ACCEPTED 03-17-00746-CV 21628391 THIRD COURT OF APPEALS AUSTIN, TEXAS 1/5/2018 10:12 AM

NO. 03-17-00746-CV JEFFREY D. KYLE CLERK

IN THE COURT OF APPEALS THIRD DISTRICT OF TEXAS FILED IN AUSTIN, TEXAS 3rd COURT OF APPEALS AUSTIN, TEXAS 1/5/2018 10:12:31 AM JEFFREY D. KYLE COMAL & CO., LLC. Clerk

Appellant, v. MICHELLE MAYS

Appellee.

APPELLANT’S BRIEF

On Appeal from the County Court at Law #1 Comal County, Texas Trial Court No. 2017CVA0011 Honorable Randy C. Gray, Judge Presiding

CATHERINE M. STONE LANGLEY & BANACK, INC. State Bar No. 19286000 745 E. Mulberry, Ste. 700 [email protected] San Antonio, Texas 78212 PAULA C. BOSTON (210) 736-6600 Telephone State Bar No. 24089661 (210) 735-6889 Facsimile [email protected]

ATTORNEYS FOR APPELLANT COMAL & CO., LLC Appellant Requests Oral Argument

IDENTIFICATION OF PARTIES Appellant: Comal & Co., LLC (“Comal & Co.”) Trial Counsel: None Appellate Counsel: Catherine M. Stone Paula C. Boston LANGLEY & BANACK, INC. 745 E. Mulberry, Ste. 700 San Antonio, Texas 78212 Telephone: (210) 736-6600 Facsímile: (210) 735-6889 [email protected] [email protected] Appellee: Michelle Mays (“Mays”) Trial and Appellate Counsel: James R. Heinbaugh 1111 N. Walnut Ave., Ste. 102 New Braunfels, Texas 78130 [email protected] Trial Court: The Hon. Randy C. Gray County Court at Law #1 Comal County 424 S. Castell Ave., Ste 102 New Braunfels, Texas 78130

TABLE OF CONTENTS IDENTIFICATION OF PARTIES ............................................................. i TABLE OF CONTENTS ...........................................................................ii TABLE OF AUTHORITIES .................................................................... iii STATEMENT OF THE CASE .................................................................. v STATEMENT REGARDING ORAL ARGUMENT .................................. v ISSUE PRESENTED ............................................................................... vi When a Plaintiff fails to comply with Texas Rule of Civil Procedure 106 and the trial court erroneously grants an unacceptable substitution of service, all of which are obvious on the face of the record, should the default judgment be overturned in keeping with well-established Texas law? STATEMENT OF FACTS ......................................................................... 1 SUMMARY OF THE ARGUMENT .......................................................... 4 ARGUMENT ............................................................................................. 4 A. Standard of Review ........................................................................ 4 B. Appellant’s Burden of Proof in a Restricted Appeal...................... 5 C. The Burden of Proof is Met ............................................................ 5 D. There Was No Compliant Affidavit. .............................................. 6 E. The Trial Court Granted Unlawful Relief. .................................... 9 PRAYER .................................................................................................. 12 CERTIFICATE OF COMPLIANCE ........................................................ 13 CERTIFICATE OF SERVICE................................................................. 13 APPENDIX .............................................................................................. 14

