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Filed: 7/6/2022 4:46 PM
J OHN D. KINARD - District Clerk
Galveston County, Texas
Envelope No. 66077155
By: Shailja Dixit
7/7/2022 8:17 AM
CAUSE NO. 22-CV-0729
RICHARD VILLNAVE AND DARIUS § IN THE DISTRICT COURT OF
STEWART
Plaintiffs, GALVESTON COUNTY, TEXAS
VS.
10" JUDICIAL DISTRICT COURT
ENCORE DREDGING PARTNERS, LLC
Defendant
MEMORANDUM IN SUPPORT OF MOTION TO SET ASIDE DEFAULT JUDGMENT
MAY IT PLEASE THE COURT:
This Court should set aside the default judgment entered against Defendant, Encore
Dredging Partners, LLC (“Encore”). Encore’s failure to file responsive pleadings timely was due
to accident or mistake rather than conscious indifference. Further, Encore is able to establish that
it has a meritorious defense. Finally, Plaintiffs will not be harmed or delayed in setting aside the
default judgment. Therefore, Encore respectfully requests that this Honorable Court set aside the
default judgment previously entered in this matter.
I FACTUAL BACKGROUND
a. Plaintiffs Allided with Encore’s Properly Marked Dredging Pipe
This case arises out of an incident that allegedly occurred on the evening of January 14,
2022, whereby Plaintiffs, Richard Villnave and Darius Stewart, claim to have struck a dredging
pipe of the M/V Ranger, which is owned by Encore, while traveling in a 21-foot duck boat in West
Galveston Bay. (See Plaintiffs’ Original Petition). They also claimed that the dredging pipe was
unlit and not visible at the time they struck it. As a result of this alleged incident, Plaintiffs filed
the instant lawsuit against Encore, asserting that it was negligent and/or grossly negligent in failing
to properly mark and/or illuminate the dredging pipe. Encore maintains that at all relevant times
the dredging pipe of the M/V RANGER was clearly visible and was properly marked and lit
according to Coast Guard regulations. (See Declaration of Toby Marek and accompanying
exhibits, collectively attached hereto as Exhibit 1, at § 8 and 9).
Toby Marek was the dredge superintendent of the M/V RANGER on January 14, 2022.
(Ex. 1 at4 5). Mr. Marek’s duties specifically include overseeing dredge production and activities
as well as ensuring safety and compliance with applicable regulations. (Ex. / at {| 6). He was
aboard the M/V RANGER when the alleged accident occurred. (Ex. J at § 16). He instructed two
of his crew members to investigate the accident to ensure that the dredge was properly lit and
marked. (Ex. / at § 18). Mr. Marek confirmed that the dredge pipe was properly lit and marked.
(Ex. 1 at J 8,9, and 19).
At all relevant times on January 14, 2022, and for approximately one (1) month prior, the
dredge pipeline was marked by two (2) reflective lights and a red float buoy. (Ex. J at § 9 and 19,
and accompanying Exhibit C). Encore also placed signs at a nearby boat launch alerting boaters of
the pipeline and dredge. (Ex. J at J 10 and accompanying Exhibit A). The dredging pipe was also
visible above the surface of the water at the time of the allision. (Ex. 1 at § 13 and 14). Additionally,
Encore, through Mr. Marek, provided a Notice to Mariners for the United States Coast Guard to
issue regarding the dredging operation of the Dredge RANGER, formerly known as the EAGLE
ONE. (Ex. I at {12 and accompanying Exhibit B).! The entity named in the Notice to Mariners is
Inland Dredging, which is a subsidiary of Encore, but Encore acquired Inland Dredging on
December 31, 2020, before the Notice was issued. (See Affidavit of Vernon Bryant, attached hereto
as Exhibit 2, at 4 5).
1 The Notice references the Dredge “EAGEL ONE,” which was renamed to the “RANGER” subsequent to the issuance
of the Notice. (Ex. J at§ 12).
Despite the markings, lighting, warnings, and visibility of the dredging pipe, Plaintiffs still
reportedly allided with the pipe, but initially only complained of damage to their vessel and not
personal injuries or physical pain. (Ex. 1 at § 20 and 21).
b. Encore Attempted to Compensate Plaintiffs After the Incident Despite Finding
That the Pipe Was Properly Marked
Mr. Villnave informed the dredge crew that he had struck the pipeline with his duck boat
roughly five hours after it occurred. (Ex. J at {| 17). Eventually, Mr. Villnave (not Mr. Stewart)
made a claim with Encore to recover for alleged damage to the vessel. (See Affidavit of Dwayne
Breaux, attached hereto as Exhibit 3 at § 4). Nate Woods, who works in Encore's safety
department, primarily handled Mr. Villnave’s claim and conducted a separate investigation into
the incident. (Ex. 3 at | 4). Despite coming to the same conclusion as Mr. Marek, Mr. Woods still
extended a monetary offer of compromise to Mr. Villnave towards the repair of his vessel. (Ex. 3
at 6; See also February 7, 2022 Correspondence between Mr. Villanve and Mr. Woods, attached
hereto as Exhibit 4). However, Mr. Villnave wanted the money paid directly to him instead of
directly to the repair shop performing the alleged repairs. (Ex. 4). Despite an assurance to pay the
repair shop for all invoiced repairs, Mr. Villnave did not agree. (Ex. 4). Encore did not agree to
send Mr. Villnave money so an agreement was never reached. Instead, the instant lawsuit was filed
just three months after the alleged incident and it was the first time that any claims of personal
injury were made.
IL PROCEDURAL BACKGROUND
On April 27, 2022, Plaintiffs filed their Petition and requested service and citation on
Encore. On April 29, 2022, Encore was served through its registered agent, CT Corporation
System.
