                                                                                  ACCEPTED
                                                                             03-14-00331-CV
                                                                                    4179766
                                                                   THIRD COURT OF APPEALS
                                                                              AUSTIN, TEXAS
                                                                        2/17/2015 3:12:06 PM
                                                                           JEFFREY D. KYLE
                                                                                      CLERK
                       NO. 03-14-00331-CV

                                                    FILED IN
                                             3rd COURT OF APPEALS
                 IN THE COURT OF APPEALS         AUSTIN, TEXAS
             THIRD JUDICIAL DISTRICT OF TEXAS2/17/2015 3:12:06 PM
                      AUSTIN, TEXAS            JEFFREY D. KYLE
                                                     Clerk



 RANDOLPH A. LOPEZ D/B/A BROWN HAND CENTER AND D/B/A
               BROWN MEDICAL CENTER
                        Appellant

                                 v.

   COX TEXAS NEWSPAPERS, L.P., D/B/A AUSTIN AMERICAN-
                    STATESMAN,
                      Appellee


             REPLY BRIEF OF APPELLANT
   RANDOLPH A. LOPEZ D/B/A BROWN HAND CENTER AND
           D/B/A BROWN MEDICAL CENTER


     On Appeal from County Court at Law No. 2 of Travis County, Texas
                 Trial Court Cause No. C-1-CV-13-002354


        Isaac J. Huron/SBN 24032447/ihuron@lawdcm.com
    Ramon R. Rodriguez/SBN 24088319/rrodriguez@lawdcm.com
                  DAVIS, CEDILLO & MENDOZA, INC.
                   755 E. Mulberry Ave., Suite 500
                     San Antonio, Texas 78212
              Tel:(210) 822-6666/Fax: (210) 822-1151

ATTORNEYS FOR APPELLANT RANDOLPH A. LOPEZ D/B/A BROWN
    HAND CENTER AND D/B/A BROWN MEDICAL CENTER

                ORAL ARGUMENT REQUESTED
                                         TABLE OF CONTENTS
                                                                                                                 Page

TABLE OF CONTENTS ........................................................................................... i

TABLE OF AUTHORITIES .................................................................................... ii

SUMMARY OF THE ARGUMENT ........................................................................1

ARGUMENT AND AUTHORITIES ........................................................................3

    1. Appellee’s Characterization of the Carpenter Court’s Holding is an
       Erroneous Oversimplification..........................................................................3

    2. A Meritorious Defense in a Default Summary Judgment Context Can Be
       Established if the Movant Can Establish That There May Be a Genuine Issue
       of Material Fact................................................................................................5

    3. Appellee’s Mistake Was Genuine, and Not Occassioned by Conscious
       Indifference. .....................................................................................................7

    4. Appellant’s Challenge to the Award of Attorney’s Fees Was Subsumed
       Within Its Challenge to Liability. ....................................................................8

    5. Appellant is Willing to Reimburse the Appellee for its Expenses. .................9

CONCLUSION & PRAYER ...................................................................................10

CERTIFICATE OF COMPLIANCE ........................................................................12

CERTIFICATE OF SERVICE .................................................................................13




                                                            i
                                         TABLE OF AUTHORITIES

Cases                                                                                                                   Page

Angelo v. Champion Restaurant Equipment Co.,
 713 S.W.2d 96 (Tex. 1986) ............................................................................. 9, 10

Arthur Andersen & Co. v. Perry Equip. Corp,
  945 S.W.2d 812, 818 (Tex. 1997) ..........................................................................9

Carpenter v. Cimarron Hydrocarbons Corp.,
 98 S.W.3d 682, 686 (Tex. 2002) ............................................................... 1, 3, 4, 5

Costello v. Johnson,
 680 S.W.2d 529, 531 (Tex. App.—Dallas 1984, writ ref'd n.r.e.) .........................6

Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388 (Comm'n App. 1939)
  ..................................................................................................... 1, 3, 5, 6, 7, 8, 10

Ferguson & Co. v. Roll,
  776 S.W.2d 692, 698 (Tex. App.—Dallas 1989, no writ) .....................................1

