Maxx Builders, LLC v. Story, Not Reported in S.W. Rptr.

(2016)

Maxx Builders, an LLC, entered into a contract with Story to

construct a “fire wall” for his building. The contract specified
2016 WL 3544495
the materials Maxx Builders was required to use. Story alleges
Only the Westlaw citation is currently available.
Maxx Builders used inferior materials to those specified in
SEE TX R RAP RULE 47.2 FOR the contract.
DESIGNATION AND SIGNING OF OPINIONS.
Story sued Maxx Builders for damages and attorney's fees
Court of Appeals of Texas, Houston (1st Dist.). under the Texas Deceptive Trade Practices Act. Harris Khan,
the non-attomey owner of Maxx Builders, filed a pro se
MAXX BUILDERS, LLC, Appellant
answer on behalf of Maxx Builders.
v.
Edward L. STORY, Individually In response, Story filed a motion to show authority to act,
and as the Representative of the arguing that Khan, as a non-attorney, could not represent an
Estate of Karen L. Story, Appellee LLC. Maxx Builders did not respond to the motion. The trial
court issued an order requiring Maxx Builders to designate
NO. 01–15–00850–CV a person authorized to act on its behalf and appear before
| the trial court by June 26 or it would strike Maxx Builders's
Opinion issued June 28, 2016 answer.

On Appeal from the 10th District Court, Galveston County,

Maxx Builders did not designate an attorney by that date
Texas, Trial Court Case No. 15–CV–0393
and, on July 1, Story filed a motion to strike Maxx Builders's
Attorneys and Law Firms answer and enter default judgment against it. Story served this
motion on Maxx Builders the same day. On July 7, Story set a
Gary Edwin Lee, for Edward L. Story, Individually and as the hearing on the motion for July 28 and served notice to Maxx
Representative of the Estate of Karen L. Story. Builders that its “motion to strike pleadings and enter default
judgment ... will be considered at a hearing on July 28....”
Panel consists of Justices Bland, Brown, and Lloyd.
Instead of waiting until July 28, the trial court struck Maxx
Builders's pleadings and entered default judgment against it
MEMORANDUM OPINION on the day Story filed his motion. The trial court ordered
Story to provide evidence of damages at the scheduled July
Harvey Brown Justice
28 hearing.
*1 Edward Story sued Maxx Builders, a limited liability
corporation, for violations of the Texas Deceptive Trade Maxx Builders did not appear at the July 28 hearing. The
Practices Act. After striking Maxx Builders's pro se “answer,” trial court, after hearing testimony from Story, found Maxx
filed by a non-attorney corporate officer, the trial court Builders liable for actual damages, mental anguish damages,
entered a default judgment against it. Although Maxx and “additional damages for the knowingly committed
Builders admits that its answer was “defective” because it actions, as well as prejudgment interest and attorney's fees.”
was filed by a non-attorney, it argues it was entitled to notice
of a default judgment hearing. Because a defective answer, After the July 28 hearing, Maxx Builders hired an attorney
including an answer filed for a limited liability corporation and, through its attorney, filed a motion for new trial. The trial
by a non-attorney, prevents a trial court from entering a court denied Maxx Builders's motion. Maxx Builders appeals
default judgment without first giving notice of a hearing on the orders granting default judgment and denying its motion
the motion for default judgment, we reverse and remand for for a new trial.
additional proceedings.

Maxx Builders Filed an Answer

Background

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Maxx Builders, LLC v. Story, Not Reported in S.W. Rptr. (2016)

