Texas Court Weighs in on Service Requirement in Recent Case Involving Business Dispute 

Mar 3, 2023

Austin Oil and Gas Attorney, Gregory D. Jordan

Austin, TX (Law Firm Newswire) July 29, 2021 – One of the many important procedural requirements when bringing a lawsuit after a Texas business dispute is serving the other party. The service requirement is intended to ensure that the other party is on notice about the claim to respond adequately. Not only is service critical to the other party’s rights, but it also ensures the orderly processing of claims in front of the court. 

Recently, the Court of Appeals for the Fifth District of Texas issued an opinion in a business dispute case discussing the service requirement. In that case, the defendant company appealed a default judgment that was entered against it after the company failed to respond to the plaintiff company’s allegations. A default judgment is when the court enters judgment in a party’s favor when the other party does not respond to a lawsuit. 

The case involves a rental agreement for commercial property. WWLC leased property to Miraki. The lease term was five years and provided for increasing rent, from $4,400 to $5,400 over the term of the lease. About two years into the lease, Miraki stopped paying rent. Miraki ceased rent payments after he claimed that WWLC failed to make necessary repairs to the property. WWLC evicted Miraki. In response, Miraki sued WWLC for breach of lease, fraud, and violations of the Texas Deceptive Trade Practices Act. 

Miraki hired a process server to serve the owner of WWLC. The process server tried to serve the owner five times; however, he was unsuccessful. Miraki then obtained an order for substituted service by attaching a copy of the petition and citation to the front door of the owner of WWLC’s home. The owner never responded, and the court eventually entered a judgment in Miraki’s favor for $382,543.26 in actual damages, $738,771.60 in punitive damages, and $30,000 in attorney fees.

Miraki never attempted to serve WWLC through its registered agent, HPZ International. WWLC identified HPZ International, Inc. as its registered agent in name-change and assumed name documents filed with the Secretary of State in 2011. Through these filings, a previous company, WLC Investment, L.P., changed its name to WWLC, and WWLC adopted WLC Investment, L.P. as an assumed name. Under Texas law, these filings needed to be made by HPZ. The owner of WWLC signed on behalf of HPZ but failed to clarify her position in that company. Subsequently, HPZ forfeited its charter in January of 2016. 

A month after WWLC learned of the default judgment, the owner of WWLC sought to vacate the default judgment. The trial court rejected WWLC’s claims, noting the defect in the WWLC/HPZ arrangement, and found that the service was not defective on this basis. WWLC then appealed. 

On appeal, the court noted that “service on a limited partnership may be made on its general partner or registered agent.” Here, the court found that the evidence suggested that the owner of WWLC was both the general partner and the registered agent of WWLC. Because the owner of WWLC testified to being the “owner,” she was a party against whom service could be made. Accordingly, the court held that service was appropriate in this case. 

Austin business law attorney Gregory W. Jordan explains, “While accomplishing service in some cases is straightforward, that is certainly not always the case. Often parties are eager to get their lawsuit underway and attempt to serve the other party quickly. However, especially in business disputes, Texas law provides strict rules on which individuals can be served and how service must be accomplished. Thus, rushing to serve any point-of-contact can result in unnecessary delay down the road.”

At the Law Offices of Gregory D. Jordan, Attorney Jordan represents businesses in all types of Texas contractual disputes and other business-related issues. Attorney Jordan has over 30 years of relevant experience helping businesses confront the legal issues they face throughout Travis County and Central Texas. Contact the Law Offices of Gregory D. Jordan at http://www.theaustintriallawyer.com/.

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