PNS STORES, INC., d/b/a MacFrugal‘s Bargain Closeouts d/b/a/ MacFrugals, Inc., Petitioner, v. Anna E. RIVERA as Next Friend for Rachael Rivera, Respondent.
No. 10-1028.
Supreme Court of Texas.
Argued Jan. 11, 2012. Decided Aug. 31, 2012.
379 S.W.3d 267
David A. Oliver, Jr., Paul Brown Kerlin, Tiffany Sue Bingham, Vorys, Sater, Sey
Bernard Wm. Fischman, Attorney at Law, Richard Tinsman, Daniel J.T. Sciano, Tinsman & Sciano, Inc., San Antоnio, TX, Kimberly S. Keller, Keller Stolarczyk PLLC, Boerne, TX, for Respondent Rivera, Anna E.
Justice GUZMAN delivered the opinion of the Court.
In this appeal from a summary judgment dismissal of a direct and collateral attack, the petitioner, PNS Stores, Inc., contends the underlying judgment is void and subject to collateral attack at any time. In this regard, PNS argues that the trial court rendering the default judgment never acquired personal jurisdiction over it because the service of process was defective. Alternatively, PNS argues that its adversary‘s extrinsic fraud prevented it from leаrning about the underlying default judgment and that limitations was thereby tolled, making its direct attack through a bill of review timely.1
The court of appeals affirmed the summary judgment, concluding that the underlying default judgment was not void and that there was no evidence of extrinsic fraud that would toll limitations. 335 S.W.3d 265, 277. We agree with the court below that the alleged defects in service of process were not sufficient to render the default judgment void, but we hold that summary judgment was improperly granted because there is some evidence of extrinsiс fraud. Accordingly, we reverse the court of appeals’ judgment and remand the case to the trial court for further proceedings.
I. Factual and Procedural Background
On December 29, 1998, Rachael Rivera filed suit against PNS Stores, Inc. in state court for injuries she allegedly sustained when she slipped and fell at a MacFrugal‘s Bargain Closeouts Store, owned by PNS. PNS removed the case to federal court, and after discovery, the federal district court granted PNS‘s motion for summary judgment and dismissed the case “without prejudice on January 7, 2000.”2 No appeal was taken.
Three months later, Rivera, through her attorney Oscar Tamez, sued again in state court for the same slip and fall claims,3 serving PNS through its registered agent for service of process, Prentice Hall Corporation. PNS failed to answer, and Rivera obtained a no-answer default judgment for $1,480,677.74 plus post-judgment interest. Rivera then waited six years to abstract the judgment and about nine years to attempt execution.4 By then, the judg
Thirteen days later, PNS filed a bill of review seeking to set aside the default judgment and quash the writ. After limited discovery, both Rivera and PNS moved for summary judgment. Rivera moved for summary judgment based on the four-year statute of limitations applicable to a bill of review. In its summary judgment motion, PNS argued that the default judgment was barred by res judicata5 and void due to errors in service of process. Alternatively, PNS argued that if the judgment was merely voidable, its bill of review was nonetheless timely filed becausе its adversary‘s extrinsic fraud tolled limitations.
The trial court granted Rivera‘s motion for summary judgment and denied PNS‘s. PNS appealed. The court of appeals affirmed the summary judgment, concluding that: (1) PNS‘s attack was a direct attack; (2) PNS‘s only possible means of direct attack was by bill of review that would be barred by limitations unless there was evidence of extrinsic fraud sufficient to toll the bill‘s four-year limitations period; and (3) there was no evidence of extrinsic fraud.6 335 S.W.3d 265, 275–77.
II. Analysis
PNS argues the court of appeals erred in affirming Rivera‘s summary judgment because (1) defects in service rendered the default judgment void, and therefore assailable at any time, and (2) even if the judgment was merely voidable, the summary judgment was nevertheless erroneous because fact issues remained regarding the existence of extrinsic fraud sufficient to toll the bill of review‘s limitations period. Although we disagree that the alleged defects in service render the default judgment void, we agree there is some evidence of extrinsic fraud sufficient to raise a fact issue about whether PNS‘s bill of review is barred by limitations.
