Peter C. Kern v. Joe Bill Spencer, Individually and as Part Owner of Nature Leisure Times, L.L.C. Janice L. Spencer, an Individual Mary Spencer, an Individual Brent Pennington, an Individual Ruwach Resorts, Inc. JLS Construction, Inc. And Nature Leisure Times

Citation: Not availableDocket: 02-06-00199-CV

Court: Court of Appeals of Texas; July 24, 2008; Texas; State Appellate Court

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Peter C. Kern appealed a no-evidence summary judgment granted by the trial court in favor of several appellees, including Joe Bill Spencer and Brent Pennington, citing errors in the trial court's handling of his case. Kern contended that the court improperly denied his motion for a new trial after he failed to respond to the appellees' motions for summary judgment. The lawsuit, initiated in August 2004, included claims of breach of contract and fraudulent misrepresentation against the appellees, who filed general denials and counterclaims against Kern. 

In February 2006, after the discovery deadline, Pennington and Spencer filed no-evidence motions for summary judgment, which the trial court scheduled for submission without a hearing. Kern did not file responses or objections to these motions, nor to the proposed orders submitted by the appellees. The trial court granted the summary judgment motions on March 10, 2006, leading to a severance of Kern’s claims for finality and appealability.

On April 7, 2006, Kern, now represented by new counsel, filed a motion for a new trial asserting that his lack of response was due to accident or mistake rather than intentional neglect. This motion was supported by affidavits from Kern and his previous attorney, Ronald Kurpiers. The court ultimately affirmed the trial court's decision, noting that Kern did not demonstrate that his failure to respond was accidental or a mistake.

Kern's affidavit asserts that there are genuine issues of material fact regarding his claims. Kurpiers's affidavit states he did not receive any notices about hearings or submission dates for summary judgments, attributing this to staff oversight rather than intentional neglect. Kurpiers claims his lack of response was accidental or due to mistakes by his office. In contrast, Pennington and Spencer argue that Kern has not actively pursued the case, citing his failure to respond to discovery requests, his absence at depositions, and non-responses to motions for summary judgment. Spencer's response includes an affidavit from Jason Katz, asserting that notices of the summary judgment motions were properly sent to Kurpiers's office via certified mail, with proof of receipt signed by Kurpiers's receptionist, Tanya Ortiz. Additionally, Katz states he communicated via voice message and facsimile to Kurpiers regarding the motions. Pennington's response echoes Spencer's claims, supported by affidavits from his attorney and assistant, which also show receipt of motions by Ortiz. The trial court held a hearing on Kern's motion for a new trial on May 22, 2006, where Kurpiers was absent, and the attorneys for Pennington and Spencer testified about Kurpiers's consistent failures to prosecute the case and attend depositions.

Pennington’s attorney, Shipman, testified regarding multiple instances of non-responsiveness from Kurpiers concerning discovery requests and depositions. Initially, Kurpiers did not respond to disclosure requests, later claiming he didn't receive notice just before a hearing on a motion to compel. Shipman noted that Kurpiers was also unresponsive about Kern's deposition, eventually stating he hadn’t received notice. Kurpiers postponed depositions several times and failed to appear on the scheduled day, calling from Florida to inform that he could not attend. Shipman expressed ongoing difficulties in communicating with Kurpiers, including unanswered voicemails and messages. Similarly, Spencer’s attorney, Katz, reported Kurpiers's failure to attend a deposition and respond to discovery requests, including multiple letters sent regarding motions for summary judgment, to which Kurpiers did not reply. The trial court denied motions for a new trial for both Pennington and Spencer on May 30 and June 6, 2006, respectively, leading to the current appeal.

