Background

• Zohra Khwaja appeals the trial court's denial of her motion for new trial following a no-answer default judgment against her in favor of Quik-Way Retail Associates II, Ltd. (Cause No. DC-14-01589).
• Khwaja formed Akbar Alesha, LLC, signed a contract and a personal guaranty with Quik-Way, and relied on her sister Nazli to manage the business and respond to the suit.
• Quik-Way sued Khwaja and Nazli in February 2014; after failure to answer, the trial court granted a no-evidence default judgment awarding damages, exemplary damages, and attorney’s fees.
• Nazli’s and Khwaja’s timely motion for new trial argued the failure to answer resulted from accident/mistake, not intentional indifference, and that they had meritorious defenses and would not delay or injure Quik-Way.
• The trial court granted Nazli's motion for new trial but denied Khwaja's; the appellate court applied Craddock v. Sunshine Bus Lines to determine whether the three elements were satisfied.
• The court reversed the default judgment and remanded for further proceedings, holding Khwaja established all three Craddock elements.

Issues

Key Cases Cited

• Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388 (Tex. 1939) (establishes Craddock three-element standard for set-aside of default judgments)
• Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922 (Tex. 2009) (meritorious defense may be shown by prima facie proof and affidavits)
• Old Republic Ins. Co. v. Scott, 873 S.W.2d 381 (Tex. 1994) (precedes consideration of delay or injury when granting new trial)
• Sutherland v. Spencer, 376 S.W.3d 752 (Tex. 2012) (defines conscious indifference standard for failure to appear)
• Strackbein v. Prewitt, 671 S.W.2d 37 (Tex. 1984) (evidence of breakdown in communication can negate intentional nonappearance)