On November 27, 2018, the Dallas Court of Appeals ruled in favor of Mr. Christian in a case argued by Firm founder Jack Ternan. The trial court had granted summary judgment against Mr. Christian based on a default judgment entered earlier in the case against the other defendants. The Court of Appeals reversed and remanded the case for further proceedings.
In federal court, it has long been recognized that a default by one defendant does not bind the other defendants. See, e.g., Frow v. De La Vega, 82 U.S. 552, 554 (1872). However, the Supreme Court of Texas has never directly addressed the issue. Several Courts of Appeal have addressed the question in specific contexts, such as guarantors contesting defaults by principals and employers contesting defaults by employees. See e.g., Mayfield v. Hicks, 575 S.W.2d 571 (Tex. Civ. App.—Dallas 1978, writ ref’d n.r.e.); Brazos Valley Cmty. Action Agency v. Robinson, 900 S.W.2d 843, 845–46 (Tex. App.—Corpus Christi 1995, writ denied). The Dallas Court of Appeals held that the same principles apply to a default by a corporation and the assertion of personal liability pursuant to Texas Tax Code Section 171.255. In particular, the Court agreed with Mr. Christian’s contention that “the default of a non-answering party does not bind an answering party in the same suit or deny that party an opportunity to assert defenses”.
A copy of the opinion issued by Justice Molly Francis can be accessed by clicking here.