Gonzales v. Surplus Ins. Servs.,
 863 S.W.2d 96, 102 (Tex. App.—Beaumont 1993, writ denied) ..........................6

Huffine v. Tomball Hosp. Auth.,
 979 S.W.2d 795, 799 (Tex. App.—Houston [14th Dist.] 1998, no pet.) ...............6

Krchnak v. Fulton,
 759 S.W.2d 524, 528–29 (Tex. App.—Amarillo 1988, writ denied) ....................6

Medina v. W. Waste Indus.,
 959 S.W.2d 328, 330 (Tex. App.—Houston [14th Dist.] 1997, pet. denied)
  ............................................................................................................................6, 7

Mosser v. Plano Three Venture,
893 S.W.2d 8, 12 (Tex. App.—Dallas 1994, no pet. hist.)........................................5




                                                               ii
Pascual Madrigal P.L.L.C. v. Commercial IT Solutions Inc.,
 No. 04-13-00742-CV, 2014 WL 4230174, at *4
 (Tex. App.—San Antonio Aug. 27, 2014, no pet.) ................................................6

Washington v. McMillan, 898 S.W.2d 392, 396
 (Tex. App.—San Antonio 1995, no writ) ...................................................... 5, 6, 7

Weech v. Baptist Health Sys.,
 392 S.W.3d 821, 825 (Tex. App.—San Antonio 2012, no pet.) ............................6




                                                 iii
                          SUMMARY OF THE ARGUMENT

         In contrast to the Appellee’s overly simplified views of this case, this Court

must determine whether to apply the Craddock factors in a situation where the

non-responding did not discover its mistake until after judgment was entered.

         When the Supreme Court of Texas issued its opinion in Craddock, it did so

with the intention of preventing the unduly harsh punishment that results when a

default judgment is entered against a party who, by mistake or accident, failed to

respond. Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex.

2002). Although Craddock has been a part of Texas Jurisprudence since 1939, the

question presented by the facts of this case remains unanswered. Craddock v.

Sunshine Bus Lines, Inc., 134 Tex. 388 (Comm'n App. 1939). Appellee completely

ignores this fact to reach a conclusion that belies the dictates of this State’s highest

court.

         Appellant maintains that this Court ought to apply the modified summary

judgment Craddock standard1 espoused by the appellate courts of this state to

prevent the manifest injustice that occurs when a party’s mistake precludes his

response. Appellant further maintains that its failure to respond was the result of a

1Under the modified Craddock standard, all the non-movant must do is allege that there is a
genuine issue regarding a material fact. Medina, 959 S.W.2d at 331. Under the traditional
Craddock standard, the movant must demonstrate that he has a meritorious defense, which, “if
proved, would cause a different result upon a retrial of the case, although it need not be a totally
opposite result.” Ferguson & Co. v. Roll, 776 S.W.2d 692, 698 (Tex. App.—Dallas 1989, no
writ).


                                                 1
mistake and not conscious indifference as Appellee suggests. The Appellant has

demonstrated not one, but several, meritorious defenses which it may raise if this

matter is remanded to the Trial Court. Lastly, Appellant submits that it is willing to

reimburse the Appellee the cost of obtaining its judgment. Appellant’s reply

address each of the issues raised by Appellee in order.




                                          2
                      ARGUMENT AND AUTHORITIES

1.    APPELLEE’S  CHARACTERIZATION OF THE          CARPENTER COURT’S       HOLDING
      IS AN ERRONEOUS OVERSIMPLIFICATION.

      The Carpenter Court expressly stated that it was not deciding “whether

Craddock should apply when a nonmovant discovers its mistake after the

summary-judgment hearing or rendition of judgment[,]” which is precisely the case

here. Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682, 686 (Tex.

2002). Appellant did not discover that the suggestion of bankruptcy was

inapplicable until almost a month after the judgment was rendered. Under these

circumstances, Craddock is the appropriate standard.

