red-hot-enterprises-llc-aka-red-hot-signs-printing-and-promotional-and ( 2012 )

MEMORANDUM OPINION
No. 04-11-00686-CV
RED HOT ENTERPRISES LLC, a/k/a Red Hot Signs Printing and Promotional,
and Charles Patrick Jackson,
Appellants
v.
YELLOW BOOK SALES AND DISTRIBUTION COMPANY, INC.,
Appellee
From the County Court at Law No. 3, Bexar County, Texas
Trial Court No. 362236
Honorable Jason Pulliam, Judge Presiding
Opinion by: Phylis J. Speedlin, Justice
Sitting: Catherine Stone, Chief Justice
Phylis J. Speedlin, Justice
Steven C. Hilbig, Justice
Delivered and Filed: July 25, 2012
AFFIRMED AS REFORMED
Red Hot Enterprises, LLC, a/k/a Red Hot Signs Printing and Promotional (“Red Hot”)
and Charles Patrick Jackson appeal from a no-answer default judgment in a suit on a sworn
account by Yellow Book Sales and Distribution Company, Inc. (“Yellow Book”). We affirm the
trial court’s judgment, but reform the pre- and post-judgment interest rate to 5% per annum.
04-11-00686-CV
BACKGROUND
On September 10, 2010, Yellow Book filed suit on a sworn account against Red Hot and
Jackson alleging they contracted for, and failed to pay for, goods or services provided during the
usual course of business; it raised alternative claims of breach of contract and quantum meruit.
Yellow Book attached an affidavit and verified statement of account to its petition. Yellow Book
sought to recover the unpaid account balance of $11,936.38, plus accrued interest on the debt,
reasonable attorney’s fees, and pre- and post-judgment interest. Neither Red Hot nor Jackson
made an appearance or filed an answer. On March 23, 2011, the trial court rendered a default
judgment awarding Yellow Book $11,936.38 as the principal amount owed, plus $3,580.91 in
attorney’s fees, and pre-judgment and post-judgment interest at 18% per annum. Red Hot and
Jackson now present this restricted appeal challenging the service of process, and the awards of
attorney’s fees and pre- and post-judgment interest.
ANALYSIS
To prevail on a restricted appeal, an appellant must demonstrate: (1) it filed notice of
restricted appeal within six months after the date the judgment was signed; (2) it was a party to
the suit; (3) it did not participate in the hearing that resulted in the judgment complained of and
did not timely file a post-judgment motion or request for findings of facts and conclusions of
law; and (4) error is apparent on the face of the record. See TEX. R. APP. P. 30; Ins. Co. of State
of Pennsylvania v. Lejeune, 297 S.W.3d 254, 255 (Tex. 2009) (per curiam); Alexander v.
Lynda’s Boutique, 134 S.W.3d 845, 848 (Tex. 2004). The only element in dispute in this case is
whether there is error apparent on the face of the record. Appellants assert the return of citation
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in the record does not show that Jackson was personally served with citation, and therefore the
trial court lacked personal jurisdiction over Jackson. 1
Strict compliance with the rules governing service of citation must affirmatively appear
on the record for a default judgment to be sustained on appeal. Lejeune, 297 S.W.3d at 255;
Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994) (per curiam). In reviewing a
default judgment, the court may not make any presumptions in favor of valid issuance, service,
and return of citation. Primate Constr., 884 S.W.2d at 152; Wachovia Bank of Delaware, N.A. v.
Gilliam, 215 S.W.3d 848, 850 (Tex. 2007). Failure to comply with the rules of service
constitutes error on the face of the record which invalidates a default judgment. Primate Constr.,
884 S.W.2d at 153.
Here, the return of service in the record affirmatively shows strict compliance with the
rules for service of citation. See TEX. R. CIV. P. 16, 106, 107. The return of service for Jackson
states that a true copy of the citation along with the plaintiff’s original petition was delivered to
Charles Patrick Jackson, in person, at 8332 Highland View, Universal City, Texas, 78148, at
7:55 a.m. on September 22, 2010; the return was signed and verified by a private process server.
See TEX. R. CIV. P. 107. The return also contains a handwritten note stating that, “Mr. Jackson
refused service … Put on front porch.” The return constitutes prima facie evidence of the facts
recited, and the recitations “carry so much weight that they cannot be rebutted by the
uncorroborated proof of the moving party.” Primate Constr., 884 S.W.2d at 152. Considering
the return in its entirety, together with the citation, and giving it a “fair, reasonable and natural
construction,” its plain intent and meaning is that, upon being informed of the nature of the
process and that service was being attempted, Jackson refused to accept the process papers. See
1
Appellants concede that Red Hot was personally served with citation by and through its registered agent, Dawn
Jackson, in person, at 8332 Highland View, Universal City, Texas, 78148, and the return of service in the record
supports this fact.
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Brown-McKee, Inc. v. J.F. Bryan and Assocs., 522 S.W.2d 958, 959 (Tex. Civ. App.—
Texarkana 1975, no writ).
In their brief, appellants speculate that the process server could have put the citation on a
different front porch other than where Jackson was present, Jackson could have refused service
over the telephone instead of in person, or the citation could have been put on the front porch at a
different time than when the process server communicated with Jackson; thus, the record does
not affirmatively show Jackson was personally served. There is nothing in the record, however,
to corroborate any of these speculative statements; thus, they are not sufficient to rebut the prima
facie evidence of the return’s factual recitations. See Primate Constr., 884 S.W.2d at 152.
Generally, a person within the jurisdiction of a court has an obligation to accept service
of process when it is reasonably attempted. Rogers v. Moore, No. 05-05-01666-CV, 2006 WL
3259337, at *1 (Tex. App.—Dallas Nov. 13, 2006, no pet.) (mem. op.); Dosamantes v.
