Date: 05-19-2011

Case Style: George E. Dixon v. Carmen Nance Sanders

Case Number: 01-10-00814-CV

Judge: Laura Carter Higley

Court: Texas Court of Appeals, First District on appeal from the 405th District Court of Galveston County

Plaintiff's Attorney: Timothy J. Henderson for Camen Nance Sanders

Defendant's Attorney: No appearance

Description: This is a restricted appeal from the trial court’s entry of a post-answer default judgment against George E. Dixon, appellant, and Tradesman Services, d/b/a GED, LLC. In two issues, Dixon argues the trial court erred by (1) allowing his attorney to withdraw from the case without providing him the statutorily-required notices and (2) granting the default judgment when he had not received notice of the trial setting.

We reverse and remand. Background

In 2006, appellee, Carmen Nance Sanders, entered into a contract with Tradesman Services for renovation work on a home that had been recently purchased by Sanders. Tradesman Services is wholly owned by Dixon. In June 2007, Sanders brought suit against Dixon and Tradesman Services alleging, among other causes of action, fraud.

Dixon appeared in the suit by filing an answer to Sanders’s petition on July 16, 2007. Some time later, Dixon obtained representation for the case. On December 22, 2008, however, Dixon’s counsel filed a motion to withdraw. That motion was granted on February 25, 2009.

The trial court’s final judgment reflects that it found Dixon liable for all of Sanders’s claims against him on July 9, 2009, but did not make any determination on damages at that time. A trial was set for March 11, 2010, to determine liability and damages against Tradesman Services and damages against Dixon. On February 24, 2010, Sanders sent Dixon notice that the trial had been reset for March 12, 2010. The notice was sent certified mail to his last known address. The notice did not contain a certificate of service.

Dixon did not appear for trial. As a part of her trial exhibits, Sanders offered—and the trial court admitted—the notice stating that the trial had been reset along with a copy of the envelope showing the address it was mailed to and the green card signifying it was sent certified mail with the United States Postal Service. Sanders’s counsel admitted to the trial court that the certified mail was returned showing it was never accepted, but he asserted that “sometimes certified mail -- [does not] get accepted by” Dixon.

After Sanders presented her evidence, the trial court entered a judgment finding Dixon and Tradesman Services liable for fraud and assessed actual and exemplary damages against both parties jointly and severally. The judgment was signed on that day.

On May 21, 2010, Dixon filed a motion for new trial, asserting he had no knowledge of the trial date or the judgment. Sanders responded by pointing out that the trial court’s plenary power over the suit had already expired. The motion was denied on June 17, 2010. Dixon filed his notice of restricted appeal on September 9, 2010. Restricted Appeal

A party can prevail in a restricted appeal only if (1) it filed notice of the restricted appeal within six months after the judgment was signed; (2) it was a party to the underlying lawsuit; (3) it did not participate in the hearing that resulted in the judgment complained of and did not timely file any post-judgment motions or requests for findings of fact and conclusions of law; and (4) error is apparent on the face of the record. Ins. Co. of State of Penn. v. Lejeune, 297 S.W.3d 254, 255 (Tex. 2009); see Tex. R. App. P. 26.1(c), 30. The face of the record consists of all the papers on file in the appeal. See Norman Commc’ns. v. Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (stating that review by restricted appeal affords appellant same scope of review as ordinary appeal, which is review of entire case).

In Craddock, the Texas Supreme Court set forth three requirements that a defendant must satisfy in order to have a default judgment set aside and obtain a new trial: (1) the failure to file an answer or appear at a hearing was not intentional or the result of conscious indifference, but was a mistake or accident; (2) a meritorious defense; and (3) a new trial will not result in delay or prejudice to the plaintiff. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939). The same prerequisites for setting aside a no-answer default judgment also apply to a post-answer default judgment. Dir., State Emps. Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994). A trial court abuses its discretion by not granting a new trial when all three elements of the Craddock test are satisfied. Id.; Blake v. Blake, 725 S.W.2d 797, 800 (Tex. App.—Houston [1st Dist.] 1987, no writ).

A defendant who never received notice of a trial setting does not need to meet all the Craddock requirements. The defendant in that situation satisfies the first Craddock prong that the failure to appear was not intentional or the result of conscious indifference. Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005). Any analysis of the second or third prong becomes unnecessary. Mahand v. Delaney, 60 S.W.3d 371, 375 (Tex. App.—Houston [1st Dist.] 2001, no pet.).

Here, it is undisputed that Dixon filed his notice of restricted appeal within six months after the judgment was signed; that he was a party to the underlying lawsuit; that he did not participate in the hearing that resulted in the default judgment, which is the judgment complained of; and that he did not timely file any post-judgment motions or requests for findings of fact and conclusions of law. The only issue remaining is whether error appears on the face of the record. A. Notice of Trial Setting

In his second issue, Dixon argues the trial court erred by granting the default judgment when he had not received notice of the trial setting.

Once a defendant has made an appearance in a cause, he is entitled to the notice of the trial setting as a matter of due process under the Fourteenth Amendment. In re $475,001.16, 96 S.W.3d 625, 627 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (citing Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 86, 108 S. Ct. 896, 899–900 (1988); LBL Oil Co. v. Int’l Power Servs., Inc., 777 S.W.2d 390, 390–91 (Tex. 1989)). A post-answer default judgment is valid only if the defendant has received notice of the default judgment hearing. Id. The plaintiff has the burden of proving the defendant was served in strict compliance with the rules. Cox v. Cox, 298 S.W.3d 726, 733 (Tex. App.—Austin 2009, no pet.).

