in Re RPH Capital Partners, LP

Opinion

ACCEPTED 04-16-00424-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 8/2/2016 11:56:14 AM KEITH HOTTLE CLERK

No. 04-16-00424-CV

IN THE FOURTH COURT OF APPEALS AT SAN ANTONIO, TEXAS

In re RPH CAPITAL PARTNERS, LP,

Relator

Original Proceeding from the 57th Judicial District Court, Bexar County, Texas, Cause No. 2016-CI-05251, the Honorable Antonia Arteaga, Presiding

REPLY IN SUPPORT OF PETITION FOR WRIT OF MANDAMUS

Christopher D. Kratovil Phyllis Speedlin Texas Bar No. 24027427 Texas Bar No. 18906100 Email: ckratovil@dykema.com Email: pspeedlin@dykema.com Kristina M. Williams DYKEMA COX SMITH Texas Bar No. 24078303 Weston Centre Email: kwilliams@dykema.com 112 E. Pecan Street Adam Nunnallee Suite 1800 Texas Bar No. 24057453 San Antonio, TX 78205 Email: anunnallee@dykema.com (210) 554-5500 – Telephone DYKEMA COX SMITH (210) 226-8395 – Facsimile 1717 Main Street, Suite 4200 Dallas, Texas 75201 (214) 462-6400 – Telephone (214) 462-6401 – Facsimile Andy Taylor State Bar No. 19727600 Email: ATaylor@AndyTaylorLaw.com ANDY TAYLOR & ASSOCIATES, P.C. 2668 Highway 36S, #288 Brenham, Texas 77833 (713) 222-1817 – Telephone (713) 222-1855 – Facsimile

ORAL ARGUMENT NOT REQUESTED TABLE OF CONTENTS ARGUMENT IN REPLY ..........................................................................................1

I. INTRODUCTION AND SUMMARY OF ARGUMENT IN REPLY. .....................1

II. THE PERIDOT PARTIES WAIVED THEIR RULE 245 ARGUMENT. ..............4

A. This Court’s November 2015 holding in Templeton controls and vitiates the Peridot Parties’ Rule 245 argument. ..................4

B. The restricted appeal case law invoked by the Peridot Parties’ to escape Templeton is inapplicable. .............................8

III. THE PERIDOT PARTIES CONTINUE TO OFFER NO EXPLANATION FOR THEIR FAILURE TO APPEAR FOR TRIAL, AND THIS IS FATAL TO THEIR BILL OF REVIEW. ..................................................................................12 A. This is a Bill of Review, Not a Motion for New Trial. .............12

B. Even if Analyzed as a Motion for New Trial, the Peridot Parties Still Failed to Carry their Burden of Proof for Summary Judgment, Failing to Present Any Evidence At All on Three Different Elements...............................................14

IV. EQUITY AND SOUND PUBLIC POLICY PRECLUDE GIVING THE PERIDOT PARTIES A “MULLIGAN” AND SETTING ASIDE THE DEFAULT JUDGMENT ON THIS RECORD.................................................21 CONCLUSION AND PRAYER .............................................................................23 CERTIFICATE OF COMPLIANCE .......................................................................26

CERTIFICATE OF SERVICE ................................................................................27 CERTIFICATION AND VERIFICATION.............................................................28

i TABLE OF AUTHORITIES

CASES Abend v. Fed. Nat’l Mortg. Ass’n, 466 S.W.3d 884 (Tex. App.—Houston [14th Dist.] 2015, no pet) ............................................7

Alexander v. Lynda’s Boutique, 134 S.W.3d 845 (Tex. 2004) ......................................................................................................9

Balogh v. Ramos, 978 S.W.2d 696 (Tex. App.—Corpus Christi 1998, pet. denied) ........................................7, 16

Chapa v. Wirth, 343 S.W.2d 936 (Tex. App.—Eastland 1961, no writ) ............................................................13

Conrad v. Orellana, 661 S.W.2d 309 (Tex. App.—Corpus Christi 1983, no writ) ..................................................13

Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939) ............................................................................................ passim Custom-Crete, Inc. v. K-Bar Servs., 82 S.W.3d 655, 659 (Tex. App.--San Antonio 2002, no pet.) ................................................. 11, 17

Dolgencorp of Texas, Inc. v. Lerma, 288 S.W.3d 922 (Tex. 2009) ....................................................................................................18 Eastin v. Dial, 288 S.W.3d 491 (Tex. App.—San Antonio 2009, pet. denied)............................................2, 12 In re Parker, 20 S.W.3d 812 (Tex. App.–Texarkana 2000, no pet.).................................................... passim In the Interest of Sadberry, No. 06-01-00098-CV, 2009 Tex. App. LEXIS 3000, *7 (Tex. App.—Texarkana April 30, 2002, pet. denied) ........11

Ivey v. Ivey, No. 05-07-01311-CV, 2009 Tex. App. LEXIS 3207, *7 (Tex. App.—Dallas May 12, 2009, pet. denied) ...........................................11

