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Victory Wholesale v. Texas

Court of Appeals of Texas, Fourteenth District, Houston
Feb 8, 2007
No. 14-05-01264-CV (Tex. App. Feb. 8, 2007)


No. 14-05-01264-CV.

Judgment rendered and Memorandum Opinion filed February 8, 2007.

On Appeal from the 334th District Court Harris County, Texas Trial Court Cause No. 2003-20338.

Panel consists of Chief Justice HEDGES and Justices YATES and SEYMORE.


In a single issue, appellants Wafic Tawfic Ataya, Sawssan Ataya a/k/a Sawssan Mohamad Elehik-Issa, and Victory Wholesale, Inc. challenge the trial court's denial of their motion for new trial. We affirm.

I.Factual and Procedural Background

This appeal concerns a post-answer default judgment and subsequent denial of a motion for new trial. In April 2003, the State of Texas sued Wafic Tawfic Ataya, his wife, Sawssan Ataya, and their wholesale food distribution business, Victory Wholesale (collectively Aappellants'), seeking civil penalties and to enjoin them from operating the business without a license in violation of the Texas Health and Safety Code. Appellants timely answered. After numerous re-settings, the trial court set the case for trial for a two-week docket beginning the latter half of September 2005.

There is conflicting evidence in the record as to whether the two-week period began September 20 or 26. The exact date, however, is irrelevant to our disposition of this appeal.

The record reflects that, as early as July 22, 2005, appellants' attorney, Jonathan E. Bruce, informed them in writing of this trial setting. Mr. Ataya also concedes that Bruce informed him of this setting on August 16, 2005 in discussions about a potential settlement with the State. Thereafter, in the three-week period before September 20, Bruce left numerous messages on Mr. Ataya's cell phone reminding him of the trial setting and requesting a callback. After hearing no response, on September 20, Bruce mailed a letter to the Atayas' home address in Houston, Texas imploring them to return his numerous phone messages and again stating that trial was set for "this week" and that the court could call the case at any time. Still after hearing no response, on September 30, Bruce mailed the Atayas a final correspondence stating that (1) the court had called their case for October 4, (2) he would move for a continuance, which the court would most likely deny, and, (3) pursuant to a prior written agreement, he would move to withdraw as appellants' counsel because they had paid him only for a settlement agreement. Finally, at 3:15 p.m. on October 3, Mr. Ataya called Bruce. From the conversation, which Bruce described as Akind of . . . chopped-up, — Bruce understood that Mr. Ataya was out of the country. According to Bruce, Mr. Ataya said he received the correspondence regarding the October 4 trial date and the motion to withdraw and that he did not object to the motion for withdrawal. To ensure that Mr. Ataya understood the situation, Bruce faxed a copy of the September 30 letter to a "local phone number which apparently was faxed to him overseas[, and Mr. Ataya later] re-faxed it to [Bruce's] office."

The record does not reveal exactly when the court set the trial for October 4. Both parties allude to the evacuation of the Houston metropolitan area during the week of September 20 due to Hurricane Rita and agree the evacuation delayed the court in calling the case until October 4. However, appellants did not contend in the trial court or to this court that the hurricane or resulting evacuation in any way contributed to their failure to appear for the October 4 trial setting.

The following day, on October 4, 2005, appellants failed to appear for trial. Bruce, however, appeared, and, as promised, moved to withdraw as appellants'counsel and requested a continuance. The court granted his motion to withdraw but denied the continuance in part because it "ha[d continued trial] so many times before" and "[Mr. Ataya's] absence has caused us to continue to move this case." The court subsequently entered a default judgment against appellants, permanently enjoining them from operating without a license. The court also assessed $425,000 in penalties for seventeen violations of the Health and Safety Code, $13,210.04 in investigation costs, $4,100 in destruction costs of adulterated products discovered in the investigation, and $24,963.95 in attorney's fees.

