Encompass Counseling, Wellness & Rehab, LLC v. Consilium Staffing, LLC

• Court: Court of Appeals of Texas
• Decided: July 2, 2024
• Docket: 05-23-00670-CV
• Status: Published

Opinion

REVERSE and REMAND; and Opinion Filed July 2, 2024

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-23-00670-CV

ENCOMPASS COUNSELING, WELLNESS & REHAB, LLC, Appellant V. CONSILIUM STAFFING, LLC, Appellee

On Appeal from the 193rd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-22-16578

MEMORANDUM OPINION Before Justices Smith, Miskel, and Breedlove Opinion by Justice Smith This is a restricted appeal from a no-answer default judgment rendered against

appellant Encompass Counseling, Wellness & Rehab, LLC. In four issues,

Encompass asserts that error is apparent on the face of the record because (1) there

is no reporter’s record; (2) appellee Consilium Staffing, LLC’s petition and

supporting affidavit affirmatively disclose the invalidity of its claims; (3) the record

does not contain invoices to prove up Consilium’s attorney’s fee claim; and (4) the

process server’s return of service failed to indicate that service was made to an authorized agent. Because we agree that service was invalid, we reverse the trial

court’s default judgment and remand for further proceedings.

Background

In December 2022, Consilium filed suit against Encompass to collect amounts

due and owing for locum tenens medical staffing services provided to Encompass.

Consilium alleged an unpaid balance of $29,032.50, and asserted a suit on a sworn

account and causes of action for breach of contract and quantum meruit. The petition

alleged that Encompass, a Georgia limited liability company doing business in

Texas, could be served through Victoria Ross, its chief executive officer. Ross was

served with the petition on December 17, 2022, and the return of service was filed

with the trial court on December 21, 2022. Encompass did not file an answer or

otherwise respond.

On Consilium’s motion, the trial court entered a default judgment on January

20, 2023. The judgment awarded Consilium the balance of the unpaid account as

actual damages in the amount of $29,032.50 and other fees and costs, including

attorney’s fees of $2,883.50 and conditional attorney’s fees in the event of an appeal.

Encompass did not timely file a notice of appeal. On July 10, 2023, it filed a

notice of restricted appeal, alleging that it had not participated in the proceedings

prior to entry of the default judgment.

–2– Restricted Appeal

A restricted appeal is a direct attack on a default judgment. See Ex Parte E.H.,

602 S.W.3d 486, 495 (Tex. 2020); TEX. R. APP. P. 26(c), 30. A restricted appeal is

sustained when the appellant shows that (1) it filed its notice of restricted appeal

within six months after the judgment was signed, (2) it was a party to the underlying

suit, (3) it did not participate in the hearing that resulted in the judgment complained

of and did not timely file any post-judgment motions or request findings of fact and

conclusions of law, and (4) error is apparent on the face of the record. Ex Parte

E.H., 602 S.W.3d at 495; Greystar, LLC v. Adams, 426 S.W.3d 861, 866 (Tex.

App.—Dallas 2014, no pet.). Here, the record establishes, and neither party

disputes, that the first three elements are met. Therefore, we decide only whether

error appears on the face of the record. For purposes of a restricted appeal, the face

of the record consists of all the papers on file before the judgment was entered as

well as any reporter’s record. Reed Elsevier, Inc. v. Carrollton–Farmers Branch

Indep. Sch. Dist., 180 S.W.3d 903, 905 (Tex. App.—Dallas 2005, pets. denied).

Invalid Service

In its fourth issue, Encompass asserts that error is apparent from the face of

the record because the record shows Consilium failed to follow the required

procedures for service of process. Specifically, Encompass contends that service

was invalid because the record does not show Ross’s capacity to receive service on

behalf of Encompass. We agree.

–3– The usual rule that all presumptions—including valid issuance, service, and

return of citation—will be made in support of a judgment does not apply to a direct

attack on a default judgment. Prado v. Nichols, No. 05-20-01092-CV, 2022 WL

574845, at *2 (Tex. App.—Dallas Feb. 25, 2022, no pet.) (mem. op.) (citing Primate

Constr. Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994) (per curiam)). If the record

does not affirmatively show strict compliance with the rules governing citation and

return of service, then service is invalid and error is apparent on the face of the

record. Id. Whether service strictly complies with the rules of civil procedure is a

question of law that we review de novo. U.S. Bank Tr., N.A. v. AJ & SAL Enters.,

LLC, No. 05-20-00346-CV, 2021 WL 1712213, at *2 (Tex. App.—Dallas Apr. 30,

2021, no pet.) (mem. op.).

A proper return of service must show the person or entity served. See TEX. R.

CIV. P. 107(b)(5). A limited liability company (LLC) is not a person capable of

accepting process on its own behalf and must be served through an agent. Pearson

v. Duncanville Senior Care, LLC, No. 05-21-00900-CV, 2022 WL 4480562, at *2

(Tex. App.—Dallas Sept. 27, 2022, no pet.) (mem. op.) (citing Prado, 2022 WL

574845, at *2). Agents authorized by statute to accept service on behalf of an LLC

include its registered agent and, depending on whether the LLC is manager- or

member-managed, any manager or member of the LLC. Id.; see TEX. BUS. ORGS.

–4– CODE ANN. §§ 5.201(b), 5.255(3).1 If an agent is served, the record must show that

the agent was authorized to receive service for the addressee. See Pearson, 2022

WL 4480562, at *2; Reed Elsevier, 180 S.W.3d at 905.

Here, the face of the record shows that Consilium filed suit against

Encompass, an LLC, and served process on Ross, Encompass’s chief executive

officer. A chief executive officer, however, is not an authorized agent for service

for an LLC, and the return of service did not otherwise indicate Ross’s capacity to

receive service on behalf of Encompass. See Reed Elsevier, 180 S.W.3d at 905

(when return did not indicate capacity of person served or explain authority to

receive service as registered agent, service was invalid). Nor did anything else in

the record before the trial court when it granted Consilium’s motion for default

judgment indicate that Ross had authority to receive service on behalf of Encompass.

Because the face of the record fails to show strict compliance with the rules

governing citation and return of service, the trial court lacked jurisdiction to render

a default judgment against Encompass. See, e.g., Prado, 2022 WL 574845, at *2

(reversing default judgment where return of service reflected name of individual

served but neither return of service nor any other portion of record indicated his

capacity to receive service on behalf of purported corporation).

1 Although not at issue here, the Texas Business Organizations Code also provides for service of a foreign entity through the Texas Secretary of State in the event the foreign entity fails to maintain a registered agent in Texas. See TEX. BUS. ORGS. CODE ANN. §§ 5.201, 5.251.

–5– We sustain Encompass’s fourth issue. Our resolution of this issue makes it

unnecessary to address appellant’s remaining issues. See TEX. R. APP. P. 47.1.

Conclusion

We reverse the trial court’s default judgment and remand this cause to the trial

court for further proceedings.

/Craig Smith/ CRAIG SMITH JUSTICE 230670F.P05

–6– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT

ENCOMPASS COUNSELING, On Appeal from the 193rd Judicial WELLNESS & REHAB, LLC, District Court, Dallas County, Texas Appellant Trial Court Cause No. DC-22-16578. Opinion delivered by Justice Smith. No. 05-23-00670-CV V. Justices Miskel and Breedlove participating. CONSILIUM STAFFING, LLC, Appellee

In accordance with this Court’s opinion of this date, the judgment of the trial court is REVERSED and this cause is REMANDED to the trial court for further proceedings consistent with this opinion.

It is ORDERED that each party bear its own costs of this appeal.

Judgment entered this 2nd day of July 2024.

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