Texas Court of Appeals, 1st District (Houston) Cases

Balkan Express, LLC v. Stefanie Hollins

• 2023-12-19

Date Filed2023-12-19

Docket01-22-00911-CV

Cited0 times

StatusPublished

Full Opinion (html_with_citations)

Opinion issued December 19, 2023

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-22-00911-CV
———————————
BALKAN EXPRESS, LLC, Appellant
V.
STEFANIE HOLLINS, Appellee

On Appeal from the 151st District Court
Harris County, Texas
Trial Court Case No. 2022-47525

MEMORANDUM OPINION

This appeal stems from a bill of review proceeding filed to vacate a default

judgment entered in an underlying case involving a collision between Appellee

Stefanie Hollins’ automobile and Appellant Balkan Express, LLC’s truck. Hollins

sued Balkan for negligence. Following unsuccessful attempts to serve Balkan,
Hollins moved for, and the trial court granted, a default judgment against Balkan.

Balkan filed a bill of review requesting the default judgment be set aside arguing it

was not personally served with service of process. Hollins moved for summary

judgment arguing Balkan could not prevail on his bill of review because the default

judgment had resulted from his own negligence. The trial court agreed, granting

Hollins’ motion for summary judgment and denying Balkan’s bill of review.

In a single issue, Balkan argues the trial court erred in granting Hollins’

summary judgment and dismissing his bill of review based on the finding Balkan

was negligent in failing to update the service address for its registered agent on file

with the Texas Secretary of State. Because the evidence established Balkan was

negligent in failing to maintain a current service address for its registered agent

with the Texas Secretary of State and that the default judgment resulted from its

negligence, we conclude Balkan failed to satisfy the requirements for maintaining

a bill of review.

We affirm.

Background

Appellee Stefanie Hollins was involved in a collision with a truck owned by

Appellant Balkan Express, LLC and driven by one of its employees. Hollins sued

2
Balkan for negligence.1 Three times Hollins attempted to serve Balkan with

process through its registered agent, Zlatan Karic, at 7312 Rock Garden Trail, Fort

Worth, Texas, 76123, the address on file with the Texas Secretary of State. After

the third unsuccessful attempt to serve Balkan, Hollins filed a first amended

petition stating she had been unable to serve Balkan at the address on file with the

Secretary of State. Pursuant to Section 5.253 of the Texas Business Organizations

Code, she requested that citation be issued to the Texas Secretary of State as the

designated agent for process for Balkan.

On March 23, 2021, Hollins served the Texas Secretary of State with her

first amended petition. The Secretary of State served Balkan via certified mail,

return receipt requested on March 29, 2021, sending the citation and amended

petition to Balkan’s registered agent at the address on file with the Secretary of

State. Process was returned to the Secretary of State’s office on April 12, 2021

“Bearing Notation Return to Sender, Attempted Not Known, Unable to Forward.”

The Secretary of State issued a “Whitney Certificate” on June 30, 2021, certifying

it received service of process for Balkan and that it forwarded the citation to

Balkan pursuant to Section 5.253 of the Texas Business Organizations Code.2

1
The underlying lawsuit is styled Stefanie Hollins v. Balkan Express, LLC, Cause
No. 2021-10318, in the 151st District Court of Harris County, Texas.
2
A Whitney Certificate is a certification filed by the Texas Secretary of State after
forwarding process by certified mail, return receipt requested to the registered
agent’s most recent address on file with its office. Acadian Props. Austin, LLC v.
3
Balkan did not file an answer or make an appearance in the underlying

lawsuit. Hollins moved for default judgment, attaching a Certificate of Last

Known Address that identified 7312 Rock Garden Trial in Fort Worth as Balkan’s

last known mailing address. On August 30, 2021, the trial court signed a default

judgment against Balkan, awarding Hollins $555,290 in damages.

