Opinion
05-22-00454-CV
04-27-2023
RICHARD S. WADE, Appellant v. VERTICAL COMPUTER SYSTEMS, INC. AND LUIZ VALDETARO, Appellees
On Appeal from the 68th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-21-06094
Before Justices Molberg, Carlyle, and Smith
MEMORANDUM OPINION
CORY L. CARLYLE JUSTICE
Richard S. Wade, proceeding pro se, appeals the trial court's judgment awarding appellees Vertical Computer Systems, Inc. and Luiz Valdetaro more than twenty-one million dollars on their claims against him for breach of fiduciary duty, fraud, and embezzlement. We affirm in this memorandum opinion. See Tex. R. App. P. 47.4.
Background
Vertical is a public corporation that provides software and related services and holds interests in several subsidiaries. For nearly twenty years ending in 2020, Vertical's sole directors were Mr. Wade and William Mills. Mr. Wade was also Vertical's president and CEO during that time. Mr. Valdetaro served as chief technical officer of Vertical and its subsidiaries starting in 2012.
Appellees sued Mr. Wade and Mr. Mills in April 2020, contending, among other things, (1) "under Wade's mismanagement the stock price of Vertical has gone from approximately $5 a share to less than one penny"; (2) Vertical "has seen its revenue drop almost in half in recent years as a result of [Mr. Wade's] gross negligence and self-dealing"; and (3) Mr. Wade's self-dealing resulted in a $425,000.00 IRS tax lien against Mr. Valdetaro's personal assets. Mr. Wade filed a general denial answer and special exceptions.
In May 2021, the claims against Mr. Wade were severed into this case. Mr. Wade's attorney filed a June 3, 2021 motion to withdraw as counsel due to "disagreements" and Mr. Wade's "failure to pay counsel," which the trial court granted. In the motion to withdraw, counsel provided Mr. Wade's "last known" street address, email address, and phone number and stated Mr. Wade "has not, to the knowledge of the undersigned, selected substitute counsel." Two months later, in August 2021, the case was set for an April 19, 2022 bench trial via Zoom.
The Zoom trial took place at 5:06 p.m. on April 19, 2022. The trial court stated, "Are we ready to get started?" Appellees' counsel announced ready and presented (1) testimony of Vertical's former chief financial officer and (2) various tax forms and corporate reports filed by Vertical in past years. The trial court stated, "Any cross-examination?" The record shows there was no response.
Then, appellees presented testimony of Mr. Valdetaro. After his direct examination by appellees' counsel, the following exchange took place:
THE COURT: Any cross-examination?
MR. WADE: Yes. This is Richard Wade.
THE COURT: Okay.
MR. WADE: And unfortunately, I didn't know about this-
THE COURT: Mr. Wade, you've already talked to my court coordinator. You were responsible for keeping the Court notified of your change of address, and you haven't done that. And so, you were provided notice of this trial, you did not attend. And so, I'm not sure what else to tell you. But we provided-under the Dallas County local rules, you should have called in last Thursday. We bent over backwards to provide you the Zoom link. If you have any questions, you can ask them now.
MR. WADE: Well, um . . . . (Pause.)
THE COURT: Mr. Wade, did you want to ask any questions?
MR. WADE: Not right now.
Next, appellees read excerpts into the record from a deposition of Mr. Wade's CPA in a California lawsuit against Mr. Wade. After appellees rested, the trial court stated, "All right. Mr. Wade, if you want to go ahead and make your presentation, if you'd like to make one." Mr. Wade did not present any evidence or assert any objections to appellees' evidence. He spoke for more than five pages describing his version of his complained-of actions, then stated, "So that's all I have to say."
After appellees' closing argument, Mr. Wade stated, "Your Honor, can I have a chance to reply to that?" The trial court responded, "Sure. This is your closing argument." Mr. Wade presented argument describing again why his complained-of actions were not improper, then stated, "So that's all I have to say. I'm finished."
During appellees' rebuttal, Mr. Wade interrupted appellees' counsel several times, asserting "that's not true" and interjecting his own arguments. Then, the following exchange occurred:
THE COURT: All right. Let's go ahead and finish this. Obviously, Mr. Wade is not going to let you finish. I've already made a decision. I'm ruling in favor of the Plaintiff on all of this.
MR. WADE: All right. Okay.
. . . .
THE COURT: Anything else today?
[APPELLEES' COUNSEL]: No, Your Honor.
THE COURT: Mr. Wade? Are you there?
MR. WADE: No, Your Honor.
THE COURT: Okay. Have you already submitted a judgment yet, sir?
[APPELLEES' COUNSEL]: No, Your Honor, we will.
