Sanctions against out-of-state debt collector affirmed

Plaintiff's attorney was no-show for trial in debt collection suit in which defendant maintained that the alleged debt had been paid. Trial court imposed frivolous suit sanctions against Hosto & Buchan, an Arkansas law firm that sues individuals and businesses on behalf of creditors (or their alleged assignees) in Texas courts. First Court of Appeals, in opinion written by Chief Justice Radack, finds that complaint against sanctions order was not preserved for appellate review, but reforms judgment to reflect dismissal without prejudice for want of prosecution.

Midland Funding NCC-2 Corp. v. Josiah Azubogu, No. (Tex.App. - Houston [1st Dist.], Dec. 13, 2007)(Opinion by Justice Radack) (DWOP, reinstatement, appellate deadlines, sanctions for baseless suit)
Appeal from 165th District Court of Harris County (Hon. Elizabeth Ray)

MEMORANDUM OPINION

Appellant, Midland Funding NCC-2 Corp. (“Midland”), filed suit against appellee, Josiah Azubogu. The trial court dismissed the case with prejudice for want of prosecution and imposed sanctions against Midland’s law firm, Hosto & Buchan, P.L.L.C., for filing a frivolous lawsuit and failing to appear at trial. In two points of error, Midland contends the trial court erred in (1) dismissing Midland’s case with prejudice for want of prosecution and (2) awarding sanctions on its own initiative, without notice of hearing and with no countersuit asserted.

We modify the judgment, and, as modified, we affirm.

Background

Midland, represented by Hosto & Buchan, filed an original petition against Azubogu in the 165th Judicial District of Harris County, Texas on April 18, 2005. Midland claimed to be the assignee of an account in default originally owed by Azubogu. Azubogu filed an original answer on May 16, 2005, setting forth a general denial and asserting the affirmative defense that the alleged debt had been fully satisfied.

On October 14, 2005, the trial court generated a docket control order setting the date of trial at May 22, 2006. Azubogu and his counsel appeared at 10:00 A.M. on May 31, 2006, when the court coordinator called the case for trial. Neither Midland nor Midland’s counsel appeared at that time.

No one at Hosto & Buchan returned several calls made by the court coordinator. The trial court telephoned lead counsel at a number in Dallas and left two voice mail messages. The trial court also called a Little Rock, Arkansas number and reached Mr. Hosto, a named partner of the firm. Mr. Hosto was unaware of the proceedings and told the court that he was not licensed in Texas. Mr. Hosto informed the court he would send a Dallas or Houston lawyer to the court immediately.

The trial court advised Mr. Hosto that the file showed the case was being frivolously prosecuted and it planned to award sanctions under Rule 13 in the amount of $5,000 against Hosto & Buchan. The trial court also advised Mr. Hosto that it would reconsider its position if Mr. Hosto dispatched an attorney to the court immediately.

Midland’s counsel failed to timely appear. The court dismissed the case for want of prosecution, with prejudice, and awarded sanctions under Rule 13 for filing a frivolous lawsuit.

On June 7, 2006, Midland timely moved for new trial, requesting that the case be reinstated, or alternatively, that the judgment be modified to a dismissal without prejudice. Midland’s motion was not verified. Midland filed notice of its appeal on August 28, 2006.

Jurisdiction

Midland’s motion for new trial requests that the trial court (1) reinstate the case, or, alternatively, (2) reform the judgment to dismiss the case without prejudice. To seek reinstatement of a dismissed case, the movant must set forth the grounds for reinstatement in a verified motion filed with the clerk within 30 days after the dismissal order is signed. Clark v. Yarbrough, 900 S.W.2d 406, 408 (Tex. App.—Texarkana 1995, writ denied). Rule 165a(3) requires that “[a] motion to reinstate shall set forth the grounds therefor and be verified by the movant or his attorney. It shall be filed with the clerk within 30 days after the order of dismissal is signed. . . .” Tex. R. Civ. P. 165a(3) (emphasis added). A timely and proper motion to reinstate extends the trial court’s plenary jurisdiction until 30 days after the motion to reinstate is overruled. McConnell v. May, 800 S.W.2d 194, 194 (Tex. 1990). An unverified motion to reinstate, however, extends neither the trial court’s plenary power, nor the time in which to perfect an appeal. Butts v. Capitol City Nursing Home, Inc., 705 S.W.2d 696, 697 (Tex. 1986).

