in Re RPH Capital Partners, LP ( 2016 )

ACCEPTED
04-16-00424-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
8/2/2016 11:56:14 AM
KEITH HOTTLE
CLERK
No. 04-16-00424-CV
IN THE FOURTH
COURT OF APPEALS AT
SAN ANTONIO, TEXAS
In re RPH CAPITAL PARTNERS, LP,
Relator
Original Proceeding from the 57th Judicial District Court, Bexar County, Texas,
Cause No. 2016-CI-05251, the Honorable Antonia Arteaga, Presiding
REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS
Christopher D. Kratovil Phyllis Speedlin
Texas Bar No. 24027427 Texas Bar No. 18906100
Email: ckratovil@dykema.com Email: pspeedlin@dykema.com
Kristina M. Williams DYKEMA COX SMITH
Texas Bar No. 24078303 Weston Centre
Email: kwilliams@dykema.com 112 E. Pecan Street
Adam Nunnallee Suite 1800
Texas Bar No. 24057453 San Antonio, TX 78205
Email: anunnallee@dykema.com (210) 554-5500 – Telephone
DYKEMA COX SMITH (210) 226-8395 – Facsimile
1717 Main Street, Suite 4200
Dallas, Texas 75201
(214) 462-6400 – Telephone
(214) 462-6401 – Facsimile
Andy Taylor
State Bar No. 19727600
Email: ATaylor@AndyTaylorLaw.com
ANDY TAYLOR & ASSOCIATES, P.C.
2668 Highway 36S, #288
Brenham, Texas 77833
(713) 222-1817 – Telephone
(713) 222-1855 – Facsimile
ORAL ARGUMENT NOT REQUESTED
TABLE OF CONTENTS
ARGUMENT IN REPLY ..........................................................................................1
I. INTRODUCTION AND SUMMARY OF ARGUMENT IN REPLY. .....................1
II. THE PERIDOT PARTIES WAIVED THEIR RULE 245 ARGUMENT. ..............4
A. This Court’s November 2015 holding in Templeton controls
and vitiates the Peridot Parties’ Rule 245 argument. ..................4
B. The restricted appeal case law invoked by the Peridot
Parties’ to escape Templeton is inapplicable. .............................8
III. THE PERIDOT PARTIES CONTINUE TO OFFER NO EXPLANATION FOR
THEIR FAILURE TO APPEAR FOR TRIAL, AND THIS IS FATAL TO THEIR
BILL OF REVIEW. ..................................................................................12
A. This is a Bill of Review, Not a Motion for New Trial. .............12
B. Even if Analyzed as a Motion for New Trial, the Peridot
Parties Still Failed to Carry their Burden of Proof for
Summary Judgment, Failing to Present Any Evidence At
All on Three Different Elements...............................................14
IV. EQUITY AND SOUND PUBLIC POLICY PRECLUDE GIVING THE
PERIDOT PARTIES A “MULLIGAN” AND SETTING ASIDE THE
DEFAULT JUDGMENT ON THIS RECORD.................................................21
CONCLUSION AND PRAYER .............................................................................23
CERTIFICATE OF COMPLIANCE .......................................................................26
CERTIFICATE OF SERVICE ................................................................................27
CERTIFICATION AND VERIFICATION.............................................................28
i
TABLE OF AUTHORITIES
CASES
Abend v. Fed. Nat’l Mortg. Ass’n, 466 S.W.3d 884
(Tex. App.—Houston [14th Dist.] 2015, no pet) ............................................7
Alexander v. Lynda’s Boutique, 134 S.W.3d 845
(Tex. 2004) ......................................................................................................9
Balogh v. Ramos, 978 S.W.2d 696
(Tex. App.—Corpus Christi 1998, pet. denied) ........................................7, 16
Chapa v. Wirth, 343 S.W.2d 936
(Tex. App.—Eastland 1961, no writ) ............................................................13
Conrad v. Orellana, 661 S.W.2d 309
(Tex. App.—Corpus Christi 1983, no writ) ..................................................13
Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124
(Tex. 1939) ............................................................................................ passim
Custom-Crete, Inc. v. K-Bar Servs., 82 S.W.3d 655, 659
(Tex. App.--San Antonio 2002, no pet.) ................................................. 11, 17
Dolgencorp of Texas, Inc. v. Lerma, 288 S.W.3d 922
(Tex. 2009) ....................................................................................................18
Eastin v. Dial, 288 S.W.3d 491
(Tex. App.—San Antonio 2009, pet. denied)............................................2, 12
In re Parker, 20 S.W.3d 812
(Tex. App.–Texarkana 2000, no pet.).................................................... passim
In the Interest of Sadberry, No. 06-01-00098-CV, 2009 Tex. App.