THE COURT: When you do that, go ahead and make sure that it says that, this trial was heard on today's date, April 19th, and that you- make sure you email Mr. Wade a copy of the judgment at his most recent email address you have for him. And then get that to the Court. And Mr. Wade, if you have any objection to the form of the judgment, please let Plaintiff's counsel know. And you guys be safe, okay. Thank you so much.
MR. WADE: Thank you.
The trial court's April 22, 2022 final judgment (1) stated Mr. Wade "appeared pro se and announced ready for trial"; (2) ordered that Vertical recover damages from Mr. Wade of $19,760,000.00 for breach of fiduciary duty and $409,000.00 for embezzlement; and (3) ordered that Mr. Valdetaro recover damages from Mr. Wade of $532,322.00 for breach of fiduciary duty and $973,037.00 for fraud. Mr. Wade filed a May 12, 2022 pro se notice of appeal in which he stated he was "seeking to appeal all portions of the judgement" and asserted:
I, Richard Wade, make oath and say that:
I did not receive any notice of a trial date in the case (cause No. DC-21-06094) against me until the day the trial started on 4/19/22, when I was emailed instructions on how to log into the trial "call." I logged in and found that the Plaintiff (Luiz Valdetaro et al) was referring to a case from 2020 (cause DC-20-06209), which had been put aside because in October 2020, Plaintiff got control of a corporation named Vertical Computer Systems Inc. (VCSY), of which I was President and CEO at the time. When I appeared on the trial "call," I said that I was present, though did not say I was "ready" as the Final Judgment indicates. Clearly if I learned about the trial that morning, I wasn't "ready." The Judge was harsh towards me and would not give me a chance to reply to accusations against me. After the trial "call," I found on the Dallas County Court Portal notice from the Court dated 8/24/21 showing the trial date of 4/19/22 that I never received because it was sent to the wrong address, where I haven't lived for 10 years. I never received the notice, and as far as I knew, the lawsuit against me had either been put on hold or been dismissed in October 2020, when in Court the Judge told the Plaintiff that he now had control of the company so there was no point in continuing. . . . Because I had no knowledge that a court date of 4/19/22 had been set I had no time to prepare or consult an attorney.
Though Mr. Wade's notice of appeal contained the word "oath" as described above, it was not notarized and contained no jurat of any type.
Analysis
We liberally construe pro se pleadings and briefs, but hold pro se litigants to the same standards as licensed attorneys and require them to comply with applicable laws and rules of procedure. In re N.E.B., 251 S.W.3d 211, 211-12 (Tex. App.- Dallas 2008, no pet.) (citing Mansfield State Bank v. Cohn, 573 S.W.2d 181, 184-85 (Tex. 1978)). To do otherwise would give a pro se litigant an unfair advantage over a litigant who is represented by counsel. Id. at 212.
Under Texas Rule of Civil Procedure 245, the parties in a contested case must be given "reasonable notice of not less than forty-five days" of a first trial setting. Tex.R.Civ.P. 245. Texas Rule of Civil Procedure 21a provides methods of service for "[e]very notice required by these rules." Tex.R.Civ.P. 21a. "Service by mail or commercial delivery service shall be complete upon deposit of the document, postpaid and properly addressed, in the mail or with a commercial delivery service." Tex.R.Civ.P. 21a(b)(1). The due process right to proper service of trial settings may be waived if not brought to the trial court's attention. In re X.C.J., No. 05-18-01233-CV, 2019 WL 2336876, at *3 (Tex. App.-Dallas June 3, 2019, no pet.) (mem. op.); see also In re K.M.L., 443 S.W.3d 101, 119 (Tex. 2014).
To preserve an issue for appellate review, a party must raise a timely and specific objection to the trial court. Tex.R.App.P. 33.1(a). "This preservation requirement applies to a complaint that the appellant did not have adequate notice of a hearing as required by Rules 21 and 21a of the Texas Rules of Civil Procedure." In re M.L.R., No. 05-15-00647-CV, 2016 WL 5791530, at *3 (Tex. App.-Dallas Oct. 4, 2016, no pet.) (mem. op.); accord In re R.A., 417 S.W.3d 569, 581 (Tex. App.-El Paso 2013, no pet.).
