Ross v. National Center for Disabled
| Decision Date | 16 November 2005 |
| Docket Number | No. 08-04-00375-CV.,08-04-00375-CV. |
| Citation | 176 S.W.3d 642 |
| Parties | Richard ROSS, Appellant, v. NATIONAL CENTER FOR the EMPLOYMENT OF the DISABLED, Assignee of Access Healthsource, Inc., Assignee of O.R. Brooker et al., Appellees. |
| Court | Texas Supreme Court |
John P. Mobbs, El Paso, for Appellant.
Ken Slavin, Kemp Smith, P.C., El Paso, for Appellees.
Before BARAJAS, C.J., McCLURE, and CHEW, JJ.
Appellant Richard Ross appeals a denial of a petition for bill of review seeking to set aside a default judgment entered against him in Cause No. 99-1459. On appeal, Appellant raises three issues for review. In Issue No. One, he challenges the service of process prior to the rendition of the default judgment. In Issue No. Two, he challenges the trial court's finding that he failed to exercise due diligence to pursue all adequate legal remedies available against the default judgment. In Issue No. Three, he challenges the trial court's finding that unclean hands precludes him from seeking and obtaining a bill of review. We affirm the judgment of the trial court.
On April 26, 1999, Plaintiffs O.R. Brooker, W.A. Pitchford, Natalie T. Bornstein, Maria G. Cardenas, Vernoy Walker, Joel Hendryx, Randolph Waldman, Walker Jackson, Kathryn Horn, and Mary Ward brought suit against Defendants Ross, Dr. Richard Standridge, and James Farrelly in County Court at Law Number Seven, El Paso County, Texas. As we summarized in our previous opinion, the original petition alleged specifically, that the Defendants falsely represented how and why the stock merger into Access Healthsource would be beneficial to them and as a result of the Defendants' misrepresentations the value of their stock went from five million dollars to zero dollars. See Ross v. Access Healthsource, No. 08-03-00096-CV, 2003 WL 22870629, at *1 (Tex.App.-El Paso Dec. 4, 2003, pet. denied).
On October 19, 1999, the trial court granted Appellees' motion for substitute service of process on Appellant at an address in Scottsdale, Arizona. The Arizona process server's affidavit on November 1, 1999, states that he attempted to personally serve Appellant at the given address, but had to post and mail the documents served. The description of documents served does not list the citation and the record does not contain a return receipt for certified mail, though the affidavit states the documents were mailed by certified mail. On January 21, 2000, Appellees obtained a default judgment against Appellant in which they were awarded five million dollars in actual damages and five million dollars in exemplary damages plus interest and attorney's fees. The default judgment recites that Appellant was duly served with process. On February 29, 2000, the trial court severed Appellees' cause of action against Defendants Dr. Standridge and Mr. Farrelly from its default judgment against Appellant.
In March 2000, Appellees sought enforcement of the Texas default judgment in an Arizona state court. On April 17, 2000, Appellant filed a motion under Ariz. R. Civ. P. 60(c) to vacate the foreign judgment Appellees had filed in Arizona based on insufficient service of process. On August 8, 2000, the Arizona state court found insufficient service of process on Appellant and ordered the foreign judgment filed by Appellees "void and hereby vacated." On January 7, 2003, Appellant filed a petition for bill of review, challenging the default judgment obtained against him by Appellees in January 2000. On January 31, 2003, the trial court ruled that Appellant's bill of review petition to set aside the January 2000 default judgment was denied. Appellant timely appealed the trial court's judgment.
In this Court's opinion in Ross, 2003 WL 22870629, at *5, we held that a genuine fact issue existed as to whether Appellant had shown good cause for failing to exhaust his legal remedies and reversed and remanded the trial court's granting of summary judgment denying the bill of review for further proceedings. On October 8, 2004, the trial court held a bench trial wherein the trial judge found that Appellant did not come into the court with clean hands and failed to diligently pursue all available avenues. On November 29, 2004, the trial judge signed the judgment denying Appellant's petition for bill of review seeking to set aside the default judgment granted against him and signed on January 21, 2000. Appellant now timely appeals the trial court's judgment.
In Issue No. One, Appellant asserts that because it is undisputed that he was not served with process before the default judgment was entered against him, he is not required to prove the usual bill of review elements; rather, he contends that the bill of review elements are satisfied as a matter of law, thus making him entitled to have the default judgment set aside.
