All Valley Innovations Group, LLC and Enrique J. Castellanos v. William Carrell

NUMBER 13-24-00628-CV

                             COURT OF APPEALS

                    THIRTEENTH DISTRICT OF TEXAS

                      CORPUS CHRISTI – EDINBURG


ALL VALLEY INNOVATIONS
GROUP, LLC AND ENRIQUE
J. CASTELLANOS,                                                              Appellants,

                                            v.

WILLIAM CARRELL,                                                               Appellee.


             ON APPEAL FROM THE 197TH DISTRICT COURT
                   OF CAMERON COUNTY, TEXAS


                           MEMORANDUM OPINION

                  Before Justices Silva, Peña, and Fonseca
                  Memorandum Opinion by Justice Fonseca

       Appellants All Valley Innovations Group, LLC (All Valley) and Enrique J.

Castellanos appeal from the trial court’s post-answer default judgment awarding over $27

million in damages to appellee William Carrell. Appellants contend the trial court erred in

denying their motion for new trial because insufficient notice of the trial date amounted to
a violation of due process of law, and they challenge the sufficiency of the evidence

supporting the judgment. We reverse and remand for further proceedings because

appellants’ failure to appear at trial was due to mistake or accident, not conscious

indifference.

                                       I.       BACKGROUND

       This appeal arises from a construction contract suit. Carrell is the owner of property

located at 2213 Padre Boulevard on South Padre Island. He hired All Valley as a general

contractor to perform improvements and repairs at the property. 1 Disputes arose

regarding the quality of appellants’ work, including allegedly concealing defects that

caused damage to the property. Carrell sent a letter firing appellants and demanding

damages, but appellants did not pay Carrell’s demand.

       Carrell filed suit on September 8, 2022, asserting breach of contract, negligence,

fraud, and misrepresentation, and requesting actual damages, consequential damages,

exemplary damages, pre- and post-judgment interest, attorneys’ fees, and court costs.

Appellants filed a general denial. Trial was initially set for May 30, 2023, but, following

multiple agreed continuances, it was finally reset for August 26, 2024.

       On July 31, 2024, appellants’ counsel Juan G. Ramos moved to withdraw as

counsel in the case, citing appellants’ failure to pay his fees. The motion certified that trial

was set on August 26, 2024, and that a copy of the motion had been provided to

appellants. Carrell opposed this motion.

       At the August 15, 2024 hearing on the motion, Ramos claimed he filed the motion

due to an inability to communicate with appellants. Appellants did not personally appear


       1 Castellanos is the owner of All Valley. We shall collectively refer to them as appellants except

where we need to distinguish between the two.

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at the hearing. Carrell’s counsel agreed not to oppose the withdrawal on condition that

the trial date not be moved. Ramos confirmed he told Castellanos about the trial setting

and about the multiple prior continuances. The trial court stated it would not continue the

trial date if appellants obtained new counsel and granted Ramos’s motion.

       The trial court signed a written order granting the motion, finding “good cause

exists for withdrawal” of Ramos. The order further stated the trial court’s findings that a

copy of the motion was “delivered by certified mail and e-mail” to appellants and that

appellants had “been notified in writing of the right to object to the motion” at their last

known address and email. The order also stated appellants were notified of the pending

August 26, 2024 trial.

       On August 23, 2024, John A. Rigney filed his notice of appearance as appellants’

counsel. The same day, he filed a motion for continuance citing the need for time to obtain

the case file and informing the trial court he had conflicting hearing settings on the trial

date. The trial court did not explicitly rule on this motion.

       The bench trial occurred on August 26, 2024, after the trial court called out for

appellants in the courtroom three times without answer. Carrell proceeded with his default

judgment prove-up via his testimony. He testified that he contracted with appellants to

renovate his property, but the renovations were defectively constructed and it cost a total

of $228,500 to repair. He also testified regarding his other damages, claiming total

damages of $23,440,939.40. Carrell’s counsel testified to prove up his attorney’s fees.

