Fidelity and Guaranty Insurance Co. v. Drewery Construction Co. Inc.

A conclusory statement that documents were lost must generally be supported by some explanation from the person most likely to have seen them, or of the efforts made to find them. But the Craddock standard is one of intentional or conscious indifference that the defendant knew it was sued but did not care. An excuse need not be a good one to suffice.

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Click here for the full text of this decision FACTS:In this suit on a surety bond, Drewery Construction Co. Inc., a subcontractor, obtained a default judgment for $158,131.05 plus interest and attorney’s fees against Fidelity and Guaranty Insurance Co., surety for the general contractor, JenCra Inc. Fidelity filed a motion for new trial explaining that the service papers had been lost. The trial court denied the motion, and the court of appeals affirmed. HOLDING:The court reverses the court of appeals’ judgment and remands the case to the trial court. Fidelity complains of a minor omission in the citation. Citation here was correctly addressed to “Fidelity and Guaranty Ins. Co.” but the style of the case listed only “JenCra, Inc. & Fidelity and” due to space constraints, omitting the remainder of Fidelity’s title. This appeal is from a motion for new trial. The court discusses why cases concerning concerning restricted appeals do not necessarily apply to motions for new trial. When a default judgment is attacked by motion for new trial or bill of review in the trial court, the parties may introduce affidavits, depositions, testimony and exhibits to explain what happened. That being the case, these procedures focus on the critical question in any default judgment: “Why did the defendant not appear?” If the answer to this critical question is “Because I didn’t get the suit papers,” the default generally must be set aside (exceptions to this rule exist when non-receipt is uncorroborated). But, if the answer to the critical question is “I got the suit papers but then . . . ,” the default judgment should be set aside only if the defendant proves the three Craddock elements. Craddock v. Sunshine Bus Lines, 133 S.W.2d 124 (Tex. 1939). Undisputed evidence presented on the motion for new trial showed that Fidelity’s registered agent received the suit papers. Thus, the only relevance of the partial omission of Fidelity’s name is its possible role in the Craddock analysis. While errors in suit papers might mislead a defendant into failing to answer, Fidelity makes no such assertion here. Because Fidelity’s failure to answer had nothing to do with this omission, it provides no ground for setting aside the default judgment by motion for new trial. Fidelity argues that the default should be set aside because it was served with Drewery’s original petition, which was later amended before the default judgment. But the only difference in the two petitions was an amendment to allow long-arm service on JenCra by serving the Secretary of State. Service of an amended petition on a party that has not appeared is necessary only when a plaintiff “seeks a more onerous judgment than prayed for in the original pleading.” Weaver v. Hartford Accident & Indem. Co., 570 S.W.2d 367 (Tex. 1978). That was not the case here. Of the three Craddock elements needed to set aside a default, Drewery argues, and the court of appeals held, that Fidelity failed to establish only the first whether the default was the result of accident or mistake. Fidelity attached four affidavits to its motion for new trial. The court finds that they detail the procedures for handling service papers in general and what is known about Drewery’s papers in particular. In the case of the electronic records, they explain precisely where the breakdown occurred. The court disagrees that to establish that papers were lost there must be an affidavit from the person who lost them describing how it occurred. The court agrees that a conclusory statement that documents were lost must generally be supported by some explanation from the person most likely to have seen them, or of the efforts made to find them. But the Craddock standard is one of intentional or conscious indifference � that the defendant knew it was sued but did not care. An excuse need not be a good one to suffice. The affidavits here show neither intent nor indifference, the court decides. OPINION:Per curiam.

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