No. 05-99-00018-CV.
Opinion issued December 14, 1999. DO NOT PUBLISH. Tex. R. App. P. 90
Appeal from the 101st District Court, Dallas County, Texas, Trial Court Cause No. 95-09033-E.
Before Justices LAGARDE, JAMES, and ROACH. Opinion By Justice JAMES.
TOM JAMES, JUSTICE.
These are cross-appeals in a personal injury action. The appellee, Clarence Grippe, was an independent contractor for FFE Transportation Services, Inc. (Services) when he sustained injuries in a fall from a trailer owned by Services. The appellants, Frozen Food Express Industries, Inc. (Industries) and Frozen Food Transportation Services, Inc. (Transportation), raise five points of error: (1) Grippe's action against appellants is barred by the statute of limitations; (2) there is no evidence or factually insufficient evidence to support the jury's finding that appellants' negligence proximately caused Grippe's injuries; (3) the single business enterprise theory does not apply under the facts of this case; (4) the trial court abused its discretion by denying appellants leave to amend their answer so they could raise verified denials; and (5) there is no evidence or factually insufficient evidence to support the jury's award of future damages. Grippe cross-appeals on a single point: the trial court erred in denying his motion to reform and correct the judgment to reflect the correct name of the defendant, FFE Transportation Services, Inc., the company with which Grippe had contracted. We reverse and render for the appellants Industries and Transportation.
Industries is a publicly owned holding company. It owns 100% of the stock of FFE, Inc. FFE, Inc., also a holding company, holds the stock of several corporations, including Services. Industries was named in the lawsuit as "Frozen Food Express Industries, Inc. aka or dba F.F.E. Industries, Inc. aka or dba F.F.E. Maintenance Department aka or dba FFE, Inc. aka or dba Frozen Food Express, Inc. aka or dba Conwell Cartage, Inc. aka or dba Middleton Transportation Company."
Frozen Food Transportation Services, Inc. was named in the lawsuit as "Frozen Food Transportation Services, Inc. aka or dba FFE Transportation Services Inc. aka or dba FFE Transportation Services aka dba FFE Transportation aka or dba FFE Industries, Inc. aka or dba FFE Maintenance."
Factual and Procedural Background
Grippe was a truck driver for Services. As an independent contractor, he owned the tractor that pulled a trailer owned by Services. The trailer had a side door through which the driver entered and exited to unload small loads. To enter this particular trailer through the side door, the driver must use the tire as a step and grab the side of the door to pull himself up. On June 7, 1995, Grippe, then 63-years-old, injured his shoulder and back when he fell from the trailer while attempting to exit through the side door. On August 30, 1995, Grippe sued "Frozen Food Express, Inc." for his injuries. On November 9, 1995, Frozen Food Express, Inc. was timely served through its registered agent, Stoney Stubbs. On June 6, 1997, the day before the statute of limitations expired, Grippe filed his fourth amended petition naming eight new defendants. Two of these defendants are the appellants, Industries and Transportation. No citations were requested. On June 9, 1997, Grippe filed his fifth amended petition and again no citations were requested. On July 9, 1997, Grippe filed his sixth amended petition. Finally on July 31, 1997, one citation was issued for the sixth amended petition. This citation was directed to "Trailmobile Trailer Corporation Services, Inc. aka FFE Transportation Services, Inc., by serving reg. agt., Stoney M. Stubbs." Stubbs was served with this citation on August 5, 1997. Grippe did not request any other citations until January 5, 1998. On that day citations were issued naming appellants Industries and Transportation. These citations were served the same day. At one time there were as many as ten defendants named in this lawsuit, but when the case went to trial in July 1998, only three defendants remained, both appellants and Frozen Food Express, Inc. The jury found in favor of Grippe and apportioned forty percent liability to Transportation, forty percent to Industries, twenty percent to Grippe, and awarded damages in the amount of $400,000 for past and future pain and mental anguish, loss of earning capacity, and physical impairment. After reducing the amount of damages to reflect Grippe's proportionate share of responsibility, the trial court entered judgment in Grippe's favor against Industries and Transportation, jointly and severally. In addition to the questions of liability, there were four other questions presented to the jury. In question number three, the jury found "Frozen Food Transportation Services, Inc." and "FFE Transportation Services, Inc." are two different names for the same entity. In question number five, the jury found "Frozen Food Express Industries, Inc.," "Frozen Food Express, Inc.," and "Frozen Food Transportation Services, Inc." operated as a single business enterprise. In question number six, the jury found Grippe and his attorney exercised due diligence after the filing of the lawsuit to secure service of citation on Transportation and Industries. In the last special question, the jury found Grippe did not release FFE Transportation Services from liability in the Independent Contractor Agreement. Due Diligence in Service of Citation