       The trial court took judicial notice of its file and granted all of Carrell’s requested

relief. The trial court entered a final judgment on August 26, 2024. The judgment noted

that appellants failed to appear for trial and awarded total damages of $27,308,251.41.



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This included actual damages of $228,500, past lost profits of $697,387.40, future lost

profits of $17,434,685, and punitive damages of $5 million.

        Appellants filed a motion for new trial on September 24, 2024, asserting that the

awarded damages lacked sufficient evidence and were not properly proven. The motion

also argued that Rigney lacked sufficient time to prepare for trial as he was retained as

counsel three days prior to trial. Finally, the motion argued that the failure to appear for

trial was excusable pursuant to all three Craddock factors. See Craddock v. Sunshine

Bus Lines, Inc., 133 S.W.2d 124 (Tex. 1939).

        The motion included an affidavit from Rigney explaining his absence from trial. He

attested that he had not been monitoring the case (Carrell’s counsel claimed the opposite

at the bench trial) and had called before trial to seek an agreed continuance. He also

attested that he had communicated to Carrell’s counsel that he had multiple conflicting

hearings on the trial date and could not attend but would seek someone to cover the

motion for continuance hearing for him. He further testified that Noe Alaniz in fact

attempted to attend the trial, but that Alaniz informed him the court conducted trial without

him. Rigney concluded that Carrell’s counsel misrepresented their conversation to the

trial court.

        Carrell responded to the motion for new trial. He argued that the judgment was

supported by sufficient evidence and that appellants had proper notice of the trial date.

Thus, he asserted appellants’ failure to appear at trial was intentional. Carrell also claimed

the jurat in Rigney’s motion for continuance was defective because it lacked Rigney’s

birth date. He also claimed there was “no evidence” that Rigney nor Alaniz contacted

Carrell’s counsel or the trial court the week of trial. Regardless, he further argued that



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Rigney should have refused to represent appellants because he knew there were only a

few days until trial and had insufficient time to prepare.

       Carrell attached evidence to his response showing that Rigney previously

represented appellants in other cases, and he argued Rigney thus was aware of their trial

settings in this case. He also attached an affidavit from his counsel regarding a phone

call with Rigney on August 23, 2024, during which Rigney stated he was aware of the

August 26, 2024 trial date. He also attested that Alaniz did not file a notice of appearance

in the case, did not appear at trial, and did not provide notice he would appear at trial,

and that Rigney did not notify him that Alaniz would appear at trial. Carrell’s counsel

further attested that the demand letter had been sent to appellants by email and certified

mail to the same address and email where trial notice was sent.

       The trial court held a hearing on the motion for new trial on November 7, 2024.

Rigney argued several grounds for granting the motion, including that Ramos was allowed

to withdraw three business days before trial, that appellants were “out of town” and could

not be contacted to be told about the trial date or that Ramos had withdrawn from the

case, and that he attempted to seek an agreed continuance with Carrell’s counsel. He

further argued that Carrell’s counsel lied to the trial court about their communications and

his awareness of the trial date. He also attacked the lack of evidence supporting the

judgment as argued in the written motion.

       Carrell’s counsel replied that appellants failed to meet the Craddock factors

because appellants were aware of the trial date and chose not to appear. He also argued

that Rigney did not contact him on the day of trial or afterwards regarding his lack of

appearance. He further argued that Carrell’s testimony was sufficient to support the



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judgment.

       Rigney testified he first received notice of the trial date on the Friday before trial.

He conceded he had spoken with Ramos about potentially taking over a matter the prior

month but did not know it was this matter. He could not attend the trial because he had

conflicting cases in Hidalgo County. He claimed that he could not reach appellants before

the trial date and thus technically lacked authority to file a motion for continuance or

assume representation at that time. Rigney claimed he learned that appellants lacked

awareness of the trial date after the fact by speaking to them and Ramos.