Maxx Builders argues that it appeared by filing an answer, answer, “judgment cannot be entered on the pleadings, but
and, “a trial court may not render a default judgment against the claimant must offer evidence and prove his case as in a
a defendant who has appeared without first giving the judgment upon a trial.”).
defendant notice of the dispositive default judgment hearing.”
The rule governing post-answer default judgment applies
even when the trial court strikes the defendant's answer.
A. No-answer default and post-answer default Beasley, 109 S.W.3d at 899; see Knox v. Long, 257 S.W.2d
judgments generally 289, 296 (Tex.1953) (“In the case of a disobedient defendant
*2 Texas recognizes two types of default judgments: a no- where answer on the merits of the case has been stricken,
answer default judgment and a post-answer default judgment. a default judgment may not be taken, but the plaintiff must
See Dolgencorp of Texas, Inc. v. Lerma, 288 S.W.3d 922, discharge his burden of showing his right to a recovery.”);
930 (Tex.2009). A no-answer default is a default judgment Robb Int'l, Inc. v. SHL Thai Food Serv., LLC, 346 S.W.3d
“caused by a defendant's failure to answer after service....” 208, 210 (Tex.App.—Houston [14th Dist.] 2011, no pet.)
Paradigm Oil, Inc. v. Retamco Operating, Inc., 372 S.W.3d (stating, in case not involving stricken answer, “this court
177, 183 (Tex.2012). “A postanswer default judgment occurs and other intermediate courts of appeals have held that an
when a defendant who has answered fails to appear for answer purportedly filed on behalf of a corporation by a
trial.” Lerma, 288 S.W.3d at 925. A trial court cannot render non-attorney, though defective, still prevents the trial court
a noanswer default judgment against a defendant who has from granting a default judgment.”); Guadalupe Econ. Servs.
filed an answer. See Davis v. Jefferies, 764 S.W.2d 559, 560 Corp. v. Dehoyos, 183 S.W.3d 712, 715–17 (Tex.App.—
(Tex.1989) (per curiam). Austin 2005, no pet.) (holding that due process entitled
defendant-corporation that filed pro se answer to notice of
The plaintiff's burden differs for each type of default trial date); Santex Roofing & Sheet Metal, Inc. v. Venture
judgment: in a noanswer default, “a defaulting defendant Steel, Inc., 737 S.W.2d 55, 56 (Tex.App.—San Antonio 1987,
admits all facts properly pled in the plaintiff's petition.... no writ) (noting, in dicta, that “[t]he Texas Supreme Court
[And] the plaintiff is only required to prove its claim for has held that it is improper to render judgment by default
unliquidated damages.” Lerma, 288 S.W.3d at 930. But if even in a case where the trial court has correctly ordered
the defendant files an answer, “the plaintiff is required to the answer of the defendant stricken”); Wuxi Taihu Tractor
offer evidence and prove all aspects of its claim” before Co. v. York Grp., Inc., No. 01–13–00016–CV, 2014 WL
the trial court can enter a post-answer default judgment. Id. 6792019, at *9 (Tex.App.—Houston [1st Dist.] Dec. 2, 2014,
Judgment after a post-answer default “cannot be entered on pet. denied) (mem.op.) (stating, in case where trial court had
the pleadings, but, rather, a plaintiff must offer evidence and not struck defective answer, “non-attorney's answer on behalf
prove his case as in a judgment on trial.” Sharif v. Par Tech, of a corporation, although defective, prevents the trial court
Inc., 135 S.W.3d 869, 873 (Tex.App.—Houston [1st Dist.] from granting a default judgment against the corporation”).
2004, no pet.).

Before entering a post-answer default judgment, the trial B. Standard of review

court must hold a hearing on the plaintiff's evidence, and the *3 A trial court's decision to overrule a motion to set
defendant must be given notice of the hearing. 1 See In re aside a default judgment and grant a new trial is subject to
$475,001.16, 96 S.W.3d 625, 627–28 (Tex.App.—Houston review for abuse of discretion. Interconex, Inc. v. Ugarov,
[1st Dist.] 2002, no pet.) (“[O]nce a defendant has made 224 S.W.3d 523, 536 (Tex.App.—Houston [1st Dist.] 2007,
an appearance in a cause, he is entitled to the notice of the no pet.). When a defendant receives proper notice of a post-
trial setting as a matter of due process under the Fourteenth answer hearing, the trial court should set aside a post-answer
Amendment.”); KSNG Architects, Inc. v. Beasley, 109 S.W.3d default judgment if the defendant establishes that (1) its
894, 899 (Tex.App.—Dallas 2003, no pet.) (“[W]ell-settled nonappearance was the result of an accident or mistake, not
law forbids entering a default judgment against a defendant intentional or the result of conscious indifference; (2) the
that has received no notice of the hearing on a motion for motion for new trial alleges a meritorious defense; and (3)
default judgment.”); Vaughan v. Medina, No. 01–09–00885– granting the motion will not cause undue delay or otherwise
CV, 2011 WL 1233556, at *2 (Tex.App.—Houston [1st Dist.] injure the plaintiff. Craddock v. Sunshine Bus Lines, Inc.,
Mar. 31, 2011, no pet.) (mem.op.) (After defendant files 133 S.W.2d 124, 126 (Tex.1939). But when a defendant does
not receive notice of the hearing, the defendant's lack of

