Lutea, L.L.C. and Pharia, L.L.C. v. W.S. Draper AKA Warner Draper ( 2018 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-18-00120-CV
LUTEA, L.L.C. AND PHARIA, L.L.C. APPELLANTS
V.
W.S. DRAPER AKA WARNER APPELLEE
DRAPER
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FROM COUNTY COURT AT LAW NO. 1 OF TARRANT COUNTY
TRIAL COURT NO. 2013-005341-1-A
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MEMORANDUM OPINION1
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We have before us an appeal by Lutea, L.L.C. and Pharia, L.L.C.
(Lutea/Pharia) from a final judgment granting Appellee W.S. Draper aka Warner
Draper’s motion for summary judgment and denying Lutea/Pharia’s motion for
summary judgment in support of their bill of review. Through the latter, they
sought to reverse a final default judgment issued by Tarrant County Court at Law
1
See Tex. R. App. P. 47.4.
No. 1 (CCL) declaring “that the judgment obtained by Pharia, L.L.C. in Cause
Number JP04-JS00010886, styled Pharia, L.L.C. v. W.S. Draper a/k/a Warner
Draper, in the Justice Court, Precinct Four, of Tarrant County, Texas is void for
want of subject matter jurisdiction” (CCL Judgment). Lutea/Pharia asserts that
the trial court erred in granting Draper’s motion and denying its own. We
reverse.
Background
This dispute concerns credit card debt allegedly owed by Draper.
Lutea/Pharia came to own the debt and sued to recover it. Suit upon the debt
was commenced in the Precinct Four, Tarrant County Justice Court (JP). That
court entered judgment granting Lutea/Pharia monetary relief against Draper.
After the period for appealing the judgment lapsed, Draper initiated suit against
Lutea/Pharia in the CCL to void the judgment because JP purportedly lacked
subject-matter jurisdiction over the proceeding.
No one denies Lutea/Pharia were duly served with the citation via their
registered agent and that the citation and original petition were forwarded to the
attorney representing them, Cody Moorse. Nor is it disputed that Moorse
neglected to file an answer on their behalf. His lapse resulted in the entry of the
CCL Judgment on October 3, 2013.
Lutea/Pharia filed neither a notice of appeal nor motion for new trial in an
effort to negate the CCL Judgment. Furthermore, the record contains evidence
indicating that neither Lutea/Pharia nor Moorse received notice of the judgment
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until March 31, 2014. Apparently, Moorse was told of it on that date during a
conversation with Draper’s attorney. This led Moorse to request a copy of the
judgment from the court clerk. The copy allegedly arrived on April 7, 2014.
When it did, Moorse told his supervising attorney of it. His supervisor responded
by directing him to “investigate the facts surrounding the service of the petition,
what happened to it after it arrived at [the law firm] and what had happened in the
County Court case, and report back . . . to determine the proper course of
action.” Moorse did not report back. Instead, he ended his tenure with the law
firm several months later. Eventually, the aforementioned supervising attorney
found the judgment “[o]n July 18, 2014, while reviewing Mr. Moorse’s case load
with Mr. Moorse’s successor” and “realized that the default judgment had not
been addressed.” The discovery led to Lutea/Pharia petitioning for a bill of
review on August 22, 2014.
Jurisdiction
Lutea/Pharia initially attack the subject-matter jurisdiction of the CCL and
its authority to render the default judgment. Their effort is twofold. That is, they
contend the CCL lacked subject-matter jurisdiction over Draper’s suit because
(1) the effort was a collateral attack upon the JP’s judgment and (2) Draper
lacked standing to nullify the purportedly void judgment because he suffered no
injury. We overrule each.
Regarding the matter of a collateral attack, we are a bit unclear as to the
tenor of the argument. Lutea/Pharia seem to be suggesting that because the
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record underlying the JP’s judgment failed to illustrate that it (the JP) lacked
jurisdiction, the CCL could not entertain the collateral attack. In other words, they
seem to be suggesting that because both the record before the JP and its
judgment failed to support Draper’s claim, the CCL had no jurisdiction to
entertain his attempt to prove the JP had no jurisdiction. To that we say the
following.
“‘It is well settled that a litigant may attack a void judgment directly or
collaterally . . . .’” Carlson v. Schellhammer, No. 02-15-00348-CV, 2016 WL
6648754, at *2 (Tex. App.—Fort Worth Nov. 10, 2016, no pet.) (mem. op.)
(quoting PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 271 (Tex. 2012)).
Furthermore, a judgment is void and subject to collateral attack at any time when,
among other things, there exists no jurisdiction over the subject matter of the
dispute. Carlson, 2016 WL 6648754, at *2 (citing PNS Stores, Inc., 379 S.W.3d
at 272). That is the very thing Draper argued in his suit filed with the CCL.
