Despite adequate service, a default judgment nevertheless failed to withstand a restricted appeal when the pleaded cause of action didn’t match the judgment:

The Agreement as described by Struge conflicts with the terms of the Agreement attached to the petition. Because none of the alleged breaches, taken as true, actually constitute breaches of the Agreement under its plain terms, Struge’s pleadings fail to state a valid breach of contract claim and the petition cannot support a default judgment on the grounds of breach of contract.

Albanian-American Cultural Center, Inc. v. Struge Cultural Center, Inc., No. 05-23-01134-CV (Oct. 15, 2024) (mem. op.) Incidentally, the Albanian-American Cultural Center appears to be a thriving celebration of Albanian culture in the Dallas area, which I was unaware of but am certainly happy to see.

The facts of Lawton Candle v. BG Personnel were as follows:

1. Lawton Candle is an LLC organized under Oklahoma law. It is not registered to do business in Texas and does not have a registered agent in Texas.
2. BG Personnel sued Lawton Candle in Dallas.
3. BG Personnel had process served on Lawton Candle’s registered agent in Tulsa.
4. BG Personnel obtained a default judgment against Lawton Candle.

Lawton Candle filed a restricted appeal, arguing that under Texas law, the only acceptable means of service on a foreign entity is via the Texas Secretary of State. The Fifth Court agreed – rejecting BG Personnel’s argument that no Texas law foreclosed service in the above manner – and vacated the default judgment. No. 05-23-00449-CV. (May 13, 2024).

The clerk sent notice of judgment to an outdated address for counsel, after he had notified the court of the change, and took no further action when that notice was returned by the Post Office. The Fifth Court granted relief from that judgment in a restricted appeal in Getmeplacement LLC v. Wiese Indus., LLC, No. 05-21-00133-CV (Oct. 31, 2022) (mem. op.).

In the context of service of process, and reinforcing its recent holding about the distinction between individuals and entities in Prado v. Nichols, No. 05-20-01092-CV (Feb. 25, 2022) (mem. op.), the Fifth Court rejected a judgment based on the return of service in Mesa SW Management v. BBVA USA:

“Appellee used an entity to receive the process and a natural person to serve the process; [Tex. R. Civ. P.] 105 does not allow this. Rule 105 requires one person perform both actions. Because the process was delivered to an entity but a natural person executed and returned the same, we conclude appellee failed to strictly comply with rule 105.” No. 05-20-01091-CV (Feb. 24, 2022) (mem. op.) (emphasis added).

In a restricted appeal: “[T]he face of the record shows that appellee filed suit against a Texas corporation named either Joe Prado DBA J.P. Enterprises or Joe Prado ‘JP Enterprises.’ The return of service shows that Joe Prado was served but does not indicate his capacity to receive service on behalf of the purported corporation. Moreover, no other portion of the record indicates Joe Prado’s authority to receive service on behalf of the corporation. We conclude the face of the record fails to show strict compliance with the rules governing return of service; thus, the trial court lacked jurisdiction to render a default judgment against JP Enterprises.” Prado v. Nichols, No. 05-20-01092-CV (Feb. 25, 2022) (mem. op.) (citation omitted, emphasis added).

. . . But in our service.” Cf. Julius Caesar, Act I, Scene III. The key phrases in the return of service in Pro-Fire & Sprinkler, LLC The Law Co. were as follows:

The panel majority concluded this return was defective because (1) the pleading was attached to the door without looking for someone over 16 to receive it, as required by the substituted-service order, and (2) the return was inconsistent, saying both that the pleading was attached to the door and served “in person.” A dissent saw these matters as the sort of “incidental details” that do not require reversal. No. 05-19-01490-CV (Nov. 29, 2021).

Bad service was found, and a restricted appeal succeeded, in Plummer v. Enterra Capital when the citation described the documents served (without attachments) as:

and otherwise: “The E&P citation was to be served on Plummer as E&P’s registered agent on Ridgeview Drive in Richardson, but handwriting next to the printed address showed an address on Arapaho Road in Richardson for a different entity, Richmond Engineering, Inc. Both of the returns show service at the Arapaho Road address. The Officer’s Return on each citation showed service on November 16, 2018, but the blank following ‘by delivering to the within named’ was not filled in on either return.” No. 05-19-00255-CV (Feb. 20, 2020) (mem. op.)

