Linda Hayes SCHOENDIENST, Appellant v. Robert L. HAUG, Vince Wood and Highland Ventures, I, Ltd., Appellees.
No. 03-12-00291-CV.
Court of Appeals of Texas, Austin.
March 15, 2013.
399 S.W.3d 313
Conclusion
Having overruled appellants’ issues, we affirm the trial court‘s judgment.
OPINION
BOB PEMBERTON, Justice.
This is a restricted appeal from a “no-answer” default judgment that appellees Robert L. Haug, Vince Wood, and Highland Ventures, I, Ltd. obtained against appellant Linda Hayes Schoendienst (Hayes).1 Hayes brings three issues urging reversal of the judgment. Her principal complaint is that appellees violated her due process rights by taking the default judgment without prior noticе after she had appeared in the action. In the alternative, Hayes urges that appellees’ pleadings did not support the judgment‘s imposition of liability against her and that there was no evidence to support the damages the judgment awarded. Concluding that Hayes had appeared and that appellees violated due process by taking the default judgment against her without notice, we will reverse the district court‘s judgment and remand.
Elizabeth S. Kerr, Friedman, Suder & Cooke, P.C., Fort Worth, TX, for appellant.
Eleanor Ruffner, Daniel H. Byrne, Fritz, Byrne, Head & Harrison, P.L.L.C., Austin, TX, for appellees.
BACKGROUND
On August 22, 2011, appellees sued an entity known as Stewardship Advisors, LLC, alleging they had been victimized by a fraudulent investment scheme. About two weeks later, on September 11, 2011, appellees filed an amended petition that named additional defendants including Hayes. Appellees sought monetary damages, attorney‘s fees, declaratory relief, and equitable relief that included a temporary restraining order and temporary injunction to prohibit the defendants from “using, spending, investing, withdrawing, transferring[,] or otherwise dissipating”
In advance of the scheduled hearing on the temporary injunction request, the parties, including Hayes, who was acting pro se, consented to and signed an agreed temporary injunction on September 30, 2011. The agreed temporary injunction recited that the parties “have reached an agreement that the Temporary Restraining Order ... will be extended as an Agreed Temporary Injunction,” found that appellees would probably prevail at trial and the other facts necessary to justify the relief, and imposed restraints on the defendants’ conduct that generally tracked those in the TRO.3 The district court signed the agreed temporary injunction on October 3, 2011.
Meanwhile, as Hayes concedes, she was served with process yet did not file an answer. On October 20, 2011, after Hayes‘s answer date had passed, appellees obtained—without notice, as they acknowledge—an interlocutory defаult judgment against her. The default judgment awarded appellees $420,000 in actual damages, attorney‘s fees, an accounting of Hayes‘s records, a constructive trust against any assets in her possession that may be traced to funds or assets provided by appellees, and a declaration that any funds or assets in Hayes‘s possession that were traceable to appellees’ investments belonged to them. Contemporaneously, appellees obtained—again, without notice to Hayes—a severance of their claims against the other defendants so as to make the interlocutory default judgment against Hayes final. This restricted appeal later followed.
STANDARD AND SCOPE OF REVIEW
Hayes has opted to challenge the default judgment by restricted appeal, as the Texas Rules of Appellate Procedure permit her to do. See
The “record,” for purposes of a restricted appeal, consists of the clerk‘s record, the reporter‘s record (if one wаs made), and any evidence otherwise presented to the trial court before final judgment. See Norman Commc‘ns v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam); Alexander, 134 S.W.3d at 848-49 (“The rule has long been that evidence not before the trial court prior to final judgment may not be considered in a [restricted appeal] proceeding.” quoting General Elec. Co. v. Falcon Ridge Apartments, Joint Venture, 811 S.W.2d 942, 944 (Tex. 1991)). Error must be apparent from the face of the record, not inferred from the record. Gold v. Gold, 145 S.W.3d 212, 213 (Tex. 2004) (per curiam). The scope of our review in a restricted appeal is the same as in ordinary appeals; that is, we review the entire case. Norman, 955 S.W.2d at 270.
