Court Opinion

ID: 4320179
Source: CourtListenerOpinion
Date Created: 2018-10-11 21:42:17.975711+00
Date Added: 2024-06-11T14:45:26.080736
License: Public Domain

Affirmed and Opinion filed October 9, 2018.

                                     In The

                    Fourteenth Court of Appeals

                             NO. 14-17-00951-CV

                       JOSEPH MILCOUN, Appellant
                                       V.
          WERNER CO. AND KELLER LADDERS, INC., Appellees

                   On Appeal from the 333rd District Court
                            Harris County, Texas
                      Trial Court Cause No. 2016-04946

                                OPINION

      Appellant Joseph Milcoun appeals a summary judgment in favor of appellee
KLI, Inc. f/k/a Keller Ladders, Inc. on the affirmative defense of limitations.
Milcoun sued KLI roughly four months before the statute of limitations expired,
but he did not obtain service on KLI until over eighteen months after filing suit.
Milcoun contends that the trial court erred in granting summary judgment because
his attorney exercised due diligence in obtaining service of process on KLI. We
affirm.
                                         I. BACKGROUND

      On January 26, 2016, Joseph Milcoun sued “Werner Co.” and “Keller
Ladders Inc.” alleging that he was injured by a Keller ladder sometime in May
2014. According to Milcoun, before he filed suit, he determined that Keller
Ladders had been acquired by Werner and was no longer in business. Nevertheless,
out of an abundance of caution, Milcoun decided to sue both entities.

      Milcoun successfully served Werner on February 4, 2016. Milcoun
attempted to serve Keller Ladders’ registered agent, CT Corporation System, but
CT Corporation System refused service because it was “withdrawn” as Keller
Ladders’ registered agent.

      Werner filed an answer and the parties engaged in discovery. On October
27, 2016, Werner’s attorney emailed Milcoun’s attorney and explained that the
ladder at issue was manufactured by Keller Ladders prior to an asset purchase of
Keller by Werner that excluded “all old/tail liabilities.” Werner’s attorney stated
that he would forward a copy of the asset purchase agreement to Milcoun’s
attorney and offered to provide additional supporting evidence. Werner
subsequently objected to Milcoun’s interrogatories and requests for production on
the grounds that Werner did not manufacture or design the ladder.

      On November 22, 2016, Werner moved for a no-evidence summary
judgment. Milcoun filed a response and motion for continuance. On March 14,
2017, the trial court granted Werner’s motion, denied Milcoun’s request for a
continuance, and dismissed Milcoun’s claims against Werner. The trial court then
granted Werner’s request to sever Milcoun’s claims against it, making the
summary judgment order in favor of Werner final.1

      1
          Werner is not a party to this appeal.

                                                  2
         After Werner moved for summary judgment, on December 8, 2016, Milcoun
attempted to serve Keller Ladders at a New Jersey address through the Texas
Secretary of State. On January 13, 2017, the citation and petition were returned to
the Secretary of State bearing the notation “Return To Sender, Not Deliverable As
Addressed, Unable To Forward.”

         Milcoun next attempted to serve Keller Ladders through Mark Parsky, an
attorney in private practice in Chicago, Illinois, who had recently represented
Keller Ladders in litigation. Parsky filed a special appearance and moved to quash
the service of citation on the grounds that neither he nor his law firm had ever been
Keller Ladders’ registered agent. Milcoun voluntarily withdrew his service of
citation to Parsky on February 21, 2017.

         On June 9, 2017, Milcoun filed a motion seeking substituted service by
publication on Keller Ladders. The trial court granted the motion on July 6, 2017.
It is undisputed that Milcoun obtained service on Keller Ladders by publication on
August 10, 2017.

         On October 3, 2017, KLI, Inc., f/k/a Keller Ladders, Inc. (KLI), filed an
answer in which it asserted the affirmative defense of limitations. Days later, KLI
moved for a traditional summary judgment asserting that Milcoun’s suit was barred
by the statute of limitations because Milcoun did not exercise diligence in serving
KLI. After an oral hearing, the trial court granted KLI’s summary judgment motion
on November 6, 2017. In granting the motion, the trial court cited Miller v.
General Motors Corp., No. 14-00-00098-CV, 2002 WL 1963493, *2 (Tex. App.—
Houston [14th Dist.] Aug. 22, 2002, pet. denied) (not designated for publication),
and Broom v. MacMaster, 992 S.W.2d 659, 665 (Tex. App.—Dallas 1999, no
pet.).

