                                                                                  ACCEPTED
                                                                              12-15-00047-CV
                                                                 TWELFTH COURT OF APPEALS
                                                                               TYLER, TEXAS
                                                                        11/25/2015 8:23:18 AM
                                                                                    Pam Estes
                                                                                       CLERK

                    Cause No. 12-15-00047-CV
                  IN THE COURT OF APPEALS
             FOR THE TWELFTH JUDICIAL DISTRICT FILED IN
                                             12th COURT OF APPEALS
                        TYLER, TEXAS              TYLER, TEXAS
                                          11/25/2015 8:23:18 AM
                                                 PAM ESTES
                                                   Clerk
==========================================================

                          MARK J. HEALEY
                           APPELLANT

                                  V.

                         EDWIN N. HEALEY
                            APPELLEE

===========================================================

            On Appeal from Severed Cause No. 2014C-0638
          From the 3rd District Court, Henderson County, Texas
              Honorable Mark Calhoon, Judge Presiding


  ======================================================

                 APPELLANT’S REPLY BRIEF
  ======================================================

                          STARK & GROOM, L.L.P.
                          Steve Stark
                          State Bar No.: 19066000
                          110 East Corsicana Street
                          Athens, Texas 75751
                          Phone:      (903)675-5691
                          Fax:        (903)675-6454
                          Email: stevestark@starkandgroom.com
                          Attorney For Appellant
                      TABLE OF CONTENTS

INDEX OF AUTHORITIES……………………………………...................3

I.     OBJECTION TO APPELLEE’S STATEMENT OF FACTS AND
       INTRODUCTION………………………………………………...….5

II.    APPELLANT’S WAIVER OF SPECIAL APPEARANCE ERROR..5

III.   SUMMARY OFARGUMENT……………………………………….5

IV.    REPLY TO ASSERTION THIS APPEAL IS MOOT…………….....6

V.     REPLY TO ASSERTION THAT DEFAULT JUDGMENT WAS
       PROPER……………………………………………………………...7

VI.    REPLY TO CRADDOCK ISSUES………………………………….9

VII. REPLY TO ASSERTION THAT APPELLANT DID NOT
     PRESERVE ERROR RE: SEVERANCE………………………….10

VIII. REPLY TO ASSERTION THAT SEVERANCE WAS PROPER
      AND HARMLESS………………………………………………….10

IX.    CONCLUSION AND PRAYER……………………………………16

CERTIFICATE OF COMPLIANCE & CERTIFICATE OF SERVICE….18

                           APPENDIX

Bankruptcy Code 11 US Code 108 ………………………..……………..6

Bankruptcy Petition ……………………………………………….21, 22, 23

Order of Lift Of Stay……………………………………………………....24




                               2
                          INDEX OF AUTHORITIES

Cases

Butler v. Butler 577 SW2d 581 (Tex. Civ. App-Texarkana 1978, writ
dismissed 1979)…………………………………………………………..9

Continental Carbon Co. v. Sea-Land Services, Inc.., 27 SW3d 194
(Tex. App. Dallas 2000, rev. denied)…………………………………8, 9

Craddock v. Sunshine Bus Lines, 133 SW2d 124 (Tex. 1939)………..5, 9

Director State Employees, Workers’ Compensation Div. v. Evans,
889 SW2d 266 (Tex. 1994)……………………………………………….9

In Re J.P. 196 SW3d 434 (Tex. App.-Dallas 2006)……………………...7

Guaranty Federal Savings Bank v. Horseshoe Operating Co., 793 SW2d
652 (Tex. 1990). ……………………………………………………..…11

Kao Holdings, Lt. v. Young, 214 SW3d 504 (Tex. App. Hou.
[14th Dist. 2006]……………………………………………………..….10

Kansas University Endowment Association v. King, 350 SW2d 11
(Tex. 1961)………………………………………………………...…13, 14

Landers v. East Tex. Salt Water Disposal Co., 248 S.W.2d 731
(Tex. 1952)…………………………………………………………...11, 13

LBL Oil Co. v. Int’l Power Serv., Inc., 777 S.W. 2d 390 (Tex. 1989).7, 8, 9

Lopez v. Lopez 757 SW2d 721 (Tex. 1998)……………………………….10

Mayfield v. Geichert, 437 SW2d 638 (Tex. Civ. App.-Dallas, 1979,
no writ)……………………………………………………………………..15

