Court Opinion

ID: 4658303
Source: CourtListenerOpinion
Date Created: 2021-02-08 08:19:14.483734+00
Date Added: 2024-06-11T08:01:50.774396
License: Public Domain

Affirmed and Memorandum Opinion filed February 4, 2021.

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-19-00842-CV

                         RAMESH KAPUR, Appellant

                                        V.
U.S. BANK NATIONAL ASSOCIATION AS INDENTURE TRUSTEE FOR
  THE HOLDERS OF THE CIM TRUST 2017-3 MORTGAGE-BACKED
                NOTES, SERIES 2017-3, Appellee

                    On Appeal from the 334th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2018-87850

                         MEMORANDUM OPINION

      Ramesh Kapur appeals from a no-answer default judgment rendered against
him in favor of U.S. Bank National Association (“U.S. Bank”). In two issues Kapur
contends the trial court erred in denying his motion for new trial because (1) the
return of service did not comply with the order granting substitute service; and (2)
Kapur satisfied the Craddock1 requirements for a new trial. We affirm.

                                      BACKGROUND

      In its petition U.S. Bank alleged that Carol Gafford purchased a condominium
(“the Property”) in 1998. Eight years later in 2006, Gafford executed a Texas Home
Equity Loan Agreement (the “Security Instrument”), with which U.S. Bank believes
Gafford paid the original 1998 loan. In 2012, due to nonpayment of maintenance
fees, the Condominium Association sold the Property at a trustee sale to Ramesh
Kapur doing business as AIC Management. The Condominium Association’s
declarations have a provision that makes all liens subordinate in all respects to any
mortgage. In 2018, U.S. Bank purchased the 2006 Home Equity mortgage on the
property. U.S. Bank filed suit seeking a declaratory judgment that U.S. Bank’s lien
memorialized in the Security Instrument was superior to Kapur’s lien.

      In support of its petition U.S. Bank attached (1) the 1998 warranty deed with
vendor’s lien; (2) the 2006 Home Equity loan agreement and mortgage; (3) the 2018
transfer and assignment of the mortgage to U.S. Bank; (4) the 2012 trustee’s deed
conveying the Property to AIC Management; and (5) the Condominium
Association’s declarations.

      After several unsuccessful attempts to serve the petition on Kapur, U.S. Bank
filed a motion for substitute service of process pursuant to Texas Rule of Civil
Procedure 106(b). In its motion U.S. Bank detailed five service attempts on Kapur
at his last known address, 3427 Ashton Park Drive, Houston, Texas 77082. U.S.
Bank researched other possible addresses for Kapur, including looking up the
registration of a vehicle that was parked at the Ashton Park address. Service at that
address was unsuccessful as was service at three additional addresses including four

      1
          See Craddock v. Sunshine Bus Lines, 133 S.W.2d 124 (Tex. [Comm’n Op.] 1939).

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attempts at one of those addresses. Searches of other property owned by Kapur
showed his most current address to be the Ashton Park address. U.S. Bank also made
several service attempts at the most recent address for AIC Management. U.S. Bank
continued to research the Harris County District Clerk records in other cases in
which Kapur had been a defendant. In three other unrelated Harris County suits
Kapur listed the Ashton Park address as his current address. Assumed name records
for AIC Management Company signed by Kapur reflected its address to be the
Ashton Park address. U.S. Bank, therefore, requested authority to serve Kapur at the
Ashton Park address by affixing the citation and petition to the front door of the
property, by certified mail, return receipt requested, and first-class mail.

      On April 9, 2019, the trial court granted U.S. Bank’s motion permitting
substitute service at the last known usual place of abode or business at 3427 Ashton
Park Drive, Houston, Texas 77082, either: (1) by leaving a true copy of the citation,
with a copy of the petition and the order authorizing substituted service attached,
with anyone over sixteen years of age at the address; or (2) by firmly affixing a true
copy of the citation, with a copy of the petition and order authorizing substitute
service attached, to the front door at the address. The order further stated that service
“shall not be deemed perfected unless it also complies with the following
provisions:”

      (a) a copy of the Citation, Petition, and this Order shall be mailed by
      BOTH certified mail, return receipt requested, AND by regular mail to
      the Defendant at the same address at which service is authorized above;
      (b) the return of service shall not be made until 30 days after mailing or
      until the process server receives back the green card from the post
      office, whichever date is earlier;
      (c) the return of service shall include a statement setting out the date of
      mailing and the result of the mailing by certified mail, and the date of
      mailing and result of same by regular mail (i.e., whether the envelope
      was returned by the post office, the green card came back signed, etc.);
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      and
      (d) a copy of any envelope or green card returned by the post office
      shall be attached to the return of service.