Midland’s motion for new trial is unverified; therefore, as a motion to reinstate, it is insufficient to extend the time in which to perfect an appeal. The trial court’s order became final on June 30, 2006. Under rule 26.1(a) of the Texas Rules of Appellate Procedure, a notice of appeal was required to be filed on or before July 30, 2006. Tex. R. App. 26.1(a). Even implying an extension of time, the notice of appeal could be filed no later than August 15, 2006. Midland’s notice of appeal was not filed until August 28, 2006. Thus, Midland’s notice of appeal is untimely unless its motion for new trial sought more than reinstatement of the case. See Tex. Dep’t of Transp. v. Martini, 902 S.W.2d 138, 140–41 (Tex. App.—Houston [1st Dist.] 1995, no writ) (holding that postdismissal motion need not have been verified to extend appellate timetables because it sought more relief than mere reinstatement of case).

In this case, Midland’s postdismissal motion sought two forms of relief—reinstatement of the case or, alternatively, reformation of the judgment to a dismissal without prejudice. We hold that the portion of the motion seeking reformation of the judgment is more than a motion to reinstate; it is a motion for new trial. See id. A proper motion for new trial will extend one’s appellate timetables. See Tex. R. App. 26.1(a)(1) (notice of appeal must be filed within 90 days, not 30 days, if motion for new trial filed). Because Midland’s motion for new trial extended the appellate timetable, its notice of appeal is timely and this Court has jurisdiction. Thus, we turn to the merits of the appeal.

Dismissal with Prejudice for Want of Prosecution

In issue one, Midland contends the trial court erred by dismissing its case for want of prosecution with prejudice. We agree.

When a plaintiff fails to appear and prosecute his case, the court’s only remedy is to dismiss the case. Smock v. Fischel, 207 S.W.2d 891, 892 (Tex. 1948). A judge rendering a judgment other than that authorized by Rule 165a has exceeded his jurisdiction. Lum v. Lacy, 616 S.W.2d 260, 261 (Tex. Civ. App.—Houston [1st Dist.] 1981, no writ) (citing Freeman v. Freeman, 327 S.W.2d 428, 433 (Tex. 1959)); see Burton-Lingo Co. v. Lay, 142 S.W.2d 448, 448 (Tex. Civ. App.—El Paso 1940, no writ) (holding trial court is without jurisdictional power to render any judgment against non-appearing plaintiff other than dismissal of plaintiff’s suit for want of prosecution). Dismissal for want of prosecution does not preclude the filing of another suit; therefore, dismissing a case with prejudice for want of prosecution is improper. See Willis v. Barron, 604 S.W.2d 447, 450 (Tex. App.—Tyler 1980, writ ref’d n.r.e.). If a case has been dismissed with prejudice for want of prosecution, the order of the trial court dismissing the suit must be reformed to eliminate the words “with prejudice.” Id.; Melton v. Rylander, 727 S.W.2d 299, 303 (Tex. App.—Dallas 1987, writ ref’d n.r.e.). Although the trial court had authority to dismiss Midland’s case for want of prosecution under Rule 165a, it improperly dismissed the case with prejudice.

Accordingly, we sustain Midland’s first point of error. We modify the judgment to dismiss the case for want of prosecution without prejudice.
Sanctions

In its second issue on appeal, Midland contends the award of sanctions must be reversed because the trial court (1) did not provide Hosto & Buchan with proper notice and hearing before imposing sanctions; (2) accepted evidence from Mr. Azubogu at the time of trial regarding payment of the account, and such evidence improperly formed the basis of the sanctions imposed for filing a frivolous lawsuit; (3) erred by awarding monetary sanctions on its own initiative; (4) erred by failing to state the particulars of good cause for the order of Rule 13 sanctions, and (5) lacked authority to impose sanctions for Midland’s failure to appear at trial.

Midland did not raise these complaints in its motion for new trial and cannot complain on appeal of such error, if any. See Tex. R. App. P. 33.1(a)(1)(A) (“[a]s a prerequisite to presenting a complaint for appellate review, the record must show that the complaint was made to the trial court by a timely request, objection, or motion that stated the grounds for the ruling that the complaining party sought from the trial court with sufficient specificity to make the trial court aware of the complaint”); see Sterling v. Alexander, 99 S.W.3d 793, 797 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (“We find appellant waived his objection to the trial court’s sanction because he does not cite to any place in the record nor have we identified anything in the record where he preserved his argument.”). Midland has waived any error regarding the award of sanctions and cannot now complain on appeal.

Accordingly, we overrule Midland’s second issue on appeal.

Conclusion

We modify the judgment to dismiss the case without prejudice, and, as modified, we affirm.

Sherry Radack
Chief Justice

Panel consists of Chief Justice Radack and Justices Alcala and Bland.