside Default or for a New Trial and based upon those allegations, we=d ask the Court to reinstate the matter on the Court=s docket.

Briefly, mid-way through the hearing and just before the witnesses testified, Plummer alluded to the argument he now makes on appeal when he made the following request of the trial court:

Now, in the event the Court does not reinstate it, we would ask the Court to reB reform the judgment to reflect that its [sic] Dismissal for Want of Prosecution because I believe that=s the appropriate proceeding under these circumstances.  It is not a default, but a dismissal for want of prosecution.

. .   .

So we would ask the Court to do that. And without further argument to the Court, we would ask the Court to rule in that regard, that this is a 165(a) proceeding and that it=s a Motion to Reinstate and that we=re entitled to reinstatement.

At the end of the hearing, the trial court characterized the hearing as an inquiry into whether the motion was Aa Motion to Set Aside a Default and alternative [sic] Motion for New Trial or a motion not styled, but otherwise related to 165 and 165(a).@  Necessarily included in that assessment was the request by appellant to reform the judgment.  The trial court did not rule on the day of the hearing.  Rather, the court asked the parties for additional briefing which is not in the appellate record.  The trial court denied the requested relief in its entirety.  We conclude appellant=s request that the trial court reform the judgment to reflect a dismissal for want of prosecution was sufficient to preserve error.  Appellant stated the grounds for the ruling sought with sufficient specificity to make the trial court aware of the complaint when he made a specific request that the trial court reform the judgment.  See Tex. R. App. P. 33.1(a)(1).

ANALYSIS

In its first point of error, appellant argues the trial court erred in granting a take nothing judgment against appellant for failure to appear at trial because the only ruling the trial court could make was a dismissal  for want of prosecution, as appellant was a plaintiff.  In advancing this argument, appellant relies on State v. Herrera, 25 S.W.3d 326 (Tex. App.CAustin 2000, no pet.).  In that case, the State, two municipalities, and a city transit authority sued a taxpayer to collect past‑due state and local sales taxes, penalties, and interest owed them.  Id. at 327.  When the case was called for trial, the plaintiffs failed to make an appearance. Id.  The taxpayer-defendant announced that he was ready to proceed and then moved for judgment.  Id. The trial court granted the motion and ordered that the plaintiffs take nothing by their action against the taxpayer-defendant.  Id. Reversing and remanding, the Austin Court of Appeals heldAthe trial court may not adjudicate the merits of a plaintiff's claim when he fails to appear for trial, but may only dismiss the claim for want of prosecution.@  Id. at 328.

The rationale for such a rule is manifest; an important distinction between dismissals with and without prejudice is the preclusive effect of these two types of judgments.  Orders dismissing cases with prejudice have full res judicata and collateral estoppel effect, barring subsequent relitigation of the same causes of action or issues between the same parties.  See Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630B31 (Tex. 1992).  A take nothing judgment is a dismissal with prejudice. See Garcia‑Marroquin v. Nueces County Bail Bond Bd., 1 S.W.3d 366, 379 n.8 (Tex. App.CCorpus Christi 1999, no pet.) (noting that the statement, Aplaintiff take nothing by her suit,@ constitutes a decision on the merits).  Thus, it constitutes a decision on the merits and acts as a final determination on the merits of the case.  See Id;  see also Mossler v. Shields, 818 S.W.2d 752, 754 (Tex. 1991) (A[I]t is well established that a dismissal with prejudice functions as a final determination on the merits.@).