      The Carpenter holding is a narrow one. When a party has an opportunity to

use other procedural remedies to avoid a default judgment, his motion for new trial

should be reviewed under an abuse of discretion standard. Carpenter, 98 S.W.3d at

686. As the Court explained, its purpose in “adopting the Craddock standard was

to alleviate unduly harsh and unjust results at a point in time when the defaulting

party has no other remedy available . . . [b]ut when our rules provide the defaulting

party a remedy, Craddock does not apply.” Id.

      Cimarron, plaintiff in Carpenter, had an opportunity to file to a motion for

leave before summary judgment was entered, and did so. Id. Cimarron failed to file

a response because there was a miscommunication between the partner and the

associate handling the file. Id. Once the partner discovered the failure to file a

                                         3
response, he immediately took steps to remedy the situation by filing a motion for

leave and a motion for continuance. Id. His motion for new trial, then, was not his

only remedy.

       Once the mistake is discovered, it is the subsequently employed procedural

mechanism employed by the mistaken party that is evaluated under the equitable

principles espoused by this State’s highest court over seventy years ago. See

Carpenter, 98 S.W.3d at 686 (holding that a court abuses its discretion if the party

seeking leave can establish “good cause for failing to timely respond by showing

that (1) the failure to respond was not intentional or the result of conscious

indifference, but the result of accident or mistake, and (2) allowing the late

response will occasion no undue delay or otherwise injure the party seeking

summary judgment”).

       Here, the Appellant’s only remedy after he discovered his mistake was to

file a motion for new trial. Appellant’s mistake was twofold: (1) he mistakenly

believed that the suggestion of bankruptcy precluded the need for a response, and

(2) he relied on the discussions between the Court’s Clerk and Mrs. DeLeon to

bolster his erroneous belief2 that there was no need to employ any other procedural

tools to prevent Appellee’s claim from going forward in this dispute. The

Appellant, unlike the plaintiff in Carpenter, failed to file a response because he did

2
 Appellant still contends that the suggestion of bankruptcy was appropriate because Dr. Lopez is
not the contracting party.

                                               4
not think one was necessary. Appellant did not learn that his reliance on the

suggestion of bankruptcy was misplaced until “after the summary-judgment

hearing or rendition of judgment.” Carpenter, 98 S.W.3d at 686. Therefore, the

appropriate standard of review in this case is the Craddock standard.

2.    A  MERITORIOUS DEFENSE IN A DEFAULT SUMMARY JUDGMENT CONTEXT
      CAN BE ESTABLISHED IF THE MOVANT CAN ESTABLISH THAT THERE MAY BE
      A GENUINE ISSUE OF MATERIAL FACT.

      “Although Craddock involved a default judgment taken after a defendant

failed to answer, the same requirements have been applied to motions for new trial

following default summary judgments.” Mosser v. Plano Three Venture, 893

S.W.2d 8, 12 (Tex. App.—Dallas 1994, no pet. hist.). “In the summary judgment

context, however, to set up a meritorious defense means to allege facts and bring

forth summary judgment proof sufficient to raise a material issue of fact.”

Washington v. McMillan, 898 S.W.2d 392, 396 (Tex. App.—San Antonio 1995,

rehearing overruled Apr. 27, 1995). To hold otherwise, would put the Appellant in

a worse position on appeal after summary judgment is entered than the one he was

in before judgment was entered.

      Appellee’s contention that this Court should simply confine its review to its

pleadings turns the purpose of the Craddock standard on its head. If, as Appellee

contends, a reviewing court must limit its review to the movant’s summary

judgment pleading, then a nonmovant could never establish a meritorious defense



                                         5
in light of a well plead summary judgment motion. The purpose of considering

whether there is a meritorious defense is to determine whether there is any reason

that the result might have been different if the nonmovant had responded.

Otherwise, there is no need to undo the judgment. In essence, Appellee’s position

eliminates the meritorious defense element in the Craddock test.