Padilla v. Comm’n for Lawyer Discipline, 87 S.W.3d 624 (Tex. App.—San Antonio 2002, pet. Denied) .................................................7 Peralta v. Heights Med. Ctr., 485 U.S. 80 (1988) ...................................................12 ii Petro-Chemical Transp., Inc. v. Carroll, 514 S.W.2d 240 (Tex. 1974) ............................................................................................ passim

Sutherland v. Spencer, 376 S.W.3d 752 (Tex. 2012) ............................................................................................. 15, 18

Templeton Mortg. Corp. v. Poenisch, No. 04-15-00041-CV, 2015 Tex. App. LEXIS 11813, *5 (Tex. App.—San Antonio Nov. 18, 2015, no pet.) ........ passim

RULES Tex. R. Civ. P. 245 ........................................................................................... passim

TEX. R. APP. P. 26.1(c) ...............................................................................................8

iii ARGUMENT IN REPLY This Court should grant Relator RPH Capital Partners, LP’s (“RPH”)

Petition for Writ of Mandamus to correct the Honorable Antonia Arteaga’s (“Judge

Arteaga” or the “District Court”) clear abuse of discretion in awarding summary

judgment to Peridot Joint Venture, Millennium Exploration Company, LLC, and

Richard Monroy (“the Peridot Parties”), and thereby granting their equitable Bill of

Review and setting aside the Default Judgment.

I. Introduction and Summary of Argument in Reply. The summary judgment evidence presented in the District Court

conclusively established that the Peridot Parties’ lead counsel in Cause Number

2015-CI-17142, RPH Capital Partners, LP v. Peridot Joint Venture, et al (“the

Underlying Proceeding”) was served with and otherwise received notice—both

actual and constructive—of the trial date in the Underlying Proceeding. Despite

receiving this notice of the trial setting, counsel for the Peridot Parties inexplicably

failed to appear or to move for a continuance of the trial date or to otherwise object

to it. Remarkably, the Peridot Parties’ Response to RPH’s Petition for Writ of

Mandamus (the “Response”) still does not offer any coherent explanation or

excuse for Plaintiffs’ failure to appear for a trial of which they had notice.

Instead of attempting to explain why the Peridot Parties failed to appear at

the December 14, 2015 trial setting, the Peridot Parties’ Response instead focuses

1 heavily on the purported impropriety of that trial setting under Texas Rule of Civil

Procedure 245 (“Rule 245”), which mandates a minimum of 45 days’ notice of a

trial. However, by failing to move to continue or to assert any objection to a trial

setting of which they had 38 day actual notice, the Peridot Parties waived their

argument under Rule 245. Contrary to the Response, Due Process only requires

that the Peridot Parties had reasonable notice of the trial date—which they

received—and were given the opportunity to object to that date, which they did not

do. Neither Due Process nor Rule 245 gives a party—particularly a party

represented by capable counsel from a large and prestigious Dallas law firm—

license to “sit on its hands” for 38 days and flatly ignore a trial setting that it has

received multiple notices of. In short, Rule 245 is neither self-executing nor

unwaivable, and desperate cries of “Due Process” should not shield a party or its

law firm when they inexplicably ignore a trial setting that they had reasonable

notice of.

The Peridot Parties’ ultimate relief should come from the counsel who failed

them, not from an equitable bill of review where they cannot possibly satisfy—and

certainly have not satisfied on this summary judgment record—the “unmixed with

any negligence or fault” element of the bill of review test.1

1 See Petro-Chemical Transp., Inc. v. Carroll, 514 S.W.2d 240, 244-46 (Tex. 1974); Eastin v. Dial, 288 S.W.3d 491, 497-98 (Tex. App.—San Antonio 2009, pet. denied) (holding that a bill of review petitioner must plead and prove that the taking of the default judgment was “unmixed with any negligence or fault of his own.”).

2 The Peridot Parties know they can never satisfy the legal standard for a Bill

of Review, and so they instead urge this Court to apply the more lenient standard

that governs a motion for new trial. The Peridot Parties are incorrect that the

Craddock standard for a motion for new trial should apply here, as their failure to

monitor ongoing and hotly contested litigation resulted not only in their failure to

appear for trial but also their subsequent failure to timely file a motion for new

trial. But even if the Peridot Parties’ still unexplained failure to appear for trial is

evaluated not as an equitable bill of review but rather under the more lenient

Craddock standard, the Peridot Parties, on this summary judgment record, still

failed to establish three of the required elements for a new trial. First, and as

noted, the Peridot Parties failed to present any evidence as to why they failed to

appear for a trial setting of which they had notice, making it impossible for them to

establish that their still unexplained abandonment of this case was something other

than “conscious indifference.” Second, the Peridot Parties also failed to offer any

evidence as to what their “meritorious defense” to RPH’s underlying claims may

be. Third and finally, the Peridot Parties failed to present any evidence that RPH

would not suffer prejudice as the result of the setting aside of the Default

Judgment, and the only evidence in the record shows that RPH will suffer

prejudice—in the form of substantial attorneys’ fees incurred taking and defending

3 the Default Judgment, as well as the substantial delays endured in the resolution of

their underlying claims—if the Default Judgment is set aside.