LEXIS 3000, *7 (Tex. App.—Texarkana April 30, 2002, pet. denied) ........11
Ivey v. Ivey, No. 05-07-01311-CV, 2009 Tex. App. LEXIS 3207, *7
(Tex. App.—Dallas May 12, 2009, pet. denied) ...........................................11
Padilla v. Comm’n for Lawyer Discipline, 87 S.W.3d 624
(Tex. App.—San Antonio 2002, pet. Denied) .................................................7
Peralta v. Heights Med. Ctr., 485 U.S. 80 (1988) ...................................................12
ii
Petro-Chemical Transp., Inc. v. Carroll, 514 S.W.2d 240
(Tex. 1974) ............................................................................................ passim
Sutherland v. Spencer, 376 S.W.3d 752
(Tex. 2012) ............................................................................................. 15, 18
Templeton Mortg. Corp. v. Poenisch, No. 04-15-00041-CV, 2015 Tex. App.
LEXIS 11813, *5 (Tex. App.—San Antonio Nov. 18, 2015, no pet.) ........ passim
RULES
Tex. R. Civ. P. 245 ........................................................................................... passim
TEX. R. APP. P. 26.1(c) ...............................................................................................8
iii
ARGUMENT IN REPLY
This Court should grant Relator RPH Capital Partners, LP’s (“RPH”)
Petition for Writ of Mandamus to correct the Honorable Antonia Arteaga’s (“Judge
Arteaga” or the “District Court”) clear abuse of discretion in awarding summary
judgment to Peridot Joint Venture, Millennium Exploration Company, LLC, and
Richard Monroy (“the Peridot Parties”), and thereby granting their equitable Bill of
Review and setting aside the Default Judgment.
I. Introduction and Summary of Argument in Reply.
The summary judgment evidence presented in the District Court
conclusively established that the Peridot Parties’ lead counsel in Cause Number
2015-CI-17142, RPH Capital Partners, LP v. Peridot Joint Venture, et al (“the
Underlying Proceeding”) was served with and otherwise received notice—both
actual and constructive—of the trial date in the Underlying Proceeding. Despite
receiving this notice of the trial setting, counsel for the Peridot Parties inexplicably
failed to appear or to move for a continuance of the trial date or to otherwise object
to it. Remarkably, the Peridot Parties’ Response to RPH’s Petition for Writ of
Mandamus (the “Response”) still does not offer any coherent explanation or
excuse for Plaintiffs’ failure to appear for a trial of which they had notice.
Instead of attempting to explain why the Peridot Parties failed to appear at
the December 14, 2015 trial setting, the Peridot Parties’ Response instead focuses
1
heavily on the purported impropriety of that trial setting under Texas Rule of Civil
Procedure 245 (“Rule 245”), which mandates a minimum of 45 days’ notice of a
trial. However, by failing to move to continue or to assert any objection to a trial
setting of which they had 38 day actual notice, the Peridot Parties waived their
argument under Rule 245. Contrary to the Response, Due Process only requires
that the Peridot Parties had reasonable notice of the trial date—which they
received—and were given the opportunity to object to that date, which they did not
do. Neither Due Process nor Rule 245 gives a party—particularly a party
represented by capable counsel from a large and prestigious Dallas law firm—
license to “sit on its hands” for 38 days and flatly ignore a trial setting that it has
received multiple notices of. In short, Rule 245 is neither self-executing nor
unwaivable, and desperate cries of “Due Process” should not shield a party or its
law firm when they inexplicably ignore a trial setting that they had reasonable
notice of.
The Peridot Parties’ ultimate relief should come from the counsel who failed
them, not from an equitable bill of review where they cannot possibly satisfy—and
certainly have not satisfied on this summary judgment record—the “unmixed with
any negligence or fault” element of the bill of review test.1
1
See Petro-Chemical Transp., Inc. v. Carroll, 514 S.W.2d 240, 244-46 (Tex. 1974); Eastin v.
Dial, 288 S.W.3d 491, 497-98 (Tex. App.—San Antonio 2009, pet. denied) (holding that a bill of
review petitioner must plead and prove that the taking of the default judgment was “unmixed
with any negligence or fault of his own.”).
2
The Peridot Parties know they can never satisfy the legal standard for a Bill
of Review, and so they instead urge this Court to apply the more lenient standard
that governs a motion for new trial. The Peridot Parties are incorrect that the
Craddock standard for a motion for new trial should apply here, as their failure to
monitor ongoing and hotly contested litigation resulted not only in their failure to
appear for trial but also their subsequent failure to timely file a motion for new
trial. But even if the Peridot Parties’ still unexplained failure to appear for trial is
evaluated not as an equitable bill of review but rather under the more lenient
Craddock standard, the Peridot Parties, on this summary judgment record, still
failed to establish three of the required elements for a new trial. First, and as
noted, the Peridot Parties failed to present any evidence as to why they failed to
appear for a trial setting of which they had notice, making it impossible for them to
establish that their still unexplained abandonment of this case was something other
than “conscious indifference.” Second, the Peridot Parties also failed to offer any
evidence as to what their “meritorious defense” to RPH’s underlying claims may
be. Third and finally, the Peridot Parties failed to present any evidence that RPH
would not suffer prejudice as the result of the setting aside of the Default
Judgment, and the only evidence in the record shows that RPH will suffer
prejudice—in the form of substantial attorneys’ fees incurred taking and defending
3
the Default Judgment, as well as the substantial delays endured in the resolution of
their underlying claims—if the Default Judgment is set aside.
