ARNOLD v. WORLDWIDE CLINICAL TRIALS WCT

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Court of Appeals of Texas,San Antonio.

Herlinda ARNOLD, Appellant v. WORLDWIDE CLINICAL TRIALS a/k/a WCT Corporation, Appellee.

No. 04–13–00609–CV.

Decided: August 13, 2014

Sitting: CATHERINE STONE, Chief Justice, MARIALYN BARNARD and LUZ ELENA D. CHAPA, Justices. Joseph Ecke, Matthew Norris, San Antonio, TX, for Appellant. Scott Anthony Brutocao, Cornell Smith Mierl and Brutocao, Austin, TX, for Appellee.

OPINION

This is an appeal from a trial court's order granting summary judgment in favor of appellee Worldwide Clinical Trials Early Phase Services, LLC (“WCT”). On appeal, appellant Herlinda Arnold contends the trial court erred in granting summary judgment because: (1) WCT's registered agent was timely served with a citation using WCT's assumed name, and, alternatively, (2) Arnold exercised due diligence in the issuance and service of citation such that the date of service should relate back to the date of filing. Because we sustain Arnold's first issue, we need not address her alternative second issue. Tex.R.App. P. 47.1 (stating opinions should address only issues necessary to final disposition). Accordingly, we reverse the trial court's judgment and remand the cause to the trial court for further proceedings.

Background

Herlinda Arnold is a former employee of Worldwide Clinical Trials Early Phase Services, LLC (“WCT”). Arnold alleges she was wrongfully terminated by WCT and filed a discrimination claim with the Equal Employment Opportunity Commission (“EEOC”) and Texas Workforce Commission (“TWC”), alleging racial discrimination and harassment. The TWC subsequently informed Arnold on October 16, 2012, that her case had been processed by the EEOC and that she had a right to bring a civil action against WCT. The notice included the following instruction: “YOU HAVE SIXTY (60) DAYS FROM THE RECEIPT OF THIS NOTICE TO FILE THIS CIVIL ACTION.” The notice was received on or about October 16, 2012, so Arnold had until December 15, 2012, to file a civil action.

Arnold filed her original petition on November 7, 2012, and styled the case “Herlinda Arnold v. Worldwide Clinical Trials a/k/a WCT Corporation.” That same day, Arnold requested citation be issued to “Worldwide Clinical Trials a/k/a WCT Corporation” through its registered agent, CT Corporation System (“CT Corp.”). The record reflects the county clerk issued citation on November 11, 2012, and CT Corp. received it on or before November 26, 2012. However, CT Corp. rejected the documents and in a November 26, 2012 letter to Arnold's counsel stated:

Our records indicate that we represent more than one entity beginning with the name: (Worldwide Clinical Trials, etc.). In order that we may properly process the enclosed documents(s) [SIC], we must be provided with the full name of the entity for which it is intended.

At the time, CT Corp. was registered with the Texas Secretary of State as agent for two Texas entities: Worldwide Clinical Trials Early Phase Services, LLC, the appellee in this case, and “Worldwide Clinical Trials Early Phase Services/Bioanalytical Services, Inc.”

On January 10, 2013, forty-six days after CT Corp.'s rejection letter, Arnold responded by advising CT Corp. that the proper party to be served is known as “Worldwide Clinical Trials, Inc.” Arnold's letter represents that: “[a]ccording to information from the Texas Secretary of State, CT Corporation is the registered agent of Worldwide Clinical Trials, Inc.” CT Corp. again rejected Arnold's attempt at service. This time, in a letter dated January 16, 2013, CT Corp. informed Arnold it was rejecting service because “Worldwide Clinical Trials, Inc.” had withdrawn from doing business in Texas on May 28, 2002, and that CT Corp. could therefore no longer accept service on its behalf. After this second rejection, Arnold sought service on February 27, 2013 through the Texas Secretary of State on “Worldwide Clinical Trials a/k/a WCT Corporation” at an address in Pennsylvania. The Texas Secretary of State verified that a return receipt from the Pennsylvania address was received on March 11, 2013.

