Levine v. Shackelford, No. 06-0553 (Tex. Jan. 11, 2008)(per curiam)
default judgment, motion to set aside, standard, motion for new trial, Craddock test)

from Dallas County; 5th district (05-05-00374-CV, ___ S.W.3d ___, 04/07/06)   

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Levine v. Shackelford (Tex. 2008) (per curiam)



In this case, we consider whether the court of appeals applied the correct
standard in affirming a trial court’s denial of a motion to set aside a default
judgment. A three-part test determines whether a court should grant a motion for
new trial to set aside a proper default judgment. Craddock v. Sunshine Bus Lines,
Inc., 133 S.W.2d 124, 126 (Tex. 1939). The first part of the Craddock test
requires that “the failure of the defendant to answer before judgment [i]s not
intentional, or the result of conscious indifference on his part, but [i]s due to a
mistake or an accident.” Id. When applying this part of the Craddock test, the
court of appeals defined “conscious indifference” in terms of “a person of
reasonable sensibilities under the same or similar circumstances.” ___ S.W.3d
___, ___ (Tex. App.—Dallas 2006, pet. denied) (citing Young v. Kirsch, 814 S.W.
2d 77, 81 (Tex. App.—San Antonio 1991, no writ) (en banc)). The court of
appeals held that the trial court did not abuse its discretion in denying the motion
for new trial, and affirmed the trial court’s denial. Id. at ___. Though the court of
appeals articulated the “conscious indifference” requirement of the Craddock test
incorrectly, it properly applied the test. We denied the petition for review, and now
deny the motion for rehearing, but we write here to clarify the standard that the
court of appeals used.

Three law firms sued Sol and Dorothea Levine and Mardan Energy Corporation
(collectively, the Levines) for legal fees.[1] Before filing an answer, the Levines’
attorney requested a written standstill agreement from the law firms, “where no
pleadings, including the Answer, will be filed for a 45 to 60 day period while we
attempt to have the mediation process run its course.” When the law firms
refused, the Levines’ attorney agreed to file an answer by the November 29, 2004
deadline, but then failed to do so. Having not received an answer, a law firm
attorney attempted to contact the Levines’ attorney on December 6, 2004,
advising that the law firms would take a default judgment if no answer was filed.
The next day, the Levines’ attorney assured the law firms that an answer would
be filed on December 8, 2004. On Wednesday, December 8, the Levines’
attorney emailed a draft of the proposed answer to the law firms, assuring them
that he would send the answer to the court “by the end of the week.”

The law firms delivered discovery requests to the Levines’ attorney on December
15, 2004. The next day the parties attended mediation, which had been
scheduled by agreement on November 24, 2004, though there still was no answer
from the Levines on file with the court. The law firms presented a default judgment
motion to the trial court the next morning, eighteen days after the Levines’
attorney first promised to file an answer, which was granted without a hearing.
The Levines claim that their attorney placed the answer, along with a filing letter,
in his “outgoing mail bin” four days before the trial court signed the original default
judgment on December 17, 2004. Neither the trial court nor the law firms received
the answer. The Levines’ attorney never attempted to confirm that the answer had
been filed. He did not even know until December 23, 2004, when his client
informed him of the default judgment, that the clerk had not received the answer.
The Levines subsequently made several motions to set aside the default
judgment and obtain a new trial, all of which were denied by the trial court. The
court of appeals held that the Levines did not satisfy the first prong of the
Craddock test, and affirmed the trial court’s refusal to set aside the default
judgment. Id. at ___.

In applying the Craddock test to this case, the court of appeals examined the
evidence and concluded that it “showed a pattern of conduct that disregarded
deadlines, promises, procedures, and simple steps that a person of reasonable
sensibilities would have taken to ensure that the answer was properly and timely
filed.” Id. at ___. The proper standard, however is not a negligence standard. “[T]
he Craddock standard is one of intentional or conscious indifference—that the
defendant knew it was sued but did not care.”
Fid. & Guar. Ins. Co. v. Drewery
Constr. Co., 186 S.W.3d 571, 575–76 (Tex. 2006) (per curiam) (emphasis added).
The Levines’ attorney knew of the November 29, 2004 deadline for answer in the
suit. He agreed to file a general denial by that date, but he did not do so. He
again failed to meet an extended deadline. Though he eventually emailed a draft
denial to the parties, he never attempted to confirm that an answer was filed,
despite repeated discussions, emails, and contact with the opposing party
warning him that if he did not file an answer, the law firms would take a default
judgment. This pattern of ignoring deadlines and warnings from the opposing
party amounts to conscious indifference.

The court of appeals incompletely described the standard that applies in this
case. Noting that the complete definition of conscious indifference amounts to
more than mere negligence, we deny the Levines’ motion for rehearing.

OPINION DELIVERED: January 11, 2008

[1] The law firms are Shackelford, Melton & McKinley, L.L.P.; Bragg, Chumlea,
McQuality; and Joseph G. Chumlea, P.C. They brought suit to recover unpaid
legal fees totaling over $150,000, dating back to litigation from which each firm,
with the consent of the Levines, had been allowed to withdraw.