Dosamantes, 500 S.W.2d 233, 237 (Tex. Civ. App.—Texarkana 1973, writ dism’d). A
defendant who refuses to physically accept the process papers is held to have been personally
served as long as the return affirmatively shows the papers were “deposited in an appropriate
place in his presence or near him where he is likely to find them,” and he was “informed of the
nature of the process and that service is being attempted.” Rogers, 2006 WL 3259337, at *1;
Dosamantes, 500 S.W.2d at 237. A defendant’s refusal to accept the process papers goes to
show his awareness of the nature of the process and that service of process is being attempted.
See Davis v. Ross, 678 S.W.2d 636, 638-39 (Tex. App.—Houston [14th Dist.] 1984, no writ)
(assuming that defendant was aware that service of process was being attempted based on
officer’s statement in return that he attempted to serve the defendant, but defendant refused to
accept the papers); see also Tex. Indus., Inc. v. Sanchez, 521 S.W.2d 133, 135-36 (Tex. Civ.
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App.—Dallas), writ ref’d n.r.e., 525 S.W.2d 870 (Tex. 1975) (holding evidence must show
defendant was informed of nature of the process and that service was being attempted, and
recognizing that active avoidance of service indicates that defendant recognized service of
process was being attempted). The return in this case shows that Jackson refused to accept the
process papers, indicating he was aware of the nature of the process and that service was being
attempted; placement of the papers on the front porch, even if not in his presence, was an
appropriate location where he was likely to find them. See Rogers, 2006 WL 3259337, at *1;
Dosamantes, 500 S.W.2d at 237. Proper service being affirmatively shown, there is no error on
the face of the record.
Red Hot and Jackson also challenge the award of attorney’s fees and pre-judgment and
post-judgment interest, arguing there is insufficient evidence to support the awards. We
disagree. First, by failing to file an answer, appellants admitted all the material facts alleged in
Yellow Book’s petition, except for the amount of any unliquidated damages. Holt Atherton
Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992). Second, Yellow Book pled for and, as the
prevailing party, was entitled to recover reasonable attorney’s fees under statute as well as under
the terms of the contracts. TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(7), (8) (West 2008)
(providing for recovery of attorney’s fees in a suit on a sworn account or a breach of contract
action). Four written contracts make up the Red Hot/Jackson account with Yellow Book; the
contracts were attached to Yellow Book’s petition and are therefore in the record. In the event
collection on the account is necessary, each contract expressly authorizes recovery of reasonable
attorney’s fees of either 25% or 33%, based on the contract, calculated on “the amount of the
unpaid account balance (plus interest accrued thereon).” Counsel for Yellow Book filed an
affidavit stating that he is a licensed attorney and familiar with customary attorney’s fees in the
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area and that, “a 30% contingency fee, which in this case is $3,580.91, is a usual and customary
fee. $3,580.91 is a reasonable fee for services necessary for the prosecution of this lawsuit,
considering the time involved, level of experience applied to this case and required for handling
of this matter and the particular nature of this litigation.” See TEX. CIV. PRAC. & REM. CODE
ANN. §§ 38.003, 38.004 (West 2008). The default judgment awards $3,580.91 in attorney’s fees,
i.e., 30% of the unpaid principal balance of $11,936.38. Based on counsel’s uncontroverted
affidavit and the contracts forming the basis of the sworn account, there is sufficient evidence in
the record to support the award of $3,580.91 as reasonable attorney’s fees in this case. See Tex.
Commerce Bank, N.A. v. New, 3 S.W.3d 515, 517-18 (Tex. 1999).
Finally, Red Hot and Jackson assert that because Yellow Book’s petition did not request
18% interest, and the contracts do not charge 18% interest, there is insufficient evidence to
support the award of pre- and post-judgment interest at the rate of 18%. Yellow Book pled for
“accrued and unpaid interest on the debt before maturity,” and “pre-judgment and post-judgment
interest on the matured, unpaid debt at the highest legal or contractual rate allowed by law.” The
default judgment awards 18% interest “on the principal amount of $11,936.38 from 02/01/2010
until the date this judgment is signed,” as well as 18% interest “on the entire judgment from the
date said judgment is signed until such judgment is fully and finally paid.” As the contracts do
not specify an interest rate, only a monthly late charge, the trial court was authorized to award
pre-judgment and post-judgment interest based on the statutory rate. See TEX. FIN. CODE ANN.
§ 304.003 (West 2006); ExxonMobil Corp. v. Valence Op. Co., 174 S.W.3d 303, 319 (Tex.
App.—Houston [1st Dist.] 2005, pet. denied). Although section 304.003 expressly applies to
post-judgment interest rates, pre-judgment interest is computed at the same statutory rate. See
Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 528 (Tex. 1998);
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Tips v. Hartland Developers, Inc., 961 S.W.2d 618, 624 (Tex. App.—San Antonio 1998, no
pet.). We may take judicial notice of the correct, published interest rate on appeal. Office of
Pub. Util. Counsel v. Pub. Util. Comm’n of Tex., 878 S.W.2d 598, 600 (Tex. 1994). The
applicable post-judgment interest rate on the date the default judgment was signed was 5% per
annum. See Judgment Rate Summary, http://www.occc.state.tx.us/pages/int_rates/Index.html
(last visited July 11, 2012). Therefore, we affirm the award of pre- and post-judgment interest,
but reform the interest rate for both to the correct statutory rate of 5% per annum.
Based on the foregoing reasons, we affirm the trial court’s judgment as reformed.
Phylis J. Speedlin, Justice
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