Opinion
No. 08-20-00101-CV
02-26-2021
U.S. BANK TRUST, N.A., AS TRUSTEE FOR LSF8 MASTER PARTICIPATION TRUST, Appellant, v. THE FREEDOM INDEED FOUNDATION, INC., Appellee.
Appeal from the County Court at Law No. 7 of El Paso, Texas (TC # 2017-CCV-00586) MEMORANDUM OPINION
U.S. Bank Trust, N.A. as Trustee for LSF8 Master Participation Trust ("the Bank") takes a restricted appeal challenging a default judgment taken against it by The Freedom Indeed Foundation, Inc., ("the Foundation"). Finding there to be error on the face of the record, we reverse the judgment of the trial court below and remand the case for further proceedings.
I. BACKGROUND
This restricted appeal finds its inception in the Bank's 2014 non-judicial foreclosure of a residential property located at 5139 Sterling Place in El Paso, Texas ("the Property"). Alejandro Hernandez, who is the Foundation's president, was renting the property at the time. He challenged his eviction from the Property, alleging he had an oral lease with the Property's original owners that granted him the right to possession of the Property. Following a jury trial, however, a trial court awarded possession of the Property to the Bank. Appeals from that proceeding have now run their course and were resolved adversely to Hernandez. See e.g. Hernandez v. U.S. Bank Trust, N.A. for LSF8 Master Participation Trust, No. 08-16-00290-CV, 2017 WL 1953291 (Tex.App.--El Paso May 11, 2017, no pet.) (mem. op.) (dismissing appeal of jury's possession verdict on mootness grounds after the judgment was executed); see also Hernandez v. Sommers, 587 S.W.3d 461, 470-72 (Tex.App.--El Paso 2019, pet. denied) (affirming plea to the jurisdiction granted in favor of constable who was sued by Hernandez and the Foundation after the constable executed the writ of possession in these proceedings).
During the pendency of Hernandez's original appeal on the issue of possession, Alberto Enrique Hernandez and Reynaldo Aaron Morales bought the Property from the Bank at an online auction. Hernandez and the Foundation subsequently sued the new owners for a writ of reentry, again alleging wrongful eviction. The county court hearing an appeal from the justice court, dismissed that case with prejudice, and we affirmed. See Hernandez v. Hernandez, 547 S.W.3d 898 (Tex.App.--El Paso 2018, pet. denied).
In the 2017 flurry of court filings made at or around the time the Property was being sold by the Bank to the new owners, the Foundation filed a wrongful eviction suit in justice court against the Bank seeking a writ of reentry to the Property. That suit alleged that although "Alex Hernandez and all occupants" had been named in the original forcible detainer action brought by the Bank, the Foundation individually never received notice to vacate, was not named in a forcible detainer action, and was never given an opportunity to be heard. The Bank never appeared in the justice court, but that court nonetheless denied the Foundation's petition on March 27, 2017. The Foundation appealed that decision to the El Paso County Court at Law No. 7. See TEX.PROP.CODE ANN. § 92.009 (a party may appeal from the justice court's judgment at the hearing on the sworn complaint for reentry in the same manner as a party may appeal a judgment in a forcible detainer suit).
More than two years later, the Foundation moved for a default judgment with the county court in the appealed re-entry case. The motion for default judgment sought $195,200 in damages resulting from unlawful lockout, $16,536.93 in attorney's fees, $5,000 in the event of an appeal to the court of appeals, and $3,500 in the event of an appeal to the Texas Supreme Court, along with all costs of court. Following a default hearing which the Bank did not attend, the county court issued a default judgment granting the Foundation all the relief that it had requested ($16,536.93 in attorney's fees for the trial, $5,000 for appeal to the court of appeals, $3,500 in the event of an appeal to the Texas Supreme Court, and "damages in the sum of $195,200").
On April 16, 2020, the Bank filed a notice of restricted appeal, contending that it did not receive any notice of the default judgment and that there was error on the face of the record. In five issues, the Bank contends that the record fails to show it was ever served with a citation (Issue One); the trial court erred in awarding damages under the Texas Property Code (Issue Two); the evidence fails to support the damages awarded (Issue Three); the evidence fails to support the award of attorney's fees (Issue Four); and the district clerk failed to send notice of the default judgment to the Bank (Issue Five). We need only address the first issue to resolve this appeal.
