Friday, November 22, 2013

Default Judgment: Appeal, Post-Judgment Motion, and Bill of Review

Default judgment entered. Judgment granted for Plaintiff. -- Now what?  


This article discusses, in general terms, what options may be available to the consumer once a judgment has been entered for the creditor. It focuses on legal remedies to attack the judgment, not on efforts to settle the case in order to avoid enforcement in the form of execution or garnishment, topics left for another day. 
It makes sense to discuss appeals and bill of review together, at least in an article that provides a general overview because the purpose of appeal and bill of review are the same: to attack an adverse judgment. 
They are nevertheless two rather different vehicles, and come into play under different circumstances.   
The bill of review procedure applies in the trial court and may be available for as long as four years after the judgment was signed. The time frame for appeals, by contrast, is much shorter. More on appellate deadlines below.   

A bill-of-review proceeding is initiated to attack a default judgment while an appeal may be brought to challenge a variety of judgments: a default judgment; a summary judgment; or a judgment entered after trial on the merits.
A bill-of-review petition is filed in the trial court that granted the judgment. An appeal, by contrast, is taken to the court of appeals in whose geographic jurisdiction the county or district court is located, though the notice of appeal must be filed in the trial court. (Appeals from justice court, also called JP Court, are another matter; they go to county court and have their own set of rules).  

Both bill of review and appeals - ordinary appeal and restricted appeal -  have specific requirements that must be satisfied. If the judgment was entered recently (within the last 30 days), it may be possible to attack the judgment by post-judgment motion in the trial court, such as a motion for new trial or a motion to set aside the default judgment; or a motion to modify the judgment. All such post-judgment motions have to filed within 30 days counting from the date the judgment was signed by the judge (which may differ from the hearing or trial date). It may be necessary to obtain a copy of the judgment from the clerk to be sure of the correct date. An extension may be available if the defendant did not become aware of the judgment until some point later, but the time frame under the rule that extends post-judgment deadlines under special circumstances is also restricted. -- > Late notice of judgment and motion under Rule 306a.  


The timing rule for post-judgment motions is very harsh. Such motions must be filed within 30 days or the plenary power of the trial court will automatically expire, meaning that the judge could no longer set aside the judgment even if inclined to do so. 
The deadline for appeals is also 30 days, but the rules for appeals are more lenient in two respects: First, a tardy would-be appellant may qualify for a 15-day extension to file the notice of appeal; second, in the case of a default judgment, the consumer may be able to bring a restricted appeal up to six months after the judgment was entered if he or she did not file a post-judgment motion or a timely notice of appeal to initiate a regular appeal. As the name suggests, a restricted appeal is more limited in other respects. It also requires a different notice of appeal. 

But the road to the court of appeals has booby traps too. In an appeal from a bench trial, findings of facts are needed, and the request for those is due before the notice of appeal itself is due: 20 days from the date of the judgment. -- > Findings of Facts and Conclusions of Law. 


The fourteen intermediate courts of appeals in Texas hear and decide various categories of appeals from county and district courts, not all of which are relevant to debt collection litigation. Among those that pertinent are the following: (1) appeals from final summary judgments; (2) appeals from final judgments entered after a bench trial (almost never a jury trial); (3) direct (regular) appeals from default judgments; (4) restricted appeals from default judgments after the deadline for a regular appeal has passed.

Typically, the urge, need, or desire to appeal arises after a final judgment has been entered against the Defendant. Appeals during the pendency of a lawsuit are exceedingly rare in debt litigation. That category of appeal is called interlocutory, and must be specifically authorized by statute. The circumstances that give rise to a right to an appeal before a final judgment seldom occur in debt collection suits, but there are exceptions, as there are to almost any rule and generalization:   


Interlocutory appeals are not a regular feature of debt collection litigation. But there are two possible exceptions: immediate appeals relating to arbitration (denial of motion to compel arbitration); and appeal of an adverse ruling on a contest to personal jurisdiction through what is called "special appearance" under Rule 120a. The latter scenario rarely occurs because consumers in debt collection suits must be sued in the county in which they reside, not merely in the state in which they live.

If a cardholder is sued in the wrong county, the remedy is a motion for transfer of venue (and a possible unfair debt collection claim based on the mandatory venue violation). Because of potential legal liability, however, debt collectors have good reason to make sure they don’t see in the wrong court. Collectors who flout the rule even risk enforcement action by consumer protection authorities. Example: Texas AG's action against Joseph Onwuteaka and his debt collection firm over mandatory venue violations: State of Texas v. Samara Portfolio Management LLC in Harris County District Court. 

As for personal jurisdiction issues involving foreign defendants, they are much more common in commercial litigation against companies and their directors and/or owners, not consumers.

