Toby Haldeman v. Thomas Posey

NO. 12-23-00069-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

TOBY HALDEMAN, § APPEAL FROM THE 354TH
APPELLANT

V. § JUDICIAL DISTRICT COURT

THOMAS POSEY,
APPELLEE § RAINS COUNTY, TEXAS

MEMORANDUM OPINION
Appellant, Toby Haldeman, challenges the trial court’s no-answer default judgment in
favor of Appellee, Thomas Posey. In three issues, Haldeman argues that (1) the trial court erred
by denying his motion for new trial; (2) the evidence supporting the award of damages to Posey
was legally and factually insufficient; and (3) the evidence supporting the award of attorney’s fees
to Posey was legally and factually insufficient. We reverse and remand for a new trial.

BACKGROUND

Posey filed suit against Haldeman on August 26, 2022, asserting that he and Haldeman
“entered into a series of business dealings that resulted in co-ownership” of an excavator, farm
tractor, batwing mower, skid steer track loader tractor, and a dump trailer. Posey pleaded that he
and Haldeman agreed as follows: (1) they would use the equipment for various jobs “with the
understanding that all proceeds earned would be split evenly after business expenses,” (2)
Haldeman would “have entities formed that would own and manage the use of the equipment and
account for all proceeds earned[,]” (3) Posey would be allowed to use and access the equipment
“as a one-half owner[,]” and (4) Posey would provide labor on various projects, for which
Haldeman agreed to pay Posey $20 per hour.
Posey asserted that he paid $65,000 for the equipment and attached copies of Bitcoin
ledgers memorializing the transaction. Posey also alleged that he provided Haldeman with labor
during October and November of 2021, and he attached copies of his text message to Haldeman
regarding the dates of the labor he performed and the number of hours he worked. 1 Posey alleged
that Haldeman failed to (1) provide an accounting regarding the proceeds of the equipment, (2)
pay Posey his share of any profits, (3) form an entity to own and manage the equipment, (4) pay
Posey for his labor, and (5) allow Posey to use the equipment. Posey asserted causes of action for
breach of contract, quantum meruit, common law fraud, fraudulent inducement, conversion, and
partition, and he requested damages in the amount of $65,000 for breach of contract and quantum
meruit, as well as attorney’s fees pursuant to Chapter 38 of the Texas Civil Practice and Remedies
Code.
Haldeman did not file an answer, and Posey eventually filed a motion for default judgment
on December 30. With his motion, Posey filed his affidavit, in which he averred, in pertinent part,
that (1) the parties agreed to co-own the equipment, (2) Haldeman would pay Posey $20 per hour
for his labor, (3) he paid Haldeman $65,000 in Bitcoin, (4) he provided Haldeman with labor, and
(5) Haldeman failed to pay Posey for his labor and his share of profits. Posey’s motion also
included an affidavit from his attorney, Brent Money, regarding the amount of attorney’s fees and
costs incurred, which Money avers were reasonable and necessary.
On January 4, 2023, trial court signed a default judgment in favor of Posey, which awarded
Posey actual damages of $161,000 for breach of contract, quantum meruit, and common law fraud,
as well as “reasonable and necessary costs and attorney’s fees” in the amount of $8,570. In its
judgment, the trial court also ordered that Haldeman and Posey each owned a 50% share of the
equipment, determined that the equipment is susceptible to partition, and ordered that the
equipment be sold within sixty days and “that the proceeds of such sale go to the parties based on
their respective ownership shares in the [e]quipment, with the amount due to Haldeman as a result
of this partition be[ing] used to satisfy the other amounts owed to Posey in this judgment.”
Haldeman filed a motion for new trial on grounds that he failed to file an answer due to
mistake or accident, he has a meritorious defense, and granting a new trial would not cause delay
or injure Posey. In an attached affidavit, Haldeman averred that he was served with process on

1
Posey’s text message to Haldeman indicates that he provided labor on October 16, 17, 18, 21, 22, 23, 25,
and 29, and November 1 and 10.

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October 20, 2022, and he believed the deadline for filing his answer was November 14, 2022.
After Haldeman was served, he made an appointment with Money and averred as follows
regarding said meeting:

When I met with Mr. Money, we discussed the arrangement with [Posey]. I discussed with him the
money that I believe was owed to me and the facts leading up to our disagreement. Mr. Money
represented to me that he was going to call [Posey] and discuss a potential settlement. He told me
that it sounded like we could settle the lawsuit. When I left Mr. Money’s office, I understood that
Mr. Money was going to call me back with an offer to settle the lawsuit. He had asked me what I
wanted to settle the matter. I asked Mr. Money what I should do with the Petition. He told me not
to worry about it and looked at an employee in his office and directed her to put the lawsuit on hold.
I understood that the case would be on hold while we were attempting to settle it. I did not hear back
from Mr. Money, but since it was during the holidays, I assumed that we could resume discussions
after the new year. I did not retain an attorney to represent me or file an answer since I thought we
were working out a settlement. I did not know a default judgment had been taken against me until
my attorney checked the Court records and discovered the default judgment on January 27, 2023.