In the final measure, much more is required in order to secure an equitable

bill of review than is in the record here. The Peridot Parties’ counsel ignored a

trial setting, and the Peridot Parties’ remedy is an action against their counsel in the

Underlying Proceeding, Kane Russell, not an equitable bill of review. Stated

another way, there is simply no way the Peridot Parties can satisfy the “unmixed

with any negligence or fault” requirement for a bill of review. Against this

backdrop and on this record, the District Court abused its discretion in granting

summary judgment in favor of the Peridot Parties and against Relator RPH, and

thereby granting the Bill of Review and setting aside the Default Judgment. This

Court should correct that clear abuse of discretion via mandamus, and should reject

the Peridot Parties’ Bill of Review.

II. The Peridot Parties Waived Their Rule 245 Argument. A. This Court’s November 2015 holding in Templeton controls and vitiates the Peridot Parties’ Rule 245 argument.

Judge Arteaga erred in granting summary judgment in favor of the Peridot

Parties because, as held by this Court just nine months ago, “a party waives its

Rule 245 complaint by failing to take action when it ‘receives some, but less than

forty-five days’, notice.’” Templeton Mortg. Corp. v. Poenisch, No. 04-15-00041-

CV, 2015 Tex. App. LEXIS 11813, *5 (Tex. App.—San Antonio Nov. 18, 2015,

4 no pet.) (emphasis added). Templeton confirms that Rule 245 can be waived by a

party’s inaction. Contrary to the Peridot Parties’ argument, in Templeton this

Court explicitly and expressly ruled “that Templeton failed to preserve its Rule

245 notice complaint” because “despite receiving notice, Templeton neither

appeared at the hearing nor raised any pretrial objection to a lack of sufficient

notice under Rule 245.” Id. at *5 (emphasis added; citations omitted). This

Court’s language could not be more clear, but the Peridot Parties choose to avoid

this core section of the Templeton holding in their Response.

Instead of engaging with Templeton’s on-point core holding from just last

November, the Peridot Parties instead focus upon this Court’s alternate and

secondary reasons for upholding the trial court’s default judgment in that case. Id.

at *5-6. In addition to finding that Rule 245 can be waived by a party’s inaction,

Templeton also offered alternative reasons for affirming the default judgment in

that case, noting that “even if Templeton had preserved this [Rule 245] complaint

for review, we hold that does not entitle Templeton to a reversal.” Id. at *6. But

the Peridot Parties misunderstand the relevance of these alternative grounds for

affirmance of the default judgment in Templeton. Arguing against Templeton’s

application to this case, the Peridot Parties incorrectly state “[t]he court made clear

in Templeton that Rule 245 did not apply to its facts because at the time of the

notice in that case, Templeton’s pleadings had been stricken and it was no longer a

5 contested case.” (Resp. at 4). This is incorrect, as this Court recognized that the

Templeton defendant was given notice of trial, albeit less than the 45 days’ notice

required by Rule 245. See Templeton, 2015 Tex. App. LEXIS 11813, at *4-5.

Contrary to the Peridot Parties’ argument, the Templeton trial court did not

strike the defendant’s pleadings prior to notice of trial being given, but struck the

defendant’s pleadings on the day of the default judgment hearing, and in response

to the defendants failure to appear. Id. at *2-3. As such, Templeton was a

contested case at the time notice of trial was served on the defendant, but not at the

time the default judgment was entered. Just so here.

In short, this Court’s offering two alternate reasons in Templeton for

affirming the default judgment other than waiver of Rule 245 notice does not make

that precedent any less dispositive of the waiver issue in the current case. Here, as

in Templeton, the Peridot Parties “receive[d] some, but less than forty-five days’,

notice[,]” and waived their right to make any objection under Rule 245 by failing

to appear. Id. at *5. Templeton controls and should have led the District Court to

reject the Peridot Parties’ Rule 245 argument and to deny their equitable bill of

review.

Nor is the core holding of Templeton mere “dicta” as the Peridot Parties now

suggest. Instead, Templeton stands squarely for the proposition that the 45-day

notice period of Rule 245 is not a constitutional requirement, and that all that is

6 required to satisfy Due Process is reasonable notice. Templeton is hardly alone.

For example, Texarkana Court of Appeals has similarly noted that “[a] party could,

in theory, waive a complaint by failing to take action when the party receives

some, but less than forty-five days’, notice.” In re Parker, 20 S.W.3d 812, 818

(Tex. App.–Texarkana 2000, no pet.). The Corpus Christi Court of Appeals has

offered equivalent analysis, concluding that reasonable notice is all that is required

to satisfy Due Process. See Balogh v. Ramos, 978 S.W.2d 696, 699 (Tex. App.—

Corpus Christi 1998, pet. Denied). Contrary to the Peridot Parties’ argument,

while Templeton is the most recent and most relevant decision, there is ample

Texas authority for the proposition that Due Process is fully satisfied by reasonable

notice trial, and that the 45-day requirement of Rule 245 is not somehow

synonymous with Due Process. See also Abend v. Fed. Nat’l Mortg. Ass’n,

466 S.W.3d 884, 885 (Tex. App.—Houston [14th Dist.] 2015, no pet); Padilla v.

Comm’n for Lawyer Discipline, 87 S.W.3d 624, 626 (Tex. App.—San Antonio

2002, pet. denied).

