Lennis L. Nichols v. Brent Goodger and Patrice Goodger

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-16-00044-CV
Lennis L. Nichols, Appellant
v.
Brent Goodger and Patrice Goodger, Appellees
FROM THE DISTRICT COURT OF CALDWELL COUNTY, 22ND JUDICIAL DISTRICT
NO. 14-O-148, HONORABLE R. BRUCE BOYER, JUDGE PRESIDING
MEMORANDUM OPINION
Lennis L. Nichols appeals from a post-answer default judgment rendered in favor of
appellees Brent and Patrice Goodger on the Goodgers’ claims for fraud in a real-estate transaction
and violations of the Texas Deceptive Trade Practices Act (DTPA). The Goodgers’ suit claimed that
Nichols, in the course of selling the Goodgers a house in Caldwell County, had failed to disclose
foundation and septic-system defects and roof damage. Nichols failed to appear for trial, and the
district court rendered judgment for the Goodgers, awarding actual and exemplary damages. On
appeal, Nichols challenges the propriety of the default judgment, the denial of his request for a jury
trial, the denial of his motion for new trial, the legal and factual sufficiency of the evidence
supporting the judgment, and the legal sufficiency of the evidence supporting the award of
exemplary damages. We will affirm the trial court’s judgment.
Background
In August of 2012, Nichols sold his house in Caldwell County to the Goodgers. As
part of the sale, Nichols represented to the Goodgers that they would have the use of a water well
and, in the statutorily required seller’s disclosure,1 Nichols indicated among other things that he was
not aware of any damage to, defects in, or need to repair the house’s roof, septic system, or
foundation. After closing the sale, the Goodgers discovered that they did not have use of the water
well and that the foundation, septic system, and roof were defective or in need of repair.
After failed attempts to resolve the issue informally or through mediation, the
Goodgers filed suit against Nichols for, among other claims, fraud and violations of the DTPA,
alleging that Nichols had knowingly and intentionally failed to disclose the property’s defects. The
Goodgers’ petition alleged that Nichols filed claims for roof and foundation damage in 2006 and
2011, respectively, but he failed to disclose this information or that the septic system was
malfunctioning to the Nichols.
Nichols, who was served with citation at an address in Oklahoma, retained counsel
and filed an answer that included a jury request. Nichols also responded to the Goodgers’ discovery
requests and filed a motion to designate the house’s builder and Nichols’s pre-closing inspector as
responsible third parties. Later, Nichols consented to his attorney’s withdrawal from the case and
thereafter, according to the Goodgers, Nichols became difficult to reach. In fact, the Goodgers
assert, Nichols failed to appear for a scheduling hearing in January 2015, an attempted mediation in
1
See Tex. Prop. Code § 5.008 (requiring seller of residential real estate to provide purchaser
with written document disclosing condition of property).
2
July 2015, a court-ordered mediation in August 2015, and a final judgment hearing in October 2015
despite phone calls and notices mailed to the Oklahoma address identified in Nichols’s discovery
responses as his home address. At trial, the Goodgers offered the affidavit of the mediator’s
scheduler, who testified that she called Nichols sixteen times to notify him of the court-ordered
mediation date and sent notices via first-class mail which were marked “refused” by the carrier.
Nichols has since testified that he left the mail sitting in his mailbox or refused it outright and that
he did not get or respond to the phone calls or voicemail messages.
When Nichols failed to appear on the scheduled trial date, the district court rendered
default judgment against him, awarding the Goodgers $55,985.07 in damages and attorney fees and
$114,000 as exemplary damages. The district court also held Nichols in contempt of court for failure
to appear at the court-ordered mediation.
After receiving notice of the judgment, Nichols hired a new attorney and filed a
motion for new trial. At the hearing on that motion, Nichols testified that he was not indifferent to
the court proceedings, but that he had expected notice of a trial to be delivered by a sheriff, in a
manner similar to his service of process. According to Nichols, his belief stemmed from a
conversation he had in early 2015 with the Goodgers’ attorney in which he told her not to call him
or send him any letters, but that he would appear in court when the sheriff gave him notice of a trial.