McRoberts v. Tesoro S & L Association, 781 SW2d 705 (Tex. App-
San Antonio 1989, writ denied)…………………………………………..11



                                         3
Moore v. Mathis, 369 SW2d 450 (Tex. Civ. App.- Eastland 1963,
writ ref’d. n.r.e.)…… …………………………………….…………….….15

Morgan v. Compugraphic Corp. 675 SW2d 729 (Tex. 1984……12, 13, 16

Morrow v. H.E.B. Inc., 714 SW2d 297 (Tex.1986)………………………12

Peralta Heights Med Ctr., Inc., 485 US 80 (1988) …………………..7, 8 9

State ex rel. Protection of Hoist, 2010 WL 457448 (Tx. App.-
Tyler 2010)………………………………………………………………..10

Stuart v. Whitworth, 453 SW2d 875 (Tex. Civ. App. – Houston [1st Dist.]
1970, writ dism’d)…………………………………………………………13

Swafford v. Holman, 446 SW2d 75 (Tex. App.-Dallas 1969,
writ ref’d n.r.e.)…………………………………………………………….15

Texas Sting v. R.B. Foods, Inc. 82 SW3d 644 (Tex. App.- San Antonio,
2002, rev. denied)………………………………………………..…….10, 12

Tunstill v. Scott, 160 SW2d 65 (Tex. 1942)…………………………..….13

Wilson v. Wilson, 132 S.W. 3d 533, (Tex. App.-Hou. [1st dist.] 2004,
rev. denied)………………………………………………………………….7

Womack v. Berry, 291 SW2d 677 (Tex. 1956). ………………………11, 14

RULES

Bankruptcy Code, 11 U.S. Code §108 (c)…………………………………..6




                                      4
                             I.
      OBJECTION TO APPELLEE’S STATEMENT OF FACTS AND
                      INTRODUCTION

      Appellant objects to the assertion in Appellee’s Brief (at page xi at the

bottom of the page) that the original cause has been tried with result of “Final

Judgment”, referencing Appellee’s Appendix 1, when in fact such judgment is not

final as pointed out in Paragraph IV below.

                            II.
         APPELLANT’S WAIVER OF SPECIAL APPEARANCE ERROR

      After consideration of Appellee’s Brief, and further research, Appellant

concedes that Appellant’s Special Appearance was waived.

                                III.
                         SUMMARY OF ARGUMENT

      For reply, Appellant emphasizes that Special Appearance was defective,

however it was an appearance. Thus the Default Judgment without notice to him

was error. After appearance, as a matter of due process, he was entitled to notice.

In addition, Appellant properly filed motion for new trial raising the required

Craddock issues.    There were no affidavits or evidence offered to controvert

affidavit and as a matter of law the Craddock elements were presumed and new

trial should have been granted.

      Severance of the erroneous Default Judgment is clearly error in that the

claim of which the Default Judgment was granted is completely interwoven with


                                         5
remaining causes against other Defendants, the liability as to each of the three

Defendants are identical, the damages are identical and there were no judicial

economy to be served or delay to be avoided.

                                  IV.
                 REPLY TO ASSERTION THIS APPEAL IS MOOT

        Appellee asserts that this appeal is moot because a final judgment has been

entered in the remaining portion of the severed cause. This assertion is simply

false. The judgment against the remaining Defendants is not final. The judgment

against the remaining Defendants was signed June 30, 20151. Within 30 days

thereof, on July 23, 2015 the Defendant E. Peter Healey filed bankruptcy in Cause

No. 15-60471 in the United States Bankruptcy Court for the Eastern District of

Texas2. The Bankruptcy Code, 11 U.S. Code §108 (c)3 specifically provides:

        (c) Except as provided in section 524 of this title, if applicable
        nonbankruptcy law, an order entered in a nonbankruptcy proceeding,
        or an agreement fixes a period for commencing or continuing a civil
        action in a court other than a bankruptcy court on a claim against the
        debtor, or against an individual with respect to which such individual
        is protected under section 1201 or 1301 of this title, and such period
        has not expired before the date of the filing of the petition, then such
        period does not expires until the later of –