Here, as fully established in RPH’s Petition, there can be no doubt that the

Peridot Parties received not only reasonable notice of the trial setting, but multiple

forms of reasonable notice starting 38 days before the trial setting. First, the TI

Order itself—which Mr. McClure indisputably received—recited the trial date of

December 14, 2015. (M.R. 41-46). Second, Mr. McClure drafted the Protective

7 Order, which specifically referenced and incorporated the TI Order containing the

trial date. (M.R. 530-36). Third, Mr. McClure received yet another form of notice

of the trial setting, as RPH served the Peridot Parties with documents in the Dallas

Proceeding containing the Bexar County trial date. (M.R. 440, 520, 549).

Consistent with Templeton, In re Parker, and the other foregoing authorities, these

multiple reasonable notices—the first of which was received by Mr. McClure 38

days prior to the trial setting—satisfied Due Process.

B. The restricted appeal case law invoked by the Peridot Parties’ to escape Templeton is inapplicable. Desperate to escape this Court’s nine month old and directly on-point

holding in Templeton, the Peridot Parties parade a series of restricted appeal cases

for the general proposition that a default judgment can be set aside on restricted

appeal if the restricted appellant did not received adequate notice of the trial under

Rule 245. But the cases invoked by the Peridot Parties are inapplicable for several

reasons.

1. This is a Bill of Review, Not a Restricted Appeal.

First, this is not a restricted appeal but rather an equitable bill of review.

Indeed, although they acknowledge that they received notice of the Default

Judgment well within the six month window to file a restricted appeal under TEX.

R. APP. P. 26.1(c), the Peridot Parties failed to file a restricted appeal. An

equitable bill of review and a restricted appeal are governed by very different legal

8 standards. Compare TEX. R. APP. P. 26.1(c) and Alexander v. Lynda’s Boutique,

134 S.W.3d 845, 848 (Tex. 2004) (restricted appeal standard) with Petro-Chemical

Transp., Inc. v. Carroll, 514 S.W.2d 240, 244-46 (Tex. 1974) (bill of review

standard). The record is unclear as to why the Peridot Parties filed a bill of

review—a new lawsuit in which the burden is on them as the bill or review

plaintiffs—rather than pursuing the less difficult remedy afforded by restricted

appeal.

Importantly, and in contrast to a bill of review, the appellant in a restricted

appeal is not required to show that the default judgment was “unmixed with any

negligence or fault of his own.” Id. In contrast to a restricted appeal, the plaintiff

in a bill of review action—here, the Peridot Parties—must plead and prove that the

taking of the default judgment was “unmixed with any negligence or fault of his

own.” Id. Thus, in this bill of review proceeding, the negligence of the Peridot

Parties and their counsel in failing to take any action in response to a trial setting

of which they had reasonable—38 days—notice is the central inquiry before the

Court in this bill of review. Perhaps the result here would be different if the

Peridot Parties had filed a restricted appeal—as they had the option to—but they

did not. As such, the bill of review standard applies instead of the restricted appeal

standard, and the Peridot Parties have failed to offer evidence that the Default

9 Judgment did not result from the fault of their counsel, Mr. McClure and his large

Dallas law firm Kane Russell.

2. Due Process is Satisfied by Reasonable Notice of Trial.

Second, and in sharp contrast to the litany of restricted appeal cases invoked

in the Response, the Peridot Parties are not a pro se party to a small divorce in

which they received no notice or minimal notice of trial. Instead, the Peridot

Parties are participants in sophisticated commercial litigation in which they are

represented by a large and prestigious law firm. Consistent with this Court’s

holding in Templeton, it simply cannot be the law that a sophisticated litigant

represented by capable and experienced counsel has a right to “sit on its hands”

and do nothing where, as here, it receives reasonable notice of a trial setting—

albeit slightly less than the full 45 days required by Rule 245. As the Response

reluctantly concedes, the Peridot Parties received at least 38 days’ notice of the

trial setting—yet they nonetheless failed to move to continue the trial date, object

to the setting, or show up.

Contrary to the central argument made by the Peridot Parties in the

Response, Due Process is fully satisfied where, as here, a party receives reasonable

notice of trial. In re Parker, 20 S.W.3d 812, 818 (Tex. App.—Texarkana 2000, no

pet.) (holding that “[d]ue process requires only actual or constructive notice

reasonable under the circumstances.”); see also, e.g., Ivey v. Ivey, No. 05-07-

10 01311-CV, 2009 Tex. App. LEXIS 3207, *7 (Tex. App.—Dallas May 12, 2009,

pet. denied) (citing In re Parker); In the Interest of Sadberry, No. 06-01-00098-

CV, 2009 Tex. App. LEXIS 3000, *7 (Tex. App.—Texarkana April 30, 2002, pet.

denied) (“Due process only requires reasonable notice under the circumstances.”)

