Pns Stores Inc. D/B/A Macfrugal's Bargain Closeouts D/B/A Macfrugals Inc. v. Rivera

• Decision Date: 03 November 2010
• Docket Number: No. 04–09–00561–CV.,04–09–00561–CV.
• Citation: Pns Stores Inc. D/B/A Macfrugal's Bargain Closeouts D/B/A Macfrugals Inc. v. Rivera, 335 S.W.3d 265 (Tex. App. 2010)
• Parties: PNS STORES, INC. d/b/a MacFrugal's Bargain Closeouts d/b/a MacFrugals, Inc., Appellants,v.Anna E. RIVERA as Next Friend for Rachel Rivera, Appellee.
• Court: Texas Court of Appeals

335 S.W.3d 265

PNS STORES, INC. d/b/a MacFrugal's Bargain Closeouts d/b/a MacFrugals, Inc., Appellants,

v.Anna E. RIVERA as Next Friend for Rachel Rivera, Appellee.

No. 04–09–00561–CV.

Court of Appeals of Texas, San Antonio.

Nov. 3, 2010.

David A. Oliver Jr., Tiffany Bingham Briscoe, Paul B. Kerlin, Vorys, Sater, Seymour and Pease LLP, Houston, TX, for Appellants.Bernard Wm. Fischman, Attorney at Law, Richard Tinsman, Daniel J.T. Sciano, Tinsman & Sciano, Inc., San Antonio, TX, Kimberly S. Keller, The Keller Law Firm, Boerne, for Appellee.Peter D. Kennedy, James A. Hemphill, Graves Dougherty, Hearon & Moody, PC, Austin, TX, for Amicus Curiae CSC–Lawyers Incorporating Service Company.Sitting: SANDEE BRYAN MARION, Justice, PHYLIS J. SPEEDLIN, Justice, MARIALYN BARNARD, Justice.

OPINION

Opinion by: MARIALYN BARNARD, Justice.

This is an appeal from the granting and denial of summary judgment motions related to a bill of review. PNS Stores, Inc. d/b/a MacFrugal's Bargain Closeouts d/b/a MacFrugals, Inc. (“PNS”) filed a bill of review, attempting to overturn a state court default judgment. Both parties filed motions for summary judgment relating to the bill of review. The trial court denied PNS's motion for summary judgment, and granted the motions for summary judgment filed by Anna E. Rivera as next friend of Rachel Rivera (“Rivera”). On appeal, PNS contends the trial court erred in denying its motion for summary judgment and granting the “traditional motion for summary judgment, [ ] no evidence motion for summary judgment, and three supplemental motions for summary judgment” filed by Rivera. PNS raises the following issues, challenging the trial court's judgment in favor of Rivera, and contending:

(1) the federal court's dismissal of Rivera's claims against PNS by summary judgment voids the subsequent state court default judgment based on res judicata and collateral estoppel;

(2) the default judgment in favor of Rivera is void because the state court lacked jurisdiction over PNS because the face of the record affirmatively shows lack of service and improper service on PNS;

(3) the trial court unconstitutionally applied a four-year statute of limitations to PNS's claim because PNS had no knowledge of Rivera's state court suit or the default judgment for nine years;

(4) the amount of unliquidated damages awarded in the default judgment is unenforceable because the record is devoid of any evidence of damages;

(5) the trial court erred in granting Rivera's motions for summary judgment because PNS presented more than a scintilla of evidence on extrinsic fraud, including fraud by Rivera's former attorney; (6) the trial court erred in denying PNS's motion to compel Rivera's children to answer non-privileged questions relevant to extrinsic fraud;

(7) the trial court erred in denying PNS's request to supplement its summary judgment response with official bankruptcy records filed by Rivera's former attorney; and

(8) the trial court erred in denying PNS's request to supplement its summary judgment response with the deposition of James W. Karel.

We affirm the trial court's judgment.

Background

In 1998, sixty-eight-year-old Rachel Rivera was shopping at a MacFrugal's Bargain Closeouts store in San Antonio, Texas when she allegedly slipped and fell on a toy lying in the aisle, sustaining a broken hip. As a result of the alleged fall and injury, Rivera filed suit in Bexar County, Texas on December 29, 1998, asserting premises liability and negligent training and supervision claims against PNS. According to Rivera, PNS was served with process through its registered agent, Prentice Hall Corporation Systems (“Prentice Hall”), and received the notice of process on or about January 15, 1999.