        (1)   the end of such period, including any suspension of such period
           occurring on or after the commencement of the case; or
        (2) 30 days after notice of the termination or expiration of the stay
           under section 362, 922, 1201 or 1301 of this title, as the case may
           be, with respect to such claim.
1
  Appellant’s Appendix 1
2
  Bankruptcy Petition Supplemental C.R., Reply Appendix page 21, Supplemental C.R. page _____
3
  Reply Appendix page 20, Supplemental C.R. page _______

                                                     6
Relief from Stay was granted (on November 16, 2015) for appeal4 with
specific provision for pursuing appeal of the “Final Judgment”5. Motion for
new trial will be filed within the 30 days allowed and an appeal pursued if
necessary, and a new trial will be granted.

        Thus quite clearly, the judgment against the remaining Defendants is not

final and this appeal is not moot.

                              V.
    REPLY TO ASSERTION THAT DEFAULT JUDGMENT WAS PROPER

        The Trial Court’s granting of default judgment6 against Appellee without

notice was error. Even if Appellee’s Special Appearance was defective, waived or

denied it was an appearance7. It is fundamental that after an appearance, a party is

entitled to notice as a matter of due process. Wilson v. Wilson 132 SW3d 533

(Tex.App.-Hou. [1st Dist.] 2004 rehearing denied), citing Peralta Heights Med.

Ctr., Inc. 485 U.S. 80 (1988) and LBL Oil Co., v. Int’l Power Serv. Inc. 777 SW2d

390 (Tex. 1989). This principal is conceded and urged by Appellee in his brief on

page 15 under the heading “The Default Judgment Was proper Because Mark’s

Improper Filed Special Appearance Was At Most A General Appearance

Without An Answer.”

        Notice to a Defendant who has appeared includes notice of default. In Re

J.P., 196 SW3d 434 (Tex. App.-Dallas 2006). In case of LBL Oil Co., supra a post


4
  Reply Appendix page 24, Supplemental C.R. Reply page _____
5
  Appellant’s Appendix 1
6
  Default Judgment, C.R. page 386
7
  Special Appearance, C.R. page 384

                                                     7
appearance default judgment was entered without notice to the Defendant. The

Defendant had filed a Motion To Dismiss alleging no jurisdiction and a mistake as

to its identity as the proper party. Motion for Default Judgment was filed without

certificate of service on LBL and default judgment was granted. The Supreme

Court specifically pointed out that the default without notice was in conflict with

Peralta, supra. The Peralta case specifically holds that after appearance, notice

was required as a matter of due process.

        In the case at bar, Appellant’s Special Appearance8 was filed prior to the

Default Judgment9. Another Defendant, E. Peter Healey, specifically objected to

the Motion For Default and hearing was set on that motion10. However, Default

was granted by trial court prior to and without such hearing11.

        In case at bar, motion for default is without a certificate of service on

Appellant and the record clearly shows that there was no notice to Appellant 12.

The fact of no notice to Appellant is not in dispute. Yet, Appellee asserts on page

13 of his brief “Defendant received all notice to which he was entitled when he

was served with process”. For this absurd assertion, Appellee cites Continental

Carbon Co. v. Sea-Land Services, Inc.., 27 SW3d 194 (Tex. App. Dallas 2000, rev.

8
  Special Appearance filed November 20, 2014, C.R. page 384
9
  Default Judgment signed November 25, 2014, C.R. page 386
10
   Response to Motion for Default, C.R. page 379 and Docket Sheet, Appellant’s Appendix page 40.
11
   Plaintiff’s Motion For Default Judgment against Mark J. Healey, CR page 374 at Page 376 and RR page 6, line 23
to page 7 line 5.
12
   Plaintiff’s Motion For Default Judgment against Mark J. Healey, CR page 374 at Page 376 and RR page 6, line 23
to page 7 line 5.


                                                       8
denied). However, a reading of the Continental Carbon case clearly discloses that

there was no appearance by the Defendant, rather the Defendant failed to answer or

appear. In its decision the Court specifically cited Peralta, supra and noticed the

holding of the LBL Oil case that “notice is required regarding a hearing on post-

appearance motion for default judgment”.

