Opinion
No. 03-99-00122-CV
Filed: June 29, 2000
Appeal from the District Court of Travis County, 345th Judicial District No. 96-04511, Honorable Joseph H. Hart, Judge Presiding.
Mr. David C. Duggins, Clark, Thomas Winters, P.O. Box 1148, Austin, TX 78767, The Honorable Bob E. Shannon, Baker Botts, 1600 San Jacinto Center, 98 San Jacinto Boulevard, Austin, TX 78701-4039, for Appellant.
Mr. B. Russell Horton, Kincaid Horton, 100 Congress Avenue, Suite 2100, Austin, TX 78701, Ms. Jessie A. Amos, 316 West 12th Street, Suite 109, Austin, TX 78701, for Appellee.
Before Justices JONES, KIDD and PATTERSON.
This is an appeal from a no-answer default judgment that appellee Joe Winiarz obtained against appellant Natkin Service Company ("Natkin") in a suit for defamation, wrongful termination of employment, and conversion. On appeal, Natkin complains in six points of error that the trial court erred in rendering default judgment and refusing to grant its motion for new trial. We will affirm the default judgment.
Although the trial court refused to set aside the default judgment on liability, Natkin was granted a jury trial on the issue of damages.
BACKGROUND
Natkin is a Missouri corporation that conducted business within Texas as a commercial heating and air conditioning service contractor until selling its assets in 1996. Joe Winiarz was employed as manager and vice president of Natkin's central and south Texas operations from 1992 until November 8, 1995, when he was terminated for allegedly failing to comply with the company's contract bidding policies and procedures.
Several months after he was terminated, Winiarz discovered that Natkin was continuing to use his heating, ventilating, and air conditioning ("HVAC") license to conduct its operations, despite his express demand that it discontinue the use. Winiarz proceeded to file a complaint with the Texas Department of Licensing and Regulation, reporting Natkin's unauthorized use of his license. Shortly thereafter, Winiarz began to hear about several false statements Natkin's officers were making about his employment at Natkin, including allegations that he had stolen property from the company, was incompetent, and had consistently violated Generally Accepted Accounting Principles and IRS accounting rules. Winiarz also discovered that Natkin had filed several complaints against him and his newly founded company with the Texas Department of Licensing and Regulation and, furthermore, that it had attempted to file a criminal complaint accusing him of theft. Finally, Winiarz read an article in a leading industry magazine in which one of Natkin's officers falsely accused him of committing several serious and costly violations of Natkin's contract bidding and accounting policies. Winiarz maintained that all these statements were false, malicious, and made in retaliation for the complaint he had filed with the Texas Department of Licensing and Regulation.
Texas law requires any company performing heating, air conditioning, or boiler service to operate under an approved HVAC license. See Tex. Rev. Civ. Stat. Ann. art. 8861, § 3B(b) (West Supp. 2000). An individual holding an HVAC license in Texas may authorize the company employing him to operate under his license. See 16 Tex. Admin. Code § 75.70(a) (West 1999). Winiarz permitted Natkin to use his license from 1992 until his termination in November 1995.
Consequently, Winiarz filed suit against Natkin in April 1996, seeking to hold it liable for conversion of his HVAC license and libel and slander. Convinced that Natkin's explanation for his dismissal was a pretext and that he was actually fired because he was over fifty years of age, Winiarz later amended his petition to allege that he had been wrongfully terminated on the basis of his age in violation of the Texas Human Rights Act. See Tex. Lab. Code Ann. §§ 21.051, .055 (West 1996). Meanwhile, in June 1996, Natkin closed its Austin office and in October 1996, sold its remaining assets to a competitor.
At the time Winiarz filed his original petition, he requested that the constable delay serving Natkin with process until further notice. In the meantime, Winiarz attempted to negotiate a settlement and thereby eliminate the need to serve Natkin with papers. Winiarz's attorney, Russ Horton, mailed Natkin's assistant secretary and assistant general counsel, Glen Bronstein, a demand letter accompanied by a copy of a first amended petition in January 1997. Upon receiving the demand letter, Bronstein retained outside counsel, Edmond Noel, Jr., to investigate Winiarz's claims and possibly negotiate a settlement. Noel met with Horton, and the two arranged for mediation and tentatively agreed to an informal discovery plan. Horton fulfilled his obligations under the agreement by providing Natkin with the documents and statements it requested and allowing Winiarz to be deposed in an unrelated suit. At one point, in return for Noel's consent to a Rule 11 agreement preserving Winiarz's claims, Horton agreed to wait an additional forty-five days before serving Natkin — and possibly longer in the event Noel needed more time to investigate Winiarz's claims.
The two parties were still negotiating a year after Winiarz first filed suit. Horton proposed a Rule 11 agreement because he was concerned that the case would be dismissed for want of prosecution if service of process were delayed any further.
Shortly thereafter, Bronstein instructed Noel to rescind the original agreement and cease negotiations. Thereafter, Horton's attempts to contact Noel were only met with letters and voice-messages stating that Noel could no longer cooperate in any way and that he was not authorized to accept service of process on Natkin's behalf. As a result, Winiarz requested that Natkin be formally served with process by certified mail through Natkin's registered agent for service of process, CT Corporation System. On March 31, 1997, CT Corporation System was served with the citation and first amended petition by certified mail, and it immediately forwarded both documents to Bronstein. The citation and petition arrived at Bronstein's New Jersey office on April 2, 1997. Although Bronstein later remembered receiving the citation, he claims that he mistakenly misfiled the citation upon receipt and thereafter forgot about it.
On April 21, the day Natkin's answer was due, Bronstein received a letter from Noel reminding him to watch for the arrival of the citation in Winiarz's suit. Bronstein claims that when he read Noel's letter, he did not recall having received the citation just days before. Bronstein maintains that he did not remember the citation until he received a phone call from Noel on May 23. During that conversation, Noel expressed his surprise that Bronstein had not yet been served with citation in the Winiarz suit. Bronstein claims at that point he remembered receiving the citation and that upon searching his files, he discovered the citation. Shortly thereafter, he learned of the default judgment.
As a consequence of Natkin's failure to answer, the trial court rendered an interlocutory default judgment on April 30, finding Natkin liable for libel, slander, unlawful age discrimination, and conversion of Winiarz's HVAC license. Two days later, the trial court held a separate hearing to determine the amount of Winiarz's damages. At the conclusion of the hearing, the trial court rendered judgment awarding Winiarz $5.3 million in actual and punitive damages, attorneys' fees, and pre-judgment interest.
On May 30, Natkin filed a motion for new trial arguing, inter alia, that it was entitled to a new trial because it satisfied all three elements of the test set forth in Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939). In the affidavits Natkin initially filed in support of its post-judgment motion, Bronstein stated that Natkin's failure to answer had resulted from his mistaken belief that Noel was in regular contact with Horton and that Noel was handling the matter and would be given notice once service was perfected. Bronstein offered no other explanation.
Natkin also alleged that Winiarz's pleadings were too vague and deficient in that they failed to give fair notice of the claims involved; that the evidence was legally and factually insufficient to support the awards of actual damages, exemplary damages, and attorneys' fees; and that Winiarz failed to give Natkin notice of the evidentiary hearing on unliquidated damages.
