CAMPUS INVESTMENTS, INC. v. CULLEVER

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Docket Number

No. 03-0819.

Attorney(S)

George W. Vie III, Mills Shirley L.L.P., Galveston, for petitioner. Bradford Neal Oesch, Harold B. Jarnigan Jr., Bradford N. Oesch, P.C., Houston, for respondent.

Judges

PER CURIAM.

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Smart Summary

Factual and Procedural Background

Anthony Sean Cullever and Kevin Michael Els sued alleging injuries during a robbery at an adult book store where they alleged they were employees of Campus Investments, Inc. After several unsuccessful attempts to serve Campus's registered agent, plaintiffs obtained substituted service via the Texas Secretary of State. The Secretary issued a certificate stating he had received and forwarded a copy of the citation and the Second Amended Original Petition to Campus by certified mail, which was returned "Attempted — Not Known." A default judgment was entered. In a bill of review trial, the evidence showed the Secretary's certificate was on file ten days before the default judgment, but the citation and return were not. The First Court of Appeals held the certificate alone was sufficient; the Sixth Court of Appeals had reached the opposite result in a different case. Campus petitioned this Court for review. The Supreme Court granted review, approved the First Court's analysis, disapproved the Sixth Court's contrary decision, and affirmed the court of appeals' judgment.

Legal Issues Presented

Whether a certificate from the Texas Secretary of State establishing receipt and forwarding of process is sufficient to satisfy Tex. R. Civ. P. 107's requirement that citation and proof of service be on file for ten days before a default judgment, in the absence of the citation and return in the record.
Whether the trial court's denial of Campus's bill of review was supported by evidence that Campus was negligent in maintaining statutorily required registration information, thereby barring relief.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
G.F.S. Ventures, Inc. v. Harris, 934 S.W.2d 813 (Tex.App.-Houston [1st Dist.] 1996, no writ)	Held that a Secretary of State certificate can be sufficient without citation and return in the record.	The Court approved the First Court of Appeals' reliance on G.F.S. Ventures and adopted its analysis that the Secretary's certificate satisfies Rule 107.
Onyx TV v. TV Strategy Group, LLC, 990 S.W.2d 427 (Tex.App.-Texarkana 1999, no pet.)	Held that without the citation it is impossible to tell whether the defendant was informed of required details, implying the citation must be in the record.	The Court disapproved Onyx TV as contrary to the Court's reading of Capitol Brick and the Secretary's certificate's conclusive effect.
Whitney v. L L Realty Corp., 500 S.W.2d 94, 95-96 (Tex. 1973)	Reversed a default judgment where record included proof of service on the Secretary but not a certificate that the Secretary forwarded process.	Cited to show that a certificate that the Secretary forwarded process is material to upholding a default judgment.
Capitol Brick, Inc. v. Fleming Mfg. Co., 722 S.W.2d 399, 401 (Tex. 1986)	Holds that, absent fraud or mistake, the Secretary of State's certificate is conclusive evidence that the Secretary received service and forwarded it as required by statute.	The Court relied on Capitol Brick to conclude the Secretary's certificate conclusively establishes that process was served and thus fulfills Rule 107's purpose.
World Distribs. v. Knox, 968 S.W.2d 474, 479 (Tex.App.-El Paso 1998, no pet.)	Supports the proposition that a statutory designee is an agent for receiving process, not for serving it.	Cited to support the Court's statement that the Secretary (or statutory designee) is an agent for receiving process on the defendant's behalf.
Caldwell v. Barnes, 975 S.W.2d 535, 537, 539 (Tex. 1998)	Holds that affidavits in a bill of review corroborating lack of service can raise fact questions for trial.	The Court noted that a defendant misled by defective service may bring a bill of review, relying on Caldwell for that procedural avenue.
Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 927 (Tex. 1999) (per curiam)	States that a bill of review claimant must show the prior judgment did not result from the claimant's own fault or negligence.	The Court applied Wembley to conclude there was some evidence supporting the trial court's denial of Campus's bill of review because Campus was negligent in failing to update registration information.

Court's Reasoning and Analysis

The Court noted the trial evidence: the Secretary of State's certificate was on file ten days before the default judgment but the citation and return were not. It analyzed prior authorities, distinguishing Whitney (reversal where certificate that Secretary forwarded process was absent) and relying principally on Capitol Brick, which holds that the Secretary's certificate is conclusive evidence that process was received and forwarded absent fraud or mistake. The Court explained that when substituted service on a statutory agent is authorized, the designee's role is to receive process, not to serve it, and therefore a Secretary's certificate fulfills Rule 107's purpose of establishing proper citation and service. The Court acknowledged the possibility that a defective citation forwarded via substituted service could mislead a defendant, in which case a bill of review may be appropriate (citing Caldwell). Applying these principles to the record, the Court concluded Campus was not misled but was negligent in failing to update its registered-agent/address information and therefore the trial court's denial of the bill of review was supported by evidence (citing Wembley).

Holding and Implications

Holding: The Court granted the petition for review, approved the First Court of Appeals' analysis, disapproved the Sixth Court of Appeals' contrary decision, and affirmed the judgment of the court of appeals.

