Opinion
No. 04-17-00348-CV
05-02-2018
TEXAS FARMERS INSURANCE COMPANY, Appellant v. Steven L. CLACK, Appellee
MEMORANDUM OPINION
From the 198th Judicial District Court, Kerr County, Texas
Trial Court No. 1793B
Honorable Rex Emerson, Judge Presiding Opinion by: Marialyn Barnard, Justice Sitting: Sandee Bryan Marion, Chief Justice Marialyn Barnard, Justice Luz Elena D. Chapa, Justice AFFIRMED
Appellant Texas Farmers Insurance Company ("Texas Farmers") appeals from a no-answer default judgment in favor of appellee Steven L. Clack. On appeal, Texas Farmers contends the trial court erred in: (1) denying its motion for new trial/motion to set aside the default judgment (hereafter, "motion for new trial"); and (2) awarding Clack post judgment interest pursuant to section 542.060(a) of the Texas Insurance Code. We affirm the trial court's judgment.
BACKGROUND
Clack filed an insurance claim based on his policy with Texas Farmers. Clack sought to recover for hail damage to his property. After inspection, Texas Farmers claimed the damage covered by the insurance policy failed to exceed the deductible. According to Texas Farmers, much of the damage was "marring" to Clack's metal roof, which is excluded under the policy.
Clack, dissatisfied with Texas Farmers response to his claim, filed suit against Texas Farmers on January 26, 2017, alleging claims for breach of contract, violations of the Texas Deceptive Trade Practices Acts (the "DTPA"), and violations of Chapter 541 of the Texas Insurance Code. Through its litigation manager, Texas Farmers admitted Clack's petition was served on Texas Farmers on February 3, 2017. However, Texas Farmers failed to file a timely answer. See TEX. R. CIV. P. 99(b) (stating citation shall direct defendant to file written answer to petition on or before 10:00 a.m. on Monday next following expiration of twenty days after service of citation). Three days after Texas Farmers' answer was due, Clack sought a default judgment. At the default judgment hearing, Clack presented evidence relating to: (1) proof of service; (2) damage to his roof beyond marring, and notice of same to Texas Farmers; and (3) monetary damages, including actual damages and damages for violations of the DTPA and Insurance Code. The trial court granted judgment in favor of Clack. In its default judgment, the trial court awarded Clack actual damages, "[e]xemplary damages," trial attorney's fees, contingent attorney's fees in the event a motion for new trial was filed, contingent appellate attorney's fees, prejudgment interest, post judgment interest pursuant to section 542.060(a) of the Insurance Code, and court costs.
Here, Texas Farmers' written answer was due February 27, 2017. See TEX. R. CIV. P. 99(b). However, no answer was filed until March 31, 2017. The answer was filed concomitantly with Texas Farmers' motion for new trial.
Texas Farmers timely filed a motion for new trial. In the motion, Texas Farmers argued the trial court should set aside the default judgment because it had satisfied the requirements of Craddock v. Sunshine Bus Lines, 133 S.W.2d 124 (Tex. 1939). Clack challenged the motion, arguing Texas Farmers had not met any of the Craddock requirements. Thereafter, Texas Farmers sought leave of court to amend its previously filed motion for new trial and filed an amended motion for new trial. The trial court denied the motion for leave to file the amended motion for new trial. After a hearing, the trial court denied Texas Farmers' motion for new trial. Texas Farmers then timely perfected this appeal.
ANALYSIS
As stated in the introduction, Texas Farmers raises two issues challenging the trial court's default judgment in favor of Clack. First, Texas Farmers contends the trial court erred in denying its motion for new trial. Texas Farmers argues the trial court should have granted its motion for new trial because it met all three prongs of Craddock by: (1) establishing its failure to answer was not intentional or the result of conscious indifference, but was based on accident or mistake; (2) setting up a meritorious defense; and (3) demonstrating that setting aside the default judgment would not cause delay or prejudice to Clack. See id. Second, Texas Farmers contends the trial court erred in awarding post judgment interest under section 542.060(a) of the Insurance Code because: (1) the award is not supported by Clack's pleadings; and (2) Clack cannot recover 18% post judgment under section 542.060(a) on anything other than the amount of the actual underlying insurance claim. See TEX. INS. CODE ANN. § 542.060(a) (West Supp. 2017).
Craddock — Motion for New Trial
Texas Farmers first contends the trial court erred in denying its motion for new trial. Texas Farmers argues it established all three Craddock requirements, mandating the trial court to grant its motion.
