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Damages in Texas; Pleading, Mental Anguish, and Restitution Damages.

Q- What proof is required in my lawsuit when totaling damages?

Actual damages, which are also called “compensatory damages” are awarded to compensate for an injury or to repair a wrong.  Actual damages may be either economic or non-economic and do not include exemplary damages.  Economic damages compensate for actual economic or pecuniary loss, and non-economic damages are awarded to compensate for physical pain and suffering, mental and emotional pain or anguish, disfigurement, physical impairment, loss of companionship in society, inconvenience, loss of enjoyment of life, injury to reputation, and all other non-pecuniary losses, other than exemplary damages.

Q- What are the general classifications of ‘damages’?

In pleading damages, Plaintiff should plead sufficient facts, in order to give Defendant fair and adequate notice of the damages sought and enough information for Defendant to prepare a defense.  For pleading purposes, actual are classified as either direct or consequential.  Direct damages are also sometimes called “general damages”, and consequential damages called “special damages”.  General damages are further defined as those that are the necessary and usual result of the Defendant’s wrongful acts.  Plaintiff need not plead general damages.  Special damages must be specifically pleaded under Rule 56, without defining which damages are special. Courts can also disagree about which damages are considered general or special. A 1999 Baylor Law Review article may be of help: ‘The Classification of General & Special Damages for pleading purposes in Texas.’ Special damages are those that result naturally but not necessarily from Defendant’s wrongful acts.  Special damages must be foreseeable, not too remote or uncertain, and must be plead.  Although general damages do not need to be specifically plead, if Plaintiff pleads special damages, but not general damages, then Plaintiff’s right to recover general damages may be waived.  Weingartens, 461S.W.2d 260 (Houston 1970). Also Arthur Anderson v. Perry Equip (Tex. 1997).

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

Can I Draft My Own Liquidated Damages Provision? Can I Use These With a ‘Bonus Provision’ Too?

Q- Is it a good idea to draft one of these Liquidated Damages provisions myself?

As would be expected, many clients, when drafting the liquidated damages provision, will specifically state in the contract, that their liquidated damages provision is not a penalty, however, you cannot depend upon the inclusion of that sort of language, though it may carry some weight with the court, but ultimately, it is for the court to determine whether or not such clause is enforceable, and will use the factors mentioned in this paper. It is also important for the parties to clearly specify exactly when it is, that the damages will begin to accrue. This is a triggering mechanism, can occur at any point that the parties specify, and the contract may of course include certain milestones, or dates, that the parties agree will be some substantial completion, or final completion.

Q- Can I use these with a ‘bonus provision’ too?

If the contract is determined to have an actual enforceable liquidated damages provision, that clause will control the amount of damages that a client may recover. It would not be uncommon for client to ask its attorney if it can waive such provision, when the client believes that it could recover more money, by seeking recovery of actual damages instead. Parties may often choose to not only include a liquidated damages provision in the contract, but also a bonus provision, which would come into effect for completing a project on time, and within budget., For instance. Both the liquidated damages clause and bonus provision, may exist, one without the other, but be aware that a court could rule that the opposite of a bonus provision is actually a prohibited penalty clause, and therefore invalidate the entire provision.

These provisions are not appropriate for all work in all projects. If the provision is tied to a critical milestone date, that’s okay, but may actually be not useful if it causes the contractor to expedite work at the end, at the expense of the quality of his work.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

Is a ‘Liquidated Damages’ Paragraph a Good Idea in the Construction Business? And How do the Texas Courts Look at These Things?

Q- Is a ‘liquidated damages’ paragraph a good idea in the construction business?

Especially in construction cases or any case involving a specific amount of time, in which the services must be performed, liquidated damages may be a proper measure of damages. So, in Dallas debt collection, the liquidated damages clause is a stipulation, between contracting parties, which establishes in advance, the amount of damages, in the event that the contract is breached, by failing to complete a project on time. Many times these provisions as to damages will be determined on a per day basis. Because it is often very difficult, to predict at the beginning of a certain project, the amount of potential damages that would be suffered in the event that a project is delayed, it is not unusual that clients request a liquid liquidated damages provision, in order to deal with that uncertainty. This can be very helpful, because by including such a provision in the contract, the client can hold others accountable for delays in performance, without being involved in the exercise of actually proving the actual damages.

Q- How do the Texas courts look at these things?

