Lawton Candle, LLC v. BG Personnel, LP
Dallas Court of Appeals, No. 05-23-00449-CV (May 13, 2024)
Justices Garcia, Breedlove (Opinion),
and Kennedy
Lesson learned: serving an out-of-state registered agent for the out-of-state defendant is not proper service under Texas law.
In this restricted appeal, the Oklahoma defendant, Lawton Candle, LLC, claimed the default judgment against it was improper because it had not been properly served with process. The plaintiff, BG Personnel, LP, had served Lawton Candle with the lawsuit through its registered agent in Oklahoma because Lawton Candle did not maintain a registered agent in Texas. When Lawton Candle did not timely answer the petition, BG Personnel obtained a default judgment.
To reverse a default judgment on restricted appeal a defendant must show “error [that is] is apparent on the face of the record.” Defective service constitutes such an error. Appellate courts strictly enforce service rules when reviewing default judgments. Thus, the question here was: is service on a party’s agent registered in another state authorized by Texas law? The Court held that it was not.
Section 5.201(b) of the Texas Business Organizations Code authorizes service on a business entity’s registered agent, president, or any vice president. And section 5.255(3) allows service on each manager of a manager-managed domestic LLC. For a foreign LLC, section 2.256 adds to those methods any “other means of service of process . . . as provided by law.” Although this would indicate that service of Lawton Candle’s Oklahoma registered agent was effective, section 5.201 prohibits registered agents from being a resident of a different state.
Based on this language, the only means recognized by the Business Organizations Code to serve an out-of-state entity with no registered agent in Texas is through the Texas Secretary of State pursuant to section 5.251, which makes the Secretary of State the registered agent for foreign companies that don’t maintain one in Texas.
The Court noted that its “strict compliance” interpretation of the service rules may yield a “rather weird conclusion[],” but determined it was good public policy in the end. Therefore, the Court vacated the trial court’s default judgment and remanded the case.