In their first point of error, appellants argue Grippe's counsel did not exercise due diligence in procuring service of citation as a matter of law, or in the alternative, there is no evidence to support the jury's finding of due diligence. We conclude that counsel failed to exercise due diligence as a matter of law. The mere filing of a petition will not toll the running of a statute of limitation; to interrupt the statute, the plaintiff must exercise due diligence in procuring the issuance and service of citation upon the defendant. Perry v. Kroger Stores, Store No. 119, 741 S.W.2d 533, 534 (Tex.App._Dallas 1987, no writ) (citing Zale Corp. v. Rosenbaum, 520 S.W.2d 889, 890 (Tex. 1975)). While the existence of diligence is usually a question of fact, when no excuse is offered for a delay in procuring service of citation, or if the lapse of time and the plaintiff's acts conclusively negate diligence, a lack of diligence will be found as a matter of law. See Perry, 741 S.W.2d at 534. In reviewing a "matter of law" challenge, we employ a two prong test. First, we examine the record for evidence to support the finding, while ignoring all evidence to the contrary. See Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989). If there is no evidence to support the finding, we then examine the entire record to determine if the contrary proposition is established as a matter of law. Id. If the contrary proposition is established conclusively by the evidence, the point of error will be sustained. Id. Industries and Transportation were first named as defendants in Grippe's fourth amended petition filed on June 6, 1997, the day before the statute of limitations ran. When he filed this petition, counsel, for no apparent reason, failed to request a citation be issued for either of the appellants, even though in his petition he identifies the appellants by name, and asserts they should be served through their registered agent (Stubbs) and lists the address. Counsel allowed seven weeks and six days to pass before requesting a citation. Then, a citation was issued for the sixth amended petition which was incorrectly directed to "Trailmobile Trailer Corporation Services, Inc. aka FFE Transportation Services, Inc. by serving registered agent Stoney M. Stubbs." Stubbs was served with this citation on August 5, 1997. It wasn't until January 5, 1998, that counsel requested two more citations be issued. One was directed to "Frozen Food Transportation Services, Inc. aka FFE Transportation Services, Inc. by serving registered agent Stoney M. Stubbs." The other was directed to "Frozen Food Express Industries, Inc. by serving registered agent Stoney M. Stubbs." These citations were served the same day as they were issued. Diligence is defined as careful and persistent application or effort. See Webster v. Thomas, No. 14-98-00533-CV, 1999 WL 649125, at *4 (Tex.App._Houston [14th Dist.], August 26, 1999, no pet. h.) (holding a four month and ten day delay with no effort or insufficient effort to procure citation and service amounts to lack of diligence as a matter of law). "[T]he question of due diligence is answered by looking at (1) the time taken to procure citation and/or service and (2) the type of effort or lack of effort the plaintiff expended in procuring service." Id. at *2. Although a plaintiff may have good reasons for not wanting to seek immediate service on a defendant, those reasons do not negate the requirement that diligence be used in attempting service once the limitations period has passed. Broom v. MacMaster, 992 S.W.2d 659, 665 (Tex.App._Dallas 1999, no pet. h.). Grippe's counsel testified at trial on the issue of diligence. He offered no excuse for the fifty-four day delay in requesting the July 31 citation. Additionally, he blamed the district clerk for not directing this citation to the correct defendant. Counsel testified "[t]he district clerks messed up on this. . . . I was out of the loop at that point. . . . And typically I'm notified by the constable that he served the lawsuit. I never got notified. . . . I assumed that it had been served." No answer was filed in response to the July 31 citation. Aware that neither appellant had filed an answer, Grippe's counsel sent copies of the amended petitions to opposing counsel and informed opposing counsel that some of the defendants had not filed an answer. Grippe's counsel admitted, however, that he did not realize there was a problem with the July 31 citation until January 1998, approximately