Cynthia Nitzsche and Stephen Nitzsche v. Teams of Texas--Appeal from 164th District Court of Harris County

Affirmed and Memorandum Opinion filed March 29, 2007

Affirmed and Memorandum Opinion filed March 29, 2007.

In The

Fourteenth Court of Appeals

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NO. 14-05-00876-CV

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CYNTHIA NITZSCHE AND STEPHEN NITZSCHE, Appellants

V.

TEAMS OF TEXAS, Appellee

On Appeal from the 164th District Court

Harris County, Texas

Trial Court Cause No. 03-49027A

M E M O R A N D U M O P I N I O N

This case comes to us as an appeal from the trial court=s denial of a bill of review. Appellants, Cynthia and Stephen Nitzsche, sued multiple defendants, including appellee, TEAMS of Texas, for damages arising out of an insurance claim for mold and water damage. TEAMS successfully sought summary judgment and severance. The Nitzsches did not receive notice of the judgment, and therefore did not timely pursue an appeal. The trial court denied relief on a bill of review, which sought to re-start the appellate timetable so that the Nitzsches could seek appellate review of the grant of summary judgment. We have reviewed the Nitzsches= issues, and because we determine that the Nitzsches do not have a meritorious ground of appeal, hold that the trial court did not abuse its discretion in denying the Nitzsches= bill of review. We therefore affirm the trial court=s judgment.

Factual and Procedural Background

Given the procedural posture of this case, we take the facts in the light most favorable to the Nitzsches. Farmers Insurance Exchange hired TEAMS to perform certain tests on the Nitzsches= home. The Nitzsches believed that TEAMS inadequately performed its tests and evaluations, and therefore sued TEAMS, among others, for violations of the Texas Deceptive Tract Practices Act (ADTPA@). TEAMS moved for summary judgment contending that the Nitzsches could not maintain suit against it because it owed no duty to the Nitzsches. The trial court granted TEAMS=s summary judgment.

The Nitzsches then filed a motion to reconsider and TEAMS filed a motion to sever. The trial court granted TEAMS=s motion to sever on October 13, 2004, and did not grant the motion to reconsider. The clerk of the court failed to mail notice of the judgment to the Nitzsches, which caused them to miss the deadline for timely filing notice of appeal. It was not until March 2005 that the Nitzsches finally learned of the trial court=s ruling.

The Nitzsches sought a bill of review from the trial court. The trial court held a hearing, and took the matter under advisement. The trial court then denied the bill of review. The Nitzsches sought review from this court, asking us to grant the bill of review, reverse the trial court=s grant of summary judgment, and remand the case for trial. However, because we conclude that the Nitzsches cannot satisfy the first prong of the test for receiving a bill of reviewCnamely, establishing a meritorious ground for appealCwe affirm the ruling of the trial court.

Analysis

I. Standard of Review

A bill of review is an equitable proceeding brought by a party to a former action seeking to set aside a prior judgment that is no longer subject to challenge by a motion for new trial or appeal. Nguyen v. Intertex, Inc., 93 S.W.3d 288, 293 (Tex. App.CHouston [14th Dist.] 2002, no pet.). To set aside a judgmentChere, summary judgmentCutilizing a bill of review, the petitioner ordinarily must plead and prove (1) a meritorious defense to the cause of action alleged to support the judgment, (2) that he was prevented from making due to the fraud, accident or wrongful act of his opponent, (3) unmixed with any fault or negligence of his own. Id. In the context of a lost appeal, however, the party need not show a meritorious defense, but rather a meritorious ground of appeal, such that A>the judgment might, and probably would, be reversed.=@ McRoberts v. Ryals, 863 S.W.2d 450, 455 n.1 (Tex. 1993) (Enoch, J. dissenting) (citing Petro-Chemical Transp. v. Carroll, 514 S.W.2d 240, 245 (Tex. 1974)).

Official mistake, or a failure to serve the party seeking the bill with proper notice, will relieve the petitioner from establishing the second prong of the test. See Perdue v. Patten Corp., 142 S.W.3d 596, 604B05 (Tex. App.CAustin 2004, no pet.). Receiving notice too late also relieves a party from establishing due diligence in pursuing legal remedies against the judgment, which ordinarily must be proven to seek a bill of review. Id. at 607.

The grounds upon which we may grant relief upon a bill of review are narrow because the procedure conflicts with the fundamental policy that judgments must become final at some point. Nguyen, 93 S.W.3d at 293. In our review, we must indulge every presumption in favor of the trial court=s ruling. Id. We will not disturb that ruling unless the petitioner is able to show affirmatively that there was an abuse of judicial discretion. Id. A trial court abuses its discretion only if it acts in an unreasonable or arbitrary manner, or without reference to any guiding rules and principles. Id. Finally, because we have no findings of fact or conclusions of law entered in this case, we must affirm the trial court=s ruling on any theory finding support in the record. See id.