Five weeks later — approximately ten days before the hearing on the motion for new trial — Natkin filed a second supplemental affidavit in which Bronstein offered for the first time the explanation that his failure to answer resulted from the emotional shock of learning, on the same day he received the citation, that his newborn daughter had been diagnosed with a serious genetic defect and that he was the carrier of the defective gene. After considering the affidavits and Bronstein's testimony at the hearing, the trial court denied Natkin's motion for new trial on the issue of liability, finding that Natkin's failure to answer was the result of conscious indifference, rather than accident or mistake. However, the trial court nevertheless granted Natkin a new trial on the issue of damages and attorneys' fees. At the conclusion of the trial that followed, a jury awarded Winiarz nearly $7 million in damages.
Natkin then filed several post-verdict motions, including a motion for judgment notwithstanding the verdict, contending that there was insufficient evidence to support the amount of damages awarded. Natkin also moved for a mistrial and reconsideration of its prior motion for new trial, arguing for the first time that service of process was defective and that the trial court therefore lacked personal jurisdiction over Natkin at the time default judgment was rendered. Natkin continued to maintain, this time in the alternative, that it was entitled to a new trial on the issue of liability because it had satisfied all three elements of the Craddock test.
The trial court overruled all of Natkin's post-verdict motions, but nevertheless on its own motion reduced the $7 million jury award to just over $2 million. The trial court also ordered an accounting of Natkin's business records to determine the amount of damages Winiarz had incurred as a result of Natkin's conversion of his HVAC license. Once more, Natkin filed a motion for new trial, advancing essentially the same grounds it had alleged in its motion for reconsideration of the first motion for new trial. The trial court denied this last motion, and Natkin appeals.
SERVICE OF PROCESS
Natkin argues that the default judgment was improper because Winiarz failed to strictly comply with the procedural rules governing service of process, thus rendering service fatally defective and insufficient to establish personal jurisdiction over Natkin. Specifically, Natkin alleges that service was improper because: (1) at the time default judgment was rendered, the record contained no allegations or proof indicating that CT Corporation System was Natkin's registered agent for service of process; (2) the return receipt accompanying the officer's return was signed by "TW," an otherwise unidentified person at CT Corporation System; and (3) the address proven for Natkin's agent at the second trial on damages was not the address to which the citation was directed.
It is well established that a default judgment cannot withstand direct attack by a defendant who shows that he was not served in strict compliance with the applicable procedural rules governing service of process, even if he had actual knowledge of the lawsuit. See Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994); Wilson v. Dunn, 800 S.W.2d 833, 836-37 (Tex. 1990). Jurisdiction over the defendant must affirmatively appear by a showing of due service of citation, independent of the recitals in the default judgment. See Seib v. Bekker, 964 S.W.2d 25, 28 (Tex.App.-Tyler 1997, no pet.); Massachusetts Newton Buying Corp. v. Huber, 788 S.W.2d 100, 102 (Tex.App.-Houston [14th Dist.] 1990, no writ). If strict compliance is not affirmatively shown on the face of the record, the service of process is invalid and has no effect. See Uvalde Country Club v. Martin Linen Supply, 690 S.W.2d 884, 885 (Tex. 1985); Barker CATV Constr., Inc. v. Ampro, Inc., 989 S.W.2d 789, 792 (Tex.App.-Houston [1st Dist.] 1999, no pet.). In contrast to the usual rule that all presumptions will be made to support a judgment, there is no presumption of valid issuance, service, or return of citation when reviewing a default judgment. See Uvalde Country Club, 690 S.W.2d at 885; McGraw-Hill, Inc. v. Futrell, 823 S.W.2d 414, 416 (Tex.App.-Houston [1st Dist.] 1992, writ denied).
Natkin's Registered Agent for Service of Process
As noted, Natkin is a Missouri corporation. Service on a foreign corporation may be made through its president, any vice president, or its registered agent for service of process. See Tex. Bus. Corp. Act Ann. art. 8.10(A) (West 1980 Supp. 2000). In this case, Winiarz chose to serve Natkin through its registered agent for service of process, CT Corporation System, an entity that, as its primary function, regularly accepts service of process on behalf of a large number of foreign and domestic corporations conducting business in Texas. Thus, proof of due service of process in this case requires, among other things, an affirmative showing in the record that CT Corporation System was Natkin's registered agent for service of process. Although Natkin readily concedes that CT Corporation System was in fact its registered agent at the time of service, it nevertheless complains that the record as it existed at the time of the default judgment lacks the allegations and proof necessary to establish this fact. We disagree.
Winiarz alleged in his original petition: "Defendant Natkin Service Company is a Missouri corporation with a principal place of business in Colorado. It may be served with citation and notice of suit by serving its registered agent, CT Corporation System, by certified mail at 350 North St. Paul St., Dallas, Texas 75201."
Likewise, the citation names CT Corporation System as Natkin's registered agent. It is addressed:
TO: NATKIN SERVICE COMPANY BY DELIVERING TO ITS REGISTERED AGENT, CT CORPORATION SYSTEM 350 N. ST. PAUL STREET DALLAS, TEXAS 75201.
Finally, the officer's return recites:
OFFICER'S RETURN
Came to hand March 26, 1997 at 8:00 A.M. and executed in Dallas, Texas.
On March 31, 1997 at 5:00 P.M. by delivering to: NATKIN SERVICE COMPANY, by delivering to CT CORP. SYSTEM at 350 N. St. Paul St., Dallas TX 75201, by delivering to TW, by certified mail, number P382511401, return receipt requested, restricted delivery, a true copy of the citation together with a copy of the petition.
At least four other courts of appeals have held that a petition, citation, and the officer's return are sufficient, in the absence of any evidence to the contrary, to show that the individual or entity served was the registered agent of the corporate defendant. See Southland Paint Co. v. Thousand Oaks Racket Club, 724 S.W.2d 809, 810 (Tex.App.-San Antonio 1986, writ ref'd n.r.e.); K-Mart Apparel Fashions Corp. v. Ramsey, 695 S.W.2d 243, 246 (Tex.App.-Houston [1st Dist.] 1985, writ ref'd n.r.e.); National Med. Enters. v. Wedman, 676 S.W.2d 712, 715-16 (Tex.App.-El Paso 1984, no writ); Hillson v. Steel Prods., Inc. v. Wirth Ltd., 538 S.W.2d 162, 164 (Tex.Civ.App.-Houston [1st Dist.] 1976, no writ); Employer's Reinsurance Corp. v. Brock, 74 S.W.2d 435, 438-39 (Tex.Civ.App.-Eastland 1934, writ dism'd). Here, the petition, citation, and officer's return recite the complete, correct name of the defendant, Natkin Service Company, and its registered agent for service of process, CT Corporation System. Consequently, the record affirmatively establishes that CT Corporation System was Natkin's agent for service of process and that it was served with citation as the officer recited in his return. Natkin then bore the burden of presenting evidence in its motion for new trial that CT Corporation System was not its registered agent or that citation was not in fact served on Natkin through CT Corporation System as recited. See Southland Paint, 724 S.W.2d at 810; Ramsey, 695 S.W.2d at 246; Wedman, 676 S.W.2d at 715-16; Hillson, 538 S.W.2d at 164; Brock, 74 S.W.2d at 438-39. Natkin failed to satisfy its burden.
