REVERSE and REMAI1); Opinion Filed January 23, 2013.




                                                                      In The
                                              Itiitrt Lif \ppra1
                                      Fifth ithitrirt uf xaa at a11ai
                                                           No. 05-1 1-01440-CV


                                         L’ARTE DE LA MODE, INC., Appellant

                                                                         V.

                                      THE NEIMAN MARCUS GROUP, Appellee


                                         On Appeal from the 193rd District Court
                                                   Dallas County, Texas
                                            Trial Court Cause No. 09-05138-L


                                                                OPINION
                                      Before Justices Lang-Miers, Myers, and Richter
                                                                             1
                                                 Opinion By Justice Myers

           L’Arte de Ia Mode, Inc.
                              2 appeals the post-answer default judgment in favor of The Neiman

Marcus Group. L’Arte brings two issues asserting (1) the trial court erred by overruling L’Arte’s

motion for new trial, and (2) the evidence is insufficient to support the award of exemplary damages

against L’Arte. We reverse the trial court’s judgment and remand the cause for further proceedings.




      The Honorable Main Richter, Justice, Court of Appeals, Fifth District of Texas         Dallas, Retired. sitting by assignment.

     2
       The first word of appellant’s name appears throughout the record as both “L’AiIe” and “L’Art” The style of the case in the trial court
identified appellant as “L’Arte.” and appellant identifies itself in its brief as “L’Artc” Accordingly, we refer to appellant as ‘L’Arte” in this
opinion.
                                        BACKGROUND

       Wells Fargo l’rade Capital Services, Inc. loaned money to l.’Arte, and L’Arte transferred its

accounts receivable to Wells Fargo under a factoring agreement. Wells Fargo handled collections

on the accounts receivable and credited L’Arte’s customers’ payments on the receivables to L’Arte’s

loan account.

       In 2007. Neiman Marcus placed several purchase orders with L’Arte totaling over $150,000.

On December 12. 2007. Neiman Marcus sent L’Arte a check for $1 55.644.48. Neiman Marcus

canceled the check the next day and then paid the same amount to L’Arte through Wells Fargo in

smaller transactions. On March 3, 2008, Neiman Marcus erroneously paid L’Arte through Wells

Fargo an additional $155,644.48. Neiman Marcus discovered the mistake on March 25,2008, but

the check had already been cashed and had cleared the bank. Neiman Marcus demanded L’Arte

return the overpayment, and L’Arte told Neiman Marcus to work with Wells Fargo on the

overpayment issue. In August 2008, Wells Fargo told Neiman Marcus it had credited L’Arte’s

account for the $1 55.644.48. and Wells Fargo sent Neiman Marcus documents verifying the credit

to the account. Neiman Marcus forwarded this information to L.’Arte and demanded a check for the

overpayment Neiman Marcus followed up with L’Arte several times in September and October

2008, but L’Arte responded that it had no record of the original canceled check. L’Arte again told

Neiman Marcus to work with Wells Fargo to determine the whereabouts ofthe money.

       Neiman Marcus sued L.’Arte on April 29. 2009 for money had and received seeking actual

damages for the amount ofthe overpayment, $155,644.48. Neiman Marcus also sought exemplary

damages, alleging L’Arte acted maliciously by receiving and knowingly keeping the funds. L’Arte

filed a third party petition alleging Wells Fargo was liable to Neiman Marcus for the $155,644.48

because Wells Fargo received, held, and retained the funds for which Neiman Marcus was suing



                                               —2—
L’Arte. Wells Fargo filed a special appearance, which the trial court granted.’

          The case was set for trial on August 2. 2011. On June 23, 2011. L’Arte’s attorneys filed a

motion to withdraw from representing L’Arte because L’Arte had filled to make any payment or

submit a payment plan bswith respect to the very large amount owed.. for attorney’s fees.” The .




attorneys also requcsted the trial court continue the case until October 25,2011 to allow L’Arte time

to hire new counsel and prepare for trial. On July 20,2011, the trial court granted the attorneys’

motion to withdraw but denied the request for a continuance, stating, “the Court finds that any

prejudice to the Defendant [L’Arte] as a result of its attorney withdrawing at this stage in the

litigation is a result ol’ Defendant’s own conduct.”

          The case was not reached for trial on August 2,2011; however, pursuant to the court’s local

rule, the case setting applied to the entire week. On August 5, 2011, the trial court called the case

for trial, and L’Arte did not appear. Neiman Marcus filed a motion for default judgment and

presented evidence on its claim, actual damages, and costs. The court granted Neiman Marcus’s

motion for default judgment and awarded Neiman Marcus actual damages of $155,644.48 plus

prejudgment interest, exemplary damages of $311,288.96, costs, and postjudgment interest

          L’Arte timely filed a motion for new trial, asserting its failure to appear at trial was due to

accident or mistake from the withdrawal of its attorneys, of which it asserted it had no notice, and

was not intentional or the result ofconscious indifference. The trial court denied the motion for new

trial by written order.

