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In re Texas Real Estate Commission

Court of Appeals of Texas, Fourth District, San Antonio

January 24, 2018

IN RE TEXAS REAL ESTATE COMMISSION

         Original Mandamus Proceeding[1]

          Sitting: Sandee Bryan Marion, Chief Justice Rebeca C. Martinez, Justice Patricia O. Alvarez, Justice

          MEMORANDUM OPINION

          Sandee Bryan Marion, Chief Justice.

         Relator Texas Real Estate Commission ("TREC") seeks mandamus relief from the trial court's order granting real party in interest Evan Jacobson's bill of review and setting aside a default judgment against him. Based on the reasons set forth below, we conditionally grant TREC's petition.

         Background

         In 2012, Dr. Ben Luong sued Evan Jacobson, a licensed real estate agent, both individually and d/b/a Advantage Realty Group for breach of a joint venture agreement to acquire, renovate, and sell residences for a profit. Luong claimed that Jacobson intentionally misrepresented the amounts of invoices for materials and supplies used in the remodeling and commingled joint venture money with his own funds. Luong also pled that Jacobson had violated the Texas Real Estate Licensing Act, and sought recovery of his actual damages from the Real Estate Recovery Trust Account. See Tex. Occ. Code Ann. §§ 1101.601-.602 (West 2012 & Supp. 2016). Jacobson retained an attorney and filed an answer. Jacobson's counsel subsequently withdrew on June 13, 2013, and Jacobson proceeded pro se in the case. On July 1, 2013, Luong's attorney filed a motion to set the case for a non-jury trial on July 31, 2013. On July 15, 2013, Jacobson filed an "Original Answer to Motion to Set on Non-Jury Docket" objecting to the trial setting because: (i) he did not receive proper notice of the setting; and (ii) he was scheduled to be out of town from July 25 to August 6, 2013.

         On July 31, 2013, Luong and his attorney appeared for trial, but Jacobson did not appear. Prior to permitting Luong's attorney to present evidence of damages, the trial court made several inquiries into whether Jacobson had been given the required notice of the trial setting.[2] Luong's attorney represented to the court that he sent a letter with notice of the trial setting to Jacobson at his last known address by both certified mail and regular mail. The trial court noted that Jacobson had filed an objection to the setting, but the court treated it as a motion for continuance and overruled it. The trial court expressly stated it was relying on "the representation [by Luong's counsel] to the Court that you have given proper notice to the Defendant of today's hearing, " and proceeded to enter a post-answer default judgment against Jacobson. The judgment awarded Luong actual damages of $45, 587.25 for fraud/misrepresentation, breach of contract, and violations of the Texas Real Estate Licensing Act, and $7, 268.48 in attorney's fees. Luong also received treble damages of $136, 761.75 under the Deceptive Trade Practices Act.

         Jacobson did not file a motion for new trial or a notice of appeal. Luong sought to collect the actual damages portion of the judgment from the Real Estate Recovery Trust Account. See Tex. Occ. Code Ann. §§ 1101.601-.602. After a hearing on May 12, 2014, the trial court found that the $45, 587.25 in actual damages and the $7, 268.48 in attorney's fees awarded to Luong were payable out of the Real Estate Recovery Trust Account, and ordered TREC to pay Luong the sum of $50, 000. The court also ordered Luong to assign to TREC "all of his right, title and interest in the judgment, to the extent of payment." TREC and Luong negotiated a settlement and TREC paid Luong $41, 200.00 in exchange for the transfer and assignment of Luong's rights and interest in the judgment.

         In 2016, Jacobson filed an original petition for bill of review seeking to set aside the July 31, 2013 default judgment and to enjoin its enforcement and collection. In his petition, Jacobson asserted he did not receive the required forty-five days' notice of the trial setting and Luong's attorney misrepresented to the trial court that Jacobson had received the required notice. Jacobson also asserted he was deprived of the ability to file a timely motion for new trial by the district clerk's official mistakes in (i) failing to promptly notify him that a default judgment had been entered against him by sending the notice more than thirty days after entry of the judgment, and (ii) erroneously informing him on the day he received actual notice of the judgment that "there was nothing he could do to change or modify the judgment" because thirty days had already passed. Jacobson also pled that he had a meritorious defense to Luong's claims in the underlying lawsuit based on his records containing invoices, expenses, bills, and charges for the supplies and repairs relating to the two joint venture projects.

         TREC intervened in the bill of review proceeding, arguing that Jacobson was not entitled to bill of review relief and TREC would be injured if the default judgment was set aside because it already paid a portion of the judgment to Luong. The trial court held an evidentiary hearing on the bill of review on March 6, 2017. Jacobson and Luong testified, as did Henry J. Novak, Jacobson's former trial attorney in the underlying lawsuit. On March 15, 2017, the trial court signed a general order granting the bill of review and setting aside the default judgment. TREC then filed this petition for writ of mandamus, asking this court to order the trial court to vacate its order and reinstate the July 31, 2013 judgment.

         Analysis

         Mandamus relief is appropriate only to correct a clear abuse of discretion by the trial court when there is no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). A trial court has no discretion in determining what the law is or applying the law to the facts. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding). "[A] clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion." Id. We have previously recognized that mandamus is the appropriate remedy for a bill of review that was erroneously granted based on the lack of an adequate remedy by appeal. In re J.M., IV, 373 S.W.3d 725, 728 (Tex. App.-San Antonio 2012, orig. proceeding).

         A. General Bill of Review Standard

         A bill of review is an equitable proceeding through which a party seeks to set aside a judgment that may no longer be challenged by a motion for new trial or an appeal. Caldwell v.

          Barnes, 154 S.W.3d 93, 96 (Tex. 2004). Due to the public interest in the finality of judgments, the grounds for obtaining a bill of review are narrow. In re J.M., 373 S.W.3d at 728. A bill of review petitioner must generally plead and prove (1) a meritorious defense to the underlying cause of action, (2) which the petitioner was prevented from making by the fraud, accident or wrongful act of the opposing party, or by official mistake, (3) unmixed with any fault or negligence on the petitioner's part. Caldwell, 154 S.W.3d at 96; In re J.M., 373 S.W.3d at 728-29.

         B. Parties' Arguments

         In its mandamus petition, TREC argues that Jacobson failed to prove the second and third prongs of this general bill of review standard.[3] Among other arguments, TREC argues Jacobson failed to prove his own lack of fault or negligence because he admitted receiving actual knowledge of the default judgment on or about September 5, 2013 and could have still filed a motion for new trial under the extended timeline provided by Rule 306a, but failed to pursue that legal remedy. See Tex. R. Civ. P. 306a(4) (providing that when a party adversely affected by a judgment does not receive notice or acquire actual knowledge of the judgment within twenty days after the judgment is signed, then the thirty-day period for filing a motion for new trial is extended and begins on the date notice is received or actual knowledge is acquired, as long as no more than ninety days have passed since the judgment was signed). Jacobson responds to this argument by asserting he was prevented from timely filing a motion for new trial based on the misinformation provided to him by the clerk's office, and relies on this court's opinion in In re RPH Capital Partners, LP, No. 04-16-00424-CV, 2017 WL 2561562, at *2 (Tex. ...


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