Unreported / Non-Citable
Background
Air Vent, Inc. manufactures and sells powered attic-ventilation products. It alleged that Chinese company Powermax Electric Co., Ltd. designed and manufactured fan motors incorporated without modification into Air Vent’s products. Five consolidated cases arose from residential fires allegedly caused by those motors.
After Powermax terminated its attorneys, the court allowed counsel to withdraw but warned Powermax that a corporation could not proceed without counsel. Powermax failed to retain new counsel despite an order, warnings, and a grace period. The court struck Powermax’s pleadings, the clerk entered default, and Air Vent moved for default judgment and submitted supporting evidence.
The Court’s Holding
The court granted default judgment. Applying the Lindsey factors, it found that default was procedurally appropriate because Powermax had notice, its failure to obtain counsel halted the adversarial proceedings, the grounds for default were established, and nothing indicated good-faith mistake, excusable neglect, undue harshness, or good cause to set aside the default.
Accepting the well-pleaded liability allegations as admitted, the court held that Air Vent stated a viable statutory-indemnity claim under Texas law. Air Vent alleged that Powermax manufactured the defective component and that Air Vent incorporated it into the finished product without modification. Based on declarations and supporting documents, the court awarded $97,500 in settlement-related compensatory damages and $24,670.90 in reasonable attorney’s fees without an evidentiary hearing.
The court declined to award $33,299.59 in requested expenses because Air Vent did not identify their nature or establish which were recoverable nontaxable litigation expenses. It permitted Air Vent to seek taxable costs by filing a bill of costs with the clerk within 14 days.
Key Takeaways
- A corporation’s failure to retain replacement counsel after explicit warnings and a court order can support striking its pleadings and entering default judgment.
- Default admits well-pleaded liability allegations, but the court must still determine whether those allegations state a viable claim.
- Documented settlement payments and attorney’s fees may be awarded without a hearing when the record permits the amounts to be determined with certainty, while inadequately explained expenses may be denied.
Why It Matters
The decision illustrates how Texas’s products-liability indemnity statute can allow an allegedly innocent seller to recover from a component manufacturer amounts reasonably paid to resolve claims, as well as reasonable fees incurred to enforce indemnification rights.
It also underscores the consequences for corporate litigants that lose counsel and disregard an order to obtain a replacement: failure to appear through counsel can eliminate their pleadings and lead to a final judgment based on default.