          Appellant also cites Butler v. Butler 577 SW2d 581 (Tex. Civ. App-

Texarkana 1978, writ dismissed 1979). However in that case, the issue of notice

was not raised and apparently not asserted as error. It should also be noted that the

holding in the Butler case has not been cited as authority. From the facts recited,

apparently the default was entered immediately after hearing which resulted in

overruling the challenge to jurisdiction. It appears that the Defendant was present

for the default.

                                    VI.
                         REPLY TO CRADDOCK ISSUES

          The failure to set aside the default judgment was further error because

Appellant properly raised the issues set forth in Craddock v. Sunshine Bus Lines,

133 SW2d 124 (Tex. 1939)13.

          There was no reply or controverting affidavit to Appellant’s Motion For

New Trial raising fact issues. Thus uncontroverted, Appellant’s affidavit is taken

as true. Director State Employees, Workers’ Compensation Div. v. Evans, 889

13
     CR page 390

                                          9
SW2d 266 (Tex. 1994). Further, the records show no controverting evidence14.

State ex rel. Protection of Hoist, 2010 WL 457448 (Tx. App.-Tyler 2010).

Fundamentally, without required notice, there cannot be conscious indifference.

Texas Sting v. R.B. Foods, Inc. 82 SW3d 644 (Tex. App.- San Antonio, 2002, rev.

denied), citing Lopez v. Lopez 757 SW2d 721 (Tex. 1998).

        As a further matter, the default judgment was granted without hearing on the

cause of action for money had and received15. The damages were not liquidated

and there was no hearing or evidence offered. Damages are not liquidated unless

proved by a written instrument such that the amount of damages can be accurately

calculated by the trial court Kao Holdings, Lt. v. Young, 214 SW3d 504 (Tex. App.

Hou. [14th Dist. 2006].

                             VII.
     REPLY TO ASSERTION THAT APPELLANT DID NOT PRESERVE
                    ERROR RE: SEVERANCE

        Appellee asserts that Appellant did not object to the severance16. This

statement is simply false. Defendant, E. Peter Healey by written motion objected

to the severance and Appellant joined in such motion17.




14
   R.R. Hearing on Motion For New Trial page 4 to 23, Appendix to Appellant’s Brief page 36
15
   id.
16
   Order of Severance, C.R. Page 434
17
   C.R. page 379 and R.R. Hearing on Motion For New Trial, Appendix to Appellant’s Brief page 36, Page 5 line 13
& page 24 to 27

                                                      10
                           VIII.
    REPLY TO ASSERTION THAT SEVERANCE WAS PROPER AND
                        HARMLESS

      Clearly, a trial court has broad discretion in a matter of severance. Womack

v. Berry, 291 SW2d 677 (Tex. 1956). However, the Court in Womack pointed out:

            But the Court is not vested with unlimited discretion, and is
      required to exercise a sound and legal discretion within limits created
      by the circumstances of the particular case. The express purpose of
      the rule is to further convenience and avoid prejudice, and thus
      promote the ends of justice.

It is likewise clearly established that claims are properly severable if (1) the

controversy involves more than one cause of action, (2) the severed claims is one

that would be the proper subject of the lawsuit if independently asserted, and (3)

the severed claim is not so interwoven with any remaining action that they involve

the same facts and issues.      Guaranty Federal Savings Bank v. Horseshoe

Operating Co., 793 SW2d 652 (Tex. 1990). Severance is not permitted, when

injuries are indivisible. Landers v. East Tex. Saltwater Disposal Co., 248 SW2d,

731 (Tex. 1952). Likewise, the Court should not severe the cause of action against

several Defendants for the same liability, such as severance of the cause of action

against the maker and guarantor of a note.         McRoberts v. Tesoro S & L

Association, 781 SW2d 705 (Tex. App-San Antonio 1989, writ denied).

      Clearly, the cause of action asserted against Appellant for money had and

received, allegedly held in a joint bank account by three Defendants which


                                        11
included Appellant18. The default judgment was only on this claim19. The injury

claimed is clearly indivisible as to the three Defendants. The liability was the same

as to each Defendant. The damage is indivisible. Obviously, the facts were

completely interwoven. The severance was an abuse of discretion as a failure to

follow established rules of law. Texas Sting, Ltd. v. R.B. Foods, Inc., 82 SW3rd

644 (Tex. App.-San Antonio; Morrow v. H.E.B. Inc., 714 SW2d 297 (Tex.1986).

