Motion for Rehearing Denied; Opinion of October 31, 2013 Withdrawn;
Affirmed and Substitute Opinion filed January 16, 2014.




                                        In The

                      Fourteenth Court of Appeals

                                NO. 14-12-00555-CV

    MICHAEL DODD AND 3D GLOBAL SOLUTIONS, INC., Appellants
                                           V.

                           BRIAN J. SAVINO, Appellee

                     On Appeal from the 127th District Court
                             Harris County, Texas
                       Trial Court Cause No. 2011-70013

                          SUBSTITUTE OPINION

      We issued an opinion in this case on October 31, 2013, affirming the trial
court’s judgment. Appellants subsequently filed a motion for rehearing. Without
changing our previous disposition, we deny the motion for rehearing, withdraw our
earlier opinion, and issue this substitute opinion in its place.

      This is an appeal from a no-answer default judgment granted in favor of
Brian J. Savino. Appellants Michael Dodd and 3D Global Solutions, Inc. present
the following four questions for review: (1) whether Dodd may be held
individually liable under an alter ego theory of liability; (2) whether the trial court
abused its discretion by denying their Craddock motion for new trial; (3) whether
the trial court erred by denying their special appearance; and (4) whether the
evidence is legally sufficient to support the award of damages and attorney’s fees.
We affirm the trial court’s judgment.

                                   BACKGROUND1

       The controversy in this case stems from a failed investment transaction. In
June 2011, Michael Dodd, a California resident, mailed a stock offering to two
prospective investors: Brian Savino, a Houston native; and Augusta Energy
Partners, a Swiss company. The offer solicited a $10 million investment in 3D
Global Solutions, Inc., a Delaware corporation where Dodd served as president and
CEO. At the time of Dodd’s letter, 3D Global was actively trying to expand into
the fuel distribution business. Dodd envisioned that Savino, an experienced oil
trader, would facilitate the corporation’s expansion efforts.

       Savino considered the offer. Between July and September 2011, Dodd
engaged in regular telephone and email communications with Savino in Texas. The
parties discussed the building of a business relationship, which contemplated that
Savino and Augusta would become equity investors in 3D Global, and that Savino
would work for 3D Global as an oil trader in Houston. Dodd requested that Savino
and Augusta each provide $150,000 in earnest money, which would be refundable
in ten days if their transaction failed to close. Dodd also requested that Savino and
Augusta approve the use of $1.2 million of their investment proceeds to make



       1
          Appellants contest some of the background facts. We base this background section on
the findings of fact issued by the trial court, discussed infra.

                                             2
personal payments to Dodd. Savino agreed to the proposals and wire transferred
the earnest money payment to Dodd’s bank account in Indiana.

      After receiving the earnest money payment, Dodd traveled to Houston to
meet with Savino and continue their business negotiations. The parties went to the
Houston offices of Ernst & Young, where Savino personally engaged the
accounting firm to perform due diligence on the proposed transaction. Dodd agreed
to reimburse Savino one-third of Ernst & Young’s fee, with Savino and Augusta
bearing the remaining share. In another meeting, Dodd also agreed to reimburse
certain expenses that Savino incurred when he traveled to 3D Global’s offices in
New York and New Jersey.

      Ernst & Young performed an accounting of 3D Global and found that its net
present value did not correspond with the representations made by Dodd. Savino
further learned during the course of due diligence that Dodd had commingled his
personal funds with 3D Global’s and that the corporation was not adequately
capitalized. Based on these findings, Savino and Augusta decided not to close on
the investment. Savino requested, pursuant to the terms of his agreement with
Dodd, that his earnest money be returned. Dodd made repeated assurances to
Savino that his reimbursement was forthcoming. Despite his representations, Dodd
never returned the money.

      On November 17, 2011, Savino filed an original petition in Texas alleging
causes of action for breach of contract, quantum meruit, and money had and
received. Savino claimed that appellants had failed to return his earnest money
within ten days of their failed investment transaction. Savino also alleged that
appellants had failed to reimburse him for the one-third share of the Ernst &
Young fee and for other travel expenses that they had promised to pay. Savino
effectuated service on the Texas Secretary of State, who forwarded the petition and

                                        3
citation to 3D Global’s registered agent in Delaware. Appellants’ answer was due
to be filed no later than December 27, 2011, but no answer was timely received.2

       Savino filed a motion for default judgment on January 4, 2012, and an
amended motion on February 6, 2012. After each filing, a copy of the motion and a
notice of hearing were served on both Dodd and 3D Global. Again, appellants filed
no responsive pleading. After the trial court granted Savino a default judgment,
appellants filed a motion for new trial and special appearance. In denying
appellants’ special appearance, the trial court signed written findings of fact and
conclusions of law, determining that specific jurisdiction was proper over both
Dodd and 3D Global. The court overruled appellants’ motion for new trial by
operation of law.

                              SPECIAL APPEARANCE

       We begin with appellants’ third issue, which disputes the trial court’s
exercise of personal jurisdiction.

