Court of Appeals of Texas, San Antonio.
J. Wes STUCKI, Individually and d/b/a United Health Services, Appellant,
v.
MEDREC, INC., Appellee.
No. 04-95-00516-CV.
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Oct. 30, 1996.
Before RICKHOFF, HARDBERGER and DUNCAN, JJ.
Opinion
SARAH B. DUNCAN, Justice.
*1 J. Wes Stucki appeals the trial court’s denial of his motion for a new trial following a default judgment taken against him by Medrec, Inc. We reverse the judgment below and remand the case for a new trial.
Factual Background
In early 1995, Medrec filed a sworn account suit against Stucki. Medrec alleged that the parties entered a contract whereby Medrec agreed to provide temporary physical therapists for Stucki, and Stucki breached the contract when he failed to pay the fee for placement of a temporary employee. The pertinent contract provisions are as follows:
IT IS AGREED THAT IF THE ABOVE NAMED FACILITY EMPLOYS ANY CANDIDATE WITHIN 12 MONTHS OF RECEIVING THE RESUME OF A CANDIDATE FROM MEDREC THE FACILITY WILL PAY MEDREC A FEE EQUIVALENT TO 20% OF THE CANDIDATE’S FIRST YEAR’S SALARY, ESTIMATED COMMISSIONS AND BONUSES.
THE FEE IS TO BE PAID BY THE FACILITY TO MEDREC, INC. ON THE F IRST DAY THE CANDIDATE COMMENCES WORK. MEDREC WILL PROVIDE A 6-MONTH PRO-RATED GUARANTEE.
Stucki was served on February 6, 1995; accordingly, his answer was due at or before 10:00 a.m. on February 27. On March 3, no answer having been filed, Medrec obtained a default judgment for actual damages, pre- and postjudgment interest, and attorney’s fees. Stucki’s answer was filed approximately four hours later.
Stucki timely filed a motion for new trial, which alleged compliance with the elements for obtaining a new trial set forth in Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124 (1939). Stucki supported his motion with his affidavit, which stated that his company’s in-house counsel ceased his employment on February 1, 1995, and the company’s legal matters were thereafter transferred to various outside attorneys. Stucki himself thus calculated that his answer date was March 13; according to Stucki, this erroneous calculation was based upon a misreading of the date of service shown on his copy of the return of service. It was not until March 3, when he met with the attorney to whom this case had been transferred, that Stucki and his attorney realized the error and filed an answer. Stucki’s motion and affidavit further stated that he had a meritorious defense to Medrec’s lawsuit, i.e., a different interpretation of the ambiguous payment provision in the parties contract. Medrec did not file a response or controverting evidence.
Stucki’s motion for new trial was overruled by operation of law on May 17, 1995. On May 25, 1995, Judge Claude Davis denied Stucki’s motion in a signed, written order. Stucki timely appealed.
Standard of Review
The trial court’s ruling on a motion for new trial is reviewed under an abuse of discretion standard. Director, State Employees Workers’ Compensation Division 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 met.” Id.
Discussion
To be entitled to a new trial under Craddock, Stucki was required to (1) show his failure to appear was “not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident”; (2) “set [ ] up a meritorious defense”; and (3) file his motion for new trial “at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff.” Id.
Mistake or Accident
*2 In his first point of error, Stucki argues that his failure to timely answer was due to accident or mistake and not intentional or consciously indifferent conduct. We agree.
“In determining whether the failure to appear was due to intentional disregard or conscious indifference we must look to the knowledge and acts of the defendant.” Id. at 269 (quoting Strackbein v. Prewitt, 671 S.W.2d 37, 39 (Tex.1984)). “If the factual assertions in the defendant’s affidavit are not controverted by the plaintiff, the defendant satisfies his burden if his affidavit sets forth facts that, if true, negate intentional or consciously indifferent conduct by the defendant.” Evans, 889 S.W.2d at 269 (citing Strackbein, 671 S.W.2d at 38-39) (emphasis added). “In determining if the defendant’s factual assertions are controverted, the court looks to all the evidence in the record,” including the affidavits attached to the motion for new trial. Evans at 268-69. In the absence of controverting evidence, the statements in the affidavits “should, for the purpose of establishing lack of conscious indifference, be taken as true.” Id. at 269.