Implications: The Court held that a Secretary of State certificate that it received and forwarded process conclusively establishes that process was served for purposes of Tex. R. Civ. P. 107, absent fraud or mistake. Defendants who claim they were misled by defective citation forwarded via substituted service retain the ability to seek relief by bill of review; however, a bill of review is unavailable where the record supports that the claimant's own negligence in maintaining required registration information prevented receipt of process, as was found here.

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CAMPUS INVESTMENTS, INC., Petitioner v. Anthony Sean CULLEVER and Ke

PER CURIAM.

The evidence at the trial of this bill of review showed that a certificate of service from the Secretary of State was on file ten days before the underlying default judgment was granted, but citation and return were not. See Tex.R. Civ. P. 107. Relying on its opinion in G.F.S. Ventures, Inc. v. Harris, 934 S.W.2d 813 (Tex.App.-Houston [1st Dist.] 1996, no writ), the First Court of Appeals held this was sufficient. 141 S.W.3d 641. Petitioner points out that this opinion conflicts with the Sixth Court of Appeals' opinion to the contrary in Onyx TV v. TV Strategy Group, LLC, 990 S.W.2d 427 (Tex.App.-Texarkana 1999, no pet.). Finding the First Court's analysis correct, we approve the former, disapprove the latter, and affirm.

Anthony Sean Cullever and Kevin Michael Els brought suit alleging they suffered injuries during a robbery that took place at the adult book store where they allege they were employees of Campus Investments, Inc. After several unsuccessful attempts to serve the latter's registered agent, they requested service on the Secretary of State. Tex. Bus. Corp. Act art. 2.11, § B. The Secretary subsequently issued a certificate that he had received and forwarded a copy of the citation and Second Amended Original Petition to Campus by certified mail, which was returned marked "Attempted — Not Known."

Rule 107 prohibits a default judgment until citation and proof of service have been on file for ten days. Tex.R. Civ. P. 107. In Whitney v. L L Realty Corp., we reversed a default judgment because the record included proof of service on the Secretary of State, but not a certificate that the Secretary had forwarded process to the defendant. 500 S.W.2d 94, 95-96 (Tex. 1973). There was such a certificate in Capitol Brick, Inc. v. Fleming Mfg. Co., so we held that "[a]bsent fraud or mistake, the Secretary of State's certificate is conclusive evidence that the Secretary of State, as agent of [the defendant], received service of process for [the defendant] and forwarded the service as required by the statute." 722 S.W.2d 399, 401 (Tex. 1986); see also TEX. BUS. CORP. ACT art. 9.05, § A (providing that certificates issued by the Secretary are prima facie evidence of facts recited therein).

The First Court of Appeals interpreted Capitol Brick to dispense with any requirement that the default judgment record include the citation and return. 141 S.W.3d 641; G.F.S. Ventures, 934 S.W.2d at 818. The Sixth Court of Appeals noted, however, that without the citation it will be impossible to tell whether the defendant was informed of the many details necessary to respond to the lawsuit. Onyx TV, 990 S.W.2d at 430-31; see Tex.R. Civ. P. 99 (requiring citation to contain 12 discrete items, including time when answer is due and warning regarding default).

We agree with the First Court. When substituted service on a statutory agent is allowed, the designee is not an agent for serving but for receiving process on the defendant's behalf. See Capitol Brick, 722 S.W.2d at 401; World Distribs. v. Knox, 968 S.W.2d 474, 479 (Tex.App.-El Paso 1998, no pet.). A certificate like the one here from the Secretary of State conclusively establishes that process was served. Capitol Brick, 722 S.W.2d at 401. As the purpose of Rule 107 is to establish whether there has been proper citation and service, the Secretary's certificate fulfills that purpose.

We recognize that service of a defective citation through substituted service on the Secretary of State could mislead a defendant and lead to an improper default judgment. In such cases, a defendant may bring a bill of review and establish those facts. Caldwell v. Barnes, 975 S.W.2d 535, 537, 539 (Tex. 1998) (holding affidavits filed in bill of review proceeding corroborating lack of service raised fact question for trial). But Campus was not misled here because — as it had failed to update addresses for its registered agent and registered office — it never received anything the Secretary sent. Accordingly, Campus was negligent in failing to comply with its statutory duties. See, e.g., Tex. Bus. Corp. Act arts 2.10, 2.10-1, 8.09. We hold there is some evidence to support the trial court's denial of the bill of review. Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 927 (Tex. 1999) (per curiam) (holding that bill of review claimant must show prior judgment did not result from own fault or negligence).

Campus also asserts that the Second Amended Original Petition did not allege a "registered office." We disagree, as the pleading alleged the corporation's registered agent "could not be found at the registered office located at 4920 Center, Houston, Harris County, Texas 77007." According to the Secretary's affidavit, this was the address to which he directed process.

Accordingly, without hearing oral argument, we grant the petition for review, and affirm the judgment of the court of appeals. Tex.R.App. P. 59.1.