“Extrinsic evidence not before the trial court at the time of the default judgment may be considered in a motion-for-new-trial or bill-of-review proceeding, but it cannot be considered in a restricted appeal. Accordingly, even though the attachments to appellants’ notice of appeal and the documents from the other case are papers on file in this appeal, they are extrinsic evidence that cannot be considered in determining whether there is error on the face of the record.” Convergence Aviation, Inc. v. Onala Aviation, LLC, No. 05-19-00067-CV (Jan. 2, 2020) (mem. op.) (citations omitted). This includes an affidavit about whether the defendant in fact had a Texas registered agent, making service on the Secretary of State inappropriate.

Daigrepont v. Preuss reversed a default judgment for failure to comply with an order authorizing substituted service under Tex. R. Civ. P. 106(b).

• “The trial court’s order required ‘the Citation, First Amended Petition, initial discovery requests, and this Order’ be left with a person over the age of 16 or by leaving the documents on the front door of Daigrepont’s residence. It further required ‘a copy of the Citation, Petition, initial discovery requests, and this Order’ be mailed by certified mail, return receipt requested and by regular mail.”
• However: “The return of service affidavits indicate the process server posted the citation, plaintiff’s original petition, civil case information sheet, and order granting plaintiff’s motion for substitute service to his front door and mailed the
  aforementioned documents per the court’s order.”

“By failing to strictly follow the order, Preuss violated rule 106(b). Violation of rule 106(b) makes service of process invalid and of no effect.” No. 05-18-01271-CV (May 17, 2019) (mem. op.)

The restricted appeal – a unique feature of Texas civil procedure – allows an appeal for up to six months after judgment, so long as the appellant did not participate in the proceedings below and appellate review is limited to matters shown on the face of the court record. These proceedings usually involve belated challenges to default judgments, focusing on technical issues such as the language used in the return of service, compliance with the specific requirements of a statute about service, etc. The unusual restricted appeal in Ex parte Fallis – a substantive challenge by DPS to an expungement order – reminds that this procedural device can also be used to raise legal and factual sufficiency challenges. No. 05-18-00348-CV (Jan. 29, 2019) (mem. op.)

In a bad week for default judgments, the Fifth Court ruled for the appellant in a restricted appeal when the record showed:

• “The affidavit of [substituted] service filed in this case lacked an accompanying motion,”
• “The return of service in this case does not reference the court in which the case was filed, as is required by [Tex. R. Civ. P.] 107(b)(2),” and
• “[T]he petition and citation were not left with anyone over the age of sixteen nor were they mailed. Moreover, while the return reflects that the petition and citation were taped to the front door of the foregoing Fairview address, it does not show that this address was Campbell’s usual place of business. Nor is this missing information contained in the court’s order or elsewhere in the record.”

Campbel v. Bank of America, No. 05-17-01364-CV (Aug. 2, 2018) (mem. op.)

A restricted appeal examines “the face of the record” for error in a default judgment case. That review often focuses on procedural matters – mistakes in the return of service, inadequate pleading to invoke the long-arm statute, etc. – but can also focus on substance, as occurred in Haynes v. Gay. The appellants, members of the relevant LLC, successfully showed that the debt sued upon arose before the LLC forfeited its charter, and thus could not have been individually liable upon that debt. No. 05-17-00136-CV (Feb. 8, 2018). h

Defendants sought review of a post-answer default judgment by restricted appeal. Unfortunately for them, “the record is silent regarding whether notice of the final hearing date was sent . . . . ” They thus failed to show error on the face of the record, as required in a restricted appeal, because “absence in the record of any proof that notice . . . was sent to a party is ‘just that–an absence of proof of error.” Odela Group LLC v. Double-R Walnut Management LLC, No. 05-16-00206-CV (April 12, 2017) (mem. op.) (applying and quoting Gold v. Gold, 145 S.W.3d 212 (Tex. 2004)).