           To avoid the clear president Appellant cites Morgan v. Compugraphic

Corp., 675 SW2d 729 (Tex. 1984). To appreciate and properly apply the Morgan

case, the opinion along with the Court’s citation to authority must be closely read.

           In the Morgan case, the Plaintiff asserted injuries from exposure to

chemicals leaking from a type setting machine. The leaks in the type setter were

discovered and repaired, but the opinion does not disclose as to whether the repair

was by the manufacturer or installer. The manufacturer answered and the installer

(Compugraphic) did not. Default judgment and severance were granted.

           Most significantly, the Court in Morgan held:

           Even if the trial court’s severance were error, it would not be error
           that “was reasonably calculated to cause and probably did cause the
           rendition of an improper judgment in the case”.

It is thus to be assumed that there were provisions or circumstances that prevented

double recovery or other harm. In the case at bar, there is no provision to prevent

18
     Plaintiff’s 1st Amended Petition, Paragraph 20, C.R. page 247
19
     Default Judgment, C.R. page 386

                                                           12
double recovery and double recovery in fact results20. There is no provision for

credit to Appellant for sums recovered from other Defendants on the same liability

in either judgment.

           As support for the proposition of severance for venue purposes, the Morgan

Court cited Tunstill v. Scott, 160 SW2d 65 (Tex. 1942) and Stuart v. Whitworth,

453 SW2d 875 (Tex. Civ. App. – Houston [1st Dist.] 1970, writ dism’d). The

Tunstill case involved land but the Court found that the suit was primarily for the

recovery of damages and the transfer to the county of the location of the land was

error because there were no pleading to support such relief. In the Stuart case, the

Court noted that the land was not an issue, as all Defendants had filed disclaimers,

and again the pleadings did not raise appropriate issues.

           For the proposition that given an individual injury on acts of two Defendants

could proceed to judgment against any one Defendant separately or against all, the

Morgan Court cites Landers v. East Tex. Saltwater Disposal Co., 248 SW2d 731

(Tex. 1952) and Kansas University Endowment Association v. King, 350 SW2d 11

(Tex. 1961). In the Landers case, the primary focus was the reversal of prior

decisions holding that suit against multiple Defendants could not be maintained

separately when each acted independently, without concert of action and the fact

that it was difficult to attribute to damages to each Defendant individually was not


20
     Default Judgment, C.R. page 386 and Final Judgment Appellee Appendix 1

                                                       13
controlling. The case involved a spill of saltwater into a pond from two separate

pipelines with damages inseparable. However, the Trial Court’s severance of the

two Defendants was reversed and remanded. In the Kansas case, primary focus of

the Court was the distinction between separate trial and severance. The case

involved a subdivision of land which had not been staked on the ground with a

result that there was not sufficient area for all lots designated on paper. The Trial

Court severed issues of the boundary from issues of specific lot locations. The

Supreme Court reversed the severance stating “The Order of Severance fragments

the case instead of spilling it along proper lines of cleavage” and instructed the trial

court to adjudicate all claims, “many of which are interwoven and dependent on

each other”. The Court also reiterated the principal that severance is proper only

where two or more separate distinct causes of action are asserted.

      For the principal of discretion in the trial court in severance, the Court

decided in Womack v. Berry 291 SW2d 677 (Tex. 1956). This case involves

separate trial not severance. As pointed out in the Kansas University case, supra

severance is absolutely a separate cause with a final judgment while separate trials

result in only one final judgment, thus avoiding inconsistencies and double

recovery. The Womack case as pointed, out above, also clearly makes the point

that the discretion of the trial court is subject to sound, legal reasoning, based on

established principals.


                                          14
      In support of severance for judicial economy, the Court cited Mayfield v.

Geichert, 437 SW2d 638 (Tex. Civ. App.-Dallas, 1979, no writ); Swafford v.

Holman, 446 SW2d 75 (Tex. App.-Dallas 1969, writ ref’d n.r.e.) and Moore v.

