Maternidad De Los Santos v. Martha Gonzalez A/N/F of Eduardo A. Gonzalez,a Minor Child

No. 04-99-00130-CV MATERNIDAD DE LOS SANTOS, Appellant v. Martha GONZALEZ, As Next Friend of Eduardo Gonzalez, A Minor Child, Appellee From the 365th Judicial District Court, Maverick County, Texas Trial Court No. 97-06-14587-CV-A Honorable Amado Abascal III, Judge Presiding

Opinion by: Alma L. López, Justice

Sitting: Phil Hardberger, Chief Justice

Tom Rickhoff, Justice

Alma L. López, Justice

Delivered and Filed: April 12, 2000

REVERSED AND REMANDED

This appeal arises from the denial of a motion for new trial and to set aside a default judgment. Martha Gonzalez, as next friend of Eduardo Gonzalez, a minor child, filed an original petition alleging medical malpractice while under the care of Ramiro de los Santos, M.D. of Maternidad de los Santos ("Maternidad") for the delivery of her new born child, Eduardo Gonzalez. The trial court rendered a default judgment in favor of Gonzalez upon the failure of Maternidad to answer following service of process. In a single issue on appeal, Maternidad contends that the trial court abused its discretion in denying the motion for new trial. We reverse the judgment of the trial court and remand the case for trial.

Factual and Procedural Background

Martha Gonzalez gave birth to Eduardo Gonzalez on May 5, 1985. At the time of his birth, Eduardo received a permanent birth injury called Erb's Palsy, which incapacitated his arm. Martha filed an original petition on June 25, 1997 against Dr. Ramiro de los Santos and his clinic, Maternidad de los Santos. On June 26, 1997, de los Santos was served with two citations, one for himself and one for Maternidad, of which he is an agent. Dr. de los Santos filed an answer on July 18, 1997. On September 9, 1998, more than a year later, the trial court entered a default judgment against Maternidad for $2,100,000. Subsequently, Maternidad filed an original answer and a motion for new trial on September 24, 1998. On November 24, 1998, the trial court denied the motion for new trial and ordered a severance.⁽¹⁾ On November 30, 1998, Maternidad requested findings of facts and conclusions of law from the court. Maternidad filed a second motion for new trial on December 22, 1998,⁽²⁾ which was overruled as a matter of law. On January 12, 1999, the trial court filed findings of fact and conclusions of law.

On appeal, Maternidad complains that the default judgment should have been set aside and a new trial granted because its failure to file an answer was due to accident or mistake and not conscious indifference; further, Maternidad contends that it demonstrated a meritorious defense and established that the granting of a new trial would not delay the proceeding or injure the plaintiff.

Motion for New Trial

To determine whether the trial court erred by failing to set aside the default judgment, we must assess whether the trial court abused its discretion. See Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex. 1984). A trial court has wide discretion in granting a new trial, and the trial court's discretion will not be disturbed on appeal absent a showing of a manifest abuse of discretion. See Champion Int'l Corp. v. Twelfth Court of Appeals, 762 S.W.2d 898, 899 (Tex. 1988). A trial court abuses its discretion if its decision is arbitrary, unreasonable, and without reference to any guiding rules and principles. See Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex. 1997).

Whether the trial court should grant a motion for new trial to set aside a proper default judgment is determined by using the standard set out in Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 393, 133 S.W.2d 124, 126 (Tex. Com. App. 1939). See Holt Atherton Industries, Inc. v. Heine, 835 S.W.2d 80, 82 (Tex. 1992) (reaffirming the Craddock test). Under this standard, a trial court may set aside a default judgment and order a new trial in any case in which: (1) 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; (2) provided that the motion for new trial sets up a meritorious defense; and (3) is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff. See Craddock,133 S.W.2d at 126. If the facts underlying the default judgment are disputed, the trial court may, but is not required to, make findings in support of its ruling. See Landon v. Jean-Paul Budinger, Inc., 724 S.W.2d 931, 940 (Tex. App.--Austin 1987, no writ).

In making its determination, the trial court should exercise liberality in favor of a defaulted party. See Sexton v. Sexton, 737 S.W.2d 131, 133 (Tex. App.--San Antonio 1987, no writ). When a defendant satisfies the Craddock test, the trial court must set aside the default judgment. See Director, State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994). When the guidelines of Craddock are satisfied, it is an abuse of discretion to deny the defendant a new trial. See id.

1. Conscious Indifference

To begin the analysis, we must first determine whether Maternidad established that its failure to answer was due to a mistake or accident rather than the result of conscious indifference. See Craddock, 133 S.W.2d at 126. Conscious indifference exists when the defaulted party fails to take some action which would seem obvious to a reasonable person in the same or similar circumstances. See Norton v. Martinez, 935 S.W.2d 898, 901 (Tex. App.--San Antonio 1996, no writ).

