Jaime Soto v. General Foam & Plastics Corp.

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
JAIME SOTO, §
No. 08-12-00194-CV
Appellant, §
Appeal from the
v. §
205th District Court
GENERAL FOAM & PLASTICS §
CORPORATION, of El Paso County, Texas
§
Appellee. (TC# 2007-3334)
§
OPINION
Jaime Soto appeals from a summary judgment entered in favor of General Foam &
Plastics Corporation (General Foam). For the reasons that follow, we affirm.
FACTUAL SUMMARY
Jaime Soto was employed by General Foam and worked in the company’s Mexican plant,
Arboles Navidenos De Juarez, S.A. de C.V., located in Ciudad Juarez, Chihuahua, Mexico.
Arboles Navidenos is a Mexican company. Even though Soto was assigned to Arboles
Navidenos, he was an employee of General Foam. General Foam suspended Soto’s employment
for four days without pay for taking an extended lunch period without his supervisor’s
permission. Soto did not return to work on the expected date. He instead filed a claim with the
Mexican Labor Board for unemployment benefits asserting he had been terminated from
employment with Arboles Navidenos. Soto also sought unemployment benefits from the Texas
Workforce Commission claiming his employment with General Foam had been suspended.
In 2007, General Foam filed suit against Soto alleging a common law fraud cause of
action. On September 4, 2008, the trial court entered an order compelling Soto to respond to
General Foam’s interrogatories and requests for production and disclosure, but Soto refused to
cooperate with his attorney, Enrique Lopez. General Foam subsequently filed a motion for
sanctions based on Soto’s failure to respond to its interrogatories, request for production, request
for disclosure, and request for admissions. Lopez filed a motion to withdraw based on Soto’s
failure to communicate with him and provide the requested discovery documents. Lopez
supported the motion to withdraw with a letter sent to Soto stating that he and Soto had met in
December 2010 and counsel informed him that it was urgent he produce the discovery
documents requested by General Foam but as of February 2, 2011, Lopez had not heard from
Soto and he had not produced the requested documents. Lopez also informed Soto that he had
filed a motion to withdraw as his attorney and the trial court had set the motion to withdraw and
a motion for sanctions hearing on February 15, 2011. The trial court granted the motion to
withdraw on February 15, 2011. The court also granted General Foam’s motion for sanctions,
ordered that General Foam’s requests for admissions were deemed admitted, and awarded
attorney’s fees in the amount of $3,200.
Soto did not retain new counsel and for the next year he represented himself.
Approximately one year after the trial court entered the sanctions order, General Foam filed a
motion for traditional summary judgment relying in large part on Soto’s deemed admissions that
he was not terminated, he decided to not return to work, he was not an employee of Arboles
Navidenos, he committed fraud, he knowingly made false statements in his cause of action
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against Arboles Navidenos, and he intentionally failed to disclose to the Mexican court that he
made the decision not to return to his job with General Foam. Soto did not file a summary
judgment response and he appeared pro se at the hearing on March 22, 2012. The trial court
entered an order granting summary judgment in favor of General Foam.
Soto subsequently retained his original counsel, Enrique Lopez, and Lopez filed a motion
for new trial on behalf of Soto alleging he is entitled to a new trial under the standard of
Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124 (Tex. 1939). Soto
supported his motion with his own affidavit. He averred that he was not represented by legal
counsel at the time the summary judgment motion was filed, he was unaware he was required to
file a written response, and he believed he was only required to appear and argue his defense at
the hearing. Soto also attempted to contradict the deemed findings. General Foam filed a
response and requested that the court strike Soto’s affidavit because it was an impermissible
attempt to contradict the deemed findings. General Foam also urged the trial court to deny the
motion for new trial without a hearing. The trial court entered an order finding that a hearing on
the motion for new trial was not justified. Soto’s motion for new trial was overruled by
operation of law.
MOTION FOR NEW TRIAL
Soto raises two related issues on appeal related to his motion for new trial. First, he
argues that the trial court abused its discretion by not affording him an evidentiary hearing.
Second, he contends that he met the Craddock standard, and therefore, the trial court abused its
discretion by not granting him a new trial. We will begin with the second issue because it
requires us to determine by what standard Soto’s motion for new trial must be measured.
Standard of Review
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A trial court possesses broad discretion in ruling on a motion for new trial. Cliff v.
