Texas Underground v. Southwestern Bell Telephone

Opinion issued August 3, 2021
In The
Court of Appeals
For The
First District of Texas
———————————
NO. 01-19-00814-CV
———————————
TEXAS UNDERGROUND UTILITIES, INC., Appellant
V.
SOUTHWESTERN BELL TELEPHONE COMPANY, Appellee
On Appeal from the County Civil Court at Law No. 3
Harris County, Texas
Trial Court Case No. 1129099
MEMORANDUM OPINION
Appellant, Texas Underground Utilities, Inc. (“Texas Underground”),
challenges the trial court’s no-answer default judgment in favor of appellee,
Southwestern Bell Telephone Company (“Southwestern Bell”), in Southwestern
Bell’s suit against Texas Underground for negligence and strict liability. In five
issues, Texas Underground contends that the trial court erred in denying its motion
for new trial, the manner in which service was effected violated its due process rights
and public policy, the pleadings were insufficient to support the trial court’s default
judgment, and the evidence is legally insufficient to support the trial court’s damages
award.
We affirm.
Background
In its original petition, Southwestern Bell alleged that it is a “telephone
corporation and a public utility” under Texas law. In keeping with its corporate
mission, Southwestern Bell “had three copper communications cables”—
components of its telecommunications system—“buried below the surface of the
right-of-way of Dairy View Lane approximately 92 feet north of Bissonnet Street in
Houston, Harris County, Texas.” In September 2017, Texas Underground “bored or
excavated” at that location, “and when it did, it struck and damaged [Southwestern
Bell’s] cables.”
Southwestern Bell asserted that Texas Underground violated the Underground
Facility Damage Prevention and Safety Act1 which requires “a person who intends
to excavate” to “notify a notification center not earlier than the 14th day before the
1
See TEX. UTIL. CODE ANN. §§ 251.001–.203.
2
date the excavation is to begin or later than the 48th hour before the time the
excavation is to begin, excluding Saturdays, Sundays, and legal holidays.”2 It
explained that the “purpose of the notice is to allow [an] underground utility operator
an opportunity to mark the approximate location of its underground facilities in
advance of the excavation.”3
According to Southwestern Bell, Texas Underground failed to provide the
statutorily required notice and, as a result, was liable for the damages it caused
during its excavation. Southwestern Bell brought claims against Texas Underground
for negligence and strict liability. And it asserted that it “suffered actual,
incidental[,] and consequential damages[,] including the costs to replace, repair
and/or restore th[e] portion of its telecommunications system that was damaged,”
which amounted to “at least $20,486.11” but no more than “the jurisdictional limits
of the [trial] [c]ourt.” With the petition, Southwestern Bell propounded
interrogatories, requests for admission, requests for production, and requests for
disclosure.
2
See id. § 251.151(a); see also id. § 251.101(a) (notification center receives
notification of intent to excavate and disseminates that information to “operators [of
underground facilities] that may be affected by the excavation”).
3
See id. § 251.002(11), (13) (defining “[o]perator” and “[u]nderground facility”
(internal quotations omitted)).
3
In its petition, Southwestern Bell identified Texas Underground as a Texas
corporation that could “be served by serving its registered agent, Elizabeth Lugo, at
its registered office at 5712 Val Verde, Suite 250, Houston, Texas 77057” (the “Val
Verde address”). On March 6, 2019, the county clerk for Harris County issued a
citation of service for Texas Underground through Lugo at the Val Verde address.
A Harris County deputy constable attempted to serve the citation at that address on
March 29, 2019. But the officer’s return of citation filed April 15, 2019 with the
clerk of the court, contains handwritten notes indicating that the Val Verde address
was a “bad” address and explaining that there was “no such name or suite [number]
on [the] door” and that the post office box showed that the address belonged to
“ACTA/Pannell.”
The deputy constable contacted Southwestern Bell’s counsel and was
instructed to “transfer” the citation to Texas Underground’s business address, 8515
Cambridge Street, Houston, Texas 77054 (the “Cambridge Street address”). The
deputy constable attempted to serve Texas Underground through Lugo at the
Cambridge Street address during regular business hours on April 3, 2019, April 4,
2019, April 5, 2019, April 8, 2019, and April 10, 2019, leaving a card each time.