At no point has Natkin ever refuted that CT Corporation System was its registered agent, that CT Corporation was served with citation as alleged, or that the citation was properly forwarded to Natkin's general counsel. Indeed, it has judicially admitted these facts on several occasions. In both its motion for new trial and during the new trial granted on damages, Natkin repeatedly acknowledged that CT Corporation System was its registered agent and that CT Corporation System had received the citation and immediately forwarded it to Glen Bronstein, Natkin's general counsel. Beginning with its first motion for new trial, Natkin conceded that citation was sent to "Natkin's registered agent, CT Corporation System in Dallas, Texas," and that the "Officer's Return of Service contained in the Court's file reflects that service was made upon CT Corporation System on March 31, 1997." Natkin then acknowledged that as a result its answer was "due by April 21, 1997, at the earliest." Furthermore, in an affidavit offered in support of Natkin's motion for new trial, Bronstein admitted receiving a "transmittal from CT Corporation System, Natkin Service Company's registered agent in Texas, along with the summons and first amended petition that had been served on March 31, 1997." Finally, in the interrogatories obtained through discovery before the new trial on damages, Natkin was asked, "Have you been properly named in this litigation? If your answer is anything other than an unqualified `yes,' please provide the [sic] your proper name, registered agent for process, and describe in detail all defects of your designation, service of citation in this lawsuit." Natkin responded with an unqualified "Yes." Thus, Natkin has judicially admitted not only that CT Corporation System was the proper agent for service, but that service was perfected as described in the return. We reject Natkin's first argument.
Identity of "TW"
Nor are we persuaded by Natkin's contention that service is invalid because the identity and capacity of "TW," the person at CT Corporation System who signed the certified mail return receipt (commonly referred to as the "green card"), cannot be ascertained from the record. Again, Natkin does not dispute that CT Corporation System was its registered agent or that CT Corporation System immediately forwarded the citation and petition to Bronstein, Natkin's general counsel, after receiving them on March 31. Natkin only complains that the record does not affirmatively reveal TW's identity or capacity.
The rules of procedure provide that citation may be served by mailing it to the defendant by registered or certified mail, return receipt requested. See Tex.R.Civ.P. 106(a)(2). Once service is complete, the serving officer must sign and endorse the return to show when and how citation was served and, if served by certified mail, attach the return receipt signed by the addressee. See Tex.R.Civ.P. 107. Here, the citation was sent by certified mail, return receipt requested, to CT Corporation System. The return is signed and endorsed by the serving officer, stating that a copy of the petition was attached to the citation, and noting the date on which the citation was received by the officer and the date on which CT Corporation System was served. The return certifies that the citation was served on Natkin by serving its registered agent for service of process, CT Corporation System, through "TW." This return is prima facie evidence of the facts it recites, namely that service was accomplished through CT Corporation System, Natkin's registered agent. See Pleasant Homes, Inc. v. Allied Bank, 776 S.W.2d 153, 154 (Tex. 1989). The burden then shifted to Natkin to present evidence indicating that CT Corporation was not in fact served or that "TW" was not authorized to accept service on behalf of CT Corporation System. See id. Natkin has wholly failed to present any such controverting evidence. Consequently, the facts recited in the officer's return are sufficient to establish that Natkin was properly served through its registered agent for service of process, CT Corporation System.
As noted previously, a corporate defendant may be served through its president, any vice president, or duly registered agent. See Tex. Bus. Corp. Act Ann. art. 8.10(A).
To put this argument in perspective, it is important to understand the role of CT Corporation System. CT Corporation System is a large corporation that acts as a registered agent for scores of foreign and domestic corporations registered to conduct business within Texas. Its sole function is to serve as a conduit, forwarding citation papers to the appropriate corporate defendant when that defendant is sued. In this record it is undisputed that CT Corporation System performed its duty; it received the citation and petition on March 31 and immediately forwarded the papers to Natkin through Bronstein. Thus, the failure to ascertain the capacity and identity of TW in the context of this case is superfluous and irrelevant, and we are left with no doubt that service on CT Corporation System was proper. We reject this assignment of error.
The Dissent
While tacitly conceding that CT Corporation System was properly identified as the registered agent for Natkin, the dissent argues that service was defective because "TW" was not affirmatively identified in the record. Were we to so hold, we would necessarily disregard the proper allocation of burden of proof, as well as the practical realities of modern litigation.
The dissent argues that service is defective because the record does not indicate the identity or capacity of "TW," the individual at CT Corporation System who signed the certified mail return receipt. However, the Texas Supreme Court rejected substantially this same argument in Pleasant Homes, Inc. v. Allied Bank, 776 S.W.2d at 154. In Pleasant Homes, the Dallas court of appeals reversed a default judgment, holding that the judgment could not stand because the record on appeal did not affirmatively show that the individual at the defendant bank who was served with process was in fact the bank's vice-president, cashier, or agent for service. See Allied Bank v. Pleasant Homes, Inc., 757 S.W.2d 460, 463 (Tex.App.-Dallas 1988), writ denied, 776 S.W.2d 153 (Tex. 1989). While the supreme court affirmed the Dallas court's reversal of the default judgment on other grounds, it expressly disapproved of the court of appeals' conclusion that service was defective, stating: "A defendant who contends that the person served was not in fact a proper officer for service has the burden to present evidence to the trial court of improper service by motion for new trial or motion to set aside default judgment." See Pleasant Homes, 776 S.W.2d at 154. Here, the citation recites that Natkin's registered agent for service of process is CT Corporation System. The return of service indicates that CT Corporation System was in fact served as requested. This record evidence is prima facie evidence of the facts it recites and is sufficient to sustain the default judgment. See id. To reverse the default judgment it was incumbent upon Natkin to present evidence that CT Corporation System was not in fact Natkin's registered agent or that "TW" did not have the authority to sign the return receipt on behalf of CT Corporation System. See id. As stated previously, Natkin failed to satisfy this burden.
The cases that the dissent cites in support of its conclusion are easily distinguishable. Two involve instances where, as here, service was requested on a corporate defendant through its registered agent for service of process, CT Corporation System. See Southland Paint Co., Inc. v. Thousand Oaks Racket Club, 724 S.W.2d 809, 810 (Tex.App.-San Antonio 1986, writ ref'd n.r.e.); National Med. Enters. of Texas, Inc. v. Wedman, 676 S.W.2d 712, 715 (Tex.App.-El Paso 1984, no writ). Yet in both cases, personal service of citation was requested, and service was restricted to a particular individual at CT Corporation System's address. See Southland Paint Co., 724 S.W.2d at 810; National Med. Enters., 676 S.W.2d at 715. Without further comment, both courts of appeals noted that service was proper when citation was restricted to CT Corporation System's own registered agent. The dissent reads these cases too broadly. While they hold that restricted personal service on a corporate registered agent's own registered agent is valid, they do not suggest that service on a defendant's corporate registered agent by certified mail, unrestricted delivery, is defective. Here, citation was simply directed to CT Corporation System by certified mail, unrestricted delivery, as permitted under Texas Rule of Civil Procedure 106. The registered agent to be served was CT Corporation System — not "TW." Because the record shows that CT Corporation System was served as requested, and since there is no evidence indicating that "TW" did not have the requisite authority to accept service, the trial court was not obliged to venture any further. See Pleasant Homes, 776 S.W.2d at 154.
Prior to its amendment in 1988, rule 106 allowed citations to be served by certified mail only if delivery was restricted to a particular named addressee. See Rule 106(a)(2) (1987, amended 1988).
Most of the other cases cited by the dissent involve situations where the return of service reflected that service was attempted on an individual other than the person named in the citation. We do not dispute that a fatal defect in service exists in such situations. However, the case at bar involves service by unrestricted certified mail on the corporate defendant's valid registered agent for service of process, and the return of service indicates that the defendant's registered agent was in fact served accordingly. Unlike the situations in the cases cited by the dissent, here there is no discrepancy between the name of the registered agent upon whom service was requested in the citation and the name of the registered agent upon whom the return of service shows service was perfected. Both name CT Corporation System. Service is therefore regular on its face.