In the final measure, much more is required in order to secure an equitable
bill of review than is in the record here. The Peridot Parties’ counsel ignored a
trial setting, and the Peridot Parties’ remedy is an action against their counsel in the
Underlying Proceeding, Kane Russell, not an equitable bill of review. Stated
another way, there is simply no way the Peridot Parties can satisfy the “unmixed
with any negligence or fault” requirement for a bill of review. Against this
backdrop and on this record, the District Court abused its discretion in granting
summary judgment in favor of the Peridot Parties and against Relator RPH, and
thereby granting the Bill of Review and setting aside the Default Judgment. This
Court should correct that clear abuse of discretion via mandamus, and should reject
the Peridot Parties’ Bill of Review.
II. The Peridot Parties Waived Their Rule 245 Argument.
A. This Court’s November 2015 holding in Templeton controls and
vitiates the Peridot Parties’ Rule 245 argument.
Judge Arteaga erred in granting summary judgment in favor of the Peridot
Parties because, as held by this Court just nine months ago, “a party waives its
Rule 245 complaint by failing to take action when it ‘receives some, but less than
forty-five days’, notice.’” Templeton Mortg. Corp. v. Poenisch, No. 04-15-00041-
CV, 2015 Tex. App. LEXIS 11813, *5 (Tex. App.—San Antonio Nov. 18, 2015,
4
no pet.) (emphasis added). Templeton confirms that Rule 245 can be waived by a
party’s inaction. Contrary to the Peridot Parties’ argument, in Templeton this
Court explicitly and expressly ruled “that Templeton failed to preserve its Rule
245 notice complaint” because “despite receiving notice, Templeton neither
appeared at the hearing nor raised any pretrial objection to a lack of sufficient
notice under Rule 245.” Id. at *5 (emphasis added; citations omitted). This
Court’s language could not be more clear, but the Peridot Parties choose to avoid
this core section of the Templeton holding in their Response.
Instead of engaging with Templeton’s on-point core holding from just last
November, the Peridot Parties instead focus upon this Court’s alternate and
secondary reasons for upholding the trial court’s default judgment in that case. Id.
at *5-6. In addition to finding that Rule 245 can be waived by a party’s inaction,
Templeton also offered alternative reasons for affirming the default judgment in
that case, noting that “even if Templeton had preserved this [Rule 245] complaint
for review, we hold that does not entitle Templeton to a reversal.” Id. at *6. But
the Peridot Parties misunderstand the relevance of these alternative grounds for
affirmance of the default judgment in Templeton. Arguing against Templeton’s
application to this case, the Peridot Parties incorrectly state “[t]he court made clear
in Templeton that Rule 245 did not apply to its facts because at the time of the
notice in that case, Templeton’s pleadings had been stricken and it was no longer a
5
contested case.” (Resp. at 4). This is incorrect, as this Court recognized that the
Templeton defendant was given notice of trial, albeit less than the 45 days’ notice
required by Rule 245. See Templeton, 2015 Tex. App. LEXIS 11813, at *4-5.
Contrary to the Peridot Parties’ argument, the Templeton trial court did not
strike the defendant’s pleadings prior to notice of trial being given, but struck the
defendant’s pleadings on the day of the default judgment hearing, and in response
to the defendants failure to appear. Id. at *2-3. As such, Templeton was a
contested case at the time notice of trial was served on the defendant, but not at the
time the default judgment was entered. Just so here.
In short, this Court’s offering two alternate reasons in Templeton for
affirming the default judgment other than waiver of Rule 245 notice does not make
that precedent any less dispositive of the waiver issue in the current case. Here, as
in Templeton, the Peridot Parties “receive[d] some, but less than forty-five days’,
notice[,]” and waived their right to make any objection under Rule 245 by failing
to appear. Id. at *5. Templeton controls and should have led the District Court to
reject the Peridot Parties’ Rule 245 argument and to deny their equitable bill of
review.
Nor is the core holding of Templeton mere “dicta” as the Peridot Parties now
suggest. Instead, Templeton stands squarely for the proposition that the 45-day
notice period of Rule 245 is not a constitutional requirement, and that all that is
6
required to satisfy Due Process is reasonable notice. Templeton is hardly alone.
For example, Texarkana Court of Appeals has similarly noted that “[a] party could,
in theory, waive a complaint by failing to take action when the party receives
some, but less than forty-five days’, notice.” In re Parker, 20 S.W.3d 812, 818
(Tex. App.–Texarkana 2000, no pet.). The Corpus Christi Court of Appeals has
offered equivalent analysis, concluding that reasonable notice is all that is required
to satisfy Due Process. See Balogh v. Ramos, 978 S.W.2d 696, 699 (Tex. App.—
Corpus Christi 1998, pet. Denied). Contrary to the Peridot Parties’ argument,
while Templeton is the most recent and most relevant decision, there is ample
Texas authority for the proposition that Due Process is fully satisfied by reasonable
notice trial, and that the 45-day requirement of Rule 245 is not somehow
synonymous with Due Process. See also Abend v. Fed. Nat’l Mortg. Ass’n,
466 S.W.3d 884, 885 (Tex. App.—Houston [14th Dist.] 2015, no pet); Padilla v.
Comm’n for Lawyer Discipline, 87 S.W.3d 624, 626 (Tex. App.—San Antonio
2002, pet. denied).
