Huffman Asset Management, LLC and Prairie Capital, LLC v. Maurice Colter and Ni-Ida Colter

Summary

The Supreme Court of Texas held that substituted service on limited liability companies was invalid because the Secretary of State did not forward process to the most recent addresses of the entities on file with the Secretary. The court clarified that this requirement is not limited to the entities’ registered office addresses and that Whitney certificates establish only the facts stated in them, not compliance with the statute. The court reversed the court of appeals’ judgment and remanded for further proceedings.

Holdings

1. Under Texas Business Organizations Code Section 5.253(b)(1), the Secretary of State must forward process to the most recent address of the entity on file with the Secretary, which is not synonymous with the entity's registered office address.
2. A Secretary of State certificate conclusively establishes only the facts stated in the certificate; it does not conclusively establish that process was forwarded to the address required by statute unless the certificate proves that fact.
3. The Secretary of State was required to forward process to the San Jacinto Street address listed in the entities' more recent Public Information Reports, rather than to their registered office addresses.
4. Because neither HAM nor Prairie was served in strict compliance with the substituted-service requirements, the trial court abused its discretion by denying the motion for new trial, and the default judgment could not stand.

Questions Presented

1. Whether the Colters exercised reasonable diligence in attempting to serve the entities' registered agents at their registered offices before resorting to substituted service through the Secretary of State.
2. Whether the phrase "the most recent address of the entity on file with the secretary of state" in Texas Business Organizations Code Section 5.253(b)(1) means the entity's registered office address.
3. Whether the Secretary of State was required to forward process to the entities' more recent principal-office or mailing address listed in their Public Information Reports.
4. Whether the no-answer default judgment could stand when the record did not demonstrate strict compliance with the substituted-service requirements.

Disposition

reversed_and_remanded