six months later, when he finally requested citations for Industries and Transportation. Courts have consistently held counsel's mistakes and oversights are not legally acceptable excuses for the delay in procuring service of citation. See Webster, 1999 WL 649125, at *4 (counsel's phone calls to the wrong clerk's office insufficient to show diligence); Perry, 741 S.W.2d at 536 (counsel's reliance on "the court's" assurances that service had been accomplished insufficient to show diligence); Reynolds v. Alcorn, 601 S.W.2d 785, 788 (Tex.Civ.App._Amarillo 1980, no writ) (counsel's reliance upon district clerk to ascertain status of citations insufficient to show diligence). Under the circumstances in this case, counsel's actions cannot be characterized as careful and persistent. The failure to even request citation for almost eight weeks after naming the defendants cannot be characterized as diligent. Attorneys are on notice that when they join additional defendants at the eleventh hour, counsel must promptly request issuance of citation, and act carefully and persistently to secure service of citation. Furthermore, counsel's failure to realize the mistake, and his subsequent five-month delay in correcting the error, also cannot be characterized as diligent. We conclude there is no evidence to support the jury's finding of due diligence, and, as a matter of law, the evidence established counsel failed to use due diligence in securing issuance and service of citation on appellants. As an alternative to his due diligence argument, Grippe urges us to find the timely service on Frozen Food Express, Inc. was effective and timely service on appellants because the jury found Frozen Food Express, Inc. was engaged in a single business enterprise with Transportation and Industries. We disagree. We can find no authority for the proposition that service upon one entity engaging in a single business enterprise tolls the statute of limitations for service on the other entities participating in the business enterprise. A single business enterprise exists "when corporations are not operated as separate entities but rather integrate their resources to achieve a common business purpose, [and] each constituent corporation may be held liable for debts incurred in pursuit of that business purpose." See Paramount Petroleum Corp. v. Taylor Rental Ctr., 712 S.W.2d at 536; see also Beneficial Personnel Servs. of Texas, Inc. v. Rey, 927 S.W.2d 157, 164 (Tex.App.-El Paso 1996), writ granted, judgm't vacated w.r.m., 938 S.W.2d 717 (Tex. 1997) (the single business enterprise is a "theory for imposing liability where two or more business entities act as one") ; Old Republic Ins. Co. v. EX-IM Servs., 920 S.W.2d 393, 395-96 (Tex.App._Houston [1st Dist.] 1996, no writ) (joint and several liability imposed on all of the business entities engaged in single business enterprise in the amount of the default judgment rendered against one of the businesses). Thus, to the extent the single business enterprise doctrine has been recognized in Texas, we find it is a means of imposing joint and several liability on related corporations, and not a method of obtaining jurisdiction. Frozen Food Express, Inc. remained in the lawsuit throughout trial and, for reasons not apparent from the record, was released in the final judgment. Because we hold, as a matter of law, that Grippe's cause of action against Transportation and Industries is barred by the statute of limitations, there is no remaining defendant against whom Grippe has a judgment. Cf. Fontenot Petro-Chem Marine Servs., Inc. v. LaBono, 993 S.W.2d 455, 460 (Tex.App.-Corpus Christi 1999, pet. denied, reh'g filed) (unnecessary to address single business enterprise finding when one of entities was properly entitled to reversal on statute of limitations grounds); Computize, Inc. v. NHS Communications Group, 992 S.W.2d 608, 614 (Tex.App.-Texarkana 1999, no pet. h.) (single business enterprise stipulation had no effect as to entities who were not parties to the stipulation). In conclusion, we hold Grippe's counsel failed to exercise due diligence in procuring service of citation on appellants Frozen Food Express Industries, Inc. and Frozen Food Transportation Services, Inc., and his claims were barred by the statute of limitations. Accordingly, we sustain appellants' first point of error. Because of our disposition on this point, we need not address appellants' remaining points of error. Turning to Grippe's cross-point, he complains the trial court erred in not granting his motion to correct and reform the judgment so as to be against "FFE Transportation Services, Inc.," the correct name of "Frozen Food Transportation Services, Inc." Because the trial court had no jurisdiction over Frozen Food Transportation Services, Inc., this point becomes moot. We overrule Grippe's single point of error. We reverse the judgment of the trial court and render judgment that Grippe take nothing in his suit.