Rase Forwarding, LLC and Garalon Investments, LLC v. Euler Hermes North American Insurance Company ( 2021 )

NUMBER 13-20-00366-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
RASE FORWARDING, LLC AND
GARALON INVESTMENTS, LLC, Appellants,
v.
EULER HERMES NORTH AMERICAN
INSURANCE COMPANY, Appellee.
On appeal from the 93rd District Court
of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Justices Longoria, Hinojosa, and Tijerina
Memorandum Opinion by Justice Longoria
Appellants Rase Forwarding, LLC (Rase) and Garalon Investments, LLC (Garalon)
bring this restricted appeal from an amended final judgment setting aside a transfer of
real property between Rase and Garalon, among other things. By three issues Rase and
Garalon argue that they established the elements for a restricted appeal to vacate the
amended final judgment because the trial court erred by: (1) granting appellee Euler
Hermes North American Insurance Company’s (Euler) default judgment when Rase and
Garalon made appearances in the case and were not provided with notice of the hearing
on Euler’s default judgment; (2) striking Rase’s and Garalon’s respective answer without
first providing them an opportunity to hire counsel and amend their pleadings; and (3)
awarding Euler attorney’s fees without evidence to support such an award. We reverse
and remand.
I. BACKGROUND
On September 5, 2019, Euler sued Rase and Garalon under the Texas Uniform
Fraudulent Transfer Act, see TEX. BUS. & COM. CODE ANN. ch. 24 et seq., in connection
with the transfer of real property, located in Hidalgo County, Texas, between Rase and
Garalon. On September 10, 2019, Garalon was served with Euler’s original petition. On
September 27, 2019, Euler filed its first amended petition. On September 30, 2019, Rase
and Garalon filed a document titled “Defendants[’] Original Answer,” which contained a
general denial, a request for judgment in their favor, and an award of court costs, which
was signed by Arturo Garcia, in his corporate capacity, on behalf of Rase, and Bertha
Alonso, in her corporate capacity, on behalf of Garalon. On October 3, 2019, Rase was
served through the Texas Secretary of State with Euler’s first amended petition.
On October 15, 2019, Euler filed a “Motion to Show Cause/Authority” asserting that
because Garcia and Alonso signed their names to an answer on behalf of Rase, 1 and
1 We note that while Euler only moved to strike Rase’s answer in its motion to show
cause/authority, the trial court nonetheless struck the document filed on September 30, 2019, in its order,
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neither is an attorney their representation constitutes the unauthorized practice of law.
Euler also requested that the trial court strike the pleading. On December 17, 2019, the
trial court held a hearing on Euler’s motion; Euler was present, but Rase and Garalon
were not. On December 17, the trial court signed an order striking the September 30,
2019 pleading filed by Rase and Garalon.
On January 21, 2020, Euler filed a motion for default judgment, and on February
3, 2020, the trial court signed an order setting the hearing on Euler’s motion for February
21, 2020. At the default judgment hearing, Euler appeared, but Rase and Garalon did not.
The trial court signed an amended final judgment in favor of Euler, setting aside the
transfer of real property from Rase to Garalon, enjoining Rase from transferring the real
property unless it receives reasonably equivalent value in exchange of the transfer of the
real property, deeming the real property subject to seizure and sale and to any other
remedy available to a creditor as provided by law and equity, awarding Euler attorney’s
fees, court costs, and post-judgment interest against Rase and Garalon, disposing of all
matters between the parties, and denying all relief not expressly granted. This restricted
appeal ensued.
II. RESTRICTED APPEAL
To prevail on a restricted appeal, Rase and Garalon must establish that: (1) they
filed notice of a restricted appeal within six months after the judgment was signed; (2)
they were parties to the underlying lawsuit; (3) they did not participate in the hearing that
resulted in the complained-of judgment and did not timely file any post-judgment motions
which listed both Rase and Garalon in the signature block.
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or requests for findings of fact and conclusions of law; and (4) error is apparent on the
face of the record. Ex parte E.H., 602 S.W.3d 486, 495 (Tex. 2020) (holding that although
the first three requirements are jurisdictional, the fourth is not); Alexander v. Lynda’s
Boutique, 134 S.W.3d 845, 848 (Tex. 2004); Ex parte Vega, 510 S.W.3d 544, 547 (Tex.
App.—Corpus Christi–Edinburg 2016, no pet.); see TEX. CIV. PRAC. & REM. CODE ANN.