A.     Governing Law

       A court must have personal jurisdiction over a defendant before it can issue
a binding judgment against him. CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.
1996). If the defendant is a nonresident, a Texas court may exercise jurisdiction
over him if the exercise is authorized by the Texas long-arm statute. See Tex. Civ.
Prac. & Rem. Code § 17.042. The supreme court has interpreted the broad
language of the Texas long-arm statute to extend Texas courts’ exercise of
personal jurisdiction “as far as the federal constitutional requirements of due

       2
         The Secretary of State was served with process as agent for 3D Global on November
28, 2011. The Secretary was separately served with process as agent for Dodd on November 30.
3D Global’s answer was due on Monday, December 19, whereas Dodd’s was due on Tuesday,
December 27. For the sake of clarity and ease, we refer to appellants’ answer date as December
27.

                                              4
process will permit.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789,
795 (Tex. 2002). Those requirements are fulfilled if the defendant has “certain
minimum contacts with [the forum state] such that the maintenance of the suit does
not offend ‘traditional notions of fair play and substantial justice.’” Int’l Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457,
463 (1940)). Minimum contacts are sufficient to support the exercise of personal
jurisdiction if they show that the nonresident defendant has purposefully availed
himself of the privilege of conducting activities within the forum statute, thus
invoking the benefits and protections of its laws. See id. at 319; Michiana Easy
Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). In determining
whether the purposeful-availment requirement is satisfied, courts consider only the
defendant’s contacts with the forum state, and not the unilateral activity of a third
party. Michiana, 168 S.W.3d at 785. The defendant’s contacts with the forum state
must be purposeful rather than merely fortuitous. Id. Additionally, the defendant
must seek some benefit, advantage, or profit by availing himself of the forum. Id.

      Personal jurisdiction may be either general or specific. Zinc Nacional, S.A. v.
Bouche Trucking, Inc., 308 S.W.3d 395, 397 (Tex. 2010). A trial court may
exercise general jurisdiction over a defendant whose contacts with the forum state
have been continuous and systematic. Moki Mac River Expeditions v. Drugg, 221
S.W.3d 569, 575 (Tex. 2007); BMC Software, 83 S.W.3d at 796. When general
jurisdiction is at issue, only the defendant’s pre-suit contacts are relevant. PHC-
Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 169 (Tex. 2007). On the
other hand, when there is a substantial connection between the defendant’s
purposeful contacts with Texas and the operative facts of the litigation, a trial court
may properly exercise specific jurisdiction over the defendant. Moki Mac, 221
S.W.3d at 585.


                                          5
      A defendant challenging a Texas court’s personal jurisdiction must negate
every jurisdictional basis that is alleged. BMC Software, 83 S.W.3d at 793; Nat’l
Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 772 (Tex. 1995). Thus, the plaintiff
has the initial burden of pleading sufficient facts to bring the nonresident defendant
within the provisions of the Texas long-arm statute. BMC Software, 83 S.W.3d at
793; Brocail v. Anderson, 132 S.W.3d 552, 556 (Tex. App.—Houston [14th Dist.]
2004, pet. denied). If the plaintiff fails to do so, then proof of the defendant’s non-
residency is sufficient to negate personal jurisdiction. Kelly v. Gen. Interior
Constr., Inc., 301 S.W.3d 653, 658–59 (Tex. 2010). If the plaintiff does allege
sufficient jurisdictional facts, then the defendant can defeat jurisdiction in several
ways. The defendant can introduce evidence contradicting the plaintiff’s factual
allegations, or show that the defendant’s contacts with the forum state fall short of
purposeful availment, or demonstrate that traditional notions of fair play and
substantial justice are offended by the exercise of jurisdiction. Id. at 659. If specific
jurisdiction is at issue, as here, then the defendant may also show that the
plaintiff’s claims do not arise from the defendant’s contacts with Texas. Id.

B.    Standard of Review

      Whether a trial court has personal jurisdiction over a defendant is a question
of law we review de novo. Moki Mac, 221 S.W.3d at 574; BMC Software, 83
S.W.3d at 794. When, as here, the trial court issues findings of fact and
conclusions of law in connection with its ruling on the special appearance, the
defendant may challenge the trial court’s factual findings for legal and factual
sufficiency. BMC Software, 83 S.W.3d at 794. On appeal, the scope of review
includes all evidence in the record. Vosko v. Chase Manhattan Bank, N.A., 909
S.W.2d 95, 99 (Tex. App.—Houston [14th Dist.] 1995, writ denied).



                                           6
         We review any challenged findings by applying the same standards used in
reviewing jury findings. Wiese v. Pro Am Servs., Inc., 317 S.W.3d 857, 860 (Tex.
App.—Houston [14th Dist.] 2010, no pet.). When reviewing for legal sufficiency,
we consider the evidence in the light most favorable to the finding and indulge
every reasonable inference that supports the challenged finding. City of Keller v.
Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We credit favorable evidence if a
reasonable factfinder could and disregard contrary evidence unless a reasonable
factfinder could not. Id. We will conclude that the evidence is legally insufficient
to support the finding only if (a) there is a complete absence of evidence of a vital
fact, (b) we are barred by rules of law or of evidence from giving weight to the
only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital
fact is no more than a mere scintilla, or (d) the evidence establishes conclusively
the opposite of the vital fact. Id. at 810. In reviewing the factual sufficiency, we
consider all of the evidence and will set aside a finding only if it is so against the
great weight and preponderance of the evidence as to be clearly wrong and unjust.
Meehl v. Wise, 285 S.W.3d 561, 565 (Tex. App.—Houston [14th Dist.] 2009, no
pet.). We review the trial court’s legal conclusions de novo. Greenfield Energy,
Inc. v. Duprey, 252 S.W.3d 721, 730 (Tex. App.—Houston [14th Dist.] 2008, no
pet.).

