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Tunad Enterprises, Inc. v. Palma

Court of Appeals of Texas, Fifth District, Dallas

June 27, 2018

TUNAD ENTERPRISES, INC., Appellant
v.
MARTIN PALMA D/B/A LIZ PIZZA, Appellee

          On Appeal from the 417th Judicial District Court Collin County, Texas Trial Court Cause No. 417-00618-2016

          Before Justices Francis, Fillmore, and Whitehill

          MEMORANDUM OPINION

          ROBERT M. FILLMORE JUSTICE

         Martin Palma d/b/a/ Liz Pizza (Palma) sued his former landlord, Tunad Enterprises, Inc. (Tunad), alleging Tunad neither returned a $3, 500 security deposit nor provided a written description and itemized list of the deductions it claimed to have taken from the deposit. See Tex. Prop. Code Ann. § 93.011(a) (West 2014). Apparently unaware that Olatunde R. Adio, Tunad's president and registered agent, had filed an answer on behalf of Tunad, the trial court granted Palma's motion for no-answer default judgment. Upon learning of the default judgment, Adio filed a motion for new trial on behalf of Tunad, which the trial court also granted. Palma requested that the trial court reconsider the granting of the new trial and, after hearing evidence, the trial court ruled Tunad had failed to establish it was entitled to a new trial under Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (1939), [1] and reinstated the default judgment.

         In this appeal, Tunad argues the trial court erred by granting the default judgment, determining Tunad was not entitled to a new trial, denying Tunad's request for findings of fact and conclusions of law, failing to hold a hearing on Tunad's motion for reconsideration, and awarding Palma treble damages. We conclude the trial court erred by granting Palma's motion for default judgment without providing notice to Tunad. Accordingly, we reverse the trial court's judgment and remand this case for further proceedings.

         Background

         Palma leased space from Tunad in a commercial building and provided the $3, 500 security deposit required by the lease. The lease terminated on July 31, 2015, and Palma vacated the premises sometime in August 2015. After Palma failed to receive either the return of the security deposit or an itemized accounting of amounts withheld from the security deposit, he filed this suit.

         After Tunad was served, Adio called the Collin County District Clerk's office to determine if Tunad still had time to respond to the lawsuit. Following that conversation, Adio mailed a letter to the Collin County District Clerk on March 25, 2016, that contained the case number and indicated it was being filed by Adio for Tunad. The letter stated the lease with Palma ended on July 31, 2015, Palma refused to return the keys to the property, and on inspecting the property, "we" discovered Palma "unlawfully removed Fixtures attached to the Structures," causing roof damage. Attached to the letter was a September 1, 2015 "Landlord's Notice to Tenant of Damages Assessed Against Security Deposit" (Notice of Damages) prepared by Tunad and addressed to Palma with the notation "Forwarding Address Not Provided"; invoices for repairs to the property; and pictures of alleged damage to the property. The Notice of Damages described the charges against the security deposit as one month of holdover rent and the costs to repair the property due to the removal of fixtures by Palma, and stated those charges exceeded the amount of the security deposit. Adio did not serve a copy of the letter on Palma's attorney. The Collin County District Clerk's office stamped the letter as filed on March 31, 2016, and scanned it into Collin County's electronic filing system.

         On April 26, 2016, Palma filed a motion for default judgment which stated Tunad's deadline to file an answer was March 28, 2016, and Tunad had not, "to [Palma's] information and belief, filed an answer or any other pleading constituting an answer." Attached to the motion for default judgment was a certificate of last known address for Tunad, Palma's affidavit stating Tunad had not returned his security deposit, and Palma's attorney's affidavit regarding the fees incurred in the case. Palma did not serve the motion for default judgment on Tunad, and the trial court's docket sheet does not reflect a hearing was held on the motion. The trial court signed a default judgment on April 28, 2016, awarding Palma judgment for $10, 600, consisting of statutory damages of $100 and three times the withheld security deposit, plus $2, 769.71 for attorneys' fees and costs.

         After receiving notice of the default judgment from the Collin County District Clerk's office, Adio filed a motion for new trial on behalf of Tunad on May 20, 2016, stating Tunad responded to the lawsuit on March 25, 2016. Adio also set out facts relating to the damage to the property that Tunad alleged constituted a meritorious defense. Adio attached a file-stamped copy of the March 25th letter to the motion. Adio did not serve the motion for new trial on Palma's attorney. Although the docket sheet does not reflect a hearing was held on the motion for new trial, on June 10, 2016, the trial court granted Tunad's motion and set the case for trial on November 7, 2016.

         On October 26, 2016, Palma filed a motion requesting the trial court reconsider the granting of the motion for new trial. Palma stated he had not received notice of the filing of the motion for new trial, any hearing on the motion for new trial, or the order granting the new trial. Palma objected that Tunad was not properly represented in either its answer or the motion for new trial and that "improper proof" was presented to the trial court pertaining to notice to Palma and the requirements for granting a new trial. Tunad was represented by counsel at the hearing on Palma's motion for reconsideration. After hearing evidence, the trial court ruled Tunad had failed to establish it was entitled to a new trial based on the Craddock factors. On December 15, 2016, the trial court signed an order in which it withdrew its prior order granting Tunad's motion for new trial, denied Tunad's motion for new trial, and reinstated the default judgment ab initio.

         On December 16, 2016, Tunad requested findings of fact and conclusions of law. Palma objected that Tunad was not entitled to findings of fact and conclusions of law following a hearing on a motion for new trial. The trial court sustained Palma's objection and did not make findings of fact and conclusions of law. Tunad filed a motion for reconsideration on January 9, 2017. Despite Tunad's requests for a hearing, Tunad's motion for reconsideration was never heard by the trial court. Tunad filed a notice of appeal on February 27, 2017.

         Jurisdiction

         Palma initially contends we should dismiss this appeal because Tunad's notice of appeal was untimely. Palma specifically argues that, because a motion for new trial filed on behalf of a corporation by a non-attorney "should be given no effect," the default judgment rendered by the trial court on April 28, 2016, ...


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