NETCO, Inc. v. Diana Montemayor and Ludivina Flores ( 2011 )

In The

Court of Appeals

For The

First District of Texas

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NO. 01-09-00705-CV

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NETCO, Inc., Appellant

V.

Diana Montemayor and Ludiviana flores, Appellees

On Appeal from the 11th District Court

Harris County, Texas

Trial Court Case No. 2006-36666

DISSENTING OPINION

Because I believe that, as a matter of law, Montemayor and Flores did not exercise due diligence in serving NETCO, I respectfully dissent.

Montemayor and Flores filed suit on April 18, 2007, which was within the four-year limitations period that began to run on December 10, 2003.  However, NETCO was not served with the lawsuit until April 15, 2008, over four months after limitations had expired.

If a plaintiff files a petition within the limitations period, service outside the limitations period may still be valid if the plaintiff exercises diligence in procuring service on the defendant.  Ashley v. Hawkins, 293 S.W.3d 175, 179 (Tex. 2009); Gant v. DeLeon, 786 S.W.2d 259, 260 (Tex. 1990) (per curiam) (citing Zale Corp v. Rosenbaum, 520 S.W.2d 889, 890 (Tex. 1975) (per curiam)).  Once a defendant has affirmatively pleaded the defense of limitations and shown that service was untimely, the burden shifts to the plaintiff to prove diligence in her efforts to effectuate service.  Ashley, 293 S.W.3d at 179; Proulx v. Wells, 235 S.W.3d 213, 216 (Tex. 2007) (per curiam). Diligence is determined by asking “whether the plaintiff acted as an ordinarily prudent person would have acted under the same or similar circumstances and was diligent up until the time the defendant was served.”  Ashley, 293 S.W.3d at 179; Proulx, 235 S.W.3d at 216.  The duty to use due diligence continues from the date the suit is filed until the date the defendant is actually served.  Taylor v. Thompson, 4 S.W.3d 63, 65 (Tex. App.—Houston [1st Dist.] 1999, pet. denied).  Although ordinarily a fact question, a plaintiff’s evidence may demonstrate a lack of diligence as a matter of law “when one or more lapses between service efforts are unexplained or patently unreasonable.” Ashley, 293 S.W.3d at 179; Proulx, 235 S.W.3d at 216. The plaintiff has the burden to “explain every lapse in effort or period of delay.”  Proulx, 235 S.W.3d at 216 (citing Gant, 786 S.W.2d at 260).

Here, the jury found that Montemayor and Flores exercised due diligence in serving NETCO.  NETCO argues that, because it proved a lack of diligence as a matter of law, the trial court erred in overruling its motion for JNOV. I agree.

One month after the suit was filed, Montemayor and Flores made four successive attempts to serve NETCO at the same address.  All four attempts were returned for an insufficient or undeliverable address. Then, for almost six months, Montemayor and Flores made no attempts at all to serve NETCO.  Their attorney, Debra Jennings, admitted that after the previous failed attempts at service, “[n]othing prevented me from [attempting service through the Secretary of State].  It’s a choice.  The cheaper, less costly way is to serve them by certified mail, which will cost you about five bucks.” 

Limitations ran on December 3, 2007.  In early January 2008, after almost six months of unexplained inaction, Jennings made two attempts to have the Texas Department of Insurance serve NETCO, despite having been told by the Department that NETCO was not an insurance company.  Finally, on March 31, 2008—almost one year after suit was filed and almost 3 months after her last contact with the Department of Insurance—Jennings hired a private process server to attempt service, the first of which was made at the same address as the four previous, unsuccessful attempts. When the private process server was twice unsuccessful, service was finally accomplished via substituted service on the Secretary of State on April 15, 2008—almost one year after suit was filed.

Courts have routinely held claims to be time-barred as a matter of law for similar lapses in diligence. See, e.g., Webster v. Thomas, 5 S.W.3d 287, 289-90 (Tex. App.—Houston [14th Dist.] 1999, no pet.) (holding no due diligence as matter of law when evidence showed plaintiff’s actions over four months were not designed to procure issuance and service of citation); Butler v. Ross, 836 S.W.2d 833, 836 (Tex. App.—Houston [1st Dist.] 1992, no writ) (holding five-and-one-half months of inactivity and no service efforts between failed attempts at incorrect address and proper service at the correct address constituted a lack of due diligence); Hansler v. Mainka, 807 S.W.2d 3, 5 (Tex. App.—Corpus Christi 1991, no writ) (stating that request for service five months after suit was filed affirmatively demonstrated lack of due diligence); see also Gant, 786 S.W.2d at 260 (holding that plaintiff failed to exercise due diligence as matter of law because he provided no explanation for delays in service for three periods totaling thirty-eight months).

In Taylor v. Thompson, the plaintiff filed her lawsuit almost five months before limitations expired, but made no service attempts until two days before limitations ran, and finally accomplished service almost one month after limitations expired.  4 S.W.3d at 65.  This Court—noting that the duty to exercise due diligence continues from the time suit is filed until service is accomplished——held that because the plaintiff did not offer any explanation for her failure to attempt service in the four months after her suit was filed until two days before limitations ran, she did not show due diligence as a matter of law.  Id. at 65–66.

Because there is no evidence in the record explaining Montemayor’s and Flores’s lapses in service attempts from June 20, 2007 to January 7, 2008 and again from January 8, 2008 to March 31, 2008, I would hold that as a matter of law, NETCO has established that Montemayor and Flores did not exercise due diligence in their attempts to serve NETCO.  Accordingly, I would hold that the trial court erred in not granting NETCO’s motion for JNOV and not setting aside the jury’s finding that the Montemayor and Flores exercised due diligence in serving NETCO.

                                                                   Sherry Radack

                                                                   Chief Justice