Here, as fully established in RPH’s Petition, there can be no doubt that the
Peridot Parties received not only reasonable notice of the trial setting, but multiple
forms of reasonable notice starting 38 days before the trial setting. First, the TI
Order itself—which Mr. McClure indisputably received—recited the trial date of
December 14, 2015. (M.R. 41-46). Second, Mr. McClure drafted the Protective
7
Order, which specifically referenced and incorporated the TI Order containing the
trial date. (M.R. 530-36). Third, Mr. McClure received yet another form of notice
of the trial setting, as RPH served the Peridot Parties with documents in the Dallas
Proceeding containing the Bexar County trial date. (M.R. 440, 520, 549).
Consistent with Templeton, In re Parker, and the other foregoing authorities, these
multiple reasonable notices—the first of which was received by Mr. McClure 38
days prior to the trial setting—satisfied Due Process.
B. The restricted appeal case law invoked by the Peridot Parties’ to
escape Templeton is inapplicable.
Desperate to escape this Court’s nine month old and directly on-point
holding in Templeton, the Peridot Parties parade a series of restricted appeal cases
for the general proposition that a default judgment can be set aside on restricted
appeal if the restricted appellant did not received adequate notice of the trial under
Rule 245. But the cases invoked by the Peridot Parties are inapplicable for several
reasons.
1. This is a Bill of Review, Not a Restricted Appeal.
First, this is not a restricted appeal but rather an equitable bill of review.
Indeed, although they acknowledge that they received notice of the Default
Judgment well within the six month window to file a restricted appeal under TEX.
R. APP. P. 26.1(c), the Peridot Parties failed to file a restricted appeal. An
equitable bill of review and a restricted appeal are governed by very different legal
8
standards. Compare TEX. R. APP. P. 26.1(c) and Alexander v. Lynda’s Boutique,
134 S.W.3d 845, 848 (Tex. 2004) (restricted appeal standard) with Petro-Chemical
Transp., Inc. v. Carroll, 514 S.W.2d 240, 244-46 (Tex. 1974) (bill of review
standard). The record is unclear as to why the Peridot Parties filed a bill of
review—a new lawsuit in which the burden is on them as the bill or review
plaintiffs—rather than pursuing the less difficult remedy afforded by restricted
appeal.
Importantly, and in contrast to a bill of review, the appellant in a restricted
appeal is not required to show that the default judgment was “unmixed with any
negligence or fault of his own.” Id. In contrast to a restricted appeal, the plaintiff
in a bill of review action—here, the Peridot Parties—must plead and prove that the
taking of the default judgment was “unmixed with any negligence or fault of his
own.” Id. Thus, in this bill of review proceeding, the negligence of the Peridot
Parties and their counsel in failing to take any action in response to a trial setting
of which they had reasonable—38 days—notice is the central inquiry before the
Court in this bill of review. Perhaps the result here would be different if the
Peridot Parties had filed a restricted appeal—as they had the option to—but they
did not. As such, the bill of review standard applies instead of the restricted appeal
standard, and the Peridot Parties have failed to offer evidence that the Default
9
Judgment did not result from the fault of their counsel, Mr. McClure and his large
Dallas law firm Kane Russell.
2. Due Process is Satisfied by Reasonable Notice of Trial.
Second, and in sharp contrast to the litany of restricted appeal cases invoked
in the Response, the Peridot Parties are not a pro se party to a small divorce in
which they received no notice or minimal notice of trial. Instead, the Peridot
Parties are participants in sophisticated commercial litigation in which they are
represented by a large and prestigious law firm. Consistent with this Court’s
holding in Templeton, it simply cannot be the law that a sophisticated litigant
represented by capable and experienced counsel has a right to “sit on its hands”
and do nothing where, as here, it receives reasonable notice of a trial setting—
albeit slightly less than the full 45 days required by Rule 245. As the Response
reluctantly concedes, the Peridot Parties received at least 38 days’ notice of the
trial setting—yet they nonetheless failed to move to continue the trial date, object
to the setting, or show up.
Contrary to the central argument made by the Peridot Parties in the
Response, Due Process is fully satisfied where, as here, a party receives reasonable
notice of trial. In re Parker, 20 S.W.3d 812, 818 (Tex. App.—Texarkana 2000, no
pet.) (holding that “[d]ue process requires only actual or constructive notice
reasonable under the circumstances.”); see also, e.g., Ivey v. Ivey, No. 05-07-
10
01311-CV, 2009 Tex. App. LEXIS 3207, *7 (Tex. App.—Dallas May 12, 2009,
pet. denied) (citing In re Parker); In the Interest of Sadberry, No. 06-01-00098-
CV, 2009 Tex. App. LEXIS 3000, *7 (Tex. App.—Texarkana April 30, 2002, pet.
denied) (“Due process only requires reasonable notice under the circumstances.”)