II. STANDARD OF REVIEW AND CONTROLLING LAW
A meritorious restricted appeal: (1) must be filed within six months after the judgment was signed, (2) by a movant who was a party to the underlying lawsuit, (3) but who did not participate in the hearing that resulted in the judgment; (4) who did not timely file any post-judgment motions, and (5) error is apparent on the face of the record. See TEX.R.APP.P. 26.1(c), 30; Alexander v. Lynda's Boutique, 134 S.W.3d 845, 848 (Tex. 2004); Asset Prot. & Sec. Services, L.P. v. Armijo, 570 S.W.3d 377, 380-82 (Tex.App.--El Paso 2019, no pet). In a restricted appeal, the face of the record consists of all papers on file in the appeal. See Gonzalez v. Perez, 587 S.W.3d 819, 822 (Tex.App.--El Paso 2019, no pet.). Only the last element is at issue in this restricted appeal.
"For well over a century, this court has required that strict compliance with the rules for service of citation 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) (per curiam), string citing cases from Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990) to Roberts v. Stockslager, 4 Tex. 307, 309 (1849). Accordingly, when reviewing a default judgment in a restricted appeal, we do not indulge any presumptions in favor of proper issuance, service, or return of citation. Primate Constr., Inc., 884 S.W.2d at 152; Whiskeman v. Lama, 847 S.W.2d 327, 329 (Tex.App.--El Paso 1993, no writ). Instead, the prevailing party bears the burden to prove proper service of process. Primate Constr., 884 S.W.2d at 153; Whiskeman, 847 S.W.2d at 328-29.
Error is apparent on the face of the record when the record fails to show strict compliance with the rules relating to the issuance, service, and return of citation. Primate Constr., 884 S.W.2d at 152-53; Uvalde Country Club v. Martin Linen Supply Co., Inc., 690 S.W.2d 884, 885 (Tex. 1985); Whiskeman, 847 S.W.2d at 328-29. For a justice court, that would include issuing and serving a citation on the defendant. The citation must conform to a prescribed form. The citation must also contain required language informing the defendant that a suit has been filed against it. These rules parallel those applicable in district courts.
Rule 501.1(a) requires issuance of a citation:
When a petition is filed with a justice court to initiate a suit, the clerk must promptly issue a citation and deliver the citation as directed by the plaintiff. The plaintiff is responsible for obtaining service on the defendant of the citation and a copy of the petition with any documents filed with the petition. Upon request, separate or additional citations must be issued by the clerk. The clerk must retain a copy of the citation in the court's file.TEX.R.CIV.P. 501.1(a)
The "Form" is defined in Rule 501.1(b)(1)-(9) which contains nine distinct requirements, including a signature by the clerk under the seal of the court or by the judge, and a notification that "if the defendant fails to file an answer, judgment by default may be rendered for the relief demanded in the petition." TEX.R.CIV. P. 501.1
Rule 501.1(c) titled "Notice" requires this text to be included on the citation in boldface type:
"You have been sued. You may employ an attorney to help you in defending against this lawsuit. But you are not required to employ an attorney. You or your attorney must file an answer with the court. Your answer is due by the end of the 14th day after the day you were served with these papers. If the 14th day is a Saturday, Sunday, or legal holiday, your answer is due by the end of the first day following the 14th day that is not a Saturday, Sunday, or legal holiday. Do not ignore these papers. If you do not file an answer by the due date, a default judgment may be taken against you. For further information, consult Part V of the Texas Rules of Civil Procedure, which is available online and also at the court listed on this citation."TEX. R. CIV. P. 501.1(c)
Cf. TEX.R.CIV.P. 99 (governing issuance and form of citations); TEX.R.CIV.P. 106 (method of service); TEX.R.CIV.P. 107 (return of service).
III. DISCUSSION
A. Facts Relevant to Service.
The Foundation filed its suit in the Justice Court on March 23, 2017. The petition recites a California address at which the Bank can be served and states "The Plaintiff requests that Defendant be served by the Clerk of the Court via certified mail return receipt requested." The clerk's record, however, contains no citation, return citation, or green card showing that a citation was ever issued or served. The only other documents from the justice court's file are an order denying the Foundation its requested relief, an entry of appearance of counsel for the Foundation, a notice of appeal by the Foundation, a statement of inability to afford an appeal bond, and an order granting a free appeal.
