Pamela Mehl v. David Stern ( 2016 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-14-00697-CV
Pamela Mehl, Appellant
v.
David Stern, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. D-1-GN-14-002071, HONORABLE JON N. WISSER, JUDGE PRESIDING
MEMORANDUM OPINION
Pamela Mehl brings this restricted appeal from a no-answer default judgment in
which the trial court awarded appellee David Stern title and possession of a 50% interest in
residential real property, actual damages, and attorney’s fees, and appointed a receiver over the real
property at issue. The trial court’s title and possession award to Stern was based on its rescission
of a prior conveyance by Stern of his 50% interest in the real property to Mehl under a special
warranty deed. On appeal, Mehl raises nine issues challenging the default judgment. For the
following reasons, we affirm the judgment in part, reverse and vacate the judgment in part, and
reverse and remand the case in part to the trial court for further proceedings consistent with
this opinion.
BACKGROUND1
The parties at one time jointly owned residential real property (the Property). As part
of a settlement agreement between the parties after litigation in several courts, Stern transferred his
50% interest in the Property to Mehl under a special warranty deed dated May 3, 2013, and Mehl
executed a “Deed of Trust to Secure Assumption to [Stern]” (the Assumption), in which Mehl agreed
to timely tender mortgage payments on the Property to the preexisting, third-party mortgage-holder
and ultimately to refinance the mortgage by 2016.
In June 2014, Stern sued Mehl for breach of contract and trespass to try title. He
alleged that Mehl was in material default of the Assumption because she had failed to timely tender
at least five monthly mortgage payments to the mortgage-holder. He also alleged that, when he
executed and delivered the special warranty deed to Mehl, he “retained an implied and/or express
vendor’s lien to secure payments required under the Assumption.” Stern sought rescission of his
conveyance under the special warranty deed of his 50% interest in the Property to Mehl, recovery
of title and possession of his 50% interest in the Property, “monetary damages in connection with
[his] credit report,” the “establishment and foreclosure of the vendor’s lien securing [Mehl]’s
obligations, and for order of sale,” and reasonable attorney’s fees. He also sought the appointment
of a receiver with the power to sell the Property.
1
The underlying facts are from Stern’s petition, taken as true in light of Mehl’s failure to
answer. See Morgan v. Compugraphic Corp., 675 S.W.2d 729, 731 (Tex. 1984); Calderoni
v. Vasquez, No. 03-11-00537-CV, 2012 Tex. App. LEXIS 5245, at *1 (Tex. App.—Austin
June 26, 2012, no pet.) (mem. op.) (taking summary of facts from appellee’s petition as true in light
of appellant’s default).
2
After Mehl was served with citation and failed to answer, Stern sought a default
judgment. In support of a default judgment, Stern filed a certificate of Mehl’s last known mailing
address, an affidavit addressing incurred attorney’s fees, a nonmilitary affidavit, and a “Mortgage
Account Statement” dated July 22, 2014. The trial court thereafter held a hearing on July 29, 2014,
and entered a default judgment on the same day in Stern’s favor on both of his causes of action. In
its judgment, the trial court awarded the following relief: (i) “judgment for title and possession of
50% of the Property based on a rescission of the prior conveyance” under the special warranty deed;
(ii) actual damages of $20,000; (iii) attorney’s fees of $2,500; and (iv) the appointment of a receiver.
The record also includes a copy of the special warranty deed from Stern to Mehl, but no reporter’s
record was made of the hearing. Mehl thereafter filed a motion for new trial on October 13, 2014,
and a notice of restricted appeal on November 4, 2014.
ANALYSIS
To successfully attack an order by restricted appeal, the appealing party must show
that: (1) she brought the appeal within six months after the trial court signed the complained-of
judgment or order; (2) she was a party to the suit; (3) she did not participate in the hearing that
resulted in the complained-of judgment or order and did not timely file any postjudgment motions
or requests for findings of fact and conclusions of law; and (4) error is apparent from the face of the
record. See Tex. R. App. P. 26.1(c), 30; Alexander v. Lynda’s Boutique, 134 S.W.3d 845, 848 (Tex.
2004). The record, for purposes of a restricted appeal, consists of the clerk’s record and the
reporter’s record if one was made, and also includes any evidence presented to the trial court before
final judgment. See Norman Commc’ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997)
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(per curiam); General Elec. Co. v. Falcon Ridge Apartments, Joint Venture, 811 S.W.2d 942, 944
(Tex. 1991) (“The rule has long been that evidence not before the trial court prior to final judgment
may not be considered in a [restricted appeal] proceeding.”). The scope of review is the same as in
ordinary appeals, including review of legal and factual insufficiency claims. Norman, 955 S.W.2d
at 270. However, when the evidence is legally insufficient to support a default judgment, the proper
disposition generally is to reverse and remand for a new trial. See Holt Atherton Indus., Inc.
v. Heine, 835 S.W.2d 80, 86 (Tex. 1992); Armstrong v. Benavides, 180 S.W.3d 359, 364 (Tex.
