COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-02-269-CV
AVIATION COMPOSITE
TECHNOLOGIES, INC. APPELLANTS
A/K/A AVCOM TECHNOLOGIES, INC.
A/K/A
AVCOM LOGISTICS, INC., AND
STEPHEN B. SQUIRES
V.
CLB CORPORATION APPELLEE
------------
FROM THE 236TH
DISTRICT COURT OF TARRANT COUNTY
OPINION
Introduction
This
is a restricted appeal from the trial court’s order dismissing claims for want
of prosecution. See Tex. R. App.
P. 30. In three issues, appellants Aviation Composite Technologies, Inc.
a/k/a Avcom Technologies, Inc. a/k/a AvCom Logistics, Inc. (Avcom), and Stephen
B. Squires contend that error is apparent on the face of the record because (1)
the trial court abused its discretion in dismissing Avcom’s counterclaim for
negligence and claim for offset for want of prosecution and subsequently
severing the dismissed claims and (2) the trial court erred in severing the
dismissed claims without notice at a hearing that was not recorded by the court
reporter. We affirm.
Background Facts
Appellee
CLB Corporation (CLB) sued Avcom and Squires in connection with CLB’s purchase
of an airplane from Avcom. CLB obtained a prejudgment writ of attachment on some
of Avcom’s personal property; the property was later destroyed in a fire at
the facility in which it was being stored. Avcom then asserted a counterclaim
against CLB1 for negligence in connection with the
destruction of the seized property and a claim for offset against any recovery
of CLB in its claims against Avcom. Due to a “dire financial situation,”
Avcom subsequently executed an assignment for the benefit of creditors,
transferring all of its assets to another company. Avcom’s counsel then filed
a Stipulation for Withdrawal of Counsel and Motion for Withdrawal of Counsel, in
which Avcom, Squires, and their counsel represented to the court that “[d]ue
to the [a]ssignment and Avcom’s otherwise dire financial circumstances, Avcom
and Squires are no longer able or willing to fund attorney’s fees and costs
for this case. . . . At present, Avcom and Squires do not intend to retain other
counsel to represent them in this action.” The trial court granted the motion
on December 21, 2001.
On
January 25, 2002, CLB filed a motion to dismiss Avcom’s counterclaim and claim
for offset for want of prosecution. No one appeared for Avcom at the hearing,
and no record was made of the proceedings.2 On
the day of the hearing, the trial court signed an order dismissing the claims
and, on its own motion, an order severing the dismissed claims from the
remainder of the suit.
Avcom
and Squires retained new counsel on March 8, 2002, who filed a Motion to Extend
Time Limits Under Rule 306A and a Motion to Reinstate Claims on March 14, 2002.
The trial court held a hearing on both motions and denied them on March 27,
2002. Avcom perfected this appeal on July 29, 2002.
Entitlement to Restricted Appeal
To
be entitled to a restricted appeal, an appellant must first show that it: (1)
filed its notice of restricted appeal within six months after the trial court
signed the judgment or order; (2) is a party to the suit; (3) did not
participate in the hearing that resulted in the judgment complained of; and (4)
did not timely file any postjudgment motion, request for findings of fact and
conclusions of law, or a notice of appeal within the time permitted by rule
26.1(a). Tex. R. App. P. 26.1(a),
(c), 30; Clopton v. Pak, 66 S.W.3d 513, 515 (Tex. App.—Fort Worth 2001,
pet. denied). These requirements are jurisdictional and will cut off a party’s
right to seek relief by way of a restricted appeal if they are not met. Clopton,
66 S.W.3d at 515. Once an appellant establishes it has met these requirements,
it must then establish error apparent from the face of the record before it will
be entitled to relief from the adverse judgment. Id. CLB contends Avcom
and Squires have not met the second and third requirements of rule 30 and thus
are precluded from seeking a restricted appeal.
A
restricted appeal is available for the limited purpose of providing a party that
did not participate at trial the opportunity to correct an erroneous judgment. Id.
at 516. It is not available to give a party who suffers an adverse judgment at
its own hands another opportunity to have the merits of the case reviewed. Id.
