BLS Development, LLC v. Manuel Lopez ( 2012 )

Opinion filed January 19, 2012
In The
Eleventh Court of Appeals
__________
No. 11-10-00015-CV
__________
BLS DEVELOPMENT, LLC, Appellant
V.
MANUEL LOPEZ, Appellee
On Appeal from the 250th District Court
Travis County, Texas
Trial Court Cause No. D-1-GN-09-001672
OPINION
This is a restricted appeal from a no-answer default judgment entered against BLS
Development, LLC. See TEX. R. APP. P. 30. Because we do not find error on the face of the
record, we affirm the default judgment.
Manuel Lopez sued BLS for failing to pay for labor and materials provided to BLS for a
construction project. Pursuant to the allegations in Lopez’s original petition, the district clerk
issued citation on BLS by serving its registered agent, Blake Byram, at 5910 Bold Ruler Way,
Austin, Texas 78746. The process server’s affidavit was filed with the trial court. In his
affidavit, he stated that he attempted to deliver the citation at the registered address but that the
property was vacant. He then attempted to deliver the citation to another address, but the
registered agent was ―reportedly out of the country for a few weeks.‖ The process server
continued to attempt delivery at the second address on three separate occasions within the same
week. He was unsuccessful and recommended service upon the secretary of state. Another
process server delivered duplicates of the citation and the original petition to the citations clerk
of the secretary of state, as stated on the return of service.
Lopez filed a motion for default judgment and attached certification from the secretary of
state that a copy of the citation and original petition was received on July 2, 2009, and forwarded
to BLS at the registered address on July 7, 2009. The process was returned to the secretary of
state ―bearing the notation Not Deliverable As Addressed, Unable To Forward.‖ Lopez also
filed a certificate of last known address, listing Byram as the registered agent of BLS and Bold
Ruler Way as Byram’s address. The trial court held a hearing and entered a default judgment
awarding Lopez actual damages of $29,000, prejudgment interest of $1,372.93, and attorney’s
fees of $3,500. This restricted appeal followed.
In its sole issue, BLS alleges that the trial court erred when it granted the default
judgment because the trial court did not have in personam jurisdiction over BLS due to defective
service. BLS contends there are multiple errors apparent on the face of the record that show
there was not strict compliance with the rules governing substitute service and return of process.
To prevail in a restricted appeal, an appellant must establish that it filed notice of the
restricted appeal within six months after the judgment was signed, that it was a party to the
underlying lawsuit but did not participate in the hearing that resulted in the judgment complained
of or timely file any postjudgment motions or requests for findings of fact and conclusions of
law, and that error is apparent on the face of the record. TEX. R. APP. P. 26.1(c), 30; Ins. Co. of
State of Pa. v. Lejeune, 297 S.W.3d 254, 255 (Tex. 2009); Alexander v. Lynda’s Boutique, 134
S.W.3d 845, 848 (Tex. 2004).
BLS filed notice of the restricted appeal on November 25, 2009, within six months of
September 1, 2009, the date that the trial court signed the judgment. In addition, BLS was a
party to the underlying lawsuit but did not participate in the default judgment hearing or file any
postjudgment motions. Thus, the only question here is whether there is error on the face of the
record.
When the adequacy of service of citation is challenged in a restricted appeal, there are no
presumptions in favor of valid issuance, service, or return of citation. Primate Constr., Inc. v.
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Silver, 884 S.W.2d 151, 152 (Tex. 1994). Furthermore, it is well established that strict
compliance with the rules for service of citation must affirmatively appear on the record if a
default judgment is to withstand an attack on appeal. Lejeune, 297 S.W.3d at 256; Primate
Constr., 884 S.W.2d at 152; Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990); Uvalde Country
Club v. Martin Linen Supply Co., 690 S.W.2d 884, 885 (Tex. 1985). Virtually any deviation
from the rules regarding proper service of process will result in the setting aside of a default
judgment. Mansell v. Ins. Co. of the W., 203 S.W.3d 499, 501 (Tex. App.—Houston [14th Dist.]
2006, no pet.).
