491 S.W.3d 910
Tex. App.2016Background
- Lentz Engineering (plaintiff) performed subcontract work on a Texas highway project; Solidarity Contracting (prime contractor) failed to pay invoices.
- Lentz sued Solidarity and named Levent Ulusal (defendant) alleging he was responsible and asserting a claim under the Texas Construction Trust Fund Act and a fraud claim.
- Lentz amended pleadings to allege Ulusal had become a nonresident and sought service via the Texas Secretary of State at a New Jersey address; the Secretary of State’s certificate and a certificate of last known address used that address.
- Ulusal did not answer; the trial court entered default judgment on Lentz’s motion. Ulusal filed a restricted appeal within six months challenging service and sufficiency of pleadings/evidence.
- The appeal turns on whether the record on its face shows reversible error as to service under Tex. Civ. Prac. & Rem. Code § 17.044(a)(3) and whether the petition and proof supported liability and damages under the Texas Construction Trust Fund Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of long-arm service under §17.044(a)(3) (prior-resident-now-nonresident) | Lentz alleged Ulusal became a nonresident after the cause of action arose and before suit; Secretary of State forwarded process to Ulusal’s correct NJ address | Ulusal said pleading lacked the date he left Texas and original petition alleged he was a Texas resident at filing, so service was improper | Pleading alleging he became nonresident after claim arose was sufficient; statute does not require a specific move date; service via Secretary of State was effective |
| Returned/unclaimed citation and name variance/amended return | Lentz relied on Secretary of State certificate and pleading/certificate showing the NJ address was Ulusal’s correct address; amended return corrected name | Ulusal argued the mail was returned “unclaimed” and original officer’s return misnamed him (“Ulusal Levent”), and amended return lacked explicit court authorization | Address shown in record as correct; unclaimed does not defeat jurisdiction when address is valid; default judgment’s findings amounted to authorization to amend the return; service not defective |
| Sufficiency of pleading to show Ulusal was a trustee under the Construction Trust Fund Act | Lentz pleaded Solidarity contracted for an improvement and alleged Ulusal received or had control/direction of trust funds, making him a trustee under Prop. Code §162.002 | Ulusal argued petition failed to specify his role (contractor, officer, agent) so it did not show he was a trustee | Pleading gave fair notice; alleging he received or controlled trust funds was sufficient to state a trustee claim for a default judgment |
| Sufficiency of evidence for damages and attorneys’ fees under the Trust Fund Act | Lentz offered invoices, demand letters (sent in care of Ulusal), and sought attorney’s fees under Tex. Civ. Prac. & Rem. Code §38.001 based on unpaid construction obligations | Ulusal argued evidence only supported contract invoices, not trust-fund damages, and attorneys’ fees were not authorized or not properly claimed against him | Court held proof of unpaid obligations under the construction contract supported damages under the Trust Fund Act; demand to Solidarity in care of Ulusal satisfied fee-prerequisite and supported fee award against Ulusal |
Key Cases Cited
- Gen. Elec. Co. v. Falcon Ridge Apartments, Joint Venture, 811 S.W.2d 942 (Tex. 1991) (restricted appeal is direct attack on default judgment)
- Norman Commc’ns v. Tex. Eastman Co., 955 S.W.2d 269 (Tex. 1997) (face-of-record review in restricted appeals)
- Capitol Brick, Inc. v. Fleming Mfg. Co., Inc., 722 S.W.2d 399 (Tex. 1986) (Secretary of State certificate conclusively evidences service under long-arm)
- Higginbotham v. General Life & Accident Ins. Co., 796 S.W.2d 695 (Tex. 1990) (trial court findings can be tantamount to authorization to amend return)
- Barnes v. Frost Nat’l Bank, 840 S.W.2d 747 (Tex. App.—San Antonio 1992) (distinguishes “refused” and “unclaimed” notices in Secretary of State service context)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (legal-sufficiency review standards)
- Stoner v. Thompson, 578 S.W.2d 679 (Tex. 1979) (petition must give fair notice; formal defects won't invalidate default judgment when cause is stated)
- Bastine v. Comm’n for Lawyer Discipline, 252 S.W.3d 413 (Tex. App.—Houston [1st Dist.] 1996) (attorneys’ fees as unliquidated damages must be supported by pleadings and proof)