But Nichols also acknowledged that the Goodgers’ attorney had not agreed to have a sheriff deliver
notice. The district court denied Nichols’s motion for new trial.
3
Discussion
Nichols raises five issues on appeal, urging that the district court erred by (1) granting
a post-answer default judgment against him when he had not received notice of the trial setting,
(2) conducting a bench trial when Nichols had timely requested a jury trial, (3) denying Nichols’s
motion for new trial, (4) rendering judgment that was not supported by legal or factually sufficient
evidence, and (5) awarding exemplary damages when there was no evidence that he acted with
“actual knowledge.”
Default judgment
In his first issue, Nichols argues that the district court erred in rendering default
judgment against him because the court knew that Nichols did not have actual knowledge of the trial
setting. In making this argument, Nichols relies on the Supreme Court’s opinion in Peralta v.
Heights Medical Center, Inc., which set aside, on due-process grounds, a pre-answer default
judgment against a defendant who had not been served with notice of the case against him.2 Here,
however, Nichols was personally served with citation3 and was mailed notices of other settings,
including the trial setting. Once a party is properly served with citation, the Texas Rules of Civil
Procedure allow a party to be notified of a trial setting by mail as long as the notice is given at least
45 days in advance of the trial setting.4 The Goodgers submitted evidence that, at every stage of the
2
See 485 U.S. 80, 87 (1988).
3
See Tex. R. Civ. P. 106 (authorizing personal service of citation).
4
See Tex. R. Civ. P. 21a (“Every notice required by these rules, . . . other than citation to be
served upon the filing of a case of action . . . , may be served by delivering a copy to the party to be
served” by mail, commercial delivery service, fax, email, or by using personal service), 245 (“The
4
process requiring Nichols’s appearance, they sent notices by certified or regular mail to the address
Nichols provided. That Nichols either ignored the mail or refused it outright, as he acknowledged,
does not change the fact that he was, in fact, given rule-compliant notice of the trial setting.5
Nichols’s refusal to receive or read the notices—which he uses as the basis of his argument that he
did not receive actual notice of the trial setting—constitutes constructive notice of the trial setting.6
Constructive notice under these circumstances satisfies due-process concerns.7 Having determined
that Nichols was constructively notified of the trial setting, we overrule Nichols’s first issue.
Jury request
In his second issue, Nichols maintains that the district court denied him his
constitutional right to a trial by jury when it held a bench trial after Nichols had properly demanded
a jury trial.8 But the Texas Rules of Civil Procedure provide that “[f]ailure of a party to appear for
Court may set contested cases on written request of any party, or on the court’s own motion, with
reasonable notice of not less than forty-five days to the parties of a first setting for trial, or by
agreement of the parties . . . .”).
5
See Tex. R. Civ. P. 21(a).
6
See Sharpe v. Kilcoyne, 962 S.W.2d 697, 700 (Tex. App.—Fort Worth 1998, no pet.)
(holding that defendant’s knowledge of suit and refusal to accept mailings that pertained to suit
constituted constructive notice of trial setting).
7
See id. at 700 (holding that constructive notice satisfies Peralta due-process requirements)
(citing Peralta, 485 U.S. at 84–85); see also Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex. 1988)
(noting that, based on Peralta, 458 U.S. at 84–85, due process requires “actual or constructive notice
of the trial setting”).
8
See Tex. Const. art. 1, § 15 (The right of trial by jury shall remain inviolate.”).
5
trial shall be deemed a waiver by him of the right to trial by jury.9 We overrule Nichols’s
second issue.