In January 1999, PNS removed the case to federal court based on diversity jurisdiction. Ultimately, PNS filed a motion for summary judgment on all of Rivera's claims, contending there was no evidence of actual or constructive knowledge of the dangerous condition. The case was referred to a federal magistrate. Following two recommendations that PNS's motion for summary judgment be granted, a federal judge accepted the magistrate's recommendation, and on January 7, 2000, entered a judgment granting PNS's motion for summary judgment and dismissing the case. The January 7, 2000 judgment was specifically entered “without prejudice.” It was not until May 14, 2009, that the federal judge, at PNS's request, issued a nunc pro tunc order clarifying that the original summary judgment was with prejudice.¹

On January 11, 2000, just four days after the summary judgment was entered, PNS received a letter from one if its attorneys, James W. Karel, who advised PNS that although summary judgment had been granted, the case had been dismissed without prejudice. As Karel explained, in pertinent part:

... [the federal judge] dismissed this case without prejudice. As I am sure you know, we are of the opinion that the Judge should have dismissed the case with prejudice to refiling and we have tried to “second guess” the reason for [the judge's] not doing so. With the caveat that it is, at best, well reasoned speculation, I think that the purpose for the Court not dismissing the case with prejudice was to afford the Plaintiff the best possible opportunity to keep her case alive. Perhaps [the judge] is thinking that Ms. Rivera may well elect to get a different attorney to either prosecute some post-trial motions.... It is also plausible that [the judge] is trying to send a message to Ms. Rivera that inasmuch as the statute of limitations has not yet run, she may wish to consider refiling the lawsuit. For whatever reason, although we could, theoretically, try to persuade the Court to dismiss the case with some post-trial motions, I do not recommend we pursue that course of action.

Having said all this, inasmuch as the statute of limitations has not yet run, it is always possible that Plaintiff's counsel may elect to refile this case, either in State District Court or in Federal Court.

As predicted by Karel, Rivera refiled her case in state court on April 5, 2000, asserting claims against PNS that were identical to those dismissed pursuant to the federal court's summary judgment order. Rivera's attorney was Oscar Tamez, the same attorney she had when she first filed the suit. The summary judgment evidence shows notice of the suit was served on Prentice Hall, just as it had been when Rivera filed her original suit in state court. The summary judgment evidence also shows the notice of suit was sent certified mail, return receipt requested, and received by Prentice Hall on May 25, 2000. ² Prentice Hall's records, according to the testimony of its custodian of records, show the notice was forwarded to PNS. More specifically, once Prentice Hall received the notice of process regarding Rivera's second lawsuit, a Prentice Hall employee input the information into its computer system. Thereafter, Sequent, a computer program used by the company, generated a Notice of Service of Process form addressed to PNS, which described the papers being transmitted to PNS by Prentice Hall, and requesting PNS acknowledge receipt of the documents:

Please acknowledge receipt of this notice and the enclosures by signing and returning the acknowledgment copy.

The notice generated by Prentice Hall, a copy of the lawsuit, the acknowledgment form, and a return envelope for the acknowledgment were forwarded via Federal Express Overnight to the attention of “Michael Schlonsky, Esquire” in Columbus, Ohio, an attorney and the head of PNS's risk management department. From 2000 to 2005, Schlonsky was PNS's designated recipient for this type of information.³ According to its computer records, Prentice Hall received the acknowledgment that PNS had received the notice of Rivera's second lawsuit on June 2, 2000—within eight days of the time it was first sent by Prentice Hall. Prentice Hall's custodian of records testified that if the acknowledgment had not been received by Prentice Hall within ten days, a reminder notice would have been automatically sent.

Despite the foregoing, PNS claims it never received Rivera's April 5, 2000 petition. PNS points out that the filings in the default judgment action contained a certified mail green card showing service on Prentice Hall on May 25, but no year of service is shown. PNS further contends the officer's return, executed by a private process server, is in conflict because it shows service by mail “VIA USPS,” and states it was served “in person” at “800 Brazos St. Austin, TX 78701.” Thus, according to PNS, the default judgment record does not establish when service was made or how.

PNS did not file an answer to Rivera's second state court suit. Accordingly, on June 20, 2000, Rivera sought and obtained a default judgment against PNS in the amount of $1,480,677.74 plus post-judgment interest. According to an affidavit from the court reporter, who was in the trial court on June 20, 2000, a request for a reporter's record from the default judgment hearing was made; however, she could not confirm any record was actually taken because she was only required to keep her notes for three years, and all of her records from the time period of the default judgment had been destroyed. See Tex. Gov't Code Ann. § 52.046(a)(4) (West 2005) (requiring court reporter to maintain notes for three years from date of hearing). On the same day the default judgment was entered, Rivera's attorney, Oscar Tamez, filed a “Certificate of Last Known Address” for PNS, naming Prentice Hall and providing its address.

According to deposition testimony from Prentice Hall's custodian of records, Prentice Hall received a Notice of Judgment from the Bexar County District Clerk on June 29, 2000. The notice was dated June 26, 2000. Prentice Hall processed the notice, sending it via Federal Express to Schlonsky, just as it did the notice of suit and the petition. Just as before,...