A. Void and Voidable Judgments
Because there is some inconsistency in our state‘s jurisprudence concerning important distinctions between void and voidable judgments and direct and collateral attacks, we begin our analysis with a discussion of clarifying principles. It is well settled that a litigant may attack a void judgment directly or collaterally, but a voidable judgment may only be attacked directly. Hagen v. Hagen, 282 S.W.3d 899, 902 (Tex.2009) (holding that a divorce decree must be “void, not voidable, for a collateral attack to be pеrmitted“); Ramsey v. Ramsey, 19 S.W.3d 548, 552 (Tex.App.—Austin 2000, no pet.). A direct attack—such as an appeal, a motion for new trial, or a bill of review—attempts to correct, amend, modify or vacate a judgment and must be brought within a definite time period after the judgment‘s ren
The distinction between void and voidable judgments is critical when the time for a direct attack has expired. Before then, the distinction is less significant because—whether the judgment is void or voidable—the result is the same: the judgment is vacated.8 We have described a judgment as void when “the court rendering judgment had no jurisdiction of the parties or property, no jurisdiction of the subject matter, no jurisdiction to enter the particular judgment, or no capacity to act.” Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 863 (Tex.2010) (quoting Browning, 165 S.W.3d at 346). Some confusion persists, however, over collateral attacks premised on the absence of personal jurisdiction over a party. See, e.g., Skadden v. Alfonso, 217 S.W.3d 611, 619-20 (Tex. App.—Houston [14th Dist.] 2006) (noting “dicta” from this Court that courts may allow collateral attack if defendant is not served with process, but concluding that because McEwen v. Harrison, 162 Tex. 125, 345 S.W.2d 706 (1961), had not been overruled or disapproved, the court was bound to follow it), rev‘d on other grounds, 251 S.W.3d 52 (Tex.2008) (per curiam).
This confusion can be traced to our decision in McEwen. McEwen purported to distinguish the absence of personal jurisdiction from a lack of subject matter jurisdiction, observing that a default judgment rendered by a court without subject matter jurisdiction would be void whereas a judgment rendered by a court lacking personal jurisdiction over the parties might only be voidable. 345 S.W.3d at 710 (suggesting that the bill of review was the exclusive method to vacate a default judgment allegedly void for “want of service, or of valid service, of process“); see also Deen v. Kirk, 508 S.W.2d 70, 72 (Tex.1974) (noting that McEwen was concerned about “jurisdiction over the subject matter ... not ... jurisdiction over the parties“). To the extent that McEwen may be read to foreclose a collateral attack on а judgment based on the failure to serve a party with notice, it has been overruled by Peralta v. Heights Medical Center, Inc., 485 U.S. 80, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988). E.R., 385 S.W.3d at —.
In Peralta, the United States Supreme Court held that “a judgment entered without notice or service is constitutionally infirm,” and some form of attack
Turning to the case at hand, PNS argues that defects in service prevented the trial court from acquiring personal jurisdiction over it and asserts that the citation: (1) fails to list the exaсt time service was performed; (2) fails to state that PNS was served through its registered agent; (3) states that Prentice Hall was served “VIA USPS” as well as “in person;” (4) does not state that service was by certified mail; (5) does not recite that Prentice Hall was served by registered or certified mail; and (6) lacks any proof that it was on file for ten days preceding the default judgment. See generally
Although we do not agree that we must confine our review to the face of the judgment, we nevertheless conclude that these asserted defects in service do not render the default judgment void. When attacked collaterally, a judgment is presumed valid. Stewart v. USA Custom Paint & Body Shop, Inc., 870 S.W.2d 18, 20 (Tex.1994). But that presumption disappears when the record establishes a jurisdictional defect. Alfonso, 251 S.W.3d at 55 (holding that “[t]he presumption supporting judgments does not apply when the record affirmatively reveals a jurisdictional defect“). Accordingly, although we presume Rivera‘s default judgment is valid, we may look beyond its face to determine whether the record affirmatively demonstrates that the trial court lacked jurisdiction.
The record affirmatively demonstrates a jurisdictional defect sufficient to void a judgment when it either: (1) establishes that the trial court lacked subject matter jurisdiction over the suit; or (2) exposes such personal jurisdictional deficiencies as to violate due process.9 Here, PNS filed its attack outside the bill of review‘s four-year statute of limitations period and its complaints amount to no more than allegations of improper service. We must therefore determine whether PNS‘s complaints rise to the level of a due process violation that would render the default judgment
PNS nevertheless argues that a default judgment must be vacated when the prevailing party fails to strictly comply with statutory notice provisions. See, e.g., Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex.1990). But the cases on which it relies simply reiterate the strict compliance requirement in the context of a direct attack on a default judgment. See, e.g., Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex.1994) (per curiam) (noting that strict compliance is necessary to withstand a direct attack). Extending these stringent standards to collateral attacks involving mere technical defects in service would pose a serious threat to the finality of judgments. See King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003). “While no system is infallible, ‘[e]ndless litigation, in which nothing was ever finally determined, would be worse than the occasional miscarriages of justice.‘” Browning, 165 S.W.3d at 348 (alteration in original) (quoting Alexander v. Hagedorn, 148 Tex. 565, 226 S.W.2d 996, 998 (1950)). Exercising personal jurisdiction under these circumstances does not violate due process.