He contended that the judgment rendered by the JP was void. In his view,
it was void because that court lacked subject-matter jurisdiction to entertain the
underlying dispute. Furthermore, not only was the absence of jurisdiction
supposedly established by the allegations in the petition Lutea/Pharia filed, but
the petition itself was also part of the record before the JP.2 Thus, the judgment
2
Draper contended that the JP lacked subject-matter jurisdiction to
adjudicate the suit brought by Lutea/Pharia. It allegedly lacked such jurisdiction
because the plaintiffs averred two causes of action (breach of contract and
quantum meruit) and the amount in controversy with regard to one of them
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was subject to collateral attack. Whether or not he could prove the substance of
his allegation concerns his entitlement to the relief he sought, not the authority of
the CCL to adjudicate the claim.
While it may be that “[w]hen attacked collaterally, a judgment is presumed
valid,” the “presumption disappears when the record establishes a jurisdictional
defect.” PNS Stores. Inc., 379 S.W.3d at 273; see also Freeman v. Formosa
Mgmt., LLC, No. 01-15-00907-CV, 2016 WL 6803234, at *4 (Tex. App.—Houston
[1st Dist.] Nov. 17, 2016, pet. denied) (mem. op.) (stating that recent authority
from the Texas Supreme Court suggests we should look at the entire record of
the case under collateral attack and not merely the face of the judgment when
determining whether the judgment is void). That was what Draper attempted to
do, establish a jurisdictional defect.
Regarding the matter of standing, this court has defined the jurisdictional
requirement as focusing on whether a party has a sufficient relationship with the
lawsuit so as to have a justiciable interest in the outcome. City of Arlington v.
(quantum meruit) exceeded the $10,000 jurisdictional cap imposed on justice
courts. See Tex. Gov’t Code Ann. § 27.031(a)(1) (West Supp. 2017) (specifying
that a justice court has jurisdiction over civil controversies in which the amount in
dispute is not more than $10,000). In his view, lacking jurisdiction over one claim
effectively denied the JP the jurisdiction to address either. Whether that is right
or wrong is not a question we must answer at this time, though some authority
suggests it to be wrong. See e.g., Thibodeau v. Dodeka, LLC, 436 S.W.3d 23,
26–27 (Tex. App.—Waco 2014, pet. denied) (rejecting this very contention that
happened to be made by the very same attorney as in this appeal and holding
that the justice court had subject-matter jurisdiction to adjudicate the cause of
action to which an amount in controversy under $10,000 was assigned).
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Centerfolds, Inc. 232 S.W.3d 238, 244 (Tex. App.—Fort Worth 2007, pet.
denied). Such a relationship appeared here. Draper endeavored to set aside a
purportedly void judgment ordering him to pay money to Lutea/Pharia. Given
that, it can hardly be denied that he had a justiciable interest in the outcome of
the proceeding and that he had standing to vitiate his status as a judgment
debtor.
Bill of Review
As previously mentioned, this is an appeal from the denial of a bill of
review via the trial court’s decision to grant Draper’s motion for summary
judgment. Thus, the applicable standard of review is that described by this court
in Nussbaum v. Builders Bank, 478 S.W.3d 104, 106 (Tex. App.—Fort Worth
2015, pet. denied). Because Nussbaum also involved a bill of review wherein the
petitioner sought to reverse a default judgment, it helps guide our review of that
matter as well.
Per Nussbaum, such a bill ordinarily requires the plaintiff to plead and
prove “(1) a meritorious defense to the underlying cause of action; (2) which the
plaintiffs were prevented from making by the fraud, accident or wrongful act of
the opposing party or official mistake; (3) unmixed with any fault or negligence on
their own part.” Id. at 108. Yet, that is not true when the petitioner attempts to
void a default judgment via a due-process challenge based upon the absence of
notice of the default judgment. Katy Venture, Ltd. v. Cremona Bistro Corp., 469
S.W.3d 160, 164–65 (Tex. 2015). Under those circumstances, the first two
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elements need not be pled or established. Id. Instead, the complainant need
only establish that its own fault or negligence did not contribute to the absence of
notice and, thereby, the loss of opportunity to attack the judgment through a
motion for new trial or a direct appeal. Id. And, that element may be satisfied
through evidence proving the failure to receive notice of the default judgment was
caused by the use of a wrong address within a Texas Rule of Civil Procedure
239a certificate. See Nussbaum, 478 S.W.3d at 109 (stating that “[b]ut a
defaulted defendant’s failure to receive notice of a default judgment because of
the plaintiffs [sic] knowing use of an outdated address in its Rule 239a certificate
of defendant’s last known address does not necessarily constitute negligence or
fault attributable to the defendant so as to preclude the defaulting defendant from
establishing the third bill-of-review element”); Buddy “L”, Inc. v. Gen. Trailer Co.,
672 S.W.2d 541, 545 (Tex. App.—Dallas 1984, writ ref’d n.r.e.) (holding that
because the judgment creditor failed to comply with Rule 239a, the judgment
debtor was entitled to a bill of review).