(citing, e.g., Peralta v. Heights Med. Ctr., 485 U.S. 80 (1988)). Indeed, “Rule 245

provides a notice requirement that goes beyond the requirements of due process.”

Id. at 818; see also Custom-Crete, Inc. v. K-Bar Servs., 82 S.W.3d 655, 659 (Tex.

App.—San Antonio 2002, no pet.). Consistent with Templeton, and in contrast to

central argument in the Response, neither Due Process nor Rule 245 affords parties

the sweeping right to “sit on their hands” in response to a trial setting of which

they have reasonable notice. This principle is all the more true where, as here, the

party improperly “sitting on its hands” is represented by sophisticated counsel from

a large law firm.

To reiterate, none of the cases invoked by the Peridot Parties in their

Response are bill of review cases where the party challenging a post-answer

default judgment had reasonable notice of the trial setting—albeit less than the 45

days’ notice required by Rule 245. As such, the Peridot Parties’ attempt escape

this Court’s controlling and only 9-month old precedent in Templeton fails. In the

final measure, this Court’s decision last year in Templeton makes clear that where,

11 as here, a party had some notice of a trial setting—albeit less notice than required

by Rule 245—there is no right to sit on ones’ hands and fail to appear or object.

III. The Peridot Parties Continue to Offer No Explanation for their Failure to appear for Trial, and this is Fatal to their Bill of Review. A. This is a Bill of Review, Not a Motion for New Trial. Receiving some but less than forty-five days’ notice of trial does not relieve

the Peridot Parties from meeting the elements required a bill of review. Foremost

among these elements is that the Default Judgment was taken “unmixed with any

negligence or fault” of the Peridot Parties or their counsel. Petro-Chemical

Transp., 514 S.W.2d at 244-46; Eastin, 288 S.W.3d at 497-98. Insofar as Rule 245

does not convey the right to simply ignore a trial setting that gives reasonable, but

less than 45 days, notice of trial, the Peridot Parties can never satisfy this element

of the bill of review test Accordingly, the Peridot Parties have no choice but to

urge the application of an entirely different legal standard, claiming that their effort

to set aside the Default Judgment should not be reviewed as a bill of review but

rather as a motion for new trial under Craddock v. Sunshine Bus Lines, Inc.,

133 S.W.2d 124 (Tex. 1939).

The Peridot Parties are wrong, as their counsel received but ignored notice

of the trial, did not show up for that trial, and evidently did not check the docket

sheet for the case for multiple months after the trial setting, thereby missing the

entry of the Default Judgment and missing the chance to file a motion for new trial

12 or appeal. Stated another way, the only thing that prevented the Peridot Parties

from filing a timely motion for new trial was their extended failure to monitor an

active and once hotly contested case following a trial setting of which they had

notice. The Peridot Parties claim that the clerk failed to send them postcard

notification of the entry of Default Judgment against them, but this is ultimately an

irrelevant distraction from their own failure to participate in and monitor the case;

having received reasonable notice of the trial setting, the Peridot Parties not only

failed to object or participate in trial, they also failed to follow developments in the

case after the trial setting they ignored. In other words, the Peridot Parties contend

that the clerk’s purported failure to send them a postcard somehow released their

counsel from their continuing obligation, as a matter of law, to monitor the

Underlying Proceeding. See Conrad v. Orellana, 661 S.W.2d 309 (Tex. App.—

Corpus Christi 1983, no writ); Chapa v. Wirth, 343 S.W.2d 936 (Tex. App.—

Eastland 1961, no writ). This cannot be the law, as attorneys cannot cavalierly

transfer their most fundamental professional obligations to court staff. The Peridot

Parties’ effort to set aside the Default Judgment must therefore be analyzed under

the bill of review standard, not the Craddock test for a motion for new trial.

13 B. Even if Analyzed as a Motion for New Trial, the Peridot Parties Still Failed to Carry their Burden of Proof for Summary Judgment, Failing to Present Any Evidence At All on Three Different Elements.

But even under the Peridot Parties’ own theory of the case, they must still

satisfy the Craddock factors for a motion for new trial. Yet, having argued that

they must meet the standard for a motion for new trial, the Peridot Parties failed to

present any summary judgment evidence before Judge Arteaga on multiple

Craddock factors. As the party seeking to set aside the Default Judgment and

moving for (and receiving) summary judgment, the Peridot Parties had the burden

of proof on each of the Craddock factors, and the Peridot Parties’ Response fails to

show how they did this for each factor.

1. The Peridot Parties failed to prove a lack of “conscious indifference.” First, in their Response, the Peridot Parties do not direct the Court to any

evidence in the summary judgement evidence demonstrating that their still-

unexplained failure to appear for trial was not intentional or the result of

“conscious indifference.” On the contrary, the Peridot Parties’ failure to appear for

a trial setting of which they indisputably had notice remains entirely unexplained.

