Investment Ideas, Inc. v. Ellekay, LLC Dba Young Chef's Academy

• Court: Court of Appeals of Texas
• Decided: November 18, 2010
• Docket: 13-10-00208-CV
• Status: Published

Opinion

NUMBER 13-10-208-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

INVESTMENT IDEAS, INC., Appellant,

v.

ELLEKAY, LLC D/B/A YOUNG CHEF’S ACADEMY, Appellee.

On appeal from County Court at Law No. 6 of Hidalgo County, Texas.

MEMORANDUM OPINION Before Chief Justice Valdez and Justices Rodriguez and Vela Memorandum Opinion by Justice Vela This is an appeal from a default judgment granted against appellant Investment

Ideas, Inc. and in favor of appellee Ellekay, LLC d/b/a Young Chef’s Academy, for

$404,833.21, plus interest and attorney’s fees, in a claim for breach of implied warranty, breach of contract, negligence, and fraud. By one issue, Investment Ideas argues that

the trial court erred in entering a no-answer default judgment because it was not served in

strict compliance with applicable rules of civil procedure. We reverse and remand.

I. BACKGROUND

Ellekay filed its original petition on November 20, 2009, in Hidalgo County. The

petition states that Investment Ideas failed to appoint or maintain a registered agent in

Texas. Accordingly, Ellekay asserts that service could be made by serving the Secretary

of State. See TEX. BUS. ORG. CODE ANN. § 5.251(1)(A) (Vernon Supp. 2010).

Citation was issued by the Hidalgo County clerk’s office on November 23, 2009.

The “Sheriff’s Return” section of the citation reflects that service was attempted on

December 4, 2009, as follows: “Sent certified mail to Secretary of State

#7008-2810-0000-3935-6622, P.O. Box 12079, Austin, TX 78711-2079.” The return

was signed by someone who was apparently a civil process server, but whose signature

is not legible, and was followed by a number. The return was not verified.

On January 11, 2010, Ellekay moved for default judgment, reciting that Investment

Ideas had been served with citation on December 11, 2009. On January 13, 2010, the

trial court held a hearing on the default judgment. Ellekay presented a non-military

affidavit, a certificate of last known mailing address, an attorney’s fee affidavit, and an

affidavit outlining the alleged damages. The trial court entered the default judgment.

On January 15, 2010, not knowing that a default judgment had been entered,

Investment Ideas filed a special appearance contesting jurisdiction, a motion to transfer

venue, and an answer. When Investment Ideas became aware that a default judgment

2 had been entered, it also filed a timely motion to set aside default judgment and a motion

for new trial. Investment Ideas took the position at the hearing on motion for new trial

that it sought an extension of time from Ellekay’s attorney in order for Investment Ideas to

obtain Texas counsel. Ellekay denied that there was such an agreement.

The citation stated that it had been sent to “Investments Ideas Inc.,” rather than to

“Investment Ideas Inc.” The return is signed by a civil process server whose signature

was not legible. The return suggests that the petition was sent to the Secretary of State

at an Austin, Texas address but it was not verified.

On March 4, 2010, nearly a month and a half after the default judgment was

entered, Ellekay filed a “server’s return,” through an affidavit of Marilyn Stroud who

averred that she was the process server who attempted to effectuate service in this case.

She stated that the “addressee’s signature mark is filed of record in this cause,” but there

is no signature of record, nor is there an order of the trial court authorizing the amendment

of the return. The motion for new trial was overruled by operation of law without granting

leave to file the amended return.

II. LEGAL STANDARD

Strict compliance with the rules for service of citation must affirmatively appear on

the record in order for a default judgment to withstand direct attack. Primate Constr. Inc.

v. Silver, 884 S.W.2d 151, 152 (Tex. 1994). Failure to comply with the rules governing

service of citation constitutes error on the face of the record. Id. Even if a defendant

has received actual notice of the pending lawsuit, as in this case, a default judgment that

is rendered upon defective service will not withstand appellate scrutiny. Hubicki v.

3 Festina, 226 S.W.3d 405, 408 (Tex. 2007). The reason is clear: the only ground

supporting a default judgment is that the defendant has failed to comply with the

procedural requirements for answering a lawsuit. Id. If a defendant can show that the

plaintiff, in filing the lawsuit, also erred in failing to conform to the procedural rules, the

errors, in essence, offset one another. See id.; see also Landmark Organization, L.P. v.

Sunbelt Air Conditioning and Refrigeration Serv., Inc., No. 13-08-00676-CV, 2010 WL

2784032, at *3 (Tex. App.−Corpus Christi July 15, 2010, no pet.) (mem. op.). Virtually

any deviation from the statutory requisites for service of process will destroy a default

judgment. Carmona v. Bunzl Distrib., 76 S.W.3d 566, 568-69 (Tex. App.−Corpus Christi

2002, no pet.). The record must show that at the time the default is entered, proper

service of citation was made. Id. at 568.

III. ANALYSIS

Here, the pleadings were filed against a company named “Investment Ideas, Inc.”

The citation, however was issued to “Investments [sic] Ideas, Inc.”, but it should have

been issued to “Investment Ideas, Inc.”, by and through its registered agent for service.

Texas Rule of Civil Procedure 107 provides that where the citation is served by an

authorized person rather than by an officer, the return shall be verified. TEX. R. CIV. P.

107. The return in this case was served by one other than an officer and was not

verified. Rule 107 requires an acknowledgement of the instrument before a notary

public. Laas v. Williamson, 156 S.W.3d 854, 858 (Tex. App.–Beaumont 2005, pet.

denied). The record reflects that a verification was not filed until March 4, 2010, more

than a month and a half after the entry of judgment in an attempt to amend the order

4 post-judgment.

Rule 118 of the Texas Rules of Civil Procedure allows service of process or proof

of service to be amended. TEX. R. CIV. P. 118. In Higginbotham v. General Life &

Accident Insurance Company, the supreme court noted that the trial court has express

authority to allow amendment of the return of citation. 796 S.W.2d 695, 696 (Tex. 1990).

In Higginbotham, the record affirmatively showed service of citation, and the trial court

entered a formal order that service had been accomplished. The Higginbotham court

determined that the order signed by the trial court was “tantamount to an order amending

the return.” Id. Ultimately, the court limited its holding to cases where there is a record

showing strict compliance with a valid method of service and an order expressly

amending the return or an order that is tantamount to an order amending the return. Id.

at 697. At the motion for new trial hearing, counsel for Ellekay noted that the process

server had filed an affidavit in an attempt to amend service. Neither the affidavit nor the

amendment were offered at the hearing.

The return of citation here is unverified. Thus, it clearly does not comply with Rule

107. See TEX. R. CIV. P. 107. And, there was neither an order entered allowing an

amendment nor was there an order entered that was tantamount to an amendment. The

trial court took the case under advisement, and the motion for new trial was overruled by

operation of law. Because service of citation did not comply with the procedural rules,

the default judgment cannot stand under the strict scrutiny standard set forth in Primate.

See Primate Constr. Inc., 884 S.W.2d at 152. We sustain Investment Idea’s first issue.

5 IV. CONCLUSION

We reverse the judgment and remand to the trial court.

ROSE VELA Justice

Delivered and filed the 18th day of November, 2010.