Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Advanced Messaging Wireless Inc., Noel Bunyan and Don Nichols, (collectively Advanced Messaging), challenged the judgment of the trial court following a post-answer default judgment that Campus Design, Inc. recover damages in the sum of $857,653, plus attorney’s fees with 18 percent interest. The parties’ dispute arose from the following facts. By written contract, Campus Design Inc., as seller, sold its communications business operated under the name of Digicom PCS to Advanced Messaging for the purchase price of $250,000, plus additional sums to be paid by the buyer for the inventory, the ACB account and future activation payments. By separate written guaranty agreements, Bunyan and Nicholseach executed commercial guaranties by which they guaranteed payment of the promissory note executed by Advanced Messaging and all other obligations of the buyer to the seller pursuant to the contract of sale. After Advanced Messaging defaulted in payment of rentals to various landlords and of the promissory note, Campus Design filed suit to recover on the promissory note and the contract of sale. Campus Design also sought to recover its damages against Bunyan and Nichols pursuant to the written guaranties. By its answer Advanced Messaging asserted fraud as an affirmative defense, but did not plead payment. Campus Design then filed its first amended original petition. A copy of the note, guaranty and contract of sale were attached and incorporated into the amended petition which was served on Advanced Messaging by mail; however, no answer was filed to the amended pleading. The trial court therefore rendered judgment for Campus Design. Although counsel for Advanced Messaging filed a motion for new trial, a request for findings of fact and conclusions of law was not filed. HOLDING:Judgment reformed and, as reformed, affirmed. Advanced Messaging claims that the trial court erred in failing to grant its motion for new trial and to set aside the default judgment for violating the scheduling order and Texas Rules of Civil Procedure, legal and factual insufficiency to support fraud, improperly estimated damages, satisfaction of the Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124,126 (1939) test, legal and factual insufficiency to establish fraud as guarantors, legal and factual insufficiency to support 18 percent post-judgment interest, and contends the judgment is void against guarantors in bankruptcy. The court agrees with Advanced Messaging’s contention that there was no evidence or alternatively insufficient evidence to support the finding that it defrauded Campus Design, and that the evidence is legally and factually insufficient to establish that Bunyan and Nichols defrauded Campus Design in their capacities as guarantors. The court points out that the mere breach of contract or failure to perform a contract is not evidence of fraud. Because no testimony or documentary evidence was presented to support any implied finding that at the time any representations were made Advanced Messaging had any intent to deceive or of not performing at the time they were made, the court holds that fraud was not shown. However, the trial court rejects Advanced Messaging’s challenges to the amounts of damages awarded by the trial court because Advanced Messaging failed to asked for findings of fact and conclusions of law to address the evidence of damages produced by Campus Design. Advanced Messaging next contends the trial court erred in failing to set aside the judgment because there was no evidence or factually insufficient evidence to support the award of 18 percent post-judgment interest. However, the court holds that because statutory construction is a question of law and post-judgment interest is regulated by statute, the award for interest is not subject to a sufficiency of the evidence analysis. The court also disagrees with Advanced Messaging’s argument that the trial court erred in failing to grant a new trial because the judgment was based on the amended petition which was filed after the date allowed for amendments per the scheduling order, and by its second point, it contends it did not receive adequate notice of the claims of fraud and additional breach of contract finding. Advanced Messaging does not contend it did not know the scheduling order set the case for trial, but instead contends the amended pleading was not timely sent to its counsel. However, the court points out that service by counsel creates a presumption of timely service. Finally, Advanced Messaging contends the trial court erred in failing to grant its motion for new trial under the test established by Craddock v. Sunshine Bus Lines because its failure to appear at trial was not intentional or the result of conscious indifference, but due to mistake or accident; it had a meritorious defense; and granting the motion will not delay or otherwise work an injury to Campus Design. But the court disagrees and finds that the failure to appear was not caused by accident or mistake, and that Advanced Messaging has not demonstrated a meritorious defense to the breach of contract claims. Consequently, the court holds tat the trial court did not abuse its discretion in overruling the motion for new trial. Having held that there was no evidence of fraud, the court reforms the judgment of the trial court to delete any reference to fraud and, as reformed, affirms the judgment of the trial court. OPINION:Reavis, J.; Quinn, C.J., and Reavis, J., and Boyd, S.J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.