(citing, e.g., Peralta v. Heights Med. Ctr., 485 U.S. 80 (1988)). Indeed, “Rule 245
provides a notice requirement that goes beyond the requirements of due process.”
Id. at 818; see also Custom-Crete, Inc. v. K-Bar Servs., 82 S.W.3d 655, 659 (Tex.
App.—San Antonio 2002, no pet.). Consistent with Templeton, and in contrast to
central argument in the Response, neither Due Process nor Rule 245 affords parties
the sweeping right to “sit on their hands” in response to a trial setting of which
they have reasonable notice. This principle is all the more true where, as here, the
party improperly “sitting on its hands” is represented by sophisticated counsel from
a large law firm.
To reiterate, none of the cases invoked by the Peridot Parties in their
Response are bill of review cases where the party challenging a post-answer
default judgment had reasonable notice of the trial setting—albeit less than the 45
days’ notice required by Rule 245. As such, the Peridot Parties’ attempt escape
this Court’s controlling and only 9-month old precedent in Templeton fails. In the
final measure, this Court’s decision last year in Templeton makes clear that where,
11
as here, a party had some notice of a trial setting—albeit less notice than required
by Rule 245—there is no right to sit on ones’ hands and fail to appear or object.
III. The Peridot Parties Continue to Offer No Explanation for their Failure
to appear for Trial, and this is Fatal to their Bill of Review.
A. This is a Bill of Review, Not a Motion for New Trial.
Receiving some but less than forty-five days’ notice of trial does not relieve
the Peridot Parties from meeting the elements required a bill of review. Foremost
among these elements is that the Default Judgment was taken “unmixed with any
negligence or fault” of the Peridot Parties or their counsel. Petro-Chemical
Transp., 514 S.W.2d at 244-46; Eastin, 288 S.W.3d at 497-98. Insofar as Rule 245
does not convey the right to simply ignore a trial setting that gives reasonable, but
less than 45 days, notice of trial, the Peridot Parties can never satisfy this element
of the bill of review test Accordingly, the Peridot Parties have no choice but to
urge the application of an entirely different legal standard, claiming that their effort
to set aside the Default Judgment should not be reviewed as a bill of review but
rather as a motion for new trial under Craddock v. Sunshine Bus Lines, Inc.,
133 S.W.2d 124 (Tex. 1939).
The Peridot Parties are wrong, as their counsel received but ignored notice
of the trial, did not show up for that trial, and evidently did not check the docket
sheet for the case for multiple months after the trial setting, thereby missing the
entry of the Default Judgment and missing the chance to file a motion for new trial
12
or appeal. Stated another way, the only thing that prevented the Peridot Parties
from filing a timely motion for new trial was their extended failure to monitor an
active and once hotly contested case following a trial setting of which they had
notice. The Peridot Parties claim that the clerk failed to send them postcard
notification of the entry of Default Judgment against them, but this is ultimately an
irrelevant distraction from their own failure to participate in and monitor the case;
having received reasonable notice of the trial setting, the Peridot Parties not only
failed to object or participate in trial, they also failed to follow developments in the
case after the trial setting they ignored. In other words, the Peridot Parties contend
that the clerk’s purported failure to send them a postcard somehow released their
counsel from their continuing obligation, as a matter of law, to monitor the
Underlying Proceeding. See Conrad v. Orellana, 661 S.W.2d 309 (Tex. App.—
Corpus Christi 1983, no writ); Chapa v. Wirth, 343 S.W.2d 936 (Tex. App.—
Eastland 1961, no writ). This cannot be the law, as attorneys cannot cavalierly
transfer their most fundamental professional obligations to court staff. The Peridot
Parties’ effort to set aside the Default Judgment must therefore be analyzed under
the bill of review standard, not the Craddock test for a motion for new trial.
13
B. Even if Analyzed as a Motion for New Trial, the Peridot Parties
Still Failed to Carry their Burden of Proof for Summary
Judgment, Failing to Present Any Evidence At All on Three
Different Elements.
But even under the Peridot Parties’ own theory of the case, they must still
satisfy the Craddock factors for a motion for new trial. Yet, having argued that
they must meet the standard for a motion for new trial, the Peridot Parties failed to
present any summary judgment evidence before Judge Arteaga on multiple
Craddock factors. As the party seeking to set aside the Default Judgment and
moving for (and receiving) summary judgment, the Peridot Parties had the burden
of proof on each of the Craddock factors, and the Peridot Parties’ Response fails to
show how they did this for each factor.
1. The Peridot Parties failed to prove a lack of “conscious
indifference.”
First, in their Response, the Peridot Parties do not direct the Court to any
evidence in the summary judgement evidence demonstrating that their still-
unexplained failure to appear for trial was not intentional or the result of
“conscious indifference.” On the contrary, the Peridot Parties’ failure to appear for
a trial setting of which they indisputably had notice remains entirely unexplained.