Indeed, the only explanation the Peridot Parties offered to the District Court on the

reasons for their failure to appear is their lead counsel’s (Mr. McClure of the Kane

Russell firm in Dallas) following statement: “I did not see the inclusion of

14 December 14, 2015 trial setting in the signed order and the date was not docketed

by me or my firm.” (MR 655, 661). The Peridot Parties offer no better

explanation to this Court. (Resp. at 22). This cursory and carefully-worded

statement sheds absolutely no light on why the Peridot Parties failed to appear for a

trial setting of which they had both actual and constructive notice, including

multiple forms of written notice. See Sutherland v. Spencer, 376 S.W.3d 752, 755

(Tex. 2012) (“[T]he critical question in any default judgment [is]: ‘Why did the

defendant not appear?’”). “[F]orgetfulness alone is [not] sufficient to satisfy the

first Craddock element.” Id. Based on the limited summary judgment evidence

submitted by the Peridot Parties, there is no evidence that their failure to appear

was, at best, the product of Mr. McClure’s “forgetfulness.” As a matter of Texas

law, that is simply not enough. Id.

Moreover, the Peridot Parties not only failed to appear for trial on December

14, 2015, they also “went dark” for an extended period prior to that trial setting. In

their Response, the Peridot Parties fault RPH’s lead trial counsel, Andy Taylor,

for informing Judge Arteaga at the December 14 trial setting that he had received

no communications from them in 30 days, but it had been 24 days since he

received any communications—written or verbal—from counsel to the Peridot

Parties. (M.R. 438-42). Moreover, the Peridot Parties continued to remain “dark”

for months after the entry of the Default Judgment, reemerging from their still

15 unexplained absence from the case only after RPH commenced enforcement and

collection efforts in March 2016. In short, the Peridot Parties did not just miss a

trial setting of which they had notice, as they also ignored this case for extended

periods both before and after that trial setting.

The insufficiency of the Peridot Parties’ explanation of and evidence for

failing to appear becomes even more apparent when comparing treatment of

similar situations by Texas courts of appeal. In Balogh, the Corpus Christi Court

of Appeals upheld the denial of a motion for new trial following a post-answer

default judgment because the defendant failed to demonstrate his failure to attend

trial was not intentional or the result of conscious indifference. Balogh v. Ramos,

978 S.W.2d 696, 699 (Texas App.—Corpus Christi 1998, pet. Denied). The

Corpus Christi Court of Appeals noted the defendant provided affidavit evidence

that he had no actual notice of the trial setting because he did not receive the

docket control order, but offered no explanation for his failure to appear at a docket

control conference where the trial date was set, did not deny receiving the

plaintiff’s request for a docket control conference, and did not contradict the

clerk’s notes that notice of the conference where the trial date was set was mailed

to the defendant. Id. Here, the Peridot Parties’ conduct is even more egregious

than in Balogh, as the Peridot Parties admit receiving notice of the trial setting

16 contained in the TI Order but, for reasons left entirely unexplained, they failed to

act.

Similar to the defendant in Balogh, the Peridot Parties also received notice

of the trial setting in other ways because Mr. McClure drafted the Protective Order,

which specifically references and incorporates the TI Order containing the trial

date. The Peridot Parties’ argument in response borders on bizarre: they claim that

McClure cannot be held to the contents of the very document he drafted and

signed, the TI Order. (Resp. at 22). This cannot be. Moreover, Mr. McClure

received yet another form of notice of the trial setting, as RPH served the Peridot

Parties with documents in the Dallas Proceeding containing the Bexar County trial

date. (M.R. 440, 520, 549).

A careful examination of the reasons for a party’s failure to appear at trial is

required before relief from a Default Judgment can be granted. In contrast to the

Peridot Parties’ conduct here, in Custom Crete, this Court held a defendant

complaining of insufficient notice under Rule 245 did not intentionally fail to

appear or exercise conscious indifference because the defendant appeared at trial

mistakenly believing a non-attorney could represent the corporation at trial.

82 S.W.3d at 660. Similarly, in Parker, the Texarkana Court of Appeals held a

defendant that received fourteen days’ notice of a trial setting did not act

intentionally or with conscious indifference because the defendant sent a letter to

17 the district clerk prior to trial requesting clarification of the trial date and

complaining of lack of proper notice. 20 S.W.3d at 819. Here, the Peridot Parties

failed to show for trial and offer no explanation for how they allegedly overlooked

multiple instances putting them on notice of the trial date. All the Peridot Parties

have managed to show is that Mr. McClure was, at best, extremely “forgetful,” but

“forgetfulness alone is [not] sufficient to satisfy the first Craddock element.”

Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex. 2012).

For these reasons, Judge Arteaga abused her discretion not only by granting

the Peridot Parties’ motion for summary judgment in the Bill of Review

proceeding, but also by denying RPH’s cross-motion for summary judgment

asking for the denial of the Bill of Review.