None of these attempts was successful. In an affidavit, the deputy constable stated
that “[i]t [wa]s impractical to procure service of [c]itation on [Texas
Underground] . . . because he, she, they absent[ed] or secret[ed] himself, herself, or
4
otherwise evade[d] such service each time [the deputy constable] . . . attempted to
effect such service on him, or her, in th[e] cause.” And the deputy constable added
that “Lugo d[id] work at th[e] [Cambridge Street address] but was not stated [sic] by
the receptionist.”
On April 16, 2019, Southwestern Bell amended its petition4 and sought to
serve citation on the Secretary of State.5 The return of citation executed by a deputy
constable in the Travis County Constable’s Office, Precinct Five, and filed with the
clerk of the court, states that on May 8, 2019, the deputy constable delivered
“duplicate true copies of the citation together with accompanying duplicate true
copies” of Southwestern Bell’s first amended petition and discovery requests to the
Secretary of State’s designated agent for service. The Secretary of State issued a
Certificate of Fact certifying that Texas Underground is an existing, for-profit
domestic entity and that the Secretary of State’s records show Lugo as the entity’s
designated agent for service and the Val Verde address as the entity’s designated
address for service. And in a written certification, Deputy Secretary of State Jose
Esparza certified that on May 10, 2019 “a copy of the Citation and Plaintiff’s First
Amended Petition and Request for Disclosures was forwarded” to Lugo at the Val
4
Southwestern Bell’s amended petition contained the same factual allegations and
claims as its original petition.
5
See TEX. BUS. ORGS. CODE ANN. § 5.251(1)(B).
5
Verde address by certified mail, return receipt requested, and was returned to the
Secretary of State’s office on June 3, 2019 “[b]earing the notation Return to Sender,
Unclaimed, Unable to Forward.”
After Texas Underground did not answer Southwestern Bell’s suit by June 3,
2019, or otherwise appear, Southwestern Bell moved for a default judgment.
Southwestern Bell attached to its motion the affidavit of Paul Hartwell, a Senior Risk
Specialist for Southwestern Bell. Hartwell attested to Southwestern Bell’s business
records documenting “the labor and materials used and the expenses incurred to
repair the telecommunications cables that were damaged in the right-of-way of Dairy
View Lane north of Bissonnet Street on or about September 7, 2017.” Those
business records accompanied Hartwell’s affidavit. Hartwell also stated in his
affidavit that “as part of [his] job, [he] ha[d] learned in general what [wa]s involved
in the repair of telecommunications cables and related facilities” and he had “become
familiar with the costs and expense of the labor and material necessary to repair
communications facilities.” And he averred that “[t]he claim against [Texas
Underground] for repair costs in the amount of $20,486.11 [was] just, reasonable
and was incurred by [Southwestern Bell].” After Southwestern Bell supplemented
its motion with a copy of the return from the Secretary of State, the trial court
rendered a default judgment in favor of Southwestern Bell, awarding it $20,486.11
in damages, plus pre-judgment interest and costs.
6
Texas Underground first appeared in the case and moved for new trial on
September 5, 2019. In its motion, Texas Underground asserted that Southwestern
Bell had failed to provide it with proper notice of suit because Southwestern Bell
“knew or should have known” that the registered agent’s address on file with the
Secretary of State “was not the correct address on which to serve [Texas
Underground]” and was not the address of Texas Underground’s “home office.”
According to Texas Underground, Southwestern Bell “knew that the Val Verde
address was no good,” and the Deputy Secretary of State’s certification showed that
the citation, first amended petition, and discovery requests were sent to that address
even though Southwestern Bell knew the correct address. Thus, Texas Underground
asserted that it did not receive notice of Southwestern Bell’s suit. Texas
Underground also summarily asserted that the “Craddock[6] [f]actors [were]
satisfied.”
In its response to the motion for new trial, Southwestern Bell asserted that the
record showed it exercised reasonable diligence in attempting to serve Texas
Underground and because Texas Underground’s registered agent could not be found
at its registered office, Southwestern Bell properly served Texas Underground
through the Secretary of State.7 The Secretary of State’s Certificate of Fact filed
6
See Craddock v. Sunshine Bus Lines Inc., 133 S.W.2d 124, 126 (Tex. 1939).
7
See TEX. BUS. ORGS. CODE ANN. § 5.251(1)(B).
