Crown Bay Mgmt. v. Surface Works, Inc.
| Docket Number | 02-21-00025-CV |
| Decision Date | 27 January 2022 |
| Parties | Crown Bay Management, LLC d/b/a Lakeshore VillageApartments, Appellant v. Surface Works, Inc. d/b/a Surface Connection and WellsFargo Bank, N.A., Appellees |
| Court | Texas Court of Appeals |
On Appeal from County Court at Law No. 2, Tarrant County, Texas Trial Court No. 2020-002577-2
Before Bassel, Wallach, and Walker, JJ. Memorandum Opinion by Justice Walker
In this garnishment action, we are asked to determine whether the trial court that entered the underlying default judgment had personal jurisdiction over a Georgia company. We conclude that because the record surrounding the entry of the default judgment affirmatively revealed a jurisdictional defect, the resulting garnishment judgment founded on the default judgment must be reversed.
Appellee Surface Works, Inc. d/b/a Surface Connection (a Texas corporation) filed a suit on a sworn account, a quantum meruit claim, and a breach of contract claim against appellant Crown Bay Management d/b/a Lakeshore Village Apartments (a Georgia company) and LVA Holdings d/b/a Lakeshore Village Apartments (a South Carolina company) in Tarrant County, Texas. Surface Works alleged that it had contractually sold and provided resurfacing products to Crown Bay and LVA to be used at LVA's South Carolina apartments, which Crown Bay managed. Crown Bay and LVA had allegedly failed to pay Surface Works approximately $20, 000 under the contract. Because Crown Bay and LVA did not have a registered agent for service in Texas, Surface Works served them through the Texas Secretary of State, who then sent the citations to Crown Bay's address in Georgia and to LVA's address in South Carolina. See Tex. Bus. Orgs. Code Ann. §§ 5.251-.254; Tex. Civ. Prac. & Rem. Code Ann. §§ 17.044-.045.
When neither answered the suit, Surface Works successfully sought a default judgment. See Tex. R. Civ. P. 239, 241.
Seven months later, Surface Works filed an application for writ of garnishment against Crown Bay's and LVA's checking accounts with appellee Wells Fargo Bank, N.A. See Tex. R. Civ. P. 658. The trial court clerk issued the writ of garnishment directed to the garnishee-Wells Fargo. See Tex. R Civ. P. 659. Wells Fargo answered and stated that it was withholding the judgment amount from Crown Bay's account, which contained $81, 693.33.[1] See Tex. R Civ. P. 665.
On the same day that Wells Fargo answered the writ, Crown Bay and LVA filed a declaratory-judgment action in Georgia against Surface Works and Wells Fargo, seeking a declaration that they had not owed any amounts on the account and a permanent injunction of any collection efforts. They also raised a breach-of-contract claim based on their vendor agreement with Surface Works. The Georgia trial court entered an ex parte temporary restraining order that restrained Wells Fargo from freezing the funds. But after a hearing, the Georgia court denied Crown Bay and LVA's motion for a preliminary injunction, concluding that they had not shown irreparable harm, a likelihood of success on the merits of their case, or the absence of any other available remedy.
Surface Works then moved for judgment on its writ. See Tex. R. Civ. P. 668. Crown Bay filed a petition to intervene and a motion to dissolve the writ of garnishment, arguing that because the trial court had not had sufficient personal jurisdiction over it to enter the default judgment, the judgment was void and therefore could not be the basis for a garnishment judgment. See Tex. R. Civ. P. 664a. Notably, Crown Bay did not attempt to directly attack the default judgment through a restricted appeal or a bill of review. See generally Tex. R App. P. 26.1(c) (setting six-month deadline to directly attack a judgment in a restricted appeal); Tex. R Civ. P. 329b(f) (); PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 275 (Tex. 2012) (); Garcia v. Ennis, 554 S.W.3d 209, 213-16 (Tex. App.-Fort Worth 2018, no pet.) (discussing bill of review used as direct challenge to default judgment allegedly entered without proper service of citation on defendant).
After an evidentiary hearing, the trial court denied Crown Bay's motion to dissolve the writ of garnishment and granted Surface Works' motion for judgment, ordering that Surface Works could recover the default-judgment amount from Wells Fargo. See Tex. R Civ. P. 668. The trial court also entered findings of fact and conclusions of law that Crown Bay had minimum contacts with Texas sufficient for the trial court to have exercised personal jurisdiction and to have entered the default judgment. Thus, the trial court concluded that at the time the writ of garnishment was issued, Surface Works had a valid judgment against Crown Bay.