The next sequential document in the clerk's record is a letter from the El Paso County Clerk, dated April 10, 2017, that notified the parties that the clerk received the transcript from the justice court. That letter informs the defendant that pursuant to Rule 753 (which had been repealed effective August 31, 2013--some four and half years earlier) "that if he/she did not file a written answer in the Justice Court, a written answer must be filed with this office no later than eight (8) days from on this the 6th day of April, 2017, or a default Judgment may be taken against the Defendant (emphasis original)." The letter states that it was mailed to the parties, including the Bank. The file also contains a green card signed by an individual at the address listed for the Bank on April 14. 2017.
Finally, on October 24, 2019, the Foundation filed a motion for default judgment. The trial court signed an order setting a hearing on that motion for December 6, 2019. The default judgment itself reflects the matter was heard on December 18, 2019.
The clerk's notice of the default was not sent until April 14, 2020. --------
B. Discussion
The Bank identifies the complete absence of a citation as the primary defect on the face of the record. And without a citation in the file, there can of course be no return of citation to document that the lawsuit was ever served. The Foundation responds that when it filed the petition in the justice court, it specifically requested that the clerk serve the bank with the petition via certified mail, return receipt requested. As the Foundation states: "The Justice of Peace is not a court of record; however, Appellee understands that after he made an objection to the Justice Clerk's failure to issue citation, Appellant was ultimately served with Citation and the Petition like Appellee requested." But the record does not support that claim, because there is no citation in the file and no proof of service. Rule 501.1(a) specifically requires the clerk to "retain a copy of the citation in the court's file." The absence of the citation bodes that one was never issued, and thus never served.
The Foundation's other response is that the county clerk mailed a letter notifying the Bank that the justice court suit had been appealed to the county court. And the Foundation further asserts, without citation to the record, that its counsel mailed a notice of the default hearing to the Bank. Even if true, neither of these mailings constitute valid service of process as our rules require. Ordinarily, in cases claiming the existence of an error on the face of the record, courts address issues such as alleged technical defects in the citation, or discrepancies between the citation or return of service. See e.g. Uvalde Country Club, 690 S.W.2d at 885 (petition identified the registered agent for service as "Henry Bunting, Jr." but the citation and return of service reflected delivery to "Henry Bunting"); Gonzalez, 587 S.W.3d at 822 (posting citation on the door of the courthouse rather than on the defendant's front door); Verlander Enterprises, Inc. v. Graham, 932 S.W.2d 259, 262 (Tex.App.--El Paso 1996, no pet.) (lack of seal on citation). And finding such defects, courts do not hesitate to reverse default judgments. A fortiori, absent proof of any citation, return, or proof of proper service of process, the default judgment cannot stand. See Primate Const., Inc., 884 S.W.2d at 153 ("Proper service not being affirmatively shown, there is error on the face of the record.").
The Texas Supreme Court justifies its focus on precision in the issuance and return of citation by noting the parity it creates:
As we explained in Dunn, we rigidly enforce rules governing service when a default judgment is rendered because the only ground supporting the judgment is that the defendant has failed to respond to the action in conformity with applicable procedure for doing so. If the defendant can then show that the person commencing the action was guilty of comparable nonconformity with procedural rules, under a principle of equality the derelictions offset each other and the merits of the controversy may be brought forward for consideration.Hubicki v. Festina, 226 S.W.3d 405, 408 (Tex. 2007), quoting Dunn, 800 S.W.2d at 837 and RESTATEMENT (SECOND) OF JUDGMENTS § 3 cmt. d (AM.LAW INST. 1982). The complete absence of a citation and return of service in this case compels that we sustain Issue One and set aside the default judgment in this case. As the balance of the Bank's issues are moot, we decline to address them.
IV. CONCLUSION
The trial court's judgment is in all things set aside. The cause is remanded to the trial court for further proceedings not inconsistent with this opinion.
JEFF ALLEY, Justice February 26, 2021 Before Rodriguez, C.J., Palafox, and Alley, JJ.