See, e.g., Bronze Beautiful, Inc. v. Mahone, 750 S.W.2d 28, 29 (Tex.App.-Texarkana 1988, no writ) (service invalid where citation was directed to defendant's registered agent, Carol Jeannine Duty, and return receipt was signed by Eunice Harvey and M.W.); American Universal Ins. Co. v. D.B. B., Inc., 725 S.W.2d 764, 765 (Tex.App.-Corpus Christi 1987, writ ref'd n.r.e.) (default judgment was improper where citation was directed to defendant's registered agent, Mr. Jack Keith, and return receipt was signed by J. Williams); Pharmakinetics Lab., Inc. v. Katz, 717 S.W.2d 704, 706 (Tex.App.-San Antonio 1986, no writ) (service of process invalid where citation was to be served on Steve Woodman, and return receipt was signed by Charlotte Young).
In essence, the dissent's argument hinges on the false premise that CT Corporation System — rather than Natkin — was the actual defendant who was to be served with citation. But that is, of course, not the case here. Natkin was the defendant, and it was to be served through its external registered agent for service, CT Corporation System. As no one disputes, CT Corporation System performed its duty by promptly forwarding the necessary papers to Natkin after it was served. Natkin cannot now seize upon a purported hypertechnical defect in service — not upon itself but rather upon its external registered agent for service in order to escape liability for its default, especially where the external registered agent performed its duties and in no way contributed to the default.
Finally, we note that the dissent's argument disregards the practical adverse economic consequences of its holding. According to the dissent's view, only the president, vice president, or registered agent for CT Corporation System would have the authority to physically open the company's mail and sign all certified mail return receipts in suits where service is attempted by certified mail. Otherwise, service would be technically defective. CT Corporation System, like all other corporate registered agents, must be able to act through its employees, especially where the defaulting defendant makes no showing that the individual accepting service had no authority to act on behalf of the corporate registered agent.
Registered Agent's Address
Likewise, we find no merit in Natkin's final attack on service in which it complains that the address to which the citation was sent was later shown to be incorrect during the trial on damages. The return receipt and the officer's return show that CT Corporation System was served at "350 N. St. Paul Street, Dallas, Texas 75201." Although Natkin does not dispute that this is the correct address, it points to the "statement of change of registered agent," dated February 28, 1977, introduced in evidence during the second trial on damages, in which Natkin changed the address of its registered agent for service of process, CT Corporation System, to "the Republic National Bank Building, c/o CT Corporation System, Dallas, Texas 75201." Although CT Corporation System later filed a change of address with the secretary of state in January 1990 changing its registered office to 350 N. St. Paul St. in Dallas, Natkin argues that this filing as evidenced in the record was inadequate and that as a result the address in the 1977 filing is still controlling. Natkin apparently faults CT Corporation System's 1990 change-of-address filing because where the names of the affected corporations should appear on the one-page form, there are the words, "See attached list." Because the attached list is absent from this record, Natkin claims all that is known is that "some unidentified corporation" changed the address of its registered agent, CT Corporation System, to 350 N. St. Paul Street and that CT Corporation System's registered office remains, for purposes of service on Natkin, at the Republic National Bank Building address. We are unconvinced by this argument.
In effect, Natkin argues that service of process was invalid because CT Corporation System was served with process at its correct address rather than the one registered almost twenty years earlier. Natkin would have us penalize Winiarz for serving Natkin at its registered agent's correct address. We find this argument untenable. There is no question that CT Corporation System was Natkin's registered agent for service and that on March 31, 1997, CT Corporation System was located at 350 N. St. Paul Street in Dallas. The record indicates that in 1990, CT Corporation System filed notice of its change of address with the secretary of state, attaching a list of the corporations that would be affected with regard to service of process. Winiarz, in heeding this notice, updated his information and requested service at the new, correct address. Natkin urges us to set aside the default judgment because CT Corporation System, in changing its address, did not specifically name Natkin on the same page, but instead may have included it in an attachment that was not introduced during the trial on damages. However, we decline to invalidate a default judgment on the basis that process was served at the registered agent's correct address. We reject Natkin's final argument in support of holding service invalid.
In Personam Jurisdiction
Even if we assume that service of process was defective on the basis of any or all of the grounds raised on appeal, we nevertheless conclude that the trial court's final judgment is not void for want of in personam jurisdiction as Natkin contends. Natkin voluntarily appeared and fully participated in the jury trial on damages, thereby acknowledging the court's in personam jurisdiction. As a result, the trial court's personal jurisdiction was invoked, and the final judgment rendered following the jury trial on damages is valid and binding.
For a judgment to be valid, the record must affirmatively show that the trial court had in personam jurisdiction of the defendant at the time the judgment was rendered. See El-Kareh v. Texas Alcoholic Beverage Comm'n, 874 S.W.2d 192, 194 (Tex.App.-Houston [14th Dist.] 1994, no writ); Cates v. Pon, 663 S.W.2d 99, 101 (Tex.App.-Houston [14th Dist.] 1983, writ ref'd n.r.e.). To make this showing, the record must reflect either an appearance by the defendant or proper service of citation. See El-Kareh, 874 S.W.2d at 194; Cates, 663 S.W.2d at 102. Thus, the trial court may render judgment if the defendant voluntarily appears before the court, even in the absence of proper service of citation. See Tex.R.Civ.P. 120; CIGNA Ins. Co. v. TPG Store, Inc., 894 S.W.2d 431, 434 (Tex.App.-Austin 1995, no writ). As Natkin is eager to point out, it never appeared or filed an answer prior to rendition of the default judgment on May 2, 1997. However, Natkin entirely disregards the events that followed, including the trial court's order granting a new trial on damages and Natkin's decision to appear and participate in that trial — all of which preceded the final judgment that Natkin now appeals.
After the trial court granted Natkin's motion for new trial, in part, by awarding a new trial on damages, Natkin filed an answer, made a general appearance, and participated at trial by examining witnesses and eliciting testimony. In so doing, any defect in service was waived, and the trial court's in personam jurisdiction was invoked. See Tex.R.Civ.P. 120; Tex.R.Civ.P. 121; Schultz v. Schulz, 726 S.W.2d 256, 258 (Tex.App.-Austin 1987, no writ) (by appearing in court, defendant waives any complaints concerning defective service). Notably, at no point did Natkin ever argue that service was defective or otherwise call into question the trial court's jurisdiction. Instead, Natkin indicated by its conduct that it wholly acceded to the trial court's jurisdiction. Only later — after participating at trial and after the trial court's rendition of a final judgment did Natkin challenge the trial court's jurisdiction by raising for the very first time the alleged service defect. However, as we have already observed, the court's personal jurisdiction by that time had already attached.
Any appearance by the defendant in open court "shall have the same force and effect as if the citation had been duly issued and served as provided by law." Tex.R.Civ.P. 120.
"An answer shall constitute an appearance of the defendant so as to dispense with the necessity for issuance or service of citation upon him." Tex.R.Civ.P. 121.
If Natkin had wished to challenge the trial court's personal jurisdiction on the basis of defective service, it needed to object to the alleged jurisdictional defect before appearing and participating in the trial on damages. But here, Natkin raised the alleged jurisdictional defect for the first time only after making an appearance and participating in a jury trial and after an adverse judgment had been rendered against it. Therefore, because the trial court's personal jurisdiction over Natkin had attached before the final judgment was rendered, the judgment is not void.