Proof of Service was entered into the record on May 3, 2022. Thereafter, Plaintiffs filed a
Motion for Default Judgment on June 2, 2022 because Encore had not filed responsive pleadings.
This Court granted Plaintiffs’ Motion for Default Judgment on June 6, 2022 and set a hearing to
determine the amount of Plaintiffs’ unliquidated damages for July 11, 2022. Plaintiffs never
provided notice of the Motion for Default Judgment to Encore until after the Order granting the
default judgment was signed by this Court.
On June 6, 2022, Plaintiffs provided notice to Encore that the default judgment had been
entered and that the damages hearing was set for July 11, 2022. Now, Encore files the instant
Motion to Set Aside Default Judgment to show why responsive pleadings were not filed timely and
respectfully requests that this Court set aside the default judgment and allow this lawsuit to proceed
on the merits.
TIL. LAW AND ARGUMENT
a. The Default Judgment Should be Set Aside under the Craddock Standard
In determining whether a party is entitled to set aside a default judgment, Texas
courts follow the Craddock standard:
A default judgment should be set aside and a new trial ordered in any case in which
the failure of the defendant to answer before judgment was not intentional, or the
result of conscious indifference on his part, but was due to a mistake or an accident;
provided the motion for a new trial sets up a meritorious defense and is filed at a
time when the granting thereof will occasion no delay or otherwise work an injury
to the plaintiff.
Craddock y, Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939).
In a “no-answer” context, the Texas Supreme Court has stated that analysis under the Craddock
standard should focus on one critical question: “Why did the defendant not appear?” Fid. & Guar.
Ins. Co. v. Drewery Const. Co., 186 S.W.3d 571, 574 (Tex. 2006). This question is broken down.
into three elements that, if proven, will cancel, or set aside, the default judgment:
(1) Mistake or Accident — The failure to file an Answer prior to the judgment was due to
a mistake or an accident, and not intentional or due to conscious indifference;
(2) Meritorious Defense — The Motion sets up a meritorious defense; and
(3) Delay or Harm/Injury — Setting aside the default judgment will not cause delay or
harm to the plaintiff.
Id.
1 Encore’s Failure to Answer Timely was Due to a Mistake or Accident
Regarding the burden of proof for the first Craddock element, the Texas Supreme Court
has held the following:
A defendant satisfies its burden as to the first Craddock element when its factual
assertions, if true, negate intentional or consciously indifferent conduct by the
defendant and the factual assertions are not controverted by the plaintiff. Inre R.R.,
209 S.W.3d 112, 115 (Tex.2006) (per curiam). Consciously indifferent conduct
occurs when “the defendant knew it was sued but did not care.” Fidelity, 186
S.W.3d at 576. Generally, “some excuse, although not necessarily a good one,
will suffice to show that a defendant's failure to file an answer was not because
the defendant did not care.” In re R.R., 209 S.W.3d at 115.
Sutherland y. Spencer, 376 S.W.3d 752, 755 (Tex. 2012) (emphasis added).
Thus, “some excuse,” even if not a good one, is all that is needed to show that the failure to answer
was due to mistake or accident. Generally, affidavits are sufficient to establish the Craddock
elements. See Dir., State Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 268
(Tex.1994); see also Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005). In making a
determination of whether an excuse exists, courts will usually look to the knowledge and acts of
the defendant. Strackbein v. Prewitt, 671 S.W.2d 37, 39 (1984). “A perusal of the cases dealing
with the question clearly demonstrates that in their consideration of relevant facts, the courts have
interpreted the first prong liberally in favor of the movant.” K-Mart Corp. v. Armstrong, 944
S.W.2d 59, 61 (Tex. App. 1997), writ denied (July 31, 1997) (citing Gotcher v. Barnett, 757
S.W.2d 398, 401 (Tex.App.—Houston [14th Dist.] 1988, no writ).
Examples of excuses sufficient to qualify as an accident or mistake under Craddock vary.
This Court has often set aside default judgments when papers were misplaced,
though no one knew precisely how. See Old Republic Ins. Co. v. Scott, 873 S.W.2d
381, 382 (Tex.1994) (reversing default when investigator averred that she believed
suit papers were inadvertently included among files transferred to another
adjustment company); Estate of Pollack v. McMurrey, 858 S.W.2d 388, 391
(Tex.1993) (reversing default when unidentified person signed for papers and never
delivered them to executrix); Hanks v. Rosser, 378 S.W.2d 31, 32, 36 (Tex.1964)
(reversing default when druggist testified he placed suit papers “on his prescription
counter,” that he “just lost them” and “never did find them”).
Fid. & Guar. Ins. Co. v. Drewery Const. Co., 186 8.W.3d 571, 575 (Tex. 2006).
Further, negligence alone will not preclude setting aside a default judgment. /d. (citing Ivy
v. Carrell, 407 S.W.2d 212, 213 (Tex.1966); Ferguson & Co. v. Roll, 776 S.W.2d 692, 697
(Tex.App.—Dallas 1989, no writ); Gotcher, 757 S.W.2d at 402; Pohl and Hittner, Judgment By
Default in Texas,37 SW. LJ. 421, 433). Indeed, as a result of the in-depth analysis
given default judgments in the Pohl and Hittner article, they point out that “[iJn fact, the
defendant's burden of demonstrating the accidental or mistaken nature of his failure to answer may
often result in an admission of negligence.” Pohl and Hittner, 37 SW. L.J. at 443. Nonetheless,
this is why only an excuse, as opposed to a good excuse, is required to show accident or mistake.
Craddock, 133 8.W.2d at 125; Ferguson, 776 S.W.2d at 695.
Here, Encore did not file responsive pleadings because of accident and mistake.