A fairly recent case discussed liquidated damages at length, and for the Texas debt collection attorney, it is worth reviewing; Polimera v. Chemtex Environmental 2011 Tex App Lexis 3886 (Beaumont 2011). In this case, the Texas Court of Appeals found a liquidated damages clause and enforceable. The court restated the standard that whether a contract was a good enforceable contract is a question of law, and whether a liquidated damages provision is enforceable, is also a question of law. Court also said that evidence regarding “the difficulty of estimating damages and whether the amount of damages is a reasonable forecast of just compensation”, must be viewed as of the time the contract was executed, and cited the Baker case, above. The court further spoke to the issue of whether it was a penalty, by saying “if the liquidated damages are proven to be disproportionate to the actual damages, the liquidated damages can be declared a penalty, and recovery were limited to actual damages.”. TXU Portfolio v. FPL Energy; 328 SW3d 580 (Dallas 2010). The Beaumont court also stated that the burden of proving that the provision was a penalty, is on the party challenging the liquidated damages clause. They went on to say that generally, when asserting this defense, that party must prove the amount of the other party’s actual damages, in order to show that the provision set forth in the agreement, was not an actual approximation of actual loss.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

I’m Thinking About Inserting a ” Liquidated Damages ” Provision in my Contract; How Does a Court Look at These Things?

In this week’s Blog, let’s talk about a different type of damages, liquidated damages provisions. A liquidated damages clause sets the amount of damages for breach of contract, in advance. Obviously this type of provision can be very important to a Texas debt collection lawyer. A liquidated damages provision is not illegal in Texas, as an agreement to limit liability, as long as there is no disparity of bargaining power between the parties. Arthur Garage v. Racal-Chubb Security 997 SW2d 803 (Dallas 1999). Whether such a contract term is actually a liquidated-damages provision or a not-permitted penalty, is a question of fact, because it may also be an unenforceable penalty. The courts typically look at two different elements to determine whether the liquidated damages clause if valid. Such a clause if valid and enforceable if:

  1. The harm caused by the breach is incapable of being estimated, or is difficult to estimate at the time of the agreement.
  2. The amount of liquidated damages is a reasonable forecast of just compensation for the breach.

Baker v. international Record 812 SW2d 53 (Dallas 1991), and Tex. Bus & Comm. Code, Sec. 2.718, which states generally that liquidated damages will be allowed, if the amount is reasonable under the circumstances.

The two part test above is sometimes known as the “penalty analysis” method or the “anticipated harm test”. The evidence related to the difficulty of estimation aspect, and also the reasonableness of the forecast element, must be viewed by the jury as of the time the contract was executed. Also, if a contract has a provision which sets an upper limit on the amount which is recoverable, for a breach of contract, that is considered a limitation of liability provision, and is not subject to the liquidated damages penalty analysis.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

What Happens if I Do Not File Special Exceptions? And Can I get the Court to Just Dismiss the Lawsuit?

Q—What happens if I do not file Special Exceptions?

If Plaintiff’s pleadings are not challenged by Special Exceptions, the court will construe the pleadings liberally in favor of the pleader.  Horizon v. Auld, 34 SW3d 887 (Tex. 2000).  Without Special Exceptions, a court will uphold Plaintiff’s pleading, even if an element of a cause of action is omitted.  Every defect must specifically be identified by Special Exception rulings, before the jury receives the charge, is waived by the parties seeking reversal.

If a Plaintiff agrees that the filed Special Exceptions are valid, Plaintiff should, therefore, simply amend the pleadings without contesting the exceptions.  If Plaintiff does not agree, however, it should file a response and state why the Special Exceptions should be denied.  At hearing of the Special Exception, only argument will be heard, and no evidence may be presented.  A trail court has wide discretion when ruling on Special Exceptions, and the court must accept as true all material factual allegations, and all factual statements reasonably inferred from the allegations in the petition.  The party filing the Special Exceptions should insist that a judge sign a written order on the Special Exceptions.

Q—Can I get the Court to just dismiss the lawsuit?

When the court sustains Special Exceptions, the court must give Plaintiff a chance to amend its pleadings and order Plaintiff to re-plead.  It is not proper for a court to dismiss the lawsuit at the same time Special Exceptions are sustained.  A court is, however, not required to give Plaintiff an opportunity to amend if the pleading defect is one that cannot be cured by amendment.

