Investment Ideas, Inc. v. Ellekay, LLC Dba Young Chef's Academy ( 2010 )

NUMBER 13-10-208-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
INVESTMENT IDEAS, INC., Appellant,
v.
ELLEKAY, LLC D/B/A YOUNG CHEF’S ACADEMY, Appellee.
On appeal from County Court at Law No. 6
of Hidalgo County, Texas.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Vela
Memorandum Opinion by Justice Vela
This is an appeal from a default judgment granted against appellant Investment
Ideas, Inc. and in favor of appellee Ellekay, LLC d/b/a Young Chef’s Academy, for
$404,833.21, plus interest and attorney’s fees, in a claim for breach of implied warranty,
breach of contract, negligence, and fraud. By one issue, Investment Ideas argues that
the trial court erred in entering a no-answer default judgment because it was not served in
strict compliance with applicable rules of civil procedure. We reverse and remand.
I. BACKGROUND
Ellekay filed its original petition on November 20, 2009, in Hidalgo County. The
petition states that Investment Ideas failed to appoint or maintain a registered agent in
Texas. Accordingly, Ellekay asserts that service could be made by serving the Secretary
of State. See TEX. BUS. ORG. CODE ANN. § 5.251(1)(A) (Vernon Supp. 2010).
Citation was issued by the Hidalgo County clerk’s office on November 23, 2009.
The “Sheriff’s Return” section of the citation reflects that service was attempted on
December 4, 2009, as follows: “Sent certified mail to Secretary of State
#7008-2810-0000-3935-6622, P.O. Box 12079, Austin, TX 78711-2079.” The return
was signed by someone who was apparently a civil process server, but whose signature
is not legible, and was followed by a number. The return was not verified.
On January 11, 2010, Ellekay moved for default judgment, reciting that Investment
Ideas had been served with citation on December 11, 2009. On January 13, 2010, the
trial court held a hearing on the default judgment. Ellekay presented a non-military
affidavit, a certificate of last known mailing address, an attorney’s fee affidavit, and an
affidavit outlining the alleged damages. The trial court entered the default judgment.
On January 15, 2010, not knowing that a default judgment had been entered,
Investment Ideas filed a special appearance contesting jurisdiction, a motion to transfer
venue, and an answer. When Investment Ideas became aware that a default judgment
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had been entered, it also filed a timely motion to set aside default judgment and a motion
for new trial. Investment Ideas took the position at the hearing on motion for new trial
that it sought an extension of time from Ellekay’s attorney in order for Investment Ideas to
obtain Texas counsel. Ellekay denied that there was such an agreement.
The citation stated that it had been sent to “Investments Ideas Inc.,” rather than to
“Investment Ideas Inc.” The return is signed by a civil process server whose signature
was not legible. The return suggests that the petition was sent to the Secretary of State
at an Austin, Texas address but it was not verified.
On March 4, 2010, nearly a month and a half after the default judgment was
entered, Ellekay filed a “server’s return,” through an affidavit of Marilyn Stroud who
averred that she was the process server who attempted to effectuate service in this case.
She stated that the “addressee’s signature mark is filed of record in this cause,” but there
is no signature of record, nor is there an order of the trial court authorizing the amendment
of the return. The motion for new trial was overruled by operation of law without granting
leave to file the amended return.
II. LEGAL STANDARD
Strict compliance with the rules for service of citation must affirmatively appear on
the record in order for a default judgment to withstand direct attack. Primate Constr. Inc.
v. Silver, 884 S.W.2d 151, 152 (Tex. 1994). Failure to comply with the rules governing
service of citation constitutes error on the face of the record. Id. Even if a defendant
has received actual notice of the pending lawsuit, as in this case, a default judgment that
is rendered upon defective service will not withstand appellate scrutiny. Hubicki v.
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Festina, 226 S.W.3d 405, 408 (Tex. 2007). The reason is clear: the only ground
supporting a default judgment is that the defendant has failed to comply with the
procedural requirements for answering a lawsuit. Id. If a defendant can show that the
plaintiff, in filing the lawsuit, also erred in failing to conform to the procedural rules, the
errors, in essence, offset one another. See id.; see also Landmark Organization, L.P. v.
Sunbelt Air Conditioning and Refrigeration Serv., Inc., No. 13-08-00676-CV, 2010 WL
2784032, at *3 (Tex. App.−Corpus Christi July 15, 2010, no pet.) (mem. op.). Virtually
any deviation from the statutory requisites for service of process will destroy a default
judgment. Carmona v. Bunzl Distrib., 76 S.W.3d 566, 568-69 (Tex. App.−Corpus Christi
2002, no pet.). The record must show that at the time the default is entered, proper
service of citation was made. Id. at 568.
III. ANALYSIS
Here, the pleadings were filed against a company named “Investment Ideas, Inc.”
The citation, however was issued to “Investments [sic] Ideas, Inc.”, but it should have
been issued to “Investment Ideas, Inc.”, by and through its registered agent for service.
Texas Rule of Civil Procedure 107 provides that where the citation is served by an
authorized person rather than by an officer, the return shall be verified. TEX. R. CIV. P.
107. The return in this case was served by one other than an officer and was not
verified. Rule 107 requires an acknowledgement of the instrument before a notary
public. Laas v. Williamson, 156 S.W.3d 854, 858 (Tex. App.–Beaumont 2005, pet.
denied). The record reflects that a verification was not filed until March 4, 2010, more
than a month and a half after the entry of judgment in an attempt to amend the order
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post-judgment.
Rule 118 of the Texas Rules of Civil Procedure allows service of process or proof
of service to be amended. TEX. R. CIV. P. 118. In Higginbotham v. General Life &
Accident Insurance Company, the supreme court noted that the trial court has express
authority to allow amendment of the return of citation. 796 S.W.2d 695, 696 (Tex. 1990).
In Higginbotham, the record affirmatively showed service of citation, and the trial court
entered a formal order that service had been accomplished. The Higginbotham court
determined that the order signed by the trial court was “tantamount to an order amending
the return.” Id. Ultimately, the court limited its holding to cases where there is a record
showing strict compliance with a valid method of service and an order expressly
amending the return or an order that is tantamount to an order amending the return. Id.
at 697. At the motion for new trial hearing, counsel for Ellekay noted that the process
server had filed an affidavit in an attempt to amend service. Neither the affidavit nor the
amendment were offered at the hearing.
The return of citation here is unverified. Thus, it clearly does not comply with Rule
107. See TEX. R. CIV. P. 107. And, there was neither an order entered allowing an
amendment nor was there an order entered that was tantamount to an amendment. The
trial court took the case under advisement, and the motion for new trial was overruled by
operation of law. Because service of citation did not comply with the procedural rules,
the default judgment cannot stand under the strict scrutiny standard set forth in Primate.
See Primate Constr. Inc., 884 S.W.2d at 152. We sustain Investment Idea’s first issue.
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IV. CONCLUSION
We reverse the judgment and remand to the trial court.
ROSE VELA
Justice
Delivered and filed the
18th day of November, 2010.
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