7
with the clerk of the court on June 18, 2019 showed that Texas Underground’s
registered agent was Lugo and that the address of Texas Underground’s registered
office was the Val Verde address. Thus, Southwestern Bell asserted that Texas
Underground’s failure to receive notice of the suit was due solely to its failure to
comply with its duty to provide the Secretary of State with current and accurate
information on the whereabouts of its registered office and the identity of its
registered agent.8 Because Texas Underground had not established that “it was never
served or that service was improper,” Southwestern Bell also argued that Texas
Underground was required to satisfy the requirements of Craddock v. Sunshine Bus
Lines Inc., 133 S.W.2d 124 (Tex. 1939), which it had failed to do.
After a hearing,9 the trial court denied Texas Underground’s motion for new
trial.
Motion for New Trial
In its first issue, Texas Underground argues that the trial court erred in denying
its motion for new trial because it “satisfied the requirements of” Craddock and the
trial court should have vacated the default judgment against it.
8
See id. §§ 5.201, 5.202.
9
No evidence was admitted at the hearing on Texas Underground’s motion for new
trial.
8
We review the trial court’s denial of a motion for new trial for an abuse of
discretion. See Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009).
In other words, the court’s ruling on the motion for new trial will not be disturbed
on appeal absent a showing of an abuse of discretion. Strackbein v. Prewitt, 671
S.W.2d 37, 38 (Tex. 1984). A trial court abuses its discretion if its decision is
arbitrary, unreasonable, and without reference to guiding rules and principles. See
Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex. 1997); Imkie v. Methodist Hosp.,
326 S.W.3d 339, 344 (Tex. App.—Houston [1st Dist.] 2010, no pet.). When as here,
no findings of fact and conclusions of law are filed, the denial of a motion for new
trial must be upheld on any legal theory supported by the evidence. See Strackbein,
671 S.W.2d at 38.
In Craddock, the Texas Supreme Court set forth three requirements that a
defaulting party must satisfy to set aside a default judgment and obtain a new trial:
(1) the defaulting party’s failure to file an answer before judgment was not
intentional or the result of conscious indifference but was a mistake or accident;
(2) the defaulting party has a meritorious defense; and (3) a new trial will not result
in delay or prejudice to the non-defaulting party. 133 S.W.2d at 126. To
successfully challenge a default judgment, the defaulting party must allege the three
Craddock requirements and support them with sworn proof. Ivy v. Carrell, 407
S.W.2d 212, 214 (Tex. 1966) (noting party challenging dismissal bears burden of
9
establishing entitlement to relief); Polignone v. Bulldog Chems., LLC, No.
01-16-00633-CV, 2018 WL 4128002, at *4 (Tex. App.—Houston [1st Dist.] Aug.
30, 2018, no pet.) (mem. op.). The defaulting party must either (1) allege facts and
attach affidavits to a verified motion to set aside the default judgment or motion for
new trial that meet the three Craddock requirements or (2) present evidence at the
hearing on its motion that meets those requirements. Polignone, 2018 WL 4128002,
at *4. A trial court abuses its discretion in denying a new trial when the Craddock
requirements are satisfied. Dolgencorp, 288 S.W.3d at 926; Bank One, Tex., N.A. v.
Moody, 830 S.W.2d 81, 85 (Tex. 1992); Polignone, 2018 WL 4128002, at *4.
To determine whether the trial court erred in not setting aside the default
judgment against a defaulting party, we first consider whether its failure to answer
was not intentional or the result of conscious indifference, but due to a mistake or an
accident. See Polignone, 2018 WL 4128002, at *4. “Conscious indifference” means
more than mere negligence. Smith v. Babcock & Wilcox Constr. Co., 913 S.W.2d
467, 468 (Tex. 1995). “A failure to appear is not intentional or due to conscious
indifference within the meaning of the rule merely because it is deliberate; it must
also be without adequate justification.” Id.; see Mahand v. Delaney, 60 S.W.3d 371,
374 (Tex. App.—Houston [1st Dist.] 2001, no pet.); Sharpe v. Kilcoyne, 962 S.W.2d
697, 701 (Tex. App.—Fort Worth 1998, no pet.); see also Milestone Operating, Inc.
v. ExxonMobil Corp., 388 S.W.3d 307, 310 (Tex. 2012) (“Consciously indifferent
10
conduct occurs when the defendant knew it was sued but did not care.” (internal
quotations omitted)). The defaulting party must offer some excuse for its failure to
answer, which need not necessarily be a good excuse. See Sutherland v. Spencer,
376 S.W.3d 752, 755 (Tex. 2012); Mahand, 60 S.W.3d at 374 (“Even a slight excuse
may justify a new trial.”); State v. Sledge, 982 S.W.2d 911, 914 (Tex. App.—
Houston [14th Dist.] 1998, no pet.).