Under the supreme court's 1939 decision in Craddock, a default judgment should be set aside and a new trial granted if the defaulting party establishes: (1) the failure to appear was not intentional or the result of conscious indifference, but was the result of an accident or mistake; (2) the motion for new trial sets up a meritorious defense; and (3) granting the motion will occasion no delay or otherwise injure the plaintiff. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 925-26 (Tex. 2009) (citing Craddock, 133 S.W.3d at 126); Saenz v. Saenz, No. 04-16-00588-CV, 2017 WL 2351101, at *1 (Tex. App.—San Antonio May 31, 2017, no pet.) (mem. op.). A trial court's refusal to grant a motion for new trial is reviewed under an abuse of discretion standard. Dolgencorp of Tex., Inc., 288 S.W.3d at 926; Saenz, 2017 WL 2351101, at *1. A trial court abuses its discretion in refusing to grant a motion for new trial following a default judgment only when the defaulting party establishes all three elements of the Craddock test. Dolgencorp of Tex., Inc., 288 S.W.3d at 925-26; Saenz, 2017 WL 2351101, at *1. Although Texas Farmers argues it satisfied all of the Craddock requirements, we hold it failed to set up a meritorious defense, and therefore, the trial court did not err in denying its motion for new trial.
To satisfy the meritorious defense prong of Craddock, the defaulting party must "must allege facts which in law would constitute a defense to the cause of action asserted by the plaintiff, and must be supported by affidavits or other evidence proving prima facie that the defendant has such [a] meritorious defense." Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966) (emphasis added); see, e.g., Estate of Pollack v. McMurrey, 858 S.W.2d 388, 392 (Tex. 1993); Saenz, 2017 WL 2351101, at *1; In re Adams, 416 S.W.3d 556, 561 (Tex. App.—Tyler 2013, orig. proceeding); Kyle v. Zepeda, No. 01-11-00388-CV, 2013 WL 2246030, at *4 (Tex. App.—Houston [1st Dist.] May 21, 2013, no pet.) (mem. op.); Anderson v. Anderson, 282 S.W.3d 150, 155 (Tex. App.—El Paso 2009, no pet.); In re A.P.P., 74 S.W.3d 570, 574 (Tex. App.—Corpus Christi 2002, no pet.). A motion for new trial does not set up a meritorious defense if "it merely alleges that the defendant has a meritorious defense." Ivy, 407 S.W.2d at 214. As stated by the First Court of Appeals in Kyle, the movant must support its allegation of a meritorious defense by attaching affidavits to its motion or submitting other competent evidence. 2013 WL 2246040, at *4. Affidavits or other evidence providing prima facie proof of a meritorious defense "is necessary to prevent the reopening of cases to try out fictitious or unmeritorious defenses." Id. Therefore, mere allegations are insufficient. Saenz, 2017 WL 2351101, at *1 (citing Action Powersports, Inc. v. 1STEL, Inc., 500 S.W.3d 632, 640 (Tex. App.—Texarkana 2016, no pet.) (quoting Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 82 (Tex. 1992)).
Here, Texas Farmers alleged numerous defenses in its motion for new trial. However, Texas Farmers did not support the alleged defenses by affidavit or other evidence as required. See Ivy, 407 S.W.2d at 214; see also Estate of Pollack, 858 S.W.2d at 392; Saenz, 2017 WL 2351101, at *1; Adams, 416 S.W.3d at 561; Kyle, 2013 WL 2246030, at *4; Anderson, 282 S.W.3d at 155; A.P.P., 74 S.W.3d at 574. The only evidence attached to the motion for new trial or otherwise submitted by Texas Farmers was the affidavit of Richard J. Daniels, a litigation manager for Farmers Insurance Exchange. Daniels's affidavit was limited to evidence relevant to whether Texas Farmers' failure to answer was intentional, the result of conscious indifference, or the result of an accident or mistake. There is nothing in his affidavit that speaks to the defenses alleged by Texas Farmers in the motion for new trial.
Texas Farmers argues that because the insurance policy and other evidence produced by Clack was admitted into evidence at the default judgment hearing, it may rely on such evidence in support of certain meritorious defenses alleged in the motion for new trial. Texas Farmers cites no authority, nor have we found any, that support the contention that in establishing the meritorious defense factor under Craddock a defaulting party may rely on evidence produced by the non-defaulting party at the default judgment hearing. Rather, it is the defaulting party's burden to set up a meritorious defense under Craddock, which requires the defaulting party to allege facts supported by affidavits or other evidence proving prima facie that it has a meritorious defense. Ivy, 407 S.W.2d at 214; Acosta v. Tri State Mortg. Co., 322 S.W.3d 794, 801 (Tex. App.—El Paso 2010, no pet.). Although the defaulting party need not offer affidavits attached to the motion for new trial into evidence in order to have them considered for purposes of the meritorious defense element, the defaulting party must attach the affidavits or other supporting evidence to the motion or otherwise submit such evidence for consideration. See Director State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 268 (Tex. 1994). Because Texas Farmers failed to provide affidavits or other evidence proving prima facie that it has a meritorious defense, we hold it failed to satisfy the second element of Craddock. See Ivy, 407 S.W.2d at 214; see also Estate of Pollack, 858 S.W.2d at 392; Saenz, 2017 WL 2351101, at *1; Adams, 416 S.W.3d at 561; Kyle, 2013 WL 2246030, at *4; Anderson, 282 S.W.3d at 155; A.P.P., 74 S.W.3d at 574. Accordingly, we hold the trial court did not abuse its discretion in denying Texas Farmers' motion for new trial and overrule the first issue.
