Stephan D. Hwang v. Capital One National Association ( 2020 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-19-00005-CV
___________________________
STEPHAN D. HWANG, Appellant
V.
CAPITAL ONE NATIONAL ASSOCIATION, Appellee
On Appeal from County Court at Law No. 2
Denton County, Texas
Trial Court No. CV-2018-00578
Before Sudderth, C.J.; Bassel and Womack, JJ.
Memorandum Opinion by Chief Justice Sudderth
MEMORANDUM OPINION
In February 2018, Appellee Capital One National Association sued pro se
Appellant Stephan D. Hwang1 for an “unpaid balance of $51,463.27” for a line of
credit that he opened in 2007, and in April 2018, Hwang answered with a general
denial, affirmative defenses, and a counterclaim, and included a request for disclosure
in his answer.
On June 20, 2018, Hwang filed a motion to compel Capital One to respond to
his request for disclosure. At the conclusion of the June 27, 2018 hearing, Capital
One’s attorney provided the trial court with a proposed order comporting with the
trial court’s ruling denying the motion to compel, which the trial court signed.
However, the trial court struck through two paragraphs in the proposed order: “2.
The Clerk of this Court will set this case for trial on the merits at a time convenient to
the parties, and convenient to this Court,” and “3. The Clerk of this Court will send
Notice to the Parties informing them of said trial date.” In so doing, the trial judge
stated,
I’m going to interlineate your 2 and 3 because I think that’s exactly what
we should do here in open court today is . . . we’ll actually set this for
trial as opposed to the Court setting it and then getting your input at a
later time. So let’s go off the record briefly and get [the court
coordinator] in here to give us a trial date.
....
Hwang is a licensed attorney representing himself.
1
2
Let’s go back on the record. This case is set for trial before the bench on October
the 8th at 9:00 a.m. If there’s any need for continuances, obviously the
Local Rules suggest that each of you get one. Beyond the one, if y’all
need some -- need another continuance, I’m open to it, but it’s not the
freebie that the first one is. Okay? Thank y’all very much. Y’all have a
good day. [Emphasis added.]
On October 8,2 the trial court entered a judgment for Capital One for
$51,463.27; the judgment states that Capital One appeared through counsel and
offered proof of its claims and that Hwang did not appear.
On October 10, Hwang filed a first amended answer, and on November 30,
Capital One filed a notice of delivery of business records affidavit in which it stated
that on September 7, 2018, it had served the notice of business records affidavit on
Hwang by certified mail.
On December 19, 2018, Hwang filed a motion for new trial in which he stated
that he had not obtained actual knowledge of the final judgment until December 4,
2018. In the motion, Hwang complained that he had received no notice of the trial
setting, and he raised the Craddock3 elements of mistake, meritorious defense, and no
harm to Capital One. In the affidavit attached to his motion, Hwang stated that he
had received no notice of the October 8, 2018 trial setting and that he became aware
2
The trial court’s judgment shows a signing date of October 9, 2018, but a filing
date of October 8, 2018 is stamped at the top of the order. Capital One states in its
appellate brief that the trial judge mistakenly wrote October 9 instead of October 8.
See Tex. R. App. P. 38.1(g).
3
Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939).
3
of the judgment on December 4, 2018,4 only after he received opposing counsel’s
November 2018 notice of business records affidavit, after which time he examined
the case’s register of actions and realized that a judgment had been entered. See Tex.
R. Civ. P. 306a. He pointed out that Capital One would not be harmed by the delay
in granting a new trial because the case would otherwise still be in the discovery
period. Attached in support of Hwang’s limitations defense was a December 7, 2009
“adverse action notice” from Capital One about his delinquent account.
In its Response and Brief in Opposition to Defendant’s Motion for New Trial,
Capital One opposed Hwang’s motion, arguing that Hwang had been notified of the
trial date in open court and that his motion was untimely:
3. On June 27, 2018 at 3:00P.M. . . . the Court . . . notified the
parties, on the court record, that the case would be set for trial upon the
merits on October 8, 2018 at 9:00A.M.