In its motion for new trial, Texas Underground failed to articulate any excuse
for failing to timely inform the Secretary of State of the change of address for its
registered office for service. The Texas Business Corporation Act requires that all
corporations shall “designate and continuously maintain” a registered office and a
registered agent. TEX. BUS. ORGS. CODE ANN. § 5.201. A corporation “may change
its registered office, its registered agent, or both by filing a statement of the
change . . . .” Id. § 5.202. These provisions impose an affirmative duty on the
corporation to ensure that the Secretary of State has current and accurate information
on the whereabouts of the corporation’s registered office and the identity of its
registered agent. See Catalyst Partners, Inc. v. BASF Corp., No. 02-10-00377-CV,
2011 WL 2306836, at *1 n.2 (Tex. App.—Fort Worth June 9, 2011, no pet.) (mem.
op.) (explaining, although defendant complained plaintiff asked Secretary of State
to serve defendant at address of defendant’s registered agent when plaintiff knew
registered agent’s address “was not good,” defendant had “statutory duty to update
11
its address for its registered agent”); NETCO, Inc. v. Montemayor, 352 S.W.3d 733,
740–41 (Tex. App.—Houston [1st Dist.] 2011, no pet.); Global Servs., Inc. v. G & W
Leasing Co., No. 01-94-01234-CV, 1996 WL 608904, at *7 (Tex. App.—Houston
[1st Dist.] Oct. 24, 1996, writ denied) (not designated for publication).
Texas Underground argues that the trial court erred in denying its motion for
new trial because it “satisfied” “the first element of the Craddock test” and Texas
Underground “did not receive notice of the trial setting.” Assuming, without
deciding, that Texas Underground’s failure to timely notify the Secretary of State of
its registered office’s change in address was not intentional or the result of conscious
indifference,10 we consider whether Texas Underground received actual or
constructive notice of the hearing on Southwestern Bell’s motion for default
judgment. If Texas Underground did not, due process relieves it from the burden of
proving the second and third Craddock requirements. See Mathis v. Lockwood, 166
S.W.3d 743, 744 (Tex. 2005) (holding lack of notice renders analysis under second
Craddock requirement unnecessary and acknowledging, without deciding, that
10
See Craddock, 133 S.W.2d at 126 (first requirement defaulting party must satisfy to
set aside default judgment and obtain new trial is that defaulting party’s failure to
file answer before judgment was not intentional or result of conscious indifference
but was mistake or accident); Polignone v. Bulldog Chems., LLC, No.
01-16-00633-CV, 2018 WL 4128002, at *4 (Tex. App.—Houston [1st Dist.] Aug.
30, 2018, no pet.) (mem. op.) (“[T]o determine whether the trial court erred in not
setting aside the default judgment against [defendants], we first consider whether
their failure to answer was not intentional or the result of conscious indifference,
but due to a mistake or an accident.”).
12
intermediate appellate courts have also held that lack of notice renders analysis under
third Craddock requirement unnecessary); Lopez v. Lopez, 757 S.W.2d 721, 723
(Tex. 1988) (defendant without actual or constructive notice of trial need not show
meritorious defense to be entitled to new trial); see also Maxx Builders, LLC v. Story,
No. 01-15-00850-CV, 2016 WL 3544495, at *3 (Tex. App.—Houston [1st Dist.]
June 28, 2016, no pet.) (mem. op.); Mahand, 60 S.W.3d at 375 (extending Lopez in
lack-of-notice cases to also dispense with third Craddock requirement of showing
motion for new trial would not cause delay or injury).
Texas Underground attached to its motion for new trial the affidavit of Lugo,
in which she states that she did not receive actual notice of the hearing on
Southwestern Bell’s motion for default judgment. Because this statement is
undisputed, we confine our inquiry to whether Texas Underground satisfied its
burden of establishing that it lacked constructive notice of the default-judgment
hearing.