       Ramos testified that he emailed Rigney on August 19, 2024, to notify him about

his withdrawing from the case. He also attempted to notify appellants about his withdrawal

via appellants’ employees, Julio Aguilera and Maggie Rocha, by email and letter around

July 28 and again on August 9. He claimed he withdrew due to lack of payment as well

as lack of communication from appellants. Ramos testified that he told Rigney there was

a firm trial setting and that Rigney immediately attempted to secure the file around August

21, though did not obtain it until August 23 or August 24. Ramos was unaware of

appellants’ whereabouts at the time of trial because he did not have communication with

them. He also testified that one of the letters he sent to appellants was returned by the

postal service. Accordingly, he stated he was not personally aware if appellants became

aware of the trial date as his only communications were to appellants’ employees.

Typically, Castellanos would respond but did not do so in this instance.

       Lucio, Carrell’s counsel, testified regarding his call with Rigney. He stated he told

Rigney that it was “a very bad case” and advised him not to represent appellants because

they were proceeding to trial. He testified that he also told Rigney not to take the case if



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Rigney had conflicting hearings and that he could not agree to a continuance. Lucio

disagreed that Rigney told him that he would appear late and could not recall if Rigney

stated that he would have another attorney appear. Lucio disagreed that it was a

misrepresentation to tell the trial court that he did not know where Rigney was on the

morning of trial, despite being told Rigney had hearings in Hidalgo County, because he

did not know for certain where Rigney was located. He also disagreed that it was a

misrepresentation to state Rigney was monitoring the case because he claimed that was

what Ramos told him.

       Castellanos testified regarding his lack of notice of the trial date. Carrell’s counsel

objected to such testimony on the basis that it added new information and reasoning as

to the basis for the motion for new trial past the deadline. The trial court did not rule on

this objection but stated it would allow the testimony “and give it the proper weight that it

should be given based on your objection.”

       Castellanos stated Ramos did not provide notice of the August 26 trial date and

that he did not speak with Rigney prior to the trial setting. He testified he typically spoke

with Ramos on the phone, or Ramos contacted his employees who would personally hand

him emails, but that those employees no longer worked for him. He did not receive any

phone calls from Ramos in July or August 2024 and had not spoken with him for “a year,

a year and a half”—though he conceded he did not attempt to contact Ramos either.

Aguilar stopped working for him in April 2024 and Rocha stopped working for him in

February 2024. Castellanos did not tell Ramos that the employees stopped working for

him.




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       After Rocha left Castellanos’ employ, Castellanos hired Edney Ceballos to monitor

company email, but Ceballos did not inform Castellanos about any email concerning a

trial setting. Castellanos learned about the judgment from Rigney and was never aware

of trial dates in the case. He did not tell Ramos to stop emailing the former employees.

He testified that he did not see any messages from Rigney until after trial because he was

out of town with his family that weekend and was not “answering it.”

       The parties stipulated that Alaniz would testify that he was not hired to try the case

and was just appearing to argue the motion for continuance. The parties further stipulated

that he was not present at the time the trial court called the case for trial. Rigney asserted

that Alaniz did eventually appear at trial, but late.

       This appeal followed after the motion for new trial was overruled by operation of

law. See TEX. R. CIV. P. 329b(c).

                                       II.    ANALYSIS

       Appellants raise five issues on appeal. The first two issues concern whether the

trial court erred by entering a post-answer default judgment under Craddock. As these

issues are dispositive of the appeal, we do not address appellants’ other issues.

A.     Preservation for Appeal

       As a preliminary matter, Carrell argues appellants failed to preserve their

arguments regarding lack of notice of the trial date. See TEX. R. APP. P. 33.1(a). He

asserts that (1) appellants’ written motion for new trial did not discuss lack of notice as a

ground of error and (2) they could not raise notice for the first time at the hearing because

that was after the deadline for amending the motion under Texas Rules of Civil Procedure

321 and 329b. Carrell cites several cases which he claims support his arguments. See



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Aguirre v. Phillips Props., Inc., 111 S.W.3d 328, 332 (Tex. App.—Corpus Christi–

Edinburg 2003, no pet.); Walker v. Gonzales Cnty. Sheriff’s Dep’t, 35 S.W.3d 157, 160

(Tex. App.—Corpus Christi–Edinburg 2000, no pet.); L.B. Foster Co. v. Glacier Energy,

Inc., 714 S.W.2d 48 (Tex. App.—San Antonio 1986, no writ).