C.       Analysis

         Appellants do not dispute that their actions were covered by the Texas long-
arm statute. See Tex. Civ. Prac. & Rem. Code § 17.042 (nonresident may be sued
if, in addition to other acts that may constitute doing business, he contracts with a
Texas resident, commits a tort in Texas, or recruits a Texas resident for
employment inside or outside of Texas). Their only contention is that they never
established minimum contacts in the state of Texas.

                                           7
      As indicated above, the touchstone of the minimum contacts analysis is
purposeful availment. Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010).
Before a Texas court may exercise personal jurisdiction over a nonresident, the
nonresident’s contacts must show that he purposefully availed himself of the
privileges and protections of the forum’s laws. Nogle & Black Aviation, Inc. v.
Favaretto, 290 S.W.3d 277, 281 (Tex. App.—Houston [14th Dist.] 2009, no pet.).
Appellants contend this standard has not been met for several reasons. Their first
reason focuses on the conduct of Savino, who traveled to New York and New
Jersey several times to discuss the parties’ proposed business relationship.
Appellants argue that the trial court could not exercise personal jurisdiction
because Savino purposefully sought to invest outside of Texas. The focus of this
argument is misplaced. In a jurisdictional analysis, “it is only the defendant’s
contacts with the forum that count.” Michiana, 168 S.W.3d at 785. The unilateral
activity of Savino, the plaintiff in this case, is not controlling. Id.; Cerbone v. Farb,
225 S.W.3d 764, 768 (Tex. App.—Houston [14th Dist.] 2007, no pet.).

      Appellants contend next that minimum contacts have not been established
because Dodd only made a single visit to Houston, whereas multiple face-to-face
meetings between the parties occurred in New York and New Jersey. Based on
Dodd’s isolated trip, appellants argue that there has not been “continuous and
systematic contact” in the state of Texas. Continuous and systematic contact is
necessary only when a trial court exercises general jurisdiction over a nonresident,
however. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415–
16 (1984); DENSO Corp. v. Hall, 396 S.W.3d 681, 693 (Tex. App.—Houston
[14th Dist.] 2013, no pet.). In this case, Savino invoked, and the trial court
exercised, specific jurisdiction, not general jurisdiction.



                                           8
      Appellants also contend that their contract with a Texas resident is
insufficient by itself to establish minimum contacts. It is true that “an individual’s
contract with an out-of-state party alone [cannot] automatically establish sufficient
minimum contacts in the other party’s home forum.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 478 (1985). A contract is “ordinarily but an intermediate
step serving to tie up prior business negotiations with future consequences which
themselves are the real object of the business transaction.” Id. at 479. “It is these
factors—prior negotiations and contemplated future consequences, along with the
terms of the contract and the parties’ actual course of dealing—that must be
evaluated in determining whether the defendant purposefully established minimum
contacts within the forum.” Id.

      Appellants attempt to play down the significance of their prior negotiations.
They argue that their phone calls, emails, and correspondence with Savino are of
little value in a jurisdictional analysis because we live in an advanced society
where interstate communications are commonplace. Appellants cite no authority
for this proposition, however. The law is well-established that we must examine
the quality and nature of the defendant’s contacts, not their number or the ubiquity
of their means. Am. Type Culture Collection Inc. v. Coleman, 83 S.W.3d 801, 806
(Tex. 2002). Moreover, the question before us is not whether certain of appellants’
contacts with Texas, standing alone, are sufficient to subject them to personal
jurisdiction here. Instead, it is whether there is a substantial connection between all
of appellants’ Texas contacts, considered collectively, and the operative facts of
the litigation. P.V.F., Inc. v. Pro Metals, Inc., 60 S.W.3d 320, 326 (Tex. App.—
Houston [14th Dist.] 2001, pet. denied); see also Polythane Sys., Inc. v. Marina
Ventures Int’l, Ltd., 993 F.2d 1201, 1206 (5th Cir. 1993); Intercarga, S.A. v. Fritz



                                          9
Cos., No. 14-02-00297-CV, 2003 WL 21402583, at *7 (Tex. App.—Houston [14th
Dist.] June 19, 2003, no pet.) (mem. op.).

      Appellants’ contacts with Texas are stated in the trial court’s findings of
fact, which show as follows:

      Dodd mailed an offering memorandum to Savino, a Texas resident,
      soliciting Savino’s investment in 3D Global.

      Over a span of several months, Dodd engaged in multiple telephone and
      email communications with Savino in Texas regarding the proposed
      investment.

      One term of the proposed investment provided that Savino would work for
      3D Global as an oil trader from Savino’s personal offices in Houston.

      Dodd executed an earnest money agreement with Savino, agreeing to refund
      Savino’s earnest money payment in ten days if the investment failed to
      close.

      After receiving the earnest money payment, Dodd traveled to Houston
      voluntarily for the express purpose of conducting business in Texas.

      While in Houston, Dodd went to the offices of Ernst & Young, where he
      agreed to reimburse Savino for his share of the accounting firm’s due
      diligence fee.

      While in Houston, Dodd also agreed to reimburse Savino for Savino’s travel
      expenses to New York and New Jersey, where the offices of 3D Global are
      located.