Mathis, 369 SW2d 450 (Tex. Civ. App.- Eastland 1963, writ ref’d, n.r.e.). In the

Mayfield case, defamation was asserted by one physician against two others and

Methodist Hospital. After jury trial, the Court severed and granted judgment jnov,

severed one Defendant physician from the cause against the other and the hospital,

declared a mistrial as to the severed physician and granted judgment in favor of the

remaining physician and the hospital.     The Supreme Court observed that the

hospital and the physician dismissed from liability and were found by the jury to

have qualified privilege. Quite obviously, the Supreme Court found no harm in the

severance. In the Swafford case, suit was brought against the finance company and

its attorneys. The Trial Court severed the suit against the attorneys from the suit

against the finance company and summary judgment was granted in favor of the

attorneys. It is obvious that the Appellate Court found no harm in the severance

given the summary judgment and the failure to properly preserve and present

issues regarding the summary judgment. In the Moore, the case involved default

judgment and severance, sought to be set aside or defeated by injunction against

enforcement and bill of review. The Court noted:

      Severance of the cause of action against Moore from that against the
      remaining Defendants was within the power and jurisdiction of the
                                        15
        Court. Even if such action was erroneous, the judgment was final and
        appealable.

The court went on to point out that the bill of review was not properly supported.

        In Morgan as cited by Appellee, the cases as cited by Court simply do not

conflict with the fundamental rules regarding severance but are in support of the

established principals. As pointed out the Morgan Court stated:

        Even if the trial court’s severance were error, it would not be error
        that “was reasonably calculated to cause and probably did cause the
        rendition of an improper judgment in the case”.

        In the case before the Court there was no advantage to be served by the

severance and considerable harm. Severance is inappropriate because the facts are

interwoven and inappropriate because the asserted liability is the same and the

damage is indivisible21. Double recovery fact resulted in that the default judgment

against Appellant has no provision for offset or credit for judgment or recovery

from the remaining Defendants22. There was no judicial economy or convenience

served or delays to be avoided as the matter was tried the following June23. The

default entry could easily have been left interlocutory with only one final judgment

entered. Severance served no purpose.




21
   The Default Judgment (C.R. page 386) was based upon the claim of money had and received which was asserted
against Appellant and other Defendants for money held in an account which any two of Appellants or the other
Defendants had signature authority. Plaintiff’s First Amended Petition, Paragraph 20, C.R. page 247, and see
Appellant’s Brief, page xi.
22
   Default Judgment C.R. page 386 and Final Judgment Appellee Appendix 1
23
   id.

                                                      16
                                 IX.
                         CONCLUSION & PRAYER

      WHEREFORE, because the granting of the Default Judgment was error and

the Severance of the Default Judgment was in error, this cause should be reversed

and remanded for a new trial and such other and further appropriate relief should

be granted.

                               Respectfully submitted,

                               STARK & GROOM, LLP

                               /s/ Steve Stark
                               Steve Stark
                               State Bar No. 19066000
                               110 East Corsicana Street
                               Athens, Texas 75751
                               Phone: (903) 675-5691
                               Fax:     (903) 675-6454
                               Email: stevestark@starkandgroom.com
                               Attorney for Appellant




                                       17
                    CERTIFICATE OF COMPLIANCE and
                       CERTIFCATE OF SERVICE

       This certifies that the undersigned has reviewed this Reply Brief of
Appellant and concluded that every factual statement in it is supported by
competent evidence, and that the documents included in the Appellant’s Appendix
are true and correct copies of the original papers and that this document is in Times
New Roman 14, contains 3490 words, and Appellant’s Brief contained 1,982
words, as indicated by the word count function of the computer program used to
prepare it, excluding the caption, table of contents, index of authorities, index of
appendix, signature, proof of service, certification, certificate of compliance, and
appendix and I, the undersigned attorney, hereby certify that a true and correct
copy of the foregoing Reply Brief of Appellant and corresponding Appendix was
duly served by email this the 25th day of November, 2015 as follows:


Jennifer Lovelace               Via email: jlovelace@lovelacekillen.com
Koy R. Killen                   Via email:kkillen@lovelacekillen.com
Lovelace Killen P.L.L.C.
104 South Main Street
Burleson, Texas 76028

                                              /s/ Steve Stark_____________
                                              Steve Stark
                                              Attorney for Appellant




                                         18