Indeed, the only explanation the Peridot Parties offered to the District Court on the
reasons for their failure to appear is their lead counsel’s (Mr. McClure of the Kane
Russell firm in Dallas) following statement: “I did not see the inclusion of
14
December 14, 2015 trial setting in the signed order and the date was not docketed
by me or my firm.” (MR 655, 661). The Peridot Parties offer no better
explanation to this Court. (Resp. at 22). This cursory and carefully-worded
statement sheds absolutely no light on why the Peridot Parties failed to appear for a
trial setting of which they had both actual and constructive notice, including
multiple forms of written notice. See Sutherland v. Spencer, 376 S.W.3d 752, 755
(Tex. 2012) (“[T]he critical question in any default judgment [is]: ‘Why did the
defendant not appear?’”). “[F]orgetfulness alone is [not] sufficient to satisfy the
first Craddock element.” Id. Based on the limited summary judgment evidence
submitted by the Peridot Parties, there is no evidence that their failure to appear
was, at best, the product of Mr. McClure’s “forgetfulness.” As a matter of Texas
law, that is simply not enough. Id.
Moreover, the Peridot Parties not only failed to appear for trial on December
14, 2015, they also “went dark” for an extended period prior to that trial setting. In
their Response, the Peridot Parties fault RPH’s lead trial counsel, Andy Taylor,
for informing Judge Arteaga at the December 14 trial setting that he had received
no communications from them in 30 days, but it had been 24 days since he
received any communications—written or verbal—from counsel to the Peridot
Parties. (M.R. 438-42). Moreover, the Peridot Parties continued to remain “dark”
for months after the entry of the Default Judgment, reemerging from their still
15
unexplained absence from the case only after RPH commenced enforcement and
collection efforts in March 2016. In short, the Peridot Parties did not just miss a
trial setting of which they had notice, as they also ignored this case for extended
periods both before and after that trial setting.
The insufficiency of the Peridot Parties’ explanation of and evidence for
failing to appear becomes even more apparent when comparing treatment of
similar situations by Texas courts of appeal. In Balogh, the Corpus Christi Court
of Appeals upheld the denial of a motion for new trial following a post-answer
default judgment because the defendant failed to demonstrate his failure to attend
trial was not intentional or the result of conscious indifference. Balogh v. Ramos,
978 S.W.2d 696, 699 (Texas App.—Corpus Christi 1998, pet. Denied). The
Corpus Christi Court of Appeals noted the defendant provided affidavit evidence
that he had no actual notice of the trial setting because he did not receive the
docket control order, but offered no explanation for his failure to appear at a docket
control conference where the trial date was set, did not deny receiving the
plaintiff’s request for a docket control conference, and did not contradict the
clerk’s notes that notice of the conference where the trial date was set was mailed
to the defendant. Id. Here, the Peridot Parties’ conduct is even more egregious
than in Balogh, as the Peridot Parties admit receiving notice of the trial setting
16
contained in the TI Order but, for reasons left entirely unexplained, they failed to
act.
Similar to the defendant in Balogh, the Peridot Parties also received notice
of the trial setting in other ways because Mr. McClure drafted the Protective Order,
which specifically references and incorporates the TI Order containing the trial
date. The Peridot Parties’ argument in response borders on bizarre: they claim that
McClure cannot be held to the contents of the very document he drafted and
signed, the TI Order. (Resp. at 22). This cannot be. Moreover, Mr. McClure
received yet another form of notice of the trial setting, as RPH served the Peridot
Parties with documents in the Dallas Proceeding containing the Bexar County trial
date. (M.R. 440, 520, 549).
A careful examination of the reasons for a party’s failure to appear at trial is
required before relief from a Default Judgment can be granted. In contrast to the
Peridot Parties’ conduct here, in Custom Crete, this Court held a defendant
complaining of insufficient notice under Rule 245 did not intentionally fail to
appear or exercise conscious indifference because the defendant appeared at trial
mistakenly believing a non-attorney could represent the corporation at trial.
82 S.W.3d at 660. Similarly, in Parker, the Texarkana Court of Appeals held a
defendant that received fourteen days’ notice of a trial setting did not act
intentionally or with conscious indifference because the defendant sent a letter to
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the district clerk prior to trial requesting clarification of the trial date and
complaining of lack of proper notice. 20 S.W.3d at 819. Here, the Peridot Parties
failed to show for trial and offer no explanation for how they allegedly overlooked
multiple instances putting them on notice of the trial date. All the Peridot Parties
have managed to show is that Mr. McClure was, at best, extremely “forgetful,” but
“forgetfulness alone is [not] sufficient to satisfy the first Craddock element.”
Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex. 2012).
For these reasons, Judge Arteaga abused her discretion not only by granting
the Peridot Parties’ motion for summary judgment in the Bill of Review
proceeding, but also by denying RPH’s cross-motion for summary judgment
asking for the denial of the Bill of Review.