§ 51.013; TEX. R. APP. P. 25.1, 26.1(c), 30. As the first three requirements are
jurisdictional, if they are not met, we may not consider the appeal. See Ex parte E.H., 602
S.W.3d at 495; see also Morales v. Marquis, No. 13-12-00407-CV, 2013 WL 2298469, at
*1 (Tex. App.—Corpus Christi–Edinburg May 23, 2013, no pet.) (mem. op.).
A. Standard of Review for a Restricted Appeal
A restricted appeal is a direct attack on a judgment. Autozone, Inc. v. Duenes, 108
S.W.3d 917, 919 (Tex. App.—Corpus Christi–Edinburg 2003, no pet.); see also Norman
Comm. v. Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex.1997). We limit our review in a
restricted appeal to the face of the record. See Ex parte Vega, 510 S.W.3d. at 547. Error
that is merely inferred from the record will not suffice. See Ginn v. Forrester, 282 S.W.3d
430, 431 (Tex. 2009) (per curium). The “face of the record” consists of all papers that
were before the trial court at the time it rendered judgment. See Ex parte Vega, 510
S.W.3d at 547. We will reverse only if the decision, on its face, “probably caused the
rendition of an improper judgment.” Guadalupe Econ. Servs. Corp. v. Dehoyos, 183
S.W.3d 712, 715 (Tex. App.—Austin 2005, no pet.) (citing TEX. R. APP. P. 44.1). An
appellant who alleges error apparent on the face from the record due to the absence of
notice carries a heavy burden because the record will not usually show affirmative proof
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of the error claimed. See Gen. Elec. Co. v. Falcon Ridge Apts., 811 S.W.2d 942, 943–94
(Tex. 1991); see also Int. of J.A.M., No. 13-18-00494-CV, 2019 WL 3721350, at *3 (Tex.
App.—Corpus Christi–Edinburg Aug. 8, 2019, no pet.) (mem. op.).
B. Second and Third Requirements
There is no dispute that Rase and Garalon established the second and third
requirements of a restricted appeal. As to the second, Rase and Garalon were parties to
the underlying lawsuit. See TEX. R. APP. P. 25.1, 30; Ex parte E.H., 602 S.W.3d at 495.
As to the third requirement, their defective answer, which included a general denial, does
not constitute participation. See Ex parte Vega, 510 S.W.3d at 547 (holding that appellant
met the non-participation requirement because even though it filed an answer, it did not
participate in the hearing on appellee’s petition that resulted in the expunction order);
Schulz v. Schulz, 726 S.W.2d 256, 258 (Tex. App.—Austin 1987, no writ) (holding that
appearance does not preclude appeal by writ of error); Sunbelt Const. Corp. v. S & D
Mech. Contractors, Inc., 668 S.W.2d 415, 417 (Tex. App.—Corpus Christi–Edinburg
1983, writ ref’d n.r.e.) (holding that defendant’s actions of filing of general denials did not
participate to such an extent that they are now precluded to appeal by writ of error on a
non-participation ground). Finally, the record does not contain any post-judgment motions
or requests for findings of fact and conclusions of law. See TEX. R. APP. P. 25.1, 30; Ex
parte E.H., 602 S.W.3d at 495. The second and third requirements have been met.
C. First Requirement
Rase and Garalon argue that their notices of appeal were timely filed because they
were filed within six months of the amended final judgment. Euler responds that Rase
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and Garalon filed untimely notices of appeal because they were filed in the trial court on
the 181st day and in the court of appeals on the 182nd day, and that six months in a
restricted appeal should mean 180 days.
In a restricted appeal, the notice of appeal must be filed within six months after the
judgment or order is signed. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.013; TEX. R.
APP. P. 26.1(c); see also Ex parte F.T.K., No. 13-16-00535-CV, 2018 WL 2440545, at *2
(Tex. App.—Corpus Christi–Edinburg May 31, 2018, no pet.) (mem. op.) (explaining that
for a restricted appeal we count the number of months, not the number of days). Here,
the record reflects that Rase and Garalon each timely filed their notice of restricted appeal
because the trial court signed the amended final judgment on February 21, 2020, and
Rase and Garalon filed their notices of appeal with the trial court on August 20, 2020,
which is within the six-month deadline. See TEX. R. APP. P. 25.1(a) (“An appeal is
perfected when a written notice of appeal is filed with the trial court clerk.”); see also Ex
parte F.T.K., 2018 WL 2440545, at *2 (finding that the Department of Public Safety (DPS)
timely filed its notice of appeal because the court entered the order of expunction on
March 11, 2016, and DPS filed its notice of restricted appeal on September 9, 2016, which
was before September 12, 2016); Ex parte Border, No. 13-17-00113-CV, 2018 WL
2440384, at *2 (Tex. App.—Corpus Christi–Edinburg May 31, 2018, no pet.) (mem. op.)
