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Wembley Inv. Co. v. Herrera - 11 S.W.3d 924 (Tex. 1999)

Rule:

A bill of review is an independent action to set aside a judgment that is no longer appealable or subject to challenge by a motion for new trial. Although it is an equitable proceeding, the fact that an injustice has occurred is not sufficient to justify relief by bill of review. Generally, bill of review relief is available only if a party has exercised due diligence in pursuing all adequate legal remedies against a former judgment and, through no fault of its own, has been prevented from making a meritorious claim or defense by the fraud, accident, or wrongful act of the opposing party. If legal remedies were available but ignored, relief by equitable bill of review is unavailable.

Facts:

Petitioner Wembley Investment Company seeks to set aside a default judgment by bill of review. The trial court granted Wembley summary judgment on the bill of review, but the court of appeals reversed, holding that Wembley failed to prove as a matter of law that it was diligent in pursuing a ruling on its motion for new trial while the default judgment remained interlocutory.

Respondent Rosaura Herrera was leaving work when she slipped and fell in the hallway, injuring her back. Wembley owned, and Vantage Management Company managed, the building in which the incident occurred. Herrera sued Wembley and Vantage, claiming that their negligence and gross negligence caused her injuries. When the incident occurred, Wembley and Vantage were wholly-owned subsidiaries of Vantage Companies, and both were insured under a liability policy issued by American & Foreign Insurance Company, a member of the Royal Insurance Group. Through some confusion on Royal's part, Herrera's suit against Vantage was referred to counsel for a response, but Herrera's suit against Wembley was not. Consequently, no answer was filed on Wembley's behalf.

A little over a year later, the trial court granted the default judgment against Wembley and others. The record did not reflect that the clerk mailed notice of the default judgment to Wembley, and Herrera conceded that the clerk apparently did not do so. Wembley first learned of the default judgment when Herrera's counsel contacted Wembley's chairman. Only then, Wembley claims, did Royal learn that Wembley was its insured. Royal retained counsel to overturn the default judgment against Wembley. Uncertain about the default judgment's finality absent an express disposition of Hartford's subrogation claims, Wembley's counsel filed both a motion for new trial and a petition for bill of review. Discovery proceeded, and the motion for new trial was set for hearing on January 17, 1995. The trial court reset the hearing to January 24, 1995, and later postponed it at Herrera's counsel's request.

In mid-January 1995, Herrera's counsel informed Hartford that some of its subrogation claims had not been dismissed. He requested Hartford to file a motion for nonsuit and proposed judgment on these claims, which it did. The trial court granted Hartford's motion and signed the "Judgment of Nonsuit" as to all nondefaulting defendants on January 20, 1995. Although Wembley had entered an appearance, the summary judgment proof shows that it did not receive a copy of the nonsuit motion or judgment. Wembley first learned of the nonsuit on September 20, 1995, at the hearing on its motion for new trial. By that time, the trial court lacked jurisdiction to grant a motion for new trial, and Wembley could not seek relief by appeal or writ of error. The trial court denied Wembley's motion for new trial, and Wembley moved for summary judgment in the bill of review proceeding. The trial court determined that Wembley had a meritorious defense to Herrera's suit and that it had established the necessary bill of review elements as a matter of law. Accordingly, the trial court granted Wembley's motion for summary judgment, set aside the December 13, 1993 default judgment, and rendered a take-nothing judgment against Herrera in the underlying case. The court of appeals reversed the summary judgment, concluding that Wembley had not proved as a matter of law that it diligently pursued relief on its motion for new trial before seeking a bill of review.

Issue:

Did the petitioner have an obligation to advance its motion for new trial sooner than the time allowed by law?

Answer:

No.

Conclusion:

The Supreme Court of Texas granted Wembley's petition for review and reversed the appellate judgment. The court of appeals erred in holding that petitioner Wembley had an obligation to advance its motion for new trial sooner than the time allowed by law.

A bill of review is an independent action to set aside a judgment that is no longer appealable or subject to challenge by a motion for new trial. Although it is an equitable proceeding, the fact that an injustice has occurred is not sufficient to justify relief by bill of review. Generally, bill of review relief is available only if a party has exercised due diligence in pursuing all adequate legal remedies against a former judgment and, through no fault of its own, has been prevented from making a meritorious claim or defense by the fraud, accident, or wrongful act of the opposing party. If legal remedies were available but ignored, relief by equitable bill of review is unavailable. 

The court of appeals held that the default judgment was interlocutory when Wembley learned of its existence in August 1994. The court further held that, even though Wembley did not know that the default judgment had become final, Wembley could have obtained relief by obtaining a ruling on its motion for new trial while the default judgment remained interlocutory. The court concluded this constituted some evidence that Wembley did not exercise due diligence in pursuing available legal remedies, and that Wembley was therefore not entitled to summary judgment. A party who fails to timely avail itself of available legal remedies is not entitled to relief by bill of review. But here, it is undisputed that Wembley timely availed itself of a legal remedy by filing a motion for new trial in October 1994. It did so even though the time in which Wembley was required to file the motion did not begin to run until the judgment was final on January 20, 1995. Wembley's summary judgment proof established that it was never served with a copy of the nonsuit motion or order. Although the certificate of service in Hartford's nonsuit motion created a presumption that it was received, that presumption is "not 'evidence' and it vanishes when opposing evidence is introduced that the [document] was not received."

Here, Wembley was unaware that the default judgment had become final as a result of the nonsuit and that the appellate timetable was running against it. Our rules of procedure impose no obligation upon a litigant to obtain a ruling on a motion for new trial before the judgment becomes final. And Herrera has not asserted estoppel or other extenuating circumstances that might otherwise render relief by bill of review inequitable. Under these circumstances, Wembley's failure to obtain a ruling on its motion for new trial resulted from the accidents or wrongful acts of others and not from lack of due diligence.

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