Huggins, 724 S.W.2d 778, 778-79 (Tex. 1987); Acosta v. Tri State Mortgage Company, 322
S.W.3d 794, 801 (Tex.App.--El Paso 2010, no pet.). Accordingly, we review the court’s denial
of a motion for new trial for an abuse of discretion. Id. When a motion for new trial is overruled
by operation of law, as in this case, the question presented is whether the trial court abused its
discretion by allowing the motion to be overruled. Limestone Construction, Inc. v. Summit
Commercial Industrial Properties, Inc., 143 S.W.3d 538, 542 (Tex.App.--Austin 2004, no pet.),
citing Bank One of Texas, N.A. v. Moody, 830 S.W.2d 81, 85 (Tex. 1992). A trial court abuses
its discretion when it acts in an arbitrary or unreasonable manner, or it acts without reference to
any guiding principles of law. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42
(Tex. 1985); Acosta, 322 S.W.3d at 801.
Craddock is Inapplicable
Soto argues, as he did in the trial court, that his motion for new trial is governed by the
equitable standard established in Craddock v. Sunshine Bus Lines. This standard applies to a
motion for new trial challenging a no-answer default judgment. Craddock, 133 S.W.2d at 125-
26. It also applies to a post-answer default judgment where a party fails to appear for trial on the
merits. See Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966). Under this standard, a default
judgment must be set aside when the defendant establishes that (1) the failure to answer or
appear was not intentional or the result of conscious indifference, but was the result of accident
or mistake; (2) the motion for new trial sets up a meritorious defense; and (3) granting the
motion will occasion no undue delay or otherwise injure the party taking the default judgment.
Carpenter v. Cimarron Hydrocarbons Corporation, 98 S.W.3d 682, 684 (Tex. 2002); Craddock,
133 S.W.2d at 126.
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In Carpenter v. Cimarron Hydrocarbons, the Supreme Court addressed whether the
Craddock standard applies to a motion for new trial filed after summary judgment has been
granted where the non-movant failed to file a timely response. Cimarron’s attorney discovered
he had not filed a response two days before the summary judgment hearing. 98 S.W.3d at 684.
He filed a motion for leave to file a late response and a motion for a continuance on the day of
the hearing. Id. at 685. The trial court denied both motions and granted summary judgment in
favor of Carpenter. Id. at 685. Cimarron filed a motion for new trial and argued the summary
judgment should be set aside under the Craddock standard. Id. The trial court denied the
motion. Id. The Second Court of Appeals applied Craddock and reversed. Cimarron
Hydrocarbons Corporation v. Carpenter, 35 S.W.3d 692 (Tex.App.--Fort Worth 2000).
The Supreme Court observed that the Craddock standard is based on equitable principles
and was adopted to alleviate unduly harsh and unjust results at a point in time when the
defaulting party had no other available remedy. Carpenter, 98 S.W.3d at 685-86. But when the
rules provide the defaulting party a remedy, Craddock does not apply. Id. at 686. Under Rule
166a(c), the non-movant may file a motion for leave to file a late summary judgment response.
TEX.R.CIV.P. 166a(c). Thus, the Supreme Court held that Craddock does not apply to a motion
for new trial filed after summary judgment is granted on a motion to which the non-movant
failed to timely respond when the respondent had notice of the hearing and an opportunity to
seek a continuance or file a motion for leave to file a late response as permitted by Rule 166a(c).
Carpenter, 98 S.W.3d at 686.
The court then considered whether the trial court abused its discretion by denying
Cimarron’s motion for leave to file a late response to the summary judgment motion. Id. at 687.
It held that the correct standard is the good cause standard which governs the withdrawal of
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admissions. Carpenter, 98 S.W.3d at 687; see TEX.R.CIV.P. 198.3.1 Thus, a motion for leave to
file a late summary-judgment response should be granted when a litigant establishes good cause
for failing to timely respond by showing that (1) the failure to respond was not intentional or the
result of conscious indifference, but the result of accident or mistake, and (2) allowing the late
response will occasion no undue delay or otherwise injure the party seeking summary judgment.
Id. at 688. The Court concluded that the trial court did not abuse its discretion by denying
Cimarron’s request for leave to file a late response because its motion offered no explanation for
its failure to timely respond and it was not accompanied by any supporting affidavits or
evidence. Id. Consequently, the trial court did not abuse its discretion by denying the motion for
new trial. Id.