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                    II. DUE DILIGENCE IN SERVICE OF CITATION

       In one issue, Milcoun contends that the trial court erred in granting summary
judgment because he acted with due diligence in attempting to serve KLI. Milcoun
argues that he explained all periods of inactivity and acted as a reasonable person
would in the same or similar circumstances because for nearly a year Werner
represented that it was the proper defendant.

                               Standard of Review

       We review the trial court’s grant of summary judgment de novo. Mann
Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex.
2009). In a traditional motion for summary judgment, the movant must establish
that no genuine issue of material fact exists and the movant is entitled to judgment
as a matter of law. Tex. R. Civ. P. 166a(c). We review the evidence presented in
the motion and response in the light most favorable to the party against whom the
summary judgment was rendered, crediting evidence favorable to that party if
reasonable jurors could and disregarding contrary evidence unless reasonable
jurors could not. Fielding, 289 S.W.3d at 848.

       A defendant moving for summary judgment on the affirmative defense of
limitations has the burden to conclusively establish that defense. KPMG Peat
Marwick v. Harrison Cty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). If
the movant establishes that the statute of limitations bars the action, the nonmovant
must then adduce summary judgment proof raising a fact issue in avoidance of the
statute of limitations. Id.

                               Analysis of the Issue

       It is undisputed that Milcoun filed suit roughly four months before the two-
year statute of limitations on his personal-injury claims expired. See Tex. Civ.

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Prac. & Rem. Code § 16.003(a); Sharp v. Kroger Tex. L.P., 500 S.W.3d 117, 119
(Tex. App.—Houston [14th Dist.] 2016, no pet.). It is also undisputed that Milcoun
did not successfully serve KLI until August 10, 2017—over fourteen months after
the statute of limitations expired and eighteen months after filing suit. As explained
below, the only disputed issue is whether Milcoun exercised diligence in procuring
service on KLI.

                         Applicable law on diligent service

      If a party files its petition within the limitations period, service outside the
limitations period may still be valid if the plaintiff exercises diligence in procuring
service on the defendant. Ashley v. Hawkins, 293 S.W.3d 175, 179 (Tex. 2009);
Gant v. DeLeon, 786 S.W.2d 259, 260 (Tex. 1990) (per curiam). When a defendant
has affirmatively pleaded the defense of limitations, and shown that service was
not timely, the burden shifts to the plaintiff to prove diligence. Ashley, 293 S.W.3d
at 179; Sharp, 500 S.W.3d at 119. Therefore, once KLI pleaded limitations and
presented summary judgment evidence that Milcoun did not timely serve KLI, the
burden shifted to Milcoun to prove that he exercised diligence in obtaining service
on KLI. See Ashley, 293 S.W.3d at 180; Sharp, 500 S.W.3d at 119.

      Generally, diligence is a question of fact, but if no excuse is offered for a
delay in the service of citation, or if the lapse of time and the plaintiff’s acts are
such as conclusively negate diligence, a lack of diligence will be found as a matter
of law. Sharp, 500 S.W.3d at 120. In assessing diligence, we look to whether
Milcoun acted as an ordinarily prudent person would have acted under the same or
similar circumstances and was diligent up until the time the defendant was served.
See Ashley, 293 S.W.3d at 179. Milcoun’s diligence is measured from the date he
filed suit until the time KLI was successfully served. See Sharp, 500 S.W.3d at
120; (citing Proulx v. Wells, 235 S.W.3d 213, 216 (Tex. 2007); Gant, 786 S.W.2d
5
at 260). Thus, Milcoun was required to present evidence regarding the efforts he
made to serve KLI, and to explain every lapse in effort or period of delay. See
Ashley, 293 S.W.3d at 179; Sharp, 500 S.W.3d at 119.