Southwestern Bell attempted to serve Texas Underground at the Val Verde
address on March 29, 2019, but its attempt was unsuccessful, and Southwestern Bell
discovered that the Val Verde address was a “bad” address. In April 2018,
Southwestern Bell attempted to serve Texas Underground at the Cambridge Street
address—its business address—during regular business hours on five different days
but was unsuccessful every time. In an affidavit, the deputy constable who attempted
13
to serve the citation detailed those attempts and stated that it was “impractical to
procure service” on Texas Underground because Lugo, Texas Underground’s
registered agent, had “absent[ed] or secret[ed]” herself “or otherwise evade[d] such
service.”
Texas Underground does not contest that Southwestern Bell’s attempts at
service were reasonably diligent. Because of Southwestern Bell’s diligent but
unsuccessful attempts to serve Texas Underground, Southwestern Bell was entitled
to serve the Secretary of State as Texas Underground’s substitute agent. See TEX.
BUS. ORGS. CODE ANN. § 5.251(1)(B) (if “registered agent of the entity cannot with
reasonable diligence be found at the registered office of the entity,” Secretary of
State becomes agent for service on corporation). Service on the Secretary of State
is accomplished by delivering duplicate copies of the “process, notice, or demand”
and any required fee. See id. § 5.252. On receipt, the Secretary of State forwards
one copy of the “process, notice, or demand” to the registered office of the
corporation’s most recent address on file with the Secretary by certified mail, return
receipt requested. See id. § 5.253. The Secretary of State’s certificate is conclusive
evidence that the process was properly served and filing the certificate with the clerk
of the court disposes of the requirement in Texas Rules of Civil Procedure 107 and
239 that the citation and return be filed. See Campus Invs. v. Cullever, 144 S.W.3d
464, 466 (Tex. 2004).
14
Texas Underground maintains that Southwestern Bell should have informed
the Secretary of State of Texas Underground’s change of business address. But
Southwestern Bell had no duty to update Texas Underground’s address; the Texas
Business Organizations Code imposes that duty solely on Texas Underground. See
generally TEX. BUS. ORGS. CODE ANN. §§ 5.202–.204; see also Catalyst Partners,
2011 WL 2306836, at *1 n.2; NETCO, Inc., 352 S.W.3d at 740–41; Global Servs.,
1996 WL 608904, at *7. The record shows that Southwestern Bell was diligent but
unsuccessful in serving Texas Underground at its registered office and it strictly
complied with the statutory service requirements for substituted service on the
Secretary of State. Texas Underground thus received constructive notice.
Because Texas Underground had notice of the hearing on Southwestern Bell’s
motion for default judgment, it would be entitled to a new trial only if it showed the
trial court that it has a meritorious defense and that a new trial would not result in
delay or prejudice to Southwestern Bell. See Craddock, 133 S.W.2d at 126. During
the hearing on the motion for new trial, Texas Underground’s counsel asserted that
that one of Southwestern Bell’s subcontractors caused the damage to its cables and
should have been designated as a responsible third party. See id. (second
requirement defaulting party must satisfy to set aside default judgment and obtain
new trial is that defaulting party has meritorious defense). On appeal, Texas
Underground maintains that the possible existence of a responsible third party shows
15
that it has a meritorious defense. But arguments of counsel are not evidence. E.g.,
Wheelbarger v. Landing Council of Co-Owners, 471 S.W.3d 875, 892 (Tex. App.—
Houston [1st Dist.] 2015, pet. denied); Tex. Dep’t of Pub. Safety v. Mendoza, 952
S.W.2d 560, 564 (Tex. App.—San Antonio 1997, no writ); McCain v. NME Hosps.,
Inc., 856 S.W.2d 751, 757 (Tex. App.—Dallas 1993, no writ). And Texas
Underground cites no authority in support of its position. Texas Rule of Appellate
Procedure 38.1(i) requires that an appellant’s brief “contain a clear and concise
argument for the contentions made, with appropriate citations to authorities and to
the record.” TEX. R. APP. P. 38.1(i). “This is not done by merely uttering brief
conclusory statements, unsupported by legal citations.” Tesoro Petroleum Corp. v.
Nabors Drilling USA, Inc., 106 S.W.3d 118, 128 (Tex. App.—Houston [1st Dist.]
2002, pet. denied); see also Barham v. Turner Constr. Co. of Tex., 803 S.W.2d 731,
740 (Tex. App.—Dallas 1990, writ denied) (appellant bears burden of discussing his
assertions of error). A failure to provide substantive analysis of an issue or cite
appropriate authority waives a complaint on appeal. Marin Real Estate Partners,
L.P. v. Vogt, 373 S.W.3d 57, 75 (Tex. App.—San Antonio 2011, no pet.); Huey v.
