Lawton Candle, LLC v. BG Personnel, LP ( 2024 )

VACATE and REMAND and Opinion Filed May 13, 2024
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-23-00449-CV
LAWTON CANDLE, LLC, Appellant
V.
BG PERSONNEL, LP, Appellee
On Appeal from the County Court at Law No. 4
Collin County, Texas
Trial Court Cause No. 004-02893-2022
OPINION
Before Justices Garcia, Breedlove, and Kennedy
Opinion by Justice Breedlove
This is a restricted appeal of a default judgment. Appellant Lawton Candle,
LLC, argues that the trial court erred in granting default judgment because appellee
BG Personnel, LP, failed to properly effect service of process. We agree. BG
Personnel’s service on Lawton Candle’s Oklahoma registered agent was improper
because no authority under Texas law expressly allows process to be validly served
on a foreign limited liability company’s registered agent who is not located in the
State of Texas, and Texas law requires strict compliance with the rules governing
service of citation. Accordingly, we vacate the trial court’s judgment and remand to
the trial court. See, e.g., Wachovia Bank of Delaware, N.A. v. Gilliam, 215 S.W.3d
848, 851 (Tex. 2007) (vacating default judgment & remanding after concluding there
was error on the face of the record related to service of process); Lytle v.
Cunningham, 261 S.W.3d 837, 841–42 (Tex. App.—Dallas 2008, no pet.)
(concluding attempted service of process on a particular party was invalid and of no
effect and the default judgment as to that party was void; court vacated final
judgment by default and remanded cause for further proceedings).
BACKGROUND
The facts underlying this case are well known to the parties—therefore, we
recite only those facts that are relevant to the resolution of the issue of service of
process. See TEX. R. APP. P. 47.1. BG Personnel filed suit against Lawton Candle in
November 2022 and filed an amended petition in January 2023. BG Personnel
requested issuance of a citation to serve Lawton Candle “by serving its Registered
Agent, United State [sic] Corporation Agents, Inc., at 624 Denver Avenue, Tulsa,
Oklahoma 74119.” An affidavit was filed stating the petition was served on the
Oklahoma registered agent.
Lawton Candle is an Oklahoma limited liability company; it is not registered
to do business in Texas, nor does it maintain a registered agent in Texas. Its
operations are based entirely in Oklahoma.
BG Personnel moved for default judgment when Lawton Candle failed to
answer after its Oklahoma registered agent was served. The County Court at Law
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No. 4 for Collin County, Texas, granted BG Personnel’s motion and entered default
judgment on February 6, 2023, based on Lawton Candle’s failure to answer or
appear. Three months later, Lawton Candle noticed the present restricted appeal.
STANDARD OF REVIEW
To prevail on its restricted appeal, Lawton Candle must establish: (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. Greystar, LLC v. Adams, 426 S.W.3d 861, 866 (Tex. App.—Dallas
2014, no pet.) (internal citations omitted). For purposes of a restricted appeal, the
record consists of all papers filed in the appeal, including the reporter’s record. Id.“In a restricted appeal, defective service of process constitutes error apparent
on the face of the record.” Dolly v. Aethos Commc’ns Sys., Inc., 10 S.W.3d 384, 388
(Tex. App.—Dallas 2000, no pet.). Whether service strictly complied with the rules
is a question of law 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.); Daigrepont v. Preuss, No. 05-18-01271-CV, 2019 WL
2150916, at *3 (Tex. App.—Dallas May 17, 2019, no pet.) (mem. op.).
There is no presumption in favor of proper issuance, service, and return of
citation. Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994) (per
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curiam); Greystar, 426 S.W.3d at 866. As the Texas Supreme Court has observed,
“we rigidly enforce rules governing service when a default judgment is entered
because the only ground supporting the judgment is that the defendant has failed to
respond to the action in conformity with the applicable procedure for doing so.”
Hubicki v. Festina, 226 S.W.3d 405, 408 (Tex. 2007) (per curiam). If the record fails
to affirmatively show strict compliance with the rules of civil procedure governing
issuance, service, and return of citation, there is error apparent on the face of the
record, and the attempted service of process is invalid and of no effect. Greystar,
426 S.W.3d at 866. When the attempted service of process is invalid, the trial court
acquires no personal jurisdiction over the defendant, and the default judgment is
void. Id.DISCUSSION
The only element of a restricted appeal that is in question is whether Lawton
Candle has shown error on the face of the record because of defective service and
return of citation. Lawton Candle argues that error is present on the face of the record
because BG Personnel failed to serve either (1) one of Lawton Candle’s managers
or members or (2) the Texas Secretary of State in strict compliance with the Texas
Rules of Civil Procedure and Texas Business Organizations Code. BG Personnel
argues that, although Texas Business Organizations Code § 5.251 provides that
service on the Texas Secretary of State is permissible for nonresident entities who
do not maintain a registered agent in Texas, service is not mandated upon the
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Secretary of State. BG Personnel further argues that Texas Business Organizations
Code § 5.256 does not preclude any other means of service upon a foreign entity,
nor does the Texas Long Arm Statute, Texas Civil Practice and Remedies Code
§ 17.044(a).
