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Ex Parte: Gryphon Holdco, LLC v. the State of Texas ( 2024 )


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  •                                           NO. 12-23-00265-CV
    IN THE COURT OF APPEALS
    TWELFTH COURT OF APPEALS DISTRICT
    TYLER, TEXAS
    EX PARTE:                                                §    APPEAL FROM THE 7TH
    GRYPHON HOLDCO, LLC                                      §    JUDICIAL DISTRICT COURT
    §    SMITH COUNTY, TEXAS
    MEMORANDUM OPINION
    Gryphon Holdco, LLC, appeals from a default judgment entered against it ordering it to
    pay delinquent property taxes. In a single issue, Gryphon contends the evidence is legally and
    factually insufficient to support the default judgment. We affirm.
    BACKGROUND
    In March 2018, Lindale Independent School District, Smith County, Smith County
    Emergency Services District #01, and Tyler Junior College (collectively Appellees) sued
    Enersafe Inc. and Gryphon to recover delinquent ad valorem taxes for business personal
    property. 1 Gryphon was served via its registered agent on November 5, 2018. Enersafe was
    served through the Texas Secretary of State in March 2021. Neither defendant filed an answer.
    In the petition, Appellees claimed they were owed taxes for “Business Personal Property
    consisting of furniture, fixtures, equipment, inventory, machinery and vehicles, used in the
    operation of Enersafe, Inc. . . . assessed in the name of Enersafe, Inc. on the tax rolls of Lindale
    Independent School District, Smith County, Texas.” The petition then listed the taxes owed to
    each entity as of the date of filing for the year 2016. It further stated: “All Defendants named in
    this suit either owned the property that is the subject of this suit on January 1 of the year in which
    1
    Enersafe is not a party to this appeal.
    taxes were imposed on said property, or owned or claimed an interest in or lien upon said
    property at the time of the filing of this suit.”
    In June 2023, Appellees filed a trial request form. The trial court held a short hearing on
    July 17, during which it granted Appellees’ request for a default judgment. Gryphon then filed a
    motion for new trial in which it argued it was “unaware it had been sued and was not aware that
    an answer was required.” The trial court denied the motion. Gryphon filed a motion for
    reconsideration, on which the trial court did not rule. This appeal followed.
    DEFAULT JUDGMENT
    In its sole issue, Gryphon contends the evidence is legally and factually insufficient to
    support the trial court’s default judgment. Specifically, it urges that there is no evidence that it
    owes any taxes or owns the property at issue.
    In their brief, Appellees focus on the standard for reviewing the denial of a motion for
    new trial found in Craddock v. Sunshine Bus Lines, Inc., 
    133 S.W.2d 124
     (Tex. 1939).
    However, Gryphon explicitly states in its reply that it is not appealing the denial of its motion for
    new trial and is instead directly attacking the default judgment. To support its contention,
    Gryphon points to Matter of Marriage of Williams, 
    646 S.W.3d 542
     (Tex. 2022).
    In Williams, a respondent in a divorce proceeding sought to challenge the trial court’s
    property division following a default judgment when she had not raised the issue in the trial
    court. Id. at 543-44. In a per curiam opinion, the Texas Supreme Court held that she could raise
    her legal sufficiency challenge for the first time on appeal. Id. at 544. In its analysis, the Court
    cited the differences between the equitable doctrine of Craddock and a legal sufficiency
    challenge:
    A motion under Craddock does not attempt to show an error in the judgment; rather, it seeks to
    excuse the defaulting party's failure to answer by showing the Craddock elements. In contrast, a
    complaint of legally or factually insufficient evidence assails the judgment, seeking to show that it
    is not supported by evidence presented in the trial court.
    Id. at 545 (internal citations omitted). The Court further cited to controlling civil law allowing a
    default judgment damages award to be challenged:
    Our decision in Holt Atherton Industries, Inc. v. Heine confirms that the sufficiency of the
    evidence to support a default judgment can be challenged even though the challenging party is not
    entitled to have the default set aside under Craddock. 
    835 S.W.2d 80
    , 83-84 (Tex. 1992). There,
    2