      Appellee’s response also ignores the well-established jurisprudence of this

State that has applied the summary judgment standard of review in the default

context. Weech v. Baptist Health Sys., 392 S.W.3d 821, 825 (Tex. App.—San

Antonio 2012, no pet.); Pascual Madrigal P.L.L.C. v. Commercial IT Solutions

Inc., No. 04-13-00742-CV, 2014 WL 4230174, at *4 (Tex. App.—San Antonio

Aug. 27, 2014, no pet.); Huffine v. Tomball Hosp. Auth., 979 S.W.2d 795, 799

(Tex. App.—Houston [14th Dist.] 1998, no pet.); Medina v. W. Waste Indus., 959

S.W.2d 328, 330 (Tex. App.—Houston [14th Dist.] 1997, pet. denied); Washington

v. McMillan, 898 S.W.2d 392, 396 (Tex. App.—San Antonio 1995, no writ);

Gonzales v. Surplus Ins. Servs., 863 S.W.2d 96, 102 (Tex. App.—Beaumont 1993,

writ denied); Krchnak v. Fulton, 759 S.W.2d 524, 528–29 (Tex. App.—Amarillo

1988, writ denied); Costello v. Johnson, 680 S.W.2d 529, 531 (Tex. App.—Dallas

1984, writ ref'd n.r.e.). The rule that Appellant suggests ought to apply in these

cases acknowledges the difference between the substantially lower burden imposed

on the non-movant to avoid judgment in the summary judgment context versus at



                                        6
trial. Medina, 959 S.W.2d at 330-31. “For instance, when the movant's summary

judgment proof, standing alone, is sufficient as a matter of law, the non-movant

may still preclude summary judgment if he utilizes his response to direct the court's

attention to material questions of fact in the record, or if he attaches proof to his

response which controverts the proof offered by the movant.” Id. Holding

otherwise might establish scenarios where the “failing to respond [itself] . . . causes

a summary judgment to be rendered.” Washington, 898 S.W.2d at 396. The

equitable principles behind the reasoning in Craddock apply with equal force to the

case at bar.

3.    APPELLEE’S MISTAKE WAS GENUINE, AND NOT OCCASIONED BY CONSCIOUS
      INDIFFERENCE.

      Appellee’s characterization of the Appellant’s mistake finds its greatest

strength in hindsight. Appellant does not, and has never contended, that “a non-

parties bankruptcy filing never stays a judicial proceeding.” Appellee’s Brief at 17.

Instead, Appellant contends that the claims of Appellee are against the Brown

Medical Center, as that is the party that contracted for the advertising services.

      Implicit in the lower court’s holding that judgment was proper against Dr.

Lopez is that he was a debtor on the sworn account. Dr. Lopez contends, still, that

there is insufficient evidence in this appellate record to support such a finding, and

that the actual debtor is the Brown Medical Center. Dr. Lopez mistakenly relied on

this contention, among other things, to reach his conclusion that the suggestion of

                                          7
bankruptcy was the appropriate—and only—filing that was necessary to advise

the plaintiff that his claims had to be brought in the bankruptcy court against

Brown Medical Center.

      Appellee contends that this argument is “hard to accept as truthfully felt.”

Appellee’s Brief at 17. However, the Appellee wholly fails to point to any

controverting evidence, and the record certainly supports a finding that Dr. Lopez

was not consciously indifferent to the matter. Mrs. DeLeon testified that she

attempted to contact Appellee’s trial counsel on several occasions to no avail. See

Affidavit of Elizabeth DeLeon CR 79-80. Mrs. DeLeon further testified that she

contacted the lower court’s clerk to discuss the filing of the suggestion, and what

impact that would have on the proceedings. Id. Perhaps, Appellant was unwise in

reaching the conclusion that he did, but that is not demonstrative of conscious

indifference, and is rather properly classified as a mistake or an accident.

4.    APPELLANT’S CHALLENGE TO THE AWARD OF ATTORNEY’S FEES WAS
      SUBSUMED WITHIN ITS CHALLENGE TO LIABILITY.

      When Appellant challenged the finding of liability in its motion for new

trial, it also implicitly challenged the damages that were award as a result. Further,

nothing in the Craddock standard states that a movant seeking a new trial is

required to raise every meritorious defense he may possess. Simply, he is required

to show that he has at least one. When the questions before the Court are ones of




                                          8
equity, the Court “should deal with the facts on a case-by-case basis in order to do

equity.” Angelo v. Champion Rest. Equip. Co., 713 S.W.2d 96, 98 (Tex. 1986).