Specifically, notice of the lawsuit was not delivered to the proper personnel within Encore due to
an administrative oversight. CT Corporation system (“CT Corp”) is Encore’s registered agent for
service. (Ex. 2 at § 11). CT Corp mailed the lawsuit to Vernon Bryant, who is a Managing Partner
of AV Capital Management Holdings, LLC and the Chairman of Encore Dredging Holdings, LLC,
which are related to but distinct entities from Encore. (Ex. 2 at § 12). Mr. Bryant is not involved
in the day-to-day operations of Encore. (Ex. 2 at {| 4). Rather, he was simply listed as Encore’s
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contact after December 31, 2020 while Encore Dredging Holdings, LLC was setting up a
permanent address. (Ex. 2 at J 7). His designation as Encore’s contact was meant to be temporary,
and certain other individuals were to be transitioned into the role of Encore’s contacts. (Ex. 2 at
8). Thus, Mr. Bryant, whose job title and duties have nothing to do with Encore, received a copy
of the lawsuit.
Mr. Bryant noticed the lawsuit in a stack of mail sometime in late May 2022. (Ex. 2 at 4
13). Though he has never received copies of lawsuits for Encore prior to this occasion, he
immediately took action to ensure that the lawsuit was being handled. (Ex. 2 at {14 and 15). Mr.
Bryant contacted Encore’s CEO, Dwayne Breaux, to inquire whether there were individuals within
the company that should be handling the lawsuit and whether they should have received notice.
Mr. Breaux confirmed that there were individuals who should have received notice and would be
handling the lawsuit, such as Nate Woods, Jenifer Lake, and Greg Ford. (Ex. 3 at 8 and Ex. 2 at
4, 15 and 16). Mr. Bryant and Mr. Breaux were both under the impression that individuals were
handling the lawsuit, pursuant to Encore’s established procedure. (Ex. 3 at { 13 and Ex. 2 at § 21).
Mr. Breaux especially believed this was so because he recalled that Nate Woods was handling the
claim and communicating with Mr. Villnave prior to the filing of the lawsuit. (Ex, 3 at § 4, 5, and
6). However, no notice of the lawsuit was ever provided to Nate Woods. (Ex. 3 at { 9).
Additionally, neither Mr. Bryant nor Mr. Breaux had any involvement in handling the claim prior
to the instant litigation. (Ex. 3 at ¢ 5 and Ex. 2 at § 4).
In the case of Fid. & Guar. Ins. Co. v. Drewery Const. Co., the Texas Supreme Court was
faced with a similar situation as the one presented here. 186 S.W.3d 571 (Tex. 2006). Fidelity's
registered agent for service, Corporation Service Company (CSC), received the plaintiffs petition
and citation.
Though in the ordinary course of business CSC would forward an electronic scan
of the documents to a Fidelity affiliate, computer records show this never occurred.
As a backup, in the ordinary course of business CSC would forward the service
documents themselves to the same affiliate, where they were compared with the
electronic copy and then discarded after 90 days. As 90 days had passed before
Fidelity learned of the default, all the records received during that time had been
discarded. Thus, neither CSC nor Fidelity could verify whether Drewery's suit
papers were actually forwarded by CSC to Fidelity. CSC averred that an employee
of Fidelity's affiliate “acknowledged receipt of the Petition,” but the Fidelity agent
who should have received them averred that she never did.
Id. at S75.
Despite the fact that someone in Fidelity received the lawsuit papers, the proper personnel in the
company never received notice. The Texas Supreme Court found this to be enough of an excuse
to qualify as an accident or mistake rather than conscious indifference because Fidelity established
through affidavits that it had a procedure within its company to handle lawsuits and avoid a
situation where the lawsuit would go untouched. “The affidavits here show neither intent nor
indifference. Instead, they detail Fidelity's efforts to establish a system that would avoid precisely
what happened.” Jd. at 576.
In this case, Encore had the personnel in place to handle claims and lawsuits. However,
they were inadvertently omitted on the notice of the lawsuit from CT Corp. Due to a clerical error
in failing to change the company’s contacts, which was believed to have been accomplished,
Encore officers were under the impression that the lawsuit was being handled by the appropriate
employees, when in fact they had never received notice of the lawsuit. This was a mistake on the
part of Encore and a complete accident. Further evidenced by the fact that two different Encore
employees investigated the accident and spoke with Plaintiffs, there has never been any conscious
indifference toward Plaintiffs claims. On the contrary, Encore has always had a willingness to
engage Plaintiffs and attempt to resolve the underlying issue.
2. Encore Has a Meritorious Defense to Plaintiffs’ Allegation:
In determining the meritorious defense element, courts look to the facts alleged in the
movant's motion and supporting affidavits, regardless of whether those facts are controverted. K-
Mart Corp. v. Armstrong, 944 S.W.2d 59, 63 (Tex. App. 1997), writ denied (July 31, 1997) (citing
Director, State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 270
(Tex.1994)). A movant's motion need only set up, but not prove, a meritorious defense. /d. (citing
Ivy, 407 S.W.2d at 214) (emphasis added). A meritorious defense is one that, if proven, would
establish a valid defense. Evans, 889 S.W.2d at 270.
Here, Encore has a meritorious defense to Plaintiffs’ negligence claims. Of note, there are
claims from the vessel operator, Mr. Villnave, and also claims from the passenger, Mr. Stewart.
Both Plaintiffs specifically claim that Encore was negligent in failing to properly mark and/or
illuminate the dredge pipe of the M/V RANGER. However, Encore disputes these factual
allegations and has evidence to controvert the Plaintiffs’ claims. Mr. Marek investigated the
alleged incident and testified that Encore had lights and markers on its dredging pipe and fulfilled
its Coast Guard requirements to mark the pipe. (Ex. J at § 8 and 19, and accompanying Exhibit
C). Encore also placed signs at a nearby boat launch to alert boaters of the pipeline and dredge.
