The Waco Court of Appeals has upheld a default judgment awarding $1 million in actual and another $1 million in punitive damages to investors in a failed real estate development.
Nicholas Lind v. M3 Fort Worth Developer, LLC and The YoungESTone, LLC (No. 10-24-00064-CV; April 16, 2026) arose from a dispute between a real estate developer and investors in several residential development projects in Ellis County. M3 and The YoungESTone (YO) agreed to buy vacant lots and finance the construction of homes on the lots. Serene Country Homes and its affiliate Windridge agreed to sell the homes. M3 and YO paid Serene $280,000 in management fees and $753,480.20 for construction fees under the agreements. Construction began on one project but was never finished. Six others never started. Serene/Windridge, however, didn’t repay M3 or YO. They filed suit against the entities and several involved individuals, including Lind, who they claimed “was involved in a scheme to induce them to sign the contracts related to the investment in and development of real residential property.” Plaintiffs asserted fraud, conspiracy, and violations of the Texas Securities Act, seeking actual and exemplary damages, plus attorney’s fees.
Lind, however, was served with the original petition but never filed an answer. M3 and YO then filed their first amendedx petition, which “modified allegations regarding the method of service for some defendants, corrected the spelling of YO’s name in [one] paragraph, and corrected the firm name of M3 and YO’s counsel.” The two petitions were identical in all other respects. Lind was not served with the amended petition, and M3 and YO moved for a default judgment against Lind seven months after they filed suit. Finding that Lind had admitted to the allegations against him in the first petition, the trial court granted the motion against Lind and the other non-answering defendants. Following a damages hearing, at which Lind did not appear, the court entered judgment awarding $529,275.80 to M3 and $504,204.80 to YO. It further awarded over $1 million in punitive damages, along with $47,940.92 for M3’s attorney’s fees. Lind subsequently filed a motion of restricted appeal challenging the default judgment.
In an opinion by Chief Justice Johnson, the court of appeals affirmed. Among other things, for a restricted appeal Lind had to prove that error was apparent on the face of the record. “The ‘face of the record,’ in restricted appeal,” the court observed, consists of the ‘papers on file in the appeal’” (citations omitted). First, the court determined that M3 and YO were not required to re-serve Lind with their amended petition because they did not “seek[] a more onerous judgment than prayed for in the original pleading” (citations omitted). Consequently, error for lack of service was not reflected on the face of the record.
Lind next argued that there was insufficient evidence admitted at the default judgment hearing “to establish a causal nexus between Lind’s conduct and the requested damages.” Lind did not challenge liability, just damages. In its order granting default judgment, the trial court stated that Lind admitted the allegations in the petition, but “[w]hile a default judgment conclusively establishes the ‘causal nexus between the conduct of the defendant and the event sued upon,’ the default does not result in an admission ‘that an event sued upon caused any of the plaintiff’s alleged injuries’” (citation omitted). Plaintiffs, consequently, still had to establish that causal nexus in order to prove up their damages. M3 and YO attempted to establish that based on affidavits and exhibits stating how much they had paid out for work that was never done. “The limited evidence contained in the two affidavits provided by M3’s and YO’s managers,” the court stated, “do not contain any factual assertions that the payments were caused by anything said or done by Lind and never mention Lind by name,” or, for that matter, any of the other alleged conspirators. Though liability for participating in a conspiracy was established by default, whether the damages caused by the underlying wrong were attributable to the conspiracy was not.
As to the Texas Securities Act claims, M3 and YO sought “full recission of their investment,” as well as damages. The trial didn’t order rescission against Lind but did award economic and exemplary damages to M3 and YO. The court obsrved that “[p]roof of a causal nexus between the event sued upon and resulting injury is not required to award damages for a claim under [the TSA] because loss causation is not an element” (citations omitted). Consequently, the court ruled for M3 and YO on that issue. It thus affirmed the trial court’s judgment.