      As previously stated by the Appellant, “[b]esides the already briefed

challenge to liability, the Appellant challenges the damages that were awarded by

virtue of Appellee’s successful claim on a breach of contract claim.” Appellant’s

Brief at 20. It is clear that the award of attorney’s fees does not reflect a proper

application of the Arthur Anderson factors a court must consider in an award of

attorney’s fees. Arthur Andersen & Co. v. Perry Equip. Corp, 945 S.W.2d 812, 818

(Tex. 1997). This is simply one of the meritorious defenses that the Appellant

possesses to challenge the judgment that was entered against him, and is properly

before this Court.

5.    APPELLANT IS WILLING REIMBURSE THE APPELLEE FOR ITS EXPENSES.

      “Involved is an equitable principle, and the court should deal with the facts

on a case-by-case basis in order to do equity. Failure to offer reimbursement

should not in every instance preclude the granting of a new trial.” Angelo v.

Champion Rest. Equip. Co., 713 S.W.2d 96, 98 (Tex. 1986). While Appellee is

correct that there is presently no offer to reimburse the Appellee for the expenses it

incurred, the Supreme Court has never expressly stated that such an offer is

required. “Although these may be important factors for the court to look to in




                                          9
determining whether it should grant a new trial, they should not be the sine qua

non of granting the motion.” Id.

      Further, it is not too late for the Appellant to make such an offer, which

Appellant, by this reply brief, is doing so at this time. Appellee should not be heard

to complain of this late offer of reimbursement, as evidence of the Appellant’s

willingness to reimburse the Appellee may be raised on appeal. Id. (“Additionally,

it should be noted that Angelo expressed the willingness to reimburse Champion

for their expenses at oral argument at the court of appeals and in their brief to us.”).

                           CONCLUSION & PRAYER

      Given that Lopez has satisfied the traditional and modified Craddock

factors, this Court should reverse the judgment of the Trial Court, and remand this

matter so that it may proceed to trial.




                                          10
Respectfully submitted,

DAVIS, CEDILLO & MENDOZA, INC.
McCombs Plaza, Suite 500
755 E. Mulberry Avenue
San Antonio, Texas 78212
Telephone No. : (210) 822-6666
Telecopier No. : (210) 822-1151

By: /s/ Isaac J. Huron
   Isaac J. Huron
   State Bar No. 24032447
   Ramon Rodriguez
   State Bar No. 24088319
   ihuron@lawdcm.com
   rrodriguez@lawdcm.com

ATTORNEY FOR APPELLANTS




 11
                       CERTIFICATE OF COMPLIANCE

       I hereby certify that this reply brief is in compliance with the rules governing
the length and font requirements for briefs prepared by electronic means. The reply
brief was prepared using Microsoft Word 2010. According to the software used to
prepare this brief, the total word count, including footnotes, but not including those
sections excluded by rule, is 2,175. The “Times New Roman” font is used in this
reply brief, with 14 pt. font for the body of the reply brief, and 12 pt. font for
footnotes.



                                        /s/ Isaac J. Huron
                                            Isaac J. Huron




                                          12
                         CERTIFICATE OF SERVICE

      I hereby certify that a true and correct copy of the foregoing document has
been forwarded on this 17th day of February, 2015 via the electronic service system
provided through Texas.gov and via email to Appellee’s counsel:

Timothy A. Hootman, SBN 09965450
2402 Pease St
Houston, TX 77003
(t) 713.247.9548
Email: thootman2000@yahoo.com

Bill Malone, Jr., SBN 12877500
8650 Spicewood Springs, No 145-598
Austin, TX 78759
(t) 512.346.9600
Email: bill@billmalonelaw.com



                                      /s/ Isaac J. Huron
                                          Isaac J. Huron




                                        13