ii TABLE OF AUTHORITIES CASES: Benefit Planners, L.L.P. v. RenCare, Ltd., 81 S.W.3d 855 (Tex. App.—San Antonio 2002, pet. denied).............................................................................................. 6 C.W. Bollinger Ins. Co. v. Fish, 699 S.W.2d 645 (Tex. App.—Austin 1985, no writ) ....................... 11, 12 David A. Carl Enterprises, Inc. v. Crow-Shutt # 14, 553 S.W.2d 118 (Tex. Civ. App.—Houston [1st Dist.] 1977, no writ) ........................................................................................ 11 Fid. & Guar. Ins. Co. v. Drewery Const. Co., Inc., 186 S.W.3d 571 (Tex. 2006) .................................................................... 4 Norman Communications v. Texas Eastman Co., 955 S.W.2d 269 (Tex. 1997) .................................................................... 4 Paramount Credit, Inc. v. Montgomery, 420 S.W.3d 226 (Tex. App.—Houston [1st Dist.] 2013, no pet.) ......................................................................................... 11 Pike-Grant v. Grant, 447 S.W.3d 884 (Tex. 2014) .................................................................... 5 Primate Const., Inc. v. Silver, 884 S.W.2d 151 (Tex. 1994) .................................................................... 4 TAC Americas, Inc. v. Boothe, 94 S.W.3d 315 (Tex. App.—Austin 2002, no pet.) .................................. 5 Torres v. Haynes, 432 S.W.3d 370 (Tex. App.—San Antonio 2014, no pet.)..................................................................................................... 8 Wilson v. Dunn, 800 S.W.2d 833 (Tex. 1990) ................................................................ 7, 8 iii STATUTES: TEX. BUS. ORGS. CODE § 2.251 ....................................................... 9, 10, 11 TEX. BUS. ORGS. CODE § 5.252 ................................................................... 9 RULES: TEX. R. CIV. P. 26.1 .................................................................................... 3 TEX. R. CIV. P. 30 ....................................................................................... 3 TEX. R. CIV. P. 106 ........................................................................... passim TEX. R. CIV. P. 107 ....................................................................... 10, 11, 12 Tex. R. Civ. P. 124 ................................................................................... 12 iv STATEMENT OF THE CASE This is a restricted appeal of a default judgment signed on August 9, 2017, that was inappropriately rendered against Appellant, Comal & Co., LLC. The underlying matter is a roof repair dispute, with allegations of breach of contract and deceptive trade practices, among others. CR 8-14. Appellant never received proper notice of this matter and learned of the default judgment only after the fact. Because Appellee, Michelle Mays, failed to obtain service of process on Appellant and the substituted service approved by the trial court was invalid under the Texas Rules of Civil Procedure, the default judgment must be reversed and the underlying matter remanded to the trial court for disposition. STATEMENT REGARDING ORAL ARGUMENT Although Mays’ failure to comply with Texas Rule of Civil Procedure 106 is obvious on the face of the record before the Court, oral argument is requested to aid the Court in resolving this issue and discussing the arguments presented herein. v ISSUE PRESENTED When a Plaintiff fails to comply with Texas Rule of Civil Procedure 106 and the trial court erroneously grants an unacceptable substitution of service, all of which are obvious on the face of the record, should the default judgment be overturned in keeping with well-established Texas law? vi STATEMENT OF FACTS On January 9, 2017, Mays filed her Original Petition. CR 8. That day, a Citation by Mailing was signed by the Deputy Clerk; however, no return of service was received and no address is visible on the returned envelope. CR 16-18. A second Citation by Mailing was sent to the Secretary of State, but no return of service form was completed. CR 19- 20, 34. On March 30, 2017, an additional citation was issued by the Deputy Clerk. CR 28-31. Again, no return of service form was filled out, but an affidavit was provided by the service processor, stating that he mailed the citation and original petition to an incorrect address for Comal & Co., LLC’s registered agent, Rory Closson. CR 31-32 (stating documents were delivered to 197 Acacia Parkway but not 1597 Acacia Parkway). On May 1, 2017, another Citation by Mailing was signed by the Deputy Clerk and presumably sent to the Secretary of State. CR 35-36. Over one month later, on June 15, 2017, the Secretary of State provided a certificate of service, stating that service by certified mail on the registered agent had been returned as unclaimed. CR 37-38. After attempting, but failing, to serve Appellant, Mays filed a Motion for Substituted Service. CR 39-47. However, Mays failed to support her motion with an affidavit stating the location of Appellant’s usual place of business or usual place of abode or other place where Appellant could probably be found and stating specifically the facts showing that service had been attempted under Texas Rule of Civil Procedure 106(a)(1) or (2) at the location named in such affidavit but had not been successful. CR 39-47. Attached to the Motion for Substituted Service was the Secretary of State’s certification that a copy of the Citation and Plaintiff’s Original Petition had been received on May 10, 2017, and had been forwarded to the address provided for Appellant, but the documents were returned to the Secretary of State’s office bearing the notation “Return to Sender, Unclaimed, Unable to Forward.” CR 47. Also attached to the Motion for Substituted Service, in place of the Return of Service form from the County Court at Law #1, was the affidavit from the service processer that lists an incorrect address for Comal & Co., LLC’s registered agent, Rory Closson. CR 44. On June 23, 2017, the trial court granted May’s Motion for Substituted Service by issuing an order stating that service was sufficient by the service of citation made May 10, 2017, on the Secretary of State. CR 48. The trial court ordered that Appellant’s written answer was due on or before the Monday following twenty days after the date of service, which would have been prior to the signing of the order on June 5, 2017. 1 Id.