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Maxx Builders, LLC v. Story, Not Reported in S.W. Rptr. (2016)

notice satisfies the first Craddock prong and renders analysis S.W.2d 289, 296 (Tex.1953)). An “answer” filed by a non-
of the second and third prongs unnecessary. See Mathis v. lawyer corporate officer, although “defective,” is sufficient
Lockwood, 166 S.W.3d 743, 744 (Tex.2005) (holding that lack to constitute an answer for default-judgment purposes and
of notice renders analysis under second prong unnecessary thus, any default judgment after such an answer is filed must
and acknowledging, without deciding, that intermediate follow the requirements of a post-answer default judgment.
appellate courts have also held that lack of notice renders Rabb Int'l, 346 S.W.3d at 210 (“[A] document filed in court
analysis under third prong unnecessary); Mahand v. Delaney, by a non-attorney purportedly on behalf of a corporation
60 S.W.3d 371, 375 (Tex.App.—Houston [1st Dist.] 2001, no is defective but not void, and may be effective for certain
pet.). purposes, such as avoiding a default judgment and perfecting
appeal”); Dehoyos, 183 S.W.3d at 715–17 (Because “[c]ourts
have repeatedly held that due process requires that a party
C. Deficient answer of non-attorney corporate officer be given notice of a lawsuit and an opportunity to be heard”
constitutes an answer for default judgment purposes and defendant—corporation filed pro se letter with court
Maxx Builders argues that the trial court's order granting that constituted answer, defendant was entitled to notice
default judgment against it violates its due process rights and hearing on post-answer default judgment); Beasley,
“and thus is void because [it] had answered and appeared and 109 S.W.3d at 899 n.5 (“An answer filed on behalf of
therefore [was] entitled to receive notice of the dispositive a corporation by a non-attorney is sufficient to prevent a
hearings.” Story responds that Maxx Builders did not default judgment.”); Wuxi Taihu, 2014 WL 6792019, at *9
“appear” in this lawsuit because “a non-attorney may not (“non-attorney's answer on behalf of a corporation, although
appear pro se on behalf of a corporation.” And because its defective, prevents the trial court from granting a default
answer was appropriately stricken, Maxx Builders “was not
judgment against the corporation”). 2
entitled to notice” of the default judgment hearing. Story
argues that even if Maxx Builders's “defective answer was
*4 This court in Wuxi Taihu discussed the split in
sufficient to preclude summary judgment, it does not follow
other jurisdictions and noted that some state courts hold
that [it] was relieved from taking any action on its own behalf
that any action taken by a non-lawyer for a corporation
to prevent the Answer from being stricken. [It] was noticed
“constitutes a nullity, and renders the proceedings void ab
of every hearing; thus [its] opportunity to be heard was lost
initio.” 2014 WL 6792019, at *8 (internal citations and
by its own inaction.”
quotation marks omitted). But the majority of jurisdictions,
including Texas, have adopted the “curable defect” approach,
A trial court can properly strike a corporate officer's pro se
which “hold[s] that an action taken by a non-attorney on
answer for a corporation because only a licensed attorney may
behalf of a corporation presents a curable defect.” Id. This
appear and represent a corporation in litigation. Kunstoplast
approach “liberally construe[s] the rules of civil procedure
of Am., Inc. v. Formosa Plastics Corp., USA, 937 S.W.2d 455,
[to] emphasize substance over form to advance the policy
456 (Tex.1996). But due process requires that a party be given
favoring resolution of cases on the merits.” Id.
“an opportunity to be heard.” Guadalupe, 183 S.W.3d at 715.
Thus, “Texas courts have always been reluctant to uphold a
The “curable defect” approach to post-answer defaults was
default judgment without notice where some response from
applied to an answer filed for a corporation by a non-attorney
the defendant is found in the record.” Santex, 737 S.W.2d at
in Beasley. 109 S.W.3d at 899. In that case, an officer of a
56. “It is a basic tenet of jurisprudence that the law abhors
defendant—corporation filed a pro se answer and received
a default.” Hock v. Salaices, 982 S.W.2d 591, 593 (Tex.App.
notice of a hearing on a motion to strike its answer but had
—San Antonio 1998, no pet.). Thus, “[t]raditionally any sort
no notice that the trial court could enter a default judgment
of appearance will defeat a default. Indeed, the courts have
against it at that hearing. Id. The Dallas court held that,
gone to great lengths to excuse defects in answers to prevent
because “well-settled law forbids entering a default judgment
the entry of default judgments against parties who have made
against a defendant that has received no notice of the hearing
some attempt, albeit deficient, unconventional, or flat out
on a motion for default judgment,” an “answer filed on behalf
forbidden under the Rules of Civil Procedure....” Id.
of a corporation by a non-attorney is sufficient to prevent a
default judgment” Id. at 899 & n.5. “Texas law does not favor
Thus, a no-answer default judgment is improper when a trial
striking defective pleadings without giving an opportunity to
court has “correctly ordered the answer of the defendant
replead.... Texas law states the trial court must afford the party
stricken.” Santex, 737 S.W.2d at 56 (citing Knox v. Long, 257