Appellants thereafter filed a motion for new trial. They contended that their respective failures to appear were not intentional or the result of conscious indifference but, rather, was due to a mistake. In support, appellants attached affidavits of both Mr. and Mrs. Ataya and copies of Bruce's September 20 and 30 letters. In his affidavit, Mr. Ataya averred that he went to Sacramento, California on September 3, 2005 to care for a sick relative and left his cell phone and fax machine in the care of his wife. He stated that his wife is of foreign extraction, does not read or speak English fluently, and has difficulty understanding many English phrases. Therefore, because his wife "could neither read nor understand [Bruce's] messages very well," "[n]one of these communications were conveyed to [him] by [his] wife until October 3, 2005." He further claimed that, by the time he spoke with Bruce the day before trial, he Adid not have sufficient time, money or means of getting from Sacramento to Houston, by 9:00 a.m. the following morning." Though Mr. Ataya admitted he was "told earlier in the year that the case may go to trial around this time," he claimed he Athought [he] would have some more time to arrange [his] appearance in court." In her affidavit, Mrs. Ataya echoed her husband's assertions that she does not read or speak English fluently. Further, though she acknowledged Bruce's Apurported" attempts to call her husband's cell phone and the September 30 letter and stated that her Ahusband became aware of this letter on October 3, 2005," she maintained that she "never understood that there was a trial on October 4, 2005." Therefore, in the motion, appellants relied on Mrs. "taya's alleged lack of English proficiency to establish their respective Amistake[s]" in failing to appear.

Mrs. Ataya stated in her affidavit that, due to her inability to fully understand English, Mr. Ataya interpreted the affidavit for her.

Appellants also asserted in their motion for new trial that (1) the Atayas are merely officers and agents of Victory Wholesale and thus not personally responsible for its corporate civil liabilities and (2) Victory Wholesale had filed for bankruptcy and thus was protected by the automatic stay in the United States Bankruptcy Code. They further contended that the granting of a new trial would not injure the plaintiff.

The State responded that appellants acted with conscious indifference in failing to appear for trial, citing the repeated, unreturned communications from Bruce. To controvert Mrs. Ataya's alleged lack of English proficiency, the State's attorney attached an affidavit averring that she had previously deposed Mrs. Ataya in October 2003 entirely in English, and Mrs. Ataya never requested an interpreter. The State further challenged the appellant's defenses. As to the Atayas, the State asserted that because they had been sued in their individual capacities, the Atayas could not defend on the basis they were merely officers and agents of Victory Wholesale. As to Victory Wholesale, the State contended the governmental unit exception to the automatic bankruptcy stay applied, which allowed a suit against the company. Finally, the State maintained that a grant of new trial would cause significant delay and prejudice.

The court heard the motion, but no party presented live testimony. After considering "the motion; the evidence; and the applicable law," the court subsequently denied appellants' motion for new trial, finding that "defendants" claim of lack of notice because Sawssan Ataya could not understand the messages not to be credible in light of the competing evidence and this Court's own experience with this cause . . . [and] that Defendants have failed to establish a meritorious defense to the action."

The Atayas and Victory Wholesale now appeal, claiming the trial court should have set aside the default judgment and granted a new trial because appellants negated a lack of intent or conscious indifference in failing to appear, presented a meritorious defense, and established a new trial would cause no injury to the State.

II.Standard of Review

We review a trial court's denial of a motion for new trial under the abuse of discretion standard. Puri v. Mansukhani, 973 S.W.2d 701, 715 (Tex.App.-Houston [14th Dist.] 1998, no pet.). Generally, a trial court abuses its discretion when it acts without reference to any guiding rules and principles or in an arbitrary or unreasonable manner. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241B42 (Tex. 1985). A trial court does not abuse its discretion if it bases its decision on conflicting evidence and some evidence supports its decision; however, an abuse of discretion occurs when the trial court's decision is contrary to the only permissible view of the evidence. See In re Barber, 982 S.W.2d 364, 366 (Tex. 1998); Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992). In the default judgment context, a trial court abuses its discretion by failing to grant a new trial when the movant meets all of the Craddock elements. Bank One, Tex., N.A. v. Moody, 830 S.W.2d 81, 85 (Tex. 1992) (citing Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (1939)). Under Craddock, a default judgment should be set aside and a new trial granted if (1) the failure to answer was not intentional or the result of conscious indifference but was due to a mistake or accident, (2) the defendant sets up a meritorious defense, and (3) the motion is filed at such time that granting a new trial would not result in delay or otherwise injure the plaintiff. In re R.R., 209 S.W.3d 112, 114B15 (Tex. 2006).


Appellants contest the trial court's findings regarding the first Craddock element on two grounds. First, as a threshold matter, they contend the trial court's credibility determination regarding Mrs. Ataya's ability to understand her attorney's messages constitutes an abuse of discretion Ain its own right — because the court never had an opportunity to judge her credibility. Second, they generally contend the trial court committed a substantive abuse of discretion by implicitly concluding, based on the above finding, that they failed to negate an intentional or consciously indifferent failure to appear. We disagree with both contentions.