      In its motion for summary judgment, KLI identified two periods in which it
claimed that Milcoun failed to exercise diligence in serving KLI: (1) a ten-month
period between February 5, 2016, and December 8, 2016; and (2) a 108-day period
between February 21, 2017, and June 9, 2017. We address each in turn.

                              The ten-month delay

      According to KLI, Milcoun proffered no evidence to show what was done to
effectuate service on KLI between February 5, 2016, when Milcoun unsuccessfully
attempted to serve Keller Ladders through CT Corporation System, and December
8, 2016, when Milcoun requested that a second citation be issued for service on
Keller Ladders. Milcoun acknowledges that he did not attempt to serve KLI during
this time but argues that he acted reasonably based on Werner’s representation that
Werner was the proper party. Milcoun also argues that he did not intentionally stop
trying to serve Keller; instead, he relied on his research that Keller no longer
existed and his initial unsuccessful attempt to serve Keller through CT Corporation
System.

      Milcoun’s primary contention is that it was reasonable for him to believe
Werner’s representation that Werner was the only proper defendant—making it
unnecessary to serve KLI—because Werner answered the lawsuit and, in response
to Milcoun’s request for disclosures, Werner “asserted that the parties were
properly named and there were no other potential parties to this case.” As support,
Milcoun relies on Werner’s responses to Milcoun’s requests for disclosure (a) and
(b), in which Milcoun requested the following information:

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             (a) The correct names of the parties to the lawsuit;
      RESPONSE [by Werner]: The parties are correctly named to the
      best of Defendant’s knowledge.
             (b) The name, address (work and home), and telephone number
             (work and home) of any potential parties;
      RESPONSE [by Werner]: None at this time.
Milcoun asserts that since “Keller Ladders was acquired by Werner,” it was more
than reasonable for him to believe Werner’s representations that the only proper
defendant was already served. We disagree.

      In its discovery responses, Werner merely stated that the parties were
“correctly named to the best of Defendant’s knowledge” and that it knew of no
other potential parties “at this time.” Werner’s responses, even when viewed in the
light most favorable to Milcoun, say nothing about KLI and cannot reasonably be
understood to imply that KLI was not a proper defendant or did not need to be
served. Likewise, the fact that Werner filed an answer and engaged in discovery in
response to Milcoun’s lawsuit cannot reasonably be viewed as a tacit
acknowledgement that Werner was the only proper party to the lawsuit. Milcoun’s
explanation for the ten-month lapse in attempting to effectuate service on KLI is
unreasonable and demonstrates a lack of diligence as a matter of law. See Ashley,
293 S.W.3d at 179 (stating that if “one or more lapses between service efforts are
unexplained or patently unreasonable,” then the record demonstrates lack of
diligence as a matter of law); Rodriguez v. Tinsman & Houser, Inc., 13 S.W.3d 47,
49 (Tex. App.—San Antonio 1999, pet. denied) (explaining that a lack of diligence
will be found as a matter of law “if no valid excuse for lack of service is offered”).

      To the extent Milcoun asserts that he came to believe KLI no longer existed
based on his research and his initial failed attempts at service, Milcoun provides no
details or summary judgment evidence concerning the steps he took to research

                                          7
KLI’s legal status, the length of time he conducted his research, or the facts he
discovered from his research that caused him to believe that KLI no longer
existed.2 Milcoun’s bare assertion that he “came to believe” that KLI no longer
existed and so did not need to be served does not raise a fact issue as to diligence.
See Ashley, 293 S.W.3d at 180–81 (holding that twenty hours spent searching the
internet did not raise a fact issue as to reasonable diligence during eight-month gap
between attempts at service); Tate v. Beal, 119 S.W.3d 378, 380 (Tex. App.—Fort
Worth 2003, pet. denied) (“The duty to exercise diligence is a continuous one,
extending from the date suit is filed until service is obtained.”); Rodriguez, 13
S.W.3d at 49 (stating that a lack of due diligence can be found as a matter of law
“if the lapse of time and the plaintiff’s acts, or inaction, conclusively negate
diligence”).

