PNS Stores, Inc. v. Rivera

• Decision Date: 31 August 2012
• Docket Number: No. 10–1028.,10–1028.
• Citation: PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 55 Tex. Sup. Ct. J. 1400 (Tex. 2012)
• Parties: PNS STORES, INC., d/b/a MacFrugal's Bargain Closeouts d/b/a/ MacFrugals, Inc., Petitioner, v. Anna E. RIVERA as Next Friend for Rachael Rivera, Respondent.
• Court: Texas Supreme Court

379 S.W.3d 267

55 Tex. Sup. Ct. J. 1400

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

v.Anna E. RIVERA as Next Friend for Rachael Rivera, Respondent.

No. 10–1028.

Supreme Court of Texas.

Argued Jan. 11, 2012.

Decided Aug. 31, 2012.

Peter D. Kennedy, Graves Dougherty Hearon & Moody PC, Austin, TX, for Amicus Curiae CSC—Lawyers Incorporating Service Company.

David A. Oliver, Jr., Paul Brown Kerlin, Tiffany Sue Bingham, Vorys, Sater, Seymour

and Pease LLP, Houston, TX, for Petitioner PNS Stores, Inc.

Bernard Wm. Fischman, Attorney at Law, Richard Tinsman, Daniel J.T. Sciano, Tinsman & Sciano, Inc., San Antonio, TX, Kimberly S. Keller, Keller Stolarczyk PLLC, Boerne, TX, for Respondent Rivera, Anna E.

Justice GUZMAN delivered the opinion of the Court.

In this appeal from a summary judgment dismissal of a direct and collateral attack, the petitioner, PNS Stores, Inc., contends the underlying judgment is void and subject to collateral attack at any time. In this regard, PNS argues that the trial court rendering the default judgment never acquired personal jurisdiction over it because the service of process was defective. Alternatively, PNS argues that its adversary's extrinsic fraud prevented it from learning about the underlying default judgment and that limitations was thereby tolled, making its direct attack through a bill of review timely. ¹

The court of appeals affirmed the summary judgment, concluding that the underlying default judgment was not void and that there was no evidence of extrinsic fraud that would toll limitations. 335 S.W.3d 265, 277. We agree with the court below that the alleged defects in service of process were not sufficient to render the default judgment void, but we hold that summary judgment was improperly granted because there is some evidence of extrinsic fraud. Accordingly, we reverse the court of appeals' judgment and remand the case to the trial court for further proceedings.

I. Factual and Procedural Background

On December 29, 1998, Rachael Rivera filed suit against PNS Stores, Inc. in state court for injuries she allegedly sustained when she slipped and fell at a MacFrugal's Bargain Closeouts Store, owned by PNS. PNS removed the case to federal court, and after discovery, the federal district court granted PNS's motion for summary judgment and dismissed the case “without prejudice on January 7, 2000.” ² No appeal was taken.

Three months later, Rivera, through her attorney Oscar Tamez, sued again in state court for the same slip and fall claims,³ serving PNS through its registered agent for service of process, Prentice Hall Corporation. PNS failed to answer, and Rivera obtained a no-answer default judgment for $1,480,677.74 plus post-judgment interest. Rivera then waited six years to abstract the judgment and about nine years to attempt execution.⁴ By then, the judgmenthad more than doubled to $3,513,070.55. The writ of execution was served at the PNS corporate headquarters in Columbus, Ohio and at its place of business in San Antonio on February 10, 2009.

Thirteen days later, PNS filed a bill of review seeking to set aside the default judgment and quash the writ. After limited discovery, both Rivera and PNS moved for summary judgment. Rivera moved for summary judgment based on the four-year statute of limitations applicable to a bill of review. In its summary judgment motion, PNS argued that the default judgment was barred by res judicata ⁵ and void due to errors in service of process. Alternatively, PNS argued that if the judgment was merely voidable, its bill of review was nonetheless timely filed because its adversary's extrinsic fraud tolled limitations.

The trial court granted Rivera's motion for summary judgment and denied PNS's. PNS appealed. The court of appeals affirmed the summary judgment, concluding that: (1) PNS's attack was a direct attack; (2) PNS's only possible means of direct attack was by bill of review that would be barred by limitations unless there was evidence of extrinsic fraud sufficient to toll the bill's four-year limitations period; and (3) there was no evidence of extrinsic fraud. ⁶335 S.W.3d 265, 275–77.