The burden of proof lies with the movant to show that the failure to appear at trial was not negligent, intentional, or the result of conscious indifference. Holberg v. Short, 731 S.W.2d 584, 586 (Tex.App. — Houston [14th Dist.] 1987, no writ). Conscious indifference means failing to take some action which would seem indicated to a person of reasonable sensibilities under similar circumstances. State v. Sledge, 982 S.W.2d 911, 914 (Tex.App.-Houston [14th Dist.] 1998, no pet.). In other words, Ait must be shown that the appellant was clearly aware of the situation and acted contrary to what such awareness dictated." Id.; see also Fidelity — Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 575B76 (Tex. 2006) (defining the conscious indifference standard as "the defendant knew it was sued but did not care"). A failure to appear is not intentional or due to conscious indifference merely because it was deliberate; rather, it must also be without justification. In re K.A.R., 171 S.W.3d 705, 717 (Tex.App. — Houston [14th Dist.] 2005, no pet.). Proof of such justificationCaccident, mistake, or other reasonable explanationCnegates intent or conscious indifference. Id. When the non-movant controverts the movant's allegations, the trial court must look to the knowledge and acts of the movant to determine whether his conduct was the result of conscious indifference or intentional disregard. Holberg, 731 S.W.2d at 586-87 (citing Strackbein v. Prewitt, 671 S.W.2d 37, 39 (Tex. 1984)). Courts have applied this element liberally, and each case depends on its own facts. Gotcher v. Barnett, 757 S.W.2d 398, 401 (Tex.App.-Houston [14th Dist.] 1988, no writ).

Appellants' threshold contention seems to suggest the trial court abused its discretion by making a credibility finding as to Mrs. Ataya without the benefit of any live, sworn testimony. In support, they cite Estate of Pollack v. McMurrey, 858 S.W.2d 388, 392 (Tex. 1993), for the proposition that the "trial court generally may not resolve disputed fact issues regarding intent or conscious indifference on affidavits alone." We find Pollack distinguishable. There, the trial court denied a motion for new trial without hearing evidence because the motion Afail[ed] on its own?; thus, neither the movant nor the non-movant had the opportunity to develop and present evidence on conscious indifference at an evidentiary hearing. Id. at 390B91. Here, an evidentiary hearing was held, and, presumably, appellants had the opportunity to present live testimony at the hearing. Given these circumstances, we do not find that the court abused its discretion simply by ruling on the first Craddock element based on the evidence before it. See In re Barber, 982 S.W.2d at 366; Advanced Aesthetics, Inc. v. Creative Beauty Innovations, Inc., No. 2-04-078-CV, 2005 WL 327176, at *1 (Tex.App.-Fort Worth Feb. 10, 2005, pet. denied) (mem. op.) (affirming denial of motion for new trial for failure to establish first Craddock element and distinguishing its facts from Pollack on basis that trial court denied motion for new trial only after conducting hearing in which court did not deny parties ability to further develop facts, and parties opted to rely solely on competing affidavits, rather than present live testimony); Novosad v. Cunningham, 38 S.W.3d 767, 771B72 (Tex.App.-Houston [14th Dist.] 2001, no pet.) (holding that trial court did not abuse its discretion in denying motion for new trial where it could have concluded that movant's failure to answer was intentional or due to conscious indifference based on evidence heard, which consisted of affidavits filed by parties); Holberg, 731 S.W.2d at 587 (holding that trial court did not abuse its discretion in denying motion for new trial where it could have concluded that movant's failure to answer was intentional or due to conscious indifference based on evidence heard, which consisted of controverting affidavits).

Appellants have not presented a record showing the trial court denied their ability to present live testimony to this court. See W — F Transp., Inc. v. Wilhelm, 208 S.W.3d 32, 37 (Tex.App.-Houston [14th Dist.] 2006, no pet.) (noting that historically, burden falls on appellant to see that sufficient record is presented showing reversible error). Moreover, appellants have failed to explicitly contend that the trial court precluded live testimony at the hearing. See TEX. R. APP. P. 38.1(h) (AThe brief must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record."); Thomas v. Olympus/Nelson Prop. Mgmt., 148 S.W.3d 395, 401 (Tex.App.-Houston [14th Dist.] 2004, no pet.) (noting that appellant bears burden to show that record supports contentions raised, which includes specifying location of supporting evidence).