Motion for new trial
In his third issue, Nichols complains about the district court’s refusal to grant his
motion for new trial. He asserts that the district court abused its discretion in denying his motion
for new trial because he presented evidence that satisfies each element of the Craddock test.10 We
disagree. Craddock provides:
[A] default judgment should be set aside and a new trial ordered in any case in which
the failure of the defendant to answer before judgment was not intentional, or the
result of conscious indifference on his part, but was due to a mistake or an accident;
provided the motion for a new trial sets up a meritorious defense and is filed at a time
when the granting thereof will occasion no delay or otherwise work an injury to the
plaintiff.”11
Initially, we note that Nichols’s briefing on this issue is inadequate. The Texas Rules
of Appellate Procedure require a party’s brief, among other things, to “contain a clear and concise
argument for the contentions made, with appropriate citations to authorities and to the record.”12
Beyond his mere assertion that his evidence meets the Craddock test, Nichols’s brief does not
9
Tex. R. Civ. P. 220; see Bradley Motors, Inc. v. Mackey, 878 S.W.2d 140, 141 (Tex. 1994)
(“[A] party who fails to appear at a trial after filing an answer waives the right to a jury trial.”).
10
See Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939); see also
Waffle House, Inc. v. Williams, 313 S.W.3d 796, 813 (Tex. 2010) (trial court’s denial of motion for
new trial is reviewed for an abuse of discretion).
11
Craddock, 133 S.W.2d at 126.
12
Tex. R. App. P. 38.1(i).
6
include a discussion of the evidence or citations to the record. Regardless, however, because Nichols
displayed a “pattern of ignoring deadlines and warnings from [the] opposing party,” he is unable to
prove under Craddock that his failure to appear was not the result of intentional or consciously
indifferent conduct.13 Accordingly, the district court did not abuse its discretion in denying the
motion for new trial, and we overrule Nichols’s third issue.
Sufficiency of the evidence
In his fourth issue, Nichols raises legal- and factual-sufficiency challenges to the
evidence supporting three aspects of the district court’s judgement. First, Nichols challenges factual
sufficiency of the evidence supporting the district court’s award of damages under the Goodgers’
fraud and DTPA claims.14 We point out initially that Nichols has not adequately briefed this issue.15
Aside from the assertion that the Goodgers failed to meet their burden of establishing each of their
claims, Nichols does not provide reference to the record or support his argument with citations to
cases. Regardless, however, our review of the record shows that there is sufficient evidence to
13
See Levine v. Shackelford, Melton & McKinley, L.L.P., 248 S.W.3d 166, 169 (Tex. 2008)
(holding that “pattern of ignoring deadlines and warnings from opposing party amounts to conscious
indifference”); see also McLeod v. Gyr, 439 S.W.3d 639, 655 (Tex. App.—Dallas 2014, pet. denied)
(holding that failure to appear at trial was result of conscious indifference because attorney admitted
that he had received notice of the trial setting and disregarded it because case had settled).
14
In a factual-sufficiency challenge to evidence supporting an adverse finding on an issue
on which the challenger did not have the burden of proof at trial, we may set aside the finding only
if the evidence supporting the finding is so weak as to be clearly wrong and manifestly unjust. See
Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam); McMillin v. State Farm Lloyds,
180 S.W.3d 183, 201 (Tex. App.—Austin 2005, pet. denied).
15
See Tex. R. Civ. P. 38.1(i).
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support the district court’s judgment under either claim.16 For example, the Goodgers introduced
evidence establishing that Nichols knew about the foundation and roof problems and the fact that
he did not have access to the water well, but represented to the Goodgers that the house was free of
any of these problems and that they would have access to the water well. The Goodgers’ evidence
included testimony regarding the inspections and repairs done to the foundation and the roof,
photographs of the house’s problems, and a letter regarding Nichols’s prior insurance claim for
foundation damage. The evidence also shows that although Nichols had patched and caulked
damaged areas, Nichols failed to disclose the issues. Finally, Brent Goodger testified that if Nichols
had disclosed the problems, the Goodgers would not have purchased the property. Applying the
applicable factual-sufficiency standards of review, we cannot say that the judgment here is so
contrary to the overwhelming weight of the evidence as to be clearly wrong.17
Nichols next asserts that the evidence supporting the district court’s judgment is
legally insufficient because the Goodgers “failed to adduce any evidence disposing of the liability
issues raised as to” Nichols’s designation of a responsible third party. But the record before us
shows that although Nichols filed a motion to designate responsible third parties, the district court
never ruled on the issue and Nichols never designated a third party. Even assuming he had
designated a responsible third party, however, designation of a responsible third party is a defensive
16
See, e.g., Ernst & Young, L.L.P. v. Pacific Mut. Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001)
(listing elements of fraud claim); Doe v. Boys Clubs of Greater Dall., Inc., 907 S.W.2d 472, 478–79
(Tex. 1995) (describing elements of DTPA claim).