      On May 17, 2019, Andrew Espinosa, the process server, filed an affidavit in
which he averred that on April 18, 2019 he received the citation, petition, and order
granting substitute service. On April 23, 2019 he delivered those documents to
Kapur at 3427 Ashton Park Drive in Houston, Texas by “affixing a true copy of the
citation, Plaintiff’s original petition and order granting motion for substitute service
of process attached to the front door of said address.” Espinosa also averred that
service was mailed by certified mail return receipt requested on April 29, 2019, but
was not returned. Further, service was mailed by regular mail on April 29, 2019.
Espinosa’s affidavit was attached to the return of service, which was filed with the
Harris County District Clerk on May 29, 2019.

      U.S. Bank filed a motion for default judgment asserting that Kapur had not
filed an answer or appeared in the case despite having been served with the petition.
U.S. Bank attached the Security Instrument, which provided superior title in the
mortgage holder and the Condominium declarations, which noted that a mortgagee
would hold a superior lien to any purchaser who purchased the property at the
Association’s foreclosure sale. U.S. Bank alleged that its title was clouded by
Kapur’s inferior lien and sought declaratory judgment that Kapur took the Property
subject to its Security Instrument and, as such, any ownership rights claimed by
Kapur were extinguished by U.S. Bank’s Security Instrument. The trial court signed
a default judgment in which it declared that U.S. Bank’s Security Instrument
remained a valid and subsisting encumbrance on the Property and Kapur’s interest
was subject to U.S. Bank’s Security Instrument.

      Kapur filed a timely motion to set aside default judgment and motion for new

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trial. Kapur supported the motion with a sworn affidavit. In that motion, Kapur
asserted that the court should set aside the default because: (1) he was not properly
served with citation; (2) because he was not properly served, he need not provide a
meritorious defense; (3) although he need not provide a defense, he has a meritorious
defense; and (4) granting a new trial would not cause delay or harm. The trial court
signed an order denying Kapur’s motion to set aside default judgment and for new
trial. A reporter’s record was made of the hearing on Kapur’s motion, but no
evidence was presented at the hearing.

                                     ANALYSIS

I.    Standard of Review and Applicable Law

      In Kapur’s first issue he asserts the trial court erred in granting default
judgment because the return of service did not comply with the order granting
substitute service. In his second alternative issue Kapur asserts he satisfied the
Craddock requirements for a new trial.

      We review a trial court’s denial of a motion for new trial after a default
judgment for abuse of discretion. See In re R.R., 209 S.W.3d 112, 114 (Tex. 2006)
(per curiam). A trial court abuses its discretion if its decision is arbitrary,
unreasonable, or without reference to guiding principles. Cire v. Cummings, 134
S.W.3d 835, 838–39 (Tex. 2004); Novik v. Lendr, LLC, 592 S.W.3d 907, 911 (Tex.
App.—Houston [14th Dist.] 2019, no pet.). We first turn to Kapur’s arguments
regarding service.

II.   The trial court did not err in denying a new trial on Kapur’s improper-
      service ground.

      For a default judgment to withstand direct attack, the record must establish
strict compliance with the rules of civil procedure governing issuance, service, and
return of citation. Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 152 (Tex. 1994);
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Creaven v. Creaven, 551 S.W.3d 865, 870–71 (Tex. App.—Houston [14th Dist.]
2018, no pet.). If the record does not affirmatively show strict compliance with the
rules, the attempted service of process is invalid. See Hubicki v. Festina, 226 S.W.3d
405, 408 (Tex. 2007).

      Texas law prefers personal service over substituted service. Creaven, 551
S.W.3d at 870. When the plaintiff uses substituted service, Texas law places a burden
on the plaintiff to prove that he or she served the defendant in the manner required
by the applicable rule. Id. Texas Rule of Civil Procedure 106 authorizes a court to
order a substituted method of service. Tex. R. Civ. P. 106(b)(2). “Where citation is
executed by an alternative method as authorized by Rule 106, proof of service shall
be made in the manner ordered by the court.” Tex. R. Civ. P. 107(f). When a trial
court orders substituted service under Rule 106, the only authority for the substituted
service is the order itself. Vespa v. Nat’l Health Ins. Co., 98 S.W.3d 749, 752 (Tex.
App.—Fort Worth 2003, no pet.); see also Creaven, 551 S.W.3d at 870. As a result,
any deviation from the trial court’s order necessitates a reversal of the default
judgment based on service. Vespa, 98 S.W.3d at 752.