In determining whether the nonparticipation requirement of rule 30 is met, the
question is whether the appellant participated in the “decision-making
event” that resulted in the order adjudicating the appellant’s rights. Withem
v. Underwood, 922 S.W.2d 956, 957 (Tex. 1996) (citing Texaco, Inc. v.
Cent. Power & Light Co., 925 S.W.2d 586, 589 (Tex. 1996)); Clopton,
66 S.W.3d at 516. Participation in the decision-making event producing the final
judgment adjudicating a party’s rights will cut off that party’s ability to
proceed by restricted appeal. Clopton, 66 S.W.3d at 516; Lewis v.
Beaver, 588 S.W.2d 685, 687 (Tex. Civ. App.—Houston [14th
Dist.] 1979, writ ref’d n.r.e.).
CLB
claims that Avcom and Squires participated in the decision-making event leading
to dismissal of Avcom’s claim by: (1) telling the court in the motion to
stipulate to withdrawal of counsel that Avcom was not willing or able to fund
attorney’s fees, that it did not intend to retain counsel, and that it
understood its claims could be dismissed as a lack of its legal representation;
(2) failing to obtain legal representation after being served with notice of the
dismissal motion and hearing; (3) failing to attend the dismissal hearing after
being served with notice; and (4) failing to timely file a motion to reinstate
the dismissed claims despite being timely served with notice of the dismissal
order.
We
disagree. The decision-making event in this case is the dismissal hearing in
which the trial court dismissed and severed Avcom’s claims. While the trial
court’s decision to dismiss the case may have been based on Avcom’s
statements in the motion to stipulate, neither Avcom nor Squires participated in
the dismissal hearing, nor did they respond to the dismissal motion in any way.
In fact, the reasons CLB lists for showing that Avcom and Squires participated
in the dismissal clearly show that they did not. Furthermore, the motion for
withdrawal acknowledges only that dismissal could occur; it does not
affirmatively agree to dismissal. See Clopton, 66 S.W.3d at 516 (holding
that appellants participated in decision-making events leading to dismissal
because their attorney signed joint motion to sever and dismiss with prejudice
and subsequent trial court orders granting the agreed motion and dismissing
appellants’ claims against appellees).
An
appellant in a restricted appeal is not required to show diligence or lack of
negligence before its complaints will be heard. Texaco, 925 S.W.2d at
590. “[I]t is the fact of nonparticipation, not the reason for it, that
determines the right to appeal by” restricted appeal. Id. Therefore, in
determining whether Avcom and Squires participated in the “decision-making
event” leading to the dismissal and severance orders, it makes no difference
whether they knew of the hearing and intentionally did not attend or engage new
counsel to attend. We hold that Avcom and Squires did not participate in the
decision-making event leading to the dismissal and severance of Avcom’s
claims.
CLB
further contends that Avcom and Squires cannot maintain this restricted appeal
because they timely filed a postjudgment motion, the Motion to Extend Time
Limits Under Rule 306A. The motion contended that the time to file a motion to
reinstate should be extended because Avcom and Squires did not receive notice of
the dismissal under rule 306a(4). Tex. R.
Civ. P. 306a(4). Rule 306a(4) provides that if a party does not receive
notice of a judgment or appealable order, the time to challenge the judgment or
order in the trial court begins to run when the party actually receives notice
or actual knowledge of the signing of the judgment or order, provided that the
time may not begin more than ninety days after the judgment or order is signed. Id.
CLB contends that even though the trial court denied the motion to extend and
found that the motion to reinstate was untimely, the motion to extend was a
timely filed postjudgment motion because it was filed within ninety days after
the judgment was signed.
The
policy behind the nonparticipation requirement of former rule 45, now rule 30,
was to deny writ of error appeal, now called restricted appeal, to a party who
should reasonably resort to the quicker method of direct appeal. Texaco,
925 S.W.2d at 590. Logic dictates that the requirement that no timely
postjudgment motions have been filed furthers the same policy. A party who
timely files a motion for new trial or a motion to reinstate is entitled to a
longer period of time to perfect an ordinary appeal. See Tex. R. App. P. 26.1(a). But a motion to
extend time to file a motion to reinstate does not extend the time to file a
notice of appeal under rule 26.1(a). Id. Thus, regardless of whether the
motion to extend was timely filed, the trial court’s denial of that motion
precluded Avcom and Squires from perfecting an ordinary appeal.3
We conclude that Avcom and Squires did not timely file a postjudgment motion for
purposes of rule 30. Tex. R. App. P.
