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Abuzaid v. Anani, LLC

Court of Appeals of Texas, Fifth District, Dallas

November 21, 2017

JOSEPH ABUZAID, Appellant
v.
ANANI, LLC, BIG D CONCRETE, INC., MUAMAR ANANI AND HANADI ANANI, Appellees

         On Appeal from the 160th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-15-06938

          Before Justices Bridges, Fillmore, and Stoddart

          MEMORANDUM OPINION

          DAVID L. BRIDGES JUSTICE .

         This appeal involves appellant Joseph Abuzaid's alleged fraudulent filing of UCC Financing Statements. Appellees Anani, LLC and Big D Concrete, Inc. challenged the financing statements as fraudulent liens and sought partial summary judgment. Appellees Muamar and Hanadi Anani subsequently intervened and filed a separate summary judgment motion challenging the fraudulent liens Abuzaid had filed against them. The trial court granted appellees' motions and signed a final judgment awarding appellees actual and exemplary damages and terminating the liens. Abuzaid later filed a motion for new trial in which he argued he did not receive notice of the final summary judgment hearing. The trial court denied the motion.

         On appeal, Abuzaid argues the trial court abused its discretion by denying his motion for new trial because he satisfied the Craddock requirements. He further claims the trial court erred by granting summary judgment because he presented evidence negating at least one element of appellees' claims, and no evidence supports the exemplary damages awards. We vacate the trial court's award of exemplary damages as to Big D and Anani, LLC, and in all other respects, affirm the trial court's judgment.

         Background

         On April 6, 2015, Abuzaid filed a UCC Financing Statement asserting a perfected security interest or lien against Big D in the amount of $10, 000, 000 on "all assets owned by Big D Concrete LLC [sic] without any exceptions." On the same day, Abuzaid filed an identical financing statement against Anani, LLC. He also filed a UCC financing statement asserting a perfected security lien against Muamar and Hanadi Anani.

         On June 18, 2015, Big D and Anani, LLC filed suit against Abuzaid alleging he fraudulently filed both UCC Financing Statements in violation of civil practice and remedies code section 12.002(a)(1) and business and commerce code section 9.5185. See Tex. Civ. Prac. & Rem. Code Ann. § 12.002 (West 2017) & Tex. Bus. & Comm. Code Ann. § 9.5185 (West 2011). Big D and Anani, LLC sought attorney's fees and exemplary damages pursuant to section 12.002(b)(4) of the civil practice and remedies code. Abuzaid filed a pro se original answer and general denial.

         Anani, LLC and Big D filed a motion for partial traditional summary judgment on September 8, 2015 in which they argued Abuzaid's lien filings were premised upon "nothing more than mere allegations asserted by Defendant against Plaintiffs in a separate lawsuit which is still pending in Dallas County and has not been reduced to judgment." Thus, there was no security interest upon which the UCC filing could be predicated. Anani, LLC and Big D further argued they never executed a security agreement authorizing a security interest in specified collateral as required by statute. They alleged, without an executed security agreement, any financing statement filed with the Secretary of State was based on a groundless and ineffective lien.

         Abuzaid filed an emergency motion for continuance of the partial summary judgment hearing until he could hire counsel, which the trial court denied. The trial court subsequently granted Big D and Anani, LLC's motion for partial traditional summary judgment on November 19, 2015.

         After the trial court granted the motion for partial traditional summary judgment, Muamar and Hanadi Anani filed their original petition in intervention alleging the UCC filing against them was similarly fraudulent. They also sought attorney's fees and exemplary damages pursuant to section 12.002(b)(4) of the civil practice and remedies code. The Ananis then filed a motion for traditional summary judgment challenging the validity of the financing statement because, like Big D and Anani, LLC, they never executed a security agreement. The trial court granted their traditional motion for summary judgment.

         On February 16, 2016, the trial court held a hearing on Big D and Anani, LLC's motion for final summary judgment. On February 29, 2016, the trial court signed a final order in which it reiterated the UCC Financing Statements were "immediately ordered TERMINATED and EXPUNGED from record" and awarded $15, 000 in statutory damages and $50, 000 in exemplary damages to all four parties. It also awarded reasonable attorney's fees.

         Abuzaid filed a motion for new trial challenging only exemplary damages on March 11, 2016.[1] He claimed he had "every intention of defending the claims raised at the summary judgment hearing on February 16, 2016, " but computer issues prevented him from seeing the hearing notice. His failure to appear was due to "his mistake and inadvertence." He blamed an incompatible update on his email server for the disruption in his email service, which delayed delivery of some email and sent others to his junk mail folder. However, he admitted he learned about the February 16, 2016 hearing when he received an email from the court on February 17, 2016, with the proposed order granting the final motion for summary judgment. Thus, it is undisputed Abuzaid learned about the hearing prior to the trial court signing the final judgment on February 29, 2016.

         The trial court denied Abuzaid's motion for new trial after a hearing. This appeal followed.

         Motion for New Trial and the Application of Craddock/Carpenter

         In his first issue, Abuzaid argues the trial court abused its discretion by denying his motion for new trial because he satisfied the Craddock elements. Appellees respond Craddock does not apply to these facts, or alternatively, Abuzaid failed to satisfy all three elements entitling him to a new trial.

         We review a trial court's ruling on a motion for new trial under an abuse of discretion standard. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009) (per curiam). A trial court abuses its discretion when it acts in an unreasonable or arbitrary manner or without reference to any guiding rules and principles. K-Mart Corp. v. Honeycutt, 24 S.W.3d 357, 360 (Tex. 2000) (per curiam).

         Under Craddock, a movant for new trial must (1) establish that the failure to answer was not intentional or due to conscious indifference, but rather, was due to mistake or an accident, (2) set up a meritorious defense, and (3) demonstrate that the granting of a new trial will not cause delay or otherwise injure the plaintiff. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939).

         In Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex. 2002), the Texas Supreme Court held that, in a summary judgment default situation where the defaulting party failed to file a timely response but had time prior to entry of the summary judgment to obtain leave to file an untimely response or to obtain a continuance, Craddock did not apply. In such situations, the court considers whether a party who files a motion for leave to file a late summary judgment response establishes "good cause" by showing that the failure to timely respond (1) was not intentional or the result of conscious indifference, but the result of accident or mistake, and (2) allowing a late response will not cause any undue delay or otherwise injure the other party. Id. at 688. However, the court in Carpenter did not "decide ...


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