In the appeal, the Appellant contends that the trial court erred by not applying the Craddock test, asserting that the court abused its discretion in denying the motion for a new trial. Kern argues that the three-element Craddock test applies, modified for the summary judgment context, while Spencer claims the two-element test from Carpenter v. Cimarron Hydrocarbons Corp. is applicable. The Craddock test requires that the defaulting party show (1) the failure to respond was not intentional or due to indifference but a mistake or accident, (2) the motion for a new trial presents a meritorious defense, and (3) granting the new trial would not cause delay or injustice to the plaintiff. The Medina case modified the second element for summary judgment contexts, requiring proof of a genuine issue of material fact.

The supreme court in Cimarron disapproved of the Medina decision, clarifying that the Craddock test does not apply to cases where a nonmovant fails to respond to a summary judgment before the court’s ruling. However, the court did not resolve whether Craddock is applicable if the nonmovant realizes their failure to respond after the judgment is rendered. The court established a new standard for granting a late response, requiring the nonmovant to demonstrate good cause by proving that their failure was due to accident or mistake rather than intentional neglect, and that permitting the late response would not cause undue delay or harm to the opposing party.

In the present case, Kern contends that he and Kurpiers were unaware of the summary judgment motions before the court's decision, suggesting it falls under the unresolved question from Cimarron. Despite this uncertainty, the essential requirement remains consistent: the nonmovant must show their tardiness was unintentional or due to a mistake. The review of the trial court's decision for abuse of discretion follows the same principles established in Craddock and Cimarron, where such abuse occurs if the court misapplies the law. 

The distinction between "conscious indifference" and "accident or mistake" is critical; conscious indifference implies a failure to act that would be evident to a reasonable person, which exceeds mere negligence. A party must provide an explanation for the failure, though it need not be a strong justification. If a party relies on an agent to file documents, they must prove that the failure was not due to the agent's conscious indifference.

Conclusory allegations are deemed insufficient in legal proceedings, as established in case law. Factual allegations that are uncontroverted can negate claims of intent or conscious indifference. If the opposing party presents evidence showing conscious indifference, the matter becomes a factual question for the trial court. In reviewing the evidence, the court considered: (1) six certified mailings notifying Kurpiers of submission dates, allowing time to respond; (2) statements from attorneys indicating Kurpiers's persistent failure to prosecute, attend depositions, or respond to discovery; (3) Kurpiers's claims of not being notified; and (4) his affidavit containing only conclusory claims of no conscious indifference. The trial court found Kurpiers’s failure to respond to summary judgment motions to be intentional or indicative of conscious indifference, affirming that it acted within its discretion. The court referenced precedent where a pattern of ignoring deadlines is sufficient to establish conscious indifference. Both of Kern's issues were overruled, and the trial court’s judgment was affirmed. Additionally, it was noted that while statements by attorneys are generally not considered evidence unless made under oath, any error was waived due to the lack of objection. The nature of the evidentiary hearing was evident given the objections raised and the court's rulings.

Lack of objection to attorneys’ statements allows them to be considered as evidence. The trial court validly attributed receipt of documents to attorney Kurpiers, despite his receptionist signing for them, as notice is imputed when an attorney's agent receives it. Katz’s affidavit indicates that copies of Spencer’s motions for summary judgment were sent via certified mail to Kurpiers’s office on February 1, 2006, with confirmation of receipt on February 6, 2006. Additional motions and notices were similarly sent and received, with corresponding “green cards” signed by receptionist Tanya Ortiz. Katz also left a voice message and sent a facsimile of the hearing notices, which was received on February 3, 2006. Pennington's response asserted that Kern had done little to advance the case and confirmed that proper notice of the motions had been received. Affidavits from Pennington’s attorney and legal assistant included evidence of receipt of motions by Ortiz. At the motion for new trial hearing on May 22, 2006, Kurpiers did not attend, and testimony revealed a pattern of his failure to prosecute the case and respond to discovery requests, including a delayed excuse of not receiving notice.