(explaining that DPS filed its notice of restricted appeal within six months after the
judgment was signed because the order of expunction was signed on August 18, 2016,
and DPS filed its notice of restricted appeal on February 17, 2017). Thus, Rase and
Garalon timely filed their notices of appeal, satisfying the first requirement.
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D. Fourth Requirement
In their first issue, Rase and Garalon argue that error is apparent on the face of
the record because their due process rights were violated when the trial court signed the
amended final judgment without first being provided notice of the default judgment
hearing. Specifically, Rase and Garalon argue that they made general appearances
which entitled them to notice of the hearing, and the striking of their answer does not
negate their appearance to merit a default judgment. Euler responds that there is no error
apparent on the face of the record because any determination of lack of notice would
require this Court to make an inference.
1. Defective Answer
Although a party’s answer omits certain formalities required by the Texas Rules of
Civil Procedure, it does not render the answer ineffective so as to entitle the plaintiff to a
default judgment. See R.T.A. Int’l v. Cano, 915 S.W.2d 149, 151 (Tex. App.—Corpus
Christi–Edinburg 1996, writ denied) (finding that a stricken answer did not merit a default
judgment); see also Knox v. Long, 257 S.W.2d 289, 303 (Tex. 1953), overruled in part by
Jackson v. Hernandez, 285 S.W.2d 184 (Tex.1955) (explaining in dicta that “[i]n the case
of a disobedient defendant where answer on the merits of the case has been stricken, a
default judgment may not be taken, but the plaintiff must discharge his burden of showing
his right to recovery.”); Home Grown Design, Inc. v. S. Texas Milling, Inc., No. 13-07-
00646-CV, 2008 WL 2744795, at *2 (Tex. App.—Corpus Christi–Edinburg July 3, 2008,
no pet.) (mem. op.).
Here, the trial court appropriately struck Rase’s and Garalon’s answer because the
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answer was filed by non-lawyers, Garcia and Alonso. See Kunstoplast of Am., Inc. v.
Formosa Plastics Corp., USA, 937 S.W.2d 455, 456 (Tex. 1996) (per curium)
(“Generally[,] a corporation may be represented only by a licensed attorney. . . .”); see
also Home Grown Design, Inc, 2008 WL 2744795, at *2. However, Rase’s and Garalon’s
answer, although defective, is sufficient to avoid a default judgment. See Cano, 915
S.W.2d at 151; Handy Andy, Inc. v. Ruiz, 900 S.W.3d 739, 742 (Tex. App.—Corpus
Christi–Edinburg 1994, writ denied). Specifically, as Rase and Garalon contend, their
answer, although defective, constitutes a general appearance because it: (1) did not
challenge jurisdiction over them; (2) prayed for the trial court to enter judgment in their
favor and award costs of court; and (3) recognized that the action was properly pending
as it denied all of Euler’s allegations. See Exito Electronics Co., Ltd. v. Trejo, 142 S.W.3d
302, 304 (Tex. 2004) (per curium) (explaining that “[a] party enters a general appearance
when he (1) invokes the judgment of the court on any question other than the court’s
jurisdiction, (2) recognizes by his acts that an action is properly pending, or (3) seeks
affirmative action from the court.”); Grynberg v. M-I L.L.C., 398 S.W.3d 864, 879 (Tex.
App.—Corpus Christi–Edinburg 2012, pet. denied); see also Quality Truck Parts, Inc. dba
Worldwide Diesel v. Circle K Constr., LLC, No. 10-18-00111-CV, 2018 WL 5840057, at
*2 (Tex. App.—Waco 2018, no pet.) (mem. op.) (finding a pro se response not void, which
was filed by a representative of the corporation, but rather to be a general appearance).
Moreover, an answer, even a defective one, constitutes an appearance. See TEX. R. CIV.
P. 121 (“An answer shall constitute an appearance. . . .”); Baker v. Monsanto, Co., 111
S.W.3d 158, 160 (Tex. 2003) (explaining the plaintiff’s answer constituted a general
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appearance); Gonzalez v. Phoenix Frozen Foods, Inc., 884 S.W.2d 587, 589 (Tex. App.—
Corpus Christi–Edinburg 1994, no writ.) (noting that an amended answer constitutes an
appearance); see also Wuxi Taihu Tractor Co., Ltd. v. York Group, Inc., No. 01-13-00016-
CV, 2014 WL 6792019, at *10 (Tex. App.—Houston [1st Dist.] 2014, pet. denied) (mem.
op.).
