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Texas Farmers Insurance Co. v. Clack

Court of Appeals of Texas, Fourth District, San Antonio

May 2, 2018

TEXAS FARMERS INSURANCE COMPANY, Appellant
v.
Steven L. CLACK, Appellee

          From the 198th Judicial District Court, Kerr County, Texas Trial Court No. 1793B Honorable Rex Emerson, Judge Presiding

          Sitting: Sandee Bryan Marion, Chief Justice, Marialyn Barnard, Justice, Luz Elena D. Chapa, Justice

          MEMORANDUM OPINION

          Marialyn Barnard, Justice

         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 petition 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).[1] 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.

         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 ...


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