The most common forms of appeal in debt litigation are (1) ordinary appeal from a final judgment -- either a summary judgment in favor of the creditor or a judgment entered after a bench trial -- and (2) restricted appeal, which is a special form of appeal that affords a remedy for default judgments under certain conditions. Sometimes, it is the creditor that appeals when the consumer prevails in the trial court. 


A bill of review proceeding is a method to attack a judgment that is no longer appealable because it has become final and the deadlines for regular and restricted appeal have passed. Unlike appeals, a bill of review is filed in the trial court in which the judgment was rendered. As such, it looks more like a regular lawsuit initiated by petition (though it must be sworn). The bill-of-review case may be assigned a new cause number just as all other freshly filed civil suits; or it may be given the original cause number with an extension added (a hyphen plus an additional digit or letter). Regardless of how a particular county or clerk denominates the bill-of-review case, its purpose is to persuade the trial judge to set aside the final judgment in the earlier case, and thereby -- essentially -- revive that lawsuit. If the bill of review is granted, the effect will be that the parties are returned to the position they were in before the judgment was granted. This means that the case is re-opened, and will have to be tried or disposed of in some other fashion. -- > Final dispositions of debt suits.  

An appeal, by contrast, involves a proceeding in a higher court that seeks to convince the higher court that the trial judge erred, or that there was some other problem, such as a defect in service (which the trial court judge may not have noticed and may not have been made aware of). There may be variety of outcomes: reversal and remand to the trial court; reversal and rendition of judgment in the appellant's favor; affirmance of the trial court's judgment, and partial reversal. Sometimes the courts of appeals correct a minor matter, such as deleting a word or item or adjusting the interest rate, and characterize the disposition as "affirming the judgment as reformed". 


There are many requirements for a successful appeal, and many procedural traps along the way. It is almost impossible for a pro se litigant to be successful on appeal, though not unheard of either. Most pro se appeals in debt suits are either dismissed or denied, and even those brought with attorneys often fail, for a variety of reasons. -- > appellate decisions in debt litigation 

Dismissal is the virtually guaranteed outcome if the appellant does not pay the appellate filing fee ($195) or does not pay for the clerk's record (cost depends on number of pages needed for the appeal). Appeals from judgments resulting from bench trials normally also require a reporter’s record (cost depends on length measured in words spoken and transcribed; with fees charged per page). The reporter’s record should be much shorter, and cheaper, compared to other civil cases involving comparable dollar amounts in damages because little or no oral testimony is typically presented, as most if not all of the evidence is in the form of documents submitted with a business records affidavit.  

Other forms of noncompliance can also entail dismissal, such as failing to file the required appellate docketing statement. Unrepresented litigants typically do not know how to draft an appellate brief, and often violate multiple rules of form. They will typically be given another chance (ordered) to submit a compliant brief by a specified deadline, but a fundamental lack of familiarity with the appellate process cannot be remedied within a matter of weeks; not to mention presenting a strong argument on the merits, supported by relevant legal authority (case law). If an argument on appeal is not supported with citations (to relevant published opinions in earlier cases and to the record in the case before the court), the argument is waived, and the justices will often not even consider it. 

The panel hearing the case will often overlook defects in form that remain in the resubmitted pro se brief, but will very likely rule against the unrepresented appellant on the merits, often based on failure to preserve error in the trial court, such as not making objections at all, or not giving a ruling on them. 

Most pro se appeals thus fail, assuming they even reach decision the decision stage. -- > Common error on appeal 

That said, default judgment are easier to attack than decisions on the merits, especially when the defendant was not (properly) served with process ( -- > Defect in service of citation) or was not given notice of the trial or hearing. One of the most critical issues is the date the defendant becomes aware that a default judgment was entered and/or hires an attorney who can assess the case and see if there is a viable basis to attack it. 

The clerk of the court will typically mail notice that a judgment was entered to the defendant's last known address, but that may not be the correct one. If the defendant does not take action promptly, it may be too late to undo the judgment, unless the requirements for a bill of review are satisfied. 

A bill of review, however, is an equitable remedy, and as such leaves a lot of discretion to the judge to grant or deny it, depending on the reason that led to the default judgment and whose fault it was. An additional complicating factor is that in most cases the judge hearing the bill of review will be the same that signed the judgment that is being attacked. If the judge made an error, it can be a delicate matter asking the same judge to correct it since the bill of review plaintiff would have to convince the judge of some wrongdoing or an oversight the last time around. In an appeal, by contrast, it is three justices on a higher court that review the actions of the judge in the court below, and they do it on a daily basis for a living. 

1 comment:

  1. On June 8, 2017, in Harris County 80th Civil Court, a state court jury found Samara Portfolio Management liable for $25 millon in civil penalties.