Ninth Court Reverses Default Judgment in $1.3M Operating Agreement Dispute Over E-Filing Deadline Calculation Under Rule 21(f)(5)
The Beaumont Court of Appeals reversed a $1,379,281.69 default judgment against Proline Energy Resources in an oil and gas operating agreement dispute, holding that the trial court erred in refusing to consider a motion for new trial based on lack of plenary power. The court determined the motion was timely under Texas Rule of Civil Procedure 21(f)(5) where it was transmitted to the electronic filing service provider before midnight on the due date, despite subsequent technical failures and clerk's office rejections.
Background and Default Judgment
Gordy Oil Company sued Proline Energy Resources, Inc. for breach of contract, quantum meruit, and unjust enrichment, claiming Proline owed money under an oil and gas operating agreement. After Proline failed to timely answer following service on its registered agent via certified mail on July 3, 2023, Gordy moved for default judgment. On August 9, 2023, the Liberty County trial court signed a default judgment awarding Gordy $1,379,281.69 in economic damages, $15,476.50 in attorney's fees, $861.40 in court costs, prejudgment interest, conditional appellate attorney's fees totaling $60,000, and post-judgment interest.
The Motion for New Trial
Proline's Motion for New Trial and to Set Aside Default Judgment was file-stamped September 11, 2023. Proline supported its motion with evidence and counsel's declaration, arguing that it met its burden under Craddock as to all three elements and that the default judgment should be set aside. Proline also argued that Peri Petroleum, LLC is the lessee under the applicable agreement rather than Proline Energy Resources, Inc.
Although the motion was file-stamped after the filing deadline, Proline argued in subsequent filings that the motion was timely. In its Amended Motion for New Trial, Proline explained to the trial court that it originally sent its Motion for New Trial to the electronic service provider before the deadline, but the filing was rejected due to technical issues.
Trial Court's Plenary Power Determination
The trial court determined that Proline's Motion for New Trial was untimely and concluded it lacked plenary power to consider the motion. The trial court denied the motion on the basis that it no longer had jurisdiction to rule on the requested relief because its plenary power had lapsed.
Appellate Court's Reversal
The Ninth Court of Appeals reversed and remanded. The court held that Proline's Motion for New Trial was timely under Texas Rule of Civil Procedure 21(f)(5) where it transmitted the motion to its electronic filing service provider before midnight on the due date. The appellate court concluded that the trial court erred when it refused to consider Proline's Motion for New Trial based on a lack of plenary power, and remanded the case for further proceedings.