Texas Rule of Civil Procedure 251 states that a trial court shall not grant a continuance "except for sufficient cause supported by affidavit, or by consent of the parties, or by operation of law." Tex.R.Civ.P. 251. We review the denial of a motion for continuance for an abuse of discretion. Wal-Mart Stores Tex., LP v. Crosby, 295 S.W.3d 346, 356 (Tex. App.-Dallas 2009, pet. denied). The denial will be reversed only if the trial court's action was arbitrary, unreasonable, or without reference to any guiding rules and principles. Garner v. Fid. Bank, N.A., 244 S.W.3d 855, 858 (Tex. App.-Dallas 2008, no pet.). Failure to comply with Rule 251's affidavit requirement creates a rebuttable presumption that the trial court did not abuse its discretion in denying a motion for continuance. Hitselberger v. Bakos, No. 05-21-00146-CV, 2022 WL 16735374, at *2 (Tex. App.-Dallas Nov. 7, 2022, no pet.) (mem. op.); Moffitt v. DSC Fin. Corp., 797 S.W.2d 661, 663 (Tex. App.-Dallas 1990, writ denied); In re A.D.A., 287 S.W.3d 382, 386 (Tex. App.-Texarkana 2009, no pet.). Whether a continuance should have been granted is to be judged in light of the facts before the trial judge at the time the motion was presented. Hitselberger, 2022 WL 16735374, at *2; Gulf Ins. Co. v. Dunlop Tire & Rubber Corp., 584 S.W.2d 886, 889 (Tex. Civ. App.-Dallas 1979, writ ref'd n.r.e.).
Mr. Wade presents two issues on appeal. First, he contends the trial court "did not follow the Texas Rules of Civil Procedure." He asserts Rule 21a(b)(1) "says that notices should be properly addressed" and the trial court "erred by sending notice of the trial to the wrong address." He argues that as a result, he "did not learn of trial until the morning of the trial so he could not be prepared or offer evidence." He states that "[b]ecause the trial court should have considered evidence from [him], the trial court's decision should be reversed."
Second, Mr. Wade asserts he "wishes to present evidence" in this Court that was not presented to the trial court and "add context" regarding the merits of appellees' claims against him. He contends that "[b]ecause the trial court should have considered evidence from [him], the trial court's decision is so contrary to the overwhelming weight of evidence that [he] had no chance of providing as to be clearly wrong and unjust," and "[t]hus, the trial court's judgment is not supported by factually sufficient evidence."
Both sides seek to have this Court consider evidence not submitted to the trial court prior to the May 12, 2022 filing of this appeal. Specifically, (1) appellees ask this Court to consider a March 13, 2023 affidavit of their counsel attached to their appellate sur-reply brief and (2) on March 27, 2023, Mr. Wade asked the trial court clerk to file "in the records of this case" a March 27, 2023 declaration by him with nearly 100 pages of "exhibits," then prepare and transmit a "supplemental" clerk's record containing those items to this Court, which the trial court clerk did. Both sides have filed pre-submission motions in this Court seeking to prevent this Court's consideration of the other side's "evidence" first filed on appeal. We grant Mr. Wade's March 22, 2023 motion to "disregard" appellees' March 13, 2023 affidavit attached to their sur-reply brief. See Gen. Elec. Co. v. Falcon Ridge Apts., Joint Venture, 811 S.W.2d 942, 944 (Tex. 1991) (noting that "[o]ur system is founded upon a belief that trial courts should first be given the opportunity to consider and weigh factual evidence" and stating that considering affidavits first filed in appellate court would "undermine this judicial structure"); see also Sink v. Sink, 364 S.W.3d 340, 345 (Tex. App.-Dallas 2012, no pet.) ("[A]n appellate court cannot consider documents that are cited in the brief and attached as appendices if they are not formally included in the record on appeal."). As to appellees' April 17, 2023 motion to "disregard appellant's supplemental record excerpts," we note that several exhibits in the supplemental clerk's record contain file-stamps showing they were filed in the trial court prior to the trial court's judgment. We deny appellees' motion to disregard as to those items containing trial court file-stamps dated prior to the trial court's judgment. See Tex. R. App. P. 34.5(c)(1). We otherwise grant appellees' motion to disregard the supplemental clerk's record. See Richards v. Comm'n for Lawyer Discipline, 35 S.W.3d 243, 251-52 (Tex. App.-Houston [14th Dist.] 2000, no pet.) (though appellate record can be supplemented with "omitted" items from trial court record that existed at time appellate record was initially requested, appellate rules do not "allow the creation of a new trial court record"); Graham v. Pazos De La Torre, 821 S.W.2d 162, 165 (Tex. App.-Corpus Christi-Edinburg 1991, writ denied) (same).
Lack of notice of trial setting
The record shows Mr. Wade appeared at trial, which began at 5:06 p.m., and which he asserts he only learned of that morning. Though he stated to the trial court "unfortunately, I didn't know about this," he did not object to the trial continuing or request more time to prepare. See Tex. R. App. P. 33.1(a). Instead, he proceeded to trial and thus waived any objection to lack of notice of the trial setting. See Fifteen-Thousand One-Hundred Ninety-Six Dollars v. State, No. 03-16-00015-CV, 2016 WL 6833102, at *2 (Tex. App.-Austin Nov. 17, 2016, no pet.) (mem. op.) (party waives objection to lack of Rule 245 notice if it proceeds to trial and fails to object to lack of notice).
