Commercial Union Assurance Co. v. Silva

988 S.W.2d 798, 1999 Tex. App. LEXIS 825, 1999 WL 62227
CourtCourt of Appeals of Texas
DecidedFebruary 10, 1999
DocketNo. 04-98-00602-CV
StatusPublished
Cited by5 cases

This text of 988 S.W.2d 798 (Commercial Union Assurance Co. v. Silva) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Commercial Union Assurance Co. v. Silva, 988 S.W.2d 798, 1999 Tex. App. LEXIS 825, 1999 WL 62227 (Tex. Ct. App. 1999).

Opinion

OPINION

CATHERINE STONE, Justice.

In this appeal we are asked to review the validity of substituted service on a surplus lines insurer. The appellant insurance companies (collectively “Commercial Union”) challenge a default judgment, claiming that appellees (collectively “Silva”) did not properly comply with service of process requirements under Tex. Ins.Code Ann. art. 1.36, § 12 (Vernon 1998). In this case of first impression, we find that Silva did not properly serve process on Commercial Union under the applicable statutes. As a result, we reverse the default judgment and remand the case to the trial court for further proceedings.

Factual and Procedural Background

Arnulfo Silva and Javier Calzoncin were killed in a flash fire while in a structure designed by the Texas Recreation Corporation (“TRC”). Appellees, surviving family members of Silva and Calzoncin, brought a wrongful death suit against TRC. TRC then filed bankruptcy and the bankruptcy court approved a settlement between appellees and TRC, providing in part that if Silva prevailed in her action against TRC, Silva could seek recovery on the judgment from TRC’s insur[800]*800er, Commercial Union. Silva obtained a judgment for $1.6 million plus interest against TRC and subsequently brought suit against Commercial Union to collect under the insurance policy issued by Commercial Union to TRC.

Silva attempted service of process on Commercial Union by serving duplicate copies of the citation and the original petition on the Secretary of State. The citations provided the Secretary of State with the name and address of the agent for service of process as specifically designated in the insurance policy. The Secretary of State’s certificates indicate that copies of the citation and petition were forwarded to Commercial Union at the address given and that each was returned with the notation “Forwarding Order Expired.” These certificates were filed in the record on the same day the default judgment was rendered by the court below, January 15, 1998. The trial court entered a default judgment against Commercial Union for $1 million plus interest. Commercial Union maintains that it neither received notice nor acquired actual knowledge of the judgment until May 6,1998.

STRICT Compliance and Substituted Service

To obtain a valid default judgment, the record must reflect strict compliance with the rules of civil procedure respecting the issuance of citation, the manner and mode of service, and the return of process. See Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex.1994); Harmon Truck Lines, Inc. v. Steele, 836 S.W.2d 262, 263 (Tex.App.—Texarkana 1992, writ dism’d). “Failure to affirmatively show strict compliance with the rules of civil procedure renders the attempted service invalid and of no effect.” Harmon Truck Lines, Inc., 836 S.W.2d at 263.

Service of Process on Eligible Surplus Lines Insurers

Under article 1.36 of Texas Insurance Code, any act of doing insurance business by an eligible surplus lines insurance company constitutes a binding and irrevocable appointment of the Secretary of State by that insurer to be the lawful attorney for sendee of that insurer. The statute provides in relevant part as follows:

(a) Any act of doing an insurance business by an eligible surplus lines insurance company constitutes an irrevocable appointment of the Secretary of State by that insurer binding on it and its successors in interest to be the lawful attorney for service of that insurer. The Secretary of State may be served with any process, notice, or demand arising out of doing an insurance business in this state by that insurer....
(b) Any act of doing an insurance business by an eligible surplus lines insurance company signifies the insurer’s agreement that legal process served under this section has the same legal force and validity as personal service of process in this state on that insurer or its successor in interest.
(c) Any policy issued by the surplus lines insurer or any certificate of insurance issued by the surplus lines agent must contain a provision stating the substance of this section and designating the Person to whom the commissioner is to mail process. This address must be supplied by the plaintiff in the citation that is served.
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(e) This section is cumulative of any other methods that may be provided by law for service of process on a surplus lines insurer, including Section 3 of this Article.

Tex. Ins.Code Ann. art. 1.36, § 12 (Vernon Supp.1998) (emphasis added).

In an apparent effort to comply with this statute, Silva served copies of the citation and original petition on Helen Lupercio, a designated agent for service for the Secretary of State, and provided the name and address for service of process on Commercial Union as listed in the insurance policy. Silva recognizes that section 12(c) refers to the “commissioner,” and that section 1 of article 1.36 defines “commissioner” as the Commissioner of Insurance. Nonetheless, Silva contends that the reference is simply a hold-over from the previously enacted statute, and in any event, the statute does not preclude the [801]*801Secretary of State from mailing process to a defendant.

No case law exists concerning this particular application of article 1.36, section 12 of the Insurance Code. Nonetheless, a statute will be construed according to its plain language. RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex.1985). Where there is no ambiguity, we will interpret a statute according to the plain meaning of the text. See id.

As noted, Silva contends that because section 12(c) does not say that only the Commissioner may mail process to the designated person in the policy, the Secretary of State may also mail process to this person. We reject this argument. A plain reading of section 12 does not allow for such inferences, especially where the Commissioner and Secretary of State are treated distinctly throughout the statute. See Tex. Ins.Code Ann. art. 1.36, § 1, et seq. Nor does the plain meaning of the statute allow us to rewrite the statute because “commissioner” may or may not be a hold-over from previous versions of the statute. See RepublicBank N.A., 691 S.W.2d at 607 (quoting Simmons v. Arnim, 110 Tex. 309, 220 S.W. 66, 70 (Tex.1920) and holding that courts are not responsible for omissions in legislation). Interpreting the statute according to its most literal meaning, section 12(c) does not apply to the Secretary of State, but only to the Commissioner of Insurance, and thus, any forwarding instructions in this section do not apply.

Silva notes that under the general citation statute governing service of process on the Secretary of State, service may be effected by certified mail, return receipt requested, or by “any other method authorized by statute or the Texas Rules of Civil Procedure for service on the secretary of state.” See Tex. Civ. Prac. & Rem.Code Ann. § 17.026 (Vernon 1997).

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988 S.W.2d 798, 1999 Tex. App. LEXIS 825, 1999 WL 62227, Counsel Stack Legal Research, https://law.counselstack.com/opinion/commercial-union-assurance-co-v-silva-texapp-1999.