      U.S. Bank served Kapur via substituted service under Rule106, and thus was
required to follow the trial court’s instructions precisely. See Creaven, 551 S.W.3d
at 871. The trial court required service (1) by leaving a true copy of the citation, with
a copy of the petition and the order authorizing substitute service attached, with
anyone over sixteen years of age at the address; or (2) by firmly affixing a true copy
of the citation, with a copy of the petition and order authorizing substitute service
attached, to the front door at the address. The order further required the petition,
citation, and order granting substitute service to be mailed certified mail return
receipt requested and first-class mail. The return of service is prima facie evidence
of how service was performed. Id.

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      In Kapur’s affidavit attached to his motion to set aside default judgment and
motion for new trial Kapur asserted that he did not receive service because he did
not live at 3427 Ashton Park Drive. Kapur also averred that he was out of the country
on April 23, 2019, the day the citation and petition were attached to the door of that
address, and did not return to the United States until May 27, 2019.

      In U.S. Bank’s response to the motion to set aside default judgment it
presented evidence that (1) Harris County assumed name records reflected the
address of AIC Management was 3427 Ashton Park Drive; (2) AIC Management
filed an answer in unrelated litigation listing its address as 3427 Ashton Park Drive;
(3) another trial court in unrelated litigation granted substitute service on AIC
Management at 3427 Ashton Park Drive; (4) Kapur filed a motion for new trial in
another unrelated case and identified the business address of AIC Management as
3427 Ashton Park Drive; (5) in yet another unrelated litigation Kapur requested an
oral hearing on April 26, 2019, a date he averred he was out of the country; and (6)
in a motion to compel in the same case, Kapur states that he appeared at a hearing in
Harris County District Court on May 1, 2019. At the hearing on Kapur’s motion to
set aside default judgment Kapur’s counsel admitted that Kapur did not leave the
country until May 7, 2019 and returned “toward the end of May.” The trial court’s
default judgment was not signed until July 30, 2019.

      On appeal Kapur argues the trial court erred in denying his motion to set aside
default judgment because the return of service did not comply with the trial court’s
order for substitute service. Specifically, Kapur alleges noncompliance with the
order because the process server signed his affidavit 18 days after service was
mailed. The date the process server signed his affidavit is not dispositive as it was
not a requirement of the trial court’s order. The court’s order required that the return
of service shall not be made until 30 days after mailing. The record affirmatively

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reflects that the citation and petition were mailed April 29, 2019 and the return of
service was filed May 29, 2019.

         Kapur also contends he did not receive service of the petition and citation and
the trial court should have granted his motion to set aside default judgment. A
defendant is not entitled to have a default judgment set aside if the return of service
includes the proper recitations and the defendant’s alleged nonreceipt of service of
process is uncorroborated. See Fid. & Guar. Ins. Co. v. Drewery Constr. Co., 186
S.W.3d 571, 573–74 (Tex. 2006). The return of service is not a trivial, formulaic
document and is considered prima facie evidence of the facts it recites. Id. “The
recitations in the return of service carry so much weight that they cannot be rebutted
by the uncorroborated proof of the moving party.” Id. Thus, we turn to Kapur’s
proof.

         In the trial court Kapur asserted in his affidavit that he did not reside at the
Ashton Park address and was not in the country at the time the citation and petition
were served. We first note that the clerk’s record contains a copy of the return of
service and the affidavit from the process server. Because the return of service
appears in the record it is prima facie proof of service unless Kapur corroborated
with evidence his assertion that he did not receive the petition and citation. See Fid.
& Guar. Ins. Co., 186 S.W.3d at 573–74; Primate Constr., 884 S.W.2d at 152. To
defeat the prima facie showing, a defendant must do more than simply deny service:
the defendant must corroborate denial of service with evidence of supporting facts
and circumstances. See Ward v. Nava, 488 S.W.2d 736, 738 (Tex. 1972). The
corroborating circumstances may consist entirely of circumstantial evidence, but
must derive from a source other than the defendant who challenges service. Id.; see
also Flores v. Sonic Auto. of Tex., L.P., No. 14-12-00722-CV, 2013 WL 5776077,
at *3 (Tex. App.—Houston [14th Dist.] Oct. 24, 2013, pet. denied) (mem. op.).