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Maxx Builders, LLC v. Story, Not Reported in S.W. Rptr. (2016)

who filed the defective pleading an opportunity to cure the

Story argues that Maxx Builders had notice of the order
defect by repleading.” Id. at 898. The Dallas court concluded
requiring it to hire an attorney by June 26 and Maxx Builders
that the trial court erred by “striking the defective answer” and
“rejected the opportunity and effectively ignored the case.”
by not allowing the defendant “a reasonable time to remedy
While it is true that Maxx Builders had notice of that order,
the defect” before entering a default judgment. Id. at 899.
that order only stated that Maxx Builders's answer would be
stricken—not that the trial court would enter default judgment
Story attempts to distinguish Beasley by arguing that it
against it. Nor did Maxx Builders receive notice or a hearing
considered the “narrow question ... of whether, after striking
before the trial court ruled on Story's motion for postanswer
the defective answer, the trial court abused its discretion by
default judgment.
not allowing the offending party any time to remedy the
defect.” Story argues that Maxx Builders had the opportunity
We sustain Maxx Builders's first issue. Because Maxx
to hire a lawyer and was put on notice that if it did not do
Builders did not have notice of a hearing on Story's motion for
so, “the Court will strike [its] pleadings.” But this argument
default judgment, we do not reach the issues of whether Maxx
ignores the “well-settled rule” in Texas that a defendant is
Builders had sufficient notice of the hearing on liquidated
entitled to notice and a hearing on a post-answer default
damages or whether the evidence was sufficient to support
judgment—even if entered after the trial court strikes a
Story's damages claims.
defective answer. See id. at 899.

Although Maxx Builders's answer was properly stricken

because it was filed by a non-lawyer corporate officer, the Conclusion
default judgment against it is a post-answer default judgment
because Maxx Builders filed at least some form of answer *5 We reverse the trial court's order granting Story's motion
in the trial court. Maxx Builders did not receive notice of a for default judgment and remand to the trial court.
hearing on Story's motion for post-answer default judgment
because the trial court granted the default motion on the day
All Citations
it was filed, July 7, rather than waiting for the date set forth
in the notice of hearing, July 28. Not Reported in S.W. Rptr., 2016 WL 3544495

Footnotes

1 Maxx Builders focuses its appellate argument on whether it received notice of a hearing, not on whether the
required hearing was held. Therefore, we focus our analysis on the same issue.
2 Story cites to three cases to support his argument that the trial court did not err in striking Maxx Builders's pro
se answer. But that is not the issue; the trial court could not enter a default judgment without giving notice and
a hearing because Maxx Builders filed an answer—albeit a defective one—and a defective answer precludes
entry of a no-answer default judgment.

End of Document © 2021 Thomson Reuters. No claim to original U.S. Government Works.

© 2021 Thomson Reuters. No claim to original U.S. Government Works. 4