In re Lakeside Resort JV, No. 22-1100, 2024 WL 2095990 (Tex. May 10, 2024).

In this case, the Texas Supreme Court recently set aside a default judgment against Beck Redden’s client and announced new rules for determining the finality of a default judgment and the circumstances under which such a judgment is beyond the ability of courts to grant relief.

A personal injury plaintiff filed suit against our client, the owner of a prominent resort hotel, for injuries allegedly caused by a hazard on the resort premises. Due to communication failures between the agent for service of process and the resort owners, no answer was filed. The plaintiff took a default judgment and then took no action to enforce the judgment for more than six months in an effort to allow all the deadlines for judicial relief to expire.

Beck Redden was engaged when the plaintiff began efforts to enforce the judgment and quickly identified an anomaly in the language of the judgment: although the judgment purported to be final, it also specifically stated that it was “not appealable,” a statement that was inconsistent with a final judgment. Thus, Beck Redden moved to set aside the judgment on the basis that it was not final and was subject to judicial relief. The trial court disagreed, as did the intermediate court of appeals, so Beck Redden sought relief by a petition for writ of mandamus to the Texas Supreme Court.

The Supreme Court agreed with Beck Redden, holding that a default judgment that expressly describes itself as “not appealable” is not a final judgment. Importantly, the Court held that due process concerns make it especially crucial for courts to demand strict compliance with the rules governing finality in the context of default judgments, announcing a new rule about finality in this context: A default judgment that does not contain a clear and unequivocal expression of finality is not a final judgment—and unlike the case of judgments rendered in other contexts, courts cannot consult the record to decide whether a default judgment in fact resolved all claims by all parties. For default judgments alone, this second step—consulting the record—is unnecessary when the judgment contains language that affirmatively undermines or contradicts finality.

The Beck Redden team consisted of Russell S. Post and Mary Kate Raffetto. Beck Redden trial partner Troy Ford, along with trial associate Garrett S. Brawley and appellate associate Nicholas Bruno, provided additional support during separate proceedings to set aside the judgment in the trial court.