On appeal, Crown Bay argues that the trial court erred by entering judgment on the writ of garnishment because the default judgment, upon which the writ was based, was void for a lack of personal jurisdiction based on Crown Bay's lack of minimum contacts in Texas. In short, Crown Bay is collaterally attacking the default judgment. See PNS Stores, 379 S.W.3d at 272.
A judgment is void and may be collaterally attacked at any time when "the court rendering judgment had no jurisdiction of the parties or property, no jurisdiction of the subject matter, no jurisdiction to enter the particular judgment, or no capacity to act." Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 863 (Tex. 2010); see also Fleming v. Seeligson, 57 Tex. 524, 531 (1881) (). If a personal-jurisdiction defect implicates due process, the judgment will be void and cannot be used to support a writ of garnishment. See PNS Stores, 379 S.W.3d at 272; Kelly v. Gibbs, 19 S.W. 563, 563 (Tex. 1892) (op. on reh'g); Amato v. Hernandez , 981 S.W.2d 947, 950 (Tex. App.-Houston [1st Dist] 1998, pet. denied) (op. on reh'g). But if a personal-jurisdictional defect does not implicate due process, e.g., there was a lack of proper service of process, the judgment is merely voidable and is not subject to a collateral attack. See Joiner v. Vasquez , 632 S.W.2d 755, 757 (Tex. App.-Dallas 1981, no pet).
In a collateral attack of an allegedly void judgment, the judgment is presumed valid unless the record affirmatively reveals a jurisdictional defect. PNS Stores, 379 S.W.3d at 273. This presumption extends to the fact that "the parties have been properly brought into court." State Mortg. Corp. v. Ludwig, 48 S.W.2d 950, 954 (Tex. 1932). We may not consider extrinsic evidence in determining the affirmative presence of a jurisdictional defect. See York v. State, 373 S.W.3d 32, 41 (Tex. 2012); White v. White, 179 S.W.2d 503, 504-05 (Tex. [Comm'n Op.] 1944); Levy v. Roper, 256 S.W. 251, 253 (Tex. 1923) (quoting Crawford v. McDonald, 33 S.W. 325, 328 (Tex. 1895)); Stockyards Natl Bank v. Presnall, 194 S.W. 384, 384 (Tex. 1917); see also PNS Stores, 379 S.W.3d at 273; In re Blankenship, 392 S.W.3d 249, 257 (Tex. App.-San Antonio 2012, no pet).
Crown Bay bases its personal-jurisdiction argument on evidence it largely adduced at the trial court's hearing on its motion to dissolve the writ and on Surface Works' motion to render judgment on the writ, specifically: (1) Crown Bay's corporate counsel's testimony at the hearing that Crown Bay is not registered to do business in Texas and does not conduct any business in Texas; (2) Surface Works' credit manager's testimony at the hearing that she called and emailed Crown Bay and LVA from Texas to attempt to collect the monies due and that their orders had been either called in or emailed to Surface Works in Texas; (3) the evidence at the hearing showing that the only contact with Texas was Crown Bay's contracting with a Texas resident-Surface Works; and (4) Surface Works' failure to allege jurisdictional facts in its original suit.
As we explained, Crown Bay must establish that the default judgment was void based on the record as it stood at the time the default judgment was rendered. Accordingly, any evidence adduced in Crown Bay's collateral attack-in connection with its postjudgment motion to dissolve the writ as an intervenor-is not considered. See Mitchell v. Map Res., Inc., 615 S.W.3d 212, 220 (Tex. App.-El Paso 2020, pet. pending) (plurality op.) (); Holloway v. Starnes, 840 S.W.2d 14, 18 (Tex. App.-Dallas 1992, writ denied) (); cf. In re D.L.S., No. 05-08-00173-CV, 2009 WL 1875579, at *2 (Tex. App.-Dallas July 1, 2009, no pet.) (mem. op.) ( because extrinsic evidence cannot be considered, "[a] collateral attack fails if the judgment contains jurisdictional recitals, even if other parts of the record show a lack of jurisdiction"; thus, "jurisdictional recitals in a judgment that is regular on its face import absolute verity and can be attacked only directly, not collaterally").
Accordingly we focus on the record surrounding the default judgment. To establish a personal-jurisdictional defect sufficient to render the default judgment void, this record must "expose[] personal jurisdictional deficiencies as to violate due process." PNS Stores, 379 S.W.3d at 273. Surface Works alleged in its petition that...
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