WCT answered Arnold's lawsuit in its correct name, “Worldwide Clinical Trials Early Phase Services, LLC,” and shortly thereafter moved for summary judgment on the ground of untimely service. The trial court granted WCT's motion and found there was no issue of misidentification and Arnold did not exercise diligence in serving the proper defendant within the sixty-day statutory window or thereafter. Arnold then moved for a new trial and reconsideration, which was denied by the trial court. Arnold subsequently perfected this appeal.

Analysis

Arnold contends the trial court erred by granting WCT's motion for summary judgment on the ground of untimely service. We review the trial court's ruling on a motion for summary judgment de novo. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 156 (Tex.2004). We must take as true all evidence favorable to the nonmovant and indulge every reasonable inference and resolve any doubts in its favor. Id. at 157. Where, as here, the motion for summary judgment is based on the affirmative defense of limitations, the defendant has the burden to conclusively establish that defense, including the cause of action's accrual date. See Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex.2005).

Here, Arnold had sixty days to “bring a civil action” against WCT after she received her notice of the right to sue from the TWC. See Tex. Lab.Code Ann. § 21.254 (West 2011). Texas courts have interpreted this requirement to mean the plaintiff must both “file her action and have the defendant served with process.” Tarrant County v. Vandigriff, 71 S.W.3d 921, 924 (Tex.App.-Fort Worth 2002, pet. denied); Boyattia v. Hinojosa, 18 S.W .3d 729, 733 (Tex.App.-Dallas 2000, pet. denied). It is undisputed that: (1) Arnold's right to sue letter is dated October 16, 2012; (2) Arnold filed her petition on November 7, 2012; and (3) WCT's registered agent, CT Corp., received a copy of Arnold's petition within the statutory sixty-day period on November 26, 2012. However, the parties dispute whether Arnold's initial attempted service on CT Corp. was effective so that Arnold met the applicable sixty-day deadline.

Citing Rule 28 of the Texas Rules of Civil Procedure, Arnold contends her initial attempt to serve WCT through CT Corp. was effective service because she served WCT's registered agent using WCT's assumed name of “Worldwide Clinical Trials.”1 Rule 28 provides “[a]ny partnership, unincorporated association, private corporation, or individual doing business under an assumed name may sue or be sued in its ․ assumed or common name for the purpose of enforcing for or against it a substantive right.” Tex.R. Civ. P. 28. Under Rule 28, “[t]he proper party is sued when that party is sued in its assumed or common name.” Chilkewitz v. Hyson, 22 S.W.3d 825, 830 (Tex.1999). Accordingly, Arnold's action was timely filed against WCT when she filed her petition against WCT using its assumed name.

Furthermore, it is undisputed that CT Corp. is WCT's registered agent. Under Texas law, a registered agent “is an agent of the entity on whom may be served any process, notice, or demand required or permitted by law to be served on the entity.” Tex. Bus. Orgs.Code Ann. § 5.201(b)(1) (West 2012). Because the law permits WCT to be sued in its assumed name, CT Corp. could be served with process using WCT's assumed name, and the record reflects that service was effected on CT Corp., and thereby on WCT, on November 26, 2012, prior to the expiration of the limitations period. See PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 274 (Tex.2012) (“service effected on a registered agent within the scope of its agency is imputed to the litigant”). On that date, CT Corp. had the duty to receive or accept and forward the process or lawsuit to WCT. See Tex. Bus. Orgs.Code Ann. § 5.206(a)(1) (West 2012).

WCT argues that CT Corp. had no obligation to forward the process to WCT because CT Corp. was the registered agent for a second entity that used the same common name. The dilemma faced by CT Corp. does not, however, alter the applicable law. By contracting to act as the registered agent of WCT, CT Corp. became WCT's agent on whom Arnold was entitled to serve the lawsuit she filed against WCT in its assumed name. See Cummings v. HCA Health Servs. of Tex., Inc., 799 S.W.2d 403, 405 (Tex.App.-Houston [14th Dist.] 1990, no writ) (holding service on Hospital Corporation of America d/b/a Tidelands General Hospital was service on the assumed name and constituted service on HCA Health Services, Inc. d/b/a Tidelands General Hospital because CT Corporation System was the registered agent for both); see also Chilkewitz, 22 S.W.3d at 830 (holding suit filed naming “Morton Hyson, M.D.” as defendant was suit against Morton Hyson, M.D., P.A. which used Morton Hyson, M.D. as an assumed or common name and association was served through its only officer and director who did business under the same name); Northwest Sign Co. v. Jack H. Brown & Co., Inc., 680 S.W.2d 808, 808–09 (Tex.1984) (holding service on registered agent Jack H. Brown was service on Jack H. Brown & Company d/b/a Signgraphics even though Jack H. Brown was also the registered agent for Signgraphics, Inc.).

