Supreme Court of Texas.
Robert SUTHERLAND, Jesus De La Garza and Southern Customs Paint and Body, Petitioners,
Robert Keith SPENCER, Respondent.
June 29, 2012.
Attorneys & Firms
*753 Jon D. Brooks, Brooks LLP, Corpus Christi, TX, for Robert Sutherland.
Rene Rodriguez, Law Offices of Rene Rodriguez, Corpus Christi, TX, for Robert Keith Spencer.
Justice LEHRMANN joined.
In this case, we consider whether the excuse offered by defendants for failing to answer a lawsuit timely is sufficient to satisfy the first element of the Craddock element, the defendants’ motion for new trial could not be denied on the ground that the excuse was insufficient. Accordingly, we reverse the court of appeals’ judgment and remand the case to that court.
Robert Spencer contracted with Southern Customs Paint and Body to paint and perform a frame-off restoration on his 1965 Chevrolet Corvette for $7,500. Spencer alleged that when he went to pick up his car five months later, he found that the work was incomplete and that irreplaceable parts and pieces of the vehicle were missing. In accordance with the notice provision of the Deceptive Trade Practices Act (DTPA), Spencer sent Southern *754 Customs and its co-operators, Jesus “Jesse” De La Garza and Robert Sutherland, (collectively, Southern Customs) a demand letter alerting them to the possibility of a suit. See TEX. BUS. & COM.CODE § 17.505 (requiring a consumer to give written notice to the defendant at least sixty days before filing suit). Upon receipt, Southern Customs responded to that letter.
A year later, Spencer brought a DTPA suit against Southern Customs for violating the terms of the automobile repair service contract. Spencer complained of an incomplete and inadequate paint job on his Corvette, lost car parts, and false representations regarding the time and cost for completing the work. Through a process server, Spencer served all three named defendants with citations. One citation named “Jesse Garza” as the defendant for service, but the return stated that the citation was served on “Jesse De La Garza.” Another citation named “Southern Customs Paint and Body” as a defendant, while the return stated the citation was served on “Southern Custom’s by delivering to Robert Sutherland.” De La Garza pointed out the citation’s error in his name to the process server, who then offered to take the citation back to correct the mistake. De La Garza declined that offer and told the process server that regardless of the error, he knew he was the person being sued and to leave the documents with him.
Southern Customs failed to file a timely answer. Spencer obtained a default judgment that awarded him nearly $150,000, which included the trebling of Spencer’s economic and mental anguish damages due to alleged intentional conduct under the DTPA, as well as attorney’s fees.
Southern Customs filed a timely motion for new trial, arguing that service on De La Garza was improper, and that Southern Customs established the necessary Craddock test.
Southern Customs asserts that service of process was invalid because one of the citations misstated the name of Jesse De La Garza and the return on the other citation did not show proper service on Southern Customs Paint and Body. Southern Customs states that “[t]here are no presumptions in favor of valid issuance, service, and return of citation,” citing Old Repub. Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex.1994) (per curiam).
A defendant satisfies its burden as to the first Craddock, 133 S.W.2d at 126 (holding that the effect of weather on business “certainly constituted some excuse for the oversight”). Spencer made no attempt to controvert Southern Customs’s claims regarding the weather conditions during this time period or the weather’s adverse effect on Southern Customs’s business. We conclude that this excuse is sufficient to show that the failure to answer was not the result of intentional or consciously indifferent conduct.
Contrary to the dissent’s assertion, this decision does not alter our default judgment jurisprudence. We do not hold that forgetfulness alone is sufficient to satisfy the first Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 86 (Tex.1992).
Southern Customs provided a sufficient excuse for failing to answer the suit timely, thus satisfying the first element of the Craddock elements. TEX.R.APP. P. 59.1.
Chief Justice WILLETT joined.
Chief Justice WILLETT, dissenting.
We reject this excuse when tax returns are late, or when homework is missing, but a defendant can now use it to disregard an official directive by the State of Texas that he either answer a lawsuit or risk a judgment against him. The defendants here received and reviewed the citation and petition, placed the papers on their office desk, stopped thinking about the lawsuit because of the holidays and “weather conditions,” and ultimately forgot about it. If those facts constitute a sufficient excuse for neglecting to answer a lawsuit, the rules and precedent governing default judgments have been displaced by a simple command: no default judgment will stand if the defendant asserts that the mundane distractions of everyday life destroyed his cognition.