....
7. Contrary to this assertion, Defendant was notified of the trial
date in open court on June 27, 2018 after his Motion to Compel was
denied. Defendant, in response to Judge Ramirez’s declaration of the
October 8, 2018, trial date, verified that the case was to be set for trial on
Columbus Day, to which the Judge replied in the affirmative, stating that
the Denton County Courts would be open for regular business hours on
Columbus Day.
4
After Hwang filed his notice of appeal, we abated the appeal for the trial court
to make a finding of when Hwang received notice or acquired actual knowledge of the
judgment. The trial court entered a finding that Hwang had received actual notice of
the judgment on December 4, 2018. See Tex. R. Civ. P. 306a(4)–(5).
4
8. The above facts are also reflected on the Court’s online docket,
available for public viewing, which states under the date of 6/27/18:
“order entered Set for trial – oct 8 at 9am on the record.”
See Tex. R. Civ. P. 329b. Capital One neither addressed Hwang’s meritorious defense
and no-harm arguments nor filed any counter affidavit to Hwang’s motion for new
trial.
Hwang then filed an amended motion for new trial to address the timeliness
argument. In his amended motion, Hwang also incorporated by reference his earlier
motion, affidavit, and exhibits; stated that he did not recall the oral trial setting; and
denied that he had participated in the conversation setting the trial date. Hwang
verified the facts recited in the amended motion and attached a new affidavit in which
he reiterated his lack of memory with regard to the June 27 oral announcement of trial
setting:
8. I have no remembrance of any conversations from that day.
And except for the fact that I lost the motion to compel, I don’t
remember much of anything else, including the setting being set . . . .
9. I was relying on written notices for trial setting, which I never
received, in order to put forth my defense to plaintiff’s claims . . . .
....
11. Nothing about missing the trial setting was intentional or a
conscience [sic] indifference.
The trial court held a hearing on Hwang’s motion on January 4, 2019. At that
hearing, Capital One’s counsel argued that “this [was]n’t, you know, an accidental
disregard of the Court’s order of trial date” because “we were all in the same room
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when we were notified of the trial date.” After asking the court reporter to pull the
record, the trial judge then read aloud the conversation that the parties and trial judge
held on the record at the June 27 hearing.
When the trial court asked if anyone thought the court reporter’s record was
inaccurate, Hwang replied, “No reason to believe so, Your Honor.” Hwang agreed
with the trial court that he had received notice of the trial setting in court but stated
that he “just ha[d] no recollection.” The trial court admitted the reporter’s record into
evidence as an exhibit and denied Hwang’s motion.
In two issues, Hwang appeals the trial court’s judgment for Capital One. The
parties agree that at the June 27, 2018 hearing, the trial court announced that the case
was set for trial on October 8, 2018. Hwang argues, however, that because the trial
court failed to reduce the oral pronouncement to writing, he was deprived of notice of
the final trial, that his failure to answer was not intentional or the result of conscious
indifference but rather accident or mistake, and that the trial court abused its
discretion by denying his motion for new trial when it failed to consider all of the
Craddock factors at the new trial hearing. Capital One responds that the trial court’s
online docket reflected the trial court’s oral pronouncement, that the trial court
properly denied Hwang’s motion because he could not satisfy the first Craddock factor,
i.e., that his failure to appear at trial was due to mistake or accident, and that “it was
clear that the failure of [Hwang] to appear at the trial setting was due to intentional
disregard or conscious indifference.”
6
We review a trial court’s denial of a motion for new trial for an abuse of
discretion. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009) (per
curiam). A post-answer default judgment, among others, should be set aside and a
new trial granted when the defaulting party establishes that (1) the failure to appear
was not intentional or the result of conscious indifference but was instead the result
of an 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. Id.
at 925–26 (citing Craddock, 133 S.W.2d at 126, and Ivy v. Carrell, 407 S.W.2d 212, 213
(Tex. 1966)). When a defaulting party moving for new trial meets all three elements
of the Craddock test, then a trial court abuses its discretion if it fails to grant a new
trial. Id. at 926.