Having reviewed the record in its entirety, including the pleadings, the citation, and the return of service, we are convinced that Natkin was properly served with process through its registered agent, CT Corporation System. Nevertheless, in the event that one or more of appellant's three grounds did render service defective, we believe that Natkin waived any service defect by appearing and participating in the jury trial on damages. Accordingly, we overrule Natkin's first point of error.
MOTION FOR NEW TRIAL
In its second point of error, Natkin argues that even if service of process was procedurally valid, the trial court nevertheless abused its discretion when it denied the motion for new trial because Natkin had satisfied all three factors of the test set forth in Craddock v. Sunshine Bus Lines, Inc., 133 S.W.2d 124, 126 (Tex. 1939). These factors require that a defaulting defendant seeking a new trial: (1) demonstrate that its failure to file an answer or appear was not intentional or the result of conscious indifference, but was due to mistake or accident; (2) offer a meritorious defense; and (3) demonstrate that granting a new trial will not result in delay or prejudice to the plaintiff. See id. The appropriate standard of review of a trial court's decision to grant or deny a motion for new trial is abuse of discretion. See Jackson v. Van Winkle, 660 S.W.2d 807, 809 (Tex. 1983); Vannerson v. Vannerson, 857 S.W.2d 659, 663 (Tex.App.-Houston [1st Dist.] 1993, writ denied). When all three elements of the Craddock test are met, the trial court abuses its discretion by not granting a new trial. See Bank One, Texas, N.A. v. Moody, 830 S.W.2d 81, 85 (Tex. 1992).
With respect to the first factor, Natkin has failed to demonstrate that the trial court abused its discretion when it concluded that Natkin's failure to answer was the result of conscious indifference, rather than a mistake or accident. In its order denying Natkin's motion for new trial, the trial court stated that it found "by a preponderance of the evidence that the Defendant's failure to answer was due to the conscious indifference of the Defendant and not due to an accident or mistake of the Defendant." Natkin argues that the evidence is undisputed that its failure to answer was the result of mistake or miscommunication, rather than conscious indifference. Considering all the evidence in the record, along with the reasonable inferences therefrom, we disagree.
Bronstein's explanation for his failure to answer changed dramatically between the filing of his original and first supplemental affidavits and the filing of his second supplemental affidavit five weeks later, just ten days before the hearing on the original motion for new trial. Initially, Bronstein attributed the failure to his mistaken belief that Noel was handling the matter and would receive notice of service. Five weeks later in a second supplemental affidavit filed just ten days before the hearing, Bronstein attributed his failure to the emotional shock of learning that his daughter had been diagnosed with a serious genetic defect and that he was the carrier of the defective gene. In his written response to Natkin's motion for new trial, as well as at the hearing on that motion, Winiarz objected to the admission of Bronstein's second supplemental affidavit and challenged the plausibility of this explanation. On cross-examination, Winiarz's counsel discredited Bronstein's second explanation and excuse by showing, among other things, that Natkin had failed to answer timely in an unrelated lawsuit just six months earlier, relying on the same explanation that it had initially offered in the case at bar.
Natkin essentially argues that the trial court was bound to accept Bronstein's final explanation. Yet Bronstein's credibility was seriously challenged, and there was ample testimony before the trial court calling his veracity into question. The question of whether a party's failure to answer was intentional or the result of conscious indifference is a question of fact. See Estate of Pollack v. McMurrey, 858 S.W.2d 388, 391 (Tex. 1993). "Conscious indifference" is defined as the failure to take some action that would seem indicated to a person of reasonable sensibilities under the same circumstances. See Memorial Hosp. Sys. v. Fisher Ins. Agency, Inc., 835 S.W.2d 645, 652 (Tex.App.-Houston [14th Dist.] 1992, no writ); Liberty Mut. Fire Ins. Co. v. Ybarra, 751 S.W.2d 615, 617 (Tex.App.-El Paso 1988, no writ). In making the determination of whether the default resulted from conscious indifference or accident or mistake, it is within the trial court's province to judge the witnesses' credibility and to determine the weight to be given to their testimony. See Benoit v. Wilson, 239 S.W.2d 792, 797 (Tex. 1951); Stable Energy, P.C. v. Newberry. 999 S.W.2d 538, 556 (Tex.App.-Austin 1999, pet. denied). Thus, the trial court was entitled to believe or disbelieve the different affidavits and testimony adduced at the hearing and make reasonable inferences therefrom.
Many of Bronstein's actions suggest conscious indifference. Notwithstanding his repeated instructions ordering Noel not to accept service or otherwise cooperate with Winiarz and despite Noel's written confirmations of this understanding, Bronstein received the citation and filed it away without contacting Noel or Winiarz's counsel or filing an answer. Although Bronstein testified under oath that the news concerning his daughter seriously affected his work performance, other evidence shows that he returned to work the following day, left town on a business trip the next week, and appeared to continue work as usual throughout the following weeks. Considering the evidence the trial court had to consider in ascertaining Bronstein's degree of responsibility for Natkin's failure to answer, as well as the permissible inferences from that evidence, the trial court could have reasonably concluded that a person of reasonable sensibilities in the same circumstances would have filed an answer or taken other appropriate action after receiving the citation. We hold that the trial court did not abuse its discretion by denying the motion for new trial after finding that Bronstein's failure to answer was the result of conscious indifference rather than a mistake or accident. Having concluded that Natkin failed to satisfy the first Craddock factor, we need not consider the remaining factors.
Next, Natkin argues in the alternative that the default judgment should be set aside because Winiarz failed to give Noel or Bronstein notice of the default-judgment proceedings. However, Texas law does not require that plaintiffs send notice of a hearing on a motion for default judgment to defendants who have received service but failed to answer. See Owens v. Neely, 866 S.W.2d 716, 720 n. 1 (Tex.App.-Houston [14th Dist.] 1993, writ denied); Long v. McDermott, 813 S.W.2d 622, 624 (Tex.App.-Houston [1st Dist.] 1991, no writ); K-Mart Apparel Fashions Corp., 695 S.W.2d at 246. In support of its argument, Natkin cites the Texas Lawyer's Creed which states, "I will not take advantage, by causing any default or dismissal to be rendered when I know the identity of an opposing counsel, without first inquiring about that counsel's intention to proceed." Texas Lawyer's Creed — A Mandate for Professionalism, § III, 11 (adopted by the Supreme Court of Texas and the Court of Criminal Appeals of Texas, Nov. 7, 1989, reprinted in Texas Rules of Court 489, 491 (West 2000)). However, the creed is "primarily aspirational" and emphasizes voluntary compliance and enforcement by peer pressure and public opinion. See Order of Adoption, Texas Lawyer's Creed — A Mandate for Professionalism. Although it would have been within the trial court's discretion to have granted Natkin a new trial under these circumstances, we decline to hold that the trial court's decision not to grant a new trial on liability was an abuse of discretion.
SUFFICIENCY OF THE PLEADINGS
Natkin attacks the sufficiency of Winiarz's pleadings on two grounds. First, Natkin insists that Winiarz's pleadings are fatally defective because they are impermissibly vague. Specifically, Natkin points to Winiarz's claims for age discrimination, libel, and slander, claiming that the allegations supporting them are too conclusory and lack a sufficient factual basis.
Rule 47 of the Texas Rules of Civil Procedure requires that pleadings contain "a short statement of the cause of action sufficient to give fair notice of the claim involved. . . ." Tex.R.Civ.P. 47. The pleadings must state with reasonable certainty and without resort to outside sources the elements of a cause of action and the relief sought. See Stoner v. Thompson, 578 S.W.2d 679, 683 (Tex. 1979); K-Mart Apparel Fashions Corp., 695 S.W.2d at 245. Absent such fair notice, not even a default judgment can be rendered. See Stoner, 578 S.W.2d at 683; K-Mart Apparel Fashions Corp., 695 S.W.2d at 245.