Deutsche Bank has won a restricted appeal to set aside a no-answer default judgment. The petition named the defendant as “DEUTSCHE BANK NATIONAL TRUST COMPANY, herein sued in its capacity as the Trustee for the Morgan Stanley ABS Capital 1 Inc., Trust 2006-NC5, Mortgage Pass Through Certificates, Series 2006-NC5.” But the clerk’s office issued a citation addressed to “Deutsche Bank National Trust Company as Trustee Company,” and that name was also used on the affidavit of service. Because the citation was addressed to the wrong party, the attempted service of process was invalid and the default judgment had to be set aside.

Deutsche Bank Nat’l Trust Co. v. Kingman Holdings, LLC, 05-14-00855-CV

Sylvester Davis sued TexPro Construction Group after the contractor failed to complete a backyard construction project. When TexPro failed to file an answer, Davis sought and obtained a partial default judgment on liability. TexPro then answered, but Davis moved forward with a hearing to establish damages. TexPro did not appear at the hearing, and the trial court awarded judgment for $117,230 in compensatory damages, treble damages under the DTPA and $350,000 in exemplary damages. After blowing through the deadlines for an ordinary appeal, TexPro hired new counsel and filed a restricted appeal. The Court of Appeals held that there was no error on the face of the record just because TexPro’s registered agent had been served at a location different from the address listed on the citation. The Court also held that there was no error in the trial court’s decision to move forward with the damages hearing, since the filing of TexPro’s answer did not negate the previously-signed default judgment on liability. However, Davis’ testimony on damages was the full amount of the money paid to TexPro, without accounting for the value of the work that TexPro had actually performed. Because his affidavit testimony was conclusory in alleging that the work done was valueless, the Court of Appeals reversed and remanded for a new trial on damages.

TexPro Constr. Group, LLC v. Davis, No. 05-14-00050-CV

Speed Boats of Texas brought suit against Fountain Powerboats and obtained a default judgment.  Fountain then filed a restricted appeal in which it sought to set aside the default judgment by arguing that the record did not establish that the secretary of state served Fountain with process.   The Court of Appeals agreed.  Because the record did not “affirmatively show that the secretary of state forwarded a copy of the process to the defendant,” the Court set aside the default judgment and remanded the case back to the trial court.

Fountain Powerboats v. Speed Boats of Texas, No. 05-13-006570-CV

A pair of California residents sought to set aside a default judgment by means of a restricted appeal. The defendants claimed that the trial court lacked jurisdiction due to defective service of process, which had been accomplished through the Secretary of State. The Secretary of State’s certificate of service stated that process for both defendants had been “Unclaimed.” After the defendants failed to appear, the trial court entered default judgment for $612,500 in damages and another $13,258.27 in attorney fees. The Court of Appeals affirmed. Although the process server had listed the date of execution as taking place the month before he received the citation, that apparent typographical error was not enough to invalidate the return of service, particularly where the other service documents demonstrated the correct date of service. Substitute service through the Texas Secretary of State was also proper, the Court held, because the petition alleged that they were doing business in Texas by entering into a promissory note and guaranty with a Texas company, with the note also secured by real property located in Kaufman County. Nor did the “Unclaimed” notations demonstrate that the citations had not been served. Instead, the Court followed previous cases holding that it indicated only that the defendants had refused or failed to claim the citations from the Secretary of State’s mailings, not that service had not been accomplished.

Dole v. LSREF2 APEX 2, LLC, No. 05-12-01683-CV

John Pride and Phareale Investments filed a restricted appeal from the district court’s grant of a no-answer default judgment against them. Among other things, the appellants argued that they should have been served with the plaintiffs’ first amended petition because it sought more onerous relief than the original petition that had been served on them. The record did not reflect that the amended petition had been served on either of the appellants, and the new pleading added claims against them for fraud, declaratory relief, and exemplary damages. Based on those additions, the court of appeals concluded that the failure to serve the appellants with the amended pleading meant that the trial court erred in entering a default judgment against them.