       Milcoun also argues that the trial court erred in relying on the cases cited in
the trial court’s summary judgment order because the plaintiffs in those cases
intentionally delayed serving the defendants for tactical reasons.3 See Miller, 2002
WL 1963493, at *2 (holding plaintiff failed to diligently pursue service on car
manufacturer in products liability case when plaintiff intentionally delayed service

       2
          In the background section of Milcoun’s response in the trial court, he stated that “KLI
was purchased by Werner . . . in 1999 and according to Werner, KLI is no longer a viable
entity,” citing to a Werner website that includes “Keller” as a brand. But Milcoun did not
contend that locating this website was part of his research or that he relied on the website’s
information to confirm that KLI no longer existed. On appeal, Milcoun also cites to a KLI
website, but because he did not cite or refer to the KLI website in his response, we do not
consider it.
       3
          In his appellate briefing, Milcoun argues for the first time that KLI and Keller Ladders
Inc. are separate entities and asserts that “[i]t almost appears as if KLI, Keller Ladders, and
Werner intentionally misled Milcoun in this case to avoid being properly served with process.”
But Milcoun did not raise these issues in his summary judgment response. To the contrary,
Milcoun stated in his response that the ladder at issue “was manufactured, designed, and
marketed by Keller Ladders Inc., now known as KLI Inc.,” consistent with KLI’s representation
of its legal name. Accordingly, we do not consider these arguments. See Tex. R. Civ. P. 166a(c);
McConnell v. Southside Indep. School Dist., 858 S.W.2d 337, 341 (Tex. 1993).

                                                8
until after in-state defendants were served as a tactical decision to prevent car
manufacturer from removing case to federal court); Broom, 992 S.W.2d at 664–65
(holding plaintiff failed to demonstrate diligent service on hospital in medical
malpractice case when plaintiff initially withheld service based on uncertainty
whether hospital was an appropriate party and then, after case had been removed to
federal court, plaintiff delayed service believing that hospital’s presence in suit
would complicate efforts to have case remanded to state court).

       Milcoun reads these cases too narrowly. The import of Miller and Broom is
that a plaintiff who files suit within the limitations period, but does not serve the
defendant until after the statutory period expires, must exercise diligence to have
process issued and served on the defendant regardless of any reasons the plaintiff
may have for not wanting to do so. See Broom, 992 S.W.2d at 665; Miller, 2002
WL 1963493, at *2 (citing Broom, 992 S.W.2d at 665). As explained in Broom,
“[t]o hold otherwise would ignore the goal of statutes of limitations to inform
defendants in a timely fashion of claims against them and would eviscerate the
long established due diligence requirement.” Id. This observation by the Broom
court is particularly applicable here:

      In an affidavit filed by Broom’s attorney he states that he “withheld”
      issuance of citation on the hospital because “there was still a question
      in [his] mind” about whether Presbyterian Hospital was an appropriate
      party. What Broom’s attorney does not acknowledge is that he made
      the decision to make Presbyterian Hospital a party to the suit when he
      filed Broom’s petition naming the hospital as a defendant. Having
      made that decision, it was incumbent upon Broom to diligently
      attempt to serve the hospital to prevent her claims from being barred
      by the statute of limitations.

Id. at 665.

      Similarly, once Milcoun decided to sue KLI shortly before the statute of

                                         9
limitations ran on his claims, Milcoun was required to diligently attempt to serve
KLI to prevent his claims from being barred by limitations, even if he was unsure
of KLI’s legal status or had difficulty in serving KLI. See id. Milcoun failed to
meet his burden in response to KLI’s summary judgment motion as to the ten-
month period because his explanations for making no effort to serve KLI during
this time demonstrate a lack of diligence as a matter of law. See Ashley, 293
S.W.3d at 179–81; Rodriguez, 13 S.W.3d at 49.

                               The 108-day delay

      KLI next contends that Milcoun showed no diligence from February 21,
2017, when he informed the trial court that he was voluntarily withdrawing his
service of citation to attorney Parsky and then waited 108 days before moving for
substituted service on KLI on June 9, 2017. Milcoun responds that there was no
delay because during this period Milcoun was “trying to keep Werner as a
Defendant because Milcoun had unsuccessfully tried to serve Keller Ladders
through the Texas Secretary of State and through Parsky.”