On the other hand, a dismissal for want of prosecution is not a trial on the merits, and thus, a dismissal for want of prosecution with prejudice is inappropriate.  See Massey v. Columbus State Bank, 35 S.W.3d 697, 700 (Tex. App.CHouston [1st Dist.] 2000, pet. denied); Attorney General of the State of Texas v. Abbs, 812 S.W.2d 605, 608 (Tex. App.CDallas  1991, no writ).  When a case is dismissed for want of prosecution, it is rare that there would be any legal premise for its dismissal with prejudice since ordinarily the case might be refiled.  See Stein v. Lewisville Indep. Sch. Dist., 481 S.W.2d 436, 441 (Tex. Civ. App.CFort Worth 1972, writ ref=d n.r.e.); see also Labrie 2003 WL 122377, at *4 (noting that a dismissal for want of prosecution with prejudice is improper); see also Shields v. Boone, 22 Tex. 193 (Tex. 1858) (noting that a dismissal for want of prosecution does not interrupt the running of the statute of limitations); Shaw v. Corcoran, 570 S.W.2d 96, 98 (Tex. Civ. App.CAustin 1978, no writ) (noting that Adismissal for want of prosecution will have the same effect as if the suit had never been filed.@).  Therefore, when a trial court grants a take nothing judgment when it should instead dismiss the case for want of prosecution, it prevents the litigant from pursuing the case and defeats the purpose of Rule 165(a).

Other courts have reached similar results under this rationale.  Citing and relying upon Herrera, the El Paso Court of Appeals recently reversed and remanded a case under Aremarkably similar facts.@  See Slaughter v. Clement, 64 S.W.3d 448, 450 (Tex. App.CEl Paso 2001, no pet.).  In that case, the trial court denied the former wife=s motion to modify a divorce decree after she failed to appear at trial.  Id. at 449B50.  The trial court=s order stated that in failing to appear in person or through her attorney the former wife had wholly defaulted.  Id. at 450.  The trial court denied her motion to reinstate the case.  Id.  The appellate court reversed and remanded to the trial court after finding that A[t]he judgment on its face reveals error C the denial of [the former wife=s] motion to modify was an adjudication on the merits upon her failure to appear for trial.@  Id. at 451.  In so doing, the court expressed no opinion as to whether upon notice and hearing, the cause should be dismissed for want of prosecution.  Id.  In recent unpublished cases, the Corpus Christi and Dallas Courts of Appeals have cited the same line of authority to reach the same result.  See Dolenz v. Pirate=s Cove Water Supply & Sewage Serv. Corp., No. 13-99-740-CV, 2001 WL 1002434, at *1 (Tex. App.CCorpus Christi 2001, pet. denied) (not designated for publication); Dolenz v. Corpus Christi Int=l Sch. of Sailing, Inc., No. 05-00-00692-CV, 2001 WL 259129, at *1B2 (Tex. App.CDallas 2001, no pet.) (not designated for publication).  Accordingly, we sustain appellant=s first issue and find the trial court abused its discretion in granting a take nothing judgment against appellant for failure to appeal at trial.

DENIAL OF THE MOTION

In its second point of error, appellant contends the trial court abused its discretion by denying its AMotion to Set Aside Default, or Alternatively, Motion for New Trial.@  Having concluded the trial court abused its discretion in granting a take nothing judgment when its only option was a dismissal for want of prosecution, we sustain appellant=s second point.

For reasons articulated in our discussion of appellant=s first point of error, we cannot order reinstatement of the case because it has not been dismissed.  Herrera, 25 S.W.3d at 328.  In its prayer for relief, appellant asks that this court reverse and remand the case for a trial on the merits, or alternatively, reverse the trial court=s order denying reinstatement and remand the case to the trial court for a determination as to whether appellant=s claims should be dismissed pursuant to Rule 165(a).  At the hearing on the motion, appellant recharacterized his motion as a motion to reinstate brought pursuant to Rule 165(a), but he also made an oral request that the trial court reform the judgment to reflect a dismissal for want of prosecution.  As reinstatement is inappropriate under the circumstances, the only appropriate relief sought by appellant at the trial court level was a reformation of the judgment to reflect that it was a dismissal for want of prosecution.  The court of appeals may modify the trial court=s judgment and affirm it as modified.  See Tex. R. App. P. 43.2(b).  Thus, under the circumstances presented by this case, we find that the appropriate disposition is to affirm the judgment as modified to reflect a dismissal for want of prosecution.  De La Garza v. Express‑News Corp., 722 S.W.2d 251, 253 (Tex. App.CSan Antonio 1986, no writ) (affirming judgment as reformed by rendering judgment that should have been rendered by ordering that take nothing judgment be dismissed); Cash Buyers, Inc. v. Sash, No. 14‑99‑01169‑CV, 2001 WL 931298, at *3 (Tex. App.CHouston [14th Dist.] 2001, no pet.) (not designated for publication) (reforming take nothing judgment to reflect a dismissal for want of prosecution); but see Herrera, 25 S.W.3d at 328 (declining to reform the judgment to reflect a dismissal for want of prosecution).