Conclusion

Because we hold service was effected on WCT's registered agent before the limitations period expired, we reverse the trial court's judgment and remand the cause to the trial court for further proceedings.

DISSENTING OPINION

As noted by the majority, Arnold contends her initial attempt to serve WCT through CT Corp. was effective service because she served WCT's registered agent using WCT's assumed name—“Worldwide Clinical Trials.” I agree Rule 28 of the Texas Rules of Civil Procedure allows Arnold to sue WCT in its assumed name. See Tex.R. Civ. P. 28. However, I do not agree with the majority's conclusion that Rule 28, by extension, imposes a duty on a registered agent to know its clients' assumed or common names or accept service in those names. See id. Accordingly, I respectfully dissent. Further, having also examined Arnold's second appellate issue and finding it without merit, I would affirm the trial court's judgment.

Rule 28

Rule 28 of the Texas Rules of Civil Procedure provides: “[a]ny partnership, unincorporated association, private corporation, or individual doing business under an assumed name may sue or be sued in its partnership, assumed or common name for the purpose of enforcing for or against it a substantive right.” Tex.R. Civ. P . 28 (emphasis added). However, Rule 28 is silent as to whether a registered agent has a duty to accept service for a represented entity under the entity's assumed or common name—or even know that name. Despite this silence, the majority concludes that “[b]ecause the law permits WCT to be sued in its assumed name, CT Corp. could be served with process using WCT's assumed name, and the record reflects that service was effected on CT Corp., and thereby on WCT, on November 26, 2012, prior to the expiration of the limitations period.” Majority Op. at _.

To support its conclusion, the majority cites to authority for the proposition that “service effected on a registered agent within the scope of its agency is imputed to the litigant.” See PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 274 (Tex.2012). The majority believes CT Corp. had a duty within the scope of its agency relationship with WCT to know and accept service for WCT under its common or assumed names. I disagree.

The Texas Business Organizations Code makes it clear the only duties of a registered agent are to:

(1) receive or accept, and forward to the represented entity at the address most recently provided to the registered agent by the represented entity, or otherwise notify the represented entity at that address regarding, any process, notice, or demand that is served on or received by the registered agent; and

(2) provide the notices required or permitted by law to be given to the represented entity to the address most recently provided to the registered agent by the represented entity.

Tex. Bus. Orgs.Code Ann. § 5.206(a)(1)-(2) (West 2013) (emphasis added). Nowhere in section 5.206 is the registered agent required to know the assumed or common names of its represented entities. See id. Despite Arnold's argument that “it seems reasonable for a registered agent to be required to contact its own represented parties to discern which, if any, of those entities use the assumed or common name indicated on the notice or citation,” such a duty is not apparent from the face of section 5.206.

When construing a statute, we presume every word excluded from a statute is excluded for a purpose. Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 636, 540 (Tex.1981); Hardy v. Matter, 350 S.W.3d 329, 335 (Tex.App.-San Antonio 2011, pet. dism'd). “Only when it is necessary to give effect to the clear legislative intent can we insert additional words or requirements into a statutory provision.” Cameron, 618 S.W.2d at 540 (emphasis added); see Laidlaw Waste Sys. (Dallas ), Inc. v. City of Wilmer, 904 S.W.2d 656, 659 (Tex.1995). The legislative intent as to the duties imposed on a registered agent is clear from the plain language of section 5.206—the legislature intended to impose only certain duties on a registered agent, and those duties do not include knowing the common or assumed names of represented entities or accepting service in a represented entity's common or assumed name. See Tex. Bus. Orgs.Code Ann. § 5.206(a). Because a registered agent does not have a statutory duty to know the assumed or common names of its represented entities, it likewise cannot have a duty to accept service attempted under those assumed names. See id. Therefore, the majority's conclusion that “CT. Corp. had the duty to receive or accept and forward the process or lawsuit to WCT” is unsupported as CT Corp. could not accept and forward process to WCT when it had no duty to know, and the record reflects in fact did not know, who Arnold was attempting to serve. See Majority Op. at _.