App.—Dallas 2005, no pet.) (explaining that, although appellate courts generally reverse and render
when sustaining a legal sufficiency challenge, “an exception is made in cases involving default
judgments because the facts have not been fully developed”).
Procedural Requirements of Restricted Appeal
In her first issue, Mehl contends that she satisfied the procedural requirements for
maintaining a restricted appeal under Texas Rule of Appellate Procedure 30. See Tex. R. App. P. 30;
Alexander, 134 S.W.3d at 848. Stern does not dispute that Mehl was a party to the suit, that she filed
her notice of appeal within six months of the default judgment, and that she did not participate in the
hearing that resulted in the default judgment. Stern, however, contends that the restricted appeal
should be dismissed because “Mehl filed an arguable timely motion for new trial.” Stern focuses
on Mehl’s statements in her briefing to this Court that she did not receive notice of the judgment
from the trial court and “was unaware of entry of the [j]udgment until sometime in October 2014.”
Stern argues that Mehl could have pursued relief from the trial court under Texas Rule of Appellate
Procedure 4.2(a)(1) and Texas Rule of Civil Procedure 306(a)(4) based on her alleged lack of notice
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of entry of the judgment and, therefore, her motion for new trial that was filed in October 2014
should be considered timely for purposes of her restricted appeal, thereby precluding it. See Tex.
R. App. P. 4.2(a)(1); Tex. R. Civ. P. 306a(4).
The deadline for a party to file a motion for new trial generally is no later than thirty
days after the date the final judgment or order was signed. See Tex. R. Civ. P. 329b(a). Texas Rule
of Civil Procedure 306a(4) provides an exception to this general rule by extending the deadline for
filing a motion for new trial when a party does not receive notice of a judgment within twenty days
of the judgment being signed. See id. R. 306a(4). To be entitled to an extension for filing a motion
for new trial based on lack of notice under this rule, however, a party must comply with specified
procedural requirements:
In order to establish the application of paragraph (4) of this rule, the party adversely
affected is required to prove in the trial court, on sworn motion and notice, the date
on which the party or his attorney first either received a notice of the judgment or
acquired actual knowledge of the signing and that this date was more than twenty
days after the judgment was signed.
Id. R. 306(a)(5); Powell v. McCauley, 126 S.W.3d 158, 160 (Tex. App.—Houston [1st Dist.] 2002,
no pet.) (“Rule 306a places the burden of establishing its applicability on the party seeking the
extension.”). Texas Rule of Appellate Procedure 4.2(a)(1) similarly addresses the extension of
appellate deadlines when a party did not receive notice of a trial court’s judgment, but that appellate
rule does not operate to extend the time deadline to file a motion for new trial under the Texas Rules
of Civil Procedure. See Tex. R. App. P. 4.2(a)(1); McCauley, 126 S.W.3d at 160–61 (comparing
Tex. R. App. P. 4.2(a)(1) and Tex. R. Civ. P. 306a).
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The record reflects that Mehl filed her motion for new trial more than 30 days after
the default judgment was signed, see Tex. R. Civ. P. 329b(a), and that she did not file a sworn
motion under paragraph 5 of Texas Rule of Civil Procedure 306(a) to establish the applicability of
paragraph 4. See id. R. 306a(5); McCauley, 126 S.W.3d at 160 (observing procedural guidelines of
rule 306a(5) that must be followed to invoke the trial court’s limited jurisdiction to hold a rule 306a
hearing); see, e.g., Approximately $58,641.00 v. State, 331 S.W.3d 579, 584–86 (Tex.
App.—Houston [14th Dist.] 2011, no pet.) (discussing rule 306a(5) procedure in context of restricted
appeal and finding that trial court lacked plenary power to consider untimely filed motion for new
trial); Aviation Composite Techs., Inc. v. CLB Corp., 131 S.W.3d 181, 185–86 (Tex. App.—Fort
Worth 2004, no pet.) (concluding that appellants did not timely file postjudgment motion “for
purposes of rule 30” when they filed motion to extend time limits under rule 306a(4) and trial court
denied their motion).
