Howdy, General Partner: Who to Serve when Suing a Texas Limited Partnership
In a rare error-correction case, the Texas Supreme Court—speaking by per curiam opinion—reversed a decision by the Fifth Court of Appeals in Dallas that had incorrectly validated service of process on an owner, president, and CEO of a limited partnership.
According to the Texas Supreme Court, if a statute only allows a limited partnership to be served by its “registered agent” or “general partner,” the legislature meant what it said.
In WWLC Investments v. Miraki, a commercial landlord doing business as a limited partnership evicted a tenant who operated a specialty food market and restaurant for nonpayment of rent. The tenant complained it had properly withheld rent because the landlord failed to make promised repairs. Following the eviction, the tenant brought a new lawsuit in 2015 against the landlord for breach of the lease, fraud, and consumer protection violations. The tenant tried to serve Wendy Chen, the alleged owner, president, and CEO of the limited partnership who owned the property. But Wendy Chen was nowhere to be found.
Undeterred, the tenant sought substituted service under Texas Rule of Civil Procedure 106. After substituted service was accomplished by posting a notice of the lawsuit on the front door of her home, the tenant sought and obtained a default judgment for more than a million dollars in actual and punitive damages.
The landlord filed a bill of review proceeding to challenge the default judgment. The trial court denied all relief and the court of appeals affirmed. It was undisputed that the tenant had made no effort to serve the landlord’s registered agent or general partner.
That dog won’t hunt.
The Texas Supreme Court reversed and emphasized that the Texas Business Organizations Code only authorizes service on a limited partnership by its “general partner” or “registered agent.” See Tex. Bus. Orgs. Code §§ 5.201(b)(1), 5.255(2). Unlike corporations, limited partnerships are not authorized by the express text of the statute to be served by its named officers—like presidents or CEOs. Further, the court concluded that an “owner” is just one of the partners of a limited partnership, not necessarily the “general partner.” And Wendy Chen testified she was not the general partner.
The Texas Supreme Court reiterated: “For well over a century, this court has required that strict compliance with the rules for service of citation affirmatively appear on the record in order for a default judgment to withstand direct attack. There are no presumptions in favor of valid issuance, service, and return of citation in the face of a [direct] attack on a default judgment.” (internal quotation omitted).
The court granted the bill of review and restored the parties to their original status as plaintiff and defendant, as they existed when the lawsuit was filed in 2015. What a difference half a decade and proper service makes.
Well, I declare.
The takeaway here is the same as with all cases involving challenges to service of process: triple check the rules and the applicable statutes when attempting to bring someone within the jurisdiction of the court. Triple check them again before seeking a default judgment based on whatever service you believe you have effected. And if you receive notice that a default judgment has been rendered against you, act quickly to ensure your opponent skipped no steps in attempting to provide you with notice of the lawsuit and an opportunity to be heard.