DC CONTROLS, INC. AND MARGARET EDELBROCK, Appellants v. UM CAPITAL, L.L.C., Appellee

REVERSE and REMAND and Opinion Filed October 22, 2008
 
 
 
In The
Court of Appeals
Fifth District of Texas at Dallas
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No. 05-07-01728-CV
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DC CONTROLS, INC. AND MARGARET EDELBROCK, Appellants
V.
UM CAPITAL, L.L.C., Appellee
.............................................................
On Appeal from Dallas County Court of Law No. 3
Dallas County, Texas
Trial Court Cause No. cc-06-08355-C
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MEMORANDUM OPINION
Before Justices Morris, Whittington, and O'Neill
Opinion By Justice O'Neill
        In this restricted appeal, appellants DC Controls, Inc. and Margaret Edelbrock appeal from a default judgment. In four issues, appellants contend (1) service of citation on the Secretary of State is insufficient if the record contains no evidence of reasonable diligence to perfect service on a registered agent; (2) service cannot be perfected if, at the time of the alleged service, there was no cause of action pending; (3) plaintiff's delivery of the motion to reinstate after the trial court reinstated the case sua sponte amounts to error on the face of the record; and (4) this court should take judicial notice that the judgment includes excessive post-judgment interest and reform accordingly. We reverse the default judgment entered against appellants DC Controls, Inc. and Margaret Edelbrock and remand for further proceedings.
Background
        Appellants executed a “premium creditline for business agreement” on or about August 24, 2003 in which Bank of America issued a line of credit totaling $49,600. The terms of the agreement allowed appellants to borrow against the credit line, but it required them to pay Bank of America on demand the total of all credit advances and finance charges. Margaret Edelbrock, as president of DC Controls, Inc., signed the agreement and also signed a commercial guaranty in her individual capacity agreeing to liability for any default.
        Appellants made periodic payments; however, payments stopped on October 1, 2004. Because they failed to pay successive monthly installment amounts, appellants allegedly defaulted under the terms of the contract. The entire unpaid balance become due, which totaled $42,967.31.
        Appellee filed suit against appellants for breach of contract. The trial court set the case for dismissal pursuant to Texas Rule of Civil Procedure 165a on October 13, 2006 at 9:00 a.m. if no answer was on file. It further informed appellee that if the parties failed to answer, it was expected to have moved for summary judgment or to have proved up a default judgment. Appellants failed to answer and the trial court dismissed the case on October 23, 2006 for “failure to take action after notice of intent to dismiss for want of prosecution.”
        The trial court signed an order which purported to reinstate the case sua sponte on November 1, 2006. Although the order states “On this day came to be heard the Motion of Plaintiff requesting the Court to set aside its previous Order dismissing this case for want of prosecution and reinstating the case . . . ,” the record shows appellee's motion to reinstate was not filed until November 8, 2006.
        On January 11, 2007, appellee filed its motion for default judgment based on appellants' failure to answer. The trial court granted the default judgment on June 19, 2007 and found appellants jointly and severally liable for $42,967.34, plus pre-judgment interest totaling $10,223.24, attorney's fees in the amount of $1,000, and post-judgment interest. This appeal followed.
Standard of Review
        To successfully attack an order by restricted appeal, the appealing party must show it was a party who did not participate either in person or through counsel in the hearing that resulted in the judgment complained of, it filed a notice of appeal within six months after the order was signed, and error is apparent on the face of the record. See Tex. R. App. P. 26.1(c), 30; Tex. Dep't of Pub. Safety v. Jacobs, 250 S.W.3d 209, 210 (Tex. App.-Dallas 2008, no pet.). We are limited to considering only the face of the record, but our scope of review is otherwise the same as that in an ordinary appeal; that is, we review the entire case. Dallas County Constable Precinct 5 v. KingVision Pay-Per-View, Ltd., 219 S.W.3d 602, 611 (Tex. App.-Dallas 2007, no pet.). It is undisputed the appeal is timely, and appellants did not participate in the lawsuit. Thus, the only issue is whether error is apparent on the face of the record.
Default Against DC Controls, Inc.