On this record, we conclude that Mehl’s motion for new trial was not timely filed for
purposes of Texas Rule of Appellate Procedure 30. Given that she also satisfied the other procedural
requirements—that she was a party to the suit, that she brought her appeal within six months, and
that she did not participate in the default judgment hearing, we conclude that Mehl satisfied the
procedural requirements to bring this restricted appeal. See Tex. R. App. P. 30; Alexander,
134 S.W.3d at 848; Aviation Composite Techs., 131 S.W.3d at 185–86. On this basis, we sustain
Mehl’s first issue.
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Error Apparent on the Face of the Record
Mehl’s second through ninth issues address the substantive element for successfully
attacking a restricted appeal: whether error is apparent on the face of the record. See Alexander,
134 S.W.3d at 848. Mehl cites the following alleged reversible errors in the trial court’s default
judgment to support her position that error is apparent on the face of the record: (i) the entry of
judgment in the wrong county in violation of mandatory venue provisions (second issue); (ii) the
rescission of the land conveyance, which was only a portion of the parties’ transaction without
evidence in the record to support the rescission (third issue); (iii) the award of $20,000 in actual
damages without evidence to support the award (fourth issue); (iv) the award of both rescission and
monetary damages for breach of contract (fifth issue); (v) the award of $2,500 in attorney’s fees
(sixth issue); (vi) the appointment of a receiver in a county where the real property was not located
(seventh issue) and “where a party in interest (namely, the first mortgage holder) is not named as a
party in the suit” (eighth issue); and (vii) the failure to give Mehl three days notice prior to the
hearing appointing the receiver (ninth issue). We limit our review to the dispositive issues. See Tex.
R. App. P. 47.1.
Mandatory Venue
In her second and seventh issues, Mehl contends that Stern filed his petition in the
wrong county in violation of the mandatory venue provisions of section 15.011 of the Texas Civil
Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code § 15.011 (requiring actions for the
recovery of real property to be brought in county in which property located). Stern responds that
Mehl waived her objection to venue by failing to file an answer before the default judgment was
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signed. See Tex. R. Civ. P. 86(1) (providing that “an objection to improper venue is waived if not
made by written motion filed prior to or concurrently with any other plea, pleading or motion except
a special appearance motion provided for in Rule 120a”).
The first motion filed by Mehl with the trial court was her motion for new trial and,
in that motion, she stated that Stern was her ex-husband and argued that “[t]he divorce and all the
matters and events in this cause occurred in Williamson County, Texas, however this suit was
wrongfully filed in Travis County, Texas.” But, even if we assume without deciding that this
statement in her motion for new trial preserved the objections to venue that she raises with this
Court, her objection was not before the trial court when it signed the default judgment. See Conseco
Fin. Servicing Corp. v. Klein Indep. Sch. Dist., 78 S.W.3d 666, 670 (Tex. App.—Houston [14th
Dist.] 2002, no pet.) (“The face of the record for purposes of a restricted appeal consists of all the
papers on file before the judgment as well as the reporter’s record.”). Further, because she did not
timely file her motion for new trial, the trial court did not have jurisdiction to consider the arguments
in that motion. See Approximately $58,641.00, 331 S.W.3d at 586. On this record, we cannot
conclude that there is error apparent on the face of the record based on Mehl’s subsequent objections
to venue in Travis County and, on this basis, we overrule her second and seventh issues.
Awarded Remedies
In her remaining issues, Mehl does not challenge the trial court’s liability findings
against her but the trial court’s awarded remedies. See Lucas v. Clark, 347 S.W.3d 800, 803 (Tex.
App.—Austin 2011, pet. denied) (“When a no-answer default judgment is rendered, the defendant’s
liability for all causes of action pleaded is conclusively established and all allegations of fact set forth
8
in the petition are deemed admitted, except the amount of unliquidated damages.” (citing
Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 930 (Tex. 2009) (per curiam); Texas Commerce
Bank, N.A. v. New, 3 S.W.3d 515, 516 (Tex. 1999) (per curiam))); see also Morgan v. Compugraphic
Corp., 675 S.W.2d 729, 731 (Tex. 1984) (“[I]f the facts set out in the petition allege a cause of
action, a default judgment conclusively establishes the defendant’s liability.”). As previously stated,
Mehl challenges the awarded remedies of rescission of the conveyance under the special warranty
deed, actual damages, attorney’s fees, and the appointment of a receiver.
As to the award of the amount of $20,000 in actual damages, we agree with Mehl’s
argument in her fourth issue that this award constitutes error apparent on the face of the record.