2. The Peridot Parties failed to present any evidence of a “meritorious defense.” In addition to proving a lack of intentional conduct or conscious

indifference, even under the standard for a motion for new trial, the Peridot Parties

must also allege and prove that they have a meritorious defense to the underlying

case. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939). But the

Peridot Parties presented no evidence whatsoever to Judge Arteaga establishing a

“meritorious defense.” “Setting up a meritorious defense does not require proof in

the accepted sense.” Dolgencorp of Texas, Inc. v. Lerma, 288 S.W.3d 922, 927-28

(Tex. 2009). “Rather the motion sets up a meritorious defense if it alleges facts

18 which in law would constitute a defense to the plaintiff’s cause of action and is

supported by affidavits of other evidence providing prima facie proof that the

defendant has such a defense.” Id. at 928.

On this record, the Peridot Parties entirely failed to make mention of RPH’s

causes of action, what facts constitute a defense thereto, or what defenses those

facts support in their briefing to the District Court. Instead, the Peridot Parties

only made—and continue to make—the vague and conclusory statement that “a

meritorious defense exists.” (MR 661). None of the affidavits attached to the

motion for summary judgment the Peridot Parties filed in the District Court

mentioned any facts related to claims and defenses in the underlying suit and none

of the pleadings they attached were verified.

Finally, nothing in the Peridot Parties’ Response to this Court clarifies this

situation or explains what the “meritorious defense” they would assert against

RPH’s underlying claims would be. In sum, the Peridot Parties not only did not

present sufficient evidence to prevail on summary judgment on the “meritorious

defense” element—they failed to present any evidence on this element at all,

rendering it an abuse of discretion for Judge Arteaga to grant summary judgment to

them and to simultaneously deny it to RPH.

19 3. The Peridot Parties failed to present any evidence that RPH will not be prejudiced. The Peridot Parties also failed to present any evidence on the “prejudice”

factor of the Craddock test, and failed to prove that RPH will not suffer prejudice

if the Default Judgment is set aside. While the Peridot Parties flatly ignored the

prejudice inquiry required by Craddock, the record supports that RPH is severely

prejudiced by Judge Arteaga’s setting aside of the Default Judgment; RPH incurred

attorneys’ fees and expenses taking the default judgment when the Peridot Parties

inexplicably failed to appear for trial on December 14, 2015, in the Underlying

Suit. (MR 1127). Moreover, following entry of the Final Judgment, the record

reflects that RPH incurred substantial costs and attorney’s fees in filing a collection

proceeding, serving post-judgment discovery, defending against the current

proceeding, and mediating this matter. (MR 1127).

Contrary to both basic equity and customary practice in Bexar County, the

Peridot Parties have made no offer to cover the substantial costs and fees incurred

by RPH. Again, nothing in the Peridot Parties’ Response changes this fact, and the

record confirms RPH will suffer prejudice in the form of attorneys’ fees and costs

incurred as the direct result of the Peridot Parties’ failure to appear for a trial

setting of which they had notice. Because the only evidence in the summary

judgment record shows that RPH will be prejudiced by the setting aside of the

Default Judgment, it was an abuse of discretion for Judge Arteaga to grant

20 summary judgment to the Peridot Parties and to deny it to RPH in the Bill of

Review proceeding.

IV. Equity and Sound Public Policy Preclude Giving the Peridot Parties a “Mulligan” and Setting Aside the Default Judgment on this Record. In the final measure, the Peridot Parties are asking this Court to hold that a

sophisticated commercial litigant, represented by experienced litigation counsel at

a large Dallas law firm, deserves a “mulligan” for failing to appear for (or to

object to) a trial setting of which they received multiple written notices and at least

38 days warning. The Peridot Parties are asking the Court to do this without ever

providing a coherent explanation as to why they failed to appear, and without

establishing their lack of fault—or even a lack of conscious indifference. Nor did

the Peridot Parties bother introduce into the summary judgment record what their

meritorious defense to RPH’s underlying claims would be. And, finally, the

summary judgment record confirms that the Peridot Parties have failed to even

offer to compensate RPH for the attorneys’ fees and costs that it incurred as a

direct result of the Peridot Parties’ failure to appear for trial, meaning that RPH

will suffer prejudice if the Default Judgment is set aside.

In addition to failing to present adequate summary judgment evidence to

support their equitable Bill of Review, the Peridot Parties are also asking this Court

to set aside its own 9-month old decision in Templeton and to hold that Rule 245

can never be waived and that parties—even sophisticate parties represented by

21 quality counsel— can “instead sit on their hands” in response to multiple written

notices that give some, but less than 45 days, notice of a trial setting. This Court

should decline this invitation to reverse Templeton, and should refuse to give a

blanket license to lawyers to simply ignore trial settings that give some but less

than 45 days’ notice of trial.