In Wheeler v. Green, the Supreme Court applied the Carpenter good cause test in a
summary judgment case where the pro se non-movant did not timely respond to a request for
admissions and mistakenly failed to file a written summary judgment response based on those
deemed admissions. Wheeler v. Green, 157 S.W.3d 439 (Tex. 2005). The pro se litigant,
Wheeler, filed her responses to requests for admission two days late and the movant, Green, filed
a motion for summary judgment based entirely on the deemed admissions. Id. at 441. Wheeler
did not file a summary judgment response because she was mistaken about the nature of a
summary judgment hearing, but she appeared at the hearing. Id. at 441-42. The trial court
1
Rule 198.3 provides that:
Any admission made by a party under this rule may be used solely in the pending action and not in
any other proceeding. A matter admitted under this rule is conclusively established as to the party
making the admission unless the court permits the party to withdraw or amend the admission. The
court may permit the party to withdraw or amend the admission if:
(a) the party shows good cause for the withdrawal or amendment; and
(b) the court finds that the parties relying upon the responses and deemed admissions will not be
unduly prejudiced and that the presentation of the merits of the action will be subserved by
permitting the party to amend or withdraw the admission.
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granted summary judgment against Wheeler and terminated her rights as joint managing
conservator of her daughter and appointed the movant as the sole managing conservator.
Wheeler, 157 S.W.3d at 441. Wheeler hired an attorney who filed a motion for new trial
asserting that her responses to the request for admissions was timely, the requests should not
have been deemed admitted, and the summary judgment should be set aside. Id. at 441-42.
Wheeler also offered to pay Green’s costs. Id. The trial court denied the motion for new trial.
Id. The Dallas Court of Appeals affirmed because Wheeler did not file a summary judgment
response and never sought to withdraw her admissions. Wheeler v. Green, 119 S.W.3d 887
(Tex.App.--Dallas 2003).
Even though Wheeler did not file a motion to withdraw her deemed admissions or a
motion for leave to file a late summary judgment response, the Supreme Court found that the
arguments raised in her motion for new trial were sufficient to put the trial court on notice of her
complaints and she did not waive the arguments by raising them for the first time in her motion
for new trial. Wheeler, 157 S.W.3d at 442. The court applied Carpenter’s good cause test and
concluded that Wheeler’s failure to move to withdraw her admissions was not intentional or the
result of conscious indifference because nothing in the record suggested that before summary
judgment was granted, Wheeler realized that her responses were late, that she needed to move to
withdraw deemed admissions, or that she needed to file a response to the summary judgment
raising either argument. Id. The court also concluded that Green would not suffer any undue
prejudice if the admissions were withdrawn. Id. at 443.
The Supreme Court recognized that trial courts have broad discretion to permit or deny
withdrawal of deemed admissions, but they cannot do so arbitrarily, unreasonably, or without
reference to guiding rules or principles. Id. at 443. It emphasized that requests for admissions
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are intended to be used to eliminate matters about which there is no real controversy and were
never intended to be used as a demand upon a plaintiff or defendant to admit that he had no
cause of action or ground of defense. Wheeler, 157 S.W.3d at 443, citing Stelly v. Papania, 927
S.W.2d 620, 622 (Tex.1996). Absent flagrant bad faith or callous disregard for the rules, due
process bars merits-preclusive sanctions. Id. The court found that the record contained no
evidence of flagrant bad faith or callous disregard for the rules, nothing to justify a presumption
that Wheeler’s case lacked merit, and nothing to suggest Green was unable to prepare for trial
without the admissions. Id. at 443-44. Further, Wheeler had also offered to pay for Green’s
expenses due to her late response. Id. at 444. The court held that the trial court should have
granted a new trial and allowed the deemed admissions to be withdrawn. Id.
The Supreme Court applied Carpenter in yet another case where a summary judgment
was granted against a pro se litigant based on deemed admissions. In Marino v. King, the pro se
litigant, Marino, filed her response to the request for admissions one day late and the trial court
subsequently granted the plaintiff’s motion for summary judgment based on the deemed
admissions. Marino v. King, 355 S.W.3d 629, 630 (Tex. 2011). Marino did not move to
withdraw the deemed admissions and she did not file a response to the summary judgment
motion, but she appeared at the hearing. Id. at 630-31. Marino filed a motion for new trial and
at the hearing asked for an opportunity to correct any procedural mistakes. Id. at 632. The
motion for new trial was overruled by operation of law. Id. The Waco Court of Appeals
affirmed the summary judgment, concluding that Marino had waived her complaint about the
deemed admissions by failing to raise the issue in the trial court. Marino v. King, 356 S.W.3d 28
(Tex.App.--Waco 2010)(mem. op.).