2. Notice
Because we hold that Rase’s and Garalon’s answer constituted an appearance,
we next determine whether they were entitled to notice of the default judgment hearing.
See LBL Oil Co. v. Int’l Power Servs., Inc., 777 S.W.2d 390, 390–91 (Tex. 1989); see
also Int. of J.A.M., 2019 WL 3721350, at *3. It is a basic tenet of jurisprudence that the
law abhors a default. Hock v. Salaices, 982 S.W.2d 591, 593 (Tex. App.—San Antonio
1998, no pet). Default judgments generally fit into two categories of no-answer and post-
answer, but other variations exist, such as a post-appearance default judgment. See
Paradigm Oil, Inc. v. Retamco Oper., Inc., 372 S.W.3d 177, 184 (Tex. 2012); LBL Oil Co.,
777 S.W.2d at 390; see generally, Boyes v. Morris Polich & Purdy, LLP, 169 S.W.3d 448,
452 (Tex. App.—El Paso 2005, no pet). Notice of a default judgment hearing must be
provided to be entitled to a post-appearance default judgment. See LBL Oil Co., 777
S.W.2d at 390–91 (reversing judgment in a post-appearance default judgment case
where no actual or constructive notice of the dispositive hearing, a default judgment
hearing, was shown in the record); Xenos Yuen v. Fisher, 227 S.W.3d 193, 198–99 (Tex.
App.—Houston [1st Dist.] 2007, no pet.) (explaining that appellee’s special appearance
constituted an “appearance” sufficient to entitle him to notice of the default judgment
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hearing); see also Tatum v. Landry, No. 05-92-00518-CV, 1992 WL 186267 *2 (Tex.
App.—Dallas 1992, no pet.) (mem. op.).
Rase and Garalon argue that the trial court’s order setting the hearing on Euler’s
motion for default judgment shows that that they were not provided notice. While we
acknowledge that only Euler’s counsel is expressly copied on the order, Rase and
Garalon’s omitted contact information does not affirmatively show that Rase and Garalon
were not sent notice of the default judgment hearing. See Alexander, 134 S.W.3d at 850
(finding that the fact that the record is silent about the sending of notices under Texas
Rule of Civil Procedure 165a does not establish error); Ginn, 282 S.W.3d at 433
(explaining in the context of a dismissal for want of prosecution that “[a]bsence of proof
in the record that notice was provided does not establish error on the face of the record.”).
Rase and Garalon also argue that the lack of a notation or comment on the docket sheet
regarding notice of the default judgment hearing being provided to them shows error on
the face of the record, but silence does not establish error. See Ginn, 282 S.W.3d at 433.
However, the trial court must provide 45-days notice of a default judgment hearing,
see Custom-Crete, Inc. v. K-Bar Servs., Inc., 82 S.W.3d 655, 659–60 (Tex. App.—San
Antonio 2002, no pet.), if the default judgment hearing is effectively a trial setting. See
TEX. R. CIV. P. 245 (providing that “[t]he court may set contested cases on written request
of any party, or on the court’s own motion with reasonable notice of not less than forty-
five days to the parties of a first setting for trial. . . .”); LBL Oil Co., 777 S.W.2d at 390–91
(recognizing a default judgment hearing as effectively a trial setting); Coastal Banc SSB
v. Helle, 48 S.W.3d 796, 801 (Tex. App.—Corpus Christi–Edinburg, 2001, pet. denied)
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(“A default judgment hearing is a trial setting as it is dispositive of the case.”).
Accordingly, we find that there is error apparent on the face of the record because
the order setting the hearing on Euler’s default judgment was signed on February 3, 2020,
and the default judgment hearing was held 19 days later, on February 21, 2020, which is
less than the required 45 days. See TEX. R. CIV. P. 245; see also Blanco v. Bolanos, 20
S.W.3d 809, 811–12 (Tex. App.—El Paso 2000, no pet.) (explaining in a post-answer
default judgment case that appellee violated Texas Rule of Procedure 245 because he
filed his setting request a mere fifteen days prior to the final hearing); Morales, 2013 WL
2298469, at *2 (setting aside a post-answer default judgment where notice was not given
in compliance with Texas Rule of Civil Procedure 245). Therefore, we sustain Rase and
Garalon’s first issue. 2
III. CONCLUSION
We reverse the judgment of the trial court, vacate the default judgment, and
remand for proceedings consistent with this memorandum opinion.
NORA L. LONGORIA
Justice
Delivered and filed on the
26th day of August, 2021.
2 Because issue one is dispositive, we need not consider issues two and three. See TEX. R. APP.
P. 47.1.
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