In this case, Medrec filed no controverting evidence in response to Stucki’s affidavit; accordingly, we take as true the statements made therein. Doing so leads inevitably to three conclusions. First, Medrec’s argument that Stucki could not have believed that his answer was not due until March 13 is of no effect; we must take Stucki’s assertion as to his state of mind as true. Second, because Stucki believed his answer was not due until March 13, Stucki did not ignore the lawsuit or fail to timely seek help and advice from an attorney. Medrec’s reliance on Johnson v. Edmonds, 712 S.W.2d 651, 652-53 (Tex.App.-Fort Worth 1986, no writ), is thus misplaced. Finally, given these established facts, it is apparent that Stucki’s failure to timely file his answer was due not to intentional or consciously indifferent conduct but to his mistake in calculating the due date for his answer. Stucki’s first point of error is therefore sustained.
Meritorious Defense
In his second point of error, Stucki argues that he “set up” a meritorious defense. We again agree.
“Setting up a meritorious defense is determined based on the facts alleged in the movant’s motion and supporting affidavits, regardless of whether those facts are controverted.” Evans, 889 S.W.2d 270. In this case, Stucki alleged in his motion for new trial that the proper interpretation of the parties’ contract was that if the employee remained employed for only five months, he is required to pay only five-twelfths of the required fee, i.e., five-twelfths of the employee’s yearly salary, commissions, and bonuses; Medrec argues, on the other hand, that Stucki is obligated to pay five-sixths of the fee.
A contract is ambiguous if it is “reasonably susceptible to more than one meaning.” Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). Whether a contractual provision is ambiguous is a question of law for the court. Id. at 394. We do not decide whether the provision at issue in this case is ambiguous. We do hold, however, that the provision does not unambiguously support Medrec’s interpretation. Accordingly, Stucki “set up” a meritorious defense to Medrec’s action, and his second point of error is sustained.
Delay or Prejudice
*3 In his third point of error, Stucki argues that he satisfied his burden of establishing that he filed his motion for new trial “at a time when the granting thereof [would] occasion no delay or otherwise work an injury to the plaintiff.” Evans, 889 S.W.2d at 270 (citing Craddock, 133 S.W.2d at 126). We agree.
“Once a defendant has alleged that granting a new trial will not injure the plaintiff, the burden of going forward with proof of injury shifts to the plaintiff.” Evans, 889 S.W.2d at 270. “The purpose of this element of the Craddock test … is to protect a plaintiff against the sort of undue delay or injury that would disadvantage her in presenting the merits of her case at a new trial, such as a loss of witnesses or other valuable evidence.” Id.
In this case, Stucki stated in his motion for new trial that he was “ready for trial and willing to reimburse plaintiff for all reasonable expenses incurred in obtaining the default judgment,” thus meeting his burden under Craddock and thereby shifting the burden to Medrec to bring forward proof of injury. This Medrec failed to do. Accordingly, Stucki satisfied the third element of Craddock, and his third point of error is sustained.2
Conclusion
Because Stucki met all three elements of the Craddock test, the trial court abused its discretion in denying his motion for new trial. Accordingly, the judgment is reversed and the case is remanded for a new trial.3
Footnotes |
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| 1 | Although Judge Gebhardt signed the default judgment, Judge Claude D. Davis signed the order denying Stucki’s motion for new trial. | |
| 2 | Without citing any supporting authority, Medrec requests that we order Stucki to pay all costs, attorney’s fees, and expenses incurred in obtaining or occasioned by the default judgment. We decline Medrec’s request and defer the matter to the parties and the trial judge on remand. | |
| 3 | Because Stucki’s first three points of error are dispositive of his appeal, we do not reach his fourth point of error. | |