Moreover, although the service is technically defective, the record shows that Rivera requested service of process on PNS‘s registered agent for service, and its agent‘s (Prentice Hall‘s) computer records reveal that it received the service and accompanying documents and forwarded them to PNS.13 Although PNS claims it did not receive notice of the suit until February 10, 2010, some nine years after the default was taken, service effected on a registered agent within the scope of its agency is imputed to the litigant. See Preston Farm & Ranch Supply, Inc. v. Bio-Zyme Enters., 625 S.W.2d 295, 300 (Tex.1981) (holding that notice to an agent, in the scoрe of his agency, is notice to the
In sum, a judgment is void if the defects in service are so substantial that the defendant was not afforded due process. None of the defects at issue here deprived PNS of a meaningful opportunity to appear and answer Rivera‘s claims. When a defective citation is served, but the citation puts the defendant on notice of asserted claims in a pending suit, and the technical defects are not of the sort that deprive a litigant of the opportunity to be heard, we reject them as grounds sufficient to support a collateral attack. Because the trial court had jurisdiction over the subject matter of Rivera‘s claims and the technical defects in service at best render the default judgment voidable, not void, PNS may not collaterally attack the judgment.
B. Extrinsic Fraud
Having rejected PNS‘s collateral attack on the judgment, PNS must rely on its bill of review to attack the default judgment directly. A direct attack can be in the form of a motion for new trial, appeal, or bill of review. Frost Nat‘l Bank v. Fernandez, 315 S.W.3d 494, 504 (Tex.2010). A bill of review is an equitable proceeding to set aside a prior judgment that is no longer subject to challenge by a motion for new trial or direct appeal. Id. It must, however, be brought within four years of the rendition of the judgment. Caldwell v. Barnes, 975 S.W.2d 535, 537 (Tex.1998) (citing
A direct attack on “a judgment on the basis of extrinsic fraud is allowed because such fraud distorts the judicial process to such an extent that confidence in the ability to discover the fraudulent conduct through the regular adversarial process is undermined.” Browning, 165 S.W.3d at 348. Extrinsic fraud is fraud that denies a litigant the opportunity to fully litigate at trial all the rights or defenses that could have been asserted.14 King Ranch, 118 S.W.3d at 752. It oсcurs when a litigant has been misled by his adversary by fraud or deception, or was denied knowledge of the suit. Alexander, 226 S.W.2d at 1001. PNS argues that Tamez‘s failure to comply with
We first address PNS‘s argument that Tamez misled the trial court by providing the clerk with PNS‘s registered agent‘s address as the last known address for PNS.
At or immediately prior to the time [a] final default judgment is rendered, the party taking the same or his attorney shall certify to the clerk in writing
the last known mailing address of the рarty against whom the judgment is taken.... Immediately upon the signing of the judgment, the clerk shall mail written notice thereof to the party against whom the judgment was rendered at the address shown in the certificate....
Rivera responds that Tamez‘s violation of
We conclude that under the specific circumstances presented in this case, Tamez‘s failure to provide the clerk with PNS‘s last known address, which he knew, is some evidence of extrinsic fraud. In contrast to Layton and Alderson, Tamez knew PNS‘s mailing address, had corresponded with PNS and its counsel at this last known address only months earlier and instead chose to provide the clerk with the address of PNS‘s registered agent, Prentice Hall.
Next, PNS argues that Tamez‘s violations of the Texas Lawyer‘s Creed is evidence of еxtrinsic fraud. The Texas Lawyer‘s Creed, promulgated by this Court and the Court of Criminal Appeals, was intended to encourage lawyers to be mindful that abusive tactics—ranging from hostility to obstructionism—do not serve the justice we pursue. The Texas Lawyer‘s Creed—A Mandate for Professionalism, reprinted in TEXAS RULES OF COURT 865, 865 (West 2012). The Lawyer‘s Creed serves as an important reminder that the conduct of lawyers “should be characterized at all times by honesty, candor, and fairness.” Id. The Lawyer‘s Creed states that an attorney “will not take advantage, by causing any default or dismissal to be rendered, when [he] know[s] the identity of an opposing counsel, without first inquiring about that counsel‘s intention to proceed.” Id. at 867.
PNS argues that Tamez, in blatant violation of the Texas Lawyer‘s Creed, purposefully took a default judgment against PNS without contacting PNS‘s known attorneys and that he did so only three months after the federal court granted summary judgment in the first suit with full knowledge that PNS would defend the second lawsuit as vigorously as it had the first. The Lawyer‘s Creed, however, is aspirational. It does not create new duties and obligations enforceable by the courts beyond those existing as a
Finally, PNS argues that Tamez‘s history of unethical conduct, including grievances filed against him, his subsequent disbarment, and his refusal to give deposition testimony, is evidence of extrinsic fraud. But “[e]vidence of other wrongs or acts is not admissible to prove character in order to show ‘action in conformity therewith.‘” Serv. Corp. Int‘l v. Guerra, 348 S.W.3d 221, 235 (Tex.2011) (quoting
In sum, although Tamez‘s failure to abide by the Texas Lawyer‘s Creed and his unethical conduct are not evidence of extrinsic fraud, under the specific facts of this case, his failure to comply with
III. Conclusion
The alleged technical defects in service render the judgment voidable, not void. Therefore, PNS cannot collaterally attack the judgment. But because there is some evidence of extrinsic fraud, a material fact issue remains regarding Rivera‘s limitations defense. Accordingly, we reverse the judgment of the court of appeals and remand the case to the trial court for further proceedings.