(Ex. 1 at § 10 and accompanying Exhibit A). Further, the dredging pipe was visible above the
surface of the water at the time of the allision. (Ex. J at § 13 and 14). These facts, if proven true,
would defeat Plaintiffs’ cause of action.
Additionally, this matter would be governed by maritime law, which under the facts alleged
in the Petition, presume that Encore is free of fault in this case. Specifically, the Plaintiffs allege
that while they were underway in Mr. Villnave’s duck boat that it allided with Encore’s stationary
dredge pipe. Pursuant to The Oregon Rule, a moving vessel is deemed to be presumptively at fault
for an allision when it strikes with a stationary object. Archer Daniels Midland, Co. v. M/T
AMERICAN LIBERTY, 545 F. Supp. 3d 390, 403 (E.D. La. 2021), aff'd sub nom. In re Am.
Petroleum Tankers X LLC, No. 21-30420, 2022 WL 1613190 (5th Cir. May 20, 2022) (citing
The Oregon, 158 U.S. 186, 197, 15 S.Ct. 804, 809, 39 L.Ed. 943 (1895)). Here, Mr. Villnave
alleged that he was operating his 21-foot custom duck boat when it allided with the M/V
RANGER’s stationary dredging pipe. As such, Mr. Villnave is presumed to be at fault for this
accident.
Mr. Villnave’s presumed fault would not only reduce his own claim, but his passenger, Mr.
Stewart, would have a claim against him for striking the dredge pipe and causing his alleged
injuries. Should Mr. Stewart not assert that claim against Mr. Villnave, Encore would be able to
file a Counterclaim against Mr. Villnave for any alleged damages sustained by Mr. Stewart.
Accordingly, Encore has a valid and meritorious defense to claims of both Plaintiffs.
3. No Undue Delay or Harm/Injury Would Be Caused to Plaintiffs
“The purpose of this third element of the Craddock test is to protect a plaintiff against the
sort of undue delay or injury that would disadvantage her in presenting the merits of her case at a
new trial, such as a loss of witnesses or other valuable evidence; evidence of a delay in obtaining
compensation for injuries for which a plaintiff is entitled is not the type of injury that this prong
speaks to.” Hampton-Vaughan Funeral Home v. Briscoe, 327 S.W.3d 743, 749 (Tex. App. 2010).
In most instances, a defendant’s willingness to pay the expenses of the plaintiff involved in
obtaining the default judgment is usually sufficient to meet this third element. Jaco v. Rivera, 278
S.W.3d 867, 874 (Tex. App. 2009); K-Mart Corp. v. Armstrong, 944 S.W.2d 59, 63 (Tex. App.
1997), writ denied (July 31, 1997) (citing Director, State Employees Workers' Compensation Div.
v. Evans, 889 S.W.2d 266, 270 (Tex.1994)).
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Here, Encore is willing to reimburse Plaintiffs’ costs associated with obtaining the default
judgment. Further, setting aside the default judgment and allowing Encore to file its Answer will
not harm or delay Plaintiffs because they would not be in a worse position than had Encore filed a
timely Answer. There would be no loss of witnesses or evidence since the case is still in its infancy.
The parties would simply be put on equal footing and able to proceed with the lawsuit on the
merits. This is what the third Craddock element contemplates. 134 Tex. 388, 393, 133 S.W.2d 124,
126 (Comm'n App. 1939).
Iv. CONCLUSION
Encore’s failure to timely file responsive pleadings is a result of inadvertent mistake and
accident. Due to administrative oversight, the proper individuals who are supposed to receive
notice of lawsuits within the company never did. Instead, Mr. Bryant, who is associated with
different entities altogether, received notice of a lawsuit. At no point did Encore ever exhibit
conscious indifference toward the lawsuit or the claims of Plaintiffs. Encore had actually been
working with Mr. Villnave to resolve his claim prior to the filing of the instant lawsuit, although
back then it was merely a matter of property damage and there was never any information about
alleged personal injuries of a passenger being in the vessel.
Admittedly, Encore mistakenly failed to answer the Plaintiffs’ suit. However, Encore has
a valid and formidable defense and, in the interests of equity and justice, should be able to defend
itself from the allegations levied by the Plaintiffs. Encore, if allowed, will offer convincing proof
that the dredging pipe was properly lit and marked. Mr. Villnave will also have to overcome the
heightened burden placed on him by The Oregon Rule which places a presumption of fault onto
Mr. Villnave, as the vessel operator. As discussed, Mr. Villnave’s fault not only reduces his own
claim but also that of Mr. Stewart.
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Finally, Encore is willing to reimburse Plaintiffs’ costs associated with the filing of this
default judgment sot there would be no harm or undue delay suffered by Plaintiffs by permitting
Encore to file responsive pleadings. No evidence or witnesses would be lost, but rather the parties
would be able to proceed through this litigation. Given that all three Craddock elements have been
satisfied by Encore, this Court should set aside the default judgment previously entered in this case
against Encore and allow it to file responsive pleadings.
CERTIFICATE OF SERVICE Respectfully submitted,
Thereby certify that a copy of the STAINES, EPPLING & KENNEY
above and foregoing pleading has been
served on all counsel of record via the =
ee
service method indicated below:
[ ] U.S. Mail
[ ] Facsimile COREY P. PA TON (#24095858)
{ ] Hand Delivery 3500 North eway Boulevard, Suite 820
[x ] ECF Filing Metairie, Louisiana 70002
Telephone: (504) 838-0019
This 6" day of July, 2022. Facsimile: (504) 838-0043
Counsel for Encore Dredging Partners, LLC
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Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.