Almost one year later, on August 5, 2022, Balkan filed a bill of review,

requesting the default judgment be set aside because it had not been personally

served with service of process. In its bill of review, Balkan argued that its failure

to update its registered address with the Texas Secretary of State did not constitute

negligence. Balkan attached the declaration of Zlatan Karic, Balkan’s president

and sole shareholder, to its bill of review. Karic stated in his declaration that he

was unaware until he learned in June 2022 of Hollins’ suit that Balkan had not

informed the Secretary of State of its current business address. Karic explained the

Rock Garden Court address on file with the Secretary of State was his home

address when he incorporated the company. He claimed that at the time Hollins

served Balkan through the Secretary of State, he had not lived at that address for

five years.

KJMonte Invs., LLC,

650 S.W.3d 98

, 111 (Tex. App.—El Paso 2021, no pet.).
      “The certificate is known as a ‘Whitney Certificate’ based on the Texas Supreme
      Court’s holding in Whitney v. L & L Realty Corp.,

500 S.W.2d 94

 (Tex. 1973), in
      which the court concluded that such a certificate was necessary in cases in which
      the Secretary of State has accepted process as a defendant’s agent.”

Id. at 111, n.12

4
Hollins filed an answer to the bill of review and a hybrid motion for

summary judgment. Hollins argued in her summary judgment that a bill of review

is not available when a default judgment results from the defendant’s own

negligence. She argued Balkan had been negligent in failing to fulfill its legal duty

to maintain a correct address for its registered agent with the Texas Secretary of

State and that Balkan’s negligence had resulted in the default judgment entered

against it. Hollins argued there was “no evidence [] Balkan [could] offer that

refute[d] its own negligence.” Hollins also argued that Balkan’s failure to maintain

an updated address with the Secretary of State as required under the Texas

Business Organizations Code and its failure to answer Hollins’ suit was “as a

matter of law, negligence that bars any equitable relief.”3

In its summary judgment response, Balkan argued that (1) current case law

does not indicate Balkan’s failure to update its registered address with the

Secretary of State defeated its bill of review; and (2) equity supports setting aside

the default judgment via bill of review because, among other things, Hollins was

responsible for the accident that led to the underlying litigation.

3
Hollins attached two exhibits to her summary judgment motion: the declaration of
Zlatan Karic, Balkan’s president and sole shareholder, and Balkan’s Statement of
Change of Registered Office/Agent filed with the Secretary of State on June 30,
2022. The latter changed the address of Balkan’s registered office/agent from the
Rock Garden Trial address to its current address.

5
During the hearing on Balkan’s bill of review, the parties made largely the

same arguments as in their summary judgment pleadings. Balkan argued that

“failure to change the registered agent is not, as a matter of law, negligent.”

Balkan observed that had Hollins reviewed the police report from the accident or

performed a Google search, she would have found the correct address for Balkan.

Balkan also argued that when claiming a due process violation for lack of service

or notice, a bill of review plaintiff “is relieved of providing the first two elements,

and the third element, lack of negligence, is conclusively established if the bill-of-

review Plaintiff can prove it was never served.” In response, Hollins argued that

the Whitney Certificate provided by the Secretary of State was “conclusive proof of

compliance with statute.” She argued that the record was “replete” with entries

that Balkan’s failure to receive “notice was due to [its] mistake” in failing to

change the service address on file with the Secretary of State, and that “if you

don’t update your [registered agent’s service] address, you’re negligent.”

Following the hearing, the trial court signed a final judgment that states in

part:

The Court finds that there is no genuine issue of material fact that it
was the Bill of Review Plaintiff’s (Balken) [sic] negligence that lead
[sic] to the entry of the Final Judgment. Since, as a matter of law, the
Bill of Review Plaintiff (Balken) cannot disprove this Bill of Review
element (that the default judgment was not due to its own fault or
negligence) equitable relief is not warranted/permitted and the bill is
denied. It is further,

6
ORDERED, ADJUDGED AND DECREED that this summary
judgment disposes of all parties and claims at issue in this case. All
relief not herein granted is denied. . . .