Huey, 200 S.W.3d 851, 854 (Tex. App.—Dallas 2006, no pet.); Cervantes-Peterson
v. Tex. Dep’t of Family & Protective Servs., 221 S.W.3d 244, 255 (Tex. App.—
Houston [1st Dist.] 2006, no pet.).
16
Because Texas Underground did not present any evidence that a third party is
responsible for Southwestern Bell’s damages and failed to adequately brief this
argument on appeal, it has not shown that it has a meritorious defense, as required
under Craddock. See Craddock, 133 S.W.2d at 126. Thus, we hold that the trial
court did not err in denying Texas Underground’s motion for new trial.
We overrule Texas Underground’s first issue.
Due Process and Public Policy
In its second issue, Texas Underground argues that the trial court erred in
rendering a default judgment against it because it was deprived of due process of
law as the notice provided to it was not reasonably calculated to inform it of the
pendency of Southwestern Bell’s suit and did not afford it an opportunity to present
its objections. In its fourth issue, Texas Underground argues that the trial court erred
in rendering a default judgment against it because the Texas Business Organizations
Code’s standard for service of corporations conflicts with judicially-created
procedures and offends public policy. Because we have concluded that the service
of process on Texas Underground complied with Texas Business Organizations
Code section 5.251(1)(B), we address these issues together.
The primary reason for a corporation’s statutory duty to maintain a registered
agent and registered office is so that aggrieved parties can serve the corporation in a
lawsuit. Global Servs., 1996 WL 608904, at *7; Houston’s Wild W., Inc. v. Salinas,
17
690 S.W.2d 30, 32 (Tex. App.—Houston [14th Dist.] 1985, writ ref’d n.r.e.); see
TEX. BUS. ORGS. CODE ANN. § 5.206(a). The Texas Business Organizations Code
puts corporations on notice that they must “designate and continuously maintain” a
registered office and a registered agent and keep the Secretary of State apprised of
any changes in the address and agent so designated. TEX. BUS. ORGS. CODE ANN.
§§ 5.201, 5.202. The Code also makes plain the consequences of a failure to inform
the Secretary of State of any such change: attempts to effect personal service may
be unsuccessful and plaintiffs may have to resort to substituted service on the
Secretary. See id. § 5.251. And the inevitable result is what happened here: the
Secretary of State forwarded the citation, first amended petition, and discovery
requests to an undeliverable address.
In Texas, “all persons are presumed to know the law.” Greater Houston
Transp. Co. v. Phillips, 801 S.W.2d 523, 525 n.3 (Tex. 1990). This presumption has
particular force here, because but for the Texas Business Organizations Code, Texas
Underground would not exist. See TEX. BUS. ORGS. CODE ANN. § 3.001; see also
Willis v. Donnelly, 199 S.W.3d 262, 271 (Tex. 2006) (“A bedrock principle of
corporate law is that an individual can incorporate a business and thereby normally
shield himself from personal liability for the corporation’s contractual obligations.”).
Texas courts have held that the method of substitute service on a corporation
prescribed by the Texas Business Organizations Code is reasonably calculated,
18
under the circumstances, to notify the corporation of the pendency of the lawsuit and
afford the corporation the opportunity to present a defense. See Tankard-Smith Inc.
Gen. Contractors v. Thursby, 663 S.W.2d 473, 476 (Tex. App.—Houston [14th
Dist.] 1983, writ ref’d n.r.e.) (holding due process not violated where “the failure of
the method of service was the result of the corporation’s own failure to comply with
the statutory requirements which are designed to assure it of notice of pending
suits”); TXXN Inc. v. D/FW Steel Co., 632 S.W.2d 706, 709 (Tex. App.—Fort Worth
1982, no writ) (holding no due-process violation where failure of method of service
was “the result of [defendant]’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 [plaintiff]”). When a corporation fails to comply with its
statutory duties, as Texas Underground did here, it “cannot be heard to complain of
a lack of a due process.” Tankard-Smith, 63 S.W.2d at 476; see Campus Invs., 144
S.W.3d at 466 (defendant’s negligence in complying with statutory duties, i.e., its
failure to update addresses for its registered agent and registered office, caused lack
of notice, not any defect in citation). We hold that the service of Southwestern Bell’s
suit in compliance with Texas Business Organizations Code sections 5.251(1)(B)
and 5.252 did not deprive Texas Underground of due process, and the trial court did
not err in rendering a default judgment against Texas Underground based on this
ground.