Because we prefer a merits determination to a procedural forfeit, we have been reluctant to uphold a default judgment if it is clear that the defendant intended to answer the lawsuit. See Titan Indem. Co. v. Old S. Ins. Grp., Inc., 221 S.W.3d 703, 708 (Tex.App.-San Antonio 2006, no pet.) (“It is a basic tenet of jurisprudence that the law abhors a default because equity is rarely served by a default.”). This policy should always inform *757 our analysis, but that does not mean we can simply ignore procedural commands. A rule of procedure is a rule of law. We should tread carefully before we tolerate its disregard based on the tenuous rationale presented here.
Our precedent and rules have warned about the risk of default for more than a century. It functions primarily to spur quick action when a defendant is served with a lawsuit. Our legal system is built around deadlines. Deadlines ensure the orderly process of litigation. Statutes of limitations force the plaintiff to act, and the risk of default induces the defendant to answer. See, e.g., United States v. Locke, 471 U.S. 84, 101, 105 S.Ct. 1785, 85 L.Ed.2d 64 (1985))).
Long ago, having taken all of these considerations into account, we announced that a default judgment should be set aside if the defendant can establish certain benchmarks:
A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for a new trial sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff.
Craddock standard is equitable, its application will vary on a case-by-case basis. Over the years, we have focused the inquiry on the degree to which the defendant knew about the lawsuit but took no affirmative steps to answer it, even after knowing about the consequence of inaction.
We have had many occasions to describe how a defendant can show that the failure to answer was neither intentional nor the result of conscious indifference. Conscious indifference means “that the defendant knew it was sued but did not care.” Craddock further clarifies the rule.”).
We recently held “that some excuse, although not necessarily a good one, will suffice to show that a defendant’s failure to file an answer was not because the defendant did not care.” Smith v. Babcock & Wilcox Constr. Co., 913 S.W.2d 467, 468 (Tex.1995) (per curiam) (“A failure to appear is not intentional or due to conscious indifference within the meaning of the rule merely because it is deliberate; it must also be without adequate justification.” (emphasis added)). And our prior cases show what types of excuses qualify:
• Not receiving the citation is always a sufficient excuse for not answering. See, e.g., Mathis v. Lockwood, 166 S.W.3d 743, 745 (Tex.2005) (per curiam) (accepting a defendant’s excuse that she failed to appear at trial because she never received notice of the setting).
• Losing the service papers can be a sufficient excuse if it is “supported by some explanation from the person most likely to have seen them, or of the efforts made to find them.” Fidelity, 186 S.W.3d at 575–76 (setting a default judgment aside based on the defendant’s excuse of losing the citation because the defendant’s affidavits showed no intent or indifference but instead detailed its “efforts to establish a system that would avoid precisely what happened”).
• Misplacing the citation is sufficient when it is the result of a turnover in staff or a breakdown in communication. See, e.g., Strackbein, 671 S.W.2d at 39 (finding no conscious indifference when the failure to answer was the result of a “breakdown of communication” between two individuals, each of whom thought the other was *759 going to forward the relevant materials to the attorney).
• Some mistakes of law suffice if the mistake is the result of a defendant’s prior interactions with the law. See, e.g., Bank One, Tex., 830 S.W.2d at 84–85.
This list is not exhaustive, but it is a useful point of reference when analyzing a default judgment. None of these cases, however, address the type of excuse presented in this case. Both De La Garza and Sutherland explain their failure to answer as follows:
I remember someone coming to my shop on or about December 19, 2008, and leaving some papers with me and my partner. This was a Friday. The person who gave the papers to me did not explain what they were for or that I had any obligation to do anything in response. I had never been sued before like this and have no experience with the legal system. I briefly reviewed the papers and the[n] placed them on a desk in my office. My desk is covered in papers, concerning various matters. We do not employ a secretary or have any administrative help. My partner and I do everything. When we received the papers, it was less than a week before the Christmas holidays. The weather conditions during this period made it difficult for me to perform much labor for any customers because weather conditions adversely affect paint work on automobiles. I did return to the shop on Monday and worked part of the day. However, the work was limited to mostly returning automobiles to customers. I spent little time in my office. I also worked briefly on Tuesday, December 23, 2008, again, just returning automobiles and scheduling work. By this time, and due, in part, to the holidays, I was not thinking about the papers that had been delivered to me at my shop. The papers had been placed on my desk but were not on my mind and were camouflaged with other papers;
I did not return to the shop again after December 23, 2008, until January 5, 2009. During this period, the shop was closed for the holidays and, in part, because of the weather conditions. I also spent a lot of time during this period in San Antonio, Texas, to visit friends for the holidays. Also during this period, my thoughts were on the holidays and things I had to do to plan and prepare for the holidays. Therefore, my thoughts were not on the papers that had been delivered to me;
Between January 5, 2009, and January 16, 2009, I resumed a regular schedule at the shop. During this period, I was working and not thinking about the papers that had been delivered to me. In fact, by this time, I had forgotten that [sic] about them. I also did not understand or realize that I had any obligation to do anything, including filing an answer to the papers within any time period. This was clearly a mistake on my part;
I now understand that a default judgment was entered because an answer to the suit was not filed within the time allowed. My failure to review the documents and understand what they must have been was an accident or mistake by me because I did not understand the significance of the documents and even failed to remember that I had gotten *760 them. Further, the papers were given to me during the Christmas and New Year’s holiday period, when my mind was focused elsewhere and not on the papers. I have never been sued before. Nor did I consciously disregard answering the suit because I did not even realize that the papers that had been delivered required any attention by me. Had I realized what the documents must have been, I would have immediately retained the services of an attorney to represent me, as I did as soon as I received notice of the default judgment. The notice received by me in the mail was the first indication that I had that a lawsuit had been filed against me that required affirmative action by me.1
This excuse cannot suffice. The defendants did not lose the citation. They knew where it was. De La Garza placed it on his desk upon receipt. Cf. In re R.R., 209 S.W.3d at 115.