2. The Peridot Parties failed to present any evidence of a
“meritorious defense.”
In addition to proving a lack of intentional conduct or conscious
indifference, even under the standard for a motion for new trial, the Peridot Parties
must also allege and prove that they have a meritorious defense to the underlying
case. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939). But the
Peridot Parties presented no evidence whatsoever to Judge Arteaga establishing a
“meritorious defense.” “Setting up a meritorious defense does not require proof in
the accepted sense.” Dolgencorp of Texas, Inc. v. Lerma, 288 S.W.3d 922, 927-28
(Tex. 2009). “Rather the motion sets up a meritorious defense if it alleges facts
18
which in law would constitute a defense to the plaintiff’s cause of action and is
supported by affidavits of other evidence providing prima facie proof that the
defendant has such a defense.” Id. at 928.
On this record, the Peridot Parties entirely failed to make mention of RPH’s
causes of action, what facts constitute a defense thereto, or what defenses those
facts support in their briefing to the District Court. Instead, the Peridot Parties
only made—and continue to make—the vague and conclusory statement that “a
meritorious defense exists.” (MR 661). None of the affidavits attached to the
motion for summary judgment the Peridot Parties filed in the District Court
mentioned any facts related to claims and defenses in the underlying suit and none
of the pleadings they attached were verified.
Finally, nothing in the Peridot Parties’ Response to this Court clarifies this
situation or explains what the “meritorious defense” they would assert against
RPH’s underlying claims would be. In sum, the Peridot Parties not only did not
present sufficient evidence to prevail on summary judgment on the “meritorious
defense” element—they failed to present any evidence on this element at all,
rendering it an abuse of discretion for Judge Arteaga to grant summary judgment to
them and to simultaneously deny it to RPH.
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3. The Peridot Parties failed to present any evidence that RPH
will not be prejudiced.
The Peridot Parties also failed to present any evidence on the “prejudice”
factor of the Craddock test, and failed to prove that RPH will not suffer prejudice
if the Default Judgment is set aside. While the Peridot Parties flatly ignored the
prejudice inquiry required by Craddock, the record supports that RPH is severely
prejudiced by Judge Arteaga’s setting aside of the Default Judgment; RPH incurred
attorneys’ fees and expenses taking the default judgment when the Peridot Parties
inexplicably failed to appear for trial on December 14, 2015, in the Underlying
Suit. (MR 1127). Moreover, following entry of the Final Judgment, the record
reflects that RPH incurred substantial costs and attorney’s fees in filing a collection
proceeding, serving post-judgment discovery, defending against the current
proceeding, and mediating this matter. (MR 1127).
Contrary to both basic equity and customary practice in Bexar County, the
Peridot Parties have made no offer to cover the substantial costs and fees incurred
by RPH. Again, nothing in the Peridot Parties’ Response changes this fact, and the
record confirms RPH will suffer prejudice in the form of attorneys’ fees and costs
incurred as the direct result of the Peridot Parties’ failure to appear for a trial
setting of which they had notice. Because the only evidence in the summary
judgment record shows that RPH will be prejudiced by the setting aside of the
Default Judgment, it was an abuse of discretion for Judge Arteaga to grant
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summary judgment to the Peridot Parties and to deny it to RPH in the Bill of
Review proceeding.
IV. Equity and Sound Public Policy Preclude Giving the Peridot Parties a
“Mulligan” and Setting Aside the Default Judgment on this Record.
In the final measure, the Peridot Parties are asking this Court to hold that a
sophisticated commercial litigant, represented by experienced litigation counsel at
a large Dallas law firm, deserves a “mulligan” for failing to appear for (or to
object to) a trial setting of which they received multiple written notices and at least
38 days warning. The Peridot Parties are asking the Court to do this without ever
providing a coherent explanation as to why they failed to appear, and without
establishing their lack of fault—or even a lack of conscious indifference. Nor did
the Peridot Parties bother introduce into the summary judgment record what their
meritorious defense to RPH’s underlying claims would be. And, finally, the
summary judgment record confirms that the Peridot Parties have failed to even
offer to compensate RPH for the attorneys’ fees and costs that it incurred as a
direct result of the Peridot Parties’ failure to appear for trial, meaning that RPH
will suffer prejudice if the Default Judgment is set aside.
In addition to failing to present adequate summary judgment evidence to
support their equitable Bill of Review, the Peridot Parties are also asking this Court
to set aside its own 9-month old decision in Templeton and to hold that Rule 245
can never be waived and that parties—even sophisticate parties represented by
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quality counsel— can “instead sit on their hands” in response to multiple written
notices that give some, but less than 45 days, notice of a trial setting. This Court
should decline this invitation to reverse Templeton, and should refuse to give a
blanket license to lawyers to simply ignore trial settings that give some but less
than 45 days’ notice of trial.
