David Lindsay and Dominion Custom Homes, Inc. v. Thomas and Kelly Moody and Mel Pulver

Affirmed and Memorandum Opinion filed September 30, 2004 Affirmed and Memorandum Opinion filed September 30, 2004. In The Fourteenth Court of Appeals _______________ NO. 14-02-00758-CV _______________ DAVID LINDSAY AND DOMINION CUSTOM HOMES, INC., Appellants V. THOMAS AND KELLY MOODY AND MEL PULVER, Appellees ________________________________________________________________ On Appeal from the 165th District Court Harris County, Texas Trial Court Cause No. 01‑03124 ________________________________________________________________ M E M O R A N D U M   O P I N I O N In this restricted appeal, David Lindsay and Dominion Custom Homes, Inc. (ADominion@) appeal a post-answer default judgment entered in favor of Thomas and Kelly Moody (Athe Moodys@) and Mel Pulver on the grounds that: (1) Lindsay was entitled to, but denied, 20 days in which to answer Pulver=s cross-claim; and (2) the evidence was insufficient to support the judgment. We affirm. Background The Moodys sued Dominion, Pulver, and Lindsay for breach of a home construction agreement, violations of the Texas Deceptive Trade Practices Act (ADTPA@), fraud, negligence, gross negligence, conspiracy, and violations of the Residential Construction Liability Act (ARCLA@). The Moodys and Pulver entered into a settlement agreement, and Pulver subsequently filed a cross-action against Lindsay for breach of fiduciary duty, defalcation, conversion, and fraud. After a bench trial at which Dominion and Lindsay failed to appear, a default judgment (the Ajudgment@) was entered against them in favor of the Moodys and Pulver. Standard of Review As relevant to this case, to prevail on a restricted appeal, a party must establish that: (1) it did not participate in the hearing or other decision-making event that resulted in the judgment complained of; and (2) error is apparent on the face of the record. George Alexander v. Lynda=s Boutique, 134 S.W.3d 845, 848 (Tex. 2004); William Withem v. Joe Underwood, 922 S.W.2d 956, 957 (Tex. 1996) (per curiam). Participation at Trial Because the judgment and reporter=s record each reflect that Dominion and Lindsay made no appearance at trial, it is clear that they did not participate in the decision-making event that resulted in the judgment they complain of, and the first requirement is met.[1] Error on the Face of the Record Timeliness of Cross-claim Lindsay contends that the filing of Pulver=s cross-claim against Lindsay only seven days before trial denied Lindsay the required twenty days to file an answer to the cross-claim.[2] In that the answer period on which Lindsay relies protects a defendant from having a no-answer default taken against him and without proof of the plaintiff=s liability allegations, Lindsay does not provide authority or explanation to demonstrate how that answer period is applicable in this situation where, by reason of his previously filed answer to the Moodys= petition, he was deemed to have filed a general denial[3] to Pulver=s cross-claim and was, thus, not at risk for having a no-answer default judgment taken on it.[4] Lindsay further contends that, by raising new facts and claims from those asserted against him by the Moodys, Pulver=s assertion of a cross-claim for the first time within seven days of trial constituted unfair surprise and prejudice as a matter of law. As relevant to this case, parties may generally file pleadings at any time that does not operate as a surprise to the other party. See Tex. R. Civ. P. 63. However, pleadings may be filed within seven days of trial only with leave of court, which shall be granted unless there is a showing of surprise to the opposite party. Id. A trial court may not refuse to allow such a pleading unless the opposing party shows surprise or the pleading asserts a new claim or defense and is thus prejudicial on its face. State Bar of Tex. v. Kilpatrick, 874 S.W.2d 656, 658 (Tex. 1994). However, even where the foregoing conditions are met, so that a trial court may refuse to allow the pleading, it still has discretion whether to do so, based on whether the pleading would pose a level of surprise or unfair prejudice that could impair the opposing party=s ability to present its defense. Id. In this case, to whatever extent the assertion of new facts and claims in Pulver=s cross-claim allowed the trial court to refuse it, the mere assertion of any new facts and claims did not alone require the trial court to do so. Therefore, because Lindsay has not demonstrated any actual surprise or prejudice from the cross-claim,[5] this contention affords no basis for relief and is overruled. Sufficiency of the Evidence To demonstrate error on the face of the record, Dominion and Lindsay contend that the evidence is legally insufficient to prove liability under any of appellees= claims.