       We disagree with Carrell’s narrow interpretation of appellants’ motion. While the

original motion for new trial does not use the specific phrase “lack of notice,” it does argue

the Craddock factors and states Rigney had no time to prepare for trial or speak with his

clients concerning the trial. Presenting evidence in support of the first Craddock factor at

the hearing is not an amendment to appellants’ motion as Carrell contends. See TEX. R.

CIV. P. 321, 329(b). Further, none of Carrell’s cited cases state that arguing lack of notice

at the motion for new trial hearing in support of a Craddock argument without the specific

facts in the motion fails to preserve the issue for appeal. As such, Carrell’s argument lacks

support and we reject it.

B.     Standard of Review

       We review denial of a motion for new trial for abuse of discretion. XL Ins. Co. of

N.Y., Inc. v. Lucio, 551 S.W.3d 894, 898 (Tex. App.—Corpus Christi–Edinburg 2018, no

pet.). This includes following a trial court’s refusal to set aside a default judgment. See id.

“A trial court abuses its discretion if it acts without reference to any guiding rules or

principles or fails to correctly analyze or apply the law.” Id.

C.     Craddock

       Craddock is the seminal case regarding setting aside default judgments, holding

that a default judgment should be set aside if: (1) the failure to appear at a hearing was

not intentional or the result of conscious indifference, but was a mistake or accident;



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(2) there is a meritorious defense; and (3) a new trial will not result in delay or prejudice

to the plaintiff. Id. (citing Craddock, 133 S.W.2d at 126 (noting that, while trial courts have

broad discretion in deciding whether to set aside a default judgment and grant a new trial,

that discretion is not “unbridled”)). These elements apply to a post-answer default

judgment as well. Norimex Int’l Metals, Inc. v. Salinas, No. 13-09-00074-CV, 2010 WL

18044968, at *2 (Tex. App.—Corpus Christi–Edinburg May 6, 2010, pet. denied) (mem.

op.).

        It is appellants’ burden to prove each element of the Craddock test. Milestone

Operating, Inc. v. ExxonMobil Corp., 388 S.W.3d 307, 309 (Tex. 2012). But if all three

elements are satisfied, “a trial court abuses its discretion if it fails to grant a new trial.”

Estrada v. Boss Exotics, LLC, 703 S.W.3d 454, 458 (Tex. App.—Dallas 2024, no pet.)

(citing Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009) (per curiam)).

However, in a post-answer default judgment, if the first element is proven by evidence

that the party did not receive notice of the default judgment hearing, it is not required to

prove the second and third Craddock elements. Norimex Intern. Metals, 2010 WL

18044968, at *2 (citing Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005) (per

curiam) (further citations omitted)); see Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex. 1988)

(holding, where appellant “had no actual or constructive notice of the trial setting,” that

“the lower courts erred in requiring him to show that he had a meritorious defense as a

condition to granting his motion for new trial” because “such a requirement, in the absence

of notice, violates due process rights under the Fourteenth Amendment”).

D.      Discussion

        Texas law greatly disfavors default judgments due to the strong policy preference



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for adjudicating cases on their merits. Tabakman v. Tabakman, 728 S.W.3d 703, 707

(Tex. 2025) (per curiam). “[O]ur law merely tolerates such judgments because defendants

‘cannot defeat the authority of the courts simply by refusing to appear.’” Id. at 707–08

(quoting In re Lakeside Resort JV, LLC, 689 S.W.3d 916, 921 (Tex. 2024)). Thus, any

doubts regarding the default judgment “must be resolved against the party who secured

the default.” Id. at 708 (quoting In re Lakeside Resort JV, 689 S.W.3d at 922).

       The record reveals a concerning turn of events beginning with the trial court’s

granting of Ramos’s motion to withdraw. The trial court’s decision to allow Ramos to

withdraw less than a week prior to trial heavily contributed to appellants’ failure to appear

at trial. If a trial court allows an attorney to voluntarily withdraw, Texas law requires the

court to “give the party time to secure new counsel and time for the new counsel to

investigate the case and prepare for trial.” Villegas v. Carter, 711 S.W.2d 624, 626 (Tex.