“After a default judgment occurs, unliquidated damages, i.e., damages not expressly provided for
within a written instrument, must be proven to the trial court.” Lucas, 347 S.W.3d at 803 (citing
Tex. R. Civ. P. 243); see Heine, 835 S.W.2d at 83 (requiring court rendering default judgment to
hear evidence of unliquidated damages); cf. Whitaker v. Rose, 218 S.W.3d 216, 220 (Tex.
App.—Houston [14th Dist.] 2007, no pet.) (“For liquidated damages, a trial court can render a
default judgment if it can verify the damages by referring to the allegations in the petition and the
written instruments.” (citing Tex. R. Civ. P. 241)).
To support the trial court’s award of actual damages, Stern points to his factual
allegation in his petition that at least five mortgage payments were past due and argues that “an
award of $20,000 was necessary to address the significant arrears on the mortgage and/or to
compensate Stern for damages to his credit.” He also filed a “Mortgage Account Statement” with
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the trial court to support his request for default judgment.2 Damages in connection with Stern’s
credit, however, were unliquidated damages and, thus, Stern was required to submit competent
evidence to support this claim. See Tex. R. Civ. P. 243; Morgan, 675 S.W.2d at 731; Clark,
347 S.W.3d at 803; Rose, 218 S.W.3d at 224 (reversing award of unliquidated damages in default
judgment when “no evidence of at least one possible damage element”); see also Mead v. Johnson
Grp., 615 S.W.2d 685, 688 (Tex. 1981) (holding that “actual damages for loss of credit or injury to
credit reputation in an action for breach of contract may be recovered when there is evidence that
loss of credit was a natural, probable, and foreseeable consequence of the defendant’s breach”).
Stern also only pleaded for damages in “connection with [his] credit report” as to his breach of
contract claim. See Tex. R. Civ. P. 47(a) (stating pleading requirement of “fair notice of the claim
involved”); Morgan, 675 S.W.2d at 731–32 (requiring plaintiff seeking no-answer default judgment
to prove amount of unliquidated damages in relation to factual allegations in pleadings); Said
v. Allstate Ins. Co., No. 01-12-00435-CV, 2013 Tex. App. LEXIS 10762, at *4–5 (Tex.
App.—Houston [1st Dist.] Aug. 27, 2013, no pet.) (mem. op.) (“At the trial on damages [when a no-
answer default judgment is rendered], the plaintiff must prove by competent evidence the amount
of unliquidated damages consistent with the cause of action pleaded.”); see generally Calderoni
v. Vasquez, No. 03-11-00537-CV, 2012 Tex. App. LEXIS 5245 (Tex. App.—Austin June 26, 2012,
no pet.) (mem. op.) (discussing pleading requirements in context of restricted appeal of no-answer
default judgment). Based on our review of the record, Stern did not present competent evidence to
2
The monthly account statement reflects amounts owed to the third-party mortgage holder,
not amounts owed to Stern.
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support an actual damages award in the amount of $20,000. Thus, we conclude that there is error
apparent on the face of the record as to this award, and we sustain Mehl’s fourth issue on this basis.
We also agree with Mehl’s argument in her fifth issue that, on this record, the trial
court improperly awarded the remedies of both rescission of Stern’s conveyance of his interest in the
Property to Mehl and actual damages. A party generally is not entitled to a double recovery for the
same injury. Waite Hill Servs., Inc. v. World Class Metal Works, Inc., 959 S.W.2d 182, 184 (Tex.
1998) (per curiam) (“A double recovery exists when a plaintiff obtains more than one recovery for
the same injury.”); see Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991) (“The one
satisfaction rule applies to prevent a plaintiff from obtaining more than one recovery for the same
injury.”). Stern sought rescission of the conveyance of his 50% interest in the Property under the
special warranty deed based on an “implied and/or express vendor’s lien to secure payments required
under the Assumption” and breach of contract based on Mehl’s failure to make required payments,
but he did not file a copy of the Assumption or the parties’ settlement agreement or otherwise allege
facts or present evidence to support an award of rescission of the conveyance from Stern to Mehl in
addition to actual damages for breach of contract.3 See Waite Hill, 959 S.W.2d at 184; Scott
3
By our holding, we expressly do not foreclose on remand the award of both remedies of
rescission of the conveyance plus damages for harm to Stern’s credit based on his breach of contract
claim in the event that Stern presents evidence establishing that the award of monetary damages
would be an inadequate remedy and that the award of rescission without damages for harm to his
credit also would be an inadequate remedy. See In re Smith, 115 S.W.3d 126, 134 (Tex.