ANALYSIS
Hayes asserts that there are three reversible errors underlying the default judgment that are apparent on the face of the record: (1) appellees failed to give her notice of their intent to take the default judgment after she had appeared in the action, violating her due process rights (her first issue); (2) appellees’ pleadings did not support the judgment‘s imposition of liability against her (second issue); and (3) there was no evidence to support unliquidated damages the judgment awarded (third issue). We need only address Hayes‘s first issue.
A plaintiff may take a default judgment against a defendant who, like Hayes, fails to file an answer. See
The face of the record establishes, and both sides acknowledge, that (1) Hayes did not file a written answer; and (2) appellees did not give Hayes notice of the hearing on the default judgment. Consequently, whether Hayes is entitled to relief turns entirely on whether she “appeared” in some way other than by filing an answer. In the absence of a written answer, “whether a defendant is considered to have ‘appeared’ depends on the nature and quality of the party‘s activities in the case.” Runberg, 159 S.W.3d at 198 (quoting Bradford v. Bradford, 971 S.W.2d 595, 597 (Tex. App.—Dallas 1998, no pet.)); see also
[A] party enters a general appearance when it (1) invokes the judgment of the court on any question other than the court‘s jurisdiction, (2) recognizes by its acts that an action is properly pending, or (3) seeks affirmative action from the court.
Exito Elecs. Co. v. Trejo, 142 S.W.3d 302, 304 (Tex. 2004) (per curiam) (citing Dawson-Austin v. Austin, 968 S.W.2d 319, 322 (Tex. 1998)); see also St. Louis & San Francisco R.R. Co. v. Hale, 109 Tex. 251, 206 S.W. 75, 75 (1918) (“It seems to be almost uniformly held that a general appearance is entered whenever the defendant invokes the judgment of the court, in any way, on any question other than that of the court‘s jurisdiction, without being compelled to do so by previous rulings of the court sustaining the jurisdiction.“).
Hayes contends that her act of consenting to and signing an agreed temporary injunction—an order, signed by the district court, that restrains her conduct—amounts to the sort of implicit recognition of the court‘s jurisdiction over her that rises to the level of an appearance. In support, she refers us to a line of cases holding that a party‘s assent to an agreed judgment or other finаl order constitutes an appearance such that the party could be bound to the order despite defects in service. See In re C.R.B., 256 S.W.3d 876, 877-78 (Tex. App.—Texarkana 2008, no pet.) (party appeared by signing final order in SAPCR as “approved and consented to in both form and substance“); Spivey v. Holloway, 902 S.W.2d 46, 48 (Tex. App.—Houston [1st Dist.] 1995, no writ) (party appeared and waived service by signing divorce decree); Terry v. Caldwell, 851 S.W.2d 875, 876 (Tex. App.—Houston [14th Dist.] 1993, no writ) (party appeared and waived service by signing agreed modification in SAPCR suit). The logic of these decisions, as the court of appeals in C.R.B. observed, is that a defendant who agrees to a judgment against it impliedly consents to the court‘s jurisdiction over it to resolve questions broader than jurisdiction itself and recognizes that an action was properly pending. See C.R.B., 256 S.W.3d at 877-78 (citing Trejo, 142 S.W.3d at 304; Dawson-Austin, 968 S.W.2d at 322). Indeed, it seems self-apparent that a defendant who consents to a judgment against it necessarily acknowledges that the court had jurisdiction to render that judgment in the first place.
Appellees urge that these cases are inaрposite because each involved judgments or other final orders. In contrast to these final orders, appellees emphasize, the agreed temporary injunction here does not
Similarly, our independent research has yielded Runberg, in which the Amarillo Court of Appeals held that a defendant had appeared, so as to be entitled to notice of a default-judgment hearing in a divorce proceeding, by announcing “ready” at a hearing on temporary orders and entering into agreed temporary orders that were in the nature of injunctive relief. Seе 159 S.W.3d at 198-99. Although the defendant had participated in the hearing on temporary orders by announcing “ready” and joining in submitting the agreed temporary orders for court approval, see id., the court also deemed significant the mere fact that he had “agreed to subject himself to a detailed court order—the injunction—which restricted his personal freedom and ability to deal with his property and finances.” Id. at 199.