If a trial court sustains Special Exceptions but does not give Plaintiff an opportunity to re-plead, Plaintiff must request that the court allow time to amend and obtain a ruling on the record, denying the requested opportunity to amend, or the error is waived.  If Special Exceptions are sustained in favor of Defendant, Plaintiff given an opportunity to amend but fails or refuses to do so, the Defendant may move to dismiss based upon the Plaintiff’s failure to cure and if a request for dismissal is included in the Special Exceptions, Defendant may need to set a hearing on only the request to dismiss.  If only part of a pleading is subject to the Special Exceptions, Defendant may also then file a motion to strike that part of the petition but not the entire lawsuit.  Or, Defendant may file a motion for full or partial summary judgment which is actually preferable to a dismissal without prejudice, because for appellate purposes it is a resolution on the merits and invokes res judicata.
For Texas collection attorneys, if Plaintiff makes a good faith attempt to cure the defect in an amended petition, the court cannot strike the objectionable allegations.  Instead, Defendant must file new Special Exceptions and the court must then sustain them and Plaintiff given another opportunity to amend.  Plaintiff’s right to amend is not unlimited, however, in that a court may deny relief to amend if there is no reasonable probability that further amendment would state facts legally sufficient to sustain the cause of action.  If a Plaintiff refuses to amend, a trial court should strike the objectionable allegations and then proceed on the rest of the pleadings not stricken.  If no cause of action is stated in the remainder of the petition, however, a trial court will dismiss the suit.  In almost all cases, a dismissal after refusal to amend is without prejudice but if a defect cannot be cured by amendment, dismissal may be with prejudice.

Special Exceptions are not required to preserve pleading errors in default judgment cases.  A trial court’s ruling on Special Exceptions can be appealed.  An appellate court reviews the trial court’s ruling on Special Exceptions on an abuse of discretion standard, and must construe the pleadings liberally and accept as true all factual allegations in the pleadings.  The granting of Special Exceptions cannot be reviewed by mandamus.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

Special Exceptions in Texas – “How Much Information Am I Obligated To Put In My Petition?

Today’s Blog in the area of Texas Collections and specifically Dallas Commercial Collections, is in the area of “Special Exceptions”.  This is a Texas statutory creation in which one party can inform the opposing party of defects in its pleadings so it can cure them by amendment, if possible.  By filing Special Exceptions, the opposing party identifies pleading defects that should be remedied before a substantive response is required.  Unless the pleading is challenged by Special Exceptions, the defects are waived.  The applicable Texas rules are Tex. R. Civ. Pro. 90 and 91.

There are two types of pleading defects that may be subject of Special Exceptions:  defects in form and defects in substance.  An example of a defect in form would be that a Plaintiff in its petition did not verify its petition when necessary.  If a Plaintiff did not plead the applicable discovery level in the original petition, Defendant may file Special Exceptions requiring Plaintiff to do so.

Q.  How much information am I obligated to put in my Petition?

On the other hand, there are defects in substance.  These are the usual subject of Special Exceptions. The general rule in Texas is that courts follow the “fair notice” standard for pleading, which looks at whether the opposing party can ascertain from the face of the pleading, the nature and basic issues of the controversy, and what testimony will be relevant.  Therefore, if a Plaintiff pleads a cause of action only in general terms, a Defendant may file Special Exceptions to require Plaintiff to plead more specifically.  Rule 45 does not require Plaintiff to describe the evidence in detail in Plaintiff’s petition.  The court’s option at that point, upon filing a Special Exception, that the petition is too general is to order Plaintiff to amend its petition to allege facts more specifically, or requiring Defendant to obtain the additional facts through discovery. See Horizon v. Auld 34 SW3d 887 (Tex. 2000)
If there are inadequate allegations in the petition, if Plaintiff does not plead all elements of the cause of action, Defendant may specially except  asking the Plaintiff to plead the specific element more specifically.  A Special Exception must, of course, specifically identify which element is missing.  This is a pleading defect, which is subject to a Special Exception, and subsequent amendment.  See Trevino v. Ortega 969 SW2d 950 (Tex. 1998).

If Plaintiff’s  suit is not permitted by law, that is, there is no viable cause of action, Defendant may file Special Exceptions and a Motion to Dismiss.  Also, if a jurisdictional defect is a pleading defect that could be cured by an amendment, it should then be challenged by filing a Special Exceptions, not by the filing of a plea to the jurisdiction or by filing of the Motion for Summary Judgment.