        In its first two issues, DC Controls, Inc. argues service on the secretary of state was insufficient because there was no evidence of reasonable diligence to perfect service on its registered agent, and at the time of the alleged service no cause of action was pending. We will address its second issue first.
        In a restricted appeal from a default judgment, there are no presumptions in favor of valid service. Hubicki v. Festina, 226 S.W.3d 405, 407 (Tex. 2007). Defective service is considered error on the face of the record. Scoggins v. Best Indus. Uniform Supp. Co., 899 S.W.2d 276, 278 (Tex. App.-Houston [14th Dist.] 1995, no writ). A default judgment cannot withstand direct attack by a defendant who complains he was not served in strict compliance with the statutory requirements. Id.
        Further, for service of citation to be valid, the suit must be on file when the citation is issued. Id.; see also McGraw-Hill, Inc. v. Futrell, 823 S.W.2d 414, 417 (Tex. App.-Houston [1st Dist.] 1992, writ denied). It is impossible to serve a citation before a suit is filed. McGraw-Hill, Inc., 823 S.W.2d at 417. Further, if a trial court dismisses a suit, it is treated as if the party never filed suit until the court reinstates it. Scoggins, 899 S.W.2d at 278. Thus, citation served after a suit is dismissed is defective and establishes error on the face of the record. Id.
        Here, the trial court dismissed the suit for want of prosecution on October 23, 2006. Appellee alleges DC Controls, Inc.'s attorney of record received notice on October 31, 2006 that the Secretary of State had been served the lawsuit. As stated above, it is impossible to serve citation while a suit is dismissed. At the time of the alleged service, the case had been dismissed and had not been reinstated. Because the suit was not reinstated at the time of alleged service, citation is defective and appellant has established error on the face of the record. Scoggins, 899 S.W.2d at 278. We sustain DC Controls, Inc.'s second issue and reverse the default judgment entered against it. Because this issue is dispositive to DC Controls, Inc., we need not address issues one and four. Tex. R. App. P. 47.1.
Default Against Margaret Edelbrock
        In a third issue, Edelbrock asserts she is entitled to reversal of the default judgment against her because she was induced not to answer by relying on the court's dismissal order. Appellee filed its original petition on June 8, 2006, and Edelbrock was served on June 29, 2006. As stated above, the court dismissed the suit for want of prosecution on October 23, 2006 and then sua sponte signed an order of reinstatement on November 1, 2006. Appellee did not actually file its motion for reinstatement until November 8, 2006.         Texas Rule of Civil Procedure 165a controls reinstatement procedures for all cases, whether dismissed under rule 165a or pursuant to the court's inherent authority. Tex. R. Civ. P. 165a(3); Price v. Firestone Tire & Rubber Co., 700 S.W.2d 730, 732 (Tex. App.-Dallas 1985, no writ). Once a party files a motion to reinstate, rule 165a states the “court shall notify all parties or their attorneys of record of the date, time and place of the hearing.” Tex. R. Civ. P. 165a(3); Rohus v. Licona, 942 S.W.2d 111, 112 (Tex. App.-Houston [1st Dist.] 1997, no writ) (“The language of rule 165a does not allow the trial court discretion in whether to set a hearing on motions for reinstatement, but requires the trial court to set a hearing.”).
        Here, Edelbrock does not challenge the efficacy of the motion to reinstate or the trial court's sua sponte reinstatement prior to the filing of the motion or conducting a hearing. Rather, she argues she was induced not to answer the petition because of a mistake of fact created by the court. Specifically, she claims she never received notice of a hearing on the motion to reinstate, and the court never entered an order responsive to the motion to reinstate. Therefore, she justifiably believed no case existed because of the prior dismissal for want of prosecution.
        We agree with Edelbrock. The record contains no notice from the trial court informing Edelbrock of a hearing on the motion to reinstate, as required by rule 165a. Without such notice, Edelbrock had a justifiable belief that the case remained dismissed. Thus, she had no reason to answer a lawsuit she believed no longer existed. This establishes error on the face of the record. Accordingly, we sustain appellant's third issue and reverse the default judgment entered against her.
Conclusion
        Having sustained their second and third issues, we reverse the default judgment entered against appellants DC Controls, Inc. and Margaret Edelbrock and remand for further proceedings.
 
 
                                                          
                                                          MICHAEL J. O'NEILL
                                                          JUSTICE
 
 
071728F.P05