The defaulting party must provide some excuse, but not necessarily a good excuse for failing to answer in a timely manner. See Norton, 935 S.W.2d at 901; Gotcher v. Barnett, 757 S.W.2d 398, 401 (Tex. App.--Houston [14th Dist.] 1988, no writ) (finding that "even a slight excuse will suffice"). The absence of a purposeful or bad faith failure to answer is the controlling factor under this analysis. See Craddock, 133 S.W.2d at 125.

Moreover, when a defendant relies on his agent to file an answer, he must demonstrate that both he and his agent were free of conscious indifference. See Holt Atherton Industries, 835 S.W.2d at 83. Because de los Santos was Maternidad's agent, Maternidad must show that de los Santos's failure to answer was due to a mistake or accident rather than intentional or due to conscious indifference. See id.

In the instant case, Maternidad alleged facts in its motion for new trial which demonstrates that its failure to answer was neither intentional nor a result of conscious indifference. The motion for new trial was accompanied by an affidavit from de los Santos. In his affidavit, de los Santos indicated that he did not recall receiving two separate citations. He explained that he forwarded a citation, along with plaintiff's original petition, to his insurance carrier, and that he expected his insurance company to retain counsel to represent both him and Maternidad. At the time de los Santos forwarded plaintiff's original petition and citation to his insurance company, he assumed that whoever was hired to represent him would also file an answer on behalf of Maternidad. Dr. de los Santos also stated that he did not realize that a separate answer would have to be filed for Maternidad. Had he realized, he would have ensured that an answer was filed on behalf of Maternidad. Likewise, de los Santos believed that the attorney who filed an answer on his personal behalf would also file on behalf of Maternidad. Moreover, the motion for new trial alleges that after receiving the citation and the petition, the insurance company filed an answer in behalf of de los Santos, but did not file an answer in behalf of Maternidad because Maternidad was not insured under the policy.

Accordingly, these facts alleged in the affidavit and motion for new trial offer some excuse for the mistake and do not indicate that Maternidad was consciously indifferent to the suit or intentionally failed to answer. See Norton, 935 S.W.2d at 902 (holding that the failure to answer was an accident or mistake where there was no notice from insurance administrator that the claim was not covered, the city attorney's office was under the impression the claim was covered and was unaware of the need to answer). The affidavit evidence was sufficient to show the failure to answer was the result of accident or mistake rather that conscious indifference. See Harlen v. Pfeffer, 693 S.W.2d 543, 546 (Tex. App.--San Antonio 1985, no writ) (asserting affidavit was sufficient to show accident or mistake where both defendants thought the other had contacted the attorney to answer the suit when neither had).

Furthermore, if the factual assertions in the defendant's motion for new trial and accompanying affidavits are not controverted, the defendant satisfies its burden if it sets forth facts that, if true, negate intent or conscious indifference. See Strackbein, 671 S.W.2d at 38-39. In determining whether the defendant's assertions are controverted, the court considers all of the evidence in the record. See Norton, 935 S.W.2d at 901. In the instant case, Gonzalez claims that Maternidad's assertions are controverted because of de los Santos's familiarity with the legal system. See Young v. Kirsch, 814 S.W.2d 77, 81 (Tex. App.--San Antonio 1991, no writ). During the hearing on the motion for new trial, Gonzalez introduced an article from the Eagle Pass newspaper identifying four lawsuits filed against de los Santos in one week. Further, Gonzalez contends that de los Santos's excuse for failing to answer was not credible because he had sufficient knowledge to file an answer within the time required. Although de los Santos must have been familiar with the legal system--after all, he did forward his citation to his insurance company, he was mistaken in his belief that his insurance company would answer for Maternidad. A mistake does not equate to conscious indifference. Here, Gonzalez has not controverted Maternidad's assertion of mistaken belief. As such, Maternidad has satisfied the first prong of the Craddock test by negating intentional or consciously indifferent conduct through the facts alleged in the affidavit of de los Santos. See Norton, 935 S.W.2d at 902.

2. Meritorious Defense

To satisfy the second prong of the Craddock test, the defaulting party must set up a meritorious defense by alleging facts, supported by affidavit, which in law would constitute a defense to the cause of action pled by the plaintiff. See Estate of Pollack v. McMurrey, 858 S.W.2d 388, 392 (Tex. 1993); Norton, 935 S.W.2d at 902. A meritorious defense is one, that if ultimately proved, will cause a different result when the case is tried again. See Norton, 935 S.W.2d at 902; Harlen, 693 S.W.2d at 546. Moreover, Craddock requires that the defendant "set up" a meritorious defense, not that it prove one. See Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966); Norton, 935 S.W.2d at 902. In fact, once evidence of a meritorious defense is established, the allegations supporting it must be taken as true in spite of controverting evidence. See Norton, 935 S.W.2d at 903.