Corey Parenton on behalf of Corey Parenton
Bar No. 24095858
corey@ staines-eppling.com
Envelope ID: 66077155
Status as of 7/7/2022 8:17 AM CST
Case Contacts
Name BarNumber | Email TimestampSubmitted Status
Caroline Adams cadams@ txattorneys.com 7/6/2022 4:46:45 PM SENT
Anthony G.Buzbee tbuzbee@ txattorneys.com 7/6/2022 4:46:45 PM SENT
J esse Rubio jrubio@ txattorneys.com 7/6/2022 4:46:45 PM SENT
Daedra Minigan dminigan@ txattorneys.com 7/6/2022 4:46:45 PM SENT
Preview
Filed: 7/6/2022 4:46 PM J OHN D. KINARD - District Clerk Galveston County, Texas Envelope No. 66077155 By: Shailja Dixit 7/7/2022 8:17 AM CAUSE NO. 22-CV-0729 RICHARD VILLNAVE AND DARIUS § IN THE DISTRICT COURT OF STEWART Plaintiffs, GALVESTON COUNTY, TEXAS VS. 10" JUDICIAL DISTRICT COURT ENCORE DREDGING PARTNERS, LLC Defendant MEMORANDUM IN SUPPORT OF MOTION TO SET ASIDE DEFAULT JUDGMENT MAY IT PLEASE THE COURT: This Court should set aside the default judgment entered against Defendant, Encore Dredging Partners, LLC (“Encore”). Encore’s failure to file responsive pleadings timely was due to accident or mistake rather than conscious indifference. Further, Encore is able to establish that it has a meritorious defense. Finally, Plaintiffs will not be harmed or delayed in setting aside the default judgment. Therefore, Encore respectfully requests that this Honorable Court set aside the default judgment previously entered in this matter. I FACTUAL BACKGROUND a. Plaintiffs Allided with Encore’s Properly Marked Dredging Pipe This case arises out of an incident that allegedly occurred on the evening of January 14, 2022, whereby Plaintiffs, Richard Villnave and Darius Stewart, claim to have struck a dredging pipe of the M/V Ranger, which is owned by Encore, while traveling in a 21-foot duck boat in West Galveston Bay. (See Plaintiffs’ Original Petition). They also claimed that the dredging pipe was unlit and not visible at the time they struck it. As a result of this alleged incident, Plaintiffs filed the instant lawsuit against Encore, asserting that it was negligent and/or grossly negligent in failing to properly mark and/or illuminate the dredging pipe. Encore maintains that at all relevant times the dredging pipe of the M/V RANGER was clearly visible and was properly marked and lit according to Coast Guard regulations. (See Declaration of Toby Marek and accompanying exhibits, collectively attached hereto as Exhibit 1, at § 8 and 9). Toby Marek was the dredge superintendent of the M/V RANGER on January 14, 2022. (Ex. 1 at4 5). Mr. Marek’s duties specifically include overseeing dredge production and activities as well as ensuring safety and compliance with applicable regulations. (Ex. / at {| 6). He was aboard the M/V RANGER when the alleged accident occurred. (Ex. J at § 16). He instructed two of his crew members to investigate the accident to ensure that the dredge was properly lit and marked. (Ex. / at § 18). Mr. Marek confirmed that the dredge pipe was properly lit and marked. (Ex. 1 at J 8,9, and 19). At all relevant times on January 14, 2022, and for approximately one (1) month prior, the dredge pipeline was marked by two (2) reflective lights and a red float buoy. (Ex. J at § 9 and 19, and accompanying Exhibit C). Encore also placed signs at a nearby boat launch alerting boaters of the pipeline and dredge. (Ex. J at J 10 and accompanying Exhibit A). The dredging pipe was also visible above the surface of the water at the time of the allision. (Ex. 1 at § 13 and 14). Additionally, Encore, through Mr. Marek, provided a Notice to Mariners for the United States Coast Guard to issue regarding the dredging operation of the Dredge RANGER, formerly known as the EAGLE ONE. (Ex. I at {12 and accompanying Exhibit B).! The entity named in the Notice to Mariners is Inland Dredging, which is a subsidiary of Encore, but Encore acquired Inland Dredging on December 31, 2020, before the Notice was issued. (See Affidavit of Vernon Bryant, attached hereto as Exhibit 2, at 4 5). 1 The Notice references the Dredge “EAGEL ONE,” which was renamed to the “RANGER” subsequent to the issuance of the Notice. (Ex. J at§ 12). Despite the markings, lighting, warnings, and visibility of the dredging pipe, Plaintiffs still reportedly allided with the pipe, but initially only complained of damage to their vessel and not personal injuries or physical pain. (Ex. 1 at § 20 and 21). b. Encore Attempted to Compensate Plaintiffs After the Incident Despite Finding That the Pipe Was Properly Marked Mr. Villnave informed the dredge crew that he had struck the pipeline with his duck boat roughly five hours after it occurred. (Ex. J at {| 17). Eventually, Mr. Villnave (not Mr. Stewart) made a claim with Encore to recover for alleged damage to the vessel. (See Affidavit of Dwayne Breaux, attached hereto as Exhibit 3 at § 4). Nate Woods, who works in Encore's safety department, primarily handled Mr. Villnave’s claim and conducted a separate investigation into the incident. (Ex. 3 at | 4). Despite coming to the same conclusion as Mr. Marek, Mr. Woods still extended a monetary offer of compromise to Mr. Villnave towards the repair of his vessel. (Ex. 3 at 6; See also February 7, 2022 Correspondence between Mr. Villanve and Mr. Woods, attached hereto as Exhibit 4). However, Mr. Villnave wanted the money paid directly to him instead of directly to the repair shop performing the alleged repairs. (Ex. 4). Despite an assurance to pay the repair shop for all invoiced repairs, Mr. Villnave did not agree. (Ex. 4). Encore did not agree to send Mr. Villnave money so an agreement was never reached. Instead, the instant lawsuit was filed just three months after the alleged incident and it was the first time that any claims of personal injury were made. IL PROCEDURAL BACKGROUND On April 27, 2022, Plaintiffs filed their Petition and requested service and citation on Encore. On April 29, 2022, Encore was served through its registered agent, CT Corporation System. Proof