PAUL WILLIAMS AND HUGHES-ROTH FINANCIAL GROUP, INC., Appellants v. NEXPLORE CORPORATION, Appellee

REVERSE and REMAND; Opinion issued December 7, 2010
 
 
 
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-09-00621-CV
............................
        
PAUL WILLIAMS AND HUGHES-ROTH FINANCIAL GROUP, INC., Appellants
V.
NEXPLORE CORPORATION, Appellee
.............................................................
On Appeal from the 14th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-08-15748-a
.............................................................
MEMORANDUM OPINION
Before Justices Bridges, Francis, and Lang
Opinion By Justice Francis
        Paul Williams and Hughes-Roth Financial Group, Inc. appeal a no-answer default judgment against them in a suit brought by Nexplore Corporation. Among other issues, appellants assert the trial court lacked jurisdiction to render the default judgment because the affidavits supporting substituted service were insufficient. For reasons set out below, we agree. We reverse the trial court's judgment and remand the cause for further proceedings.
        Nexplore sued Williams and Hughes-Roth, its former chairman of the board and corporate financial advisor, respectively, seeking a declaratory judgment and return of all Nexplore stock owned or controlled by Williams and alleging contract and tort theories. When service on appellants was unsuccessful, Nexplore filed a motion for substituted service supported by pre-printed, fill-in- the-blank, form affidavits of a deputy constable. Each affidavit was identical, except for the name of the party upon whom the deputy was instructed to attempt service, and provided, in relevant part:
 
5. “I was instructed to attempt service upon Hughes Roth Financial Group @ 5001 Spring Valley Rd. #400, Dallas Texas, which is the parties usual place of “ ” Dallas.”
 
                                                          
 
6. “I have made several attempts to obtain personal service of process on the within name defendant/respondent at Paul Williams which I determined to be the Defendant/Respondent's usual place of Business because verified w/sec.”
 
 
 
DATE
 
TIME
 
COMMENT
 
 
 
 
 
12/31/08
 
9:45A
 
L/C
 
 
1/5/09
 
10:50A
 
L/C
 
 
1/6/08
 
3:00P        
 
L/C         
 
 
1/7/08
 
11:00A
 
L/C
 
 
7. “The foregoing attempt to obtain personal service on the within named Defendant/Respondent has been unsuccessful to date. I advised the plaintiff/attorney of such attempts and a Rule 106/536 Affidavit was requested.”
 
8. “I believe this party will be given effective notice of this suit by delivering a true copy of the citation, with the petition attached by serving anyone over sixteen years of age at the above address or by attaching it to the door at the above address, which is the party's usual place of abode/business, pursuant to the provisions of Rule 106/536, Texas rules [sic] of Civil Procedure.”   See Footnote 1 
 