While perhaps not as “detailed” or “extensive” as the injunctive relief in Runberg, see id. at 198-99, the agreed temporary injunction here is nonetheless similar in nature—it restricts Hayes‘s personal freedom and ability to deal with her property and finances.5 We also observe that while the agreed injunctive relief here, as in Runberg and Lette, was temporary in nature, the order here explicitly contemplated an eventual trial on the merits of appellees‘s claims against the defendants, including Hayes, before the district court. Furthermore, Hayes signed the agreed temporary injunction without any sort of reservation regarding the district court‘s jurisdiсtion or the substance of the order, nor has she even contested these issues. Cf. In re M.G.M., 163 S.W.3d 191, 200-01 (Tex. App.—Beaumont 2005, no pet.) (defendant did not waive special appearance by agreeing to extension of protective order; order was expressly “subject to and without prejudicing or waiving any plea to the jurisdiction or special appearance by Respondent“). Hayes‘s unqualified written agreement to a temporary injunction having these features are indicative of her recognition that the district court had jurisdiction оver her to decide questions beyond jurisdiction itself and that the under-
In contending otherwise, appellees rely on what they portray as an established principle of Texas law that entering into an “extra-judicial agreement” to extend a temporary restraining order is not an appearance, and they suggest that this is all that happened here. In support, appellees cite authorities addressing the implications of a party‘s entry into a
Appellees similarly rely on Crystalix Group International, Inc. v. Vitro Laser Group USA, Inc., in which the Dallas Court of Appeals concluded that a defendant did not makе a general appearance by signing two
Neither of the rule 11 agreements in this case change the status of any action with the court, nor do they request any action from the court. The TRO was already in place, and [the plaintiff] simply sought to continue the order as it was. The February 26 rule 11 agreement did not change the material components of the TRO in any way. The March 5 agreement merely showed that [the defendant] agreed not to seize оr interfere with the system. Although the agreement stated “pending adjudication by the court,” the agreement did not suggest the action was properly before the trial court, and it did not invoke any involvement from the trial court. This agreement also merely maintained the status quo from the court‘s perspective. Furthermore, [the defendant], through counsel, merely signed the agreement.
In addition to some factual distinctions between the restraints in these cases and the TRO here,7 there are fundamental differences between a
As further support for their position, appellees point to Exchequer Financial Group, Inc. v. Stratum Development, Inc. as authority for the proposition that merely acquiescing in or passively agreeing to an order for affirmative relief sought by another party does not constitute an appearance. 239 S.W.3d 899, 905 (Tex. App.—Dallas 2007, no pet.). In that case, Exchequer appealed a trial court order granting Stratum‘s special appearance and dismissing Exchequer‘s claims against Stratum. Id. at 902. Exchequer argued that Stratum had made a general appearance by signing a proposed abatement order that had been filed by Stratum‘s co-defendants. Id. at 905. Stratum‘s counsel signed the order “approved as to form only.” Id. In rejecting Exchequer‘s argument, the court reasoned in part that Stratum “did not file the motion requesting the plea in abatement” and had not requested affirmative relief, but “agreed only to an order regarding another party‘s requеst for affirmative relief.” Id. Accordingly, the court concluded that “counsel‘s signature approving the form of the order granting a plea in abatement did not constitute a general appearance.” Id.