On July 11, 2017, Mays filed a motion for default judgment, and default judgment was entered against Appellant on August 9, 2017. CR 69-70. On August 11, 2017 the trial court issued notice of the default judgment entered against Appellant. CR 71.

Appellant filed a timely notice of restricted appeal within six months after the default judgment was signed. CR 82-85; see TEX. R. CIV. P. 26.1(c), 30.

SUMMARY OF THE ARGUMENT

Appellee, Michelle Mays, failed to comply with the requirements of Rule 106 when requesting substituted service. The trial court then permitted a method of service not authorized by law. This error is apparent on the face of the record. Accordingly, the default judgment was erroneously granted and must be reversed.

ARGUMENT

A. Standard of Review

In a restricted appeal, this court’s review is limited to errors apparent on the face of the record. Fid. & Guar. Ins. Co. v. Drewery Const. Co., Inc., 186 S.W.3d 571, 573 (Tex. 2006) (per curiam). The face of the record consists of all the papers on file in the appeal, including the reporter’s record. Norman Communications v. Texas Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam).

There are no presumptions in favor of valid issuance, service, and return of citation, because presumptions can neither be confirmed nor rebutted by evidence in an appellate court. Fid. & Guar. Ins. Co., 186 S.W.3d at 573. It is the responsibility of the party requesting service to ensure both that service is properly accomplished and that service is properly reflected in the record. Primate Const., Inc. v. Silver, 884 S.W.2d 151, 153 (Tex. 1994) (per curiam); accord TAC Americas, Inc. v. Boothe, 94 S.W.3d 315, 321 (Tex. App.—Austin 2002, no pet.).

B. Appellant’s Burden of Proof in a Restricted Appeal To sustain a proper restricted appeal, the filing party must prove: (1) she filed notice of the restricted appeal within six months after the judgment was signed; (2) she was a party to the underlying lawsuit; (3) she did not participate in the hearing that resulted in the judgment complained of, and did not timely file any post-judgment motions or requests for findings of fact and conclusions of law; and (4) error is apparent on the face of the record. Pike-Grant v. Grant, 447 S.W.3d 884, 886 (Tex. 2014). “For over half a century, we have required courts to liberally construe the non- participation requirement for restricted appeals in favor of the right to appeal.” Id.

C. The Burden of Proof is Met

First, Appellant properly filed notice of the restricted appeal within six months after the judgment was signed. See CR 69-70; 84-85.

Second, Appellant was a party to the underlying lawsuit. CR 8-14; see CR 69-70.

Third, Appellant did not participate in the hearing that resulted in the judgment complained of, and did not timely file any post- judgment motions or requests for findings of fact and conclusions of law. See CR 2-3; 1 RR 2.

Fourth, there are two errors apparent on the face of the record. Specifically, Appellant was never served and substitute service was improper because there was no applicable affidavit as required under Texas Rule of Civil Procedure 106. CR 39-47. Further, the trial court failed to comply with Rule 106, by ordering that incomplete service through the Secretary of State constituted sufficient service. CR 48.

D. There Was No Compliant Affidavit.

“It is a basic tenet of jurisprudence that the law abhors a default because equity is rarely served by a default.” Benefit Planners, L.L.P. v. RenCare, Ltd., 81 S.W.3d 855, 857–58 (Tex. App.—San Antonio 2002, pet. denied). A default judgment cannot withstand a direct attack by a defendant complaining that he was not served in strict compliance with the applicable requirements. Id. Texas Rule of Civil Procedure 106 permits a court to authorize substitute service only when specific requirements are met:

(a) Unless the citation or an order of the court otherwise directs, the citation shall be served by any person authorized by Rule 103 by (1) delivering to the defendant, in person, a true copy of the citation with the date of delivery endorsed thereon with a copy of the petition attached thereto, or

(2) mailing to the defendant by registered or certified mail, return receipt requested, a true copy of the citation with a copy of the petition attached thereto.