The consequences of the majority's decision create a troubling world for registered agents because it places a duty on registered agents to know each and every assumed name of their represented entities to avoid running afoul of the requirements of the agency relationship. Aside from the obvious burden of knowing each and every assumed or common name of their represented entities, a registered agent will also have to cope with the practical consequences of representing multiple entities with the same assumed or common name.

For instance, a plaintiff could, under Rule 28, name “Delta” as a defendant and attempt service on a registered agent that represents: Delta Airlines, Delta Faucets, Delta Dental, Delta College, Delta Marine, Delta Power Equipment, Delta Waterfowl Foundation, Delta Consolidated Industries, Delta Institute, or Delta Children. What mechanism exists to address this situation if, after doing its due diligence, the registered agent is unsure which “Delta” the plaintiff meant to sue? According to the majority, it would not be sufficient to advise the plaintiff that the agent represents one or more entities with that common name. What happens if a plaintiff is attempting to sue a single franchise of a larger corporation that allows thousands of individual operators to work under the same assumed name, e.g. McDonald's and one of its over 3,000 U.S. franchises?1 How is a registered agent that represents possibly hundreds or thousands of McDonald's franchises supposed to know which one the plaintiff meant by the assumed name of “McDonald's”? The answer is simple, the registered agent has no duty to know such things. See Tex. Bus. Orgs.Code Ann. § 5.206(a)(1)-(2). Accordingly, the registered agent cannot be expected to accept service under the assumed name of one of its represented entities. See Tex.R. Civ. P. 28.

I recognize the court has also cited other authority to support its holding. See Majority Op. at _. However, each of those cases is distinguishable. In neither Cummings, Chilkewitz, nor Northwest Sign Co. did the registered agent refuse service due to confusion with whom the plaintiff intended to sue using an assumed name. See Cummings, 799 S.W.2d at 407; Chilkewitz, 22 S.W.3d at 830; Nw. Sign Co., 680 S.W.2d at 809. Accordingly, none of these cases are relevant to the current facts surrounding Arnold's attempted service with CT Corp., and none of these cases address my concerns with the majority's holding. For the reasons set forth above, I would hold Arnold did not serve WCT in a timely manner.

Due Diligence

Because I disagree with the majority's conclusion with regard to service under Rule 28, I must consider whether Arnold diligently accomplished service on WCT after the limitations period expired. If so, the judgment should be reversed, albeit for a reason different than that relied upon by the majority.

In the event service is diligently accomplished after a limitations period has expired, the date of service relates back to the date of filing the suit. See Proulx v. Wells, 235 S.W.3d 213, 215 (Tex.2007). The plaintiff bears the burden of presenting evidence regarding the efforts that were made to serve the defendant and must explain every lapse in effort or period of delay. Id. at 216. This court assesses diligence by determining “whether the plaintiff acted as an ordinarily prudent person would have acted under the same or similar circumstance and was diligent up until the time the defendant was served.” Id. In order to make this factual determination, this court examines the time it took to secure service and the effort or lack thereof expended by the plaintiff in procuring service. See id. In some instances, a plaintiff's explanation of its efforts to serve the defendant may demonstrate a lack of due diligence as a matter of law, such as when one or more lapses between service efforts are patently unreasonable or unexplained. See id.

Here, it is undisputed that Arnold's sixty-day window to bring suit against WCT closed in mid-December 2012, and service through the Texas Secretary of State was accomplished in early March, 2013. After what I consider Arnold's first failed attempt at service on November 26, 2012, she made two other efforts at service: (1) she attempted to serve WCT's registered agent on January 10, 2013, and (2) she sent service through the Texas Secretary of State on February 27, 2013. Between service attempts, Arnold attests she attempted to discover WCT's correct legal name by searching: LexisNexis, the Texas Secretary of State's website, and WCT's own website. However, my review of the summary judgment evidence reveals Arnold's lapses between her efforts to serve WCT were patently unreasonable. Specifically, Arnold's attempt at service on January 10, 2013, was unreasonable; therefore, an unjustified lapse between service efforts exists in the over two month span of mid-December 2012 and February 27, 2013.

