KATY VENTURE, LTD. and Katy Management, L.L.C., Petitioners, v. CREMONA BISTRO CORP., Respondent
No. 14-0629
Supreme Court of Texas.
July 24, 2015
Rehearing Denied October 9, 2015
The petitioners brought this equitable bill of review to set aside a no-answer default judgment. They did not receive actual service of process or timely notice of the default judgment because they failed to update their registered address with the Secretary of State‘s office. They contend, however, that the respondent failed to properly certify the petitioners’ “last known mailing address,” as our rules require for notice of a default judgment, because the respondent had actual notice of petitioners’ current address but certified the old registered address as the “last known mailing address.” Because the petitioners presented some evidence that their failure to receive notice of the default judgment resulted solely from the respondent‘s failure to properly certify the petitioners’ “last known mailing address,” and not from any negligence or fault on the petitioners’ part, we conclude that they raised a genuine issue of material fact in their bill-of-review claim. We therefore hold that the court of appeals erred in affirming the trial court‘s summary judgment in favor of the respondent. We reverse the court of appeals’ judgment and remand this case to the trial court for further proceedings consistent with this opinion.
Respondent Cremona Bistro Corp. operated a restaurant in space it leased in a commercial building owned by Katy Venture, Ltd., whose general partner is Katy Management, L.L.C. After a fire destroyed the building, Cremona attempted to recover its losses from Katy Venture‘s insurer. When the insurer denied the claim, Cremona sued both Katy entities directly, alleging they were responsible for the damage because the fire originated in a part of the building under the Katy entities’ exclusive control. Cremona first attempted to serve the Katy entities through their registered agent, Joel Kommer, by certified mail, using the Katy entities’ registered address on file with the Secretary of State‘s office. That citation was returned as “not deliverable as addressed” and “unable to forward.” Cremona then hired a process server, who attempted to serve Kommer personally at the same outdated registered address but was similarly unsuccessful. Cremona then served the process by mail on the Secretary of State as the Katy entities’ agent. The Secretary forwarded the notice by mail to the same outdated registered address. As it turns out, the Katy entities and Kommer had moved several years earlier, but failed to provide an updated registered address to the Secretary of State. After the Katy entities did not answer the lawsuit, Cremona obtained a default judgment for more than $820,000.
We review the grant of summary judgment de novo. Henkel v. Norman, 441 S.W.3d 249, 250 (Tex.2014) (per curiam). To succeed on a traditional summary judgment motion, the “movant must establish that there is no genuine issue of material fact so that the movant is entitled to judgment as a matter of law.” W. Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex.2005) (citing Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991)). “When a movant meets that burden of establishing each element of the claim or defense on which it seeks summary judgment, the burden then shifts to the non-movant to disprove or raise an issue of fact as to at least one of those elements.” Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 511 (Tex.2014). In deciding which party should prevail in this situation, “[w]e examine the record in the light most favorable to the non-movant, indulge every reasonable inference against the motion and likewise resolve any doubts against it.” Henkel, 441 S.W.3d at 250; see also Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.2009); Smith v. O‘Donnell, 288 S.W.3d 417, 424 (Tex.2009).
When the trial court entered the default judgment, Cremona was required to “certify to the clerk in writing the last known mailing address of the party against whom the judgment [was] taken.”
While failure to comply with
“A bill of review is an equitable proceeding, brought by a party seeking to set aside a prior judgment that is no longer subject to challenge by a motion for a new trial or direct appeal.” Mabon, 369 S.W.3d at 812 (citing Caldwell v. Barnes, 154 S.W.3d 93, 96 (Tex.2004) (per curiam)). Ordinarily, a plaintiff must plead and prove: “(1) a meritorious defense to the underlying cause of action, (2) which the plaintiff[] [was] prevented from making by the fraud, accident or wrongful act of the opposing party or official mistake, (3) unmixed with any fault or negligence on [its] own part.” Id. (quoting Caldwell, 154 S.W.3d at 96). But “when a bill-of-review plaintiff claims a due process violation for no service [of process] or notice [of a default judgment], it is relieved of proving the first two elements” and must only prove that its own fault or negligence did not contribute to cause the lack of service or notice. Id. Because the Katy entities assert a due process violation for failure to
The Katy entities presented some evidence that their failure to receive notice of the default judgment was not a result of their fault or negligence, but was instead Cremona‘s fault because Cremona certified the outdated registered address even though it knew the Katy entities’ actual current mailing address. See PNS Stores, 379 S.W.3d at 275-77 (holding that knowingly giving trial court incorrect last known address for defendant under
Cremona argues that the Katy entities’ own negligence at least contributed to cause their failure to receive notice of the default judgment because the Katy entities failed to update their registered address. We have held that an entity‘s failure to update its registered address with the Secretary of State constitutes negligence in the service-of-process context. See Campus Invs. v. Cullever, 144 S.W.3d 464, 466 (Tex.2004) (per curiam). But even assuming that an entity‘s failure to update its registered address with the Secretary of State can also constitute negligence in the notice-of-default-judgment context, that negligence did not necessarily contribute to cause the Katy entities’ failure to receive notice of the default judgment in this case. Because there is some evidence that Cremona provided an out-of-date address despite having knowledge of the Katy entities’ correct, current address, we cannot presume (and Cremona has not attempted to show) that Cremona would have provided the correct “last known mailing address” if the Katy entities had updated their registered agent‘s address with the Secretary of State. Updating the registered-agent address on file with the Secretary of State would have provided Cremona with another means of discovering the Katy entities’ correct address, but there is some evidence that Cremona already knew the Katy entities’ correct address and nevertheless chose to supply the court with an outdated address.
Although the Katy entities’ negligent failure to update their registered address contributed to their lack of actual service of process, we hold that there is a fact issue as to whether that negligence also contributed to their failure to receive notice of the default judgment. And because the Katy entities need only establish lack of negligence to obtain an equitable bill of review, see Mabon, 369 S.W.3d at 813, we hold that the trial court should not have granted summary judgment and that the
Accordingly, without hearing oral argument, we reverse the court of appeals’ judgment and remand this case to the trial court for further proceedings consistent with this opinion.