Under applicable Texas law and, as usually the case in Texas collection matter, a Plaintiff may plead for unliquidated damages under Rule 47, by stating that the damages sought are within the jurisdictional limits of the court.  In that case, a Defendant may Specially Except, therefore, requiring Plaintiff to state the maximum amount of damages.  When a Plaintiff pleads that the damages are “at least” a certain amount, that is the same as pleading unliquidated damages, and unless Defendant specially excepts, Plaintiff can recover more than its “at least” pleadings.

All Special Exceptions must be in writing.  There are several cases where counsel specially excepted orally, but the courts found that that did not comply with the rules.  When drafting Special Exceptions, a Defendant is required to identify the particular part of the pleading that is being challenged, and specifically point out the particular defect or omission, obscurity, duplicity, generality, or other insufficiency, under Rule 91.  The Defendant should identify the defective paragraph by number, state to the court why it is defective and explain how it can be corrected.  Previously, a Defendant could generally allege that the petition allegations were vague and indefinite and do not state a cause of action, but this does not identify the defect and is not sufficient.  It is not necessary that Special Exceptions be verified.  The party who is challenging the pleadings via Special Exceptions is required to secure a hearing on the exceptions or they are waived. See Muecke v. Hallstead  (San Antonio 2000). Also Spillman v. Simkins (San Antonio 1988).
The general rule is that Special Exceptions should be filed with the answer or shortly thereafter, and by Plaintiff shortly after Defendant files the answer.  The following are examples of

Special Exceptions which are not valid objections to pleadings.

1.    “The pleadings do not set out enough factual details”.
2.    “The pleadings do not state a cause of action”.
3.    “The pleadings do not allege all elements necessary to support a cause of action”.
4.    “Plaintiff’s pleadings allege matters that are immaterial, prejudicial, and inflammatory”.
5.    “Plaintiff did not attach a copy of the contract to its petition”.
6.    “The damage allegations do not specify the dollar amount for each element of special damages”.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

What if my Lawsuit Did Not “Arise Under” a Contract Obligation?

A closely related area to 21.223, is with lawsuits where Plaintiff’s underlying claim is based upon tort or statutory liability that does not arise out of the contract of the corporation.  In a case involving non-contractual obligations, the court stated that corporate veil-piercing was traditionally predicated on notions of justice and fairness.  Thus, in that case, Plaintiff should be required to establish that injustice or inequity will result if the separate if the separate corporate existence is recognized.  SSP Partners v. Gladstrong, 275 SW3d 444 (Tex. 2008).  Also, in the SSP Partners case above, in 2008 the Texas Supreme Court rejected the single business enterprise theory as inconsistent with veil piercing principles under Texas law.

Going backwards just a bit, a limited liability company provides its members a full liability shield, however, in keeping with the previous discussions of actual fraud, it has been held that LLC members or managers are liable for their own fraudulent or tortious acts, even if the acts are committed in the service of the LLC.  In Re: Williams (Bankruptcy Court WD Tex 124 11).  Also, Sanchez v. Mulvaney 274 SW3d 708 (San Antonio 2008).

Other Texas cases, following Sanchez, above, are Majestic Cast v. Khalaf- Dallas Court of Appeals, 2013, which held that pleading of piercing corporate veil theories are nor required when suing an individual under fraud or tortious acts theories of liability. Also, Alexander 480 SW3d 676 (Ft. Worth 2015) followed Sanchez too.

Generally, courts should respect the principle that the LLC is an entity, separate and distinct from its members, just as a corporation is an entity separate and distinct from its shareholders.  The LLC provisions of the BOC, as originally enacted did not address whether or under what circumstances a claimant may pierce a liability shield of an LLC, so in 2011, the BOC was amended to provide that Sections 21.223-21.226 which includes strict standards for piercing the corporate veil in a case arising out of a corporation’s contract, apply to an LLC.  The 2011 amendment became effective September 1, 2011.  Even before the statutory amendment, several cases were in agreement such as in Re: HRM Holdings, 421 BR 244 (Bankruptcy ND Tex. 2009) which applied corporate veil piercing principles to an LLC context, noting that Texas courts have applied the same state law principles for a veil piercing that they have applied to corporations.