A bill of review petitioner must ordinarily plead and prove the following: (1) a meritorious claim or defense; (2) that he was prevented from making by the fraud, accident or wrongful act of his opponent; (3) unmixed with any fault or negligence of his own. Ortega v. First RepublicBank Fort Worth, N.A., 792 S.W.2d 452, 453 (Tex.1990). Courts have relaxed these requirements when the party petitioning for the bill of review seeks to set aside a default judgment on the basis he was not served with process. Winrock Houston Assocs. Ltd. P'ship v. Bergstrom, 879 S.W.2d 144, 149 (Tex.App.-Houston [14th Dist.] 1994, no writ). In such cases, the petitioner need not prove fraud, accident or a wrongful act of the opposite party. Id. (citing Texas Indus., Inc. v. Sanchez, 525 S.W.2d 870, 871 (Tex.1975)). He also does not have to prove a meritorious defense. Id. (citing Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 86-87, 108 S.Ct. 896, 899-900, 99 L.Ed.2d 75 (1988); Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex.1988)).
The petitioner must, however, demonstrate he was free from fault or negligence in letting the judgment be taken, a requirement which encompasses an absence of negligence in allowing the trial court to render the default judgment against him. See id. A party's failure to make reasonable inquiries regarding his pending litigation is failure to exercise diligence, and without the showing of such diligence, a bill of review will fail since the appellant will not be able to prove his non-negligence in allowing the judgment against him to be rendered and to become final. See Melton v. Ryander, 727 S.W.2d 299, 302 (Tex.App.-Dallas 1987, writ ref'd n.r.e.).
We find Appellant's first issue is without merit. Appellant cites to this Court's previous opinion to support his contention that the failure to properly serve him relieves him from proving the usual bill of review elements.1 See Ross, 2003 WL 22870629, at *3. However, our previous opinion does not absolve Appellant from showing an exercise of due diligence. It is undisputed that Appellant had knowledge of the lawsuit being filed and that it was pending for nine months before the default judgment was granted against him. From the date he discovered the lawsuit, June 25, 1999, to the date the default judgment was entered, January 21, 2000, Appellant was aware of the pending litigation. It is also undisputed that Appellant learned of the default judgment on April 12, 2000. Appellant was not prevented from filing a timely motion for new trial or appeal because of the improper service. Appellant was aware of the default judgment within the time available for filing a motion for new trial or pursuing an appeal. We overrule Issue No. One.
In Issue No. Two, Appellant argues that the evidence demonstrated that he exercised due diligence as a matter of law, and therefore, it was error to find that he did not exercise due diligence and deny his petition for bill of review. Appellant contends that he reasonably relied on his attorney, Mr. Klausner, and that Mr. Klausner's actions were a reasonable strategic decision, one which a reasonable lawyer could have also reached. Access Healthsource on the other hand, maintains that Appellant's and Mr. Klausner's failure to "even attempt to investigate the legal remedies available in Texas against the Texas Default Judgment is overwhelming evidence that Ross failed to meet his due diligence requirement to pursue all available legal remedies against the default judgment before an equitable bill of review is available."
In reviewing the grant or denial of a bill of review, we indulge every presumption in favor of the trial court's ruling and will not disturb the ruling unless there is an affirmative showing of an abuse of judicial discretion. See Nguyen v. Intertex, Inc., 93 S.W.3d 288, 293 (Tex.App.-Houston [14th Dist.] 2002, no pet.) (citing Interaction, Inc./State v. State/Interaction, Inc., 17 S.W.3d 775, 778 (Tex.App.-Austin 2000, pet. denied)). We may reverse the trial court for abusing its discretion only if it has acted in an unreasonable or arbitrary manner, or without reference to any guiding rules and principles. Id. (citing Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex.1991)). We may not reverse for abuse of discretion merely because we disagree with a decision by the trial court, if that decision was within the trial court's discretionary authority. Id. (citing Beaumont Bank, 806 S.W.2d at 226).
A bill of review is an independent equitable action brought by a party to a former action who seeks to set aside a judgment that is no longer appealable or subject to challenge by a motion for new trial. Baker v. Goldsmith, 582 S.W.2d 404, 406 (Tex.1979); Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 926-27 (Tex.1999) (per curiam). According finality to judgments is of fundamental importance. Montgomery v. Kennedy, 669 S.W.2d 309, 312 (Tex.1984). Therefore, a court scrutinizes bills of review seeking relief from final judgments with "extreme jealousy, and...
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Ross v. Nat. Ctr. for Employ. of Disabled
...that the unserved party failed to file a motion for a new trial in the original default, and resisted postjudgment enforcement of it. 176 S.W.3d 642, 646-49. But the trial court had no jurisdiction either to enter judgment or to enforce against a party who had neither been properly served n......