19
As for Texas Underground’s assertion that the Texas Business Organizations
Code’s standard for service of corporations conflicts with judicially-created
procedures, no such conflict exists. See Campus Invs., 144 S.W.3d at 466
(explaining Secretary of State’s certificate is conclusive evidence process was
properly served and filing certificate disposes of requirement under Texas Rules of
Civil Procedure 107 and 239 that citation and return be filed). And as for Texas
Underground’s public policy challenge, we defer to the Legislature’s determination
of public policy as reflected in the statute. The Legislature, and not the courts,
generally establishes public policy. Royston, Rayzor, Vickery & Williams, L.L.P. v.
Lopez, 467 S.W.3d 494, 504 (Tex. 2015) (“It is by now axiomatic that legislative
enactments generally establish public policy.”); Fairfield Ins. Co. v. Stephens Martin
Paving, LP, 246 S.W.3d 653, 665 (Tex. 2008) (“The Legislature determines public
policy through the statutes it passes.”). We hold that Texas Underground has failed
to demonstrate that service in compliance with Texas Business Organizations Code
sections 5.251(1)(B) and 5.252 conflicts with either the Texas Rules of Civil
Procedure or public policy, and the trial court did not err in rendering a default
judgment against Texas Underground based on either of those grounds.
We overrule Texas Underground’s second and fourth issues.
20
Sufficiency of Pleadings
In its third issue, Texas Underground argues that the trial court erred in
rendering a default judgment against it because the allegations in Southwestern
Bell’s petition were insufficient to support the judgment.
Texas Rule of Civil Procedure 47 requires an original pleading setting forth a
claim for relief to contain “a short statement of the cause of action sufficient to give
fair notice of the claim involved.” TEX. R. CIV. P. 47(a). Texas Underground
acknowledges that this Court has consistently applied a liberal pleading standard11
but, citing White v. Jackson, 358 S.W.2d 174 (Tex. App.—Waco 1962, writ ref’d
n.r.e.), suggests that we should apply a more stringent standard to the pleading of
negligence claims, even though rule 47 does not impose a different pleading standard
for negligence claims.
Since the Waco Court of Appeals decided White, the Texas Supreme Court
has resolved any conflict in pleading standards among the courts of appeals in favor
of a liberal approach. In applying Texas Rule of Civil Procedure 47, the Texas
Supreme Court has declared that “[a] court should uphold the petition as to a cause
11
See, e.g., King v. Lyons, 457 S.W.3d 122, 126 (Tex. App.—Houston [1st Dist.]
2014, no pet.) (“[W]e liberally construe a petition to include claims that may
reasonably be inferred from the language used . . . .”); see also Lee v. Global
Stainless Supply, Inc., No. 01-7-00865-CV, 2018 WL 6684854, at *13 (Tex. App.—
Houston [1st Dist.] Dec. 20, 2018, pet. denied) (mem. op.) (recognizing “our liberal,
fair-notice pleading standard”).
21
of action that may be reasonably inferred from what is specifically stated, even if an
element of the cause of action is not specifically alleged.” Boyles v. Kerr, 855
S.W.2d 593, 601 (Tex. 1993); accord Ulusal v. Lentz Eng’g, L.C., 491 S.W.3d 910,
917 (Tex. App.—Houston [1st Dist.] 2016, no pet.). And more recently in DeRoeck
v. DHM Ventures, LLC, the court reaffirmed the leniency of rule 47’s pleading
standard. 556 S.W.3d 831, 833, 835 (Tex. 2018) (reversing court of appeals’s
holding that cause of action for acknowledgment of a debt must be “specifically and
clearly” pleaded because it conflicted with rule 47).
In its amended petition, Southwestern Bell alleged that it is a telephone
corporation and public utility and that the Underground Facility Damage Prevention
and Safety Act requires an excavator to “notify a notification center not less than 48
hours nor more than 14 days before the date the excavation is to begin.” See TEX.
UTIL. CODE ANN. § 251.151(a); see also id. § 251.101(a) (notification center
receives notification of intent to excavate and disseminates that information to
“operators [of underground facilities] that may be affected by the excavation”).