BLS alleges seven errors on the face of the record: (1) Lopez did not plead the requisite
statutory requirements to allow service on BLS by service on the secretary of state; (2) Lopez
failed to file a motion requesting substituted service or obtain an order by the trial court
permitting substituted service; (3) the process server’s return of service contradicts the
allegations in plaintiff’s original petition; (4) the process server failed to exercise reasonable
diligence; (5) Lopez had personal knowledge of BLS’s registered agent’s residential address, yet
failed to notify the process server or the trial court of such address; (6) the return of service is
defective; and (7) because there was no valid service, the trial court did not have in personam
jurisdiction over BLS.
With regard to the first alleged error, BLS argues that Lopez did not plead the requisite
statutory requirements to allow service on BLS by service on the secretary of state. BLS also
argues that the process server’s return of service is defective and contradicts the allegations in
Lopez’s petition because the petition did not allege that BLS could be served through the
secretary of state. Substitute service on the secretary of state is governed by Section 5.251 of the
Texas Business Organizations Code. Section 5.251 provides: ―The secretary of state is an agent
of an entity for purposes of service of process, notice, or demand on the entity if . . . the
registered agent of the entity cannot with reasonable diligence be found at the registered office of
the entity.‖ TEX. BUS. ORGS. CODE ANN. § 5.251(1)(B) (West 2011).1 ―Before a filing entity
resorts to substituted service under the applicable statute . . . the record must show that the . . .
registered agent could not with reasonable diligence be found at the registered office.‖
Collective Interests, Inc. v. Reagan Nat’l Adver., No. 03-08-00283-CV, 2010 WL 2977458, *3
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Formerly TEX. BUS. CORP. ACT art. 2.11(B) (2005).
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(Tex. App.—Austin July 29, 2010, no pet.) (mem. op.) (discussing former TEX. BUS. CORP. ACT
art. 2.11(B)). ―Those allegations are not required to be included in the petition.‖ Id.
Here, Lopez alleged in his petition that ―Defendant, BLS Development, L.L.C., is a
Texas limited liability company, which may be served by delivering the citation, with a copy of
the petition attached, to its registered agent, Blake Byram, 5910 Bold Ruler Way, Austin, Travis
County, Texas 78746.‖ Lopez was not required to plead that the registered agent could not be
found through reasonable diligence or that substituted service could be made on BLS by service
on the secretary of state. As long as the record as a whole shows that the registered agent could
not with reasonable diligence be found at the registered office, Section 5.251(1)(B) permits
service on the secretary of state. See, e.g., Ingram Indus., Inc. v. U.S. Bolt Mfg., Inc., 121
S.W.3d 31, 34 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (―The record as a whole . . . may
be considered to determine whether the reasonable-diligence requirement is satisfied.‖) (citing
G.F.S. Ventures, Inc. v. Harris, 934 S.W.2d 813, 816 (Tex. App.—Houston [1st Dist.] 1996, no
writ)); Maddison Dual Fuels, Inc. v. S. Union Co., 944 S.W.2d 735, 738 (Tex. App.—Corpus
Christi 1997, no writ) (―[W]e may look to the entire record for evidence of diligence.‖).
BLS argues that the process server failed to exercise reasonable diligence because he did
not inquire as to when the registered agent would return from being out of the country or attempt
to serve the agent at a third address where Lopez allegedly knew BLS could be found. However,
the process server was not required to attempt to find the registered agent at any other address
than the address for the registered office. See Adver. Displays, Inc. v. Cote, 732 S.W.2d 360, 363
(Tex. App.—Houston [14th Dist.] 1987, no writ) (knowledge of an address other than that of
registered office creates no presumption that appellant was amenable to service at that address)
(citing TXXN, Inc. v. D/FW Steel Co., 632 S.W.2d 706, 708 (Tex. App.—Fort Worth 1982, no
writ)). Section 5.251 provides that substituted service on the secretary of state is permitted if
―the registered agent of the entity cannot with reasonable diligence be found at the registered
office of the entity.‖ Section 5.251(1)(B) (emphasis added). The statute does not require that an
attempt be made to find the registered agent at any other place than at the entity’s registered
office. See id. Therefore, the process server’s attempts to find the registered agent at the second
address, or at any other address, were unnecessary and are irrelevant to our determination of
reasonable diligence. The only relevant attempt of service, for purposes of determining
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reasonable diligence, is the process server’s sole attempt at service on the registered agent at the
registered office.
