Propel Fin. Servs., LLC v. Conquer Land Utilities, LLC

• Decision Date: 18 April 2019
• Docket Number: NUMBER 13-18-00280-CV,13-18-00313-CV
• Citation: 579 S.W.3d 485
• Parties: PROPEL FINANCIAL SERVICES, LLC, Appellant, v. CONQUER LAND UTILITIES, LLC, Appellee.
• Court: Texas Court of Appeals

579 S.W.3d 485

PROPEL FINANCIAL SERVICES, LLC, Appellant,

v.CONQUER LAND UTILITIES, LLC, Appellee.

NUMBER 13-18-00280-CV

13-18-00313-CV

Court of Appeals of Texas, Corpus Christi-Edinburg.

Delivered and filed April 18, 2019

Sarah Ann Nicolas, Ramon Worthington, PLLC, 900 Kerria Ave., McAllen, TX 78501, for Appellant.

Oscar R. Alvarez, Attorney at Law, 512 W. Expressway 83, McAllen, TX 78501, for Appellee.

Before Justices Benavides, Longoria, and Hinojosa

Opinion by Justice Hinojosa

Appellant Propel Financial Services, LLC (Propel) appeals a no-answer default judgment in favor of appellee Conquer Land Utilities, LLC (Conquer), awarding $ 13,000,000 in damages, and post-judgment orders granting turnover relief and appointing a receiver.¹ By three issues, Propel argues that: (1) the default judgment should be set aside by restricted appeal because error appears on the face of the record; and the trial court abused its discretion in (2) ordering turnover relief and (3) appointing a receiver. We reverse and remand.

I. BACKGROUND

Propel loaned Conquer $ 47,383.68. The loan was secured by a twelve-acre tract of land located in Hidalgo City, Texas. After Conquer defaulted on the loan, Propel sold the property at a foreclosure sale. Conquer sued Propel, alleging that Propel wrongfully foreclosed on the property and sold the property for only 5% of its appraised value.

A. Service of Citation

Conquer filed its original petition on November 1, 2017. The petition identified Kohm & Associates, P.C., as Propel’s registered agent for service of process. Conquer requested that the Hidalgo County District Clerk issue a citation to Propel and serve the citation and petition by certified mail, return receipt requested. See TEX. R. CIV. P. 103, 106. The citation was directed to "Propel Financial Services, LLC c/o Kohm & Associates, PC."² On November 9, the clerk filed the following digital return receipt from the United States Postal Service (USPS):³

The digital return receipt contained the following reference identification:

B. Default Judgment

Propel failed to file an answer to the suit, and Conquer moved for default judgment. The motion was heard on December 4, 2017. At the hearing, Conquer’s counsel informed the trial court that "the return of service has been filed with the Court since November 9th." Conquer then presented the testimony of Francisco Xavier Badir Vasquez Rezzah (Rezzah), Conquer’s managing member. Rezzah testified that the value of the foreclosed property was $ 4,000,000. He based his valuation on a "2008 or 2009" appraisal of $ 3,000,080.⁴ Rezzah stated that he planned to develop two hotels and a commercial shopping center on the property. He estimated that "the loss of not being able to develop [on] this land is about $ 15,000,000 and $ 20,000,000." Rezzah requested the trial court award $ 13,000,000 in damages, which he represented to be "the value of the property plus some of the lost income or some of the lost profits" for the planned development.

The trial court rendered a default judgment in favor of Conquer and awarded $ 13,000,000 in damages.

C. Amended Proof of Service

On January 29, 2018, Conquer filed a motion to amend the proof of service pursuant to Texas Rule of Civil Procedure 118. See TEX. R. CIV. P. 118 (providing for the amendment of process or proof of service). The trial court granted the motion, and the district clerk filed the following certificate of return on January 30, 2018:⁵

D. Post-Judgment Orders

Following the default judgment, Conquer filed an application for turnover relief and a motion to appoint a receiver. After a hearing, the trial court signed separate orders granting the requested relief.

E. Appeal

Propel now challenges the default judgment by restricted appeal. See TEX. R. APP. P. 26.1(c), 30. By a separate appeal, Propel challenges the trial court’s orders granting turnover relief and appointing a receiver. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(1) (West, Westlaw through 2017 1st C.S.) (providing for the interlocutory appeal of an order appointing a receiver); Alexander Dubose Jefferson & Townsend LLP v. Chevron Phillips Chem. Co., LP , 540 S.W.3d 577, 587 (Tex. 2018) (explaining that turnover orders, when injunctive in nature, are final and appealable).

II. DEFAULT JUDGMENT

By its first issue, Propel argues "the default judgment [should] be set aside because of errors on the face of the record" related to the citation and return of service. Propel also argues that "the evidence of Conquer’s purported damages is legally and factually insufficient."