A few factors were mentioned by the Dallas Bankruptcy Court in 2011, in the case Re:Arnette (Bankruptcy ND Tex., June 2011) where the debtor was the president, sole shareholder, and sole decision maker of an LLC, the sole member and the Plaintiff brought an adversary proceeding.  The court stated that actual fraud was not the same as common law fraud and simply required proof of dishonesty of purpose or intent to deceive.  The court had no doubt that the debtor used the entity to perpetrate a fraud and that it primarily served to benefit him directly.  The debtor did not transfer assets among his companies for the purpose of using the corporate form to shield those assets but the court did find a blending of finances of the debtor and other entities, and co-mingling of funds of the entities and also with his personal funds, the debtor took loans and distributions from the LLC to fund his lifestyle rather than a regular salary and found occasional use of the entities for personal purposes without proper documentation.  The court found actual fraud.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

Can Anyone Other Than The LLC, Be Liable For This Debt?

Today’s blog will examine various provisions of Texas laws relating to LLC’s, Limited Liability Companies, in Texas. Most generally, the statutory provisions governing LLC’s are found in the Texas Business Organizations Code (BOC) and in particular, Chapter 21, governing for-profit corporations. Chapter 21, of course, is the applicable law in Texas governing formation of LLC’s, shareholder’s agreements, shares, options, and shareholder rights and restrictions and it is under Subchapter E that the BOC speaks to a LLC member’s liability for obligations of the LLC. All Texas debt collection attorneys should be familiar with this area of law.

Q— Can anyone other than the LLC, be liable for this debt?

Section 21.223 of the BOC is entitled “limitation of liability for obligations”. For the sake of brevity, the applicable provisions governing individual liability are found in Section 21.223 (a)(2), and (b). Summarized, the statues say that LLC members “may not be held liable to the corporation or its obligees with respect to any contractual obligation of the corporation, or any matter relating to or rising from the obligation on the basis that the member was the alter ego of the corporation, or on the basis of actual or constructive fraud, or a sham to perpetrate a fraud or other similar theory , or for failure of corporation to observe corporate formalities, however, the above stated law does not prevent the member from being liable, IF SUCH PERSON “caused the company to be used for the purpose of perpetrating and did perpetrate an actual fraud on the obligee primarily for the direct personal benefit of the member”.   So, (a)(2), says that the individual members are not liable on the basis of actual fraud, but (b) says that they can be liable for actual fraud if they come within the definition of “an actual fraud primarily for the direct personal benefit of the member”.

Cases construing Sec. 21————

Before we discuss the cases construing the statue, it is important to know that Section 21.223 became effective January 1, 2006, and then was amended effective, September 1, 2007. The source of this law was the Texas Business Commerce Code, Section 2.21A. The background of the current law is important also, because a Supreme Court of Texas in 1986 issued its opinion of Castleberry v. Branscum and the Texas legislature reacted to Castleberry by passing new laws in 1989, which have now become the BOC Section 21.223. It appears to be the law at this time that members may not be held liable for any matter relating to or rising from an LLC’s contractual obligation, unless, the member used the LLC to perpetrate an actual fraud for the direct personal benefit of the member.

There are several recent cases construing the BOC provision, the first is:

  1. Latham v. Burgher, 320SW3d 602 (Dallas, 2010); which held that “dishonesty of purpose or intent to deceive” was a sufficient definition of “actual fraud” for veil piercing purposes and that the trial court did not err in refusing to submit a jury instruction based upon the definition of common law fraud.
  1. In the case of Dick’s Last Resort v. Market, 273SW3d 905 (Dallas, 2008), the court rejected the argument that the jury instruction for actual fraud should include elements of the tort of common law fraud.
  1. A Houston [1st] case issued in 2007 (I’m not sure whether it is before or after the effective date of the new law), McCarthy v. Wani, 251 SW3d 573, 584 (Houston 1st 2007), stated that actual fraud, could include concealment or failure to disclose material facts, and held that the trial court did not abuse its discretion in defining “actual fraud” based on such theory rather than requiring a finding of material, affirmative, misrepresentation.
  1. A federal district court in 2011, In Re:Arnette (Bankruptcy Court ND Tex. June 7, 2011), discussed the actual fraud standard under section 21.223 and stated “that actual fraud, for purposes of the statute, is not the same as the common law tort of fraud and simply required proof of dishonesty of purpose, or an intent to deceive.

