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Click here for the full text of this decision FACTS:In 1998, Tamarack Capital LLC and Tamarack Insurance LLC (Tamarack) sued Access Healthsource Inc. in Arizona state court for breach of a stock merger agreement. Access removed the case to federal court, and it added 1. a counterclaim against Tamarack and 2. misrepresentation cross-claims against Richard Ross (the owner of the Tamarack entities) and others. After a bench trial, the federal court in Arizona entered judgment against Access for about $1 million, and the 9th Circuit affirmed. Meanwhile, ten Access shareholders sued Ross and two others on fraud claims in El Paso County Court No. 7. It is undisputed that service was defective in many respects and that Ross never received citation. Nevertheless, the El Paso court granted a default judgment against him for $5 million actual and $5 million exemplary damages. The shareholders assigned this default judgment to Access, which thereafter assigned it to an entity named National Center for the Employment of the Disabled. The latter attempted to domesticate the default judgment in Arizona. Ross successfully persuaded the Arizona court to set it aside for lack of service. Ross also filed a bill of review in El Paso to set aside the default. The trial court dismissed his bill of review by summary judgment, but the Eighth Court of Appeals reversed, finding a fact issue whether Ross had pursued his legal remedies with diligence. At a bench trial on remand, the trial court found against Ross and again denied his bill of review. This time the court of appeals affirmed, on two grounds. HOLDING:Reversed, rendered in part and remanded in part. The court of appeals held Ross had not shown diligence in pursuing his legal remedies. Traditionally, a bill of review requires proof of three elements: a meritorious defense; that was not asserted due to fraud, accident, or wrongful act of an opponent or official mistake; unmixed with any fault or negligence by the movant. But in Caldwell v. Barnes, the court notes that it held that a defendant who is not served with process is entitled to a bill of review without a further showing, because the Constitution discharges the first element, and lack of service establishes the second and third. The court of appeals found Ross at fault because, though he learned of the February 29, 2000 default judgment by regular mail on April 12, 2000, he did not file an out-of-time motion for new trial in that case. If a post-judgment postcard giving notice of default triggers a duty to enter an appearance, service of process would become obsolete. Proper service is not a technicality so easily discarded. More important, “[a] party who becomes aware of the proceedings without proper service of process has no duty to participate in them.” Caldwell, 154 S.W.3d at 97 note 1. While diligence is required from properly served parties or those who have appeared, those not properly served have no duty to act, diligently or otherwise. Ross filed his bill of review well within the applicable four-year limitations period, and he proved that he had never been properly served. The Supreme Court holds that the court of appeals erred in requiring Ross to act diligently in a case in which he was never served. The court of appeals also affirmed on the basis that Ross did not have clean hands, citing his failure to appear at the trial of his bill of review after receiving a subpoena. But there is nothing in the record indicating the district court considered or tried lesser sanctions before denying his bill of review. While the range of sanctions available for nonappearance is quite broad, it generally does not include dismissing a party’s case as an initial step. The court of appeals also faulted Ross for failing to cooperate with post-judgment efforts to collect the “earlier default judgment C” in the case in which he was never properly served. A party has no duty to participate in proceedings absent proper service of process. Moreover, death penalty sanctions are inappropriate unless a party’s conduct “justifies a presumption that its claims or defenses lack merit,” Cire v. Cummings, 134 S.W.3d 835, 840 (Tex. 2004); refusing to appear in court without proper citation does not justify such a presumption. Finally, a bill of review is a separate proceeding from the underlying suit; the court of appeals did not explain why the trial court could sanction Ross in this proceeding for misconduct in another. The Supreme Court holds that the court of appeals erred in finding that a party never served can challenge a default judgment only if he first complies with it. The court reverses the court of appeals, renders judgment for Ross setting aside the default judgment and remands for trial on the merits of the underlying allegations. OPINION:Per curiam.

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