A. Restricted Appeal

A restricted appeal is available for the limited purpose of providing a party who did not participate at trial with the opportunity to correct an erroneous judgment. Mandel v. Lewisville Indep. Sch. Dist. , 445 S.W.3d 469, 474 (Tex. App.—Dallas 2014, pet. denied) ; In re E.K.N. , 24 S.W.3d 586, 590 (Tex. App.—Fort Worth 2000, no pet.). To prevail in a restricted appeal, an appellant must show that (1) the notice of appeal was filed within six months of the complained-of judgment; (2) the appellant was a party to the suit who did not participate in the hearing that resulted in the judgment; (3) the appellant did not timely file a post-judgment motion, request findings of fact and conclusions of law, or file a notice of appeal within the time permitted under Rule 26.1(a) ; and (4) error is apparent from the face of the record. TEX. R. APP. P. 26.1(c), 30; see Alexander v. Lynda’s Boutique , 134 S.W.3d 845, 848 (Tex. 2004). In a restricted appeal, the face of the record consists of all papers that were before the trial court when it rendered its judgment. Alexander , 134 S.W.3d at 848–49. Only the fourth element is at issue in this case—whether error is apparent on the face of the record.

B. Amended Return

Propel first argues that Conquer’s return of service does not strictly comply with Texas Rule of Civil Procedure 107. See TEX. R. CIV. P. 107. As a threshold matter, we must determine whether we can consider the certificate of return filed after the entry of default judgment.

Generally speaking, the record in a restricted appeal consists only of those documents on file with the trial court when the default judgment was entered. Eguia v. Eguia , 367 S.W.3d 455, 458 (Tex. App.—Corpus Christi 2012, no pet.) ; Laas v. Williamson , 156 S.W.3d 854, 857 (Tex. App.—Beaumont 2005, no pet.) ; Stankiewicz v. Oca , 991 S.W.2d 308, 311–12 (Tex. App.—Fort Worth 1999, no pet.). But Texas Rule of Civil Procedure 118 provides that a trial court may allow an amended proof of service "[a]t any time in its discretion[.]" See TEX. R. CIV. P. 118 (emphasis added). Recognizing a trial court’s Rule 118 discretion, Texas courts have considered post-judgment amendments to proof of process in limited circumstances.⁶ However, the trial court’s authority to grant a Rule 118 amendment extends only as far as its plenary power over the judgment.⁷ See Higginbotham v. Gen. Life & Acc. Ins. Co. , 796 S.W.2d 695, 696 (Tex. 1990) (recognizing a trial court’s authority to amend proof of process in relation to a motion for new trial); LEJ Dev. Corp. v. Sw. Bank , 407 S.W.3d 863, 868 (Tex. App.—Fort Worth 2013, no pet.) (concluding that a trial court may sign a post-judgment order amending proof of process while it retains plenary power); Dawson v. Briggs , 107 S.W.3d 739, 745 (Tex. App.—Fort Worth 2003, no pet.) (same); see also McCoy v. McCoy , No. 02-17-00275-CV, 2018 WL 5993547, at *4 (Tex. App.—Fort Worth Nov. 15, 2018, no pet.) (mem. op.) (holding that the trial court did not have the authority to grant a Rule 118 motion after its plenary power expired).

Where, as here, no motion for new trial is filed, a trial court retains plenary jurisdiction for thirty days after signing a final judgment. TEX. R. CIV. P. 329b(d)–(f) ; see Lane Bank Equip. Co. v. Smith S. Equip., Inc. , 10 S.W.3d 308, 310 (Tex. 2000). The trial court’s plenary power expired on January 3, 2018 (thirty days after the December 4, 2017 default judgment). See TEX. R. CIV. P. 329b(d), (e). Conquer did not move to amend the return of service until January 29, and the trial court’s order granting the amendment was not signed until January 30, well outside the trial court’s plenary jurisdiction. Therefore, the trial court’s Rule 118 order is void, and the amendment is of no effect. See Silguero v. State , 287 S.W.3d 146, 148 (Tex. App.—Corpus Christi 2009) (orig. proceeding) (explaining that an order issued after the trial court’s plenary power expires is void). Accordingly, we do not consider the amended certificate of return in our review.

C. Compliance with Rule 107

Next, we consider Propel’s arguments regarding defects in the proof of process on file at the time of the default judgment. Specifically, Propel maintains that the USPS return receipt does not satisfy Rule 107. See TEX. R. CIV. P. 107.

1. Applicable Law

There are no presumptions in favor of a valid issuance, service, and return of citation in the face of an attack on a default judgment by restricted appeal. See Primate Constr., Inc. v. Silver , 884 S.W.2d 151, 152 (Tex. 1994). If the record fails to affirmatively show strict compliance with the rules of civil procedure governing issuance, service, and return of citation, error is apparent on the face of the record, and attempted service of process is invalid and of no effect. Lytle v. Cunningham , 261 S.W.3d 837, 840 (Tex. App.—Dallas 2008, no pet.).

"The officer or authorized person executing the citation must complete a return of service." TEX. R. CIV. P. 107(a). As relevant here, the return, together with any document to which it is attached, must include the following information: (1) the cause number and case name; (2) the court in which the case is filed; (3) a description of what was served; (4) the date and time the process was received for service; (5) the person or entity served; (6) the address served; (7) the date of service or attempted service; (8) the manner...