Turning to appellants' contentions regarding the merits of the trial court's finding, we conclude that the trial court did not abuse its discretion in implicitly finding that appellants failed to meet their burden to negate intentional or conscious indifference. As to Mr. Ataya's failure to appear, he admits having notice of the September 20 two-week trial setting since at least August 16, 2005, over two weeks before he allegedly left for California. However, he never informed his attorney he went to California, and, while there, he made no attempts to contact his attorney, the court, or even his wife concerning any communication she may have received concerning the litigation until the day before trial. Moreover, the trial court's refusal to believe that Mrs. Ataya could not understand the repeated messages from their attorney vitiates Mr. Ataya's position that he never received any of the messages from Bruce until the day before trial. Accordingly, based on the knowledge and acts of Mr. Ataya shown in the record, we cannot say the trial court abused its discretion in implicitly finding that he failed to negate intent or conscious indifference. See Martinez v. Martinez, 157 S.W.3d 467, 470B71 (Tex.App.-Houston [14th Dist.] 2004, no pet.) (finding conscious indifference for failure to answer where out of state party, though having knowledge of divorce petition as early as two months before formal service, never asked attorney to file an answer, never asked to see copy of answer to be filed, never contacted the trial court to see if answer had been filed, and never asked friends or family residing in area where Texas trial court was located to check on progress of case); Pickell v. Guar. Nat'l Life Ins. Co., 917 S.W.2d 439, 442 (Tex.App.-Houston [14th Dist.] 1996, no writ) (holding generally that a party has duty to keep informed of when case is set for trial); Sharpe v. Kilcoyne, 962 S.W.2d 697, 701 (Tex.App.-Fort Worth 1998, no pet.) (finding conscious indifference for failure to appear where party, though having knowledge she was being sued and constructive notice of trial date, and receiving multiple correspondences regarding pendency of suit, moved out of country without leaving forwarding address, failed to contact her attorney or court about case, and rejected correspondence regarding suit); see also Matter of Brackeen, No. 07-96-0431-CV, 1997 WL 760555, at *2B3 (Tex.App. — Amarillo Dec. 11, 1997, no pet.) (not designated for publication) (holding that party failed to negate intent or conscious indifference for failure to appear where party, though attorney did not inform her of precise trial date, had some notice that case may go to trial following week and took no action to resolve any uncertainty as to exact date).

As to Mrs. Ataya's failure to appear, we similarly do not find the trial court abused its discretion in implicitly finding she failed to negate intent or conscious indifference. The trial court found Mrs. Ataya's only conceivable excuse for failing to appear the day of trialCa lack of English proficiencyCto lack credibility, and she has offered no other justification. Moreover, even if Mrs. Ataya Acould neither read nor understand [her attorney's] messages very well," this alone does not explain why she waited until the day before trial to inform her husband of the messages and failed otherwise to seek help from her attorney to understand the messages. See First Nat'l Bank of Bryan v. Peterson, 709 S.W.2d 276, 279B80 (Tex.App.-Houston [14th Dist.] 1986, writ ref'd n.r.e.) (finding conscious indifference for failure to answer where three parties did not understand that writ of garnishment required answer and failed to take steps toward consulting lawyer after receiving writ); Butler v. Dal Tex Mach. — Tool Co., 627 S.W.2d 258, 260 (Tex.App.-Fort Worth 1982, no writ) (finding conscious indifference for failure to answer where party who allegedly did not understand citation failed to take any action to seek help in understanding the citation).

We acknowledge that some cases have declined to find conscious indifference where parties lacked English proficiency, did not seek aid in understanding suit papers, and thus failed to answer or appear. See, e.g., Lara v. Rosales, 159 S.W.3d 121, 124 (Tex.App. — Corpus Christi 2004, pet. denied); Martinez v. Valencia, 824 S.W.2d 719, 723 (Tex.App.-El Paso 1992, no writ). However, in these cases, unlike the current case, the lack of English proficiency was uncontroverted.

Finally, appellants do not make any specific arguments under the first Craddock element regarding Victory Wholesale's failure to appear. Therefore, to the extent appellants' contentions relating to the Atayas subsume Victory Wholesale, we similarly overrule them. To the extent appellants have failed to offer independent grounds for reversal under the first Craddock element as to Victory Wholesale, they have failed to present error to this court for review. See TEX. R. APP. P. 33.1.

Because appellants failed to meet their burden under the first Craddock element, we need not address their remaining arguments. See Novosad, 38 S.W.3d at 772.

We therefore overrule appellants' sole issue and affirm the trial court's judgment.

Summaries of

Victory Wholesale v. Texas

Court of Appeals of Texas, Fourteenth District, Houston
Feb 8, 2007
No. 14-05-01264-CV (Tex. App. Feb. 8, 2007)
Case details for

Victory Wholesale v. Texas

Case Details


Court:Court of Appeals of Texas, Fourteenth District, Houston

Date published: Feb 8, 2007


No. 14-05-01264-CV (Tex. App. Feb. 8, 2007)