Here, the process server stated in his affidavit that he attempted service at Bold Ruler
Way, the registered agent’s address, but that the property was vacant. Because the property was
vacant, any other attempts at the registered address would have been futile. See G.F.S. Ventures,
934 S.W.2d at 816–17 (holding that, because the actual residents of the registered agent’s
address had never heard of the registered agent, any further attempts to serve the registered agent
would be futile). This one attempt is sufficient to show that the registered agent could not be
found with reasonable diligence at the registered office. See Liberty Label Co. v. Morgan
Adhesives Co., No. 04-04-00279-CV, 2005 WL 1475332, at *1 (Tex. App.—San Antonio
June 22, 2005, no pet.) (mem. op.) (holding that the process server’s one attempt to serve
registered agent at vacant address constituted reasonable diligence); Ingram Indus., 121 S.W.3d
at 34 (holding one attempt to serve entity constituted reasonable diligence when the registered
agent no longer occupied the registered address and the people occupying the address had been
living there for ten years).
In addition, BLS alleges that Lopez failed to file a motion requesting substituted service
or obtain an order by the trial court permitting substituted service under Rules 106(b) and 107 of
the Texas Rules of Civil Procedure. BLS cites to National Multiple Sclerosis Society—North
Texas Chapter v. Rice, 29 S.W.3d 174 (Tex. App.—Eastland 2000, no pet.), to support its
contention that Lopez was required to file a motion for substituted service. In National Multiple
Sclerosis Society, we said that, in those cases governed by Rule 106, the record must contain a
motion, affidavit, and order complying with the rules in order to withstand a challenge to the
default judgment. 29 S.W.3d at 177–78. However, we did not reach the Rule 106(b) question
because we found that there was no evidence of reasonable diligence in the record to support
service on the secretary of state under former TEX. REV. CIV. STAT. art. 1396-2.07 (1997). Id.
Here, the record does show reasonable diligence, and we must decide whether Rules 106(b) and
107 apply when a plaintiff seeks substitute service on an entity through the secretary of state as
in this case.
Substituted service through the secretary of state is governed by Section 5.251(1)(B), not
Rules 106(b) and 107. Section 5.251 is an independent statute that provides for substituted
service on the secretary of state when reasonable diligence is shown. See Houston’s Wild West,
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Inc. v. Salinas, 690 S.W.2d 30, 32 (Tex. App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.)
(holding former TEX. BUS. CORP. ACT art. 2.11(B) and Rule 106 are not interdependent methods
of service; Article 2.11 is an independent statute). Therefore, Lopez was not required to file a
Rule 106(b) motion requesting substituted service, nor was the process server required to
effectuate a return in compliance with a court order permitting substitute service under Rule 107.
See id.
BLS also argues that the trial court erred when it granted the default judgment because
the record establishes that the certificate of last known address filed by Lopez in support of its
default judgment was false. Specifically, BLS claims that Lopez had personal knowledge of
BLS’s registered agent’s residential address, yet failed to notify the process server or the trial
court of such address. Even if this is true, BLS concedes that this information is not in the
record, but could be shown on remand. However, error must be apparent on the face of the
record in order to prevail in a restricted appeal. Alexander, 134 S.W.3d at 848. There is nothing
in the clerk’s record that supports this allegation. Thus, the alleged error is not apparent on the
face of the record.
We do not find any of BLS’s seven errors to be present on the face of the record. Lopez
satisfied the requirements under Section 5.251(1)(B) for substituted service on the secretary of
state. In addition, the certificate from the secretary of state conclusively establishes that process
was served. See Campus Invs., Inc. v. Cullever, 144 S.W.3d 464, 466 (Tex. 2004). Therefore,
the trial court did have in personam jurisdiction over BLS. The fact that BLS did not actually
receive service ―was the result of [BLS]’s own failure to comply with the statutory requirements
which were designed to assure it of notice of pending suits, not of any failure on the part of
[Lopez].‖ TXXN, 632 S.W.2d at 709. We overrule BLS’s sole issue.
The judgment of the trial court is affirmed.
JIM R. WRIGHT
CHIEF JUSTICE
January 19, 2012
Panel consists of: Wright, C.J.,
McCall, J., and Kalenak, J.
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