      Appellants did not present any evidence with their special appearance
motion controverting these jurisdictional facts. In their brief, they attack the

                                         10
sufficiency of only one of these findings, claiming that there is no evidence that
appellants ever contemplated that Savino would work for 3D Global from a
Houston-based office. This finding is plainly supported by the record, however.
Savino testified by affidavit that his “employment as an oil trader working for 3D
[Global] from Houston was an integral part of the proposed transaction.” Savino
also attached exhibits of email communications showing that the parties had
negotiated Savino’s salary and job title. We therefore reject appellants’ sufficiency
challenge. See Herbert v. Greater Gulf Coast Enters., 915 S.W.2d 866, 872 (Tex.
App.—Houston [1st Dist.] 1995, no writ) (finding must be upheld if there is any
evidence of probative force to support it).

       The record shows that appellants engaged in many dealings over several
months, all of which were aimed at establishing a continuing business relationship
with Savino, a Texas resident, and employing him in Texas. Although many of
their communications occurred by phone and email, appellants’ contacts included
an actual trip to Texas, where the parties resumed their negotiations and executed
contracts in furtherance of their proposed investment transaction. While appellants
were in Texas, the parties engaged the Houston offices of Ernst & Young to
perform due diligence on their transaction. After the due diligence revealed
unfavorable findings, the parties’ deal fell through, triggering the disputes that led
to the instant lawsuit. We conclude that there is a substantial connection between
appellants’ purposeful contacts with Texas and the operative facts of Savino’s
litigation. See Burger King, 471 U.S. at 479; Moki Mac, 221 S.W.3d at 585. The
trial court did not err by concluding that appellants had established sufficient
minimum contacts in Texas.3

       3
        We note that specific jurisdiction should be reviewed on a claim-by-claim basis. See
Moncrief Oil Int’l Inc. v. OAO Gazprom, No. 11-0195, — S.W.3d —, 2013 WL 4608672, at *4
(Tex. Aug. 30, 2013). A separate analysis is not required in this case, however, because Savino
                                              11
       Once a court determines that a nonresident defendant has minimum contacts
with the forum state, it must then decide whether exercise of personal jurisdiction
offends traditional notions of fair play and substantial justice. Burger King, 471
U.S. at 476. We consider the following factors when making this determination:
(1) the burden on the defendant; (2) the interests of the forum state in adjudicating
the dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief;
(4) the interstate judicial system’s interest in obtaining the most efficient resolution
of controversies; and (5) the shared interests of the several states in furthering
fundamental substantive social policies. Horizon Shipbuilding, Inc. v. BLyn II
Holding, LLC, 324 S.W.3d 840, 851 (Tex. App.—Houston [14th Dist.] 2010, no
pet.). Only in rare instances will the exercise of jurisdiction not comport with fair
play and substantial justice. Angelou v. African Overseas Union, 33 S.W.3d 269,
281 (Tex. App.—Houston [14th Dist.] 2000, no pet.).

       The defendant bears the burden of presenting “a compelling case that the
presence of some consideration would render jurisdiction unreasonable.” Guardian
Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231
(Tex. 1991). Despite this burden, appellants present no argument on this point.

       As shown above, appellants are clearly capable of traveling to Texas. 3D
Global is a large corporation with offices in more than one state. On this record,
the exercise of jurisdiction in Texas would not impose an unreasonable burden on
appellants. Furthermore, Texas has an obvious interest in providing a forum for
resolving Savino’s dispute. Two of the contracts at issue here were executed in
Texas, and the other contract contemplated the creation of a business office in
Texas, where Savino would personally work. The breach of these contracts plainly


bases each of his claims on the same set of contacts with Texas. See id. (“Of course, a court need
not assess contacts on a claim-by-claim basis if all claims arise from the same forum contacts.”).

                                               12
resulted in foreseeable harm to Savino, a Texas resident. We conclude that the
exercise of personal jurisdiction comported with the constitutional requirements of
due process. The trial court did not err by denying appellants’ special appearance.

                           MOTION FOR NEW TRIAL

      We next consider appellants’ motion for new trial, which was overruled by
operation of law. We review a trial court’s refusal to grant a new trial for an abuse
of discretion. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009)
(per curiam). A trial court abuses its discretion if it acts arbitrarily, unreasonably,
or without reference to guiding rules or principles. Downer v. Aquamarine
Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985).

      To set aside a default judgment, a defendant must usually establish the three
factors set forth in Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex.
1939). These require a showing that (1) the failure to answer or appear was not
intentional or the result of conscious indifference, but due to accident or mistake;
(2) the defendant has a meritorious defense; and (3) the motion for new trial has
been filed at such a time that granting it will not cause undue delay or injury to the
plaintiff. Id. at 126. We address only the first factor because it is dispositive.