30. Having determined that Avcom and Squires meet the requirements of rule 30
for maintaining a restricted appeal, we will address their issues on appeal.
Propriety of Dismissal
In
their second issue, Avcom and Squires contend that the trial court abused its
discretion in dismissing Avcom’s claims against CLB. They claim that the trial
court was not authorized to dismiss the case solely because Avcom was no longer
represented by counsel.
CLB’s
motion asked the trial court to dismiss Avcom’s claims pursuant to the
court’s inherent authority to dismiss claims that have been abandoned or that
have not been prosecuted diligently. See Villareal v. San Antonio Truck &
Equip., 994 S.W.2d 628, 630 (Tex. 1999). In its motion, CLB contended that:
(1) Avcom’s claims were brought on behalf of the corporation and not Squires;
(2) a corporation may appear and be represented only by a licensed attorney, Kunstoplast
of Am., Inc. v. Formosa Plastics Corp., 937 S.W.2d 455, 456 (Tex. 1996); (3)
Avcom stated in the motion to stipulate to withdrawal of counsel that it had no
present plans to hire counsel and was not at the time willing and able to fund
attorney’s fees, thereby indicating that it had no intention to further
prosecute its claims; and, therefore, (4) Avcom failed to prosecute its claim
with due diligence.
Avcom
filed its counterclaim and claim for offset on December 6, 2000. The record
shows that Avcom served one request for production on February 13, 2001. Out of
thirty questions, three appear to relate to its counterclaim and claim for
offset. On July 24, 2001, Avcom filed notices to depose CLB’s principal fact
witnesses, but Avcom never deposed these witnesses.
Trial
was set for the week of April 1, 2002, two months after the dismissal hearing.
Based on the minimal amount of discovery in the record concerning Avcom’s
claims, Avcom’s representations to the trial court in the stipulation of
withdrawal of counsel, and the fact that trial was only two months away when the
trial court signed the dismissal order, we cannot conclude that the trial court
abused its discretion in dismissing Avcom’s claims.4
Avcom and Squires’s second issue is overruled.
Propriety of Severance
In
their first and third issues, Avcom and Squires contend that the trial court
improperly severed the dismissed claims without prior notice to the parties and
without making a record of the proceedings and that the severance was an abuse
of discretion because its claims were compulsory counterclaims.
Lack of Notice and Record
The
order of dismissal and order of severance are both dated January 31, 2002. CLB
did not file a motion for severance; the trial court severed the dismissed
claims on its own motion. The trial court is authorized to sever claims on its
own motion, so long as the severance is proper under the rules of civil
procedure, and a motion to sever is unnecessary. Rice v. Travelers Exp. Co.,
407 S.W.2d 534, 536 (Tex. Civ. App.—Houston 1966, no writ).5
We find no authority indicating that the trial court must provide the parties
with prior notice of its intent to sever. In addition, the record indicates that
the trial court clerk mailed a copy of the severance order to Avcom and Squires
along with a copy of the dismissal order.6
Avcom
and Squires further rely on rule 13.1 of the rules of appellate procedure and
the supreme court’s opinion in Rogers v. Rogers, 561 S.W.2d 172 (Tex.
1978), for the proposition that the trial court’s severance of Avcom’s
claims without a record of the hearing resulting in the severance is error
apparent on the face of the record. Rule 13.1 provides that “[t]he official
court reporter must: (a) unless excused by agreement of the parties,
attend court sessions and make a full record of the proceedings.” Tex. R. App. P. 13.1 (emphasis added).