                                           MOTION FOR NEW TRIAL

          In its fust issue, L’Arte contends the trial court erred by denying L’Arte’s motion for new



    seeL An de Ia Mode, Inc. v. Wells Fargo Trade Capital Se’n. Inc.. No. 05-10.00742-CV. 2011 WI.. 1493988 (Ta App.—DalIas Apr.
    3
20.2011, no pet) (man. op.; (affirming trial couit’s judgment granting Wells Fargo’s special appearance).




                                                              -3--
trial. When a trial court grants a default judgment, and the defendant moves for a new trial, the

default judgment should be set aside and a new trial granted if the defendant establishes three

elements from Craddock v. 5inshine Bus Line. (I) the failure to appear was not intentional or the

result of conscious indifference, but was the result ofan accident or mistake, (2) the motion for new

trial sets up a meritorious defense, and (3) granting the motion will occasion no delay or otherwise

injure the plaintiff. Dolgencoip of Tex,, Inc. v, Lerma, 288 S.W.3d 922, 925 (Tex. 2009) (citing

&addockv. SunshineBusLines, inc., 133 S.W.2d 124, 126(Tex. 1939)). Wereviewatrialcourt’s

refusal to grant a motion for new trial for abuse of discretion. Id. at 926. When a defaulting party

moving for new trial meets all three elements of the Craddock test, the trial court abuses its

discretion if it fails to grant a new trial. Id.

                          Whether the Failure to Appear was Intentional
                             or the Result of Conscious Indifference

        L’Arte asserts in its brief that its failure to appear at trial was neither intentional nor the result

of conscious indifference because L’Arte did not receive notice that the court had set the case for

trial on August 2, 2011, that its counsel had filed a motion to withdraw, or that the court had granted

the motion to withdraw. At oral argument, L’Arte’s counsel conceded that L’Arte had received

notice of the trial setting, but he stated that L’Arte was relying on counsel appearing on its behalf at

trial. L’Arte argues that because it had no notice its attorneys had withdrawn from representing it,

its failure to appear at trial was not intentional or the result of conscious indifference.

        Rule 21a of the Rules of Civil Procedure provides that all notices, other than citation, may

be served by delivering a copy to the party either in person, by agent, or by certified or registered

mail at the party’s last known address. TEx. R. Civ. P. 21a. Rule 21a creates a presumption that a

mailed letter, properly addressed and with postage paid, is received by the addressee. Cliff v.
fluggins, 724 SW.2d 778, 780 (Tex. 1987).          In the absence of evidence to the contrary, the

presumption has the force of a rule oC law, However, this presumption is not evidence, and it

vanishes when evidence is introduced that the notice was not received. Id.

        L’Arte asserts it did not receive notice of its attorneys’ motion to withdraw or of the order

granting the motion to withdraw. The record shows L’Arte’s attorneys sent notice of the motion to

withdraw to L’Arte at its last known address by certified mail. The letter stated the attorneys would

send L’Arte notice of the date of the hearing on the   motion to   withdraw in a separate letter. The

attorneys sent L’Arte notice of the date and time for the hearing on the motion to withdraw via

regular first class mail. Thus, the presumption of service under rule 21a arose for the notice of the

motion to withdraw, but no presumption of service arose for the notice of the date and time of the

hearing because it was sent by regular first class mail, not by certified or registered mail. See

Ashworth v. Brzoska, 274 S.W.3d 324, 331 (Tex. App—-Houston [14th Dist.] 2008, no pet.).

        L’Arte’s vice president, Elizabeth Prozer, testified in her affidavit that she was L’Arte’s

primary contact with the attorneys in this case. She stated she never received a copy of the motion

to withdraw from the attorneys, nor did she receive from anyone any notice or order allowing

L’Arte’s attorneys to withdraw. She also stated she reviewed L’Arte’s business records and did not

find the motion to withdraw, a copy of the order granting the motion to withdraw, “or anything to

indicate that such motion or order was received by L’Art Dc La Mode, Inc.” Neiman Marcus did

not present any evidence that L’Arte actually received notice of either the motion to withdraw or of

the order granting the motion to withdraw. Prozer’s affidavit rebuts the presumption of notice of the

motion to withdraw.

       Generally, a corporation, such as L’Arte, can appear in court only through a licensed attorney.