Winiarz's pleadings allege that Natkin "falsely claimed that Plaintiff was incompetent, was dishonest, and had engaged in theft, fraud, and deception. These statements were false, and were published and circulated with actual awareness of their falsity." The pleadings also assert that these "defamatory statements" were made in bad faith and with malice and that they were the producing and proximate cause of actual damages. Furthermore, Winiarz's pleadings allege that Natkin had unfairly terminated him on the basis of his age, specifically citing the Texas Human Rights Act. We believe these allegations provide sufficient notice that Winiarz intended to assert claims for libel, slander, and age discrimination. Although the pleadings might have been susceptible to a special exception, they are sufficient to provide the fair notice necessary to support a default judgment. See National Med. Enters. v. Wedman, 676 S.W.2d 712, 716 (Tex.App.-El Paso 1984, no writ) (petition may be subject to special exceptions and nevertheless serve as basis for default judgment).
Second, Natkin maintains that Texas law does not recognize a cause of action for conversion of an HVAC license. A default judgment cannot be sustained where the petition fails to state a cause of action within the court's jurisdiction or affirmatively discloses the invalidity of the claim. See Paramount Pipe Supply Co. v. Muhr, 749 S.W.2d 491, 494 (Tex. 1988). To prevail on a cause of action for conversion, a plaintiff must show that the defendant wrongfully exercised dominion and control over plaintiff's property to the exclusion of, and inconsistent with, the plaintiff's rights. See Waisath v. Lack's Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971); Parker v. State Farm Mut. Auto Ins. Co., 4 S.W.3d 358, 363 (Tex.App.-Houston [1st Dist.] 1999, no pet.).
HVAC licenses are issued by the Texas Department of Licensing and Regulation pursuant to the Air Conditioning and Refrigerating Contractor License Law. See Tex. Rev. Civ. Stat. Ann. art. 8861 (West Supp. 2000). The Department's rules permit licensees to transfer to a single business the authority to operate under their license. See 16 Tex. Admin. Code § 75.1-75.70(a) (West 1999). Winiarz's first amended petition alleges that upon his termination, he notified Natkin that it no longer had permission to use his HVAC license for its operations; that he discovered in 1996 that Natkin was continuing to use the license without his permission; that Natkin refused to comply with his demand that it discontinue using the license; and that Natkin's conversion was the producing and proximate cause of damages set out later in the petition. These pleadings provide fair notice of the conversion claim being made and adequately state the required elements and the relief sought.
Although Natkin argues that HVAC licenses cannot be converted because they cannot be bartered or exchanged, it fails to cite any authority or point to any evidence in the record supporting this proposition. The sole case appellant cites, Villarreal v. Moreno, 650 S.W.2d 191, 192 (Tex.App.-San Antonio 1983, no writ), merely stands for the proposition that an expired building permit that cannot be bartered or traded cannot be the subject of a claim for conversion. The circumstances here are distinguishable from those in Villarreal. Here, Winiarz's license had not expired and was not limited to use by a single person. As Natkin concedes, the license was assignable. We overrule this point of error.
In a separate but related point of error, Natkin contends that no damages were proven to have resulted from the conversion and that because the conversion damage issue was not submitted to the jury, the trial court erred by ordering an accounting as a remedy. We disagree. As with the other causes of action, Natkin's liability for conversion was admitted by its failure to answer. In the default judgment, the trial court explicitly found that the conversion was a producing and proximate cause of damages to Winiarz; thus, a jury determination of that issue was unnecessary. Although the trial court held a separate hearing for the purpose of determining the specific amount of unliquidated damages, it decided that the damages resulting from the unauthorized use of Winiarz's HVAC license could not be ascertained without an accounting. The trial court's decision to award an accounting as an equitable remedy was within its discretion. See Southwest Livestock Trucking Co. v. Dooley, 884 S.W.2d 805, 810 (Tex.App.-San Antonio 1994, writ denied). We overrule this point of error as well.
DAMAGES
In its remaining points of error, Natkin complains that the evidence is both legally and factually insufficient to support the jury's award of damages. The standards of review we apply in these challenges are familiar. In considering a no-evidence or legal sufficiency point, we consider only the evidence and inferences from the evidence favorable to the decision of the trier of fact and disregard all evidence and inferences to the contrary. See Formosa Plastics Corp. v. Presidio Eng'rs Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998); Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995). If more than a scintilla of evidence supports the challenged finding, the no-evidence challenge fails. See Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex. 1987); Mayberry v. Texas Dep't of Agric., 948 S.W.2d 312, 318 (Tex.App.-Austin 1997, pet. denied). In considering a factual sufficiency point, we may not substitute our judgment for that of the trier of fact, but must assess all the evidence and reverse for a new trial only if the challenged finding shocks the conscience, clearly shows bias, or is so against the great weight and preponderance of the evidence as to be manifestly unjust. See Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998); Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986); Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986).
A. Age Discrimination 1. Back pay
Natkin attacks the $218,840 award of back pay for the age discrimination claim, complaining that there is insufficient evidence to support the award because: (1) Winiarz would nevertheless have been laid off for non-discriminatory reasons in mid-1996 when Natkin closed its Austin office; (2) Winiarz failed to mitigate his damages by making reasonable efforts to find another job; and (3) the jury did not offset the award by the value of Winiarz's ownership in the new company he helped to establish.
First, we disagree with Natkin's assertion that the evidence is legally and factually insufficient because the $218,840 included the salary Winiarz would have received from August to December of 1996. Natkin emphasizes that its Austin office would have permanently closed in July 1996, even if Winiarz had not been fired in November 1995. But this evidence does not preclude Winiarz's right to seek full damages for wrongful termination. Rather, it merely suggests that Natkin would have closed its Austin office in July 1996. Winiarz could still have continued in his capacity as vice president and manager of Natkin's central and south Texas operations and overseen its San Antonio and Corpus Christi branch offices.
Second, Natkin complains that Winiarz did not mitigate his damages by making reasonable efforts to find another job after his termination. Natkin bore the burden of proving not only that Winiarz failed to mitigate his damages by diligently seeking alternative employment but also of establishing the specific dollar amount by which Winiarz's failure to mitigate increased the damages. See Lakeway Land Co. v. Kizer, 796 S.W.2d 820, 824 (Tex.App.-Austin 1990, writ denied). Winiarz testified that he began networking and pursuing job leads the same month he was terminated and that he continued looking for jobs compatible with his background and expertise until he began working for the new company he helped to establish. Although Natkin attempted to discredit this testimony at trial, it has not conclusively proven that Winiarz failed to make reasonably diligent efforts to obtain employment. Nor has it proven the specific amount by which Winiarz's alleged failure to mitigate increased the amount of damages.
Finally, Natkin did not satisfy its burden of demonstrating that the jury failed to take the offset into account and that this failure resulted in double recovery. The right to an offset is an affirmative defense, and the burden of pleading and proving the facts necessary to support an offset is on the party making the assertion. See Brown v. American Transfer Storage Co., 601 S.W.2d 931, 936 (Tex. 1980); Rauscher Pierce Refsnes, Inc. v. Great Southwest Sav., F.A., 923 S.W.2d 112, 117 (Tex.App.-Houston [14th Dist.] 1996, no writ). Natkin never pleaded the right to an offset, nor did it request an instruction directing the jury to consider any offset amount. The jury was instructed that back pay includes the amount Winiarz would have earned but for his termination, "less any wages [and] earned economic benefits he received in the interim." Winiarz's expert provided detailed testimony relating how Winiarz's future compensatory damages had been calculated and how the mitigating amounts had been subtracted. Although Natkin's expert disagreed on how to arrive at the correct calculation and on the exact amount of equity Winiarz had acquired in the newly formed corporation, Winiarz's expert provided sufficient competent testimony to support the amount the jury awarded. We reject this assignment of error.