Curiously, the court of appeals mentions in a footnote that the restricted appeal had been abated for a period in order to let the district court dispose of some remaining issues that prevented the default judgment from being a final judgment. The court did not indicate why the appellants elected to proceed with the restricted appeal when they apparently could have still sought relief from the trial court to set aside the interlocutory default judgment, or why they did not pursue an appeal in the ordinary course after the judgment became final.

Pride v. Williams, No. 05-11-01189-CV

The court withdrew its previous opinion in this case, which dismissed the appeal for want of jurisdiction, and entered a new opinion affirming the trial court’s judgment denying Whitehead’s motion to vacate entry of a foreign judgment against him. The previous opinion held that Whitehead could not maintain a restricted appeal because he had participated in the hearing on the motion to vacate, despite not participating in the proceedings in Indiana that resulted in the underlying judgment. The new opinion holds that Whitehead’s lack of participation in the Indiana proceedings meets the relevant requirement to maintain a restricted appeal. The court affirmed the entry of the Indiana judgment, however, because there was no error by the Texas trial court. The certification of the Indiana judgment was accomplished by the stamped “certified copy” on the final page, meeting the authentication requirements of Texas Rule of Evidence 902.

Whitehead v. Bulldog Battery Corporation, No. 05-12-00449-CV (Memorandum Opinion on Rehearing)

HCBeck was hired to build a hall for a church. It subcontracted the foundation work to another company, B&R Development. After the building was completed, the hall began to have foundation problems, which cost HCBeck $68,976 to repair. HCBeck sued B&R for negligence and breach of contract, and obtained a no-answer default judgment. The company proved up the amount of its damages with an affidavit and supporting documentation, but the trial court did not hold an evidentiary hearing. On restricted appeal, the court of appeals reversed and remanded, holding that an evidentiary hearing was necessary because the damages sought by HCBeck were unliquidated. HCBeck’s affidavit was also inadequate to prove the claimed damages because the supporting documents totaled approximately $87,000, not the $68,976 that HCBeck sought for the default judgment. However, the court of appeals denied B&R’s request for a new trial on the merits because the company had never filed a motion for new trial in the district court. Accordingly, the remand was limited to the issue of HCBeck’s damages.

B&R Development , Inc. v. HCBeck, Ltd., No. 05-11-01150-CV

The court dismissed for lack of jurisdiction a restricted appeal from the entry of a foreign judgment. Bulldog received a judgment against Whitehead in Indiana after failing to answer a request for admissions or to appear at trial. Bulldog filed the Indiana judgment in a Texas district court pursuant to the Uniform Enforcement of Foreign Judgments Act and Whitehead moved to vacate. The court held a hearing at which both parties were represented by counsel and denied Whitehead’s motion on February 7, 2012. Whitehead filed a notice of restricted Appeal on April 4, 2012. The court of appeals dismissed the appeal for lack of jurisdiction because Whitehead fully participated in the hearing on his motion to vacate in the Texas court and because he failed to file his notice of appeal within 30 days after the judgment was signed.

Whitehead v. Bulldog Battery Corporation, No. 05-12-00449-CV

UPDATE: The court has withdrawn this opinion on rehearing.

The court of appeals has issued a short memorandum opinion in a restricted appeal following the trial court’s entry of a default judgment.  Tejas Asset Holdings filed suit against a predecessor company of JPMorgan Chase, seeking a declaration that Chase’s deed of trust lien was invalid because it allegedly did not have Tejas’ original promissory note.  Tejas attempted to serve Chase’s registered agent by certified mail, but neither the citation nor the proof of service were actually included in the clerk’s record, and the certified mail receipt was not sufficient to demonstrate service had actually occurred.  Since the record did not show that any proper return of service was on file with the clerk at least ten days before the default judgment was entered, the court reversed the default and remanded the case for further proceedings.

JPMorgan Chase Bank, N.A. v. Tejas Asset Holdings, L.L.C., No. 05-11-00962