Prior to the effective date of rule 13.1, the supreme court in Rogers, a
default judgment case, quoted with approval a prior supreme court holding that
when “‘an appellant exercises due diligence and through no fault of his own
is unable to obtain a proper record of the evidence introduced, this may require
a new trial where his right to have the case reviewed on appeal can be preserved
in no other way.’” 561 S.W.2d at 173-74 (quoting Robinson v. Robinson,
487 S.W.2d 713, 715 (Tex. 1972)).
The
cases cited by Avcom and Squires in support of their contention that the
principle in Rogers controls are all cases where a record was required to
review the sufficiency of an evidentiary decision by the trial court. See,
e.g., Carstar Collision, Inc. v. Mercury Fin. Co., 23 S.W.3d 368, 370 (Tex.
App.—Houston [1st Dist.] 1999, pet. denied) (“If the judgment is
rendered after presentation of evidence to the court in the absence of the
appellant and his attorney, the failure to have the court reporter present to
make a record constitutes reversible error. Such an error is not harmless
because, without a reporter’s record, [the court] is unable to determine if
sufficient evidence was submitted to support the judgment.” (citations
omitted)); Elkins v. Jones, 613 S.W.2d 533, 534 (Tex. Civ. App.—Austin
1981, no writ) (noting that “[b]y its terms, the Robinson rule is
applicable . . . to evidentiary hearings”). A trial court is not required to
hold an evidentiary hearing before severing a cause of action. See Tracy v.
Annie’s Attic, Inc., 840 S.W.2d 527, 539 (Tex. App.—Tyler 1992, writ
denied). Thus, Rogers does not require reversal of the trial court’s
judgment in this case.
Furthermore,
even if the court reporter’s failure to record the hearing is error under rule
13.1, Avcom and Squires have failed to show resulting harm. See Tex. R. App. P. 44.1(a). Because the
trial court was not required to hold a hearing on its motion to sever, it could
have properly based its decision on the parties’ pleadings. We hold that the
absence of a reporter’s record from the January 31, 2002 hearing, even if
error, did not “probably cause[] the rendition of an improper judgment; or
probably prevent[] [Avcom] from properly presenting the case to” this court. Tex. R. App. P. 44.1(a). We overrule
Avcom and Squires’s first issue.
Whether Severance Was Abuse
of Discretion
Avcom
and Squires contend that the trial court improperly severed the dismissed claims
because Avcom’s counterclaim is a compulsory counterclaim, the severed claims
are so interwoven with the remaining action as to involve the same facts and
issues, and the claim for offset was in the nature of an affirmative defense.
They claim that the severance precluded Avcom from presenting its claims at
trial.
A
severance splits a single suit into two or more independent actions, each action
resulting in an appealable final judgment. Van Dyke v. Boswell, O'Toole,
Davis & Pickering, 697 S.W.2d 381, 383 (Tex. 1985). Severance of claims
under the Texas Rules of Civil Procedure rests within the sound discretion of
the trial court. Liberty Nat'l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629
(Tex. 1996) (orig. proceeding). A claim is properly severable if (1) the
controversy involves more than one cause of action, (2) the severed claim is one
that would be the proper subject of a lawsuit if independently asserted, and (3)
the severed claim is not so interwoven with the remaining action that they
involve the same facts and issues. Guar. Fed. Sav. Bank v. Horseshoe
Operating Co., 793 S.W.2d 652, 658 (Tex. 1990) (op. on reh'g). The
controlling reasons for a severance are to do justice, avoid prejudice, and
further convenience. Id.
A
counterclaim is compulsory if “it arises out of the transaction or occurrence
that is the subject matter of the opposing party’s claim and does not require
for its adjudication the presence of third parties of whom the court cannot
acquire jurisdiction.” Tex. R. Civ. P.
97(a). CLB’s claims against Avcom and Squires arose out of CLB’s purchase of
a plane from Avcom. Avcom’s counterclaim against CLB did not arise until after
CLB filed suit against Avcom and Squires and relates to CLB’s prejudgment
attachment of Avcom’s property that is not the subject of CLB’s claims.
Thus, Avcom’s counterclaim against CLB does not arise out of the same
transaction as CLB’s claims and is not a compulsory counterclaim. Cf.
Leasure v. Peat, Marwick, Mitchell & Co., 722 S.W.2d 37, 39 (Tex.