      Consciously indifferent conduct occurs when “the defendant knew it was
sued but did not care.” Fid. & Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d
571, 576 (Tex. 2006) (per curiam). This standard requires a showing of more than
mere negligence. Smith v. Babcock & Wilcox Constr. Co., 913 S.W.2d 467, 468
(Tex. 1995) (per curiam). It involves behavior such as a “pattern of ignoring
deadlines and warnings from the opposing party.” Levine v. Shackelford, Melton &
McKinley, L.L.P., 248 S.W.3d 166, 169 (Tex. 2008) (per curiam). We look to the
knowledge and acts of the defaulting party to determine whether the failure to
answer or appear was intentional or due to conscious indifference. Dir., State
                                           13
Emps. Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 269 (Tex. 1994).
Generally, “some excuse, although not necessarily a good one, will suffice to show
that a defendant’s failure to file an answer was not because the defendant did not
care.” In re R.R., 209 S.W.3d 112, 115 (Tex. 2006) (per curiam).

      The excuse. Appellants’ argument focuses on the handling of this lawsuit by
Haytham Faraj, the general counsel of 3D Global. Faraj received notice of the
lawsuit on December 6, 2011, three full weeks before appellants’ answer was due.
Faraj prepared an answer and a special appearance, but he filed neither by the
answer deadline. Faraj, who is not licensed in this state, explained in his affidavit
that he lacked ready contacts in Texas who could file the pleadings on behalf of
appellants. Faraj also attested that he was engaged in other matters that required
considerable investments in time and attention. In mid-December, Faraj was
involved in a high-profile case involving allegations of sexual assault in the
military. As that trial was ongoing, Faraj was also preparing for another high-
profile case, in which he was defending a United States marine accused of wartime
atrocities in Iraq. This second case ended on January 24, 2012, with a plea deal that
sparked public controversy. Hackers from the Internet group “Anonymous” were
so upset with the plea deal that they broke into Faraj’s email account and released
more than three gigabytes worth of confidential email communications, client files,
and financial records. Faraj claimed that this breach of security required immediate
attention and contributed to his delay in filing an answer. According to appellants,
Faraj “accidentally dropped the ball.”

      The warnings. Savino counters with a series of events, which he argues
show that appellants knew they were sued but did not care. On February 1, 2012,
after the answer deadline had already passed, Faraj contacted Savino’s attorney by
telephone and acknowledged that a motion for default judgment had been pending.

                                         14
Faraj did not request a continuance or a stay of the proceedings. He offered a
settlement instead, but it was rejected by Savino’s attorney. Faraj said that he
would confer with appellants and propose another offer, but he never called back.

      After the phone call, Savino prepared an amended motion for default
judgment, which was filed on February 6 and set for a hearing on February 27.
Savino served appellants with notice of this hearing, even though he had no legal
duty to do so. See Brooks v. Assocs. Fin. Servs. Corp., 892 S.W.2d 91, 94 (Tex.
App.—Houston [14th Dist.] 1994, no writ) (“After a citation and petition are
served on a defendant, the plaintiff has no legal duty to notify the defendant before
taking a default judgment on the causes of action asserted in the petition.”).
Appellants did not respond to the notice, nor did they attend the hearing. The trial
court accordingly entered its default judgment on February 29. A full month later,
on March 30, appellants filed their Craddock motion for new trial.

      The record shows that Faraj had actual awareness of the lawsuit three weeks
before the answer deadline, and actual awareness of the default judgment at least a
month before it was entered. Faraj prepared an answer and special appearance, but
he never filed them. Faraj stated that he would propose a settlement offer after his
first offer was rejected, but he never called back. Faraj also twice received notice
of a pending motion for default judgment, yet he never responded. It was within
the trial court’s discretion to conclude that these facts fell within the rule stated in
Levine, where the supreme court held that a “pattern of ignoring deadlines and
warnings from the opposing counsel amounts to conscious indifference.” See
Levine, 248 S.W.3d at 169 (the defendants’ attorney knew of deadline to file
answer but did not do so, despite repeated discussions with the plaintiff and
warnings of its intention to take a default judgment).



                                          15
      Appellants claim that, because they have proffered an excuse, the analysis
should end. We disagree. See Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex.
2012) (“We do not hold that forgetfulness alone is sufficient to satisfy the first
Craddock element . . . .”). Although “some excuse” is often found to be sufficient
to set aside a default judgment, the supreme court has never held that any excuse
will negate a defaulting party’s intentional or consciously indifferent conduct. R.R.,
209 S.W.3d at 115. Levine illustrates this point well. In that case, the defendants’
attorney requested a written standstill agreement before filing an answer, hoping
that the parties would resolve their dispute through mediation. When the plaintiffs
refused, the attorney promised to file an answer by the deadline, but he never did
so. Having received no answer, the plaintiffs advised the attorney that a default
judgment would be taken. The attorney assured the other side that he would file an
answer by the end of the week, but again he never did so. The plaintiffs
subsequently filed a motion for default judgment, which the trial court granted
without hearing. On appeal, the supreme court upheld the default judgment, despite
the attorney’s claim that he had placed an answer in his outgoing mail bin four
days before the default judgment was signed. The supreme court held that the
attorney’s excuse was wholly insufficient because the attorney knew his answer
date, he did not attempt to confirm that his answer had been filed, and he engaged
in a pattern of ignoring deadlines and warnings. Levine, 248 S.W.3d at 168–69.

