Opinion
NO. 03-16-00539-CV
02-07-2018
Worldwide Ventures, LP and Richard Blair, Appellants v. 3600 SC I, LLC, Appellee
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 201ST JUDICIAL DISTRICT
NO. D-1-GN-15-001164 , HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING MEMORANDUM OPINION
This is a restricted appeal from a default judgment rendered by the district court of Travis County in a breach-of-lease dispute. Appellants are lessee Worldwide Ventures, LP (WV) and Richard Blair. Appellee is 3600 SC I, LLC (3600 SC). We will vacate the judgment.
In November 2012, WV leased space in the Sam Clements Building located in Austin. At that time Blair signed a "Personal Lease Guaranty" whereby he personally guaranteed payment of all rents due and owing by WV. About two years later, 3600 SC purchased the building and became successor-in-interest to the lease. WV then vacated the building before the end of the lease term.
3600 SC filed suit against WV and Blair for breach of the lease agreement. As neither WV nor Blair made an appearance, the district court rendered a joint and several default judgment against WV and Blair in the sum of $63,164.65.
WV argues that because it was not properly served, the default judgment rendered against it is void. We agree.
Between April and November 2015, 3600 SC attempted multiple times to serve Blair, individually and as registered agent for WV, at Blair's residence in Austin and at his place of business in Austin, all without success. Finally, 3600 SC obtained an order from the district court of Travis County granting substituted service as to Blair individually. Such service was then effected in December 2015 by leaving a copy of the citation and petition at Blair's place of business in Austin. Appellee 3600 SC did not seek an order from the district court granting substituted service as to WV.
3600 SC maintains that it effected service upon WV by serving the secretary of state pursuant to section 5.251 of the Texas Business Organizations Code. That statute permits service upon the secretary of state whenever an entity's registered agent "cannot with reasonable diligence be found at the registered office of the entity . . . ." Tex. Bus. Orgs. Code § 5.251(1)(B) (emphases supplied).
The record contains a certificate from the secretary of state's office reciting that it received a copy of the citation and 3600 SC's petition on June 4, 2015, and that such was forwarded by certified mail to WV's registered agent, Richard Blair at 12950 Dairy Ashford Rd., Sugarland, Texas. The process was returned to the secretary of state on July 13, 2015, bearing the notation: "Return to Sender. Not Deliverable as Addressed, Unable to Forward."
When a default judgment is directly attacked by restricted appeal (formerly writ of error), the record must reflect strict compliance with the rules relating to the issuance, service and return of citation. Primate Constr., Inc. v. Silber, 884 S.W.2d 151, 152 (Tex. 1994) (per curiam); McKanna v. Edgar, 388 S.W.2d 927, 929 (Tex. 1965).
In its brief, 3600 SC points to the record showing its multiple (and doubtless diligent) attempts to serve WV by serving Blair, WV's registered agent, at his residence and place of business in Austin. However, to support a default judgment based upon substituted service pursuant to section 5.251(1)(B), the record must show that reasonable diligence was used in seeking service on the registered agent of the entity at its registered office. See RWL Constr. v. Erickson, 877 S.W.2d 449, 451 (Tex. App.—Houston [1st Dist.] 1994, no writ); General Office Outfitters, Inc. v. Holt, 670 S.W.2d 748, 749 (Tex. App.—Dallas 1984, no writ).
Here the record is devoid of an officer's return showing attempted service on WV's registered agent at its registered office in Sugarland. Accordingly, this Court cannot determine whether the server used reasonable diligence in attempting to serve WV's registered agent at the registered address in Sugarland—a requisite showing before a valid resort to substituted service upon the secretary of state pursuant to section 5.251(1)(B). See RWL Constr., 877 S.W.2d at 451; Holt, 670 S.W.2d at 749.
As the attempted service upon WV is invalid and of no effect, the district court acquired no personal jurisdiction over WV, and the default judgment as to WV is void.
Blair argues that because service on WV was invalid, the district court's judgment against both WV and Blair should be reversed. We agree.
Rule 240 provides:
Where there are several defendants, some of whom have answered or have not been duly served and some of whom have been duly served and have made default, an interlocutory judgment by default may be entered against those who have made default, and the cause may proceed or be postponed as to the others.Tex. R. Civ. P. 240.
Pursuant to Rule 240, the only judgment that could have been properly rendered against a co-defendant filing a restrictive appeal, absent valid service on a co-defendant, was an interlocutory judgment unless there was a dismissal as to such co-defendant. Lytle v. Cunningham, 261 S.W.3d 837, 841 (Tex. App.—Dallas 2008, no pet.). When there are co-defendants and the trial court did not have personal jurisdiction over one co-defendant, the final judgment as to all defendants must be reversed. Id.
Here, the attempted service on WV was invalid. WV did not make an appearance and was not dismissed from the suit. Blair was served, but made default. Under these circumstances, pursuant to Rule 240, the judgment against Blair was interlocutory and must be reversed. See id.
The judgment is vacated in its entirety, and the cause is remanded for further proceedings.
/s/_________
Bob E. Shannon, Justice Before Chief Justice Rose, Justices Field and Shannon Vacated and Remanded Filed: February 7, 2018 Before Bob E. Shannon, Chief Justice (retired), Third Court of Appeals, sitting by assignment. See Tex. Gov't Code § 74.003(b).