We begin with the well-settled rule that for a trial court to obtain jurisdiction
over a defendant foreign entity, the record must establish strict compliance with the
proper method of service. Greystar, 426 S.W.3d at 866. A business entity is not a
person capable of accepting process on its own behalf and therefore must be served
through an agent. Prado v. Nichols, No. 05-20-01092-CV, 2022 WL 574845, at *2
(Tex. App.—Dallas Feb. 25, 2022, no pet.) (mem. op.) (citing Paramount Credit,
Inc. v. Montgomery, 420 S.W.3d 226, 230 (Tex. App.—Houston [1st Dist.] 2013, no
pet.)). Service may be made on the entity’s registered agent, president, or any vice
president. TEX. BUS. ORGS. CODE ANN. §§ 5.201(b), 5.255(1); see also id.
§ 5.201(b)(1) (providing that a registered agent is an agent who is authorized to
receive service for the entity). For the purpose of service of process, each manager
of a manager-managed domestic limited liability company and each member of a
member-managed domestic limited liability company is an agent of that limited
liability company. Id. § 5.255(3).
Section 2.256 expands proper service on a foreign limited liability company
to include (in addition to those individuals discussed above) “other means of service
of process, notice or demand . . . as provided by law.” Id. § 2.256. Section 5.201
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provides that each foreign filing entity shall “designate and continuously maintain
in this state” a registered agent, which is “an agent of the entity on whom may be
served any process, notice or demand required or permitted by law to be served on
the entity.” Id. § 5.201. The registered agent, however, cannot be a resident of a
different state because the statute expressly states that, for the agent to be a proper
individual for service, it must be an individual who (i) is a resident of this state; and
(ii) has consented in a written or electronic form developed by the Texas Secretary
of State to serve as the registered agent of the entity. Id.
When a foreign entity fails to maintain a registered agent in the state (as
required by § 5.201), the only other means for service on that entity expressly stated
in the Business Organizations Code is through the Texas Secretary of State. See id.
§ 5.251. “The secretary of state is an agent of an entity for purposes of service of
process, notice, or demand on the entity if: (1) the entity is a foreign entity or a
foreign filing entity: and (A) the entity fails to appoint or does not maintain a
registered agent in this state . . . .” Id.
BG Personnel’s argument is fatally flawed because it is based on the premise
that all methods of service of process are allowable if not otherwise prohibited, but
the reverse is true under Texas law. Greystar, 426 S.W.3d at 866. It is not sufficient
that a method of service not be expressly excluded by statute for a method of service
to be valid—instead, our laws require that a method of service of process be
expressly permitted to be valid. Id. BG Personnel has not identified any provision in
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the Business Organizations Code or other authority, and we are aware of none, that
expressly permits a foreign entity to designate a registered agent who is not located
in the State of Texas as its agent for purposes of service of process. As our Court has
observed:
Although the strict compliance requirements sometimes lead the courts
to rather weird conclusions, preventing us from making even the most
obvious and rational inferences, we believe good public policy favors
the standard. The end effect of our application of the strict compliance
standard is an increased opportunity for trial on the merits. This policy
justifies what may at first blush seem a hyper-technical rule.
Pro-Fire & Sprinkler, L.L.C. v. The L. Co., 661 S.W.3d 156, 164 (Tex. App.—Dallas
2021, no pet.).
Because the record does not reflect service on Lawton Candle via one of the
statutorily permissible agents for service of process, service was defective. Proper
service not being shown, there is error on the face of the record. See Primate Constr.,
884 S.W.2d at 153. Therefore, the trial court erred in granting BG Personnel’s
motion for default judgment.
CONCLUSION
We vacate the trial court’s judgment and remand the case to the trial court for
further proceedings consistent with this opinion.
/Maricela Breedlove/
MARICELA BREEDLOVE
230449F.P05 JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
LAWTON CANDLE, LLC, On Appeal from the County Court at
Appellant Law No. 4, Collin County, Texas
Trial Court Cause No. 004-02893-
No. 05-23-00449-CV V. 2022.
Opinion delivered by Justice
BG PERSONNEL, LP, Appellee Breedlove. Justices Garcia and
Kennedy participating.
In accordance with this Court’s opinion of this date, the judgment of the trial
court is VACATED and this cause is REMANDED to the trial court for further
proceedings consistent with this opinion.
It is ORDERED that appellant LAWTON CANDLE, LLC recover its costs
of this appeal from appellee BG PERSONNEL, LP.
Judgment entered May 13, 2024
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