Haldeman also averred that he agreed to sell Posey a one-half interest in the skid steer, farm tractor,
and excavator for $65,000, and that he would hire Posey to operate the equipment “at the hourly
rate of $20.00 per hour and divide the profits from jobs performed with the equipment 50/50.” In
addition, Haldeman contended that Posey breached the parties’ agreement when he “failed to
operate the equipment after working only [ten] days” and used the equipment for his personal
benefit without compensating Haldeman for its fair rental value. Moreover, Haldeman asserted
that he purchased “a new Can Am UTV” for Posey with the understanding that Posey would
reimburse him, and that Posey purchased a truck from him but failed to pay him for it. Haldeman
asserted that he “is entitled to an offset for the cost of the Can Am UTV, the Ford truck, and for
the reasonable rental value for [Posey]’s use of the equipment.” Haldeman further stated in his
motion for new trial that he is willing to reimburse Posey for any reasonable expenses incurred in
obtaining the default judgment and states that he is “willing to go to a final trial in this cause as
soon as the Court is available.”
In his response to Haldeman’s motion, Posey contended that Money told Haldeman his
answer was due on November 14, but Money agreed to extend the answer deadline to November
21 to allow additional time for negotiations. Money’s paralegal filed a letter with the trial court
clerk confirming a one-week extension of time for Haldeman to file an answer. Posey pointed out
in his response that he waited more than fifty days after Money met with Haldeman and thirty-
nine days after the extended answer deadline before seeking a default judgment, and he asserted
that Haldeman never contacted him or Money to attempt to settle the case or request additional

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time to answer. Posey argued that Haldeman’s failure to answer was either intentional or the result
of conscious indifference. In addition, Posey contended that Haldeman failed to set up a
meritorious defense, and he maintained that the Can Am UTV and Ford truck pertained to separate,
unrelated contracts. Posey further contended that a new trial would cause delay and injure him
because “he is ready to proceed with executing [his] judgment” and he incurred significant
attorney’s fees to obtain and defend the default judgment.
Attached to Posey’s response as exhibits were affidavits from Money and Money’s
paralegal, Cheston Henry. In his affidavit, Money averred that he met with Haldeman on
Wednesday, November 9, 2022, and Haldeman informed him that he was willing to pay Posey,
but he did not know the precise amount he owed him, so Money suggested that Haldeman “gather
his documents, figure out what he thinks he owes Mr. Posey, and come back to my office to make
a settlement offer before the end of the week.” Money averred that he reminded Haldeman that
his answer was due the following Monday, and Haldeman stated that if the case did not settle, he
would not have enough time to hire an attorney and file an answer. Money also averred that he
agreed to give Haldeman a one-week extension of time to answer, so he instructed Henry to update
the calendar accordingly, and Henry filed a letter with the court confirming that the parties agreed
to extend Haldeman’s deadline to answer to November 21, 2022. According to Money’s affidavit,
Haldeman never contacted his office after he left, “either to provide a settlement offer or to confirm
whether the answer date had been extended.” Henry averred that Money met with Haldeman on
November 9, Money agreed to give Haldeman a one-week extension of time to file an answer, and
Henry filed a notice of the one-week extension with the court. In addition, Henry averred that
Haldeman never returned to the office and did not contact Money’s office regarding settlement or
any extension of time to answer.
After conducting a hearing on Haldeman’s motion for new trial, during which Haldeman
did not introduce additional evidence, the trial judge signed an order denying Haldeman’s motion
for new trial. This appeal followed.