1986). Failure to do so functions as denial of the right to counsel, which is reversible error.

Id. While appellants do not directly challenge the trial court’s grant of the motion to

withdraw or denial of the motion for continuance on appeal, and thus we cannot reverse

on these grounds, they do assert that failure to allow them to timely obtain new counsel

contributed to the default judgment.

       To that end, the first Craddock factor requires that appellants’ failure to appear at

trial was not the result of conscious indifference meaning that appellants “knew [they

were] sued but did not care.” XL Ins. Co. of N.Y., 551 S.W.3d at 899. We look to the

knowledge and acts of appellants to make this determination. See id. All that is required

is some excuse, even if not a good one, regarding the failure to appear. Id. (citing

Sutherland v. Spencer, 376 S.W.3d 752, 755 (Tex. 2012)); Norimex Int’l Metals, 2010 WL



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18044968, at *4. Further, “[a]s a matter of law, a post-answer default judgment is valid

only if the defaulting party received notice of the trial setting at which judgment was

rendered.” Norimex Int’l Metals, 2010 WL 18044968, at *3. “Where the record establishes

that a defaulting party had no actual notice of the default judgment hearing, the default

judgment cannot be sustained.” Id.

        The facts of this matter closely align with the facts in our determination in Norimex

International Metals. There, like here, the primary record evidence we have for notice “is

their former counsel’s vague testimony at the motion for new trial hearing that he mailed

all notices to appellants’ last known address.” Id. at *3. Also, like that case, appellants

testified that they never received notice of their former counsel’s withdrawal or of the trial

setting.2 Ramos testified that he did not have any real communication with appellants

and, like in Norimex, could not say whether “appellants actually received his ‘notices.’”

See id. Castellanos’s testimony supports Ramos’s contention. Carrell argues notice to

Ramos automatically imputed notice to appellants, but that is not an automatic

assumption in consideration of the Craddock factors or after withdrawal of counsel. See

Tactical Air Def. Servs., Inc. v. Searock, 398 S.W.3d 341, 347 (Tex. App.—Dallas 2013,

no pet.) (concluding, where attorney was notified of trial setting but withdrew before trial,

that attorney’s “knowledge of the trial setting cannot be imputed to his clients”).

        Continuing the parallels with the former case, here, Carrell primarily relies “on the

fact that appellants’ former counsel sent notices to appellants’ last known address” and

the fact that the withdrawal motion certifies that the trial date was set. See Norimex, 2010



        2 While Carrell objected to this testimony, the trial court did not rule on this objection, which does

not preserve this issue on appeal. See TEX. R. APP. P. 33.1.



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WL 1804968, at *4. Even ignoring the facial issues with the motion for withdrawal,3

testimony indicated that appellants never received the motion because Ramos sent it to

an email not checked by appellants’ representative, and that it was not forwarded until

after the default judgment was signed. Likewise, Castellanos testified he did not receive

phone calls from Rigney the weekend before trial because he was on vacation and did

not check his phone. While this is not a good excuse, it is some excuse, which is all that

is required. See id. Castellanos also testified he was unaware Ramos withdrew as

counsel.

        Admittedly, as is usually the case, appellants could have made better efforts
        to communicate with counsel. However, negligent conduct does not rise to
        the level of conscious indifference, and all that is required for the setting
        aside of a default judgment is a slight excuse for the party’s failure to act.
        The foregoing, although not necessarily a good excuse, is nonetheless
        some excuse for appellants’ failure to appear at trial.


        3 Texas Rule of Civil Procedure 10 requires motions to withdraw to be “for good cause” and has

differing requirements depending on whether there will be substitute counsel. TEX. R. CIV. P. 10. While the
record indicates that Rigney essentially stepped in as substitute counsel almost immediately and that
Ramos communicated with him in some regard as to taking over representation, Ramos’s motion does not
refer to substitute counsel, and the hearing record makes no reference to this either.

