Boyo v. Boyo

• Decision Date: 15 June 2006
• Docket Number: No. 09-05-233 CV.,09-05-233 CV.
• Citation: 196 S.W.3d 409
• Parties: ANDREW BOYO, ABNL, INC., and ABNL, Ltd., Appellants, v. Margaret BOYO, Appellee.
• Court: Texas Court of Appeals

196 S.W.3d 409

ANDREW BOYO, ABNL, INC., and ABNL, Ltd., Appellants, v. Margaret BOYO, Appellee.

No. 09-05-233 CV.

Court of Appeals of Texas, Beaumont.

Submitted March 3, 2006.

Decided June 15, 2006.

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Olu McGuinnis Otubusin, Uche Mgbaraho, Martina E. Cartwright, Andrew L. Jefferson, Houston, for appellants.

Ralphaell V. Wilkins, The Wilkins Law Firm, Houston, for appellee.

Before McKEITHEN, C.J., GAULTNEY and KREGER, JJ.

OPINION

DAVID GAULTNEY, Justice.

Margaret Boyo filed a petition for divorce against Andrew Boyo. In the same petition, Margaret sued ABNL, Ltd., a foreign limited liability corporation established under Nigerian law, and ABNL, Inc., a Delaware corporation doing business in Texas. She alleged Andrew and the two companies fraudulently transferred funds and defrauded Margaret of her interest in community property. She alleged Andrew used the two companies to divert community assets in order to deprive her of a just and right division of the marital estate.

Margaret attempted to serve ABNL, Ltd. through the Texas Secretary of State. The company did not file an answer and the trial court entered a default judgment against ABNL, Ltd.

The trial court appointed Margaret and Andrew joint managing conservators of their two children, and ordered Andrew to pay child support and spousal maintenance to Margaret. The final decree granted the divorce, divided the marital estate, enjoined Andrew Boyo from removing the children from the continental United States, found the two companies were alter egos of Andrew, found Andrew conspired with the companies to deplete the community estate through fraudulent transfers, and awarded Margaret $1.25 million from Andrew and the two companies, jointly and severally.

ABNL, Ltd. filed a restricted appeal claiming the trial court lacked jurisdiction to grant the default judgment because ABNL, Ltd. does not do business in Texas and does not have sufficient minimum contacts with the State. The company says it was not given notice of the claims against it and was denied due process of law. Andrew and ABNL, Inc. appealed the alter ego and fraud findings, and the $1.25 million award. Andrew also appealed the injunction.

We affirm the injunction. We reverse the default judgment against ABNL, Ltd., and we reverse the $1.25 million judgment against Andrew and ABNL, Inc. The cause is remanded for further proceedings consistent with this opinion.

THE BACKGROUND

Andrew and Margaret married in Nigeria in 1993, arrived in the United States in 1997, and moved to Montgomery County, Texas, in 1999. Prior to the marriage, Andrew owned and managed Andy Boyo Nigeria, Ltd. The company name was later changed to ABNL, Ltd. Andrew was the majority shareholder, chief executive officer, and managing director of ABNL, Ltd. According to Andrew, two other individuals and an "employee/management share" owned the remaining shares.

In 1997, ABNL, Ltd. decided to incorporate ABNL, Inc. in Delaware to handle administrative matters in the United States for ABNL, Ltd. In 1998, sixty percent of the new corporation's shares were assigned to ABNL, Ltd., twenty percent to Andrew, fifteen percent to Peter Boyo, and five percent to Steve Oke. ABNL, Inc. contracted with ABNL, Ltd. to perform administrative services for ABNL, Ltd. from 1998 until 2003.

In 1998, ABNL, Ltd. and Baker Hughes entered into a contract with Shell Petroleum Development Company to construct a barge in New Orleans for exploration work in Nigeria. Shell paid for the construction of the barge during 1999, 2000 and 2001. Andrew testified he individually guaranteed a loan for ABNL, Ltd. for 36 million naira (Nigerian currency) from Community Circular Bank in Nigeria in 1999. Andrew says he pledged his 800,000 shares in ABNL, Ltd. and real estate in Nigeria as security. He testified that in 2001, ABNL, Ltd. defaulted on the loan and Community Circular Bank foreclosed on his ownership interest in the corporation and on the real estate. ABNL, Ltd. contracted with Shell again in 2003 to build another barge but, according to Andrew, Shell cancelled this $34 million contract. Andrew testified that at the time of the execution of this contract, he no longer had any ownership interest in ABNL, Ltd. and was working for the company as a consultant. He says ABNL, Ltd. informed ABNL, Inc. in 2003 that ABNL, Ltd. would not renew the administrative services contract between the two entities. Andrew testified ABNL, Inc. is now defunct.

Margaret filed for divorce in 2002.