The information provided in the blanks was handwritten by the deputy constable.
        The trial court granted the motion and signed an order authorizing that appellants be served by delivering process and a copy of the order to any person over the age of sixteen at 5001 Spring Valley Road, Suite 400, Dallas, Texas 75244. The deputy constable served the petitions on the receptionist at that address. About two weeks later, Williams went to the office and received the petitions from the receptionist.
        For reasons not necessary to the disposition of this appeal, appellants did not file an answer. The trial court then rendered final default judgment against appellants, awarding Nexplore the right to cancel Williams's ten million shares of Nexplore stock that Williams valued at about $7 million, monetary damages against both appellants, and attorney's fees. The next day, appellants filed an answer generally denying the allegations and, then later, a motion for new trial to set aside the default judgment. After a hearing, the trial court denied the motion for new trial and allowed Nexplore to supplement the returns of service, after final default judgment, to correct deficiencies.
        On appeal, appellants assert the trial court never acquired jurisdiction over them because of defects in the substituted service and the returns of service. Alternatively, they argue the trial court was required to grant a new trial and set aside the default judgment because appellants established the necessary elements under Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 392-93,133 S.W.2d 124, 126 (Tex. 1939). Because it is dispositive, we begin with the complaint regarding substituted service.
        Before a trial court may properly render a default judgment, the record must reflect the trial court has jurisdiction over the subject matter and the parties and the case is ripe for judgment. Finlay v. Jones, 435 S.W.2d 136, 138 (Tex. 1968); Marrot Commc'ns, Inc. v. Town & Country P'ship, 227 S.W.3d 372, 376 (Tex. App.-Houston [1st Dist.] 2007, pet. denied). Unless the record affirmatively shows, “at the time the default judgment is entered,” either an appearance by the defendant, proper service of citation on the defendant, or a written memorandum of waiver, the trial court does not have in personam jurisdiction to render default judgment against the defendant. Marrot Commc'ns, 227 S.W.3d at 376. Even actual notice to a defendant after defective service is “not sufficient to convey upon the court jurisdiction to render default judgment against him.” Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990).
        Texas Rule of Civil Procedure 106 allows the trial court to sign an order authorizing a substitute method of service, provided the plaintiff files a motion supported by proper affidavit. Tex. R. Civ. P. 106(b); State Farm Fire & Cas. Co. v. Costley, 868 S.W.2d 298, 298-99 (Tex. 1993) (per curiam). The supporting affidavit must state (1) “the location of the defendant's usual place of business or usual place of abode or other place whether the defendant can probably be found” and (2) the specific facts showing that traditional service has been attempted “at the location named in such affidavit but has not been successful.” Tex. R. Civ. P. 106(b). Failure to affirmatively show strict compliance with this rule renders the attempted service of process invalid and of no effect. Wilson, 800 S.W.2d at 836. There are no presumptions favoring valid issuance, service, and return of citation in the face of a direct attack on a default judgment. Id.
        Here, appellants contend the affidavits on which the trial court based its decision to order substituted service are insufficient, “if not entirely indecipherable.” In particular, they argue the affidavits fail to (1) contain any competent evidence that any particular address is appellants' usual place of business, usual place of abode, or other place whether appellants can be found and (2) identify any actual location where the deputy constable purportedly attempted to serve them.
        The relevant paragraphs are five and six of the affidavits. Paragraph five identifies an address where the deputy constable was instructed to attempt service, but the affidavits do not state that the address is either appellant's usual place of business. Paragraph eight does contain catch-all language that the “above address” is the parties' “usual place of abode/business.” Even if we assumed this language was sufficient to establish 5001 Spring Valley Rd. #400, Dallas, Texas, is appellants' usual place of business, the affidavit must also state facts showing traditional service was attempted at the location named in the affidavit but was not successful. Neither affidavit meets this requirement. Instead of identifying a location where service was attempted, paragraph six of both affidavits states previous service was attempted at “Paul Williams.” We conclude appellants were not served in strict compliance with rule 106(b) because substituted service was not properly authorized by the affidavits relied upon by the trial court. Without proper service, the trial court never obtained personal jurisdiction over appellants and could not render judgment against them.
        Nexplore argues any defects in the affidavit supporting substituted service are “immaterial” because this case comes to us on a denial of motion for new trial, rather than restricted appeal. Relying on Fidelity & Guaranty Insurance Co. v. Drewery Construction Co., 186 S.W.3d 571 (Tex. 2006) (per curiam), it contends that our analysis is limited to whether appellants met the Craddock standard. We do not agree with Nexplore's reading of Fidelty.
        In Fidelity, the court discussed the distinction between restricted appeals and appeals from a denial of a motion for new trial in the context of default judgments. The court explained that because of the differences in the two procedures, “cases concerning one do not necessarily apply to the other.” Fidelity, 186 S.W.2d at 573. The court, however, did not dispense with the requirement of proper service in default judgment cases and, in fact, continued to recognize well-settled law that receiving papers or notice through a procedure not authorized by law is treated the same as never receiving them. Fidelity, 186 S.W.3d at 574 n.1. Consequently, we reject any argument that appellants' complaint, which is directed at a procedure not authorized by law, is immaterial.
        Nexplore also asserts that any service defects were waived because appellants (1) filed an answer and had therefore made a general appearance in the lawsuit and (2) did not timely raise them below. Again, we disagree. With respect to the first waiver argument, a general appearance which waives defects in service must precede any action of the court which such appearance validates. Houston Precast, Inc. v. McAllen Const., Inc., No. 13-07-135-CV, 2008 WL 4352636, at *3 (Tex. App.-Corpus Christi Sept. 25, 2008, no pet.) (mem. op.); Dan Edge Motors, Inc. v. Scott, 657 S.W.2d 822, 824 (Tex. App.-Texarkana 1983, no writ). Here, appellants' answer was filed after the final default judgment was rendered; consequently, any service defect issues are not waived. As for Nexplore's second contention, the supreme court in Wilson rejected an argument that a party waived complaints of defective service by not raising them in a motion for new trial. Wilson, 800 S.W.2d at 837. If a party's complaint need not be raised at all in the trial court, it can hardly be considered waived for being untimely made.
        Given our disposition of appellants' issue regarding substituted service, we need not address appellants' remaining issues. See Tex. R. App. P. 47.1. Because the trial court did not acquire jurisdiction over appellants, the default judgment rendered against them is void.
        We reverse the trial court's judgment and remand for proceedings consistent with this opinion.
 
 
                                                          
                                                          MOLLY FRANCIS
                                                          JUSTICE
 
090621F.P05
 
Footnote 1 In paragraph five of the second affidavit, the deputy asserted he was instructed to attempt service upon “Paul Williams.”