Richard S. Wade v. Vertical Computer Systems, Inc. and Luiz Valdetaro

Supreme Court of Texas
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No. 23-0443
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Richard Wade,
Petitioner,

v.

Luiz Valdetaro and Vertical Computer Systems, Inc.,
Respondents

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On Petition for Review from the
Court of Appeals for the Fifth District of Texas
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PER CURIAM

Defendant Richard Wade appeals a $21.6 million judgment
rendered after a one-hour bench trial at which he appeared but
presented no evidence. Wade alleges he was unprepared to defend
himself because notice of the trial setting was sent to an incorrect
address. A party who has appeared in a contested civil case has a
constitutional right to notice of a trial. By rule, and absent an
agreement otherwise, notice must be effected not less than 45 days
before a first setting. That did not happen here. Having sufficiently
informed the trial court about the service defect, Wade is entitled to a
new trial.
Wade is the former president, CEO, and director of Vertical
Computer Systems, Inc. In April 2020, Vertical’s chief technical officer
and several of its shareholders sued Wade and his co-director for breach
of fiduciary duty and fraud. The original petition states Wade’s address
for service of process as “3717 Cole Avenue, Apt. 293, Dallas, Texas
75204.” (Emphasis added.) Confirming receipt of service at that
address, Wade, through his trial counsel, timely filed an answer and a
verified plea for abatement of the suit pending Vertical’s joinder as a
necessary party. Attached to the plea is Wade’s unsworn declaration
verifying his address as “3717 Cole Ave., Apt. 293, Dallas, Texas 75204.”
(Emphasis added.)
About a year later, the plaintiffs’ claims against Wade were
severed into a separate action, and the trial court ordered the parties to
submit those claims to binding arbitration in accordance with Wade’s
employment agreement. Shortly thereafter, in June 2021, Wade’s
attorney filed a motion to withdraw. The motion stated that Wade had
been notified by certified mail, regular mail, and email about the motion
and his right to object. See TEX. R. CIV. P. 10. Unlike previous filings,
however, the motion identified Wade’s “last known address” as “3717
Cole Ave., Apt. 277, Dallas, Texas 75204”—same street address,
different apartment number. (Emphasis added.)
While that motion was pending, the trial court notified the parties
that the case was set to be dismissed for want of prosecution in August
2021. See TEX. R. CIV. P. 165a. The dismissal notice stated that Wade
had “No Known Address.” Days later, the trial court granted counsel’s
motion to withdraw. Wade did not object to counsel’s withdrawal, and
no attorney was substituted as counsel.

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The following month, the trial court removed the case from the
dismissal docket and scheduled a bench trial for April 19, 2022. Notice
of the trial setting was mailed to Wade on August 24, 2021, at the
Apt. 277 address counsel’s motion to withdraw had listed as Wade’s “last
known address” rather than the Apt. 293 address the plaintiffs had
designated for service, which Wade had confirmed in his declaration.
Trial commenced by Zoom as scheduled on April 19. Wade
appeared pro se but remained silent until the court asked if he wanted
to cross-examine the plaintiffs’ second witness. Wade’s response led to
the following exchange:

THE COURT: Any cross-examination?
MR. WADE: Yes. This is Richard Wade.
THE COURT: Okay.
MR. WADE: And unfortunately, I didn’t know about this—
THE COURT: Mr. Wade, you’ve already talked to my court
coordinator. You were responsible for keeping the Court
notified of your change of address, and you haven’t done
that. And so, you were provided notice of this trial, you did
not attend. And so, I’m not sure what else to tell you. But
we provided—under the Dallas County local rules, you
should have called in last Thursday. We bent over
backwards to provide you the Zoom link. If you have any
questions, you can ask them now.
....
THE COURT: Mr. Wade, did you want to ask any
questions?
MR. WADE: Not right now.

Thereafter, the plaintiffs called just one more witness before resting.
The court then invited Wade “to go ahead and make [his] presentation.”
Wade offered a brief narrative response and an even briefer closing
argument but no evidence.

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Within an hour of commencing trial, the court announced: “I’ve
already made a decision. I’m ruling in favor of the Plaintiff[s] on all of
this.” The final judgment awarded the plaintiffs more than $21 million
for breach of fiduciary duty, theft, embezzlement, and fraud.
Wade promptly filed a pro se notice of appeal, arguing that the
trial notice was “sent to the wrong address” and that he did not receive
notice “until the day the trial started . . . when [the clerk] emailed
instructions on how to log into the trial ‘call.’” The court of appeals
affirmed the multimillion-dollar judgment, ___ S.W.3d ___, 2023 WL
3114671, at *1 (Tex. App.—Dallas Apr. 27, 2023), but we hold that
proceeding to trial in derogation of Wade’s right to notice was reversible
error. Failure to provide notice of a trial setting to a party who has
appeared in the case “violates basic principles of due process,”
warranting a new trial. E.g., Highsmith v. Highsmith, 587 S.W.3d 771,
778 (Tex. 2019); In re K.M.L., 443 S.W.3d 101, 119 (Tex. 2014) (“[F]ailure
to comply with the notice requirements in a contested case deprives a
party of his constitutional right to be present at the hearing and to voice
his objections in an appropriate manner[.]”); see TEX. R. CIV. P. 245
(requiring “reasonable notice of not less than forty-five days” of a first
trial setting for a contested case absent an agreement otherwise);
B. Gregg Price, P.C. v. Series 1 – Virage Master LP, 661 S.W.3d 419, 422
(Tex. 2023) (“When parties are not afforded a meaningful opportunity to
be heard, the remedy for denial of due process is due process.” (internal
quotation marks and citation omitted)).
Under Rule 21a, service of notice by mail is complete when a
postpaid and “properly addressed” document is deposited in the mail.
TEX. R. CIV. P. 21a(b)(1). Notice served in accordance with Rule 21a
raises a presumption that notice was received, see TEX. R. CIV. P. 21a(e),