The Texas Rules of Civil Procedure require notice of all trial settings after the first setting to be served on all parties within a reasonable time. Tex. R. Civ. P. 245. Any notice required by the rules must be sent in accordance with rule 21a. Tex. R. Civ. P. 21a. The Texas Supreme Court has recognized at least two evidentiary components of rule 21a.

First, the rule provides that service by mail is “complete upon deposit of the paper, enclosed in a postpaid, properly addressed wrapper, in a post office or official depository under the care and custody of the United States Postal Service.” Id. The evidentiary effect of this portion of the rule is to create a presumption of service in compliance with the rule. See In re E.A., 287 S.W.3d 1, 5 (Tex. 2009) (recognizing existence of presumption). The presumption is not evidence, however, and when evidence is introduced opposing this presumption, the presumption vanishes. Id.

Second, the rule provides, “A certificate by a party or an attorney of record, or the return of the officer, or the affidavit of any other person showing service of a notice shall be prima facie evidence of the fact of service.” Tex. R. Civ. P. 21a. At that point, it becomes the opposing party’s burden to show that the notice was not, in fact, received. In re E.A., 287 S.W.3d at 5.

There was no certificate of service included with the notice of trial setting. Accordingly, there is no prima facie evidence that Dixon was served. See id.

The trial court did admit into evidence, however, the notice along with a copy of the envelope showing the address it was mailed to and the green card signifying it was sent certified mail with the United States Postal Service. This is some evidence that service was complete, giving rise to the presumption Dixon was served in compliance with rule 21a. See id.

On appeal, Dixon argues that the record establishes that he was not actually served with notice of the hearing, negating the presumption that he was served. See id. (holding presumption of service vanishes when record shows mailed document was never received). Sanders argues that Dixon cannot complain that he did not receive notice because he had a habit of intentionally avoiding receipt of certified mail. See Osborn v. Osborn, 961 S.W.2d 408, 413 (Tex. App.—Houston [1st Dist.] 1997, pet. denied) (holding trial court does not abuse its discretion overruling a motion for new trial when record shows defendant intentionally avoided receiving notice of trial setting). We must determine whether the record supports either of these arguments.

At the hearing, Sanders’s counsel admitted to the trial court that the certified mail was returned showing it was never accepted, but he asserted that “sometimes certified mail -- [does not] get accepted by” Dixon. Unsworn statements by counsel are not evidence. Daugherty v. Jacobs, 187 S.W.3d 607, 619 (Tex. App.—Houston [14th Dist.] 2006, no pet.). They can constitute judicial admissions, however. Seminole Pipeline Co. v. Broad Leaf Partners, Inc., 979 S.W.2d 730, 740 (Tex. App.—Houston [14th Dist.] 1998, no pet.). “A judicial admission results when a party makes a statement of fact which conclusively disproves a right of recovery or defense he currently asserts.” Id. The elements for establishing a statement is a judicial admission are (1) the statement must be made in the course of a judicial proceeding; (2) it must be contrary to an essential fact for the party’s recovery or defense; (3) it must be deliberate, clear, and unequivocal; (4) it cannot be destructive of the opposing party’s theory of recovery or defense; and (5) enforcing the statement as a judicial admission would be consistent with public policy. Kaplan v. Kaplan, 129 S.W.3d 666, 669 (Tex. App.—Fort Worth 2004, pet. denied). The public policy concerning judicial admissions is that it would be unjust to permit a party to recover after she has sworn herself out of court by a clear, unequivocal statement. Id.

Sanders’s counsel’s representation to the trial court that the certified mail was returned showing it was never accepted was made in the course of a judicial proceeding. See id. It was contrary to an essential fact for Sanders’s recovery on the basis that Dixon had been properly served and had failed to appear. See id.; Cox, 298 S.W.3d at 733 (holding plaintiff has burden of proving defendant was served in strict compliance with rules). It was deliberate, clear, and unequivocal. See Kaplan, 129 S.W.3d at 669. It was not destructive of Dixon’s defenses. See id. It is also consistent with public policy as it prevents Sanders from obtaining a judgment after admitting that Dixon never actually received notice of the trial setting. See id.; see also In re $475,001.16, 96 S.W.3d at 627 (holding post-answer default judgment valid only if defendant received notice). We hold that Sanders’s counsel’s statement that the certified mail was never accepted constitutes a judicial admission that Dixon did not receive notice.

Sanders’s counsel’s statement to the trial court that “sometimes certified mail -- [does not] get accepted by” Dixon, however, is not contrary to an essential fact or defense asserted by the party; nor is it a deliberate, clear, and unequivocal assertion that Dixon had a habit of avoiding service.[1] See Kaplan, 129 S.W.3d at 669. Accordingly, it is not a judicial admission.

The record establishes that Dixon never actually received notice of the trial setting. This evidence caused the presumption of service in compliance with rule 21a to vanish. See In re E.A., 287 S.W.3d at 5 (holding presumption of service of amended petition vanished when record showed mail was returned “unclaimed”). The only evidence in the record, then, establishes that Dixon was not properly served with notice of the trial setting. When a defendant establishes that he did not receive notice of the trial setting, the judgment rendered against him is reversed and the cause is remanded for a new trial. Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex. 1988).

We sustain appellant’s second point of error.[2]

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See: http://www.1stcoa.courts.state.tx.us/opinions/htmlopinion.asp?OpinionId=89181

Outcome: We reverse the judgment of the trial court on the issue of fraud as it applies to George E. Dixon, individually, and remand the cause for a new trial.

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