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The Supreme Court observed that the due process concern recognized in Wheeler is one
principle which a trial court must consider when exercising its discretion to permit or deny the
withdrawal of deemed admissions. Marino, 355 S.W.3d at 633-34. Constitutional imperatives
favor the determination of cases on their merits rather than on harmless procedural defaults. Id.
at 634. Citing Wheeler, the court determined that “[u]sing deemed admissions as the basis for
summary judgment therefore does not avoid the requirement of flagrant bad faith or callous
disregard, the showing necessary to support a merits-preclusive sanction; it merely incorporates
the requirement as an element of the movant’s summary judgment burden.” Marino, 355 S.W.3d
at 634, citing Wheeler, 157 S.W.3d at 443-44. The Supreme Court reversed because it found
good cause existed for the withdrawal of the deemed admissions as there was no evidence of
flagrant bad faith or callous disregard for the rules and nothing to justify a presumption that
Marino’s defense lacks merit. Id.
Application of Wheeler and Marino
The summary judgment against Soto was based on the deemed admissions. Thus, we
must address whether good cause exists to permit withdrawal of the deemed admissions under
Wheeler and Marino.2 If good cause does not exist, the trial court did not abuse its discretion by
permitting the motion for new trial to be overruled by operation of law.
This case differs from Wheeler and Marino in that Soto was represented by counsel for
several years while discovery was ongoing. The attorney withdrew because Soto had refused to
cooperate with him and would not produce the requested discovery even when faced with a
sanctions hearing. Counsel attached to the motion to withdraw his letter to Soto urging him to
2
Soto did not file a motion to withdraw his deemed admissions or a response to General Foam’s summary
judgment motion but under Wheeler’s standard, he sufficiently raised these issues in his motion for new trial. See
Wheeler, 157 S.W.3d at 442. Soto did not waive the issues by raising them for the first time in his motion for new
trial. Id.
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produce the discovery documents and informing him that a sanctions hearing had been
scheduled. Soto did not respond to the discovery requests and the trial court entered an order
permitting counsel to withdraw on February 15, 2011. On that same date, the trial court
conducted a sanctions hearing and entered a sanctions order. Unlike the circumstances in
Wheeler and Marino, we are not presented with a case where a pro se litigant mistakenly failed
to respond to requests for admissions because he simply did not understand his obligations. Soto
was represented by counsel during the entire time period when he refused to respond to the
discovery requests and counsel unsuccessfully attempted to persuade Soto to respond to those
requests. General Foam’s requests for admissions were deemed admitted as a sanction for Soto’s
discovery abuse. Soto has not challenged the sanctions order and he has not brought forward the
reporter’s record of the sanctions hearing. Thus, we must presume that the evidence admitted at
the hearing supports the trial court’s sanctions order. See K.J. v. USA Water Polo, Inc., 383
S.W.3d 593, 608 (Tex.App.--Houston [14th Dist.] 2012, pet. denied). Even without the
transcription of the sanctions hearing, there is evidence in the record of Soto’s flagrant bad faith
and callous disregard of the rules. Consequently, due process does not bar the merits-preclusive
sanction imposed by the trial court. Under these circumstances, good cause does not exist to
permit Soto to withdraw his deemed admissions. We therefore conclude that the trial court did
not abuse its discretion by permitting the motion for new trial to be overruled by operation of
law. Issue Two is overruled.
NO HEARING ON THE MOTION FOR NEW TRIAL
In his first issue, Soto contends that the trial court abused its discretion by refusing to
allow him a hearing on the motion for new trial. Generally, a hearing on a motion for new trial is
not mandatory. Olsen v. Commission for Lawyer Discipline, 347 S.W.3d 876, 887 (Tex.App.--
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Dallas 2011, pet. denied); Landis v. Landis, 307 S.W.3d 393, 394 (Tex.App.--San Antonio 2009,
no pet.). A trial court is only required to conduct a hearing on a motion for new trial when the
motion presents a question of fact upon which evidence must be heard. Olsen, 347 S.W.3d at
887; Landis, 307 S.W.3d at 394.
Under the Carpenter good cause test, Soto was required to establish that (1) his failure to
file a motion to withdraw the deemed admissions was not intentional or the result of conscious
indifference, but was the result of accident or mistake, and (2) allowing him to withdraw the
admissions would not cause any undue delay or otherwise injure General Foam. See Carpenter,
98 S.W.3d at 688. Soto’s affidavit focused exclusively on his mistaken failure to file a summary
judgment response. He offered no explanation for his failure to respond to the discovery
requests, including the request for admissions, which caused his attorney to withdraw and the
trial court to enter the sanctions order. Soto’s motion for new trial did not present a question of
fact on the critical issue of whether good cause existed to permit him to withdraw the deemed
admissions. The trial court did not abuse its discretion by refusing to conduct a hearing on
Soto’s motion for new trial. Issue One is overruled. Having overruled both issues, we affirm the
judgment of the trial court.
October 10, 2014
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rivera, and Rodriguez, JJ.
Rivera, J., (Not Participating)
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