Opinion
NO. 14-15-01040-CV
05-16-2017
ROOFTOP GROUP USA, INC., Appellant v. SHOPPER EVENTS LLC, Appellee
On Appeal from the County Civil Court at Law No. 3 Harris County, Texas
Trial Court Cause No. 1061040
MEMORANDUM OPINION
In this restricted appeal, appellant Rooftop Group USA, Inc. challenges a default judgment rendered against it. In Rooftop's first four issues, it contends that the record does not show strict compliance with the rules regarding issuance, service, and return of the citation, thereby rendering service insufficient to confer personal jurisdiction over Rooftop. In its two remaining issues, Rooftop contends that the trial court erred in awarding liquidated damages and attorneys' fees. We affirm.
I. BACKGROUND
Appellee Shopper Events LLC filed a suit on a sworn account, alleging that Rooftop failed to pay $96,079.99 for services Shopper Events provided to Rooftop in 2012 and 2013. Shopper Events failed in its two efforts to effect service of process on Rooftop's registered agent Darren Matloff. Subsequently, in its first amended petition ("the petition"), Shopper Events alleged that Rooftop's registered agent could not be found at the registered office with reasonable diligence. In support, Shopper Events attached an affidavit to the petition detailing the attempts to serve Matloff at Rooftop's registered office. The petition also alleged that, under article 5.251 of the Texas Business Organizations Code, the Secretary of State was Rooftop's agent for service of process.
The Secretary issued a certificate of service, which certified that the Secretary received the citation and the petition on June 22, 2015, and forwarded a copy of the service documents to Rooftop's registered address by certified mail, return receipt requested, on June 25, 2015. The Secretary received the signed return receipt on June 29, 2015. Rooftop did not appear or answer.
Shopper Events moved for a default judgment. Although there was a default judgment hearing, the record does not indicate whether the trial court heard evidence as to damages because there is no court reporter's record. The trial court granted a final default judgment against Rooftop and awarded Shopper Events $96,079.99 in damages, $32,000 in attorneys' fees, 6% pre-judgment interest, and 5% post-judgment interest. Judgment was rendered on August 19, 2015, and Rooftop filed a notice of restricted appeal on December 4, 2015.
II. STANDARD OF REVIEW
A direct attack on a judgment by restricted appeal must: (1) be brought within six months after the trial court signs the judgment; (2) by a party to the suit; (3) who did not participate in the hearing that resulted in the judgment made the subject of the complaint; (4) who did not file a post-judgment motion, request for findings of fact and conclusions of law, or other notice of appeal; and (5) the error that forms the basis of the complaint must be apparent on the face of the record. Tex. R. App. P. 30; Alexander v. Lynda's Boutique, 134 S.W.3d 845, 848 (Tex. 2004); Conseco Fin. Servicing v. Klein Indep. Sch. Dist., 78 S.W.3d 666, 670 (Tex. App.—Houston [14th Dist.] 2002, no pet.). Because the first four requirements for filing a restricted appeal are not disputed, we address whether error appears on the face of the record. In a restricted appeal, the face of the record consists of all papers on file before the judgment as well as the reporter's record. Conseco, 78 S.W.3d at 670.
III. ANALYSIS
A. The face of the record reflects no error regarding the issuance, service, and return of citation.
In restricted appeals, "[t]here are no presumptions in favor of valid issuance, service, and return of citation." Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994). If the record in a restricted appeal fails to affirmatively show strict compliance with the rules of civil procedure governing service of citation, the attempted service of process is invalid and of no effect. See Uvalde Country Club v. Martin Linen Supply Co., Inc., 690 S.W.2d 884, 885 (Tex. 1985) (holding that record did not reflect strict compliance with procedural rules relating to issuance, service, and return of citation, where petition alleged that registered agent was "Henry Bunting, Jr." whereas sheriff's return on citation showed delivery to "Henry Bunting"). When the service of process is invalid, the trial court acquires no personal jurisdiction over the defendant, and the default judgment is void. Wilson v. Dunn, 800 S.W.2d 833, 836-37 (Tex. 1990).
When, as here, the defendant's registered agent cannot be found at its registered office with reasonable diligence, plaintiffs are permitted to seek substituted service on the Secretary. See Tex. Bus. Orgs. Code Ann. § 5.251(1)(B) (West 2012) (formerly Tex. Bus. Corp. Act art. 2.11). Service of process on the Secretary is accomplished by delivering duplicate copies of the process and any required fee. See id. § 5.252 (West 2012). Thereafter, the Secretary shall forward the process to the entity's most recent address on file with the Secretary by certified mail, return-receipt requested. See id. § 5.253 (West 2012). The Secretary may issue a certificate of service. "Absent 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." Capitol Brick, Inc. v. Fleming Mfg. Co., Inc., 722 S.W.2d 399, 401 (Tex. 1986) (Secretary's certificate was conclusive evidence that Secretary received service of process for corporation and forwarded service as required under former long-arm statute, article 2031b of Texas Civil Statutes); see also BLS Dev., LLC v. Lopez, 359 S.W.3d 824, 828 (Tex. App.—Eastland 2012, no pet.) (same under section 5.251 of Texas Business Organizations Code); G.F.S. Ventures, Inc. v. Harris, 934 S.W.2d 813, 818 (Tex. App.—Houston [1st Dist.] 1996, no writ) (same under article 2.11(B) of Texas Business Corporations Act).
This is also known as a "Whitney certificate" from Whitney v. L & L Realty Corp., 500 S.W.2d 94, 97 (Tex. 1973).
Rooftop alleges four errors on the face of the record regarding the issuance and return of citation on the Secretary: (1) the citation that was served on the Secretary does not have a seal of court; (2) the citation that was served on the Secretary does not identify Rooftop's agent for service of process; (3) the manner of service of the citation conflicts with the officer's return; and (4) the return receipt is not signed by the addressee.
We address Rooftop's second issue first because it assumes incorrectly that Rooftop's agent for receiving service of process was Matloff and not the Secretary. Shopper Events served the Secretary under sections 5.251 to 5.253. Tex. Bus. Orgs. Code Ann. §§ 5.251-5.253. Section 5.251 states that the Secretary is an agent of an entity for purposes of service of process if the entity's registered agent cannot with reasonable diligence be found at the entity's registered office. See id. § 5.251(1)(B). "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." Campus Investments, Inc. v. Cullever, 144 S.W.3d 464, 466 (Tex. 2004). Rooftop does not dispute, and the record shows, that Shopper Events exercised reasonable diligence before resorting to substituted service on the Secretary. The Secretary became Rooftop's agent for receiving process. See id. Accordingly, the citation was not required to identify Matloff as the registered agent for accepting service of process. We overrule Rooftop's second issue.
Because the record does not support Rooftop's assertions of fact in its first and third issues, we overrule them. First, the supplemental clerk's record reflects that the court's seal was on the citation at the time the trial court rendered the default judgment. Next, the manner of service of the citation does not conflict with the officer's return. Relying on Smith v. Commercial Equipment Leasing Co., 678 S.W.2d 917, 918 (Tex. 1984), Rooftop argues that the citation should have been served on Rooftop "in person" to match the officer's return. The manner of service of the citation in Smith conflicted with the officer's return because the citation expressly stated that it was to be served "in person" while the officer's return stated that it was delivered by mail. Id. at 917. This case is distinguishable from Smith because the citation did not state that it would be served on Rooftop in person. The citation states that Rooftop "may be served with citation by delivering the citation to the Defendant at the most recent address of the entity on file with the Secretary of State." Shopper Events served the citation and petition on the Secretary, and the Secretary forwarded a copy of the service documents to Rooftop at its registered address. Therefore, Shopper Events achieved service exactly as stated in the citation.
Rooftop argues that, although the record reflects the return receipt was stamped "TPASS/CPA," the addressee did not sign the receipt in compliance with rule 107(c) of the Texas Rules of Civil Procedure. Our sister court addressed a similar issue in G.F.S. Ventures. 934 S.W.2d at 818-19. The G.F.S. Ventures court held that, despite the appellant's complaints about the absence of a signature on the return receipt, the Secretary's certificate in the record showed strict compliance with article 2.11(B) of the Texas Business Corporations Act and was therefore sufficient to confer personal jurisdiction on appellant. See id. Moreover, "[a]s the purpose of [r]ule 107 is to establish whether there has been proper citation and service, the Secretary's certificate fulfills that purpose." Cullever, 144 S.W.3d at 466. Here, the Secretary's certificate reflects strict compliance with the rules effecting substituted service of process on the Secretary. See Tex. Bus. Orgs. Code Ann. §§ 5.252-5.253 (formerly Tex. Bus. Corp. Act art. 2.11). For instance, the Secretary's certificate states that: (1) Shopper Events delivered to the Secretary duplicate copies of the process documents (the citation and the petition); and (2) the Secretary forwarded same to Rooftop's most recent address on file with the Secretary by certified mail, with return receipt requested. See id. Accordingly, the Secretary's certificate conclusively established service of process and the trial court had personal jurisdiction over Rooftop. Capitol Brick, 722 S.W.2d at 401; G.F.S. Ventures, 934 S.W.2d at 818-19. We overrule Rooftop's fourth issue.
Rooftop argues that we should not apply "the Capitol Brick line of cases" and instead adopt the line of reasoning set forth in Orgoo, Inc. v. Rackspace US, Inc., 341 S.W.3d 34, 39 (Tex. App.—San Antonio 2011, no pet.). We disagree that Orgoo departs from Capitol Brick. In Orgoo, the default judgment was rendered on a different version of the petition than the one that the Secretary, according to its certificate, forwarded to the defendant. In line with Capitol Brick and Cullever, the court held that the Secretary's certificate was "prima facie evidence of the facts recited therein." Id. at 38. As a result of the discrepancy, it concluded that it could not uphold the default judgment. Id. at 41; see also Capitol Brick, 722 S.W.2d at 401 ("Absent fraud or mistake" Secretary's certificate is "conclusive evidence" that Secretary complied with statute). Further, Orgoo is inapplicable here because Rooftop has not showed any mistakes or discrepancies between the default judgment order and the Secretary's certificate.
B. The face of the record reflects no error on the liquidated damages award.
Next, Rooftop contends that error is apparent on the face of the record because the trial court awarded Shopper Events liquidated damages on an unliquidated claim. Rooftop further contends that the final default judgment states the trial court held a hearing and the absence of a court reporter's record constitutes reversible error. Shopper Events responds that the record supports the trial court's award of liquidated damages because its claim is liquidated and a suit on a sworn account.
We need not decide whether Shopper Events met the criteria under rule 185 for a suit on a sworn account because the specific issue here is whether damages are liquidated, and compliance with rule 185 does not contribute to that analysis in this case.
Rule 243 requires the court to hear evidence as to damages if the cause of action is unliquidated or is not proved by an instrument in writing. See Tex. R. Civ. P. 243. Examples of unliquidated damages are the determination of property value absent written instruments verifying the value, personal injury damages, and claims based on repair estimates. See Jones v. Andrews, 873 S.W.2d 102, 107 (Tex. App.—Dallas 1994, no writ) (damages for personal injuries are unliquidated); Willacy Cty. Appraisal Review Bd. v. S. Padre Land Co., 767 S.W.2d 201, 204 (Tex. App.—Corpus Christi 1989, no writ) (holding determination of property value, in case to decide if assessed value was excessive, is not a liquidated demand where only evidence of property value was the conclusory allegation of value in plaintiff's unsworn petition); Alvarado v. Reif, 783 S.W.2d 303, 305 (Tex. App.—Eastland 1989, no writ) (holding that damages based on repair estimate are unliquidated). However, if the claim is liquidated and proved by a written instrument, upon default, the damages shall be assessed by the court and final judgment rendered in that amount unless the defendant demands a jury. See Tex. R. Civ. P. 241.
A claim is liquidated under rule 241 if it may be proved by (1) a written instrument such that the amount of damages can be accurately calculated by the trial court from the instrument and (2) the factual (as opposed to conclusory) allegations in the petition. Novosad v. Cunningham, 38 S.W.3d 767, 773 (Tex. App.—Houston [14th Dist.] 2001, no pet. h.) (holding that suit to recover amount due for professional services was a liquidated claim proved by written instruments where plaintiff attached original invoices to verified petition); Mantis v. Resz, 5 S.W.3d 388, 392 (Tex. App.—Fort Worth 1999, pet. denied), overruled in part on other grounds by Sheldon v. Emergency Med. Consulting, I, P.A., 43 S.W.3d 701, 701-02 n.2 (Tex. App.—Fort Worth 2001, no pet.) (holding that claim was liquidated and proved by written instruments where evidence before trial court included petition on sworn account alleging that plaintiff performed services at defendant's request, amount that defendant owed plaintiff for those services, itemized invoices, written demand to defendant, and citation).
In this no-answer default judgment, Rooftop's failure to file an answer operates as an admission of the material facts alleged in the petition, except as to unliquidated damages. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 83 (Tex. 1992). Likewise, Rooftop admitted to the requests for admission included in the petition because Rooftop neither answered nor objected to the requests. See Tex. R. Civ. P. 198; see also Steffan v. Steffan, 29 S.W.3d 627, 629-31 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (holding that requests for admission are deemed admitted by operation of law when a party does not timely answer or object to the requests, even in situations wherein the responding party fails to answer a lawsuit).
On the day of the default judgment, the trial court had before it the petition, which includes requests for admission. Attached to the petition is an "Exhibit A," or the account, which consists of three itemized invoices. Also attached is the affidavit of Loren Olshi, an agent of Shopper Events, taken before an officer authorized to administer oaths, to the effect that Shopper Events's account, claim, and cause of action for $96,076.99 is within her personal knowledge just and true, that it is due, and that all just and lawful offsets, payments and credits have been allowed. The petition and the attached invoices support the following facts:
Rooftop purchased from Shopper Events: (1) Sam's Club In-Club Roadshows Doom Fighter & Skywriter, and services, for $25,831.25; (2) Sam's Club In-Club Roadshows UFO/Gyrocopters, and services, for $1,072.49; and (3) Sam's Club In-club Roadshows Doom Fighter & Skywriter, and services, for $69,176.25. The invoices also included the dates of purchase, and receipt of, the goods and services. These goods and services are reflected in the account. The total balance due on the account is $96,079.99, and all just and lawful offsets, payments, and credits have been allowed. The prices listed in the account were the agreed prices or reasonable market values for the goods and services. Rooftop promised to pay the balance reflected in the account, Shopper Events presented the account to Rooftop demanding payment of the account, and Rooftop acknowledged the account as justly due and owing.
Because the amount of damages may be determined by examining the invoices and the factual allegations in the petition, we hold that the claim is liquidated. See Novosad, 38 S.W.3d at 773. Accordingly, the trial court did not err in awarding liquidated damages to Shopper Events. See Tex. R. Civ. P. 241, 243.
Rooftop contends that the claim is unliquidated because the balance of the invoices includes labor based on "actual hours," and no evidence indicates the hourly rate for, or the hours spent on, labor. Rooftop directs us to an unpublished case from the Dallas court of appeals. See Courtney Equip. Co., Inc. v. Romco Equipment Co., No. 05-94-01121-CV, 1995 WL 259215, at *5 (Tex. App.—Dallas May 2, 1995, writ dism'd) (mem. op., not designated for publication). Courtney is an unpublished civil opinion issued by another court of appeals before January 1, 2003; accordingly, Courtney has no precedential value. Tex. R. App. P. 47.7(b).
Further, we reject Rooftop's contention that the "failure to have the court reporter make a record constitutes reversible error." Rooftop relies on Vaughan v. Medina, No. 01-09-00885-CV, 2011 WL 1233556, at *2 (Tex. App.—Houston [1st Dist.] Mar. 31, 2011, no pet.) (mem. op.), in making its argument. The Vaughan court recognized that this rule applies only to a post-answer default judgment. Id. Because Rooftop did not file an answer, this rule is inapplicable.
Accordingly, we overrule Rooftop's fifth issue.
C. The face of the record reflects no error on the attorneys' fees award.
Rooftop next argues that the trial court erred in awarding attorneys' fees because Shopper Events requested a percentage of the recovery as a fee without showing the fees were reasonable and necessary. Rooftop clarifies that it is "not arguing that the trial court was not allowed to award attorney's fees without holding a hearing." Shopper Events responds that its Attorneys' Fees Affidavit was sufficient to show that the fees were reasonable and necessary.
Rooftop again asserts that the final default judgment states that it held a hearing, "but there is no [c]ourt [r]eporter's [r]ecord to determine what, if any, evidence was submitted at the hearing" and that "failure to have the court reporter make a record constitutes reversible error." We reject Rooftop's contention that the absence of a court reporter's record constitutes reversible error for the reasons stated in our discussion of Rooftop's fifth issue.
Rooftop relies on Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W.2d 812, 818-19 (Tex. 1997). In Arthur Andersen, the Supreme Court of Texas concluded that evidence of a contingency fee agreement alone cannot support an award of reasonable and necessary attorney's fees. Id. A party must ask for a specific dollar amount instead of a percentage of judgment and also present evidence that shows the fees were reasonably incurred and necessary to the prosecution of the case. Id. (discussing Tex. Disciplinary R. Prof. Conduct 1.04(b)'s factors for determining reasonableness).
Here, the attorney for Shopper Events presented his affidavit in support of the attorneys' fees. In his affidavit, he testified that:
• He was "familiar with the fees customarily charged by practicing attorneys in Harris County, Texas, with regard to matters on a contingent fee basis for the Plaintiff based upon the amount of debt to be collected";
• His efforts to collect Rooftop's debt included "investigating to determine Defendants' circumstances, attempting to secure collection of the indebtedness by amicable means, preparing and filing the Petition in this cause, arranging for service of citation and preparing and filing the Judgment";
• "All actions taken by the attorneys for [Shopper Events] were
reasonable and necessary in prosecuting this matter"; andBecause Shopper Events requested a specific dollar amount and presented evidence that the attorneys' contingency fees were both reasonable and necessary, we cannot conclude that the trial court erred by awarding the requested attorneys' fees. We overrule Rooftop's sixth issue.
• In his opinion, "a reasonable and customary attorneys' fee in this matter based upon the amount in controversy would be at least $32,000."
IV. CONCLUSION
Having overruled Rooftop's six issues, we affirm the judgment of the trial court.
/s/ Marc W. Brown
Justice Panel consists of Justices Boyce, Jamison, and Brown.