The Craddock standard is one of intentional or conscious indifference—that the
defendant knew it was sued but did not care—and an excuse need not be a good one
to suffice. Fid. & Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 576 (Tex.
2006). When applying the Craddock test, the trial court looks to the knowledge and
acts of the defendant as contained in the record before the court. Holt Atherton Indus.,
Inc. v. Heine, 835 S.W.2d 80, 82 (Tex. 1992). Proof of accident or mistake negates
intent or conscious indifference. Sellers v. Foster, 199 S.W.3d 385, 399 (Tex. App.—
Fort Worth 2006, no pet.).
The record here reflects that while Hwang was affirmatively given notice of the
trial setting at the June 27 hearing, he later had no recollection of receiving that notice,
7
having apparently failed to calendar it, and relied upon receiving written notice, which
he argued the local rules provided for. His claim that his failure to appear was not
intentional or due to conscious indifference finds further support in the record with
the first amended answer that Hwang filed two days after the trial took place in his
absence.5 See id. at 399–400 (noting that courts have found calendaring errors
sufficient to establish “mistake or accident” under Craddock and that conscious
indifference requires more than negligence); see also Jackson v. Thurahan, Inc., No. 14-02-
00308-CV, 2003 WL 1566386, at *3 (Tex. App.—Houston [14th Dist.] Mar. 27, 2003,
no pet.) (mem. op.) (“This matter was not docketed on my trial schedule . . . .”).
Because the record reflects that Hwang did not intentionally or with conscious
indifference fail to appear for trial, we conclude—without reaching the trial-notice
standards that Hwang suggests—that the trial court abused its discretion by impliedly
finding otherwise.
Further, Capital One did not dispute that Hwang had set up a meritorious
defense to Capital One’s breach-of-contract and suit-on-debt claims6 or that granting
5
The record also shows that Hwang was representing himself and had actively
worked on the case, filing a general denial, affirmative defenses, a counterclaim, and
discovery, as well as a motion to compel.
6
The limitations period for a breach-of-contract or debt cause of action is “not
later than four years after the day the cause of action accrues,” see Tex. Civ. Prac. &
Rem. Code Ann. § 16.004(a)(3), and a cause of action for breach of contract accrues
upon breach. See Barker v. Eckman, 213 S.W.3d 306, 311 (Tex. 2006). In support of
his Craddock meritorious defense argument, Hwang attached to his motion for new
8
the motion would not harm Capital One, the two remaining elements of the Craddock
test.7 Craddock, 133 S.W.2d at 126.
Accordingly, we conclude that the trial court abused its discretion by denying
Hwang’s motion for new trial, sustain the applicable portions of Hwang’s two issues,
reverse the trial court’s judgment, and remand the case for further proceedings.
/s/ Bonnie Sudderth
Bonnie Sudderth
Chief Justice
Delivered: April 2, 2020
trial a December 7, 2009 delinquent-account letter from Capital One and referenced
Capital One’s original petition filed February 23, 2018, over 8 years later.
7
And the record before us does not contain any of the evidence presented by
Capital One to obtain its post-answer default judgment despite the judgment’s
statement that Capital One “offered proof of its claims.” Cf. Stoner v. Thompson, 578
S.W.2d 679, 682 (Tex. 1979) (stating that a post-answer default “constitutes neither an
abandonment of defendant’s answer nor an implied confession of any issues thus
joined by the defendant’s answer. Judgment cannot be entered on the pleadings, but
the plaintiff in such a case must offer evidence and prove his case as in a judgment
upon a trial”). Although Capital One attached the transcript of the October 8, 2018
trial as an appendix to its brief, we cannot consider a document attached as an
appendix if it is not formally included in the record on appeal. Ahmed v. Sosa, 514
S.W.3d 894, 896 (Tex. App.—Fort Worth 2017, no pet.).
9