of Service was entered into the record on May 3, 2022. Thereafter, Plaintiffs filed a Motion for Default Judgment on June 2, 2022 because Encore had not filed responsive pleadings. This Court granted Plaintiffs’ Motion for Default Judgment on June 6, 2022 and set a hearing to determine the amount of Plaintiffs’ unliquidated damages for July 11, 2022. Plaintiffs never provided notice of the Motion for Default Judgment to Encore until after the Order granting the default judgment was signed by this Court. On June 6, 2022, Plaintiffs provided notice to Encore that the default judgment had been entered and that the damages hearing was set for July 11, 2022. Now, Encore files the instant Motion to Set Aside Default Judgment to show why responsive pleadings were not filed timely and respectfully requests that this Court set aside the default judgment and allow this lawsuit to proceed on the merits. TIL. LAW AND ARGUMENT a. The Default Judgment Should be Set Aside under the Craddock Standard In determining whether a party is entitled to set aside a default judgment, Texas courts follow the Craddock standard: A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for a new trial sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff. Craddock y, Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939). In a “no-answer” context, the Texas Supreme Court has stated that analysis under the Craddock standard should focus on one critical question: “Why did the defendant not appear?” Fid. & Guar. Ins. Co. v. Drewery Const. Co., 186 S.W.3d 571, 574 (Tex. 2006). This question is broken down. into three elements that, if proven, will cancel, or set aside, the default judgment: (1) Mistake or Accident — The failure to file an Answer prior to the judgment was due to a mistake or an accident, and not intentional or due to conscious indifference; (2) Meritorious Defense — The Motion sets up a meritorious defense; and (3) Delay or Harm/Injury — Setting aside the default judgment will not cause delay or harm to the plaintiff. Id. 1 Encore’s Failure to Answer Timely was Due to a Mistake or Accident Regarding the burden of proof for the first Craddock element, the Texas Supreme Court has held the following: A defendant satisfies its burden as to the first Craddock element when its factual assertions, if true, negate intentional or consciously indifferent conduct by the defendant and the factual assertions are not controverted by the plaintiff. Inre R.R., 209 S.W.3d 112, 115 (Tex.2006) (per curiam). Consciously indifferent conduct occurs when “the defendant knew it was sued but did not care.” Fidelity, 186 S.W.3d at 576. Generally, “some excuse, although not necessarily a good one, will suffice to show that a defendant's failure to file an answer was not because the defendant did not care.” In re R.R., 209 S.W.3d at 115. Sutherland y. Spencer, 376 S.W.3d 752, 755 (Tex. 2012) (emphasis added). Thus, “some excuse,” even if not a good one, is all that is needed to show that the failure to answer was due to mistake or accident. Generally, affidavits are sufficient to establish the Craddock elements. See Dir., State Employees Workers' Comp. Div. v. Evans, 889 S.W.2d 266, 268 (Tex.1994); see also Mathis v. Lockwood, 166 S.W.3d 743, 744 (Tex. 2005). In making a determination of whether an excuse exists, courts will usually look to the knowledge and acts of the defendant. Strackbein v. Prewitt, 671 S.W.2d 37, 39 (1984). “A perusal of the cases dealing with the question clearly demonstrates that in their consideration of relevant facts, the courts have interpreted the first prong liberally in favor of the movant.” K-Mart Corp. v. Armstrong, 944 S.W.2d 59, 61 (Tex. App. 1997), writ denied (July 31, 1997) (citing Gotcher v. Barnett, 757 S.W.2d 398, 401 (Tex.App.—Houston [14th Dist.] 1988, no writ). Examples of excuses sufficient to qualify as an accident or mistake under Craddock vary. This Court has often set aside default judgments when papers were misplaced, though no one knew precisely how. See Old Republic Ins. Co. v. Scott, 873 S.W.2d 381, 382 (Tex.1994) (reversing default when investigator averred that she believed suit papers were inadvertently included among files transferred to another adjustment company); Estate of Pollack v. McMurrey, 858 S.W.2d 388, 391 (Tex.1993) (reversing default when unidentified person signed for papers and never delivered them to executrix); Hanks v. Rosser, 378 S.W.2d 31, 32, 36 (Tex.1964) (reversing default when druggist testified he placed suit papers “on his prescription counter,” that he “just lost them” and “never did find them”). Fid. & Guar. Ins. Co. v. Drewery Const. Co., 186 8.W.3d 571, 575 (Tex. 2006). Further, negligence alone will not preclude setting aside a default judgment. /d. (citing Ivy v. Carrell, 407 S.W.2d 212, 213 (Tex.1966); Ferguson & Co. v. Roll, 776 S.W.2d 692, 697 (Tex.App.—Dallas 1989, no writ); Gotcher, 757 S.W.2d at 402; Pohl and Hittner, Judgment By Default in Texas,37 SW. LJ. 421, 433). Indeed, as a result of the in-depth analysis given default judgments in the Pohl and Hittner article, they point out that “[iJn fact, the defendant's burden of demonstrating the accidental or mistaken nature of his failure to answer may often result in an admission of negligence.” Pohl and Hittner, 37 SW. L.J. at 443. Nonetheless, this is why only an excuse, as opposed to a good excuse, is required to show accident or mistake. Craddock, 133 8.W.2d at 125; Ferguson, 776 S.W.2d at 695. Here, Encore did not file responsive pleadings because of accident and mistake. Specifically, notice of the lawsuit was not delivered to the proper personnel within Encore due to an administrative oversight. CT Corporation system (“CT Corp”) is Encore’s registered agent for service. (Ex. 2 at § 11). CT Corp mailed the lawsuit to Vernon Bryant, who is a Managing Partner of AV Capital Management Holdings, LLC and the Chairman of Encore Dredging Holdings, LLC, which are related