Although default judgment is an undeniably harsh result, Judge Arteaga

abused her discretion by granting summary judgment to the Peridot Parties on their

Bill of Review despite the fact that, on this record, as they did not come anywhere

close to carrying their burden on summary judgment. Indeed, upon examination

Judge Arteaga’s abuse of discretion becomes obvious because, as explained supra,

the Peridot Parties failed to offer any summary judgment evidence on multiple

elements where, as a matter of law, they had the burden of proof—and this is

equally true regardless if this challenge to the Default Judgment is evaluated under

the bill of review standard (as it should be) or under the motion for new trial

standard. Indeed, it was not only an abuse of discretion for Judge Arteaga to grant

summary judgment on the Bill of Review to the Peridot Partiers, but on this record

it was equally an abuse of discretion for her to deny RPH’s cross-motion for

summary judgment against the Bill of Review.

The admitted harshness of default judgment is mitigated here because the

Peridot Parties do have a proper and adequate remedy, but it is not an equitable bill

22 of review, rather it is against the counsel who failed to appear for trial setting of

which they had notice, and who still refuse to explain that failure.

CONCLUSION AND PRAYER This Court has consistently recognized that mandamus relief is available

where, as here, a trial court abuses its discretion in erroneously granting a bill of

review. As shown in Relator’s Petition for Writ of Mandamus and herein, the

District Court abused its discretion in granting, via summary judgment, the Real

Parties in Interest’s Bill of Review.

For all these reasons, Relator RPH Capital Partners, LP respectfully requests

its Petition for Writ of Mandamus be granted, and that this Honorable Court of

Appeals issue a Writ of Mandamus commanding the Respondent, the Honorable

Antonia Arteaga, to: reverse, alter and amend her Order of June 9, 2016 to reinstate

the Final Judgment in Cause Number 2015-CI-17142 and styled RPH Capital

Partners, LP v. Peridot Joint Venture, et al. in the Bexar County 57th District

Court, Bexar County, Texas, as well as to reinstate all abstracts of judgment and

writs of execution issued to collect on the Final Judgment. In short, RPH requests

that this Court grant summary judgment for RPH and restore the post-answer

Default Judgment that Judge Arteaga set aside via her erroneous grant of the Bill

of Review. The Default Judgment should be left undisturbed, with full

enforcement and execution permitted.

23 RPH also requests such additional relief as it is entitled to in law or in

equity.

Respectfully submitted,

By: /s/ Christopher D. Kratovil Christopher D. Kratovil Texas Bar No. 24027427 Email: ckratovil@dykema.com Kristina M. Williams Texas Bar No. 24078303 Email: kwilliams@dykema.com Adam Nunnallee Texas Bar No. 24057453 Email: anunnallee@dykema.com DYKEMA COX SMITH 1717 Main Street, Suite 4200 Dallas, Texas 75201 (214) 462-6400 – Telephone (214) 462-6401 – Facsimile

And

Phyllis Speedlin Texas Bar No. 18906100 Email: pspeedlin@dykema.com DYKEMA COX SMITH Weston Centre 112 E. Pecan Street, Suite 1800 San Antonio, TX 78205 (210) 554-5500 – Telephone (210) 226-8395 – Facsimile

24 And

Andy Taylor State Bar No. 19727600 Email: ATaylor@AndyTaylorLaw.com ANDY TAYLOR & ASSOCIATES, P.C. 2668 Highway 36S, #288 Brenham, Texas 77833 (713) 222-1817 – Telephone (713) 222-1855 – Facsimile

ATTORNEYS FOR RPH CAPITAL PARTNERS, LP

25 CERTIFICATE OF COMPLIANCE I certify that this Reply in Support of Petition for Writ of Mandamus

complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has

been prepared in a conventional typeface no smaller than 14-point for text and 12-

point for footnotes. This document also complies with the word-count limitations

of Tex. R. App. P. 9.4(i), if applicable, because it contains 5,752 words, excluding

any parts exempted by Tex. R. App. P. 9.4(i)(1).

DATED: August 2, 2016

CERTIFIED BY: /s/ Kristina M. Williams Kristina M. Williams Counsel for Relator RPH Capital Partners, LP

26 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing Reply in

Support of Petition for Writ of Mandamus was served upon the following counsel

via this Court’s electronic filing system in accordance with the Texas Rules of

Appellate Procedure on August 2, 2016.

/s/ Kristina M. Williams Kristina M. Williams

27 CERTIFICATION AND VERIFICATION

STATE OF TEXAS

COUNTY OF DALLAS

BEFORE ME, the undersigned notary public, on this day personally

appeared Adam Nunnallee, who being duly sworn, verified and stated that he is an

attorney of record for RPH Capital Partners, LP and that he has reviewed the

Relator's Reply in Support of Petition for Writ of Mandamus and that the facts

stated within the Reply are within his personal knowledge and are true and correct

in all respects, and that the factual statements contained in the Reply are supported

by competent evidence included in the Appendix and/or Record.

Adam Nunnallee

SUBSCRIBED AND SWORN TO BEFORE ME this 2r4-4 day of t) kV-- 2016.

Notary Public PAULA ELLIOTT Notary Pubik, State of Texas My Commission Expires 05/1 9/1 8 My Commission Expires: 5- le NutAry ID. 1237731-3