2. Compensatory damages
With regard to the $300,000 award for compensatory damages, Natkin claims that in addition to the general insufficiency of the evidence to support the mental anguish damages and future pecuniary losses Winiarz claimed, there is insufficient evidence of a causal connection between Natkin's conduct and the injuries Winiarz was shown to have suffered. We disagree.
Winiarz's expert testified that Winiarz's lost future earnings were $393,931, based upon his salary at the time he left Natkin. The jury awarded Winiarz $300,000 for his future pecuniary losses and mental anguish, an amount substantially less than the expert's estimate of Winiarz's lost future earnings alone. Contrary to Natkin's allegations, our review of the record reveals that there is more than sufficient evidence to establish that Winiarz's future earning capacity was damaged and that Winiarz suffered other non-pecuniary compensatory damages as a result of Natkin's age discrimination, including emotional pain, inconvenience, mental anguish, and loss of enjoyment of life. See Tex. Lab. Code Ann. § 21.2585 (West Supp. 2000). The amount of compensatory damages awarded is not so shocking, clearly biased, or against the great weight and preponderance of the evidence as to be manifestly unjust.
B. Statutory Cap on Damages for Age Discrimination
Natkin argues that the trial court failed to limit the award of compensatory damages in connection with the age discrimination claim by the number of employees Natkin employed in the "current or preceding calendar year," as required by statute. See Tex. Lab. Code Ann. § 21.2585(d), (e) (West Supp. 2000). An award of compensatory damages is limited by the number of people employed "for each of twenty or more calendar weeks in the current or preceding year." Id. Compensatory damages are capped at $300,000 if an employer employs 500 or more employees for the applicable period. If an employer has fewer than 101 employees, a plaintiff may not recover more than $50,000 in damages. See id. In 1996, the year the trial court considered to be the "current or preceding year," Natkin employed over 500 people; but between 1997 and 1998, Natkin went from employing ten people to none.
Specifically, Natkin challenges the trial court's construction of the words, "current or preceding year." The trial court interpreted "current year" to mean the year in which the act forming the basis of liability occurred. In this case, Natkin unlawfully terminated Winiarz in 1996. Natkin, on the other hand, insists that the plain meaning of "current year" is the year in which the trial court renders judgment. We believe the meaning of "current or preceding year" in this context is ambiguous.
Neither the Texas Human Act nor the federal act on which the Texas provision was modeled define "current or preceding year." We are also unable to locate any Texas case law interpreting this provision. We do observe, however, that Texas's Human Rights Act is modeled on federal law with the purpose of executing the objectives of Title VII of the Civil Rights Act of 1964. See Tex. Lab. Code Ann. § 21.001; Ewald v. Wornick Family Foods Corp., 878 S.W.2d 653, 658 (Tex.App.-Corpus Christi 1994, writ denied). We may therefore look to federal case law interpreting the analogous federal provision in Title VII of the Civil Rights Act of 1964. See City of Austin v. Gifford, 824 S.W.2d 735, 739 (Tex.App.-Austin 1992, no writ); see also 42 U.S.C.A. § 1981a(b)(3)(A) (West 1994).
Considering the overall purpose of the federal act, as well as the construction federal courts have applied in interpreting the analogous federal provision, we believe the better interpretation of "current or preceding year" is the one applied by the trial court. The purpose of the federal act is to eliminate employment discrimination and make aggrieved parties whole for injuries they suffer because of unlawful discrimination. See Gifford, 824 S.W.2d at 739. Although Natkin correctly points out that the act was also intended to limit an employer's liability for compensatory damages based on the employer's relative size and ability to pay, we believe the act's primary purpose was employee protection. Were we to adopt Natkin's construction, employers would be able to limit their liability substantially by reducing the number of their employees between the occurrence of the discrimination and the time of judgment. In situations such as this, where the employer chooses to curtail operations, plaintiffs would be left without an adequate remedy. Thus, we believe the better interpretation when construing "current or preceding year" is to look to the year in which the violation is alleged to have occurred. We observe that this is the same construction that several federal courts have given the analogous federal provision. See Zimmerman v. North Am. Signal Co., 704 F.3d 347, 350 n. 1 (7th Cir. 1983); Jefferson v. Milvets Sys. Tech., Inc., 986 F. Supp. 6, 11-12 (D.D.C. 1997); Williams v. Pharmacia Opthalmics, Inc., 926 F. Supp. 791, 793 (N.D.Ind. 1996), aff'd, 137 F.2d 944 (7th Cir. 1998). We overrule this point of error.
See Luciano v. Olsten Corp., 110 F.3d 210, 221 (2d Cir. 1997); Hamlin v. Charter Township of Flint, 965 F. Supp. 984, 988 (E.D.Mich. 1997).
C. Damages for Defamation
Finally, with regard to the claim for defamation, Natkin maintains that there is no factual support for the $500,000 award for past compensatory damages and the $30,000 award for future compensatory damages. Consequently, it claims that those amounts, along with the additional $530,000 in punitive damages, should not have been awarded.
First, we note that the jury was instructed that "compensatory damages may include emotional pain and suffering, inconvenience, mental anguish, loss of enjoyment of life, and other non-pecuniary losses." The trial court also instructed the jury that Natkin's defamatory statements constituted "slander per se" and that a statement that is slanderous per se "is so obviously harmful that the law presumes that . . . Winiarz suffered some amount of damages." Next, we observe that the trial court, on its own motion, reduced the jury's award of $5 million in punitive damages to the substantially smaller amount of $530,000.
When words are slanderous per se, the law presumes actual damages. See West Texas Utils. Co. v. Wills, 164 S.W.2d 405, 408 (Tex.Civ.App.-Austin 1942, no writ); Shearson Lehman Hutton, Inc. v. Tucker, 806 S.W.2d 914, 922 (Tex.App.-Corpus Christi 1991, writ dism'd w.o.j.). The damages resulting from slander are purely personal, and the amount awarded is largely within the jury's discretion. See Tucker, 806 S.W.2d at 922. Here, the trial court ruled that Natkin's words were slanderous per se, and the jury heard testimony regarding the types and degrees of mental anguish Winiarz suffered as a result of Natkin's statements. In light of this testimony, we conclude that neither the $530,000 in actual damages nor the $530,000 in punitive damages is so shocking, clearly biased, or against the great weight and preponderance of the evidence as to be manifestly unjust. Natkin's last point of error is overruled.
CONCLUSION
Having overruled all points of error Natkin has raised on appeal, we affirm the trial court's final judgment.
Affirmed
I respectfully dissent.
The law does not favor default judgments and, as the majority notes, the usual rule that all presumptions are made in support of a judgment does not apply when reviewing the sufficiency of service preceding a default judgment. See Wilson v. Dunn, 800 S.W.2d 833, 836 (Tex. 1990) (quoting Uvalde Country Club v. Martin Linen Supply Co., 690 S.W.2d 884, 885 (Tex. 1985) (per curiam)). A default judgment cannot survive a direct attack by a defendant who was not served in strict compliance with service of process rules. See Wood v. Brown, 819 S.W.2d 799, 800 (Tex. 1991) (per curiam); Uvalde Country Club, 690 S.W.2d at 885. Simply put, if not based on proper service of citation, a default judgment is void. See Lozano v. Hayes Wheels Int'l, Inc., 933 S.W.2d 245, 247 (Tex.App.-Corpus Christi 1996, no writ).