See Kunstoplast of Am., inc. v.Formosa Plastics Corp., USA, 937 S.W.2d 455,456 (Tex. 1996) (per
curiam). The evidence before the trial court showed L’Arte was not aware on Auuust 2 that it was

no longer represented by counsel, Even if a non-attorney corporate representative for L’Arte had

been present for the trial setting, the representative’s presence would not have constituted an

“appearance” at trial by L’Arte. See Custom-Crete, Inc. v. K-Bar Servs., Inc., $2 SW. 3d 655, 659

(Tex. App.—San Antonio 2002, no pet.). The representative could not have objected to Neiman

Marcus’s evidence, cross-examined Neiman Marcus’s witnesses, presented a case for L’Arte, or

presented argument to the trier of fact. See id. Therefore, even if L’Arte had sent a representative

to the trial setting, because L’Arte had no attorneys to represent it, the result would have been the

same.

        Because the uncontroverted evidence shows L’Arte was unaware on the day of the trial

setting that its attorneys had moved to withdraw and had been permitted to withdraw by the trial

court, the evidence shows L’Arte was unaware it lacked representation on the day of the trial setting,

and its failure to appear at trial was not intentional or the result of conscious indifference. We

conclude L’Arte met the first element of c’raddock.

                                       Meritorious Defense

        The second element of Craddock requires the defendant to set up a meritorious defense. A

defendant does so by alleging facts that would in law constitute a defense, supporting the allegations

by affidavits or other evidence providing prima facie proof that the defendant has such a defense.

See Dolgencorp, 288 S.W.3d at 92$. A meritorious defense is one that would cause, if true, a

different result on retrial. Jaco v. Rivera, 278 S.W.3d 876, $73 (Tex. App—Houston [14th Dist.]

2009, no pet.). Once the defendant has met these requirements, controverting evidence offered by

the plaintiff should not be considered. Dolgencorp, 28$ S.W.3d at 928.

        To prove a claim for money had and received, a plaintiff must show that a defendant holds
money which in equity and good       conscience   belongs to the plaintiff “A cause of action   for   money

had and received is not premised on wrongdoing, but looks only to the           justice of   the case and

inquires whether the defendant has received money which rightfully belongs to another.” AlGA Ins.

Co.   v.   Charles I?. Chesnutt, P.C., 358 S.W.3d 808, 813 (Tex. App—Dallas 2012, no pet.) (quoting

Everitt     ‘.   TK-Taito, L.L.C., 178 S.W.3d 844, 860 (Tex. App.—Fort Worth 2005, no pet,)), “A

recovery under assumpsit for money had and received does not ‘depend on the parties’ agreement

or intent but rather the law’s presumption of a promise of compensation if one receiving another’s

money would thereby be unjustly enriched.” Id. (quoting Amoco Prod. GA. v. Smith, 946 S.W.2d

162, 164 (Tex. App.——El Paso 1997, no writ)).

            L’Arte’s alleged defense is that Wells Fargo, not L’Arte, holds Neiman Marcus’s money.

Prozer stated in her affidavit that Wells Fargo had been L’Arte’s factor for nineteen years. Under

the factoring agreement with Wells Fargo, L’Arte would bill the customer for the merchandise and

send the invoice to Wells Fargo for collection of the payment. Wells Fargo would advance L’Arte

the amount of the invoice, making a debit to L’Arte’s account. When the customer paid the invoice

by making the payment to Wells Fargo directly, Wells Fargo would credit L’Arte’s account by the

amount of the payment. When a customer overpaid, Wells Fargo handled the customer’s inquiries

about the overpayment. When Wells Fargo determined there was an overpayment, it would return

the excess funds to the customer and debit L’Arte’s account by that amount. Prozer stated that the

usual and customary practice in the garment industry was for the customer to address matters of

overpayment with the factor directly. L’Arte had no knowledge of the status of the collection of its

accounts receivable.

           Prozer stated that L’Arte never received the funds Neiman Marcus mistakenly sent to Wells

Fargo. “In fact, L’Art never received those funds. [Wells Fargo] never sent those funds to L’Art.




                                                    —7—
L’Art has never exercised possession, custody or control over those funds. L’Art has never received

any benefit or enrichment from those funds.” Prozer also stated that L’Arte played no part in cashing

the check and that no one at L’Arte knew Wells Fargo had received and cashed the cheek. Prozer

also stated that even if Wells Fargo had credited the overpayment to its account, Wells Fargo later

debited L’Arte’s account by the amount of the overpayment. “Therefore, if anyone holds (Neiman

Marcus’s] mistakenly paid funds and has been benefit[tjing from the retention of those funds, it is

[Wells Fargo] and [Wells Fargo] should return those funds.”

        This evidence sets up the defense that L’Arte did not receive, hold, or benefit from the funds

Neiman Marcus claims, which refutes an element of Neiman Marcus’s cause of action for money

had and received, This defense, if true, could cause a different result on retrial. Accordingly, we

conclude L’Arte has met the second element of the Craddock test.

