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Date: 11-05-2017

Case Style: SJ Spero and Associates, P.C. v. Barbara Fain Davis and Lance Davis

Case Number: 05-17-00023-CV

Judge: Schenck

Court: Texas Court of Appeals, Fifth District on appeal from the 191st Judicial District Court of Dallas County

Plaintiff's Attorney: Joe Sibley

Defendant's Attorney: John Barnes and Susan Bieber Meek

Description: Appellant SJ Spero & Associates, P.C. (“Spero”) appeals from the trial court’s order setting aside a default judgment granted in favor of Spero and dismissing Spero’s claims against appellees Barbara Fain Davis and Lance Davis (together, “the Davises”). In its first issue, Spero argues the trial court erred in setting aside the default judgment because there was no finding that the Davises were not properly served or did not fail to appear out of conscious indifference. In its second issue, Spero challenges the trial court’s conclusion that the contract underlying its breach-of-contract claim was void as against public policy because there were no deficiencies in the petition. We reverse and remand this case for proceedings consistent with this opinion.
FACTUAL AND PROCEDURAL BACKGROUND
The Davises engaged Spero, a Massachusetts law firm, to represent them in their claims of negligent care and treatment by Dr. Daniel Michael Brener. The parties signed an
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engagement agreement that provided Spero would receive 40% of the gross recovery if the case were settled or otherwise resolved. The engagement agreement also stated that “although [Mr. Spero] is not currently licensed to practice law in Texas, it is [his] intention, in the event it becomes necessary to commence litigation . . ., [he] shall retain the services of a licensed Texas attorney.” When the case proceeded to mediation, the Davises were represented by Spero and Joe Sibley, an attorney licensed to practice in Texas. The Davises and Dr. Brener were unable to reach a settlement agreement at mediation. Unhappy with Spero and Sibley, the Davises terminated Spero and Sibley’s representation and later reached a settlement agreement with Dr. Brener.
Spero, represented by Sibley, filed suit for breach of the engagement agreement and request for disclosure to discover the amount of the settlement the Davises had reached with Dr. Brener. Spero presented the trial court with evidence the Davises were evading service and filed a motion to substitute service, which was granted. Spero served the Davises by leaving copies at their home and work addresses and mailing copies to same. The Davises did not answer or otherwise appear. The trial court granted a partial default judgment in favor of Spero as to liability on all its claims for breach of contract against the Davises. After conducting an evidentiary hearing on Spero’s damages, the trial court signed an order granting final default judgment in favor of Spero and awarding it damages, attorney’s fees, and court costs.
Two weeks later, the Davises filed a motion to set aside and vacate the partial and final default judgments and a motion to compel arbitration pursuant to an arbitration clause in the engagement agreement. The trial court conducted a hearing on the Davises’ motion to set aside the default judgment at which the trial court judge stated she would grant the motion on the grounds that the engagement agreement was void and against public policy. The trial court later signed an order granting the motion without stating any grounds for the decision. The Davises
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then moved to dismiss Spero’s claims with prejudice and sought their attorney’s fees as sanctions against Spero, arguing the engagement agreement was a void contract and that the underlying breach-of-contract claim was void, against public policy, and had no basis in law or fact. Spero objected that the order setting aside the default judgment contained no grounds for the decision and responded to the Davises’ motion to dismiss, arguing that the trial court’s stated ground for setting aside the default judgment—the engagement agreement was void as against public policy—was an affirmative defense and therefore its breach-of-contract claim was not baseless. The trial court signed an amended order setting aside the default judgment on the ground that “[t]he contract on which Plaintiff’s suit is based is void as against public policy,” dismissing Spero’s claims on the same ground, and ordering that Spero take nothing in its suit against the Davises. Spero timely appealed from this final order.
DISCUSSION
Pursuant to rule 38.9, we construe Sperio’s brief to raise two challenges. See TEX. R. APP. P. 38.9. First, it contends the trial court erred in setting aside the default judgment because the record contains no evidence to establish all the factors set out in Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (1939). Second, it argues the trial court erred in rendering judgment in favor of the Davises.
I. Decision to Set Aside Default Judgment
In its first issue, Spero argues the trial court erred in setting aside the default judgment because there was no finding that the Davises were not properly served or did not fail to appear out of conscious indifference.
Generally, an order granting a motion for new trial within the trial court’s plenary power “is not subject to review either by direct appeal from that order or from a final judgment rendered after further proceedings in the trial court.” Cummins v. Paisan Constr. Co., 682