(b) Upon motion supported by affidavit stating the location of the defendant's usual place of business or usual place of abode or other place where the defendant can probably be found and stating specifically the facts showing that service has been attempted under either (a)(1) or (a)(2) at the location named in such affidavit but has not been successful, the court may authorize service

(1) by leaving a true copy of the citation, with a copy of the petition attached, with anyone over sixteen years of age at the location specified in such affidavit, or

(2) in any other manner that the affidavit or other evidence before the court shows will be reasonably effective to give the defendant notice of the suit. TEX. R. CIV. P. 106 (emphasis added).

“[S]ubstitute service is not authorized under Rule 106(b) without an affidavit which meets the requirements of the rule demonstrating the necessity for other than personal service.” Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990). In Wilson, the Supreme Court of Texas found that a party was not served in strict compliance with Rule 106(b), because substitute service was not properly authorized absent an affidavit explicitly required by the rule. Wilson, 800 S.W.2d at 836.

That is exactly the situation presented in this case. Mays’ Motion for Substitute Service was granted absent an affidavit as required by Rule 106. Under that rule, May was required to file an affidavit state the location of Appellant’s usual place of business or usual place of abode or other place where it could be found and stating specifically the facts showing that service had been attempted under Rule 106(a) at the location named in the affidavit but had not been successful. See id.; TEX. R. CIV. P. 106(b); CR 39-47.

Mays wholly failed to file the required affidavit. An affidavit executed by the process server did not receite that the address to which he purportedly mailed the process was Appellant’s usual place of abode or other place where the Appellant could be found. CR 31-32. In any event, the address recited in the affidavit is incorrect. Id. (citing delivery to 197 Acacia Parkway rather than to 1597 Acacia Parkway).

Because “[a] trial court has no jurisdiction to render default judgment when the rules governing service of process have not been strictly complied with,” this Court must reverse the trial court’s default judgment and remand the cause to the trial court. Torres v. Haynes, 432 S.W.3d 370, 371 (Tex. App.—San Antonio 2014, no pet.).

E. The Trial Court Granted Unlawful Relief.

The trial court exceeded its jurisdiction. Under Texas Rule of Civil Procedure 106, only once a properly supported motion for substitute service is presented can a court authorize service by either (1) leaving a true copy of the citation, with a copy of the petition attached, with anyone over sixteen years of age at the location specified in such affidavit, or; (2) in any other manner that the affidavit or other evidence before the court shows will be reasonably effective to give the defendant notice of the suit. TEX. R. CIV. P. 106(b).

However, the trial court incorrectly concluded that service on the Secretary of State sufficed, even when there was clear evidence attached to the Motion for Substitute Service that no reasonable diligence had been undertaken to find the registered agent at the registered office and that the Secretary of State had also been unable to effectuate service on the Appellant. CR 48.

Although Mays asserted in her Motion for Substituted Service that Texas Business Organizations Code §§ 5.251-2 supported her position that service on the Secretary of State sufficed, under the facts of this case, these provisions do not support Mays’ request for substituted service. See CR 39-40. The Secretary of State is an agent of an entity for service of process only if the entity either fails to appoint or maintain a registered agent in Texas or the registered agent cannot with reasonable diligence be found at the registered office of the entity. TEX. BUS. ORGS. CODE § 5.251. There is no dispute that Comal & Co., LLC, has maintained a registered agent in Texas at all pertinent times. CR 8 (Plaintiff’s Original Petition in which Comal & Co, LLC’s registered agent is listed).

It is also apparent from the record that no reasonable diligence was undertaken to find the registered agent at the registered office. The sole affidavit of service attached to Mays’ Motion for Substituted Service states that the service was attempted on the registered agent, Rory Closson, at “197 Acacia Parkway, Spring Branch, TX 78070.” CR

44 (emphasis added). However, the address for the registered agent was “1597 Acacia Parkway, Spring Branch, TX 78070.” CR 8 (emphasis added). Furthermore, this affidavit does not state, as required by Texas Rule of Civil Procedure 107, the diligence used to execute service and the cause of failure to execute service and where the defendant was to be found, if ascertainable. See CR 44. Thus the sole return of service provided in the record is noncompliant with Texas Rule of Civil Procedure 107 and disproves any suggestion that reasonable diligence was used to find the registered agent at the registered office. See Paramount Credit, Inc. v. Montgomery, 420 S.W.3d 226, 231-33 (Tex. App.—Houston [1st Dist.] 2013, no pet.); David A. Carl Enterprises, Inc. v. Crow-Shutt # 14, 553 S.W.2d 118, 120-21 (Tex. Civ. App.—Houston [1st Dist.] 1977, no writ); CR 44.

