SVT, LLC and Robert Orr v. Seaside Village Townhome Association, Inc.
14-19-00586-CV
| Tex. App. | Jul 6, 2021Background
- SVT, LLC (developer) retained title to a vacant common-area parcel (the “Repsdorph Property”) after transferring subdivision control to Seaside Village Townhome Association (Seaside). Seaside sued to quiet title.
- Earlier rulings and appeals partially adjudicated ownership; by 2016 Seaside had been declared owner of the Repsdorph Property in prior proceedings.
- In 2019 Seaside moved for summary judgment on SVT’s remaining counterclaims (including unjust enrichment). The hearing was reset by a Rule 11 agreement and an amended notice set an April 18 hearing.
- Notice of the amended hearing went to SVT’s attorneys (Mahendru and Braun) but not to the firm paralegal (Butler), who was the firm’s listed service/contact and responsible for calendaring. The attorneys assumed Butler received the notice; the hearing was not calendared, SVT did not respond or appear, and the court granted summary judgment against SVT.
- SVT filed a motion for new trial (and leave to file a late summary-judgment response) asserting mistake (unsworn declaration by counsel explaining e-service omission), attaching a proposed response showing material fact issues on unjust enrichment, and alleging no undue harm to Seaside. The trial court’s ruling was overruled by operation of law; SVT appealed.
- The appellate court applied the modified Craddock test, concluded SVT met all three prongs (failure was by mistake, SVT raised a material fact on unjust enrichment, and Seaside would suffer no undue delay), reversed and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument (Seaside) | Defendant's Argument (SVT) | Held |
|---|---|---|---|
| Whether the trial court abused its discretion by not granting SVT’s motion for new trial after summary judgment was granted for failure to respond | SVT had notice via its attorneys and was therefore consciously indifferent; permitting new trial would delay finality and Seaside would be harmed | Failure to respond was an accident/mistake caused by e-service omission to the calendaring paralegal; SVT timely moved and attached a response raising fact issues and offered readiness to proceed | Reversed: appellate court found abuse of discretion and remanded — SVT satisfied the modified Craddock test |
| Whether SVT’s failure to respond was intentional or due to conscious indifference | Attorneys were served and should have calendared/heard; no adequate excuse | Attorneys reasonably relied on firm’s calendaring procedures and the paralegal’s receipt; evidence (declaration and e-service screenshots) shows omission | Not intentional; failure was mistake/accident (first Craddock element satisfied) |
| Whether SVT’s motion for new trial set up a meritorious defense / raised a material fact issue | Unjust enrichment fails as independent claim and Seaside did nothing wrongful; no evidence Seaside’s retention was unconscionable | SVT alleged payment of property taxes, ~ $30,000 in improvements, and loans (~$17k) — may establish benefits Seaside received that would be unconscionable to retain | SVT raised a genuine issue of material fact on unjust enrichment (second modified Craddock element satisfied) |
| Whether granting a new trial would cause undue delay or injury to Seaside | Allowing late response/new trial would further delay a multi-year case and prejudice Seaside | SVT asserted no undue harm; once movant alleges no injury burden shifts to plaintiff to prove undue harm; Seaside did not show loss of witnesses or similar prejudice | No undue delay or injury shown (third Craddock element satisfied) |
Key Cases Cited
- Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939) (establishes default-judgment vacatur factors)
- Carpenter v. Cimarron Hydrocarbons Corp., 98 S.W.3d 682 (Tex. 2002) (standards for leave to file late summary-judgment response)
- Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922 (Tex. 2009) (applies Craddock factors to summary-judgment context)
- In re R.R., 209 S.W.3d 112 (Tex. 2006) (standard of review: abuse of discretion for denial of new trial)
- Weech v. Baptist Health Sys., 392 S.W.3d 821 (Tex. App.—San Antonio 2012) (discusses modified Craddock application in no-response summary-judgment setting)
- Dir., State Emps. Workers’ Comp. Div. v. Evans, 889 S.W.2d 266 (Tex. 1994) (burden-shifting on plaintiff to prove undue injury once movant asserts no harm)