    we held that the trial court had not abused its discretion by denying a motion for new trial because
    it could have concluded from the evidence that the Craddock elements were not met. Id. at 83. But
    we went on to hold that there was legally insufficient evidence to support the unliquidated
    damages awarded in the default judgment. Id. at 85-86. And we explained that “when an appellate
    court sustains a no evidence point after an uncontested hearing on unliquidated damages following
    a no-answer default judgment, the appropriate disposition is a remand for a new trial on the issue
    of unliquidated damages.” Id. at 86.
    Id. at 545 (emphasis in original).          Importantly, the Court cited crucial differences between a
    divorce proceeding and a regular civil case, such as the case at hand:
    Although defaults and sufficiency challenges operate somewhat differently in the divorce context,
    there is similarly no reason in that context to require a Craddock motion as a prerequisite to a
    sufficiency challenge. In a suit for divorce, the pleadings are not deemed admitted by the
    defendant’s failure to appear, so the plaintiff must present sufficient evidence to support the
    material allegations in the petition. In addition, legal and factual sufficiency challenges do not
    constitute independent grounds for asserting error, but they are relevant factors in determining
    whether the trial court abused its discretion.
    Id. (internal citations omitted).
    We disagree with Gryphon that Williams stands for the proposition that the entirety of the
    default judgment can be challenged on appeal. The Texas Supreme Court used the current law
    from Heine and applied it to a divorce case. Id. It did not upend established law regarding
    default judgments. That the Court specifically distinguished divorce proceedings from general
    default proceedings further negates Gryphon’s position.
    When a default judgment is taken against the defendant, all allegations of material fact
    set forth in the petition are deemed admitted except the amount of unliquidated damages, and the
    default judgment conclusively establishes the defendant’s liability. Metro A, LLC v. Polley, No.
    02-09-00025-CV, 
    2011 WL 4413233
    , at *5 (Tex. App.—Fort Worth Sept. 22, 2011, pet. denied)
    (mem. op.); see Heine, 835 S.W.2d at 83; Morgan v. Compugraphic Corp., 
    675 S.W.2d 729
    ,
    731 (Tex. 1984).       To determine unliquidated damages, the trial court must hear evidence
    regarding damages. TEX. R. CIV. P. 243.
    By failing to answer, Gryphon admitted the factual allegations in Appellees’ petition and
    its liability for the event sued upon, i.e., delinquent taxes. Therefore, Appellees were not
    required to present evidence of Gryphon’s liability. See Polley, 
    2011 WL 4413233
    , at *5; see
    also Heine, 835 S.W.2d at 83; Morgan, 675 S.W.2d at 731. And Gryphon does not argue the
    3
    damages award is either unliquidated or unsupported by evidence. 2 See TEX. R. APP. P. 38.1 (i)
    (“brief must contain a clear and concise argument for the contentions made, with appropriate
    citations to authorities and to the record”). Therefore, we overrule Gryphon’s sole issue.
    DISPOSITION
    Having overruled Gryphon’s sole issue, we affirm the trial court’s judgment. All pending
    motions are overruled as moot.
    GREG NEELEY
    Justice
    Opinion delivered May 31, 2024.
    Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
    2
    Appellees filed certified copies of tax records with the trial court prior to the hearing on the default
    judgment.
    4
    COURT OF APPEALS
    TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
    JUDGMENT
    MAY 31, 2024
    NO. 12-23-00265-CV
    EX PARTE: GRYPHON HOLDCO, LLC
    Appeal from the 7th District Court
    of Smith County, Texas (Tr.Ct.No. 25,806-A)
    THIS CAUSE came to be heard on the appellate record and briefs filed
    herein, and the same being considered, it is the opinion of this court that there was no error in the
    judgment.
    It is therefore ORDERED, ADJUDGED and DECREED that the judgment
    of the court below be in all things affirmed, and that all costs of this appeal are hereby adjudged
    against the appellant, Gryphon Holdco, LLC, for which execution may issue, and that this
    decision be certified to the court below for observance.
    Greg Neeley, Justice.
    Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.
    

Document Info

Docket Number: 12-23-00265-CV

Filed Date: 5/31/2024

Precedential Status: Precedential

Modified Date: 6/1/2024