KSNG Architects Inc. v. Beasley

The case had been on file only a matter of months, no trial date was set, and the very request to abate indicated the plaintiff would suffer no prejudice by a short delay. After striking the defective answer, the trial court abused its discretion by not allowing the appellant a reasonable time to remedy the defect.

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No. 05-02-00758-CV, 7/15/2003. Civil Litigation Click here for the full text of this decision FACTS: The appellee, Bryce Beasley, alleges that she was offered a job with KSNG Architects Inc. in February 2001, but that prior to beginning work in June 2001, KSNG rescinded its offer. Beasley sued, asserting claims for anticipatory breach of contract, detrimental reliance, promissory estoppel and negligent misrepresentation. Samuel Ng, the principal of KSNG, filed an answer on behalf of the company – but Ng is not an attorney. Beasley alleges that her attorney called Ng and informed him that he needed to hire a lawyer to file the answer, citing Globe Leasing Inc. v. Engine Supply & Machine Service, 437 S.W.2d 43 (Tex.Civ. App. – Houston [1st Dist.]1969, no writ). Beasley then filed a motion asking the trial court to strike KSNG’s answer because a non-attorney filed it and allow KSNG 10 days to retain a duly authorized attorney to file an amended answer. After Ng appeared without counsel at the hearing on the motion, the trial court struck KSNG’s answer and announced that it was entering a default judgment against KSNG on the grounds that KSNG, the corporate defendant, had failed to appear. At the time, the case had not been set for trial. Following the hearing, NG hired an attorney who filed a notice of appearance four days after the default was entered, and an amended answer and motion for new trial eight days after the default was entered. The trial court denied the motion for new trial, and KSNG appealed. HOLDING: Reversed and remanded. KSNG argues that the trial court erred in striking KSNG’s answer and rendering default judgment without first abating the action to allow KSNG the opportunity to hire counsel. Only a licensed attorney can appear and represent a corporation in litigation. Thus, the court properly determined that KSNG’s answer was defective. However, after striking the defective answer, the issue arose as to whether the trial court abused its discretion by not allowing the offending party any time to remedy the defect. Distinguishing the Beasley case from Paul Stanley Leasing Corp. v. Hoffman, 651 S.W.2d 440 (Tex. App. – Dallas 1983, no writ), upon which KSNG relied, and Dell Dev. Corp. v. Best Industrial Uniform Supply, 743 S.W.2d 302 (Tex. App. – Houston [14th Dist.] 1987, writ denied) upon which Beasley relied, the court noted in those two cases, the objection to non-attorney representation of the corporation was not lodged until the case was called or set for trial. In Beasley, no trial date had even been set when the court addressed the issue. Moreover, a request for additional time was squarely presented to the trial court by virtue of plaintiff’s motion asking to strike KSNG’s answer and give KSNG 10 days to retain an attorney and file an amended answer. The court notes that Texas law does not favor striking defective pleadings without giving an opportunity to replead. Beasley’s motion was in the nature of a plea in abatement, identifying a problem with the suit going forward in its present condition. A plea in abatement may not be used to determine the merits of an action. Rather, the trial court should allow a party a reasonable opportunity to cure the defect by repleading. The court asserts that while Ng could have reasonably expected a ruling from the trial court regarding the corporation’s obligations to hire counsel, Ng had no advance notice that judgment could be entered against KSNG at the hearing. Texas law does not favor dismissal on pleadings or hearings without notice but, rather, favors liberal amendment of pleadings and the opportunity to correct defects in pleadings whenever possible. The court stresses the specific facts of this case: namely, that the case had been on file only a matter of months, that no trial date had been set and that the very request to abate indicated that plaintiff Beasley would suffer no prejudice by a short delay. Consequently, the court concludes that, after striking the defective answer, the trial court abused its discretion by not allowing KSNG a reasonable time to hire counsel and replead. The court does not feel the need to reach KSNG’s second or third issues, but reverses the trial court’s judgment and remands the case for further proceedings. OPINION: Fitzgerald, J.; before Fitzgerald, James and Morris, JJ. Morris, J. concurs in result, but not reasoning. CONCURRING OPINION: Morris, J. Because the record before the court does not show that KSNG duly preserved error with respect to the abatement issue, the judgment should not be reversed on the basis of the trial court’s refusal to abate the case. Instead, the trial court’s judgment should be reversed because KSNG has shown itself entitled to equitable relief under Craddock v. Sunshine Bus Lines, 133 S.W.2d 124 (Tex. 1939). Although KSNG’s original answer was defective, it satisfied the minimum threshold necessary to prevent a default judgment. The company was not in default until the trial court struck its answer, whereupon the court immediately rendered a default judgment. The written order striking the answer is contained in the final default judgment. Applying Craddock from the point in time at which KSNG had no answer on file, the record shows that KSNG had no time or opportunity to cure its default status. KSNG hired an attorney two days later, and shortly thereafter filed an amended answer and motion for new trial, which encompassed each of the Craddock elements. “No conscious indifference or intentional conduct in not filing an answer sooner is present,” notes Morris, who concludes that Craddock dictates reversal of the trial court’s default judgment.

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