DENIAL OF MOTION FOR NEW TRIAL
In issue one, Haldeman argues that the trial court erred by denying his motion for new trial
because his failure to file a written answer was due to mistake or accident and was not intentional

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or the result of conscious indifference, he had a meritorious defense, and granting a new trial would
not injure Posey. Because issue one is dispositive, we consider it first.
Standard of Review and Applicable Law
We review the denial of a motion for new trial for abuse of discretion. Dolgencorp of Tex.,
Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009). A trial court abuses its discretion if it acts
arbitrarily or unreasonably, without reference to any guiding rules or principles. Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). To obtain a new trial after a
no-answer default judgment, a defendant must demonstrate that (1) his failure to answer was not
intentional or the result of conscious indifference, but was the result of an accident or mistake, (2)
the motion for new trial sets up a meritorious defense, and (3) the granting of a new trial will not
cause delay or otherwise injure the plaintiff. Craddock v. Sunshine Bus Lines Inc., 133 S.W.2d
124, 126 (1939); see B. Gregg Price, P.C. v. Series 1 – Virage Master LP, 661 S.W.3d 419, 424
(Tex. 2023) (setting forth Craddock elements). If a defendant meets all three elements of
Craddock, a trial court abuses its discretion if it fails to grant a new trial. Dolgencorp, 288 S.W.3d
at 926; see also Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 86 (Tex. 1992) (holding that
“[A]n adjudication on the merits is preferred in Texas.”).
The first element of Craddock is satisfied when the defendant’s factual assertions, “if true,
negate intentional or consciously indifferent conduct by the defendant and the factual assertions
are not controverted by the plaintiff.” Milestone Operating, Inc. v. ExxonMobil Corp., 388
S.W.3d 307, 310 (Tex. 2012). In determining whether the defendant’s factual assertions are
controverted, a court looks to all the evidence in the record. In re R.R., 209 S.W.3d 112, 115 (Tex.
2006). Consciously indifferent conduct occurs when the defendant knew he was sued but did not
care. Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex. 2012). “Generally, ‘some excuse,
although not necessarily a good one, will suffice to show that a defendant’s failure to answer was
not because the defendant did not care.’” Id. (quoting In re R.R., 209 S.W.3d at 115). A
defendant’s failure to respond “must arise from more than mere negligence, and the element of
conscious indifference can be overcome by a reasonable explanation.” In re Marriage of
Sandoval, 619 S.W.3d 716, 721 (Tex. 2021). “[A]n excuse can be reasonable if it is based on a
mistake of law that led to an intentional act.” Id. Proof of justification for the defendant’s failure
to file an answer negates intent or conscious indifference. Anderson v. Anderson, 282 S.W.3d
150, 153 (Tex. App.—El Paso 2009, no pet.).

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With respect to the second element of Craddock, “[a] meritorious defense is one that, if
proved, would cause a different result upon a retrial of the case, although it need not be a totally
opposite result.” Jackson v. Mares, 802 S.W.2d 48, 51 (Tex. App.—Corpus Christi 1990, writ
denied). “Setting up a meritorious defense does not require proof ‘in the accepted sense.’”
Dolgencorp, 288 S.W.3d at 927-928 (quoting Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966)).
“Rather, the motion sets up a meritorious defense if it alleges facts which in law would constitute
a defense to the plaintiff’s cause of action and is supported by affidavits or other evidence
providing prima facie proof that the defendant has such a defense.” Id. at 928. If the defendant
meets these requirements, the court should not consider controverting evidence offered by the
nonmovant. Id.
The third element of Craddock is intended “to protect a plaintiff against the sort of undue
delay or injury that would result in a disadvantage when presenting the merits of the case at a new
trial, ‘such as a loss of witnesses or other valuable evidence.’” Id. at 929 (quoting Dir., State
Employees Workers’ Comp. Div. v. Evans, 889 S.W.2d 266, 270 (Tex. 1994)). With respect to
the third element of Craddock, courts should deal with the facts on a case-by-case basis to do
equity. Hahn v. Whiting Petroleum Corp., 171 S.W.3d 307, 311 (Tex. App.—Corpus Christi
2005, no pet.) (citing Angelo v. Champion Rest. Equip. Co., 713 S.W.2d 96, 98 (Tex. 1986)). A
defendant’s offer to reimburse the plaintiff for costs associated with obtaining the default judgment
and his statement that he is prepared for trial immediately are factors the court should consider.
Id. (citing Cliff v. Huggins, 724 S.W.2d 778, 779 (Tex. 1987)). Once a defendant alleges that
granting a new trial will not injure the plaintiff, the burden of proof shifts to the plaintiff to
demonstrate injury. Dolgencorp, 288 S.W.3d at 929.
Analysis
As discussed above, to obtain a new trial after a no-answer default judgment, Haldeman
had to demonstrate that his failure to answer was an accident or mistake rather than intentional or
the result of conscious indifference. See Craddock, 133 S.W.2d at 126. In his affidavit, Haldeman
explained that he was served with citation, and he scheduled a meeting with Money before the
answer was due in an attempt to resolve the dispute. Haldeman averred that he did not file an
answer because, as a result of the meeting with Money, he believed the case would be “on hold”
while the parties attempted to settle it. Haldeman’s factual assertions regarding the substance of
his conversation with Money were controverted by the affidavits of Money and Henry, both of