THE DEFAULT JUDGMENT AGAINST ABNL, LTD.

ABNL, Ltd. claims the trial court lacked jurisdiction over the company because the company does not have sufficient minimum contacts with Texas. See Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 225-31 (Tex.1991) ("Federal constitutional requirements of due process limit the power of the state to assert personal jurisdiction over a nonresident defendant[.])." ABNL, Ltd. argues the attempted exercise of jurisdiction by the trial court over the company denied the company due process of law. Margaret contends ABNL, Ltd. waived any jurisdictional challenge by failing to file a special appearance in the trial court. See, e.g., Lang v. Capital Res. Invs., I & II, L.L.C., 102 S.W.3d 861, 864 (Tex.App.-Dallas 2003, no pet.). ABNL, Ltd. responds it never received notice of the lawsuit because Margaret's service of process on the company through the Secretary of State was defective.

We do not accept the argument that ABNL, Ltd. waived its jurisdictional challenge by not making a special appearance in the trial court before filing this restricted appeal. Due process requires that a party be given notice and an opportunity to present its objections. See Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 85-87, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988). Rule 120a, which requires a special appearance be filed before any other pleading or motion, applies to proceedings in the trial court. See TEX.R. CIV. P. 2 (scope of rules); see TEX.R. CIV. P. 120a ("Every appearance, prior to judgment, not in compliance with this rule is a general appearance."). See generally Lang, 102 S.W.3d at 864 (Special appearance filed after a default judgment and before motion for new trial, preserved due order of pleading under the circumstances.). A restricted appeal is available to a party who did not participate in the trial court. See TEX. R. App. P. 30; see generally Norman Commc'ns v. Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex.1977) (applying prior Rule 45). The procedure for a restricted appeal would serve little purpose if we require a party to show preservation of the challenge in the trial court before filing a restricted appeal. Furthermore, if notice is not given, a party may not learn of the suit until after the trial court loses jurisdiction over the case. See generally Whitney v. L & L Realty Corp., 500 S.W.2d 94, 96 (Tex.1973) ("If the Secretary fails to forward the process, the defendant will probably not learn of the suit until long after the time for filing a motion for new trial.").

To successfully attack a default judgment by restricted appeal, an appellant must (1) file notice of the appeal within six months of the date of judgment; (2) be a party to the suit; (3) not have participated at trial; (4) not have filed a timely postjudgment motion, request for findings of fact and conclusions of law, or notice of appeal under Rule 26.1(a) of the Texas Rules of Appellate Procedure; and (5) show error apparent from the face of the record. Tex.R.App. P. 26.1(c), 30. See generally Norman Commc'ns, 955 S.W.2d at 270 (applying four requirements under prior Rule 45). ABNL, Ltd. satisfies the first four requirements. The issue presented is whether a lack of jurisdiction is apparent from the face of the record. See Dezso v. Harwood, 926 S.W.2d 371, 373 (Tex.App.-Austin 1996, writ denied).

To obtain service on ABNL, Ltd., Margaret relied on section 17.044(b) of the Texas Civil Practice and Remedies Code, the long-arm statute which provides for service of process on a nonresident defendant. See TEX. CIV. PRAC. & REM.CODE ANN. § 17.044(b) (Vernon 1997). See also TEX.R. CIV. P. 108a; Comm'n of Contracts of the Gen. Executive Comm. of the Petroleum Workers Union of the Republic of Mex. v. Arriba, Ltd., 882 S.W.2d 576, 584 (Tex.App.-Houston [1st Dist.] 1994, no writ). Under that statute, the Secretary of State is "an agent for service of process on a nonresident who engages in business in this state, but does not maintain a regular place of business in this state or a designated agent for service of process, in any proceeding that arises out of the business done in this state and to which the nonresident is a party." TEX. CIV. PRAC. &amp REM.CODE ANN. § 17.044(b). Section 17.045(a) provides that "[i]f the secretary of state is served with duplicate copies of process for a nonresident, the documents shall contain a statement of the name and address of the nonresident's home or home office and the secretary of state shall immediately mail a copy of the process to the nonresident at the address provided." TEX. CIV. PRAC. & REM.CODE ANN. § 17.045(a) (Vernon Supp.2005). If service is obtained through the Secretary of State pursuant to the statute, the Secretary of State's certificate of service, absent fraud or mistake, establishes service of process. Campus Invs., Inc. v. Cullever, 144 S.W.3d 464, 465 (Tex.2004) (citing Capitol Brick, Inc. v. Fleming Mfg. Co., 722 S.W.2d 399, 401 (Tex.1986)).

Because this was a no-answer default judgment, the issue of minimum contacts was not actually litigated in the trial court. See generally Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199 (Tex.1985)(distinguishing default judgments from non-default cases). To support a default judgment based on service under the long-arm statute, the record must show (1) the pleadings...