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but “we cannot presume that notice was properly sent,” Mathis v.
Lockwood, 166 S.W.3d 743, 745 (Tex. 2005).
Wade contends that he did not receive proper notice because the
trial notice was not “properly addressed.” As Wade notes, notice of the
trial setting was mailed to an address provided by withdrawing counsel
that differed from the address Wade had provided to the court.
Furthermore, the clerk’s office had itself demonstrated confusion about
Wade’s address by stating on the dismissal notice that he had “No
Known Address.” When Wade first spoke at trial, he informed the court
that he lacked adequate notice about the trial setting. The court
interrupted Wade before he could articulate the specifics of his
complaint, but the ensuing colloquy demonstrates the court’s
understanding that Wade was challenging receipt of notice based on an
incorrect address. The court rejected Wade’s complaint, 1 citing a duty
to notify the court clerk about any address changes. See TEX. CIV. PRAC.
& REM. CODE § 30.015 (requiring civil litigants to notify the clerk in
writing if the party’s address changes and authorizing the court to
“assess a fine of not more than $50” for noncompliance). The court might
be right about the duty, but it was wrong about the consequence.
Even assuming such a duty, unless the failure to update an
address “was intentional rather than a mistake, due process requires
some lesser sanction than trial without notice or an opportunity to be
heard.” Mathis, 166 S.W.3d at 746 (applying the Craddock standard
and citing Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 85-86 (1988));

1 Plaintiffs’ contention that Wade failed to preserve error is without

merit. The trial transcript confirms the trial court knew the nature of Wade’s
complaint and ruled against him. See TEX. R. APP. P. 33.1(a), (c).

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see B. Gregg Price, P.C., 661 S.W.3d at 424-25 (holding that the trial
court erred in granting summary judgment when the defendant
established that the failure to present a defense was due to lack of
proper notice rather than intentional or consciously indifferent conduct).
Whether Wade’s error is more aptly characterized as a failure to correct
a mistake than a failure to provide an updated address makes little
difference in the due-process inquiry. A new trial is necessary because
there is no allegation that withdrawing counsel intentionally provided
an incorrect address for his client, and nothing from which to infer intent
or conscious disregard on Wade’s part in failing to notice, correct, or
update the address. To the contrary, the record contains evidence of a
reasonable explanation for Wade’s failure to monitor the suit: the trial
court had previously ordered the parties to binding arbitration and,
consistent with that order, counsel’s motion to withdraw informed Wade
that there were no pending trial court deadlines. See In re Marriage of
Sandoval, 619 S.W.3d 716, 721 (Tex. 2021) (“[T]he element of conscious
indifference can be overcome by a reasonable explanation.”); In re R.R.,
209 S.W.3d 112, 115 (Tex. 2006) (noting that “some excuse” will
generally suffice to show the defendant’s failure to answer was not
conscious disregard).
As an alternative argument for affirmance, plaintiffs contend that
Wade waived his right to notice by failing to move for a continuance.
Although the constitutional right to due process is waivable, any such
waiver must be voluntary, knowing, and intelligent. In re K.M.L., 443
S.W.3d 101, 119 (Tex. 2014). That standard is not satisfied here. When
Wade broached the subject of inadequate notice, the trial court cut him
off, saying: “You were responsible for keeping the Court notified of your
change of address,” and “I’m not sure what else to tell you.” Wade’s

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failure to move for a continuance at that moment or elsewise during the
exceedingly brief trial cannot fairly be characterized as a voluntary,
knowing, and intelligent waiver. See id. at 120 (holding that a pro se
father did not waive his right to notice of the trial setting in a parental
termination suit “by sitting, under subpoena, through trial without any
help from counsel and failing to formally move for continuance”).
Consistent with our strong and consistently articulated
preference for adjudicating cases on the merits, we grant the petition for
review and, without hearing oral argument, reverse the court of appeals’
judgment. See TEX. R. APP. P. 59.1. The case is remanded to the trial
court for further proceedings consistent with this opinion.

OPINION DELIVERED: August 30, 2024

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