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S.W.2d 235, 236 (Tex. 1984); see also In re Columbia Med. Ctr. of Las Colinas Subsidiary, L.P., 290 S.W.3d 204, 209 (Tex. 2009) (orig. proceeding) (reaffirming that an order granting a new trial is not reviewable on direct appeal, while allowing mandamus review of an order granting a new trial under certain circumstances). Two exceptions to the general rule have been recognized: (1) when the trial court’s order is void; and (2) when the trial court erroneously concluded that the jury’s answers to special issues were irreconcilably in conflict. Wilkins v. Methodist Health Care Sys., 160 S.W.3d 559, 563 (Tex. 2005). Neither exception applies in this case.
We overrule Spero’s first issue.
II. Dismissal
We construe Spero’s second issue to argue that the trial court erred in dismissing its claims and rendering a take-nothing judgment in favor of the Davises on the ground that the engagement agreement was void as against public policy. See TEX. R. APP. P. 38.9. Spero contends the trial court erroneously concluded the engagement agreement was a void contract and that such conclusion could not be based on its petition or the remaining record.1 The Davises respond that engagement agreement was void as against public policy because in it Spero discloses the attorney was not licensed to practice law in Texas but contracted to represent the Davises in Texas proceedings. They further contend the language in the engagement agreement implies Spero had proper authorization to practice in Texas but that the record reveals no such authorization.
The record does not clearly reveal the procedural device the trial court employed in rendering judgment for the Davises after the hearing on the motion to set aside the default
1 Further, we note Spero does not challenge the trial court’s reaching the dismissal motion, notwithstanding when the dismissal motion was filed and the pending motion to compel arbitration.
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judgment. Review of the Davises’ motion to dismiss indicates they challenged whether Spero’s claim for breach of the engagement agreement had any basis in law or fact because Spero never obtained the requisite authority to practice law in the state of Texas, making the contract void. Rule 91a provides that a party may move to dismiss a cause of action on the grounds that it has no basis in law or fact. TEX. R. CIV. P. 91a.1. Dismissal is appropriate under rule 91a if the allegations made in the petition, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought or no reasonable person could believe the facts pleaded. TEX. R. CIV. P. 91a.1; see also Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex. App.—Houston [14th Dist.] 2014, pet. denied). Whether the dismissal standard is satisfied depends solely on the pleading of the cause of action, together with any pleading exhibits permitted by rule 59. TEX. R. CIV. P. 91a.6 (citing TEX. R. CIV. P. 59). We review the merits of a Rule 91a motion de novo because the availability of a remedy under the facts alleged is a question of law and the rule’s factual-plausibility standard is akin to a legal-sufficiency review. City of Dallas v. Sanchez, 494 S.W.3d 722, 724 (Tex. 2016).
The portion of trial court’s order that dismissed Spero’s claim with prejudice stated the ground for doing so was because “[t]he contract on which Plaintiff’s suit is based is void as against public policy.” The record contains a copy of the contract at issue, the engagement agreement, attached to the Davises’ motion to set aside the default judgment. In its petition, Spero alleged (i) the Davises engaged the firm, a Massachusetts professional corporation, to represent them in certain legal claims, (ii) that Spero represented the Davises in mediation, and (iii) that the Davises failed to pay fees owed to Spero pursuant to the engagement agreement. Review of the engagement agreement reveals Spero disclosed its principal was not licensed to practice law in Texas, but that “in the event it becomes necessary to commence litigation to
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enforce [the Davises’] claims or rights . . ., Attorney shall seek appropriate permission from the appropriate Texas authorities to participate as an attorney in such litigation.”
We conclude Spero’s petition and the engagement agreement allege insufficient facts to conclude the engagement agreement was void as against public policy to support the rendition of judgment under rule 91a. See Wooley, 447 S.W.3d at 76 (appellate review of ruling under rule 91a construes pleadings liberally in favor of plaintiff); see also Sanchez, 494 S.W.3d at 724; see also TEX. GOV’T CODE ANN. § 81.102 (b)(1) (West 2013) (providing supreme court may promulgate rules prescribing procedure for limited practice of law by non-resident attorneys); TEX. R. ADMIS. 19 (imposing requirements on non-resident attorneys seeking to participate in “the proceedings of any particular cause in a Texas court”).2 Accordingly, the trial court erred in dismissing Spero’s claims. See TEX. R. CIV. P. 91a.
We sustain Spero’s second issue.

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2 As for the Davises’ assertions in their motion to dismiss and on appeal that Spero was not authorized to practice in Texas and that the record does not contain any evidence that Spero sought or obtained such authorization, we emphasize that looking beyond the plaintiff’s allegations and pleading exhibits permitted by rule 59 is inappropriate. See TEX. R.

Outcome: We reverse and remand this case to the trial court for proceedings consistent with this opinion.

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