Kurpiers was notified of Kern’s deposition but initially did not respond, later claiming he never received the notice. Shipman testified that Kurpiers postponed his deposition multiple times and ultimately called from Florida on the day it was scheduled to say he could not attend. Additionally, Shipman faced ongoing issues in communicating with Kurpiers, as he failed to respond to discovery notices, motions for summary judgment, and voicemails. Katz, representing Spencer, confirmed that Kurpiers also did not appear for a deposition, ignored discovery requests, and did not respond to three letters regarding motions for summary judgment. The trial court denied motions for new trials related to Pennington and Spencer in May and June 2006, prompting the current appeal.

In the appeal, the Appellant contends that the trial court erred by not applying the Craddock test, which assesses whether a default judgment should be set aside based on three criteria: (1) the failure to respond was not intentional or due to conscious indifference, (2) the motion presents a meritorious defense, and (3) granting a new trial would not cause injustice to the plaintiff. The Appellant argues that this test, modified for summary judgment cases as per the Medina case, should apply, while Spencer cites the two-element test from Carpenter v. Cimarron Hydrocarbons Corp. The Craddock test has been debated in courts, with some cases suggesting modifications to its application, particularly regarding the requirement for proof of a genuine issue of material fact. However, the Cimarron ruling disapproved of applying the Craddock test to no-response summary judgments when the nonmovant realizes their failure to respond before judgment is rendered.

The court did not reach a decision on whether the Craddock standard applies when a nonmovant realizes their failure to file a summary judgment response after the hearing or judgment. It introduced a test for granting a late response motion when the nonmovant identifies the mistake before the hearing, requiring the nonmovant to demonstrate good cause by showing that the failure was unintentional and not due to conscious indifference, and that allowing the late response would not unduly delay or harm the opposing party. Kern contends that he and Kurpiers were unaware of the summary judgment motions prior to the court's judgment, placing this case outside the scope of Cimarron and into the reserved question regarding post-judgment discovery of a filing failure. Regardless of whether Craddock or Cimarron applies, the nonmovant must prove their failure to respond was due to accident or mistake rather than intentionality or indifference. The court will assess the record to determine if Kern met this criterion. Both Craddock and Cimarron require reviewing the trial court's decision for abuse of discretion, which occurs if the court acts arbitrarily or misapplies the law. Conscious indifference is defined as failing to take action that a reasonable person would recognize as necessary, requiring more than mere negligence. A party must provide an explanation, but not necessarily a strong one, to show that their failure was accidental, especially if relying on an agent to file responses.

Conclusory allegations are deemed insufficient in legal proceedings, as established in several Texas cases. Uncontroverted factual allegations in a motion for a new trial can negate claims of intent or conscious indifference. If the opposing party presents evidence suggesting the movant's conscious indifference, the trial court must resolve this factual dispute. In the case reviewed, the evidence included six certified mail notices received by Kurpiers, uncontroverted statements from attorneys indicating Kurpiers' consistent failures to prosecute, and his affidavit containing only conclusory claims of lack of conscious indifference. The trial court found that Kurpiers' failure to respond to summary judgment motions was intentional or indicative of conscious indifference, thus affirming its discretion in denying his motion for a new trial. The court referenced precedents indicating that a pattern of neglect regarding deadlines reflects conscious indifference. Kern’s issues were overruled, and the trial court's judgment was affirmed. The ruling was delivered by Justice Anne Gardner with Justices Dauphinot and McCoy on the panel.

The hearing for the motion for a new trial was characterized as evidentiary, reflected by numerous objections raised regarding attorneys' statements and the court's rulings on those objections, including a granted running objection. Since no party objected to the absence of an oath for the attorneys' statements, these statements are considered as evidence. The trial court appropriately attributed the receipt of certain documents to Kurpiers, despite his receptionist signing for them, based on the principle that an attorney is regarded as having received notice when it is signed for by their agent or employee. This principle is supported by case law, specifically referencing a decision where notice was imputed to an attorney when a certified notice was signed by another attorney from a different firm located in the same building.