      Milcoun points to the following evidence of the activity during the 108-day
period: Parsky filed his special appearance and motion to quash service; Milcoun
responded to Werner’s summary judgment motion; the trial court conducted an
oral hearing on Werner’s summary judgment motion; the trial court granted
Werner’s summary judgment motion; Werner filed its motion to sever; and the trial
court signed an order severing Werner’s adjudicated claims. Milcoun also points
out that he filed his motion for substituted service less than two weeks after the
trial court lost plenary power over Werner. Thus, Milcoun urges, there is no
unexplained delay during this period and he acted as a reasonable person would
under the same or similar circumstances.

      But Milcoun’s explanation that he was attempting to keep Werner in the
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lawsuit during the 108-day period, and the evidence on which he relies, is
unrelated to Milcoun’s burden to demonstrate diligence. See Slagle v. Prickett, 345
S.W.3d 693, 698 (Tex. App.—El Paso 2011, no pet.) (“[W]hen a defendant
complains of lack of due diligence in service of process, the plaintiff must explain
what steps he took to obtain service, not explain why he did nothing.”). Having
filed suit against KLI, Milcoun was obligated to use diligence in attempting service
despite his desire to keep Werner in the lawsuit. See Broom, 992 S.W.2d at 665;
see also Lethbridge v. Stout, No. 14-15-01034-CV, 2017 WL 924522, at *3 (Tex.
App.—Houston [14th Dist.] Mar. 7, 2017, no pet.) (mem. op.) (rejecting notion
that waiting to serve a defendant while engaging in settlement negotiations with
another defendant can establish due diligence); Montes v. Villareal, 281 S.W.3d
552, 558 (Tex. App.—El Paso 2008, pet. denied) (citing Broom and holding that
counsel’s desire to delay service on defendant while waiting for expert report and
to prevent plaintiff from incurring liability for attorney’s fees and costs if report
was unsatisfactory did not negate obligation to use diligence in attempting service
once the limitations period had passed). Milcoun’s failure to present any evidence
that he exercised diligence in seeking service of process during this 108-day period
demonstrates lack of diligence as a matter of law. See Ashley, 293 S.W.3d at 179;
Sharp, 500 S.W.3d at 119.

      Milcoun asserts that we should only find lack of due diligence as a matter of
law if there is an unexplained delay of five to six months. But Ashley instructs that
although the length of the delay in service is important, “it is not necessarily
determinative of the question of diligence.” See 293 S.W.3d at 181. Instead, “we
must consider the overall effort expended over the gap in service, and whether the
search ceased to be reasonable, especially when other methods of service were
available.” Id. And courts have found lack of diligence as a matter of law over

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gaps shorter than the 108-day period at issue here. See, e.g., Mauricio v. Castro,
287 S.W.3d 476, 479–80 (Tex. App.—Dallas 2009, no pet.) (thirty-one day delay
between expiration of statute of limitations and service); Rodriguez, 13 S.W.3d at
48, 51 (twenty-five day delay between expiration of limitations and service);
Perkins v. Groff, 936 S.W.2d 661, 668 (Tex. App.—Dallas 1996, writ denied)
(twenty-one day delay between expiration of limitations and service of citation);
see also Plantation Prod. Props., L.L.C. v. Meeks, No. 10-02-0029-CV, 2004 WL
2005445, at *6 (Tex. App.—Waco Sept. 8, 2004, no pet.) (mem. op.) (stating that
“[i]t is not unusual, given the circumstances of individual cases, for a two-month
delay to be considered unreasonable”). We conclude that the trial court would not
have erred by granting summary judgment based on either one or both periods in
which Milcoun failed to demonstrate due diligence in serving KLI as a matter of
law.

                                 III. CONCLUSION

       Because the record demonstrates as a matter of law that Milcoun failed to
exercise due diligence in serving KLI, the trial court did not err in granting
summary judgment based on the running of the statute of limitations. Accordingly,
we overrule Milcoun’s sole issue and affirm the trial court’s judgment.

                                      /s/    Ken Wise
                                             Justice

Panel consists of Justices Donovan, Wise, and Jewell.

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