Affirmed and Majority and Dissenting Opinions =
filed=20
February 5, 2008.
In The
Fourteenth Court=20
of Appeals
____________
NO. 14-06-00602-CV
____________
HORNELL=20
BREWING CO., INC. (A/K/A ARIZONA), =
Appellant
V.
MODESTO TONY=20
LARA,=20
Appellee
On Appeal from the =
280th District Court
Harris County, =
Texas
Trial Court Cause =
No. 2005-27494
M A J O R=20
I T Y O P I N I O N
The trial=20
court entered a default judgment in favor of appellee Modesto Tony =
Lara=20
against appellant Hornell Brewing Co., Inc. (a/k/a Arizona). =
Hornell=20
filed a motion for new trial seeking to set aside the default =
judgment,=20
which the trial court denied. On appeal, Hornell asserts the =
trial=20
court erred in failing to grant its motion for new trial. We =
affirm.
Lara=20
alleged he was injured after ingesting broken glass while drinking =
a=20
bottle of Arizona Tea. After settlement negotiations failed =
to=20
resolve the dispute, Lara sued Hornell for negligence, products =
liability,=20
and breach of warranty. Hornell failed to answer, and Lara =
obtained=20
a default judgment for $50,000.
After=20
receiving notice of the default judgment, Hornell filed a motion =
for new=20
trial requesting that the default judgment be set aside. We =
review a=20
trial court=3Ds ruling=20
on a motion for new trial for abuse of discretion. =
Director,=20
State Employees=3D =
Workers=3D =
Comp.=20
Div. v. Evans, 889=20
S.W.2d 266, 268 (Tex. 1994). When moving for new trial to =
set aside=20
a default judgment, the defendant must (1) prove its failure to =
answer was=20
not intentional or the result of conscious indifference but due to =
accident or mistake, (2) assert a meritorious defense, and (3) =
show that=20
granting a new trial would not cause delay or otherwise injure the =
plaintiff. See Craddock v. Sunshine Bus Lines, 133 =
S.W.2d=20
124, 126 (Tex. 1939). If a defendant meets all three =
Craddock=20
elements, the trial court abuses its discretion in failing to =
order a new=20
trial. Evans, 889 S.W.2d at 268.
Hornell=20
explained in affidavits and its motion that it never received =
notice of=20
Lara=3Ds=20
suit. Hornell=3Ds process=20
for receipt of service involves many steps. After suit =
documents are=20
served on its registered agent, the documents must pass through =
two more=20
sets of hands at different corporate entities before finally =
reaching=20
Hornell=3Ds general=20
counsel. Hornell=3Ds evidence=20
showed that the process broke down after the second step, although =
it was=20
not sure exactly where or how because the suit documents were =
never=20
located.
The new=20
trial briefing and hearing focused on the first and third =
Craddock=20
elementsCwhether=20
the failure to answer was intentional or the result of conscious=20
indifference and whether a new trial would cause delay or injure=20
Lara. The trial court judge disapproved of =
Hornell=3Ds method=20
of receiving service, as she explained in the new trial=20
hearing:
I do agree=20
to a certain extent with plaintiff. I believe that the =
defendants=20
have deliberately set up a process for receiving service that is =
so=20
complicated, so cumbersome, so convoluted that it is designed to =
allow=20
them to claim that they never got something because it =
didn=3Dt go=20
properly through the four or five steps that it had to go through, =
and in=20
addition to that, none of their agents keep any records and they =
seem to=20
be proud of it because they put in their affidavits that they=20
don=3Dt keep any=20
records of all this stuff. I presume that that is designed =
to make=20
it so that nobody can prove that they ever got =
anything.
The trial=20
judge concluded that even though this conduct amounted to gross =
negligence=20
and she suspected that Hornell deliberately failed to answer, she =
stopped=20
short of actually finding that the failure to answer was =
intentional or=20
the result of conscious indifference. The trial judge =
concluded that=20
Hornell was nevertheless not entitled to a new trial based on =
prejudice to=20
Lara because Hornell would not pay Lara=3Ds expenses=20
in obtaining the default judgment.