17
See Cain, 709 S.W.2d at 176.
8
issue on which the defendant, not the plaintiff, bears the burden of proof.18 As such, the Goodgers
had no obligation to disprove the existence of a responsible third party.19
We overrule Nichols’s fourth issue.
Exemplary damages
In his final issue, Nichols challenges the legal sufficiency of the evidence supporting
the district court’s award of exemplary damages.20 Specifically, Nichols asserts that there is no
evidence to support the district court’s finding that Nichols had “actual awareness” of the falsity of
his representations—a finding required for exemplary damages under a claim for fraud in a real
estate transaction.21 We disagree.
A person acts with “actual awareness” for purposes of a section 27.01(c) fraud claim
when the person “knows what he is doing is false, deceptive, or unfair.”22 On appeal, Nichols’s chief
18
See Austin v. Kroger Tex., L.P., 465 S.W.3d 193, 209–10 (Tex. 2015) (explaining that
matters under proportionate-responsibility statute, although no longer affirmative defenses, “remain
defensive issues on which defendants, not plaintiffs, bear the burden of proof”).
19
See Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 930 (Tex. 2009) (plaintiff is
responsible for proving his claim in context of post-answer default judgment).
20
When a party attacks the legal sufficiency of the evidence supporting an adverse finding on
an issue on which they did not have the burden of proof, that party must demonstrate on appeal that
there is no evidence to support the adverse finding. See City of Keller v. Wilson, 168 S.W.3d 802,
807 (Tex. 2005).
21
See Tex. Bus. & Com. Code § 27.01 (establishing elements for claim of fraud in real-estate
transaction, including requirement that, to recover exemplary damages, false representation or
promise must have been made with “actual awareness of the falsity thereof”).
22
Scott v. Sebree, 986 S.W.2d 364, 371 (Tex. App.—Austin 1999, pet. denied) (adopting
for claims for fraud in real estate transaction Supreme Court’s treatment of “actual awareness” in
DTPA context (quoting St. Paul Surplus Lines Ins. Co. v. Dal-Worth Tank Co., 974 S.W.2d 51,
9
complaint is that, because there is no evidence showing what his mental state was at the time of the
sale or his “mindset” in recognizing right from wrong, the evidence does not support the finding that
he acted with actual awareness. But the statutory-fraud provision in the Business and Commerce
Code specifies that “[a]ctual awareness may be inferred where objective manifestations indicate that
a person acted with actual awareness.”23 As described above, the evidence in the record before us
is replete with objective manifestations indicating that Nichols knew of damages to and issues with
the house—for example, his prior insurance claims based on the damages—and that he concealed
the damage to the house by, for example, attempting to repair the damage or hide it using masonry
patches or caulk. Under a legal-sufficiency standard of review, we must view the evidence in the
light most favorable to the challenged finding and indulge every reasonable inference that would
support it.24 Doing so here, we cannot say that the district court erred in finding that Nichols had
actual awareness of the falsity of his representations.
We overrule Nichols’s fifth issue.
Conclusion
Having overruled each of Nichols’s issues, we affirm the district court’s judgment.
53–54 (Tex. 1998))); see Kelley v. Kelley, No. 11-03-00278-CV, 2004 WL 2359986, *4
(Tex. App.—Eastland Oct. 21, 2004, no pet.) (mem. op.) (agreeing with Scott and applying St. Paul
in statutory-fraud context).
23
Tex. Bus. & Com. Code § 27.01(d).
24
See City of Keller, 168 S.W.3d at 807.
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__________________________________________
Jeff Rose, Chief Justice
Before Chief Justice Rose, Justices Puryear and Goodwin
Affirmed
Filed: July 20, 2017
11