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SJ Spero and Associates, P.C. v. Davis

Court of Appeals of Texas, Fifth District, Dallas

November 1, 2017

SJ SPERO AND ASSOCIATES, P.C., Appellant
v.
BARBARA FAIN DAVIS AND LANCE DAVIS, Appellees

         On Appeal from the 191st Judicial District Court Dallas County, Texas Trial Court Cause No. DC-16-04638

          Before Justices Lang, Evans, and Schenck

          MEMORANDUM OPINION

          DAVID J. SCHENCK JUSTICE

         Appellant SJ Spero & Associates, P.C. ("Spero") appeals from the trial court's order setting aside a default judgment granted in favor of Spero and dismissing Spero's claims against appellees Barbara Fain Davis and Lance Davis (together, "the Davises"). In its first issue, Spero argues the trial court erred in setting aside the default judgment because there was no finding that the Davises were not properly served or did not fail to appear out of conscious indifference. In its second issue, Spero challenges the trial court's conclusion that the contract underlying its breach-of-contract claim was void as against public policy because there were no deficiencies in the petition. We reverse and remand this case for proceedings consistent with this opinion.

         Factual and Procedural Background

         The Davises engaged Spero, a Massachusetts law firm, to represent them in their claims of negligent care and treatment by Dr. Daniel Michael Brener. The parties signed an engagement agreement that provided Spero would receive 40% of the gross recovery if the case were settled or otherwise resolved. The engagement agreement also stated that "although [Mr. Spero] is not currently licensed to practice law in Texas, it is [his] intention, in the event it becomes necessary to commence litigation . . ., [he] shall retain the services of a licensed Texas attorney." When the case proceeded to mediation, the Davises were represented by Spero and Joe Sibley, an attorney licensed to practice in Texas. The Davises and Dr. Brener were unable to reach a settlement agreement at mediation. Unhappy with Spero and Sibley, the Davises terminated Spero and Sibley's representation and later reached a settlement agreement with Dr. Brener.

         Spero, represented by Sibley, filed suit for breach of the engagement agreement and request for disclosure to discover the amount of the settlement the Davises had reached with Dr. Brener. Spero presented the trial court with evidence the Davises were evading service and filed a motion to substitute service, which was granted. Spero served the Davises by leaving copies at their home and work addresses and mailing copies to same. The Davises did not answer or otherwise appear. The trial court granted a partial default judgment in favor of Spero as to liability on all its claims for breach of contract against the Davises. After conducting an evidentiary hearing on Spero's damages, the trial court signed an order granting final default judgment in favor of Spero and awarding it damages, attorney's fees, and court costs.

         Two weeks later, the Davises filed a motion to set aside and vacate the partial and final default judgments and a motion to compel arbitration pursuant to an arbitration clause in the engagement agreement. The trial court conducted a hearing on the Davises' motion to set aside the default judgment at which the trial court judge stated she would grant the motion on the grounds that the engagement agreement was void and against public policy. The trial court later signed an order granting the motion without stating any grounds for the decision. The Davises then moved to dismiss Spero's claims with prejudice and sought their attorney's fees as sanctions against Spero, arguing the engagement agreement was a void contract and that the underlying breach-of-contract claim was void, against public policy, and had no basis in law or fact. Spero objected that the order setting aside the default judgment contained no grounds for the decision and responded to the Davises' motion to dismiss, arguing that the trial court's stated ground for setting aside the default judgment-the engagement agreement was void as against public policy-was an affirmative defense and therefore its breach-of-contract claim was not baseless. The trial court signed an amended order setting aside the default judgment on the ground that "[t]he contract on which Plaintiff's suit is based is void as against public policy, " dismissing Spero's claims on the same ground, and ordering that Spero take nothing in its suit against the Davises. Spero timely appealed from this final order.

         Discussion

         Pursuant to rule 38.9, we construe Sperio's brief to raise two challenges. See Tex. R. App. P. 38.9. First, it contends the trial court erred in setting aside the default judgment because the record contains no evidence to establish all the factors set out in Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (1939). Second, it argues the trial court erred in rendering judgment in favor of the Davises.

         I. Decision to Set Aside Default Judgment

         In its first issue, Spero argues the trial court erred in setting aside the default judgment because there was no finding that the Davises were not properly served or did not fail to appear out of conscious indifference.

         Generally, an order granting a motion for new trial within the trial court's plenary power "is not subject to review either by direct appeal from that order or from a final judgment rendered after further proceedings in the trial court." Cummins v. Paisan Constr. Co., 682 S.W.2d 235, 236 (Tex. 1984); see also In re Columbia Med. Ctr. of Las Colinas Subsidiary, L.P., 290 S.W.3d 204, 209 (Tex. 2009) (orig. proceeding) (reaffirming that an order granting a new trial is not reviewable on direct appeal, while allowing mandamus review of an order granting a new trial under certain circumstances). Two exceptions to the general rule have been recognized: (1) when the trial court's order is void; and (2) when the trial court erroneously ...


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