II. Analysis

PNS argues the court of appeals erred in affirming Rivera's summary judgment because (1) defects in service rendered the default judgment void, and therefore assailable at any time, and (2) even if the judgment was merely voidable, the summary judgment was nevertheless erroneous because fact issues remained regarding the existence of extrinsic fraud sufficient to toll the bill of review's limitations period. Although we disagree that the alleged defects in service render the default judgment void, we agree there is some evidence of extrinsic fraud sufficient to raise a fact issue about whether PNS's bill of review is barred by limitations.

A. Void and Voidable Judgments

Because there is some inconsistency in our state's jurisprudence concerning important distinctions between void and voidable judgments and direct and collateral attacks, we begin our analysis with a discussion of clarifying principles. It is well settled that a litigant may attack a void judgment directly or collaterally, but a voidable judgment may only be attacked directly. Hagen v. Hagen, 282 S.W.3d 899, 902 (Tex.2009) (holding that a divorce decree must be “void, not voidable, for a collateral attack to be permitted”); Ramsey v. Ramsey, 19 S.W.3d 548, 552 (Tex.App.—Austin 2000, no pet.). A direct attack—such as an appeal, a motion for new trial, or a bill of review—attempts to correct, amend, modify or vacate a judgment and must be brought within a definite time period after the judgment's rendition.⁷ A void judgment, on the other hand, can be collaterally attacked at any time. In re E.R., ––– S.W.3d ––––, –––– (Tex.2012). A collateral attack seeks to avoid the binding effect of a judgment in order to obtain specific relief that the judgment currently impedes. Browning v. Prostok, 165 S.W.3d 336, 346 (Tex.2005). After the time to bring a direct attack has expired, a litigant may only attack a judgment collaterally.

The distinction between void and voidable judgments is critical when the time for a direct attack has expired. Before then, the distinction is less significant because—whether the judgment is void or voidable—the result is the same: the judgment is vacated.⁸ We have described a judgment as void 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) (quoting Browning, 165 S.W.3d at 346). Some confusion persists, however, over collateral attacks premised on the absence of personal jurisdiction over a party. See, e.g., Skadden v. Alfonso, 217 S.W.3d 611, 619–20 (Tex.App.—Houston [14th Dist.] 2006) (noting “dicta” from this Court that courts may allow collateral attack if defendant is not served with process, but concluding that because McEwen v. Harrison, 162 Tex. 125, 345 S.W.2d 706 (1961), had not been overruled or disapproved, the court was bound to follow it), rev'd on other grounds,251 S.W.3d 52 (Tex.2008) (per curiam).

This confusion can be traced to our decision in McEwen.McEwen purported to distinguish the absence of personal jurisdiction from a lack of subject matter jurisdiction, observing that a default judgment rendered by a court without subject matter jurisdiction would be void whereas a judgment rendered by a court lacking personal jurisdiction over the parties might only be voidable. 345 S.W.3d at 710 (suggesting that the bill of review was the exclusive method to vacate a default judgment allegedly void for “want of service, or of valid service, of process”); see also Deen v. Kirk, 508 S.W.2d 70, 72 (Tex.1974) (noting that McEwen was concerned about “jurisdiction over the subject matter ... not ... jurisdiction over the parties”). To the extent that McEwen may be read to foreclose a collateral attack on a judgment based on the failure to serve a party with notice, it has been overruled by Peralta v. Heights Medical Center, Inc., 485 U.S. 80, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988). E.R., ––– S.W.3d at ––––.

In Peralta, the United States Supreme Court held that “a judgment entered without notice or service is constitutionally infirm,” and some form of attack must be available when defects in personal jurisdiction violate due process. 485 U.S. at 84, 108 S.Ct. 896. The Court stated, “ ‘[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under the circumstances, to apprise interested parties of the pendency of the action....’ ” Id. (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950)). Thus, the “[f]ailure to give notice violates ‘the most rudimentary demands of due process of law.’ ” Id. (quoting Armstrong v. Manzo, 380 U.S. 545, 550, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965)). In light of Peralta, we hold that a judgment may also be challenged through a collateral attack when a failure to establish personal jurisdiction violates due process.

Turning to the case at hand, PNS argues that defects in service prevented the trial court from acquiring personal jurisdiction over it and asserts that the citation: (1) fails to list the exact time service was performed; (2) fails to state that PNS was served through its registered agent; (3) states that Prentice Hall was served “VIA USPS” as well as “in person;” (4) does not state that service was by certified mail; (5) does not recite that Prentice Hall was served by registered or certified mail; and (6) lacks any proof that it was on file for ten days preceding the default judgment. See generallyTex.R. Civ. P. 106, 107. PNS concludes that the default judgment is void and therefore must be set aside because of these...