Southwestern Bell explained that the “purpose of the notice is to allow the
underground utility operator an opportunity to mark the approximate location of its
underground facilities in advance of the excavation.” See id. § 251.002(11), (13)
(defining “[o]perator” and “[u]nderground facility” (internal quotations omitted)).
Southwestern Bell “had had three copper communications cables,” which were
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components of its telecommunications system, “buried below the surface of the
right-of-way of Dairy View Lane approximately 92 feet north of Bissonnet Street in
Houston, Harris County, Texas.” And in September 2017, Texas Underground
“bored and excavated near the median of Dairy View Lane at that location, and when
it did, it struck and damaged [Southwestern Bel]’s cables,” requiring repair at a
reasonable cost of “at least $20,486.11” but no more than “the jurisdictional limits
of the [trial] [c]ourt.”
Fairly read, Southwestern Bell, in its petition, alleged that Texas Underground
had a statutory duty to provide timely notice of its intent to excavate and a duty to
“avoid striking [Southwestern Bell]’s facilities while excavating in the
right-of-way.” And the breach of these duties proximately caused Southwestern
Bell’s damages and rendered Texas Underground liable for those damages.
Texas Underground admits that according to the standard this Court has
applied in interpreting pleadings—which is consistent with that applied by the Texas
Supreme Court—these allegations give fair notice of the claims involved in the suit.
We agree. We thus hold that the trial court did not err in rendering a default
judgment against Texas Underground based on Southwestern Bell’s pleadings.
We overrule Texas Underground’s third issue.
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Legal Sufficiency of Evidence Supporting Damages Award
In its fifth issue, Texas Underground argues that the trial court erred in
rendering a default judgment against it because the evidence is legally insufficient
to support the trial court’s damages award.
The non-answering defendant in a no-answer default judgment has effectively
admitted both the truth of the facts alleged in the plaintiff’s petition and its liability
on any cause of action properly alleged by those facts. Paradigm Oil, Inc. v.
Retamco Operating, Inc., 372 S.W.3d 177, 183 (Tex. 2012). But the plaintiff must
still present proof of its unliquidated damages. See TEX. R. CIV. P. 243; Holt
Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992). A defendant’s failure
to meet the Craddock requirements does not foreclose review on appeal of the
sufficiency of the evidence of damages to support a no-answer default judgment.
See Holt Atherton Indus., 835 S.W.2d at 82–83, 86; see also Said v. Allstate Ins. Co.,
No. 01-12-00435-CV, 2013 WL 4676254, at *2 (Tex. App.—Houston [1st Dist.]
Aug. 27, 2013, no pet.) (mem. op.) (“The legal and factual sufficiency of the
evidence supporting an award of unliquidated damages after a default judgment may
be challenged on appeal.”).
If no findings of fact or conclusions of law are filed or requested in a bench
trial, we assume that the trial court made all findings necessary to support its
judgment. See Holt Atherton Indus., 835 S.W.2d at 83. In a legal-sufficiency
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review, we consider only the evidence and inferences that tend to support the finding
and disregard all contrary evidence and inferences. Id. at 84. Anything more than a
scintilla of evidence is legally sufficient to support the trial court’s finding. See id.
Southwestern Bell attached to its motion for a default judgment the affidavit
of Hartwell, its Senior Risk Specialist, and its authenticated business records
showing the labor and material used and expenses incurred to repair the cables
damaged by Texas Underground. One report in the business records specifies the
date of the repair, names each employee who assisted in making the repair, itemizes
the regular and overtime hours expended, identifies each employee’s hourly rate,
provides the total hours worked by each employee, and calculates a total cost of
$8,254.53 for the employee-hours required to accomplish the repair. Another report
itemizes the materials required to make the repair, the number of units of each
material used, the cost per unit, and shows that the total cost of the materials used
was $2,196.67. That report also shows that Project Telcon LLC, the contractor used
by Southwestern Bell to make the required repairs, charged Southwestern Bell
$10,034.91 for its services.12 The sum of these reported costs is $20,486.11—the
amount of damages awarded to Southwestern Bell in the trial court’s default
12
The business records also show that Southwestern Bell made a demand for
$20,486.11 to Texas Underground at the Cambridge address on January 2, 2018.
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judgment. We hold that the evidence is legally sufficient to support the trial court’s
damages award.
We overrule Texas Underground’s fifth issue.
Conclusion
We affirm the judgment of the trial court.
Julie Countiss
Justice
Panel consists of Justices Countiss, Rivas-Molloy, and Guerra.
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