      Following Levine, appellants needed to demonstrate that Faraj’s excuse, if
true, negated his failure to respond to the warnings from opposing counsel.
Appellants did not meet this burden. Faraj claimed in non-specific terms that he
was preoccupied with remedying the damage caused by the hacking incident, but
Faraj never explained when the hacking incident occurred or how much time his
remedial efforts actually consumed. The timing of such matters is critical to a


                                         16
Craddock analysis, but Faraj’s affidavit is completely silent on this point. Cf.
Sutherland, 376 S.W.3d at 755 (the first Craddock element was satisfied where the
defaulting party claimed that he was unable to return to the office “due to weather
conditions over a nearly three-week period during the Christmas holiday season”).
The affidavit does not indicate whether the hacking incident occurred before or
after the telephone conference on February 1, when Savino’s attorney warned Faraj
of a looming default judgment. Nor does the affidavit establish that Faraj was so
busy restoring his email security that he was incapable of filing an answer by
February 29, when the trial court entered its default judgment.

      This is not a case of an accident or mistake, where, for instance, the suit
papers were lost or a party was misguided about his obligation to respond. See,
e.g., Drewery, 186 S.W.3d at 575–76 (suit papers were discarded); R.R., 209
S.W.3d at 115 (defendant believed she would have been appointed counsel);
Evans, 889 S.W.2d at 269 (predecessor attorney misdated the trial date and
conveyed the wrong information to successor). Faraj, an experienced litigator,
knew the consequences of failing to answer, and even had prepared an answer and
special appearance. Faraj claims that he could not file these pleadings because he
lacked ready contacts in Texas, but as Savino points out, Faraj never even attested
that he searched for local counsel before the trial court entered its default
judgment. We do not doubt that the hacking incident was serious, but when viewed
in the context of the entire record, Faraj has not established that this excuse negates
his conscious indifference to the warnings from opposing counsel.

      Appellants cannot show that their failure to answer was due to accident or
mistake. Because they are unable to satisfy their burden under the first Craddock
element, appellants are not entitled to set aside the trial court’s default judgment.



                                          17
The trial court did not abuse its discretion by overruling their motion by operation
of law.

                             ALTER EGO LIABILITY

      In their next issue, appellants argue that the trial court erred by signing a
judgment against Dodd as an individual, claiming that the pleadings fail to support
a theory of alter ego liability. Appellants also argue that, to the extent the pleadings
are not deficient, there is no evidence of alter ego.

      Generally, the owner of a corporation is not liable for the contractual
obligations of his corporation. See Tex. Bus. Orgs. Code § 21.223(a)(2). This rule
is subject to the alter ego exception, which provides that the owner may be held
liable if the obligee demonstrates that the owner “caused the corporation to be used
for the purpose of perpetrating and did perpetrate an actual fraud on the obligee
primarily for the direct personal benefit of the . . . owner.” See id. § 21.223(b). The
alter ego doctrine applies “when there is such unity between corporation and
individual that the separateness of the corporation has ceased and holding only the
corporation liable would result in injustice.” Castleberry v. Branscum, 721 S.W.2d
270, 272 (Tex. 1986); Solutioneers Consulting, Ltd. v. Gulf Greyhound Partners,
Ltd., 237 S.W.3d 379, 387 (Tex. App.—Houston [14th Dist.] 2007, no pet.). Actual
fraud involves dishonesty of purpose or intent to deceive. See Castleberry, 721
S.W.2d at 273.

      Appellants argue that the pleadings are deficient because Savino did not
specifically allege that Dodd had committed an actual fraud for his own benefit.
We conclude that appellants failed to preserve error on this point. Under Rule 33.1,
“the overruling by operation of law of a motion for new trial . . . preserves for
appellate review a complaint properly made in the motion.” Tex. R. App. P.
33.1(b). In their motion for new trial, appellants challenged Dodd’s individual
                                           18
liability by arguing only the following: (1) that Dodd was CEO of 3D Global at all
times relevant to the instant lawsuit; (2) that all of Dodd’s actions with respect to
Savino were performed in Dodd’s professional capacity as CEO; and (3) that Dodd
never commingled his funds with 3D Global. Nowhere in their motion did
appellants complain about a deficiency in the pleadings or a failure by Savino to
allege that Dodd had committed an actual fraud for his own benefit. Appellants’
complaint is therefore forfeited.

      Even if we were to assume that appellants’ complaint was properly before
this court, we would still conclude that their argument is incorrect. A default
judgment will be held erroneous only if (1) the petition does not attempt to state a
cause of action that is within the jurisdiction of the court, (2) the petition does not
give fair notice to the defendant of the claim asserted, or (3) the petition
affirmatively discloses the invalidity of such claim. Paramount Pipe & Supply Co.,
v. Muhr, 749 S.W.2d 491, 494 (Tex. 1988). Appellants do not contend that
Savino’s cause of action is unrecognized, outside the jurisdiction of the court, or
affirmatively invalidated by the petition. Their only dispute is whether Savino’s
petition gave fair notice of Dodd’s alter ego liability.

      An original petition must contain “a short statement of the cause of action
sufficient to give fair notice of the claim involved.” Tex. R. Civ. P. 47(a). The
pleader satisfies this “fair notice” standard if the opposing party can ascertain from
the pleading the nature and basic issues of the controversy and what testimony will
be relevant. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 896 (Tex.
2000). The purpose of this rule is to give the opposing party information sufficient
to enable him to prepare a defense. Id. at 897. A petition is construed liberally in
favor of the pleader if no special exceptions are filed. Id. “But, ‘liberally’ does not



                                           19
require a court to read into a petition what is plainly not there.” Wortham v. Dow
Chem. Co., 179 S.W.3d 189, 199 (Tex. App.—Houston [14th Dist.] 2005, no pet.).