Separate and apart from this Motion for Summary Judgment, the
Court held an in-person hearing on the Bill of Review Plaintiff’s
Motion to set aside the underlying default judgment. . . . The Court
hereby DENIES the Bill of Review Plaintiff’s motion to set aside the
underlying Default Judgment for the same reasons as in the Motion
for Summary Judgment and signs this one Order covering both
Motions.

This appeal ensued.

Standard of Review and Applicable Law

A. Summary Judgment

We review a trial court’s ruling on a motion for summary judgment de novo.

Valence Operating Co. v. Dorsett,

164 S.W.3d 656, 661

 (Tex. 2005). Although

Hollins filed a hybrid motion for summary judgment, the final judgment reflects

the trial court granted a traditional motion for summary judgment. In reviewing a

ruling on a traditional motion for summary judgment, “we take as true all evidence

favorable to the nonmovant, and we indulge in every reasonable inference and

resolve any doubts in the nonmovant’s favor.” Walker v. Eubanks,

667 S.W.3d 402

, 406 (Tex. App.—Houston [1st Dist.] 2022, no pet.) (citing Valence

Operating,

164 S.W.3d at 661

).

      To prevail on a traditional summary judgment motion, the movant must

establish both that no genuine issues of material fact exist and that it is entitled to


                                          7
judgment as a matter of law. TEX. R. CIV. P. 166a(c). If the movant establishes it

is entitled to summary judgment, the burden shifts to the non-movant to raise a

genuine issue of material fact to defeat the summary judgment. Centeq Realty, Inc.

v. Siegler,

899 S.W.2d 195, 197

 (Tex. 1995). The defendant who moves for

traditional summary judgment has the burden to “conclusively negate” at least one

essential element of the plaintiff’s cause of action. Little v. Tex. Dep’t. of Criminal

Justice,

148 S.W.3d 374, 381

 (Tex. 2004). Under the traditional rule, courts

“never shift the burden of proof to the non-movant unless and until the movant has

‘establish[ed] his entitlement to a summary judgment . . . by conclusively proving

all essential elements of his cause of action or defense as a matter of law.’”

Draughon v. Johnson,

631 S.W.3d 81

, 87–88 (Tex. 2021) (quoting Casso v. Brand,

776 S.W.2d 551, 556

 (Tex. 1989)).

B.    Bill of Review

      A bill of review is an equitable proceeding brought by a party who seeks to

set aside a prior judgment that can no longer be challenged by a motion for new

trial or a traditional appeal. Mabon Ltd. v. Afri-Carib Enters., Inc.,

369 S.W.3d 809, 812

 (Tex. 2012); Caldwell v. Barnes,

154 S.W.3d 93, 96

 (Tex. 2004); see

TEX. R. CIV. P. 329b(f) (“On expiration of the time within which the trial court has

plenary power, a judgment cannot be set aside by the trial court except by bill of

review for sufficient cause, filed within the time allowed by law[.]”). “Courts


                                          8
narrowly construe the grounds on which a plaintiff may obtain a bill of review due

to Texas’s fundamental public policy favoring the finality of judgments.” Mabon,

369 S.W.3d at 812

.

      A plaintiff who files a bill of review ordinarily must plead and prove (1) a

meritorious defense to the underlying cause of action, (2) which the plaintiff was

prevented from making by the fraud, accident or wrongful act of the opposing

party or official mistake, (3) unmixed with any fault or negligence on the

plaintiff’s own part. Caldwell,

154 S.W.3d at 96

. Bill of review plaintiffs who

claim they were not served with the judgment at issue are excused from proving

the first two elements. “First, if a plaintiff was not served, constitutional due

process relieves the plaintiff from the need to show a meritorious defense. . . .

Second, the plaintiff is relieved from showing that fraud, accident, wrongful act or

official mistake prevented the plaintiff from presenting such a defense.”