App.—Houston [1st Dist.] 1986, no writ) (holding that “a claim
for wrongful sequestration or attachment does not arise out of the same
transaction or occurrence as the previous action in which the wrongful
sequestration or attachment occurred”). For the same reasons, the counterclaim
and claim for offset are not “so interwoven with the remaining action that
they involve the same facts and issues.” Guar. Fed. Sav. Bank, 793
S.W.2d at 658. In fact, the substance of CLB’s suit against Avcom and Squires
is not relevant to the counterclaim or claim of offset, which alleges only that
CLB was negligent in not purchasing insurance for the stored property and in
signing a waiver of the storage facility’s liability for any damage to the
property.
Furthermore,
Avcom’s claim for offset is not in the nature of an affirmative defense. An
affirmative defense establishes an independent reason why the plaintiff should
not recover on its asserted cause of action. Tex. Beef Cattle Co. v. Green,
921 S.W.2d 203, 212 (Tex. 1996); Bright & Co. v. Holbein Family Mineral
Trust, 995 S.W.2d 742, 747 (Tex. App.—San Antonio 1999, pet. denied).
However, if Avcom proved and was awarded damages on its claim, it would not
negate CLB’s right to recover on its cause of action. See Bright & Co.,
995 S.W.2d at 747 (holding that gas lessee’s claim for overpayment of
royalties from 1980 to 1987 would not negate lessor’s claim for nonpayment of
royalties between 1987 and 1995). Thus, Avcom’s claim for offset was in the
nature of a counterclaim rather than an affirmative defense. See id. We
hold that the trial court did not abuse its discretion in severing Avcom’s
claims. We overrule Avcom and Squires’s third issue.
Having
overruled all of Avcom and Squires’s issues, we affirm the trial court’s
judgment.
TERRIE
LIVINGSTON
JUSTICE
PANEL A: CAYCE,
C.J.; LIVINGSTON and DAUPHINOT, JJ.
DELIVERED: January 15, 2004
NOTES
1.
Avcom also sued Tarrant County as a third party defendant. This court reversed
the trial court’s dismissal of Avcom’s claims against Tarrant County in a
separate cause number, 02-02-00243-CV.
2.
Avcom does not contend in this appeal that it did not receive adequate notice of
the dismissal hearing on January 31, 2002.
3.
If the trial court had granted the motion to extend, Avcom and Squires’s
motion to reinstate would have been timely; therefore, it would have extended
the time to file a notice of appeal. See Tex. R. App. P. 26.1.
4.
Avcom contends that the trial court could dismiss its claims only on the grounds
asserted in the motion to dismiss, see Villareal, 994 S.W.2d at 630-32,
and that dismissal for the sole reason that Avcom was not represented by counsel
for a short time was improper. However, the holding of Villareal is not
as broad as Avcom urges. Villareal holds that a dismissal order may not
be affirmed on the basis of the trial court’s inherent power to dismiss when
the notice of dismissal indicated only that the party’s claims were subject to
dismissal under rule 165a. Id. at 631-33; see Tex. R. Civ. P. 165a. CLB’s motion
adequately apprised Avcom and Squires that CLB was seeking dismissal pursuant to
the trial court’s inherent power to dismiss a claim for failure to prosecute
with due diligence.
5.
In addition, a trial court may sever dismissed claims from remaining claims in
order to render an otherwise interlocutory judgment final and appealable. See
Diversified Fin. Sys., Inc. v. Hill, Heard, O’Neal, Gilstrap & Goetz, P.C.,
3 S.W.3d 616, 618 (Tex. App.—Fort Worth 1999), rev’d on other grounds,
63 S.W.3d 795 (Tex. 2001); cf. Brown v. Todd, 53 S.W.3d 297, 300 (Tex.
2001) (noting that “[a]fter the trial court dismissed Hotze's claim for lack
of standing, he could have sought a severance so that the dismissal against him
would have been an appealable final judgment. In that event, both the court of
appeals and this Court would unquestionably have had jurisdiction over his
claim.”).
6.
In the order denying the motion to extend time to file a motion to reinstate,
the trial court found that Avcom and Squires failed to establish that they did
not receive notice or acquire actual knowledge of the dismissal of Avcom’s
claims.