to but distinct entities from Encore. (Ex. 2 at § 12). Mr. Bryant is not involved in the day-to-day operations of Encore. (Ex. 2 at {| 4). Rather, he was simply listed as Encore’s 6 contact after December 31, 2020 while Encore Dredging Holdings, LLC was setting up a permanent address. (Ex. 2 at J 7). His designation as Encore’s contact was meant to be temporary, and certain other individuals were to be transitioned into the role of Encore’s contacts. (Ex. 2 at 8). Thus, Mr. Bryant, whose job title and duties have nothing to do with Encore, received a copy of the lawsuit. Mr. Bryant noticed the lawsuit in a stack of mail sometime in late May 2022. (Ex. 2 at 4 13). Though he has never received copies of lawsuits for Encore prior to this occasion, he immediately took action to ensure that the lawsuit was being handled. (Ex. 2 at {14 and 15). Mr. Bryant contacted Encore’s CEO, Dwayne Breaux, to inquire whether there were individuals within the company that should be handling the lawsuit and whether they should have received notice. Mr. Breaux confirmed that there were individuals who should have received notice and would be handling the lawsuit, such as Nate Woods, Jenifer Lake, and Greg Ford. (Ex. 3 at 8 and Ex. 2 at 4, 15 and 16). Mr. Bryant and Mr. Breaux were both under the impression that individuals were handling the lawsuit, pursuant to Encore’s established procedure. (Ex. 3 at { 13 and Ex. 2 at § 21). Mr. Breaux especially believed this was so because he recalled that Nate Woods was handling the claim and communicating with Mr. Villnave prior to the filing of the lawsuit. (Ex, 3 at § 4, 5, and 6). However, no notice of the lawsuit was ever provided to Nate Woods. (Ex. 3 at { 9). Additionally, neither Mr. Bryant nor Mr. Breaux had any involvement in handling the claim prior to the instant litigation. (Ex. 3 at ¢ 5 and Ex. 2 at § 4). In the case of Fid. & Guar. Ins. Co. v. Drewery Const. Co., the Texas Supreme Court was faced with a similar situation as the one presented here. 186 S.W.3d 571 (Tex. 2006). Fidelity's registered agent for service, Corporation Service Company (CSC), received the plaintiffs petition and citation. Though in the ordinary course of business CSC would forward an electronic scan of the documents to a Fidelity affiliate, computer records show this never occurred. As a backup, in the ordinary course of business CSC would forward the service documents themselves to the same affiliate, where they were compared with the electronic copy and then discarded after 90 days. As 90 days had passed before Fidelity learned of the default, all the records received during that time had been discarded. Thus, neither CSC nor Fidelity could verify whether Drewery's suit papers were actually forwarded by CSC to Fidelity. CSC averred that an employee of Fidelity's affiliate “acknowledged receipt of the Petition,” but the Fidelity agent who should have received them averred that she never did. Id. at S75. Despite the fact that someone in Fidelity received the lawsuit papers, the proper personnel in the company never received notice. The Texas Supreme Court found this to be enough of an excuse to qualify as an accident or mistake rather than conscious indifference because Fidelity established through affidavits that it had a procedure within its company to handle lawsuits and avoid a situation where the lawsuit would go untouched. “The affidavits here show neither intent nor indifference. Instead, they detail Fidelity's efforts to establish a system that would avoid precisely what happened.” Jd. at 576. In this case, Encore had the personnel in place to handle claims and lawsuits. However, they were inadvertently omitted on the notice of the lawsuit from CT Corp. Due to a clerical error in failing to change the company’s contacts, which was believed to have been accomplished, Encore officers were under the impression that the lawsuit was being handled by the appropriate employees, when in fact they had never received notice of the lawsuit. This was a mistake on the part of Encore and a complete accident. Further evidenced by the fact that two different Encore employees investigated the accident and spoke with Plaintiffs, there has never been any conscious indifference toward Plaintiffs claims. On the contrary, Encore has always had a willingness to engage Plaintiffs and attempt to resolve the underlying issue. 2. Encore Has a Meritorious Defense to Plaintiffs’ Allegation: In determining the meritorious defense element, courts look to the facts alleged in the movant's motion and supporting affidavits, regardless of whether those facts are controverted. K- Mart Corp. v. Armstrong, 944 S.W.2d 59, 63 (Tex. App. 1997), writ denied (July 31, 1997) (citing Director, State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 270 (Tex.1994)). A movant's motion need only set up, but not prove, a meritorious defense. /d. (citing Ivy, 407 S.W.2d at 214) (emphasis added). A meritorious defense is one that, if proven, would establish a valid defense. Evans, 889 S.W.2d at 270. Here, Encore has a meritorious defense to Plaintiffs’ negligence claims. Of note, there are claims from the vessel operator, Mr. Villnave, and also claims from the passenger, Mr. Stewart. Both Plaintiffs specifically claim that Encore was negligent in failing to properly mark and/or illuminate the dredge pipe of the M/V RANGER. However, Encore disputes these factual allegations and has evidence to controvert the Plaintiffs’ claims. Mr. Marek investigated the alleged incident and testified that Encore had lights and markers on its dredging pipe and fulfilled its Coast Guard requirements to mark the pipe. (Ex. J at § 8 and 19, and accompanying Exhibit C). Encore also placed signs at a nearby boat launch to alert boaters of the pipeline and dredge. (Ex. 1 at § 10 and accompanying Exhibit A). Further, the dredging pipe was visible above the surface of the water at the time of the allision. (Ex. J at § 13 and 