On appeal,=20
Hornell argues the trial court erred in refusing to grant a new =
trial=20
based solely on its refusal to pay Lara=3Ds expenses=20
in obtaining the default judgment. In challenging a default=20
judgment, if the defendant alleges that granting a new trial will =
cause no=20
injury or delay, the burden shifts to the plaintiff to disprove=20
this. Evans, 889 S.W.2d at 270. This is an =
equitable=20
determination that should be made on a case by case basis after=20
considering the entire record. See id. at 270; =
State &=20
County Mut. Life Ins. Co. v. Williams, 924 S.W.2d 746, 749 =
(Tex.=20
App.CTexarkana=20
1996, no writ). Although an offer to pay expenses is not an =
absolute=20
precondition to granting a new trial, it is an important factor to =
consider. Evans, 889 S.W.2d at 270 n.3
Lara put=20
on evidence that he incurred approximately $2000 in expenses to =
obtain the=20
default judgment, and not only did Hornell not offer to pay, but =
it=20
refused to pay, arguing that Lara could have avoided the expense =
of a=20
default judgment by personally inquiring whether Hornell intended =
to=20
answer. Despite implementing a complicated system for =
receiving=20
service that the trial court found Hornell designed deliberately =
to make=20
service more difficult, Hornell refused to pay for the expenses =
this=20
system caused Lara and instead attempted to impose a duty on Lara =
to=20
remind it to answer. In these circumstances, we cannot say =
the trial=20
court abused it discretion in taking these factors into =
consideration and=20
determining that Hornell is not entitled to a new trial because it =
refused=20
to pay Lara=3Ds expenses=20
in this case.
For the=20
first time in its appellate brief, Hornell has offered to pay=20
Lara=3Ds=20
Areasonable=20
attorney=3Ds fees and=20
costs incurred in taking the default judgment.@ =20
However, as Lara points out, he has had to incur significant =
additional=20
expenses in defending the default judgment, and Hornell has not =
offered to=20
reimburse those. Further, although some courts consider =
offers to=20
pay default judgment expenses made for the first time on appeal, =
we hold=20
that the better practice is to assess whether the trial court =
abused its=20
discretion based on the information available to the trial court =
at the=20
time of the ruling. See Zonker v. Sullivan, =
650 S.W.2d=20
189, 190B91 (Tex.=20
App.CEl Paso=20
1983, writ ref=3Dd n.r.e.)=20
(holding offer to pay expenses on appeal too late, noting that for =
trial=20
court to properly exercise discretion, all elements of =
Craddock=20
test must be presented to trial court); Mitchell v. Webb, =
591=20
S.W.2d 547, 550 (Tex. App.CFort Worth=20
1979, no writ) (A[Defendants]=20
did not offer to reimburse [plaintiff] for any costs incurred in =
obtaining=20
his default judgment until they filed their brief on appeal. =
This is=20
clearly too late.@); see=20
also In re=20
A.W.P., 200=20
S.W.3d 242, 245 (Tex. App.CDallas 2006, no pet.) =
(reviewing trial court=3Ds decision based on =
evidence=20
before it at the time, noting appellant had not shown trial=20
court=3Ds decision was =
incorrect when=20
made); In re Harvest Cmtys. of Houston, Inc., 88 S.W.3d =
343, 349=20
(Tex. App.CSan Antonio 2002, no =
pet.)=20
(stating that we Acan only consider the =
record=20
that was before the trial court at the time of the =
hearing@ in determining =
whether the=20
trial court=3Ds ruling was=20
correct). =20
But see Dallas Heating Co. v. Pardee, 561 S.W.2d 16, =
22=20
(Tex. App.CDallas=20
1977, writ ref=3Dd n.r.e.)=20
(reversing default judgment, in part based on =
defendant=3Ds new=20
offer on appeal to pay expenses). Therefore, we conclude =
that=20
Hornell=3Ds belated=20
offer to pay Lara=3Ds trial=20
level expenses does not entitle it to a new trial.
We affirm the trial =
court=3Ds =
judgment.
/s/ =20
Leslie B. Yates
Justice
Judgment=20
rendered and Majority and Dissenting Opinions filed February 5,=20
2008.
Panel=20
consists of Justices Yates, Fowler, and Guzman (Fowler, J.,=20
=
dissenting). |