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       Kapur did not offer corroborating evidence from another source of nonreceipt
with his motion to set aside the default judgment and, indeed, Kapur’s assertions that
he did not reside at the Ashton Park address and was out of the country on the date
of service were rebutted by U.S. Bank. Kapur’s counsel admitted at the hearing that
Kapur’s affidavit was inaccurate when stating when Kapur was out of the country.
Kapur’s assertions did not go beyond his own denial that he did not receive service.
Kapur presented no independent facts and circumstances that supported and thus
corroborated his claim. See Ward, 488 S.W.2d at 738.

       Kapur further alleges noncompliance with the substitute service order because
the green card showing receipt of service was not attached to the return of service.
The trial court’s order granting substitute service required, “a copy of any envelope
or green card returned by the post office” to be attached to the return of service. The
affidavit of service noted that “Service was mailed out By CMRRR on 4/29/19 and
has not been returned.” The certified mail receipt was attached to the return of
service. The order granting substitute service further provided that, “service of
process will be deemed complete upon compliance with this Order, regardless of
whether Defendant signs the certified mail receipt.” Therefore, failure to attach the
green card did not show lack of compliance with the court’s order. See generally
State Farm Fire & Cas. Co. v. Costley, 868 S.W.2d 298, 299 (Tex. 1993) (“[T]o
require proof of actual notice upon substituted service would frustrate Rule 106(b)’s
purpose of providing alternate methods”). We therefore overrule Kapur’s first issue.

III.   The trial court did not err in denying a new trial based on Craddock.

       Because we hold that the trial court did not abuse its discretion in denying
Kapur’s motion to set aside the default judgment on the basis of defective service of
citation, we turn to Kapur’s second issue in which he contends he met the Craddock
test for setting aside a default judgment. Craddock, 133 S.W.2d at 126; see also

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Primate Constr., 884 S.W.2d at 152. A trial court abuses its discretion if it refuses
to set aside a default judgment and grant a new trial when: (1) the failure of the
defendant to answer before judgment was not intentional or the result of conscious
indifference, but rather due to a mistake or an accident; (2) the motion for new trial
sets up a meritorious defense; and (3) granting a new trial will occasion no undue
delay or otherwise injure the party taking the default judgment. Craddock, 133
S.W.2d at 126. If the movant does not satisfy all three prongs, the trial court does
not abuse its discretion in refusing to set aside a default judgment. See Dolgencorp
of Tex., Inc. v. Lerma, 288 S.W.3d 922, 926 (Tex. 2009) (per curiam). We address
only the second Craddock element because that issue is dispositive.

      The second prong of the Craddock test requires Kapur to “set up” a
meritorious defense in his motion for new trial. See id. at 927. “Setting up a
meritorious defense does not require proof ‘in the accepted sense.’” Id. at 927–28
(quoting Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex. 1966)). Rather, a motion for new
trial sets up a meritorious defense if in it the movant alleges facts which in law would
constitute a defense to the plaintiff’s claim and supports those facts by affidavits or
other evidence providing prima facie proof that the defendant has such a defense. Id.
at 928. Under Craddock, Kapur had to (1) allege facts and attach affidavits to a
verified motion to set aside the default judgment that would meet the three Craddock
requirements or (2) present evidence at the hearing on his motion that met those
requirements. See Pickell v. Guar. Nat. Life Ins. Co., 917 S.W.2d 439, 443 (Tex.
App.—Houston [14th Dist.] 1996, no writ).

      In Kapur’s motion for new trial he asserted he was not required to set up a
meritorious defense, but, if he were required to do so, he had a meritorious defense
to U.S. Bank’s claims. First, Kapur asserted that U.S. Bank had offered no evidence
that Gafford had used the proceeds of the home equity loan to pay off the original

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1998 mortgage. Next, Kapur asserted that U.S. Bank was prohibited by the statute
of limitations from asserting its interest in the Property because the Security
Instrument was executed in 2006 and suit was not filed until 2018. Kapur, however,
failed to provide evidence through his affidavit or otherwise to support these
Craddock defenses. Kapur’s affidavit attached to his motion pertains to his claim of
defective service; Kapur did not provide any evidence of his alleged defenses. See
Novik, 592 S.W.3d at 915 (assertions in declaration that pertained to claim of
defective service did not as a matter of law constitute a defense on the merits to
plaintiff’s claims). We therefore overrule Kapur’s second issue.

                                   CONCLUSION

      Having overruled Kapur’s issues on appeal we affirm the trial court’s
judgment.

                                      /s/    Jerry Zimmerer
                                             Justice

Panel consists of Justices Bourliot, Zimmerer, and Spain.

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