14). These facts, if proven true, would defeat Plaintiffs’ cause of action. Additionally, this matter would be governed by maritime law, which under the facts alleged in the Petition, presume that Encore is free of fault in this case. Specifically, the Plaintiffs allege that while they were underway in Mr. Villnave’s duck boat that it allided with Encore’s stationary dredge pipe. Pursuant to The Oregon Rule, a moving vessel is deemed to be presumptively at fault for an allision when it strikes with a stationary object. Archer Daniels Midland, Co. v. M/T AMERICAN LIBERTY, 545 F. Supp. 3d 390, 403 (E.D. La. 2021), aff'd sub nom. In re Am. Petroleum Tankers X LLC, No. 21-30420, 2022 WL 1613190 (5th Cir. May 20, 2022) (citing The Oregon, 158 U.S. 186, 197, 15 S.Ct. 804, 809, 39 L.Ed. 943 (1895)). Here, Mr. Villnave alleged that he was operating his 21-foot custom duck boat when it allided with the M/V RANGER’s stationary dredging pipe. As such, Mr. Villnave is presumed to be at fault for this accident. Mr. Villnave’s presumed fault would not only reduce his own claim, but his passenger, Mr. Stewart, would have a claim against him for striking the dredge pipe and causing his alleged injuries. Should Mr. Stewart not assert that claim against Mr. Villnave, Encore would be able to file a Counterclaim against Mr. Villnave for any alleged damages sustained by Mr. Stewart. Accordingly, Encore has a valid and meritorious defense to claims of both Plaintiffs. 3. No Undue Delay or Harm/Injury Would Be Caused to Plaintiffs “The purpose of this third element of the Craddock test is to protect a plaintiff against the sort of undue delay or injury that would disadvantage her in presenting the merits of her case at a new trial, such as a loss of witnesses or other valuable evidence; evidence of a delay in obtaining compensation for injuries for which a plaintiff is entitled is not the type of injury that this prong speaks to.” Hampton-Vaughan Funeral Home v. Briscoe, 327 S.W.3d 743, 749 (Tex. App. 2010). In most instances, a defendant’s willingness to pay the expenses of the plaintiff involved in obtaining the default judgment is usually sufficient to meet this third element. Jaco v. Rivera, 278 S.W.3d 867, 874 (Tex. App. 2009); K-Mart Corp. v. Armstrong, 944 S.W.2d 59, 63 (Tex. App. 1997), writ denied (July 31, 1997) (citing Director, State Employees Workers' Compensation Div. v. Evans, 889 S.W.2d 266, 270 (Tex.1994)). 10 Here, Encore is willing to reimburse Plaintiffs’ costs associated with obtaining the default judgment. Further, setting aside the default judgment and allowing Encore to file its Answer will not harm or delay Plaintiffs because they would not be in a worse position than had Encore filed a timely Answer. There would be no loss of witnesses or evidence since the case is still in its infancy. The parties would simply be put on equal footing and able to proceed with the lawsuit on the merits. This is what the third Craddock element contemplates. 134 Tex. 388, 393, 133 S.W.2d 124, 126 (Comm'n App. 1939). Iv. CONCLUSION Encore’s failure to timely file responsive pleadings is a result of inadvertent mistake and accident. Due to administrative oversight, the proper individuals who are supposed to receive notice of lawsuits within the company never did. Instead, Mr. Bryant, who is associated with different entities altogether, received notice of a lawsuit. At no point did Encore ever exhibit conscious indifference toward the lawsuit or the claims of Plaintiffs. Encore had actually been working with Mr. Villnave to resolve his claim prior to the filing of the instant lawsuit, although back then it was merely a matter of property damage and there was never any information about alleged personal injuries of a passenger being in the vessel. Admittedly, Encore mistakenly failed to answer the Plaintiffs’ suit. However, Encore has a valid and formidable defense and, in the interests of equity and justice, should be able to defend itself from the allegations levied by the Plaintiffs. Encore, if allowed, will offer convincing proof that the dredging pipe was properly lit and marked. Mr. Villnave will also have to overcome the heightened burden placed on him by The Oregon Rule which places a presumption of fault onto Mr. Villnave, as the vessel operator. As discussed, Mr. Villnave’s fault not only reduces his own claim but also that of Mr. Stewart. 11 Finally, Encore is willing to reimburse Plaintiffs’ costs associated with the filing of this default judgment sot there would be no harm or undue delay suffered by Plaintiffs by permitting Encore to file responsive pleadings. No evidence or witnesses would be lost, but rather the parties would be able to proceed through this litigation. Given that all three Craddock elements have been satisfied by Encore, this Court should set aside the default judgment previously entered in this case against Encore and allow it to file responsive pleadings. CERTIFICATE OF SERVICE Respectfully submitted, Thereby certify that a copy of the STAINES, EPPLING & KENNEY above and foregoing pleading has been served on all counsel of record via the = ee service method indicated below: [ ] U.S. Mail [ ] Facsimile COREY P. PA TON (#24095858) { ] Hand Delivery 3500 North eway Boulevard, Suite 820 [x ] ECF Filing Metairie, Louisiana 70002 Telephone: (504) 838-0019 This 6" day of July, 2022. Facsimile: (504) 838-0043 Counsel for Encore Dredging Partners, LLC 12 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules. Corey Parenton on behalf of Corey Parenton Bar No. 24095858 corey@ staines-eppling.com Envelope ID: 66077155 Status as of 7/7/2022 8:17 AM CST Case Contacts Name BarNumber | Email TimestampSubmitted Status Caroline Adams cadams@ txattorneys.com 7/6/2022 4:46:45 PM SENT Anthony G.Buzbee tbuzbee@ txattorneys.com 7/6/2022 4:46:45 PM SENT J esse Rubio jrubio@ txattorneys.com 7/6/2022 4:46:45 PM SENT Daedra Minigan dminigan@ txattorneys.com 7/6/2022 4:46:45 PM SENT