UNL Inc. v. Oak Hills Photo Finishing, Inc.

• Decision Date: 22 July 1987
• Docket Number: No. 04-86-00241-CV,04-86-00241-CV
• Citation: 733 S.W.2d 402
• Parties: UNL INCORPORATED, Appellant, v. OAK HILLS PHOTO FINISHING, INC. & Chase Leasing Co., Ltd., Appellees.
• Court: Texas Court of Appeals

Page 402

733 S.W.2d 402

UNL INCORPORATED, Appellant, v. OAK HILLS PHOTO FINISHING, INC. & Chase Leasing Co., Ltd., Appellees.

No. 04-86-00241-CV.

Court of Appeals of Texas,

San Antonio.

July 22, 1987.

Linda L. Walden, Lawrence J. Friedman, Gene F. Stevens, Dallas, for appellant.

Michael R. Garatoni, San Antonio, for appellees.

Before BUTTS, DIAL and CHAPA, JJ.

DIAL, Justice.

This is an appeal from the denial of a motion for new trial following a default judgment rendered against appellant, UNL Incorporated (hereinafter referred to as "UNL"). The judgment awarded treble damages and attorney's fees to appellees, Oak Hills Photo Finishing, Inc. and Chase Leasing Co., Ltd., under the Texas Deceptive Trade Practices Act (DTPA). TEX.BUS. & COM.CODE ANN. § 17.41, et seq. (Vernon Supp.1987).

Appellees, plaintiffs below, originally brought suit against three nonresident defendants: UNL, Zyco Manufacturing, Inc. (both foreign corporations), and Jim Elliot. Both Elliot and Zyco filed answers to plaintiffs' petition and were subsequently nonsuited. UNL neither appeared nor answered, and default judgment was rendered against it in due course.

By point of error, appellant questions the jurisdiction of the trial court to render judgment binding on it on the ground that the jurisdiction of the trial court does not appear on the face of the record. Appellant urges that because the trial judge was not present during the default hearing, sufficient proof of service was not properly admitted into evidence, and thus jurisdiction was not established.

Appellees served UNL, a foreign corporation, by serving the Secretary of State in accordance with the Texas Long Arm Statute. TEX.CIV.PRAC. & REM.CODE § 17.044 (Vernon 1986). ¹ When a nonresident natural person engages in business in the State of Texas but does not maintain a place of regular business in the state or designate an agent therein upon whom service may be had, the act of engaging in business is deemed equivalent to an appointment by the person of the Texas Secretary of State as such person's agent upon whom service of process may be made in any action, suit or proceeding arising out of such business done in the state. Thus for the purpose of service of citation the Secretary of State is substituted for the party defendant.

Because appeal from denial of motion for new trial is a direct attack upon a default judgment, no presumption of due service of citation arises from recital of such in the judgment. McKanna v. Edgar, 388 S.W.2d 927, 929 (Tex.1965). Jurisdiction must affirmatively appear on the face of the record. Id. at 930. The burden is upon the plaintiff to demonstrate strict compliance with the requirements of the Long Arm statute. Cars and Concepts, Inc. v. Funston, 601 S.W.2d 801, 802 (Tex.Civ.App.--Fort Worth 1980, writ ref'd n.r.e.); Alpha Guard, Inc. v. Callahan Chemical Co., 568 S.W.2d 448, 449 (Tex.Civ.App.--Austin 1978, no writ). Plaintiff must: (1) plead facts which, if true, would require the defendant to answer; and (2) prove that the defendant was, in fact, served in the required manner. Whitney v. L & L Realty Corp., 500 S.W.2d 94 (Tex.1973). The allegations in the petition before us are sufficient to require the defendants to answer if they have in fact been served in accordance with the statutory requirements. However, both service on the Secretary of State and forwarding of a copy of the process by the Secretary of State to the nonresident defendant must be shown by proof appearing in the record. Id. Our Supreme Court has held that a showing in the record that the Secretary of State forwarded a copy of the process is essential to establish the jurisdiction of the court over the defendant's person. Id. at 96.