Even prior to the effective date of the statute, the Supreme Court of Texas issued its opinion that is apparently still good law, being Willis v. Donnelly, 199 SW3d 262, 271 (Tex. 2006). In Willis, the Supreme Court stated that the statute precludes holding a LLC member liable for any contractual obligation of the corporation on the basis of alter-ego, constructive fraud, sham to perpetrate a fraud, or other similar theories, UNLESS the member caused the corporation to be used to perpetrate an actual fraud for the members direct personal benefit or the member expressly agreed to be personally liable for the obligation.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

What if the Defendant is ‘Served’ Through Their Agent? And How to Serve a Corporate-Defendant?

Today’s blog talks about the formal process of serving the defendant, thereby giving him notice that he has been sued. This is an overlooked area to Texas collection lawyers and Dallas collection lawyers, until a service problem rears its ugly head
In general, serving defendant gives the court jurisdiction over the defendant in order to satisfy due-process requirements under the Constitution and to give defendant an opportunity to appear and defend himself in court. When the lawsuit is begun, the process referred to as “process”, means serving the petition, with the citation, upon defendant.

Q- What if the Defendant is ‘Served’ Through Their Agent?

When defendant is being served through its agent, the citation must name the agent for service and the address for service upon such agent, even though the citation is directed to the defendant, not to the agent. If the citation names one person as agent for service, but the Return differs, because it was served on another person, there is a jurisdictional problem as a trial court has not in that situation acquired jurisdiction over the defendant Pharmakinetics v. Katz 717 SW2d 704 (San Antonio 1986).

 

What are the Rules for Serving a Corporate-Defendant?

If the defendant is a corporation, citation must be directed to the Corporation and name as agent for service, the president, or any vice president, or the registered agent. If the defendant is a partnership, citation should be directed to such defendant – partnership, and name the individual partners for service. Obviously individual partners must be named as individuals in the petition and citation.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

Sam Emerick, Collections Attorney

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate

What Is Meant By ‘Serving The Defendant’?

Today’s blog talks about the formal process of serving the defendant, thereby giving him notice that he has been sued. This is an overlooked area to Texas collection lawyers and Dallas collection lawyers, until a service problem rears its ugly head
In general, serving defendant gives the court jurisdiction over the defendant in order to satisfy due-process requirements under the Constitution and to give defendant an opportunity to appear and defend himself in court. When the lawsuit is begun, the process referred to as “process”, means serving the petition, with the citation, upon defendant.

Q- When a Defendant defaults in filing their Answer, what are the ‘service’ Rules?

Since the Dallas collection attorney often moves the court to render default judgment, it’s important to closely follow the rules for issuing citation, the actual service of process, filling out the Return of process, and filing the Return with the court. The Supreme Court of Texas has held that unless there is strict compliance with Rules concerning process, the judgment will be reversed Werner v. Colwell 909 SW2d 866 (Tex. 1995).

Naming the correct defendant is important; the citation served upon defendant must contain defendants correct name; if the correct defendant was incorrectly named in the petition, it is only a misnomer, and the default judgment will be affirmed if the correct defendant was actually served, if the petition contains a description of facts, in such a way that the correct defendant knows it is the intended defendant. Union Pacific v. Legg 49 SW3d 72 (Austin 2001).

It is also important to correctly identify defendant’s capacity; it defendant is being sued in a representative capacity, the petition must name that capacity, i.e. trustee, or as executor, because if defendant is being sued as a corporation, for example, judgment will not be correctly rendered if the defendant is only being sued as an individual.

It is also important for the citation to include defendant’s address for service of process, and the citation should contain a statement identifying defendant’s address as either its residents, or usual place of business. If defendant is a nonresident of Texas, the petition should use the exact language from the long-arm statute under Rule 108, or other applicable statute.

Contact Us

If you have any questions about business disparagement or need help with business debt collections in Dallas Texas, We Can Help – Give Us a Call:  214-752-8800 or Email Us: sam@samemerick.com

 

*The foregoing is not intended to provide specific legal advice, but instead only as a generalized discussion

 

Sam Emerick, Collections Attorney

 

 

 

 

 

 

Sam Emerick has over 35 years
experience in Commercial Collections Law,
Factoring Litigation and Wills, Trusts & Probate