Court Opinion

ID: 4680845
Source: CourtListenerOpinion
Date Created: 2021-04-26 07:17:46.412944+00
Date Added: 2024-06-11T08:03:57.643082
License: Public Domain

NO. 12-20-00178-CV

                         IN THE COURT OF APPEALS

              TWELFTH COURT OF APPEALS DISTRICT

                                    TYLER, TEXAS

DEUTSCHE BANK NATIONAL                         §      APPEAL FROM THE 149TH
TRUST COMPANY AS TRUSTEE FOR
THE REGISTERED HOLDERS OF
MORGAN STANLEY ABS CAPITAL I
INC., TRUST 2007-NC4 MORTGAGE
PASS THROUGH CERTIFICATES,
SERIES 2007-NC4,                               §      JUDICIAL DISTRICT COURT
APPELLANT

V.

KINDI SHEPARD,
APPELLEE                                       §      BRAZORIA COUNTY, TEXAS

                                 MEMORANDUM OPINION
       Deutsche Bank National Trust Company, as Trustee for the Registered Holders of
Morgan Stanley ABS Capital I Inc., Trust 2007-NC4 Mortgage Pass Through Certificates, Series
2007-NC4 (DBNTC) filed this restricted appeal of the trial court’s order granting a no-answer
default judgment in favor of Kindi Shepard. Deutsche Bank raises two issues on appeal. We
reverse and remand.

                                        BACKGROUND
       Shepard filed her original petition on March 3, 2020, seeking to stop the foreclosure sale
of her real property. In her petition, she alleged several causes of action including breach of
contract, violations of the Texas Debt Collection Act, violations of the Texas Deceptive Trade
Practices Act, and promissory estoppel. Shepard requested relief in the form of actual damages,
exemplary damages, nominal damages, and attorney’s fees. She further requested a temporary

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restraining order and permanent injunction to prevent the foreclosure sale scheduled for the same
day.
       On April 2, the Brazoria County District Clerk attempted to complete service via certified
mail to “Deutsche Bank c/o Corporate Officer” in New York. In the return of service, the
Deputy District Clerk certified that she served the Defendant on April 10. DBNTC did not
answer or make an appearance. Shepard filed a motion for default judgment on May 29 and
asked the trial court to issue a permanent injunction preventing the foreclosure sale of her
property and award her attorney’s fees. She further sought the issuance of writs and processes
necessary to execute the judgment. The motion was submitted to the trial court without oral
argument, and the trial court granted Shepard the relief requested on June 2.
       The writ of execution was issued on July 7, directing any sheriff or constable to execute
the writ and collect $4,898.68 plus post-judgment interest. On July 8, a Dallas County Constable
appeared at the office of Deutsche Bank Securities, Inc. (DBSI) in Dallas, seeking to seize
property to satisfy the judgment.       DBSI is a separate company unrelated to this lawsuit.
However, DBNTC ultimately learned of the suit following the incident at DBSI. DBNTC filed a
restricted appeal of the default judgment.

                                       RESTRICTED APPEAL
       DBNTC alleges two grounds for setting aside the default judgment and granting a new
trial: (1) Shepard did not properly serve DBNTC; and (2) the trial court’s judgment granted relief
that Shepard did not request in her petition.
Standard of Review
       A restricted appeal is a procedural device available to a party who did not participate,
either in person or through counsel, in a proceeding that resulted in a judgment against the party.
See TEX. R. APP. P. 30. It is a direct attack on a judgment. Roventini v. Ocular Scis., Inc., 111
S.W.3d 719, 721 (Tex. App.—Houston [1st Dist.] 2003, no pet.). The elements necessary to
prevail on a restricted appeal are that the appellant: (1) filed notice of the restricted appeal within
six months after the judgment was signed; (2) was a party to the underlying lawsuit; (3) did not
participate in the hearing that resulted in the judgment he complains of, nor timely file any post
judgment motions or requests for findings of fact and conclusions of law; and (4) is able to
demonstrate error is “apparent on the face of the record.” Ins. Co. of State of Penn. v. Lejeune,

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297 S.W.3d 254, 255 (Tex. 2009); Alexander v. Lynda’s Boutique, 134 S.W.3d 845, 848 (Tex.
2004); see also TEX. R. APP. P. 26.1(c), 30. Only the fourth element—error “apparent on the face
of the record”—is in question here.
       Although review by restricted appeal affords review of the entire case and thus permits
the same scope of review as an ordinary appeal, the face of the record must reveal the claimed
error. Roventini, 111 S.W.3d at 721 (citing Norman Commc’ns v. Tex. Eastman Co., 955
S.W.2d 269, 270 (Tex. 1997) (decided under predecessor writ-of-error practice)). The face of
the record in a restricted appeal consists of the papers on file with the court when it rendered
judgment. Barker CATV Constr., Inc. v. Ampro, Inc., 989 S.W.2d 789, 794 (Tex. App.—
Houston [1st Dist.] 1999, no pet.) (on motion for rehearing) (citing Gen. Elec. Co. v. Falcon
Ridge Apartments Joint Venture, 811 S.W.2d 942, 944 (Tex. 1991) (decided under predecessor
writ-of-error practice)). Accordingly, we may not consider, as part of the record, evidence or
documents that were not before the trial court when it rendered judgment. Barker CATV
Constr., 989 S.W.2d at 794–95; see also Gen. Elec. Co., 811 S.W.2d at 944. Error generally
may not be inferred from silence in the record; thus, absent affirmative proof of error, a restricted
appeal fails. See Alexander, 134 S.W.3d at 849–50 (holding silence in the record on restricted
appeal about whether notice was provided in hearing to dismiss for want of prosecution amounts
to absence of proof of error).
Service of Process
       A no-answer default judgment cannot stand when the defendant was not served in strict
compliance with the applicable requirements. Spanton v. Bellah, 612 S.W.3d 314, 316 (Tex.
2020). Because no-answer default judgments are disfavored and trial courts lack jurisdiction
over a defendant who was not properly served with process, we indulge no presumptions in favor
of valid issuance, service, or return of citation. Id. Service of process that does not strictly
comply with the rules’ requirements is “invalid and of no effect.” Id. at 317. Instead, the
prevailing party bears the burden to prove proper service of process. Primate Constr., Inc. v.
Silver, 884 S.W.2d 151, 153 (Tex. 1994) (per curiam).
       Shepard filed her original petition, application for injunctive relief, and request for
disclosures, naming “Deutsche Bank National Trust Company” as the defendant. Alleging the
defendant was a foreign limited liability company formed under the laws of the state of
Delaware, the petition instructed that service should be upon its registered agent at an address in

