Fourth Court of Appeals
San Antonio, Texas
DISSENTING OPINION
No. 04-26-00512-CV
IN RE UNITED SERVICES AUTOMOBILE ASSOCIATION
Original Mandamus Proceeding 1
Opinion by: H. Todd McCray, Justice
Dissenting Opinion by: Velia J. Meza, Justice
Sitting: Rebeca C. Martinez, Chief Justice
H. Todd McCray, Justice
Velia J. Meza, Justice
Delivered and Filed: September 16, 2026
This case presents a straightforward opportunity to preserve the orderly administration of
justice. Requiring the parties to try damages now, only to revisit those issues after a new trial is
granted, serves no legitimate end. Accordingly, I respectfully dissent.
This original mandamus proceeding arises from a lawsuit filed by the real-parties-in
interest Michael William Mills and Jennifer Rebecca Mills (the “Millses”) alleging the relator
United Services Automobile Association (“USAA”) wrongfully denied their homeowner’s
insurance claim. After USAA failed to answer, the trial court entered a default judgment. In this
proceeding, USAA challenges the trial court’s denial of its motion to set aside the no-answer
1
This proceeding arises out of Cause No. 25-12-30031-CV, styled Michael William Mills and Jennifer Rebecca Mills v. United Services Automobile Association, pending in the 454th Judicial District Court, Medina County, Texas, the Honorable Daniel J. Kindred presiding.
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default judgment. Because the record establishes that USAA satisfied the requirements for a new
trial under Craddock and because it lacks an adequate remedy by appeal, I would conditionally
grant mandamus relief.
BACKGROUND
The Millses filed suit against USAA, their homeowner insurer, on December 8, 2025. Their
petition alleged various causes of action including breach of contract, breaches of the common law
duty of good faith and fair dealing, and violations of various provisions of the Texas Insurance
Code and the Texas Deceptive Trade Practices Act, all allegedly stemming from USAA’s denial
of an insurance claim for damage to their home. The Millses served USAA through their registered
agent Corporation Services Company (“CSC”) on December 12, 2025.
On February 20, 2026, USAA still had not answered the petition, and the Millses filed a
motion for a no-answer default judgment. In their motion, the Millses requested a hearing be set
at a later time on the issue of damages, which the trial court granted on March 3, 2026.
On March 26, 2026, USAA filed a motion to set aside the default judgment and, in the
alternative, motion for new trial. In the motion, USAA asserts that it became aware of the default
judgment on March 6, 2026, when it received the Rule 306a notice of the default judgment. It
attached to its motion a declaration of “Claims Litigation Support Specialist I” Jessica Perez.
According to Perez, USAA’s agent for service of process is CSC. When a petition is served, CSC
uploads the petition into an online portal accessible by certain USAA employees. For the Millses’
petition, the case was placed into a queue that “belonged to Claims Litigation Support Specialist
Senior, Sandra Adams.” However, at the time the Millses’ petition came through the CSC portal,
Adams was on vacation, so Perez was covering her duties. Perez avers that she mistakenly routed
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the petition to the automobile claims department rather than the litigation department. According
to Perez,
Once the petition landed in the auto claims department, the auto litigation manager
noted in the USAA claim file that the property lawsuit had been assigned to him by
mistake, but the notation was marked as “privileged” because it originated from a
member of a litigation team. Because the entry was privileged, the auto claims
department could not view the entry. The petition was thus never routed to the
correct USAA department, and went unanswered.
The Millses filed their response to USAA’s motion on April 1, 2026, arguing that USAA
is a sophisticated party, which ignored their petition after it had been sent to USAA’s litigation
team. On April 9, 2026, the trial court denied USAA’s motion.
On April 20, 2026, USAA filed a motion to reconsider. With this motion, USAA attached
the declaration of Marco Gorena, “a litigation claim manager in the auto claims department.”
Gorena is not an attorney or member of the legal profession. In his declaration he states that upon
recognizing the petition had been mistakenly assigned to him, he made a note it needed to be
reassigned. He further adds:
I took this action because I thought that this would handle the matter, and that the
petition would be reassigned based on my note, thus sending the petition to the
correct department. I was unaware that others could not see my note, which had
been marked privileged. I did not intend for the petition to go unanswered, and
believed I had taken actions to make sure it would be answered. My inadvertent
mistake was not made with the intent that the petition not be answered.
