Supreme Court of Texas Continues to Interpret Craddock in Favor of Defaulting Party

Texas Supreme Court Building

On October 26, 2012, the Supreme Court of Texas released a per curiam opinion in Milestone Operating, Inc. v. ExxonMobil Corporation, No. 11-0647. ExxonMobil sued Milestone Operating, Inc. (“Milestone”) for breach of contract related to an oil and gas agreement. Milestone failed to appear and ExxonMobil took a default judgment against Milestone.


Milestone filed a motion for new trial challenging the service on Milestone’s registered agent, Donald Harlan, as defective and arguing that Milestone met the Craddock factors to set aside the default judgment. The trial court denied the motion for new trial. The court of appeals affirmed, holding that Milestone did not establish the first Craddock factor.


To satisfy the first prong of Craddock, the defaulting party must make factual assertions that, if true, negate intentional or consciously indifferent conduct by the defaulting party. Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939). Consciously indifferent conduct occurs when “the defendant knew it was sued but did not care.” Fidelity & Guar. Inc. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 574 (Tex. 2006) (per curiam).


At the Supreme Court, Milestone argued that it satisfied the first Craddock factor because its evidence established that Milestone’s failure to answer was not intentional or due to conscious indifference. Milestone also challenged the service of process as defective.


Milestone alleged the Harlan did not recall being served with ExxonMobil’s petition, even after reviewing his office notes and speaking with co-workers about the events on the day of alleged service. At the trial court, Harlan had also testified regarding his process for responding to service when Milestone had been sued in the past. Yet, in this matter, Harlan could not remember being served with ExxonMobil’s petition or implementing his usual process for responding to service. ExxonMobil presented evidence that the process server’s fiancée recalled witnessing the process server serving Harlan with the petition. However, the Court found that this evidence did not controvert Harlan’s testimony that he did not recall being served or recall implementing his typical process for responding to service.


Thus, the Court held that the evidence showed that Milestone’s failure to answer was neither intentional nor the result of conscious indifference. The Court reversed and remanded the case to the intermediate court of appeals for consideration of the remaining Craddock factors.