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which stated that during the meeting, Money only agreed to allow Haldeman a one-week extension
of time to file his answer.
Although Haldeman’s excuse for not filing an answer might not be a good one, it
nevertheless reasonably explains his mistaken subjective belief that he was not required to file an
answer because the case would be on hold while settlement negotiations were pending. See
Sutherland, 376 S.W.3d at 755. Moreover, although the record contains conflicting affidavits
regarding the precise content of the discussions that occurred during the meeting between
Haldeman and Money, the fact that Haldeman contacted Money in an attempt to resolve the dispute
negates any inference that Haldeman did not care that he had been sued, and Haldeman’s affidavit
explains his mistaken subjective belief that the case would be on hold during settlement
negotiations. See id.; see also In re Marriage of Sandoval, 619 S.W.3d at 721; Anderson, 282
S.W.3d at 153. The affidavits of Money and Henry confirm that Haldeman was mistaken, but their
affidavits do not prove conscious indifference. We conclude that Haldeman demonstrated that his
failure to file an answer was the result of a mistake rather than intentional or due to conscious
indifference, and he therefore satisfied the first prong of Craddock.
The second prong of Craddock required Haldeman to set up a meritorious defense in his
motion for new trial. See Craddock, 133 S.W.2d at 126. As discussed above, Haldeman averred
that Posey breached their agreement by only providing labor for ten days, and he asserted that he
is entitled to an offset for the cost of the Can Am UTV, a truck, and reasonable rental value for
Posey’s use of the equipment. We conclude that Haldeman alleged facts which would constitute
a meritorious defense to Posey’s cause of action, and Haldeman’s allegations were supported by
his affidavit, which provided prima facie proof of his alleged defenses. See Dolgencorp, 288
S.W.3d at 927-28. Therefore, Haldeman satisfied the second element of Craddock. See id.;
Craddock, 133 S.W.2d at 126.
The third element of Craddock required Haldeman to show that granting a new trial would
not cause delay or otherwise injure Posey. See Craddock, 133 S.W.2d at 126. As mentioned
above, Haldeman stated in his motion for new trial that he is ready to proceed to a trial on the
merits and is willing to reimburse Posey for reasonable costs and expenses incurred in obtaining
the default judgment. See Hahn, 171 S.W.3d at 311. The trial court was required to consider
Haldeman’s statements indicating his readiness for immediate trial on the merits and his
willingness to reimburse Posey’s reasonable costs in obtaining the default judgment. See id.

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Haldeman’s allegation that a new trial would not cause delay or injure Posey shifted the burden of
proof to Posey to demonstrate injury. See Dolgencorp, 288 S.W.3d at 929. Posey did not allege
or demonstrate that granting a new trial would result in loss of evidence or unavailability of
witnesses. See id. Posey’s response to Haldeman’s motion for new trial did not demonstrate that
the granting of a new trial would injure him; rather, his response simply expressed his desire to
collect on the default judgment against Haldeman and noted the expenses he incurred in obtaining
and defending the default judgment. Posey does not address the third Craddock element in his
appellate brief. We conclude that Haldeman satisfied the third prong of Craddock.
Because Haldeman satisfied all three elements of Craddock, we conclude that the trial
court abused its discretion by denying his motion for new trial. See Dolgencorp, 288 S.W.3d at
926. Accordingly, we sustain issue one. Because we sustain issue one, we need not address
Haldeman’s remaining issues. See TEX. R. APP. P. 47.1; Ivy, 407 S.W.2d at 214 (holding that relief
for defaulting defendant who files successful motion for new trial is setting aside default
judgment).

DISPOSITION

Having sustained issue one, we reverse the trial court’s default judgment and remand the
cause for a new trial in accordance with this opinion.

BRIAN HOYLE
Justice

Opinion delivered January 31, 2024.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

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COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

JUDGMENT

JANUARY 31, 2024

NO. 12-23-00069-CV

TOBY HALDEMAN,
Appellant
V.
THOMAS POSEY,
Appellee

Appeal from the 354th District Court
of Rains County, Texas (Tr.Ct.No. 11319)

THIS CAUSE came to be heard on the appellate record and the briefs filed
herein, and the same being considered, because it is the opinion of this court that there was error
in the judgment of the court below, it is ORDERED, ADJUDGED and DECREED by this Court
that the judgment be reversed and the cause remanded to the trial court for a new trial in
accordance with the opinion of this court; all costs of this appeal are assessed against Appellee,
THOMAS POSEY, for which let execution issue, and that this decision be certified to the court
below for observance.
Brian Hoyle, Justice.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.