On June 3, 2026, the trial court denied USAA’s motion to reconsider. USAA filed its
petition for writ of mandamus on June 26, 2026, and the Millses filed a response. USAA asks us
to direct the trial court to vacate its orders denying the motion to set aside the default judgment
and new trial and instead grant the motions. Because I would conditionally grant this petition, I
dissent from the majority’s decision denying relief.
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STANDARD OF REVIEW
Mandamus is an extraordinary remedy that will only be granted when a relator can show
that (1) the trial court clearly abused its discretion, and (2) no adequate appellate remedy exists. In
re H.E.B. Grocery Co., L.P., 492 S.W.3d 300, 302 (Tex. 2016) (orig. proceeding) (per curiam).
The relator has the burden of proof on both elements of mandamus relief. Id. A trial court abuses
its discretion when it clearly fails to analyze or apply the law correctly. Id. Appellate courts will
not disturb a trial court’s decision unless it amounts to a clear and prejudicial error of law or fails
to correctly analyze or apply the law to the facts. Id. at 302–03. The relator must establish the trial
court could have reasonably reached only one decision. Id. at 303.
Mandamus will not issue where there is “a clear and adequate remedy at law, such as a
normal appeal.” Id. at 304 (quoting State v. Walker, 679 S.W.2d 484, 485 (Tex. 1984) (orig.
proceeding)). Because mandamus is intended to be an extraordinary remedy, it is available only in
limited circumstances. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding).
“The writ will issue ‘only in situations involving manifest and urgent necessity and not for
grievances that may be addressed by other remedies.’” Id. (quoting Holloway v. Fifth Court of
Appeals, 767 S.W.2d 680, 684 (Tex. 1989) (orig. proceeding)).
ANALYSIS
Abuse of Discretion
Any analysis must begin with the Texas Supreme Court’s reminder that “[d]efault
judgments are ‘greatly disfavor[ed]’ under Texas law, consistent with the strong policy preference
for adjudicating cases on the merits.” Tabakman v. Tabakman, 728 S.W.3d 703, 707 (Tex. 2025)
(quoting In re Lakeside Resort JV, LLC, 689 S.W.3d 916, 921, 925 (Tex. 2024) (orig. proceeding)
(per curiam)). Indeed, as Justice Huddle recently noted, joined by three of her colleagues:
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The growing hostility toward default judgments unsurprisingly has yielded
consistent—usually unanimous—dispositions in this Court: we have not affirmed
a default judgment in more than two decades . . . [T]his is true whether the Court’s
decision turns on the text of a statute governing service, a rule of procedure,
application of the Craddock test, or due process principles.
Huffman Asset Mgmt., LLC v. Colter, No. 24-0205, 2026 WL 1500963, at *6 (Tex. May 29, 2026)
(Huddle, J., concurring, joined by Devine, J., Young, J., Sullivan, J.). Here, we are asked to apply
the Craddock test to a motion to set aside a default judgment. Craddock v. Sunshine Bus Lines,
133 S.W.2d 124, 126 (Tex. 1939).
A trial court’s refusal to grant a motion for new trial is reviewed under an abuse of
discretion standard. Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009) (per
curiam). “When a defaulting party moving for new trial meets all three elements of the Craddock
test, then a trial court abuses its discretion if it does not grant a new trial.” Dolgencorp of Tex.,
Inc., 288 S.W.3d at 926. In Craddock, the Texas Supreme Court held the trial court erred by
denying a motion to set aside a no answer default judgment and grant a new trial where it was
shown (1) the failure to answer was a mistake, and not intentional, (2) there was a meritorious
defense, and (3) the plaintiff would not suffer injury by granting the motion. 133 S.W.2d at 126.
For the reasons that follow, I would hold that USAA satisfied all three elements, and so the trial
court abused its discretion by not granting USAA’s motion to set aside the default judgment and
for new trial. See In re Adams, 416 S.W.3d 556 (Tex. App.—Tyler 2013, orig proceeding) (mem.
op.) (granting mandamus relief where the trial court abused its discretion and denied Relator’s
motion for new trial despite having satisfied Craddock test).
Unintentional Mistake
USAA’s burden as to the first Craddock element of unintentional mistake is satisfied if the
factual assertions in the Perez and Gorena declarations, if true, negate intentional or consciously
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indifferent conduct by USAA and are not controverted by the Millses. See In re R.R., 209 S.W.3d
112, 115 (Tex. 2006) (per curiam). A deliberate failure to answer is not enough to show
intentionality, nor is mere negligence enough for conscious indifference. Tabakman, 728 S.W.3d
at 708 (citing Smith v. Babcock & Wilcox Constr. Co., 913 S.W.2d 467, 468 (Tex. 1995)). The
controlling fact is the “absence of an intentional failure to answer rather than a real excuse for not
answering” when determining if the first element is satisfied. Milestone Operating, Inc. v.
ExxonMobil Corp., 388 S.W.3d 307, 310 (Tex. 2012). To that end, the defendant’s excuse does
not need to even be a good one to suffice. Fid. & Guar. Ins. Co. v. Drewery Const. Co., Inc., 186
S.W.3d 571, 576 (Tex. 2006).
While the employee who typically routes court filings for USAA was out of the office,
another team member covered her duties. The USAA employee covering duties mistakenly routed
the petition to the auto claims department rather than the litigation department. In her affidavit to
the court, the employee did not state she acted to purposefully prevent USAA from filing an answer
in the case. See Norton v. Martinez, 935 S.W.2d 898, 902 (Tex. App.—San Antonio 1996, no writ)
(finding the first element of the Craddock test satisfied where mistakes in routing an insurance
coverage notification in the municipality resulted in the city attorney not receiving notice of a
requirement to answer). In their motion to reconsider the denial of the motion to set aside the
default judgment, an additional declaration from the automobile claims department further
confirmed the employee who mistakenly received the petition “did not intend for the petition to
go unanswered, and believed [he] had taken actions to make sure it would be answered.” “In the
absence of controverting evidence that [USAA’s] failure to appear was due to an intentional act or
conscious indifference, [USAA’s] affidavits should be taken as true.” Id.
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The affidavits do not demonstrate an intentional act or conscious indifference. USAA,
therefore, satisfied the first element of the Craddock test.
Meritorious Defense
The second prong of the Craddock test required USAA to set up a meritorious defense in
their motion to set aside the default judgment. Dolgencorp of Tex., Inc., 288 S.W.3d at 927. A
meritorious defense has been set up “if it alleges facts which in law would constitute a defense to
the plaintiff’s cause of action and is supported by affidavits or other evidence providing prima
facie proof that the defendant has such a defense. Id. at 928.
In its motion, USAA states the insurance claim was denied because the insured’s policy
specifically excludes the type of claim the insured made on their policy—damage to the home’s
foundation. The insured had filed a claim that their home, which was covered by the USAA
insurance policy, suffered damage following a storm. USAA included excerpts from the policy in
their motion that showed the policy excluded:
Earth Movement arising from or caused by or resulting from . . . any act of nature,
meaning: (Earthquake, including land shock waves or tremors before, during or
after a volcanic eruption; (2) Landslide; mudslide or mudflow; (3) Subsidence,
sinkhole, erosion or movement resulting from improper compaction, site selection
or any other external forces; (4) Earth sinking, rising or shifting, expanding or
contracting of earth, all whether combined with water or not; . . . (m) Settling,
cracking, shrinking, bulging or expansion of pavements, patios, foundations, walls,
floors, roofs or ceilings;
USAA’s motion states the Millses’ claim fell within these excluded categories.
USAA’s assertions and supporting document are sufficient to satisfy Craddock’s second
element because they would constitute a defense to the Millses’ claim and the assertion is more
than conclusory. Compare U.S. Bank Nat’l Ass’n as Tr. for RMTP Tr. Series 2021 Cottage-TT-V
v. Bus. Unlimited 27, LLC, No. 02-25-00315-CV, 2026 WL 1041632, at *3 (Tex. App.—Fort
Worth Apr. 16, 2026, pet. filed) (mem. op.) (“Some facts supporting the defense—albeit basic and
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perhaps even threadbare—must be presented, either by affidavit or through evidence presented at
the hearing on the motion for new trial.”) (citing Dolgencorp of Tex., Inc, 288 S.W.3d at 927–28),
with Lynch v. Lopez, No. 02-22-00435-CV, 2023 WL 3878434 (Tex. App.—Fort Worth June 8,
2023, no pet.) (mem. op.) (finding second element of Craddock not met where the only support
for the element was a paragraph stating “adverse consequences . . . but present[ing] no facts that
would constitute a defense”).
Having provided sufficient facts in their motion to set aside the default judgment, USAA
satisfied the second Craddock element.
No Injury to Plaintiff
To meet the last element of the Craddock test, USAA’s motion to set aside the default
judgment stated that granting the motion would not occasion delay or otherwise injure the Millses.
Craddock, 133 S.W.3d at 126. Once USAA alleged there would be no injury in their motion, the
burden shifted to the Millses to show that injury would occur if the trial court granted USAA’s
motion to set aside the default judgment Dir., State Employees Workers’ Comp. Div. v. Evans, 889
S.W.2d 266, 270 (Tex. 1994).
USAA’s motion asserted that “mere weeks” had passed between the filing of its motion
and the entering of the no-answer default judgment order, so there was not a loss of witnesses or
valuable evidence as would delay or injure the Millses. Because their response only focused on
the first element of the Craddock test, the Millses response did “not address the second and third
element.” Indeed, even in their response to USAA’s motion for reconsideration of the denial of
the motion to set aside the default judgment, the Millses still did not address the second or third
element of the test. Thus, they have failed to carry their burden.
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The third element is likewise met. Nothing in the record suggests that granting a new trial
would have caused delay or otherwise prejudiced the Millses. Because USAA satisfied all three
elements of the Craddock test, the trial court abused its discretion by denying its motion to set
aside the default judgment. In re R.R., 209 S.W.3d at 117.
Adequate Appellate Remedy
I also conclude that USAA lacks an adequate remedy by appeal. To be sure, mandamus
does not lie to correct every erroneous interlocutory ruling, and litigation expense alone does not
render appellate review inadequate. Walker, 827 S.W.2d at 842. But the adequacy of remedy
inquiry is a practical one that requires courts to weigh the circumstances presented rather than rely
on categorical rules. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 137 (Tex. 2004); In re
McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex. 2008).
Finality of Default Judgment Order
Mandamus relief will not be available for a final, appealable order as there is an adequate
appellate remedy. See Lehmann v. Har–Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). In this case,
the order granting default judgment did not dispose of the issue of damages and is therefore not
final. See In re Blankenhagen, 513 S.W.3d 97, 101 (Tex. App.—Houston [14th Dist.] 2016, orig.
proceeding) (“Accordingly, the Default Judgment is not a final judgment because the amount of
relators’ damages has not yet been determined and cannot be ascertained from . . . the Default
Judgment[.]”). The motion for default judgment asked that “the Court enter judgment against
Defendant, United Services Automobile Association; to set matter for hearing to accept evidence
upon Plaintiffs’ damages, that Plaintiff recover costs expended in filing this suit; that Plaintiff
recover prejudgment and post judgment interest; and that Plaintiff have such other and further
relief at law or in equity to which Plaintiff may be justly entitled.” The court’s order granted the
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motion in all things, thereby leaving open the need to have a hearing on damages. See In re
Burlington Coat Factory Warehouse of McAllen, Inc., 167 S.W.3d 827, 829 (Tex. 2005)
(“Although a judgment following a trial on the merits is presumed to be final, there is no such
presumption of finality following a summary judgment or default judgment.”); Zamarripa v.
Sifuentes, 929 S.W.2d 655, 657 (Tex. App.—San Antonio 1996, no writ) (holding the “default
judgment does not dispose of the prejudgment interest claim pled in plaintiff’s petition. The
judgment is completely silent on prejudgment interest and does not contain a Mother Hubbard
clause.”).
The Appellate Remedy is Inadequate
This proceeding involves more than the ordinary burdens associated with continued
litigation. By denying a new trial, the trial court prevented USAA from litigating a defense that, if
successful, would defeat coverage under the policy. The dispute therefore concerns not merely the
amount recoverable, but whether the policy affords coverage for the claimed loss at all. If the
exclusion applies, USAA would not be liable under the policy for the damages claimed.
Whether an appellate remedy is “adequate” requires appellate courts to carefully balance
jurisprudential considerations when determining whether to review the actions of lower courts.