                                          Injury to Plaintiff

        The third element of the Craddock test is that the motion for new trial be filed at a time when

the granting thereof will occasion no delay or otherwise work an injury to the plaintiff. Director,

State Employees Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 270 (Tex. 1994); Craddock, 133

S.W.2d at 126. The goal is to avoid undue delay or injury to the plaintiff by granting the motion that

would disadvantage the plaintiff in presenting the merits of its case, such as a loss of witnesses or

evidence. Dolgencorp, 288 S.W.3d at 929; Evans, 889 S.W.2d at 270. Once a defendant has

alleged that granting a new trial will not injure the plaintiff, the burden of proof of injury shifts to

the plaintiff. Dolgencorp, 288 S.W.3d at 929 (quoting Evans, 889 S.W.2d at 270).

       In this case, L’Arte alleged in its motion for new trial that it agreed to pay Neiman Marcus’s

reasonable costs and expenses incurred in obtaining the default judgment and that it “is prepared to

proceed to trial before a jury.” Prozer stated in her affidavit that L’Arte agreed to pay Neiman
Marcus’s reasonable costs and expenses in obtaining the default judgment and that L’Arte had

always opposed Neiman Marcuss claim and intended to defend itself against those claims.

        Neiman Marcus aruned to the trial court and asserts on appeal that L’Artes thilure to pay its

previous attorneys “casts serious doubt on LArtc’s willingness-—or ability--- to pay its opponents

costs and attorneys fees.” Neiman Marcus states on appeal that L’Arte has not posted a l)Ofld to

supersede the judument against it, which Neiman Marcus argues casts doubt on L’Arte’s credibility

as to its willingness or ability to reimburse Neiman Marcus’s expenses. Neiman Marcus also asserts

that it “will suffer continued harm if L’Arte is granted a new trial diie to the unlikelihood that its fees

incurred in obtaining the default judgment will ever be recovered.”

        Neiman Marcus’s suspicion that L’Arte ,night he unwilling or unable to pay Neiman

Marcus’s expenses in obtaining the default judgment is not grounds for denying the motion for new

trial. As the supreme court stated in Do/gencoij and      Evans,   all that is necessary to meet the third

clement of Cmadhnk is that the defendant “allege[i that granting a new trial will not injure the

plaintiff.’ Evans, 9 S.W.2d at 27O see Dolgencoep, 288 S.W.3d at 929. Here, L’Arte met this

requirement by stating in the motion for new trial that it would pay Neiman Marcus’s reasonable

costs and expenses in obtaining the defaultjudgment and that it was prepared to proceed to trial. The

burden then shifted to Neiman Marcus to prove injury. Neiman Marcus presented no evidence that

L’Arte lacked the resources or willingness to pay Neiman Marcus’s expenses in obtaining the default

judgment. Nor did it present evidence of any other injury it would suffer from the granting of the

motion for new trial. Neiman Marcus presented no evidence that granting the motion “would

disadvantage the plaintiff in presenting the merits of its case, such as a loss of witnesses or

evidence.” Dolgencoip, 288 S.W.3d at 929; Evans, 889 S.W.2d at 270. Neiman Marcus does not

assert that the trial court lacks authority to provide a remedy should L’Arte fail in its obligation to
pay Neiman Marcus’s reasonable costs and expenses in obtaining the dethult judgment. The trial

court    may not dens’ the motion for new trial based solely on the plaintiff’s unsupported allegations

that the defendant xviii not keep its promise to pay the plaintiff’s   costs   and expenses in obtaining the

default tudunient. We conclude LArtc met the third element of the Craddouk lest.

          Because L’Arte’s motion for new trial satisfied all three elements ol the ( ruddock test, we

conclude the trial cowl abused its discretion by denying L’Arte’s motion for new trial. We sustain

L’Arte’s first issue. Because of our disposition ot the first issue, we do not reach L’Arte’s second

issue.

                                            CONCLUSION

          We reverse the trial court’s judgment. and we remand the cause fbr further proceedings.


                                                                   tj’
                                                                  L6J
                                                         LANA MYLRS
                                                                                  /%-
                                                         .1 U STIC E




11 1440F.P05




                                                  —10—
                                     niirt nf      1p1aI6
                       3FiftI! Thstrtrt rif Jixa at a11a

                                       JUDGMENT
L’ARTE DE LA MODE, INC., Appellant                Appeal from the 193rd District Court of
                                                  Dallas County, Texas. (Tr.Ct.No. 09-05 138-
No, 05-i l-01440-CV          V.                   L).
                                                  Opinion delivered by Justice Myers, Justices
THE NEIMAN MARCUS GROUP, Appellee                 Lang-Miers and Richter participating.


      In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and this cause is REMANDED to the trial court for further proceedings. It is
ORDERED that appellant L’Arte Dc La Mode, Inc. recover its costs of this appeal from appellee
The Neiman Marcus Group.


Judgment entered January 23, 2013.




                                                  LANA v{YERS          7
                                                  JUSTICE