In the case at bar, the supplemental transcript includes a copy of the citation directed to UNL, commanding it to appear by filing a written answer. The Sheriff's return on the same document indicates that a copy of the citation and the petition was delivered to the Secretary of State as agent for service on January 6, 1986. An attached page indicates that the document was filed with the District Court Clerk of Bexar County on January 14, 1986. At the default hearing, appellees' attorney recited that he had received from the Secretary of State a sworn statement which recited that the petition was served upon them on 1-6-86, that the Secretary in turn forwarded by certified mail, return receipt requested, to UNL on 1-8-86, a true and correct copy of the petition in this case, and that the green card return of service was returned to the Secretary on 1-21-86. The attorney then offered the sworn statement (marked Plaintiff's Exhibit No. "1") into evidence. The record is silent as to admission of the exhibit; however, the sworn statement is attached to the statement of facts which is part of the record before us. The exhibit is also marked by the court reporter with her initials, the date "2-3-86," and "PX-1."

Appellant urges that because the trial judge was not present during the default hearing, this exhibit was not properly admitted into evidence; that therefore there is no showing in the record that the process was forwarded by the Secretary of State; and that no jurisdiction was acquired over the defendant.

The transcript contains an affidavit by the court reporter which states that the testimony taken at the default hearing was not taken in the presence of the trial judge, and that appellees' attorney took Plaintiff's Exhibit No. "1" with him at the conclusion of the hearing and did not leave it in the possession of the court. This is contradicted by recitals made by the court reporter on pages 1 and 12 of the statement of facts that "On the 3rd day of February, 1986, the above entitled and numbered cause came on for hearing before said Honorable Court, ROSE SPECTOR, Judge presiding, and the following proceedings and testimony herein were had ..." and that the court reporter "certif[ies] that the above and foregoing contains a true and correct transcription of all the proceedings ... all of which occurred in open court or in chambers ... [and] that this transcription of the record of the proceedings truly and correctly reflects the exhibits, if any, offered by the respective parties."

We think that the fact that the court reporter marked the sworn statement of service with the date of the default hearing, exhibit number, and her initials is sufficient to show that the statement was before the trial court and that the trial court obtained jurisdiction over appellant. The allegation that the trial judge was not present while appellees proved up the allegations in the original petition does not support the conclusion that the statement of service was not presented to the trial court either prior to the recorded default hearing or later, when judgment was signed. The point of error is overruled.

Appellant also complains that the trial court abused its discretion in denying the motion for new trial because appellant complied with the requirements set forth in Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (1939). In Craddock, the Texas Supreme Court set forth the guiding rule which trial courts are to follow in determining whether to grant a motion for new trial:

A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or accident; provided the motion for a new trial sets up a meritorious defense and is filed at a time when the granting thereof will occasion no delay or otherwise work an injury to the plaintiff.

Id., 133 S.W.2d at 126. See also Ivy v. Carrell, 407 S.W.2d 212, 213 (Tex.1966). Within these parameters, the trial court is vested with some measure of discretion in ruling on a motion for new trial, and its ruling will not be disturbed on appeal absent a showing of abuse of discretion. Strackbein v. Prewitt, 671 S.W.2d 37, 38 (Tex.1984).

Concerning the requirement that the defaulting defendant must set up a "meritorious defense," the motion for new trial must allege facts which in law would constitute a defense to the cause of action asserted by the plaintiff. In order to prevent the reopening of cases to try out fictitious or unmeritorious defenses, the motion must be supported by affidavit or other evidence proving prima facie that the defendant has such meritorious defense. Ivy v. Carrell, 407 S.W.2d at 214. Once these requirements are met, it is improper to try the defensive issues made by the motion or the pleadings.

In their original petition, appellees alleged three causes of action: breach of the implied warranties of merchantability and fitness for a particular purpose; unconscionability under section 17.50(a)(3) of the DTPA; and specific misrepresentation under section 17.50(a)(1) of the DTPA. The defenses alleged by appellant in its motion for new trial are disclaimer of express and implied warranties and failure to comply with the pre-suit written notice requirement imposed by section 17.50A of the DTPA.

As to the latter defense, we note that the record contains a copy of a letter dated October 29, 1985, directed to the 3 original defendants in the suit, advising them of plaintiffs' specific complaints and the amount of actual damages and expenses, including attorneys' fees, incurred in asserting the claim. This letter, like the certificate of service, is attached to the statement of facts and marked with the court reporter's initials, the date "2-3-86," and the notation "PX-2." Also, appellees properly pled that written notice of the claims was given in the manner and form required by section 17.50A. It is established that a default judgment operates an an admission of the material facts alleged in plaintiffs petition, except as to unliquidated damages. Village Square, Ltd. v. Barton, 660 S.W.2d...