CONCLUSION

As the trial court erred to the extent that its order states Athe Plaintiffs take nothing on all their causes of action,@ we order the judgment be reformed to restate that cause of action is dismissed for want of prosecution.

For the foregoing reasons, the judgment is affirmed as modified.

/s/        Eva M. Guzman

Justice

Judgment rendered and Opinion filed March 6, 2003.

Panel consists of Justices Edelman, Seymore, and Guzman.

---

^[1]  Both a default judgment and a judgment nihil dicit would be inappropriate under the facts of this case.  See Stoner v. Thompson, 578 S.W.2d 679, 682B83 (Tex. 1979) (distinguishing among a default judgment, a post‑answer default judgment, and a judgment nihil dicit).

^[2]  The motion also alleged that since September 20, 2002, Plummer had been the Aprincipal counsel in the prosecution of plaintiffs= claims.@  On the occasion of a party=s first appearance through counsel, the attorney whose signature first appears on the initial pleadings for any party shall be the attorney in charge, unless another attorney is specifically designated therein.  Tex. R. Civ. P. 8.  In the Plaintiff=s Original Petition and Application for Temporary Restraining Order, the only signature by an attorney was that of Ray L. Shackelford.  In the Plaintiff=s Original Answer to Counterclaim, as well as in the First Amended Petition and Application for Injunctive Relief, both the names of Shackelford and attorney James C. Plummer appeared, though Shackelford=s appeared first. The first document on which only Plummer=s name appeared as the attorney of record was the AMotion to Set Aside Default, or Alternatively, Motion for New Trial.@

^[3]  Rule 165a(3) requires verification by the movant or the movant=s attorney of a motion to reinstate. Tex. R. Civ. P. 165a(3); McConnell v. May, 800 S.W.2d 194, 194 (Tex. 1990) (per curiam).  Because of the nature of our disposition of this case, we need not decide whether single line verifications by attorneys in a Motion to Reinstate are sufficient.  A party=s attorney may verify the pleading where he has knowledge of the facts, but does not have authority to verify based merely on his status as counsel.  See Cantu v. Holiday Inns, Inc., 910 S.W.2d 113, 116 (Tex. App.CCorpus Christi 1995, writ denied).  In the pleading or affidavit, counsel must show the basis for his or her personal knowledge of relevant facts.  See id.; see also Burke v. Satterfield, 525 S.W.2d 950, 955 (Tex. 1975) (noting that verifications are intended to be so direct and unequivocal as to subject the affiant to perjury if untrue).

^[4]  Though in this initial exchange he miscited the rule governing motions to reinstate as Rule 166(a), counsel for appellee later corrected himself and invoked the proper rule, 165(a).

^[5]  At the hearing, appellant framed its argument as if the case had been dismissed for want of prosecution.  We note that the only evidence that the case was dismissed for want of prosecution is the language in the judgment stating that plaintiffs Afailed to appear@ and the fact that appellee=s oral motion for judgment was granted.  The judgment, which recites nothing about a dismissal for want of prosecution, clearly and specifically states that this case was decided by a take-nothing judgment.