      Alter ego, or piercing the corporate veil, is not an independent cause of
action, but is instead a means of imposing liability for an underlying cause of
action. Wilson v. Davis, 305 S.W.3d 57, 68 (Tex. App.—Houston [1st Dist.] 2009,
no pet.). Alter ego is shown from the total dealings of the corporation and the
individual, including the degree to which corporate formalities have been followed
and corporate and individual property have been kept separately; the amount of
financial interest, ownership, and control the individual maintains over the
corporation; and whether the corporation has been used for personal purposes.
Castleberry, 721 S.W.2d at 272. Evidence as proof of an alter ego includes (1) the
payment of alleged corporate debts with personal checks or other commingling of
funds, (2) representations that the individual will financially back the corporation,
(3) the diversion of company profits to the individual for the individual’s personal
use, (4) inadequate capitalization, and (5) any other failure to keep corporate and
personal assets separate. Burchinal v. PJ Trailers-Seminole Mgmt. Co., LLC, 372
S.W.3d 200, 218 (Tex. App.—Texarkana 2012, no pet.) (citing Mancorp, Inc. v.
Culpepper, 802 S.W.2d 226, 229 (Tex. 1990)).

      Savino gave adequate notice to Dodd that he was being sued under an alter
ego theory of liability. Savino consistently referred to both Dodd and 3D Global as
the breaching parties in his original petition. Savino also made specific factual
allegations supporting the existence of an alter ego and of actual fraud, including
the commingling of funds, the diversion of company profits to an individual, and
inadequate capitalization.4 Finally, Savino explicitly alleged in the “Parties”


      4
          Savino’s exact allegations are as follows:

                                                 20
section of his petition that “3D Global Solutions was and functioned at all relevant
times as Mr. Dodd’s agent and alter ego.”

      Appellants suggest that these pleadings are somehow insufficient because
Savino did not “specifically plead the reasons raised for piercing the corporate
veil,” nor did he ask the trial court to make a finding of actual fraud. Appellants
essentially contend that Savino was required to allege that Dodd had committed an
“actual fraud” for his own benefit, and that without such specific pleadings, the
default judgment was improper. We disagree. The case law is clear that a petition
is sufficient if a cause of action may reasonably be inferred from what is
specifically stated in the petition, “even if an element of the cause of action is not
specifically alleged.” Boyles v. Kerr, 855 S.W.2d 593, 601 (Tex. 1993); Westcliffe,
Inc. v. Bear Creek Constr., Ltd., 105 S.W.3d 286, 292 (Tex. App.—Dallas 2003,
no pet.); see also Tex. R. Civ. P. 45(b) (“That an allegation be evidentiary or be of
legal conclusion shall not be grounds for objection when fair notice to the
opponent is given by the allegations as a whole.”). Actual fraud, a component of


      20.    On or about July 16, 2011, Mr. Savino provided the agreed earnest money
             by a wire transfer of $150,000 from his bank account at Chase Bank in
             Houston, Texas to Mr. Dodd’s personal bank account in Elkhart,
             Indiana. . . .
      29.    During the due diligence, Mr. Savino learned facts indicating that Mr.
             Dodd and 3D Global Solutions commingled funds and did not maintain
             proper corporate separation between Mr. Dodd’s personal assets and 3D
             Global Solutions’ assets. Mr. Dodd received funds intended for 3D Global
             Solutions into his personal bank account. Mr. Dodd also solicited Mr.
             Savino and Augusta to approve the use of $1.2 million in investment
             proceeds from the proposed transaction to make payments to him
             personally.
      30.    Also during the course of the due diligence, Mr. Savino learned facts
             indicating that 3D Global Solutions was not adequately capitalized. . . .
      31.    Ernst & Young was not able to validate the $10,500,000 net present value
             for 3D Global Solutions that Mr. Dodd and 3D Global Solutions had
             represented in the offering memorandum.

                                            21
alter ego liability, involves “dishonesty of purpose or intent to deceive.” See
Castleberry, 721 S.W.2d at 273. The intent to deceive can be inferred because
Savino’s factual allegations, when taken as true, support a finding that Dodd
solicited an investment in 3D Global after misrepresenting its net present value.
Based on the pleadings here, we conclude that an opposing attorney of reasonable
competence could have ascertained Dodd’s alter ego liability. See Elite Door &
Trim, Inc. v. Tapia, 355 S.W.3d 757, 766 (Tex. App.—Dallas 2011, no pet.);
Schlueter v. Carey, 112 S.W.3d 164, 168–69 (Tex. App.—Fort Worth 2003, pet.
denied).

      Appellants also broadly challenge the sufficiency of the evidence supporting
the theory of alter ego. However, in a no-answer default, the defendant admits all
facts properly pleaded in the plaintiff’s petition, except for the amount of
unliquidated damages. Dolgencorp, 288 S.W.3d at 930. If the facts set forth in the
petition allege a cause of action, the default judgment conclusively establishes the
defendant’s liability. Morgan v. Compugraphic Corp., 675 S.W.2d 729, 731 (Tex.
1984); see also Boyles, 855 S.W.2d at 601 (elements may be reasonably inferred
from what is specifically alleged even if an element of a cause of action is not
specifically alleged). Consequently, appellants are precluded from asserting a
challenge as to the sufficiency of the evidence. See Norton v. Martinez, 935
S.W.2d 898, 901 (Tex. App.—San Antonio 1996, no pet.) (“Appellants may not
now challenge the sufficiency of the evidence where their failure to answer
constitutes an admission of such liability.”).