Although default judgment is an undeniably harsh result, Judge Arteaga
abused her discretion by granting summary judgment to the Peridot Parties on their
Bill of Review despite the fact that, on this record, as they did not come anywhere
close to carrying their burden on summary judgment. Indeed, upon examination
Judge Arteaga’s abuse of discretion becomes obvious because, as explained supra,
the Peridot Parties failed to offer any summary judgment evidence on multiple
elements where, as a matter of law, they had the burden of proof—and this is
equally true regardless if this challenge to the Default Judgment is evaluated under
the bill of review standard (as it should be) or under the motion for new trial
standard. Indeed, it was not only an abuse of discretion for Judge Arteaga to grant
summary judgment on the Bill of Review to the Peridot Partiers, but on this record
it was equally an abuse of discretion for her to deny RPH’s cross-motion for
summary judgment against the Bill of Review.
The admitted harshness of default judgment is mitigated here because the
Peridot Parties do have a proper and adequate remedy, but it is not an equitable bill
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of review, rather it is against the counsel who failed to appear for trial setting of
which they had notice, and who still refuse to explain that failure.
CONCLUSION AND PRAYER
This Court has consistently recognized that mandamus relief is available
where, as here, a trial court abuses its discretion in erroneously granting a bill of
review. As shown in Relator’s Petition for Writ of Mandamus and herein, the
District Court abused its discretion in granting, via summary judgment, the Real
Parties in Interest’s Bill of Review.
For all these reasons, Relator RPH Capital Partners, LP respectfully requests
its Petition for Writ of Mandamus be granted, and that this Honorable Court of
Appeals issue a Writ of Mandamus commanding the Respondent, the Honorable
Antonia Arteaga, to: reverse, alter and amend her Order of June 9, 2016 to reinstate
the Final Judgment in Cause Number 2015-CI-17142 and styled RPH Capital
Partners, LP v. Peridot Joint Venture, et al. in the Bexar County 57th District
Court, Bexar County, Texas, as well as to reinstate all abstracts of judgment and
writs of execution issued to collect on the Final Judgment. In short, RPH requests
that this Court grant summary judgment for RPH and restore the post-answer
Default Judgment that Judge Arteaga set aside via her erroneous grant of the Bill
of Review. The Default Judgment should be left undisturbed, with full
enforcement and execution permitted.
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RPH also requests such additional relief as it is entitled to in law or in
equity.
Respectfully submitted,
By: /s/ Christopher D. Kratovil
Christopher D. Kratovil
Texas Bar No. 24027427
Email: ckratovil@dykema.com
Kristina M. Williams
Texas Bar No. 24078303
Email: kwilliams@dykema.com
Adam Nunnallee
Texas Bar No. 24057453
Email: anunnallee@dykema.com
DYKEMA COX SMITH
1717 Main Street, Suite 4200
Dallas, Texas 75201
(214) 462-6400 – Telephone
(214) 462-6401 – Facsimile
And
Phyllis Speedlin
Texas Bar No. 18906100
Email: pspeedlin@dykema.com
DYKEMA COX SMITH
Weston Centre
112 E. Pecan Street, Suite 1800
San Antonio, TX 78205
(210) 554-5500 – Telephone
(210) 226-8395 – Facsimile
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And
Andy Taylor
State Bar No. 19727600
Email: ATaylor@AndyTaylorLaw.com
ANDY TAYLOR & ASSOCIATES, P.C.
2668 Highway 36S, #288
Brenham, Texas 77833
(713) 222-1817 – Telephone
(713) 222-1855 – Facsimile
ATTORNEYS FOR
RPH CAPITAL PARTNERS, LP
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CERTIFICATE OF COMPLIANCE
I certify that this Reply in Support of Petition for Writ of Mandamus
complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has
been prepared in a conventional typeface no smaller than 14-point for text and 12-
point for footnotes. This document also complies with the word-count limitations
of Tex. R. App. P. 9.4(i), if applicable, because it contains 5,752 words, excluding
any parts exempted by Tex. R. App. P. 9.4(i)(1).
DATED: August 2, 2016
CERTIFIED BY: /s/ Kristina M. Williams
Kristina M. Williams
Counsel for Relator RPH Capital Partners, LP
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CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing Reply in
Support of Petition for Writ of Mandamus was served upon the following counsel
via this Court’s electronic filing system in accordance with the Texas Rules of
Appellate Procedure on August 2, 2016.
/s/ Kristina M. Williams
Kristina M. Williams
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CERTIFICATION AND VERIFICATION
STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned notary public, on this day personally
appeared Adam Nunnallee, who being duly sworn, verified and stated that he is an
attorney of record for RPH Capital Partners, LP and that he has reviewed the
Relator's Reply in Support of Petition for Writ of Mandamus and that the facts
stated within the Reply are within his personal knowledge and are true and correct
in all respects, and that the factual statements contained in the Reply are supported
by competent evidence included in the Appendix and/or Record.
Adam Nunnallee
SUBSCRIBED AND SWORN TO BEFORE ME this 2r4-4 day of
t) kV-- 2016.
Notary Public
PAULA ELLIOTT
Notary Pubik, State of Texas
My Commission Expires
05/1 9/1 8 My Commission Expires: 5- le
NutAry ID. 1237731-3
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