Rhino Contractors, LLC v. Vulcan Construction Materials, LP
04-15-00117-CV
| Tex. App. | Apr 2, 2015Background
- Vulcan sued Rhino for breach of contract or on a sworn account, seeking $454,846.76, prejudgment interest, and attorney’s fees; Vulcan attached a credit application and an affidavit claiming an attached account but did not attach itemized invoices or the account detail.
- Service: after failed personal service attempts, plaintiff obtained an order for substituted service by posting process on the registered agent’s home door; process server’s return and plaintiff’s certificate of last known address were filed.
- Rhino did not answer; the trial court entered a default judgment awarding principal, $12,561.36 prejudgment interest, $60,484.68 attorney’s fees, post-judgment interest and costs.
- Rhino timely moved for new trial (and later amended) asserting it never received the petition, attaching affidavits from Nancy Russell (registered agent/president) denying receipt and producing business records showing billing disputes and payments.
- Trial court allowed filing of the amended motion with affidavits but denied the motion for new trial; Rhino appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held (trial-court posture) |
|---|---|---|---|
| 1) Whether default should be set aside because defendant did not receive notice | Service was proper (substituted service posted at registered agent’s residence); citation return on file | Nancy Russell’s uncontroverted affidavit says she did not receive the posted petition; lack of notice is a sufficient excuse | Trial court denied new trial despite defendant’s affidavit (default judgment entered) |
| 2) Whether Rhino satisfied Craddock factors to obtain new trial (excuse, meritorious defense, no prejudice) | Vulcan contended default and proof were adequate; plaintiff relied on affidavit in lieu of live evidence | Rhino: failure to answer was not intentional; produced prima facie evidence of billing disputes/credits (meritorious defense); offered to reimburse costs/no prejudice | Trial court denied motion for new trial |
| 3) Whether damages award was supported (sworn account / unliquidated damages) | Vulcan relied on affidavit asserting an attached account showing $454,846.76 though no itemized account was attached | Rhino: absence of itemized sworn account violates Tex. R. Civ. P. 185; damages unliquidated, so court needed evidence; invoices missing, so award unsupported | Trial court entered judgment for stated damages despite lack of itemized account |
| 4) Whether prejudgment interest and attorney-fee awards were supported | Vulcan sought 18% prejudgment interest and claimed customary fees by affidavit | Rhino: contract provided only a 1% monthly late charge; no invoices to calculate dates/balances for interest; fee affidavit lacked Arthur Andersen proof (hours, rates, necessity) and billing records | Trial court awarded specified interest and $60,484.68 fees based on plaintiff’s affidavits |
Key Cases Cited
- Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939) (sets test for setting aside default judgments: mistake/accident, meritorious defense, no prejudice)
- Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812 (Tex. 1997) (factors for proving reasonable attorney’s fees)
- Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80 (U.S. 1988) (defendant who never received notice need not meet Craddock meritorious-defense prong)
- Sutherland v. Spencer, 376 S.W.3d 752 (Tex. 2012) (service/notice and new-trial principles)
- Milestone Operating, Inc. v. Exxon Mobil Corp., 388 S.W.3d 307 (Tex. 2012) (explain setting-aside-default principles where defendant asserts lack of notice)
- Fidelity & Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571 (Tex. 2006) (default generally must be set aside if defendant did not receive suit papers)