[6] In determining whether a finding is supported by legally sufficient evidence, we view the evidence in the most favorable light and indulge every inference in its favor. Tarrant Reg=l Water Dist. v. Gragg, ___ S.W.3d ___, ___ (Tex. 2004). The testimony pertaining to liability on Pulver=s claims includes the following: Q Mr. Pulver, you=ve alleged in your action against Mr. Lindsay that he made those misrepresentations to you? A Yes. Q And that you gave the money based on those? A Yes. Q Approximately how much money did you give Mr. Lindsay? A $115,668.00 * * * * Q Explain to the Court how you=ve been damaged as a result of Mr. Lindsay=s misrepresentations to you. A Well, I invested 115,000, which I didn=t get back. I paid a settlement to the Moodys for 5,500; . . . . The testimony pertaining to liability on the Moodys= claims includes the following: Q: As a result of the actions and events that you have chronicled in your [third amended petition], have you suffered damage . . . ? A: Yes. Q: Are those actions and damages a direct and proximate result of things that were done by Dominion Custom Homes and David Lindsay? A: Yes. Viewed in the most favorable light, the foregoing testimony supports an inference that the witnesses were testifying that the facts, events, and conduct alleged in the respective pleadings had occurred and caused them damage. Conversely, Lindsay and Dominion=s brief has not argued, cited authority, or provided reasoning to demonstrate that: (1) such testimony does not constitute evidence of the matters set forth in the pleadings; or (2) the facts set forth in the pleadings are not sufficient to support recovery under any of appellees= respective claims. Under these circumstances, Lindsay and Dominion have failed to establish the insufficiency of the evidence and, thus, error on the face of the record. Accordingly, their issues are overruled, and the judgment of the trial court is affirmed. /s/ Richard H. Edelman Justice Judgment rendered and Memorandum Opinion filed September 30, 2004. Panel consists of Justices Fowler, Edelman, and Seymore. (Seymore, J., concurs in result only.) [1] Although the same attorney had initially represented both Pulver and Dominion, the judgment states that: (1) Pulver appeared at trial but Dominion did not; and (2) the motion to withdraw previously filed by Dominion=s counsel was granted. Because the record thus reflects that Dominion had no attorney at trial, and because a corporation cannot appear without an attorney, we have no basis to conclude that Dominion participated in the trial. See Kunstoplast of Am. v. Formosa Plastics Corp., USA, 937 S.W.2d 455, 456 (Tex. 1996). [2] See Tex. R. Civ. P. 99 (requiring citation to include notice that a default judgment may be taken if an answer is not filed by the Monday following the twentieth day after service of citation); id. 107 (prohibiting default judgment from being granted until citation has been on file ten days); id. 239 (authorizing default judgment to be taken against a defendant who has not previously filed an answer if citation has been on file for the period required by rule 107). [3] See Tex. R. Civ. P. 92 (when a cross-claim is served on a party who has made an appearance in the action, the party so served, in the absence of a responsive pleading shall be deemed to have pleaded a general denial to the cross-claim). [4] See, e.g., Bradley Motors, Inc. v. Mackey, 878 S.W.2d 140, 141 (Tex. 1994) (recognizing that for post-answer default, trial court may not render judgment on the pleadings as it could for a no-answer default); Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992) (reciting that once a (no-answer) default is taken on an unliquidated claim, all allegations in the petition are deemed admitted except the amount of damages). Lindsay=s position on this issue would suggest that cross-claims may not be filed within twenty days of a trial setting, without regard to Texas Rule of Civil Procedure 63, discussed below. We thus disagree with Taliaferro to the extent it suggests that a twenty-day answer period must be afforded to parties who have already made an appearance in the case. See Taliaferro v. Texas Commerce Bank, 669 S.W.2d 172, 173B74 (Tex. App.CFort Worth 1984, no writ). [5] As a practical matter, it would seem particularly difficult for a party to demonstrate surprise or prejudice to a position that they were not even present to defend at trial in the first place. [6] To obtain a post-answer default judgment, a plaintiff must offer evidence to prove all aspects of his case. Bradley Motors, Inc. v. Mackey, 878 S.W.2d 140,141 (Tex. 1994). A post-answer default judgment can thus be challenged for legal sufficiency of the evidence. Norman Communications v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam).