American Steel Bldg. Co., Inc. v. Davidson & Richardson Const. Co.

• Citation: 847 F.2d 1519
• Decision Date: 27 June 1988
• Docket Number: No. 87-8500,87-8500
• Parties: AMERICAN STEEL BUILDING COMPANY, INC., Plaintiff-Appellee, v. DAVIDSON & RICHARDSON CONSTRUCTION COMPANY, et al., Defendants, Fred Davidson, a/k/a Zed Davidson, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1519

847 F.2d 1519

AMERICAN STEEL BUILDING COMPANY, INC., Plaintiff-Appellee, v. DAVIDSON & RICHARDSON CONSTRUCTION COMPANY, et al., Defendants Fred Davidson, a/k/a Zed Davidson, Defendant-Appellant.

No. 87-8500.

United States Court of Appeals Eleventh Circuit.

June 27, 1988.

Rehearing Denied Sept. 12, 1988.

G. Brinson Williams, Jones Osteen Jones & Arnold, Billy Jones, Hinesville, Ga., for defendant-appellant.

Lamb & Associates, Michael A. Dominy, Atlanta, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before HILL and JOHNSON, Circuit Judges, and TUTTLE, Senior Circuit Judge.

HILL, Circuit Judge:

This appeal involves the enforcement of a default judgment entered in a Texas court. The district court held that the Texas judgment was entitled to full faith and credit and granted summary judgment in favor of the plaintiff. We reverse.

I. FACTS

American Steel Building Company, Inc., appellee, entered into a written contract with Fred Davidson, appellant, and Michael Richardson. The contract provided that Davidson and Richardson would purchase three specially manufactured steel buildings from American Steel. The contract also contained a forum selection clause:

This contract shall be deemed to have been executed in the State of Texas, and the laws of the State of Texas shall be applicable thereto ... and to the extent permitted by law, it is agreed that any litigation arising hereunder shall be had in the Courts of appropriate jurisdiction in Harris County, Texas.

American Steel claims that it manufactured the buildings according to the contract and notified Davidson that they were ready for delivery. According to American Steel, Davidson refused delivery. American Steel then filed suit against Davidson, Richardson, and their partnership, Davidson and Richardson Construction, in Harris County, Texas. Because Davidson was not a resident of Texas and, in fact, had virtually no contact with the state outside of this transaction, American Steel served the Texas Secretary of State pursuant to the Texas long-arm provision, Tex.Rev.Civ.Stat.Ann. art. 2031b (Vernon 1964). The Secretary of State forwarded copies of the complaint and summons by certified mail, return receipt requested to:

Zed Davidson

c/o Davidson Saw Mill & Lumber Co.

Highway 196 West

Hinesville, Georgia 31313

The Secretary of State received the return receipt bearing the signature of Thomas Burriss. ¹ Davidson did not respond to the summons, and a default judgment was entered against Davidson & Richardson Construction, Michael Richardson, and Zed Davidson.

American Steel then filed the present suit in the United States District Court for the Southern District of Georgia, seeking to enforce the default judgment. The complaint named as defendants Davidson & Richardson Construction, Michael Richardson, and Fred Davidson a/k/a Zed Davidson. Only Fred Davidson was served and took part in this action. In an affidavit, Fred Davidson stated that he has never been known by the name "Zed Davidson."

American Steel moved for summary judgment arguing that there were no genuine issues of material fact relating to the enforceability of the Texas judgment. The district court found that the Texas court had properly obtained jurisdiction over Davidson and that the Texas judgment was entitled to full faith and credit. The district court entered summary judgment in favor of American Steel. Davidson appealed at that time, but the appeal was dismissed because the action remained pending as to the other named defendants. Subsequently, American Steel voluntarily dismissed those defendants, and Davidson filed the present appeal.

II. DISCUSSION

Under 28 U.S.C. Sec. 1738, federal courts must give full faith and credit to the final judgments of state courts. That obligation is, however, subject to an important limitation: "before a court is bound by the judgment rendered in another State, it may inquire into the jurisdictional basis of the foreign court's decree. If that court did not have jurisdiction over the subject matter or the relevant parties, full faith and credit need not be given." Underwriters National Assurance Co. v. North Carolina Life & Accident & Health Ins. Guaranty Ass'n, 455 U.S. 691, 705, 102 S.Ct. 1357, 1366, 71 L.Ed.2d 558 (1982). The full faith and credit statute thus requires a two-tiered analysis: first, we must consider whether the original court had jurisdiction, thus entitling the judgment to full faith and credit; and second, we must determine how much credit the judgment is entitled to receive. See id.; Fehlhaber v. Fehlhaber, 681 F.2d 1015, 1020 (5th Cir. Unit B 1982), cert. denied, 464 U.S. 818, 104 S.Ct. 79, 78 L.Ed.2d 98 (1983). Our first step is to determine whether the Texas court properly obtained jurisdiction over Fred Davidson.

In order to obtain jurisdiction over Davidson, the Texas court was required to comply with Texas law and the federal constitution. Because we find that the requirements of Texas law were not met, we need not address the constitutional issues. ²

As an initial matter, we note that a Texas court would not allow a collateral attack on the default judgment based upon jurisdictional defects. See, e.g., A.L.T. Corp. v. Small Business Admin., 801 F.2d 1451, 1457 (5th Cir.1986) ("Texas courts refuse to entertain collateral attacks based on service defects if the judgment recites that the defendant was fully served."); Imatani v. Marmolejo, 606 S.W.2d 710, 713 (Tex.App.1980) ("[A] defendant who is not served with process and who does not make any appearance at the trial may not, as a matter of public policy, attack the verity of a judgment in a collateral attack."). As noted above, however, federal courts may inquire into the jurisdictional basis of a judgment before according the judgment full faith and credit. That inquiry is, of course, constrained by principles of res judicata: "a judgment is entitled to full faith and credit--even as to questions of jurisdiction--when the second court's inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court which rendered the original judgment." Underwriters Nat., 455 U.S. at 706, 102 S.Ct. at 1366-1377 (quoting Durfee v. Duke, 375 U.S. 106, 111, 84 S.Ct. 242, 245, 11 L.Ed.2d 186 (1963)). In the present case, Davidson never appeared in the Texas court, never litigated the jurisdictional issues, and judgment was by default. This court has held that where the defendant does not appear, and judgment is by default, the state court judgment does not preclude the federal court from reviewing the jurisdictional issues. See Borg-Warner Acceptance Corp. v. Lovett & Tharpe, Inc., 734 F.2d 639, 640-41 (11th Cir.1984); Hazen Research Inc. v. Omega Minerals, Inc., 497 F.2d 151, 154 (5th Cir.1974). We are thus required to review the jurisdictional issues in this case. ³

As noted previously, American Steel attempted to serve Davidson and establish jurisdiction under the Texas long-arm statute, Tex.Rev.Civ.Stat.Ann. art. 2031b. Under section 5 of the statute, substitute service may be accomplished on a non-resident defendant by delivering a copy of the summons and complaint to the Texas Secretary of State. The Secretary of State must obtain a statement of the name and address of the defendant, and then forward the material to the defendant by registered mail, return receipt requested.

Davidson argues that service of process was deficient under Texas law for two reasons. First, he argues that the material was mailed to "Zed Davidson" and he has never been known by that name. Second, he argues that he never actually received the material and that Thomas Burriss, who signed the return receipt, was not his agent. ⁴ It is clear that the latter objection has no basis under Texas law. Texas does not require that a defendant actually receive the material, but only that it is served and mailed according to the statutory requirements. See TXXN, Inc. v. D/FW Steel Co., 632 S.W.2d 706, 708 (Tex.App.1982) (statute satisfied despite the fact that receipt was returned "Not Deliverable As Addressed, Unable To Forward"). Thus, as the district court found, it is not decisive that Thomas Burriss was not Davidson's agent or that Davidson may not have actually received notice.

We find, however, that the error in the name to which the Secretary of State mailed the summons and complaint is decisive under Texas law, and that it is fatal to the Texas court's exercise of jurisdiction. The Texas courts have made it abundantly clear that the requirements of any statute providing for substitute service must be "strictly complied with." See Whitney v. L & L Realty Corp., 500 S.W.2d 94, 95-96 (Tex.1973); McKanna v. Edgar, 388 S.W.2d 927, 929 (Tex.1965); Lynn McGuffy Co., Inc. v. Perfected Indus. Prod., Inc., 683 S.W.2d 781, 782 (Tex.App.1984); Verges v. Lomas & Nettleton Financial Corp., 642 S.W.2d 820, 821 (Tex.App.1982). ⁵ Under this firm rule of strict compliance, the record must show on its face that the statute was complied with and the showing may not be aided by generous inferences. McKanna, 388 S.W.2d at 929-30. As an example of the severity of this rule, a Texas court has held that the statute was not complied with where the plaintiff provided the Secretary of State with the "last known address" of the defendant rather than the defendants "home or home office" address. See Verges, 642 S.W.2d at 822.

The complaint and summons in the present case were addressed to "Zed Davidson," while the intended recipient stated that he has never been known by that name. Such an error cannot survive the strict compliance test applicable under Texas law. While the defendant might have been able to discern that the notice was intended for him, Texas law does not permit such speculation or inference. Rather, we may only inquire whether notice mailed to "Zed Davidson" strictly complies with the...