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New York. The District Clerk of Brazoria County issued citation via certified mail to “Deutsche
Bank c/o corporate officer” to the address provided in New York. However, DBNTC’s main
office is located in Los Angeles, California.
       Section 17.028 of the Texas Civil Practice and Remedies Code outlines the procedure for
giving notice of a lawsuit to a “financial institution” as defined by Section 201.101 of the Texas
Finance Code. See TEX. CIV. PRAC. & REM. CODE ANN. § 17.028 (West 2015). In relevant part,
Section 17.028 provides that “citation may be served on a financial institution by: (1) serving the
registered agent of the financial institution; or (2) if the financial institution does not have a
registered agent, serving the president or a branch manager at any office located in this state.”
Id. § 17.028(b).
       “[W]hen a procedure for giving notice and obtaining jurisdiction is statutorily
established, that method is generally exclusive and the form prescribed must be followed with
reasonable strictness.” Colson v. Thunderbird Bldg. Materials, 589 S.W.2d 836, 840 (Tex. Civ.
App.–Amarillo 1979, writ ref’d n.r.e.). “Thus, when there is a specific statute that sets out the
steps that must be taken, the inquiry is not whether the defendant had actual knowledge of the
proceeding against him; rather, the question is whether that knowledge was conveyed to him in
the manner required by the statute.”       Id.   Service in compliance with Section 17.028 is
mandatory. Bank of New York v. Chesapeake 34771 Land Trust, 456 S.W.3d 628, 633 (Tex.
App.—El Paso 2015, pet. denied).
       Service of process on the Bank was ineffective because it was not effectuated pursuant to
Section 17.028.    A party suing a financial institution in Texas must serve process on the
institution in accordance with Section 17.028; otherwise, service is ineffective. See The Bank of
New York Mellon v. Redbud 115 Land Trust, 452 S.W.3d 868, 871–73 (Tex. App.–Dallas 2014,
pet. denied) (concluding that Section 17.028 is the exclusive method for serving a financial
institution, foreign, or domestic); Bank of New York Mellon v. Soniavou Books, LLC, 403
S.W.3d 900, 903 (Tex. App.–Houston [14th Dist.] 2013, no pet.) (concluding that bank was not
properly served under Section 17.028 in light of plaintiff’s concession that it did not serve bank
in accordance with Section 17.028 in suit challenging foreclosure sale). It is beyond dispute that
the Bank is a financial institution. See TEX. FIN. CODE ANN. § 201.101 (West 2016) (including
within the definition of a “financial institution” a bank or trust company chartered in another

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state). It is also beyond dispute that Shepard did not serve the Bank in accordance with Section
17.028.
         It is apparent from the face of the record that service of process on DBNTC was
improper. 1 Accordingly, we sustain DBTC’s first issue and need not address its second issue.
See TEX. R. APP. P. 47.1.

                                                  DISPOSITION
          Having sustained DBNTC’s first issue, we reverse the trial court’s judgment and remand
the case for further proceedings consistent with this opinion.

                                                                            GREG NEELEY
                                                                               Justice

Opinion delivered April 21, 2021.
Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

          We further note that Shepard listed different entities as the defendant in her petition and citation, which
          1

also renders citation invalid and ineffective. See Deutsche Bank, Nat’l Trust Co. v. Kingman Holdings, LLC, No.
05-14-00855-CV, 2015 WL 6523712, at *3 (Tex. App.—Dallas Oct. 5, 2015, pet. denied) (mem. op.).

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                                  COURT OF APPEALS

     TWELFTH COURT OF APPEALS DISTRICT OF TEXAS

                                          JUDGMENT

                                            APRIL 21, 2021

                                        NO. 12-20-00178-CV

    DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR THE
  REGISTERED HOLDERS OF MORGAN STANLEY ABS CAPITAL I INC., TRUST
   2007-NC4 MORTGAGE PASS THROUGH CERTIFICATES, SERIES 2007-NC4,
                             Appellant
                                 V.
                          KINDI SHEPARD,
                              Appellee

                               Appeal from the 149th District Court
                       of Brazoria County, Texas (Tr.Ct.No. 107113-CV)

       THIS CAUSE came to be heard on the appellate record and briefs filed herein, and the
same being considered, because it is the opinion of this Court that there was error in judgment of
the court below, it is ORDERED, ADJUDGED and DECREED by this Court that the judgment
be reversed and the cause remanded to the trial court for further proceedings in accordance
with the opinion of this Court; all costs of this appeal are assessed against Appellee, KINDI
SHEPARD, and that this decision be certified to the court below for observance.
                   Greg Neeley, Justice.
                   Panel consisted of Worthen, C.J., Hoyle, J., and Neeley, J.

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