Mays’ assertion in her Motion for Substituted Service that there were “two separate attempts at personal service,” in addition to two separate delivery attempts via certified mail, is also not supported by the record. CR 39; see CR 15-20. The Return of Service Forms are not filled out, CR 16, 20, and the address on the envelope purportedly returned is not visible. CR 18.

Thus, as a matter of law, the Secretary of State was not Appellant’s agent under TEX. BUS. ORGS. CODE § 2.251; Appellant was never served; substitution of service was erroneously granted; and the default judgment violates the Texas Rules of Civil Procedure. See TEX.

R. CIV. P. 107(h), 124.

To the extent that Mays relies on C.W. Bollinger Ins. Co. v. Fish, 699 S.W.2d 645, 652 (Tex. App.—Austin 1985, no writ), this reliance is misplaced. C.W. Bollinger dealt with service on the Commissioner under the Insurance Code, which the court distinguished from the Texas Business Corporations Act that was then in effect. 699 S.W.2d at 651-652. The Insurance Code is not involved in this matter, nor is the Texas Business Corporations Act applicable.

Appellant also notes that no proof of service was ordered, such that a default judgment was further inadequate under Texas Rule of Civil Procedure 107(f). See Tex. R. Civ. P. 107(h).

Because Appellant was never served, the trial court granted a default judgment in violation of Texas Rule of Civil Procedure 124, which prohibits the rendering of a judgment against any defendant that is not served unless expressly provided by law, as well as in violation Texas Rule of Civil Procedure 107(h). Thus, this Court should reverse the trial court’s default judgment and remand this matter to the trial court.

PRAYER

WHEREFORE the Appellant, Comal & Co., LLC, respectfully requests that this Court reverse the trial court’s default judgment, remand this cause for further proceedings, and grant all further relief Appellant is entitled to in law and equity.

Respectfully submitted, /s/ Catherine M. Stone CATHERINE M. STONE State Bar No. 19286000 Email: [email protected] PAULA C. BOSTON State Bar No. 24089661 Email: [email protected] LANGLEY & BANACK, INC. 745 E. Mulberry, Ste. 700 San Antonio, Texas 78212 (210) 736-6600 Telephone (210) 735-6889 Facsimile

ATTORNEYS FOR APPELLANT COMAL & CO., LLC

CERTIFICATE OF COMPLIANCE

In compliance with Texas Rule of Appellate Procedure 9.4(i)(3), Appellants certify that the number of words in Appellant’s Brief, including its headings, footnotes, and quotations, is: 2457.

/s/ Paula C. Boston PAULA C. BOSTON

CERTIFICATE OF SERVICE

A true and correct copy of the foregoing document has been served upon the following counsel of record pursuant to the Texas Rules of Appellate Procedure on January 5, 2018.

/s/ Paula C. Boston PAULA C. BOSTON

APPENDIX

A. Default Judgment

B. Texas Rule of Civil Procedure 106

C. Texas Rule of Civil Procedure 107

D. Texas Rule of Civil Procedure 124

E. Texas Business Organizations Code § 5.251

F. Texas Business Organizations Code § 5.252

APPENDIX A

NO. 2017CVA0011 MICHELLE MAYS § IN THE COUNTY COURT AT LAW Plaintiff, § § v. § NO. _ _ _ _ _ __ § COMAL & CO. LLC § Defendant. § COMAL COUNTY, TEXAS

DEFAULT JUDGMENT

The hearing on this cause was held on Plaintiff, Michelle Mays, appeared and Defendant, Comal & Co. LLC, although duly cited to appear by filing an answer herein, failed to file an answer within the time allowed by law.

I. On the claim of Deceptive Trade Practices, common law fraud, breach of contract, and residential construction liability, the court finds in favor of Plaintiff, Michelle Mays, and against Defendant, Comal & Co. LLC, in the amount of $17,490.42 (Seventeen Thousand Four Hundred Ninety and 42/100 Dollars), an amount in treble damages as provided by Section l 7.50(b)(l) of the Texas Business and Commerce Code.