Per Rule 239a, the party taking a default judgment must certify to the clerk
in writing “the last known mailing address of the party against whom the
judgment is taken.” Tex. R. Civ. P. 239a. The procedural rule also obligates the
court clerk to mail written notice of the default judgment to the party against
whom it was rendered “at the address shown in the certificate, and note the fact
of such mailing on the docket.” Id. As suggested by the plain meaning of the
passage, the “last known mailing address” of the litigant against whom the
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judgment was taken is the last known address of the litigant. It is not the last
known address of the litigant’s registered agent for service of process. See
Buddy “L”, Inc., 672 S.W.2d at 545 (stating that Rule 239a “requires certification
of, and mailing to, the last known address of the defendant notwithstanding that
the defendant may have a different office registered for service of process”); see
also Cont’l Cas. Co. v. Davila, 139 S.W.3d 374, 384 (Tex. App.—Fort Worth
2004, pet. denied) (Gardner, J., concurring) (stating the same).
Here, Lutea/Pharia levies the type of due-process challenge mentioned in
Katy Venture, Ltd., 469 S.W.3d at 164–65. Lutea/Pharia contend, among other
things, that (1) they failed to receive notice of the default judgment awarded
Draper; (2) the failure was caused by the mistaken address Draper incorporated
into his Rule 239a certificate; and (3) because of the misinformation, they were
denied the opportunity to timely move for a new trial or perfect a direct appeal.
The certificate filed by Draper appears in the summary-judgment record.
Through it, he represented that both of the last known addresses of Lutea and
Pharia were “CT Corporation System, Registered Agent[,] 350 N. St. Paul Street,
Suite 2900[,] Dallas, Texas 75201.” Also of record is evidence that: (1) the CCL
signed the default judgment underlying the bill of review on October 3, 2013;
(2) the court clerk mailed notice of the “final order” to “all parties” on October 4,
2013, though the addresses used went unmentioned; (3) neither Lutea/Pharia
nor their counsel received notice or knowledge of the default judgment until
March 31, 2014; (4) the address of CT Corporation is not the actual address of
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either Lutea or Pharia but rather the address of their registered agent for service
of process; and (5) Draper had been informed of Pharia’s last known address
through pleadings served on him during the JP suit.3
It is unquestionable that the time period between October 3, 2013, and
March 31, 2014, exceeds the thirty-day period within which one must move for a
new trial. See Tex. R. Civ. P. 329b(a) (stating that a motion for new trial must be
filed before or within thirty days after the judgment or order complained of is
signed). The same is true concerning the thirty-day or ninety-day period in which
one must perfect a direct appeal. See Tex. R. App. P. 26.1 (stating that a notice
of appeal must be filed within thirty days after the judgment is signed or within
ninety days if a motion for new trial or to modify the judgment is filed).4
That Draper’s Rule 239a certificate incorporated misinformation regarding
the last known address of Lutea/Pharia also appears unquestionable. It provided
the clerk information about the address of the registered agent selected by
3
The summary-judgment record contains evidence that Lutea and Pharia
had the same mailing address.
4
We note Draper’s suggestion that Lutea/Pharia still had time to perfect a
restricted appeal when their attorney first became aware of the default judgment
on March 31, 2014. See Tex. R. App. P. 26.1(c) (stating that in a restricted
appeal, the notice must be filed within six months after the final judgment or order
is signed). Yet, the failure to perfect a restricted appeal does not bar a bill of
review. Gold v. Gold, 145 S.W.3d 212, 213 (Tex. 2004) (holding that a restricted
appeal is not a prerequisite to a bill of review); Pope v. Pope, No. 12-09-00188-
CV, 2011 WL 1259532, at *3 (Tex. App.—Tyler Mar. 31, 2011, no pet.) (mem.
op.) (holding that the “adequate legal remedies” pretermitting a bill of review do
not include a restricted appeal).
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Lutea/Pharia to receive service of process. It did not comply with the clear
dictate of Rule 239a by informing the clerk of the last known addresses of Lutea
or Pharia, even though Draper had information at least about the last known
address of Pharia.
When the foregoing is considered together in a light most favorable to
Lutea/Pharia as required by Nussbaum, we encounter, at the very least, a
material issue of fact regarding satisfaction of the last bill-of-review element. 478
S.W.3d at 106, 110. That is, the summary-judgment record contains evidence
creating a material issue of fact concerning whether the failure of Lutea/Pharia to
receive notice of the default judgment and challenge it through a timely motion
for new trial or a direct appeal was unmixed with any fault or negligence on their
own part. See Buddy “L”, Inc., 672 S.W.2d at 545. And, again, this was the only
element for a bill of review in play, given the nature of Lutea/Pharia’s contention.
So, the trial court erred in granting Draper’s motion for summary judgment
denying the bill of review. For the same reason—this material issue of fact—the
trial court properly denied Lutea/Pharia’s motion for summary judgment.
We reverse the final judgment of the trial court and remand for further
proceedings.
/s/ Brian Quinn
BRIAN QUINN
CHIEF JUSTICE
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PANEL: WALKER and BIRDWELL, JJ.; and QUINN, C.J. (Sitting by
Assignment).
DELIVERED: July 26, 2018
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