On January 10, 2013, Arnold informed CT Corp. that she specifically intended to serve a party known as “WORLDWIDE CLINICAL TRIALS, INC.” Arnold affirmed she had researched LexisNexis to determine the proper name of WCT for purposes of service. However, Arnold's own summary judgment evidence, consisting of a copy of a LexisNexis search of the corporate filings under the name “Worldwide Clinical Trial” in the state of Texas, reveals that the specific entity she wished to serve had a status listed as both “inactive” and “terminated.” I would hold it is patently unreasonable to attempt to serve an entity that one knows or should have known is “inactive” and “terminated” in the state of Texas. Accordingly, there is no summary judgment evidence to explain the two month lapse in Arnold's reasonable efforts at serving WCT between the limitations deadline of mid-December and February 27, 2013. Therefore, I would reject Arnold's argument and hold she did not meet her burden to show she diligently accomplished service on WCT after the expiration of the sixty-day window to bring a civil action against WCT under section 21.254. See Proulx, 235 S.W.3d at 215; See Tex. Lab.Code Ann. § 21.254.

Arnold, however, contends her efforts were analogous to those found diligent by the Sixth Court of Appeals in Sibley v. Kaiser Found. Health Plan of Texas. See 998 S.W.2d 399, 405–06 (Tex.App.-Texarkana 1999, no pet.). In Sibley, as here, the plaintiff made multiple attempts at personal service through a registered agent that were refused by the registered agent because it did not know to which version of the represented entity the documents should be provided. Id. at 405. Two months after attempted service failed, the plaintiff in Sibley received permission to utilize substituted service and completed service via that method. Id. at 406. After considering the efforts of the plaintiff, the Sixth Court of Appeals noted:

It is clear that Sibley took reasonable and timely steps to attempt to obtain service. It is equally clear that any confusion was caused by [the defendant's] use of multiple names for its various organizations and the apparent inability of its registered agent to provide information that would permit a party to pinpoint the actual name of its opponent. In such a situation, it would be unfair to penalize Sibley ․

Id. Sibley is distinguishable from the present case. Unlike Sibley, the record in this case reflects Arnold did not take reasonable steps to serve WCT through its registered agent. Specifically, as discussed above, Arnold undertook the patently unreasonable step of attempting to serve an entity she knew or should have known was both “inactive” and “terminated.”

Moreover, I disagree with a portion of the court's reasoning in Sibley. In that case, the court seemed to criticize and take into account “the apparent inability of [the] registered agent to provide information that would permit a party to pinpoint the actual name of its opponent.” Id. However, as discussed above, I would hold a registered agent has no duty to know the assumed or common names of its represented entities under a plain reading of section 5 .206, and I would acknowledge the statute likewise does not create a duty to provide an aspiring plaintiff information to facilitate service. See Tex. Bus. Orgs.Code Ann. § 5.206(a). Accordingly, I would decline to follow Sibley or reach a similar result regarding Arnold's diligence.

Conclusion

Because I believe the majority erred by interpreting Rule 28 in such a way as to impose new burdens on registered agents. Given the foregoing belief, I contend the majority's decision to hold Arnold's November 26, 2012 attempted service on WCT effective and timely was also erroneous. It follows that the majority should have addressed Arnold's second issue regarding due diligence and find it without merit. In sum, because I believe Arnold's attempted service was not effective and she did not exercise due diligence in serving WCT, I would overrule her issues and affirm the trial court's judgment.

FOOTNOTES

1.  The record contains evidence to establish that “Worldwide Clinical Trials” is a common or assumed name for WCT, and WCT does not dispute this fact. See Sixth RMA Partners, L.P. v. Sibley, 111 S.W.3d 46, 52 (Tex.2003) (noting whether entity uses an assumed name is a question of fact).

1.  Data re: McDonald's U.S. Franchising, http:// www.aboutmcdonalds .com/mcd/franchising/us—franchising.html (last visited Jul. 30, 2014).

Opinion by CATHERINE STONE, Chief Justice.

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