Appellees assert that this holding is “directly analogous to the instant case.” We disagree. Especially in the context of its having filed a special appearance to contest jurisdiction, Stratum‘s agreement to an abatement order, particularly “as to form only,” did not amount to a recognition of the court‘s jurisdiction to decide anything other than the pending jurisdictional challenge. On the contrary, it suspended the court‘s ability to act. See Dawson-Austin, 968 S.W.2d at 323 (motion for continuance “did not request affirmative relief inconsistent with Dawson-Austin‘s assertion that the district court lacked jurisdiction, which, as we have said, is the test for a general appearance“). In contrast, in agreeing without qualification to the temporary injunction here, Hayes subjected herself to a court order that
Finally, by concluding that Hayes appeared by agreeing to the temporary injunction here, we do not suggest that agreeing or acquiescing to some form of temporary injunctive relief will always constitute an appearance. The analysis, again, is dependent upon the particular facts presented, and plainly there are circumstances where a defendant‘s agrеement to a temporary injunction will not, in context, constitute the sort of recognition of the court‘s jurisdiction that amounts to
Furthermore, we note that two of our sister courts have recently suggested the existence of a categorical rule that appearing in matters “ancillary and prior to the main suit,” including agreeing to temporary injunctive relief, does not constitute a general appearance that waives a special appearance. See Carey v. State, No. 04-09-00809-CV, 2010 WL 2838631, at *3, 2010 Tex. Apр. LEXIS 5683, at *8 (Tex. App.—San Antonio July 21, 2010, pet. denied) (mem. op.); accord Grynberg v. M-I L.L.C., 398 S.W.3d 864, 877-79, 2012 WL 7849182, at *10-11, 2012 Tex. App. LEXIS 10747, at *32-33 (Tex. App.—Corpus Christi 2012, no pet.) (citing Carey for that proposition). Leaving aside that Hayes, unlike the defendants in Carey and Grynberg, has not contested personal jurisdiction, a close examination of the authorities cited to support that proposition reveals it to be an overbroad oversimplification. Carey, for example, cites In re M.G.M., which, as noted, involved an agreed protective order that expressly reserved the defendant‘s right to challenge personal jurisdiction. The court similarly relied on Perkola v. Koelling & Assocs., 601 S.W.2d 110, 111-12 (Tex. Civ. App.—Dallas 1980, writ dism‘d), and Turner v. Turner, No. 14-98-00510-CV, 1999 WL 33659, at *2-3, 1999 Tex. App. LEXIS 491, at *6-7 (Tex. App.—Houston [14th Dist.] Jan. 28, 1999, no pet.) (not designated for publication), two cases involving an attorney‘s mere physical presence at a temporary injunction hearing—i.e., a situation similar to Smith—and a case involving the filing of a discovery mandamus, Gutierrez v. Cayman Islands Firm of Deloitte & Touche, 100 S.W.3d 261, 267 (Tex. App.—San Antonio 2002, pet. dism‘d), which is an action not necessarily inconsistent with a challenge to personal jurisdiction, see Exito Elecs. Co. v. Trejo, 142 S.W.3d 302, 306-07 (Tex. 2004). In short, we see nothing in Carey or Grynberg that should alter our conclusion that Hayes appeared by agreeing to the temporary injunction at issue here.
CONCLUSION
Because we have sustained Hayes‘s first issue and this hоlding entitles her to the entirety of the appellate relief she seeks, we do not reach her other issues. See
BOB PEMBERTON
Justice
Notes
(a) using, spending, investing, withdrawing, transferring[,] or otherwise dissipating any funds or assets contributed or earned by Plaintiffs or traceable to such funds; (b) using, spеnding, withdrawing, investing, transferring, or otherwise using any funds or assets related to the Flip; (c) using, spending, withdrawing, investing, transferring, or otherwise using any funds or assets related to SHW; and (d) using, spending, withdrawing, investing, transferring[,] or otherwise using any funds or assets that can be traced to the Flip or SHW, provided that Defendants may engage in any of the foregoing actions with the advance written consent of Plaintiffs.
to desist and refrain from the following acts, without Plaintiffs’ express written consent, until judgment in this cаuse is rendered by this Court: (a) using, spending, investing, withdrawing, transferring[,] or otherwise dissipating any funds or assets contributed or earned by Plaintiffs or traceable to such funds; (b) using, spending, withdrawing, investing, transferring, or otherwise using any funds or assets related to the Flip (as defined in Plaintiff‘s [sic] Amended Petition and Application for Temporary Restraining Order and Temporary Injunction); (c) using, spending, withdrawing, investing, transferring, or otherwise using any funds or assets related to SHW Capital 2011, LP; and (d) using, spending, withdrawing, investing, transferring, or otherwise using any funds or assets that can be traced to the Flip or to SHW Caрital 2011, LP.
