Wend Jal, S.A. de C.V., Juan Jose Leano Espinoza, Felix E. Elorriaga and Eduardo Guzman Solis v. Joyce Steel Hendricks, James L. Hendricks, C.E. Steel, Anne Steel, Gladys P. Steel and Hamco, a Partnership--Appeal from 131st Judicial District Court of Bexar County

No. 04-99-00308-CV

WEND JAL, S.A. DE C.V., Juan Jose Leano Espinoza,
Felix E. Elorriaga, and Eduardo Guzman Solis,
Appellants
v.
Joyce Steel HENDRICKS, James L. Hendricks,
C.E. Steel, Ann Steel, Gladys P. Steel, and Hamco,
Appellees
From the 131st Judicial District Court, Bexar County, Texas
Trial Court No. 95-CI-05407
Honorable Raul Rivera, Judge Presiding

Opinion by: Sarah B. Duncan, Justice

Sitting: Phil Hardberger, Chief Justice

Catherine Stone, Justice

Sarah B. Duncan, Justice

Delivered and Filed: October 11, 2000

REVERSED AND REMANDED

This is a restricted appeal of a post-answer default judgment against Wend Jal, S.A. de C.V., Juan Jose Leano Espinoza, Felix E. Elorriaga, and Eduardo Guzman Solis, and in favor of Joyce Steel Hendricks, James L. Hendricks, C.E. Steel, Ann Steel, Gladys P. Steel, and Hamco, a partnership. We hold there is legally insufficient evidence of common law fraud. We therefore reverse the trial court's judgment. In the interest of justice, however, we remand the cause for further proceedings.

Factual and Procedural Background

The plaintiffs sued Wend Jal, S.A. de C.V., Juan Jose Leano Espinoza, Felix E. Elorriaga, and Eduardo Guzman Solis ("Wend Jal") for common law fraud arising out of the plaintiffs' investment in Wend Jal. Wend Jal answered but did not appear at trial. The plaintiffs therefore requested a post-answer default judgment; and one of the plaintiffs began to testify in support of the requested judgment. The trial judge interjected, asking if the misrepresentations were set out in the petition. The witness indicated they were, and the court stated it would incorporate those allegations into the record. The witness then continued to testify regarding the plaintiffs' damages and other matters. At the conclusion of the trial, the trial court rendered judgment in the plaintiffs' favor for $1,320,000 in actual damages; $7,500 in expenses; $1,320,000 in punitive damages, and costs of court and postjudgment interest. Wend Jal appeals, contending the evidence is legally and factually insufficient to support the trial court's judgment.

Standard of Review

"[T]o be entitled to reversal by [restricted appeal], a party who did not participate at trial has six months in which to show error on the face of the record." Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex.1994). The parties agree appellants did not participate at trial, and they timely filed a restricted appeal. Thus, the only element in dispute is whether there is error apparent on the face of the record. To make this determination, we consider all papers on file in the appeal, including the reporter's record. DSC Fin. Corp. v. Moffitt, 815 S.W.2d 551 (Tex.1991) (per curiam). However, in the context of a post-answer default judgment, "the plaintiff ... must offer evidence and prove his case as in a judgment upon a trial." Flores v. Brimex Ltd. Partnership, 5 S.W.3d 816, 820 (Tex. App.-San Antonio 1999, no pet.) (citing Stoner v. Thompson, 578 S.W.2d 679, 682 (Tex. 1979)).

The scope and standards for sufficiency review are well-established. To determine whether there is legally sufficient evidence, we review "only the evidence and the inferences tending to support the finding and disregard all evidence and inferences to the contrary." Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). If there is more than a scintilla of evidence to support the finding, the legal sufficiency challenge must fail. See Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex.1987). Conversely, to determine whether there is factually sufficient evidence to support a jury finding, we review the entire record to determine if the finding "is so against the great weight and preponderance of the evidence as to be manifestly unjust." Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986). See generally Robert W. Calvert, "No Evidence " and "Insufficient Evidence " Points of Error, 38 Tex. L. Rev. 361 (1960).

Discussion

To establish common-law fraud, a plaintiff must prove: "(1) a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the representation was made with the intention that it be acted upon by the other party; (5) the party acted in reliance upon the representation; and (6) the party suffered injury." Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex. 1998).

The record before us contains no evidence that any misrepresentation made by any of the appellants was made with knowledge that it was false or recklessly without knowledge of the truth. "When a legal insufficiency point is sustained, the reviewing court generally renders judgment in favor of the party bringing the point of error." Flores, 5 S.W.3d at 821. However, "in light of the procedural history of this case, the interests of justice are better served by remanding this case for further proceedings consistent with this opinion." Id. We therefore reverse the trial court's judgment and remand the cause to the trial court for further proceedings.

Sarah B. Duncan, Justice

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