Prudential, 148 S.W.3d at 136. Mandamus review of “incidental, interlocutory rulings” can unduly
interfere with the trial courts, distract the appellate court to issues unimportant to the ultimate
disposition of the case, and add unproductively to litigation expense. Id. However, reviewing
significant rulings in exceptional cases can preserve important substantive and procedural rights,
provide helpful guidance on the law that may otherwise prove elusive on appeal, and, importantly
for this case, “spare private parties and the public the time and money utterly wasted enduring
eventual reversal of improperly conducted proceedings.” Id. Conducting a damages trial under
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these circumstances risks wasting substantial judicial and public resources because any resulting
judgment is likely to be undone when the default judgment is ultimately set aside. See McAllen
Med. Ctr., 275 S.W.3d at 466 (“[I]nsisting on a wasted trial simply so that it can be reversed and
tried all over again creates the appearance not that the courts are doing justice, but that they don't
know what they are doing. Sitting on our hands while unnecessary costs mount up contributes to
public complaints that the civil justice system is expensive and outmoded.”).
Indeed, the Supreme Court has granted mandamus relief recently in a similar situation as
the one presented here. See Lakeside Resort, 689 S.W.3d at 916. Lakeside Resort had not been
properly served and therefore did not answer the petition filed against them resulting in a default
judgment on liability. Id. at 919–20. The default judgment precluded Lakeside Resort’s ability to
defend itself on the issue of liability. Id. at 921 (discussing why default judgments are disfavored
and noting that “an absent defendant often has not actually chosen to abandon its right to defend
itself.”). The trial court erroneously believed it had issued a final, appealable order granting the
default judgment, and denied Lakeside Resort’s motion to set aside the default judgment and for
new trial. Id. at 920. The Supreme Court held the trial court’s determination that its plenary power
had expired and its order execution of the judgment was an abuse of discretion and ultimately
granted relief. Id. at 925.
The Texas Supreme Court’s recognition of a lack of adequate appellate remedy is not new. 1
In TransAmerican National Gas Corporation v. Powell, the Supreme Court granted mandamus
relief where the trial court abused its discretion by striking TransAmerican’s pleadings as a
discovery sanction. 811 S.W.2d 913 (Tex. 1991). There was no adequate appellate remedy where
1
Indeed, in McAllen Med. Ctr., the Supreme Court acknowledged that in cases dating back to the 1800’s, jurisprudence has recognized the availability of mandamus when it affords a “more complete and effectual remedy” when “other modes of redress are inadequate or tedious.” 275 S.W.3d 458, 467 (Tex. 2008) (citing Bradley v. McCrabb, Dallam 504, 507 (Tex.1843)).
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TransAmerican was forced to go to trial on damages as the sanctions imposed were an abuse of
discretion and the appeal would be not whether TransAmerican had been liable, but whether the
trial court had abused its discretion in imposing sanctions. Id. at 920 (“[W]hen a trial court imposes
discovery sanctions which have the effect of precluding a decision on the merits of a party’s
claims—such as by striking pleadings, dismissing an action, or rendering default judgment—a
party’s remedy by eventual appeal is inadequate, unless the sanctions are imposed simultaneously
with the rendition of a final, appealable judgment.”).
Under these circumstances, appellate review following final judgment does not provide an
adequate remedy. If the denial of the motion for new trial is ultimately determined to have been
erroneous, the parties and the courts will have devoted substantial resources to proceedings
conducted without affording USAA the opportunity to litigate a defense it was entitled to assert
under Craddock. As Prudential and McAllen recognize, the adequacy of remedy analysis includes
consideration of the public and private costs associated with proceedings that may ultimately prove
unnecessary. See Prudential, 148 S.W.3d at 136-37; McAllen Med. Ctr., 275 S.W.3d at 464-68.
CONCLUSION
Reasonable minds may disagree about whether extraordinary relief is warranted here. But
Craddock reflects Texas’s enduring preference for resolving disputes on their merits rather than
by default. Because USAA satisfied all three Craddock elements and presented a defense that
could defeat liability altogether, the trial court abused its discretion in refusing to grant a new trial.
The interests of justice are best served by allowing the defense to be heard.
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Because the trial court abused its discretion and because appeal is not an adequate remedy
under Prudential and McAllen, I would conditionally grant mandamus relief. Accordingly, I
dissent.
Velia J. Meza, Justice
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