                                     DAMAGES

      In their final issue, appellants contend there is no evidence of either breach
of contract or of unliquidated damages. For reasons just stated, appellants cannot
dispute the sufficiency of Savino’s breach of contract claims because the default

                                          22
judgment conclusively establishes their liability. See Dolgencorp, 288 S.W.3d at
930; Morgan, 675 S.W.2d at 731. Accordingly, we consider only whether the
evidence is sufficient to support the award of unliquidated damages. See Tex. R.
Civ. P. 243; Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992).

         The final judgment awards Savino $187,386.90, plus interest. The largest
portion of this award represents the reimbursement of $150,000 in earnest money,
which appellants do not appear to challenge. The remaining share consists of the
reimbursement of the Ernst & Young fee ($20,000), the reimbursement of Savino’s
travel expenses ($4,986.87), and the award of reasonable and necessary attorney’s
fees ($12,400). Appellants contend there is no evidence to support these specific
awards, other than conclusory and self-serving statements, because there is no
reporter’s record of the default judgment hearing. We address the contract damages
first.

A.       Contract Damages

         In the affidavit attached to his amended motion for default judgment, Savino
attested that he and Augusta had collectively paid $40,000 to Ernst & Young, or
two-thirds of the accounting firm’s $60,000 fee. Savino also attached an invoice
from Ernst & Young, which showed an outstanding balance of $20,000. Savino
further attested that he had incurred $4,986.87 in travel expenses, which he
supported with two authenticated expense reports.

         During a default judgment proceeding, affidavit testimony will support the
award of unliquidated damages if the affidavit avers personal knowledge of the
facts, describes the circumstances that resulted in the loss, and identifies the total
amount owed as a result. See Tex. Commerce Bank, Nat’l Ass’n v. New, 3 S.W.3d
515, 517 (Tex. 1999) (per curiam). Savino’s affidavit does precisely that. Savino
attested that appellants had agreed to bear one-third of the fees charged by Ernst &
                                          23
Young, and that Ernst & Young had issued an invoice for a total amount of
$60,000. Savino also attested that appellants agreed to reimburse certain travel
expenses, and that Savino had duly submitted documentation of these expenses in
the amount of $4,986.87. We conclude that this evidence is sufficient to support
the award of contract damages, notwithstanding the absence of a hearing transcript.
See id. (upholding damages award on affidavit testimony where no oral testimony
was taken at the default judgment hearing). Furthermore, because Savino described
the underlying bases to support his claim for damages, we reject appellants’
suggestions that his affidavit is conclusory or self-serving. See Dolcefino v.
Randolph, 19 S.W.3d 906, 930 (Tex. App.—Houston [14th Dist.] 2000, pet.
denied) (“A conclusory statement is one that does not provide the underlying facts
to support the conclusion.”).

B.    Attorney’s Fees

      Savino’s attorney’s fees award is supported by the affidavit of Amy Tabor,
his retained trial counsel. Tabor attested that she spent approximately thirty-three
hours working on the case. Based on her hourly rate of $375, Savino incurred a bill
in the amount of $12,400. Tabor attested that these fees were reasonable and
necessary “considering the nature of the case and the difficulty of the questions
involved.”

      Appellants attack this affidavit for similar reasons as before, claiming that it
is conclusory and self-serving. Appellants also complain that the evidence is
legally insufficient because Tabor did not attach any invoices, nor did she explain
why more than thirty hours of work was necessary on this case.

      We disagree with appellants’ argument that Tabor’s affidavit is conclusory.
Tabor attested that she is a duly licensed attorney and that she had personal
knowledge of the work performed. Tabor specifically indicated that she had
                                         24
investigated claims, reviewed documents, drafted pleadings, and performed other
actions necessary to her duties. Tabor’s affidavit testimony was sufficient by itself
to support the award of attorney’s fees. See New, 3 S.W.3d at 517–18.

         We also reject appellants’ argument that Tabor failed to explain the
reasonableness of her fees. Tabor attested that her fees were based on a fixed
hourly rate and the difficulty of the questions involved. These are factors described
in Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818 (Tex.
1997), which courts may consider when determining the reasonableness of
attorney’s fees. See also Arthur J. Gallagher & Co. v. Dieterich, 270 S.W.3d 695,
706 (noting that there is no requirement that an attorney prove up the
reasonableness of her fees with each of the Arthur Andersen factors).

         We conclude that the evidence is legally sufficient to support the award of
unliquidated damages.5

                                       CONCLUSION

         We overrule appellants’ four issues and affirm the judgment of the trial
court.




                                              /s/    Martha Hill Jamison
                                                     Justice



Panel consists of Justices Boyce, Jamison, and Busby.

         5
          The trial court awarded three cents more than the amount of damages claimed by
Savino in the affidavits attached to his amended motion for default judgment. Appellants have
not raised a specific complaint regarding this discrepancy. We are not inclined to disturb the trial
court’s judgment because of this de minimis amount.

                                                25