App.—Texarkana 2003, pet. denied) (stating general rule that “equity will not allow rescission of
a contract for the mere breach of the contract, especially when damages would be an adequate
remedy”); Ferguson v. DRG/Colony North, Ltd., 764 S.W.2d 874, 886 (Tex. App.—Austin 1989,
writ denied) (noting that “[t]here is authority that a party seeking the equitable remedy of rescission
must plead and prove the absence of an adequate remedy at law”); see also Drake v. Chase Bank,
No. 02-13-00340-CV, 2014 Tex. App. LEXIS 12572, at *3 (Tex. App.—Fort Worth Nov. 20, 2014,
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v. Sebree, 986 S.W.2d 364, 368 (Tex. App.—Austin 1999, pet. denied) (stating that rescission is
“equitable remed[y] used as substitute[] for monetary damages when such damages would not be
adequate”); see, e.g., Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am., 341 S.W.3d 323,
345 (Tex. 2011) (“Rescission is an equitable remedy and, as a general rule, the measure of damage
is the return of the consideration paid, together with such further special damage or expense as may
have been reasonably incurred by the party wronged on account of the contract.” (quoting Smith
v. National Resort Cmtys., Inc., 585 S.W.2d 655, 660 (Tex. 1979))); Aegis Ins. Holding Co.
v. Gaiser, No. 04-05-00938-CV, 2007 Tex. App. LEXIS 2364, at *12 (Tex. App.—San Antonio
Mar. 28, 2007, pet. denied) (mem. op.) (concluding that investor plaintiffs were “entitled to recover
only ‘one satisfaction’ for their injury,” which recovery would be “either through rescission or
through damages”). Thus, we conclude that there is error apparent on the face of the record as to the
combined award of the remedies of actual damages and rescission of the conveyance and sustain
Mehl’s fifth issue on this basis.
Because we have concluded that error is apparent on the face of the record as to the
awarded remedies of damages and rescission on the above stated grounds, we do not address Mehl’s
third issue which also challenges the rescission of the Property’s conveyance on different grounds.
See Tex. R. App. P. 47.1. As to Mehl’s sixth, eighth, and ninth issues challenging the award of
no pet.) (mem. op.) (observing that party may recover loss-of-credit damages for breach of contract
but that “Texas does not recognize an independent claim for irreparable harm to credit”); Turner
v. Turner, No. 09-06-00570-CV, 2008 Tex. App. LEXIS 4720, at *9–10 (Tex. App.—Beaumont
June 26, 2008, pet. denied) (mem. op.) (concluding that evidence did not support award of both
rescission and damages and that trial court erred in granting both remedies when plaintiff “did not
demonstrate that the damages awarded to him [were] inadequate or that rescission was required to
fully compensate him” for opposing parties’ breach of agreement).
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attorney’s fees and the appointment of a receiver, we also do not address those issues except to
reverse the award of attorney’s fees and vacate the appointment of the receiver and remand those
remedies for the trial court’s reconsideration in light of our reversal of the trial court’s awards of
damages and rescission. See id. R. 44.1(b) (addressing when partial remand is appropriate); Tex.
Civ. Prac. & Rem. Code § 38.001 (authorizing recovery of reasonable attorney’s fees for contract
claim “in addition to the amount of a valid claim and costs”); Mustang Pipeline Co. v. Driver
Pipeline Co., 134 S.W.3d 195, 201 (Tex. 2004) (per curiam) (requiring party to recover damages to
be entitled to attorney’s fees in breach of contract case); Brown v. Ogbolu, 331 S.W.3d 530, 535
(Tex. App.—Dallas 2011, no pet.) (reversing award of attorney’s fees based on reversal of damages
awarded for breach of contract); Argyle Mech., Inc. v. Unigus Steel, Inc., 156 S.W.3d 685, 688 (Tex.
App.—Dallas 2005, no pet.) (reversing award of attorney’s fees based on reversal of damages and
remanding both for new trial).4
CONCLUSION
For these reasons, we affirm the trial court’s default judgment as to its liability
findings against Mehl, reverse the judgment as to the awarded remedies, vacate the appointment of
the receiver, and remand the case to the trial court for further proceedings consistent with
this opinion.
4
In his petition, Stern sought attorney’s fees under section 38.001 of the Texas Civil Practice
and Remedies Code. See Martin v. Amerman, 133 S.W.3d 262, 267 (Tex. 2004) (observing that
attorney’s fees are not available under a trespass to try title claim because they are not provided
under the Texas Property Code).
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__________________________________________
Melissa Goodwin, Justice
Before Justices Puryear, Goodwin and Bourland
Affirmed in Part; Reversed and Vacated in Part; Reversed and Remanded in Part
Filed: July 28, 2016
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