I do not believe that Natkin Service Co. was properly served with citation in the present case. The facts reflect that when Winiarz decided to file suit against Natkin, he requested that Natkin be served with process by certified mail through Natkin's registered agent, CT Corporation System ("CT Corporation"). The return citation is signed by the serving officer and certifies that citation and a copy of the petition were served on Natkin by serving its registered agent, CT Corporation. Service on CT Corporation was evidenced by the initials "T.W." signed on the certified mail return receipt (also known as the "green card"). Natkin challenges the sufficiency of service on three grounds, claiming that (1) Winiarz failed to show that CT Corporation was Natkin's agent for service, (2) the address proven for Natkin's agent was not the address to which citation was directed, and (3) neither the identity nor the capacity of "T.W." was ever established. Even assuming the majority is correct and Winiarz properly established both that CT Corporation was Natkin's agent for service and that citation was directed to the right address, the record does not reflect — by allegation or proof — who T.W. is or in what capacity he or she is employed at CT Corporation. This is a fatal defect in service of process.
Both Natkin and CT Corporation are foreign corporations. Service of process on a foreign corporation may be effected through its president, any vice president, or its registered agent for service. See Tex. Bus. Corp. Act Ann. art. 8.10(A) (West 1980). Winiarz claims that citation was properly served on Natkin by serving its registered agent, CT Corporation. The majority holds that because someone at CT Corporation signed the return receipt, service was therefore proper and nothing more is required to establish proper service of Natkin.
The rule for service of process on a domestic corporation is substantially the same. See Tex. Bus. Corp. Act Ann. art. 2.11(A) (West 1980).
Winiarz does not contend that he served, or made an attempt to serve, Natkin's president or any vice president.
There is no question, it seems to me, that if CT Corporation itself had been the defendant, a return receipt signed only by an unidentified "T.W." would be insufficient to establish proper service. As a foreign corporation, service would be proper only if the record affirmatively reflected that T.W. were the president, vice president, or registered agent for CT Corporation. See Tex. Bus. Corp. Act Ann. art. 8.10. The citation Winiarz attempted to serve on CT Corporation did not specify any particular recipient; it was addressed only to the corporation, and T.W. signed on its behalf. The citation and the rest of the record are bare of any detail of T.W.'s identity or capacity at CT Corporation. Where, as here, the return receipt bears no indication of either the signer's connection with or authorization by the addressee, the attempted service of process is ineffective. See American Bankers Ins. Co. v. State, 749 S.W.2d 195, 197 (Tex.App.-Houston [14th Dist.] 1988, no writ); United States v. Charter Bank NW, 694 S.W.2d 16, 18 (Tex.App.-Corpus Christi 1985, no writ). Texas case law is clear that when service is on a registered agent for a corporation, the citation must affirmatively show that the individual served is in fact the agent for service. See, e.g., Bronze Beautiful, Inc. v. Mahone, 750 S.W.2d 28, 29 (Tex.App.-Texarkana 1988, no writ) (where receipt card was signed by Eunice Harvey and M.W. and record contained no affirmative showing that either person was registered agent for company, service was invalid and default judgment improper); American Universal Ins. Co. v. D.B. B., Inc., 725 S.W.2d 764, 765 (Tex.App.-Corpus Christi 1987, writ ref'd n.r.e.) (where it was not addressee who signed receipt for service and record did not affirmatively show signer was agent, default judgment was improper); Pharmakinetics Lab., Inc. v. Katz, 717 S.W.2d 704, 706 (Tex.App.-San Antonio 1986, no writ) (service of process rendered invalid where return was not signed by person designated to receive service for defendant).
The record does affirmatively reflect that the initials of CT Corporation's registered agent for service are not "T.W."
Nor is there any indication from the case law that the requirements for service by certified mail, as was attempted here, are less stringent than for other personal service of process. Texas Rule of Civil Procedure 106 authorizes service of citation by "mailing to the defendant by registered or certified mail, return receipt requested, a true copy of the citation with a copy of the petition attached thereto." Tex.R.Civ.P. 106(a)(2). Rule 107 requires that "[w]hen the citation was served by registered or certified mail as authorized by Rule 106, the return by the officer or authorized person must also contain the return receipt with the addressee's signature." Tex.R.Civ.P. 107. Nothing in the rules indicate that our otherwise strict requirements for service of process are relaxed when service is effected by mail. Indeed, the cases are uniformly to the contrary, continuing to insist on strict adherence. See Hollister v. Palmer Indep. Sch. Dist., 958 S.W.2d 956, 958-59 (Tex.App.-Waco 1998, no pet.); Laidlaw Waste Systems, Inc. v. Wallace, 944 S.W.2d 72, (Tex.App.-Waco 1997, writ denied); Bronze Beautiful, Inc., 750 S.W.2d at 29 ("To show proper service on a corporation by certified mail, the return receipt must be signed by the corporation's president, vice-president, or registered agent."); American Bankers Ins. Co., 749 S.W.2d at 197; American Universal Ins. Co., 725 S.W.2d at 765; Pharmakinetics Labs., Inc., 717 S.W.2d at 706.
Finally, it is irrelevant that Natkin admittedly knew about the lawsuit and that citation was forwarded from CT Corporation to Natkin's general counsel. The supreme court has squarely held that "a default judgment is improper against a defendant who has not been served in strict compliance with law, even if he has actual knowledge of the lawsuit." Wilson v. Dunn, 800 S.W.2d at 83 (emphasis added); see Verlander Enters., Inc. v. Graham, 932 S.W.2d 259, 262 (Tex.App.-El Paso 1996, no writ).
Because service is otherwise insufficient on CT Corporation, the only way this Court can sustain the default judgment here is to hold that the requirements for service on CT Corporation were relaxed because it was acting as a registered agent for service for another corporation. This is what the majority does when it holds that T.W.'s identity is "superfluous and irrelevant" to establish sufficiency of service on CT Corporation. This proposition is at odds with the plain language of article 8.10, and I believe that neither precedent nor our rules of procedure support the majority's conclusion.
Because Natkin listed CT Corporation as its registered agent, and because CT Corporation itself is a foreign corporation, proper service of Natkin pursuant to article 8.10 must also require proper service of CT Corporation pursuant to that same provision, i.e., by serving CT Corporation's president, vice president, or registered agent for service. Cf. Southland Paint Co. v. Thousand Oaks Racket Club, 724 S.W.2d 809, 810 (Tex.App.-San Antonio 1986, writ ref'd n.r.e.) (delivery on corporate defendant proper where served through its registered agent for service, CT Corporation, by delivery to CT Corporation's registered agent for service, Mary Lou Boring); National Med. Enters. of Texas, Inc. v. Wedman, 676 S.W.2d 712, 715 (Tex.App.-El Paso 1984, no writ) (compliance with statute shown where citation was delivered to corporation's registered agent for service, CT Corporation, by delivering to CT Corporation's registered agent for service, Mary Lou Boring).
By failing to establish precisely who T.W. is, Winiarz has not shown that CT Corporation was properly served with citation. By failing to show that CT Corporation was properly served, Winiarz likewise has not demonstrated that Natkin was properly served. Accordingly, personal jurisdiction over Natkin did not attach, and the default judgment is invalid. I would reverse the trial court's judgment and remand the cause for a new trial.