In the instant case, Maternidad claimed three meritorious defenses on the motion for new trial. Specifically, Maternidad asserted: that it has met the standard of care; that no proximate cause has been established; and finally, that Gonzalez failed to comply with the provisions of the Medical Liability and Insurance Act by not posting the appropriate bond and not providing Maternidad with an expert report.

Initially, Plaintiff's original petition alleged that Maternidad failed to use ordinary care in the treatment of Martha and Eduardo Gonzalez. As a defense, Maternidad asserted that it has met the appropriate standard of care. Dr. de los Santos's affidavit specifically indicated that he and Maternidad complied with the proper standard of care. Moreover, de los Santos contended in his affidavit that Maternidad developed, employed, monitored and followed appropriate policies and procedures with regard to the assessment, treatment, management, and oversight of Eduardo Gonzalez. Likewise, Maternidad trained, employed, and provided appropriate personnel to carry out its policies. Thus, Maternidad established a defense to Gonzalez's complaint. Because it established a meritorious defense, Maternidad has satisfied the second prong of the Craddock test.

3. No Delay or Injury

To satisfy the third prong of the Craddock test, the defaulting party must establish that the granting of its motion for new trial would not occasion a delay or otherwise work an injury to the plaintiff. See Craddock, 133 S.W.2d at 126. In determining whether delay or injury will occur to the plaintiff, the court considers whether the defendant has offered to reimburse the plaintiff for the costs involved in obtaining a default judgment and whether the defendant is ready, willing, and able to go to trial. See Angelo v. Champion Restaurant Equip. Co., 713 S.W.2d 96, 98 (Tex. 1986); Norton, 935 S.W.2d at 903.

In the instant case, Maternidad claimed in its motion for new trial that a new trial would neither delay nor prejudice Gonzalez because Maternidad was willing and able to proceed to trial immediately. Moreover, Maternidad offered to reimburse Gonzalez for the reasonable costs and expenses incurred in taking the default judgment. Having presented prima facie evidence that the granting of a new trial will not delay or otherwise injure the plaintiff, the burden then shifts to Gonzalez to show proof or injury. See Cliff v. Huggins, 724 S.W.2d 778, 779 (Tex. 1987); Norton, 935 S.W.2d at 903. Gonzalez, however, has not offered evidence to rebut Maternidad's showing of no injury or undue delay. Since Gonzalez did not rebut Maternidad's showing of no injury, Maternidad has established that the granting of new trial would not cause undue delay or injury. Accordingly, Maternidad has satisfied the third prong of the Craddock test.

Because Maternidad has successfully satisfied all three elements of the Craddock test, we find that the trial court abused its discretion in overruling Maternidad's motion for new trial and in failing to set aside the default judgment. As a result, we reverse the judgment of the trial court and remand this case for trial on the merits.

Alma L. López, Justice

DO NOT PUBLISH

1. When the trial court renders a non-answer default judgment, the judgment is not presumed to dispose of all parties and all issues. See Martinez v. Humble Sand & Gravel, Inc., 875 S.W.2d 311, 312 (Tex. 1994). Likewise, if the plaintiff's petition names multiple defendants, and the plaintiff obtains a no-answer default judgment against one of the defendants, the default judgment is interlocutory and cannot be appealed until the trial court either renders a final judgment in the case or signs an order of severance making the interlocutory default judgment final. See Tex. R. Civ. P. 240; Twenty-Four Thousand One Hundred and Eighty ($24,180.00) Dollars in U.S. Currency v. State, 865 S.W.2d 181, 188 (Tex. App.--Corpus Christi 1993, writ denied). Here, the default judgment became final and appealable on November 24, 1998 when the court signed an order of severance. See Tex. R. Civ. P. 306a; Martinez, 875 S.W.2d at 313 (affirming that when a severance order takes effect, the appellate time table runs from the signing date of the order that made the judgment "final" and appealable).

2. This court may not consider grounds articulated in a second motion for new trial filed within the court's plenary jurisdiction, but more than thirty days after the judgment is signed. See Tex. R. Civ. P. 329b (providing time for filing motions); Kalteyer v. Sneed, 837 S.W.2d 848, 850-51 (Tex. App.--Austin 1992, no writ); Homart Dev. Co. v. Blanton, 755 S.W.2d 158, 160 (Tex. App.--Houston [1st Dist.] 1988, orig. proceeding) (citing Roy W. McDonald, 4 Texas Civil Practice in District and County Courts § 18.06.2, at 287 (1984)).