This case is distinct from Id.
In this case, the affidavits obliquely speak of “weather conditions.” There is no assertion that the weather impeded access to the courthouse, precluded the retention of a lawyer, or (as in Craddock ) overburdened the defendants’ business with an influx of work. Indeed, according to the affidavits, the defendants had more time on their hands as business subsided due to the weather.
That leaves “the holidays.” We are lenient when deadlines fall on legal holidays. See TEX.R. CIV. P. 4. But the rules nevertheless require that litigants answer lawsuits, request a jury, move for new trial, perfect an appeal—all within prescribed time limits and even when holidays intervene. In any event, the defendants offer no particular reason why the holidays prevented them from answering the lawsuit. Rather, they assert that their minds were preoccupied by the holidays, to the exclusion of the lawsuit. Consequently, this case comes down to one proposition: that a defendant who says he forgot about being sued is not indifferent to the risk of default.
*761 Even a liberal interpretation of our precedent cannot justify the Court’s acceptance of this excuse. As we have consistently instructed, determining whether the failure to answer was a result of conscious indifference requires looking to the “knowledge and acts” of the defendant. Id. Prewitt’s affidavits in support of his motion for new trial established the following:
(1) on June 18, three days after being served, Prewitt called Mr. Bentley and asked if Bentley would represent him in the suit. He was advised by Bentley that he would do so if the papers in the case were forwarded to him; (2) Prewitt then instructed Julie Miracle to gather all of the documents pertaining to the Strackbein matter; (3) on June 23, after the documents had been assembled, Prewitt again called Bentley’s office and talked with a secretary who advised him that Bentley was out of town but that he should mail the documents to her so that the matter could be timely handled; (4) Prewitt then instructed Julie Miracle to mail the documents to Bentley’s office; (5) however, due to a breakdown of communication, Julie Miracle thought Prewitt was going to mail the documents and Prewitt thought Julie Miracle would mail them; (6) instead, the papers were misplaced in the office and were not discovered until Prewitt received notice of default; and (7) until that time, Prewitt believed that the papers were in the attorney’s office and that the suit was being handled by the attorney.
Craddock standard is one of intentional or conscious indifference—that the defendant knew it was sued but did not care.”). Holding otherwise renders the citation’s command impotent.
We will one day see a case in which a defendant served with citation is so overwhelmed with events that a trial judge exercises sound discretion to order a new trial. In this case, however, the period from the defendants’ receipt of the citation to notice of the default is marked with contempt for their obligation to the rule of law. The trial court was not required to accept the defendants’ excuse on these facts. Because the Court holds otherwise, I respectfully dissent.
The style of this case initially reflected the parties as they were originally named in the trial court, including “Jesse Garza.” Because De La Garza’s briefing in this Court refers to him as “Jesus De La Garza,” which is consistent with his affidavit filed in the trial court, we have corrected the case style to reflect what we believe is his legal name. There is no dispute that these names, as well as “Jesse De La Garza” and “Jesse de la Garza,” refer to the same person.
Sutherland’s and De La Garza’s uncontroverted affidavits each state:
When we received the papers, it was less than a week before the Christmas holidays. The weather conditions during this period made it difficult for me to perform much labor for any customers because weather conditions adversely affect paint work on automobiles. I did return to the shop on Monday and worked part of the day.... I also worked briefly on Tuesday, December 23, 2008, again, just returning automobiles and scheduling work. By this time, and due, in part, to the holidays, I was not thinking about the papers that had been delivered to me at my shop.
The only difference between the excuse provided in De La Garza’s affidavit and Sutherland’s affidavit is that Sutherland’s does not contain the sentence: “I also spent a lot of time during this period in San Antonio, Texas, to visit friends for the holidays.”