II. Official Mistake

Neither party disputes that the only evidence at trial indicated that the clerk of the court failed to mail any notice of the trial court=s judgment. Additionally, the only evidence presented at trial indicated that the first opportunity for the Nitzsches to have received actual notice of the judgment was too late to timely file notice of appeal. Therefore, the only evidence adduced showed official mistake. We must now determine if the Nitzsches are able to satisfy the requirements for a bill of review.

III. Texas Law Does Not Permit the Nitzsches to Sue TEAMS

The Nitzsches are unable to satisfy the first prong of the test for receiving a bill of review: the requirement of showing a meritorious ground of appeal. Texas law does not permit the Nitzsches to maintain suit against TEAMS, and, therefore, the Nitzsches have no valid basis upon which to appeal the grant of summary judgment granted in TEAMS=s favor.

In Dagley v. Haag Engineering Co., we held that a contractor hired by an insurance company owes no duty to an insured, and also has no special relationship with an insured so as to trigger liability under the DTPA. 18 S.W.3d 787, 791B92 (Tex. App.CHouston [14th Dist.] 2000, no pet.). That decision relied on, and was in accord with, other decisions of Texas appellate courts, and the federal Fifth Circuit Court of Appeals applying Texas law. See Dear v. Scottsdale Ins. Co., 947 S.W.2d 908, 916B17 (Tex. App.CDallas 1997, writ denied) (opinion on rehearing) (analogizing to Natividad v. Alexis, Inc., 875 S.W.2d 695 (Tex. 1994)) overruled on other grounds, Apex Towing Co. v. Tolin, 41 S.W.3d 118, 123 (Tex. 2001); Muniz v. State Farm Lloyds, 974 S.W.2d 229, 235B37 (Tex. App.CSan Antonio 1998, no pet.); Bui v. St. Paul Mercury Ins. Co., 981 F.2d 209, 210 (5th Cir. 1993) (Texas law). These cases stand for the proposition that a party, such as the Nitzsches, cannot maintain suit for negligence or DTPA violations against a contractor hired by an insurance company, to perform adjusting or testing services on behalf of the insurance company. We are bound by this precedent.

The Nitzsches make no attempt to distinguish Dagley. Their only argument is that they need not prove a direct contractual relationship because they are a third-party beneficiary. However, as our precedent clearly holds, the lack of privity of contract or special relationship completely defeats the Nitzsches= claims against TEAMS. However, it also follows from our third-party-beneficiary precedent that the Nitzsches are not third-party beneficiaries who can pursue a claim against TEAMS. Rather, TEAMS owes a duty to, and has a contractual relationship with, Farmers.

In Texas, there is a presumption that parties enter into contracts for themselves, unless it clearly appears that they intended a third party to benefit from the contract. MCI Telecommunications Corp. v. Texas Utilities Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999). We will not create third-party-beneficiary status on our own or by implication; instead, the intent to create that status must be clearly and fully spelled out in the contract. See id. Simply receiving some incidental benefit from the contract is not enough, the contracting parties must have entered into the contract so as to secure a direct benefit for the third party as either a donee or a creditor beneficiary. Id. The Nitzsches cannot satisfy this test and have presented no proof to overcome the presumption against third-party-beneficiary status.

We do not have a copy of the contract between Farmers and TEAMS, and thus lack the instrument with which we must begin our inquiry. See id. at 650B51 (stating that our analysis requires us to interpret the contract and interpret it de novo). With the evidence we do have, there is nothing to indicate that the contract between TEAMS and Farmers was entered into for the Nitzsches= benefit. Instead, the record indicates that Farmers hired TEAMS for its own benefitCnamely, to evaluate the claim for purposes of determining Farmers= liability. As a result, we can determine only that the Nitzsches did not overcome the above presumption and, in line with precedent, hold that they were not third-party beneficiaries who could maintain suit against TEAMS. As our case law requires, Farmers retains liability for the actions of its contractor, and the Nitzsches must seek any damages from Farmers for any alleged TEAMS misconduct. See Dear, 947 S.W.2d at 917 (citing Natividad, 875 S.W.2d at 698).

Conclusion

Having determined that appellants cannot satisfy the first prong of the test to receive relief under a bill of review, we affirm the judgment of the trial court.

/s/ John S. Anderson

Justice

Judgment rendered and Memorandum Opinion filed March 29, 2007.

Panel consists of Justices Anderson, Hudson, and Guzman.