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Suarez v. Fernandez

Court of Appeals of Texas, Fifth District, Dallas

April 30, 2019

JUAN SUAREZ, JR., Appellant
v.
SUSANA FERNANDEZ AND JULIAN OCHOA, Appellees

          On Appeal from the 95th District Court Dallas County, Texas Trial Court Cause No. DC-17-09749

          Before Justices Whitehill, Partida-Kipness, and Pedersen, III

          MEMORANDUM OPINION

          ROBBIE PARTIDA-KIPNESS JUSTICE.

         This is a restricted appeal from a no-answer default judgment. In seven issues, appellant Juan Suarez, Jr. generally complains the trial court erred in granting the default judgment because (1) appellees Susana Fernandez and Julian Ochoa did not plead a viable cause of action against him, (2) the petition reveals the invalidity of appellees' claim, (3) there was legally insufficient evidence to support the default judgment, and (4) the trial court's actual and exemplary damages awards were improper for multiple reasons. Appellees concede error with respect to the exemplary damage award. For the reasons set forth below, we affirm in part and reverse in part the trial court's judgment.

         BACKGROUND

         Appellees sued Suarez for fraud asserting he and others "combined, colluded, and conspired" to use Fernandez's identity and social security number to obtain a merchant's account with a bank to process credit card payments for goods sold by El Hoyo, Inc., a corporation formed to operate El Hoyo restaurant.[1] Appellees alleged Suarez, the registered agent and accountant of the corporation, along with Bravo and Montoya, retained the proceeds of the restaurant's credit card sales causing appellees to incur an outstanding personal tax liability of over $100, 000. Suarez did not file an answer. Appellees moved for default judgment.

         On March 23, 2018, the trial court held a hearing requiring appellees to prove up their unliquidated damages. See Tex. R. Civ. P. 243 (court shall hear evidence on unliquidated damages). At the hearing, Fernandez testified that she, her husband Ochoa, and others formed El Hoyo, Inc. to operate a restaurant by the same name. Suarez was the registered agent, accountant, and business manager of the corporation. The restaurant operated from 2008 through 2015. During an IRS audit in 2015, Fernandez learned she had an outstanding tax liability of $105, 397 from credit card income for food and drinks at El Hoyo restaurant because the credit card payments were being processed through the bank under her name and social security number. Suarez had represented to her that El Hoyo, Inc. had obtained a taxpayer ID and processing machine. Fernandez indicated that before 2015 she did not know they were processing the credit cards under her name instead of the corporation's name. Fernandez confronted Bravo and Montoya who told her to see Suarez. She attempted several times to see Suarez, but he completely avoided her. She denied giving Bravo, Montoya, or Suarez permission to use her name and social security number to process merchants' accounts. Fernandez requested the Court to award her actual damages in the amount of $105, 397, representing the amount in taxes the IRS claims she owes. She also indicated misrepresentations were made by Suarez, Bravo, and Montoya about how food and drink processing was done through El Hoyo, Inc., when in fact it was being done through her name and social security number. Fernandez requested exemplary damages but left the amount to be awarded up to the trial judge.

         At the conclusion of the hearing the trial court rendered a judgment in appellees' favor and against all defendants jointly and severally for $105, 397 in actual damages and $400, 000 in exemplary damages. Suarez timely filed this restricted appeal.

         ANALYSIS

         To succeed in a restricted appeal, Suarez must establish: (1) he filed a notice of appeal within six months after the default judgment was signed; (2) he was a party to the underlying suit; (3) he did not participate in the hearing resulting in the default judgment; and (4) error is apparent on the face of the record. See Pike-Grant v. Grant, 447 S.W.3d 884, 886 (Tex. 2014) (per curiam). The only element at issue here is whether there is error on the face of the record. In determining that issue, we are limited to considering only the face of the record, which consists of all papers on file in the appeal, including the reporter's record. See Norman Commc'ns v. Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam). But our scope of review is otherwise the same as that in an ordinary appeal; we review the entire case. See id.

         In his first and second issues, Suarez asserts the trial court's default judgment is improper because appellees' pleadings (1) failed to plead sufficient facts to constitute a cause of action for fraud against him and (2) discloses the invalidity of appellees' claim. We disagree. A default judgment is proper where the plaintiff's petition states a cause of action, invokes the trial court's jurisdiction, gives fair notice of the claim asserted, and does not disclose any invalidity of the claim on its face. Elite Door & Trim, Inc. v. Tapia, 355 S.W.3d 757, 766 (Tex. App.-Dallas 2011, no pet.) (citing Paramount Pipe & Supply Co. v. Muhr, 749 S.W.2d 491, 494 (Tex. 1988)).

         In determining whether a pleading provides fair notice, we must assess whether the opposing party can ascertain from the pleading the nature and basic issues of the controversy and what testimony will be relevant to enable the opposing party to prepare a defense. See id. at 766. Where, as here, no special exceptions are filed, we liberally construe the pleadings in favor of the pleader. See Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex. 2000). That an element of a claim has been omitted is not dispositive. See Boyles v. Kerr, 855 S.W.2d 593, 601 (Tex. 1993). The fair notice standard "relieves the pleader of the burden of pleading evidentiary matters with meticulous particularity." Tapia, 355 S.W.3d at 766.

         The elements of common law fraud are "(1) that a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the speaker made the representation with the intent that the other party should act upon it; (5) the party acted in reliance on the representation; and (6) the party thereby suffered injury." Henning v. OneWest Bank FSB, 405 S.W.3d 950, 963 (Tex. App.-Dallas 2013, no pet.) (quoting Aquaplex, Inc., Rancho La Valencia, Inc., 297 S.W.3d 768, 774 (Tex. 2009) (per curiam)).

         Appellees pleaded a fraud claim against Suarez. In their petition under the section entitled "Facts," appellees alleged they formed El Hoyo, Inc. to operate a restaurant. Appellees identified Suarez as El Hoyo, Inc.'s registered agent and accountant. When appellees confronted Bravo and Montoya about their outstanding personal tax liability for credit card payments for food and drinks at the restaurant, they told Fernandez to ...


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