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Macs v. Lenahan

Court of Appeals of Texas, Fourth District, San Antonio

January 3, 2018

Michael MACS, High Cotton Holdings, LLC, Ranger O&G Operating, LLC, and Ranger Exploration Corporation, Appellants/Cross-appellees
v.
Christopher LENAHAN d/b/a CPL Services, Appellee/Cross-appellant

         From the 218th Judicial District Court, La Salle County, Texas Trial Court No. 16-07-00088-CVL Honorable Russell Wilson, Judge Presiding

          Sitting: Marialyn Barnard, Justice Rebeca C. Martinez, Justice Irene Rios, Justice

          MEMORANDUM OPINION

          Rebeca C. Martinez, Justice

         Appellants Michael Macs, High Cotton Holdings, LLC, Ranger O&G Operating, LLC, and Ranger Exploration Corporation appeal the summary judgment rendered in favor of Christopher Lenahan d/b/a CPL Services. We reverse the judgment of the trial court and render judgment in favor of appellants.

         Background

         On March 11, 2014, Christopher Lenahan d/b/a CPL Services sued Michael Macs, High Cotton Holdings, LLC, Ranger O&G Operating, LLC, and Ranger Exploration Corporation ("appellants"). Lenahan did not individually serve appellants with process, but instead served their attorney, J. Wayne Ballew. Ballew agreed to accept service on behalf of appellants pursuant to a Rule 11 agreement dated April 4, 2014. The agreement was filed with the court on May 22, 2014 as part of Lenahan's motion for a "no answer" default judgment. On the same day, the trial court rendered a Final Default Judgment against appellants, finding that each were responsible for the same alleged wrongdoing and awarding Lenahan a total of $2, 964, 732.00 in actual and punitive damages, plus an additional $76, 000 in attorney's fees.

         On July 1, 2016, appellants filed a bill of review, asserting that fraud by Ballew caused the default judgment to be rendered and that it should be set aside due to their lack of fraud or negligence in failing to answer or oppose the default judgment.

         On August 19, 2016, appellants moved for summary judgment as a matter of law requesting that the trial court grant their petition for a bill of review and set aside the default judgment entered against them. Appellants asserted that the default judgment was rendered against them without having been served with process, without being provided notice of the default judgment, and without Lenahan filing proof of service at least 10 days before moving for a default judgment. Appellants argued that service on attorney Ballew was ineffective under Rule 119, and therefore the bill of review should be granted. Tex.R.Civ.P. 119. On November 23, 2016, Lenahan filed a cross-motion for summary judgment on traditional and no-evidence grounds. The trial court granted Lenahan's traditional motion for summary judgment and denied Lenahan's no-evidence motion. The trial court also denied appellants' motion for summary judgment and dismissed appellants' bill of review with prejudice. Appellants timely appealed the denial of their motion for summary judgment. Lenahan did not file a notice of cross-appeal, but complains on appeal of the trial court's denial of his request for recovery of attorney's fees in connection with the summary judgment.

          Standard of Review and Applicable Law

         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 Katy Venture, Ltd. v. Cremona Bistro Corp., 469 S.W.3d 160, 163 (Tex. 2015). When, as here, the parties file competing motions for summary judgment, and the trial court grants one and denies the other, we "determine all questions presented, and if the trial court erred, render the judgment the trial court should have rendered." Sw. Bell Tel., L.P. v. Emmett, 459 S.W.3d 578, 583 (Tex. 2015).

         A bill of review may be brought by a party seeking to set aside a prior judgment that is no longer subject to challenge by a motion for new trial or appeal. PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 271 (Tex. 2012); Mungia v. Via Metro. Transit, 441 S.W.3d 542, 547 (Tex. App.- San Antonio 2014, pet. denied). Ordinarily, the bill of review plaintiff must 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. Mabon Ltd. v. Afri-Carib Enters., Inc., 369 S.W.3d 809, 812 (Tex. 2012). However, when a bill of review plaintiff proves that it was not served with notice of the lawsuit, the judgment is "constitutionally infirm, " and the plaintiff is relieved of proving these elements. Id. at 813 (quoting Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 84, 87 (1988)). The third element is conclusively established if the bill of review plaintiff can prove that he was never served with process. Caldwell v. Barnes, 154 S.W.3d 93, 97 (Tex. 2004) (per curiam). "An individual who is not served with process cannot be at fault or negligent in allowing a default judgment to be entered." Id.

         Discussion

         Appellants argue their attorney's acceptance of service did not comply with Rule 119 and therefore cannot support the default judgment. Rule 119 of the Texas Rules of Civil Procedure provides, in relevant part:

The defendant may accept service of process, or waive the issuance or service thereof by a written memorandum signed by him, or by his duly authorized agent or attorney, after suit is brought, sworn to before a proper officer other than an attorney in the case, and filed among the papers of the cause, and such waiver or acceptance shall have the same force and effect as if the citation had been issued and served as provided by law. The party signing such memorandum shall ...

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