To the extent Mr. Wade's argument can be construed to assert that his statement "unfortunately, I didn't know about this" constituted an oral motion for continuance, that motion failed to comply with Rule 251's affidavit requirement. Tex. R. Civ. P. 251. That failure created a rebuttable presumption that the trial court did not abuse its discretion by denying the motion for continuance. See Hitselberger, 2022 WL 16735374, at *2. Mr. Wade presented no evidence at trial, nor did he file a motion for new trial or file any evidence in the trial court prior to filing this appeal. Thus, the no-abuse-of-discretion presumption was not rebutted. He asserts in his appellate reply brief that "w]hile [he] did earn an MBA (business) and was able to head a public company for 20 years, this does not make him an attorney." But as described above, he was required to comply with applicable laws and rules of procedure. In re N.E.B., 251 S.W.3d at 211-12. We conclude the trial court did not abuse its discretion to the extent it denied an oral motion for continuance by Mr. Wade. See Tex. R. Civ. P. 251; Hitselberger, 2022 WL 16735374, at *2 (whether continuance should be granted is to be judged in light of facts before trial judge at time motion is presented).
Mr. Wade does not address Rule 251's "operation of law" provision or assert its applicability. Thus, he has waived any complaint as to the trial court's denial of a continuance on that ground. See In re Z.A., No. 05-21-00126-CV, 2021 WL 3477713, at *3 n.1 (Tex. App.-Dallas Aug. 6, 2021, no pet.) (mem. op.); Tex.R.App.P. 38.1(i).
Factual insufficiency
Though Mr. Wade contends in his second issue that "the trial court's judgment is not supported by factually sufficient evidence," he bases that contention on documents not introduced or admitted into evidence at trial that he asserts demonstrate the trial court's decision is "clearly wrong and unjust." "When an appellate court conducts a factual-sufficiency review, it evaluates all the evidence admitted in the trial and decides whether the factfinder's verdict is so contrary to the overwhelming great weight and preponderance of the evidence that it is clearly wrong and unjust." Seeger v. Del Lago Owners Ass'n, No. 09-19-00433-CV, 2022 WL 1572046, at *6 (Tex. App.-Beaumont 2022, no pet.) (mem. op.); see also In re Langston, No. 10-19-00015-CV, 2021 WL 2252710, at *3 (Tex. App.-Waco May 28, 2021, pet. denied) (mem. op.) (describing factual sufficiency review as "a review of all the evidence before the trial court"); In re G.E.T., 04-19-00475-CV, 2020 WL 20152, at *3 (Tex. App.-San Antonio Jan. 2, 2020, no pet.) (mem. op.) (in factual sufficiency review, appellate court "consider[s] all the evidence admitted at trial").
Mr. Wade does not address or explain how the evidence admitted at trial demonstrates the trial court's decision is so contrary to the overwhelming great weight and preponderance of the evidence that it is clearly wrong and unjust. Thus, his factual sufficiency complaint presents nothing for this Court's review. See Seeger, 2022 WL 1572046, at *6; Tex.R.App.P. 38.1(i).
Additionally, Mr. Wade asserts for the first time in his appellate reply brief (1) because he "was never served with process" in "the severed cause of action," the trial court "lacked jurisdiction to enter judgment," and (2) "[s]ince arbitration was ordered and never took place, the case must be dismissed." Though a defect in service of process may be challenged at any time, severance and the docketing of the severed matter as a separate suit does not constitute a new and independent suit and "[n]ew service of process is not required." Harris v. Moore, 740 S.W.2d 14, 15 (Tex. App.-El Paso 1987, no writ); see also Finlan v. Peavey, 205 S.W.3d 647, 651 (Tex. App.-Waco 2006, no pet.); Tex.R.Civ.P. 41. Mr. Wade does not challenge service of process as to the original lawsuit and the record shows he filed a general denial answer in that suit. We conclude his lack-of-jurisdiction contention is without merit. As to his arbitration complaint, "[w]e cannot consider matters raised for the first time in a reply brief." Sanchez v. Martin, 378 S.W.3d 581, 590 (Tex. App.-Dallas 2012, no pet.); accord Dallas Cnty. v. Gonzales, 183 S.W.3d 94, 104 (Tex. App.-Dallas 2006, pet. denied). Because Mr. Wade did not assert this issue in his opening appellate brief, it presents nothing for this Court's review.
We affirm the trial court's judgment.
JUDGMENT
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellees VERTICAL COMPUTER SYSTEMS, INC. AND LUIZ VALDETARO recover their costs of this appeal from appellant RICHARD S. WADE.