As noted in the background portion of this opinion, Texas Farmers filed a motion for leave to file an amended motion for new trial. In the amended motion for new trial, which was part of the motion for leave, Texas Farmers attached numerous affidavits and exhibits in support of its meritorious defense. However, the amended motion for new trial was not filed until May 5, 2017, more than thirty days after the default judgment was rendered. Accordingly, it was untimely. See TEX. R. CIV. P. 329b(a), (b); Moritz v. Preiss, 121 S.W.3d 715, 721 (Tex. 2003). "An untimely amended motion for new trial does not preserve issues for appellate review, even if the trial court considers and denies the untimely motion within its plenary power period." Moritz, 121 S.W.3d at 721. Thus, Texas Farmers' amended motion for new trial and the evidence attached thereto cannot be used to support Texas Farmers' claim of a meritorious defense. See id.
Award of Post Judgment Interest as Exemplary Damages —
Texas Insurance Code § 542.060(a)
In its second appellate issue, Texas Farmers contends that even if it failed to establish its entitlement to a new trial under Craddock, it is still entitled to a reversal of the judgment because the portion of the judgment awarding Clack 18% interest pursuant to section 542.060(a) of the Insurance Code is improper. Texas Farmers argues the award is improper because: (1) it is not supported by Clack's pleadings; and (2) an 18% post judgment interest award as exemplary damages is permitted only on the amount of the underlying insurance claim, not treble damages, attorney's fees, prejudgment interest, or court costs. In addition, at the conclusion of the argument relating to section 542.060(a), Texas Farmers asserts in a single sentence that, "The claim for exemplary damages is barred because exemplary damages are not permitted under the DTPA or Chapter 541 of the Texas Insurance Code." It then states the award under section 542.060(a) was improper because "it compounded the 18% interest annually." However, we find we need not reach any of these issues because they have not been preserved for our review.
To preserve a complaint for appellate review, the complaining party must make a timely objection "with sufficient specificity to make the trial court aware of the complaint, unless the specific grounds were apparent from the context." TEX. R. APP. P. 33.1(a)(1). Moreover, a party's complaint on appeal must comport with the complaint raised in the trial court. E.g., Curry v. Tex. Dep't of Pub. Safety, 472 S.W.3d 346, 353 (Tex. App.—Houston [1st Dist.] 2015, no pet.); Marin v. Mem'l Point Prop. Owners Ass'n, Inc., 410 S.W.3d 397, 407 (Tex. App.—Houston [14th Dist.] 2013, no pet.); J.C. Penney Life Ins. Co. v. Heinrich, 32 S.W.3d 280, 290 (Tex. App.—San Antonio 2000, pet. denied).
Here, in its motion for new trial, Texas Farmers' complaint regarding any award of exemplary damages is found in the section on meritorious defenses and states, in its entirety:
Even if [Clack's] claims for exemplary damages are not barred for other reasons, which they are, [Texas Farmers] would show that [Clack] cannot recover said damages under the standards set forth in Chapter 41 of the TEX. CIV. PRAC. & REM. CODE and based on protections afforded by the United States Constitution and the Texas Constitution, Defendant further asserts the limits and caps on punitive and exemplary damages as set forth in Chapter 41 of the TEX. CIV. PRAC. & REM. CODE, including but not limited to the limits and caps set forth in Section 41.008 of the TEX. CIV. PRAC. & REM. CODE.
There is no reference to exemplary damages as post judgment interest under section 542.060(a) of the Insurance Code or compounding of such interest, and there is no challenge to the award of exemplary damages under the DTPA or Chapter 541 of the Insurance Code. Rather, the only reference is to exemplary damages under Chapter 41 of the Texas Civil Practice and Remedies Code and the federal and state constitutions.
The complaint raised by Texas Farmers in the trial court was not sufficiently specific to advise the trial court that Texas Farmers was challenging the portion of the judgment awarding 18% interest under section 542.060(a) of the Insurance Code or the award of exemplary damages under the DTPA or Chapter 541 of the Insurance Code, nor are such complaints apparent from the context. See TEX. R. APP. P. 33.1(a)(1). Additionally, the complaints set out in the motion for new trial regarding exemplary damages do not comport with any of the complaints raised in this appeal. See, e.g., Curry, 472 S.W.3d at 353; Marin, 410 S.W.3d at 407; J.C. Penney Life Ins. Co., 32 S.W.3d at 290. Accordingly, Texas Farmers has failed to preserve any of the complaints set forth in its second issue for our review.
CONCLUSION
Based on the foregoing analysis, we hold Texas Farmers failed to establish its entitlement to a new trial and failed to preserve any of its appellate complaints with regard to exemplary damages. Accordingly, we overrule Texas Farmers' issues and affirm the trial court's default judgment in favor of Clack.
Marialyn Barnard, Justice