         Accordingly, Ramos’s motion had to meet the requirements applicable when there is no substitute
counsel, including stating: (1) a copy of the motion was delivered to the party; (2) the party was notified in
writing of the right to object to the motion; (3) whether the party consents to the motion; (4) the party’s last
known address, telephone number, and email address; and (5) all pending settings and deadlines. While
Ramos’s motion provided good cause and met requirements one, two, and five, it failed to meet requirement
three and only partially complied with requirement four. The motion fails to state whether appellants
consented to the motion and fails to list an email address or telephone number for appellants.

          The facts of this case elucidate why these requirements exist. It is apparent that Ramos had no
real contact with his clients for a lengthy period and thus never obtained information from them on whether
they consented to the motion. Given the short period between Ramos’s withdrawal and the trial date, the
need for appellants’ consent was crucial as having entirely new counsel enter a case merely days before a
trial is inherently problematic. Likewise, the lack of complete contact information for his clients and the
record’s indication that Ramos apparently had no direct access to his clients’ representative is equally
troublesome and revealing.

          Therefore, the motion to withdraw is facially deficient and does not support Carrell’s assertion that
appellants had notice. See Tactical Air Def. Servs., 398 S.W.3d at 347 (noting, where attorney was notified
of trial setting but withdrew before trial, that the motion to withdraw’s failure to comply with Rule 10 is
“significant in the context of determining whether notice should be imputed to [his] former clients”).



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Id.

        As for Rigney, the record indicates that he lacked authority to appear on behalf of

appellants at the time he filed his notice of appearance and motion for continuance. It is

foundational under Texas law that a lawyer has no authority to bind a client “in the

absence of authority to do so.” McMillan v. McMillan, 72 S.W.2d 611, 612 (Tex. App.—

Dallas 1934, no writ). Regardless of whether his acts constituted conscious indifference,

they cannot be imputed on appellants without appellants’ express authority. Certainly,

appellants could not provide authority to an attorney to appear on their behalf that they

had not spoken to prior to the trial date. Moreover, Rigney’s representation of appellants

on other matters does not automatically confer authority in this case as Carrell argues.4

        Carrell argues that appellants received notice in several ways. He claims that

Ramos testified that he personally advised Castellanos about the trial date, but as his

testimony at the motion for new trial hearing elaborated, he could not be sure that his

communication reached Castellanos. Carrell also argues that because Rigney’s motion

for continuance references the trial date and makes no claim of confusion about the trial

date, knowledge of the trial date is imputed on appellants. But as stated above, Rigney

was acting without authority and had not even spoken with appellants when he filed the

motion. See id. Thus, mere filing of this motion does not impute knowledge on appellants

without further record evidence.

        Carrell also argues that the trial court was entitled to credit Ramos’s statement “in

plain terms” that he notified appellants, over his clarification and over Castellanos’s



        4 As such, any complaints regarding defects in Rigney’s verification are irrelevant to resolution of

this appeal.



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testimony. It is true that a trial court does not abuse its discretion if its decision is based

on some evidence of a substantive and probative character. In re Barber, 982 S.W.2d

364, 366 (Tex. 1998) (orig. proceeding). The trial court is entitled to determine as to

whether failure to appear is the result of conscious indifference or mistake. See Price v.

Firestone Tire & Rubber Co., 700 S.W.2d 730, 733 (Tex. App.—Dallas 1985, no writ).

However, we do not agree that Ramos’s statement can be characterized as telling “the

judge in plain terms” that he directly informed Castellanos about the trial date, given

Ramos’s later clarification. With the final testimony on the record, there is no substantive

evidence that Ramos definitively spoke with appellants about the trial date. Therefore, it

was not within the trial court’s discretion to deny the motion for new trial. See In re Barber,

982 S.W.2d at 366.

       Accordingly, we sustain appellants’ first three issues.

                                     III.   CONCLUSION

       We reverse the trial court’s judgment and remand to the trial court with instructions

to grant the motion for new trial and for further proceedings consistent with this

memorandum opinion.

                                                                 YSMAEL D. FONSECA
                                                                 Justice

Delivered and filed on the
9th day of April, 2026.




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