Peralta v. Heights Med. CTR., Inc., 485 U.S. 80 (1988)

Peralta v. Heights Medical Center, Inc.

No. 86-1430

Argued November 30, 1987
Decided February 24, 1988
485 U.S. 80

APPEAL FROM THE COURT OF APPEALS OF TEXAS,

FIRST DISTRICT

Syllabus

In 1982, a default judgment was entered against appellant in appellee medical center’s Texas state court suit to recover a sum allegedly due under appellant’s guarantee of a hospital debt incurred by one of his employees. The judgment was recorded, a writ of attachment was issued, and appellant’s real property was sold to satisfy the judgment. In 1984, appellant initiated a bill of review proceeding seeking, inter alia, to set aside the default judgment and void the sale, and alleging that, since the original service of process itself showed it was untimely made and, in fact, he had never been personally served, the judgment was void under Texas law. The court entered summary judgment for appellee on the ground that it must be shown in a bill of review proceeding that the complainant had a meritorious defense to the action in which the judgment was entered, which appellant conceded he did not have. In affirming, the State Court of Appeals rejected appellant’s contention that the meritorious defense requirement violated his due process rights under the Fourteenth Amendment to the Federal Constitution, declaring that the requirement was "not onerous." The State Supreme Court denied appellant’s application for a writ of error, noting "No Reversible Error."

Held: The holding below contravenes this Court’s precedents, under which a judgment entered without notice or service violates the Due Process Clause. See, e.g., Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306; Armstrong v. Manzo, 380 U.S. 545. The argument that appellant suffered no harm from the default judgment, since the same judgment would again be entered on retrial absent a meritorious defense, is untenable because, had he had notice of the suit, appellant might have impleaded the employee whose debt had been guaranteed, worked out a settlement, paid the debt, or sold the property himself rather than suffer its sale at a constable’s auction for allegedly much less than its true value. Nor is there any doubt that the entry of the judgment itself had substantial adverse consequences, since the judgment was entered on county records, became a lien on appellant’s property which impaired his ability to mortgage or alienate the property, and was the basis for issuance of the writ of execution under which the property was promptly sold, again without notice. The contention that appellant has other remedies to escape the consequences of an invalid judgment, and should be left to pursue those avenues, will not be considered here, since there is no indication that it was raised below. Pp. 84-87.

Reversed.

WHITE, J., delivered the opinion of the Court, in which all other Members joined, except KENNEDY, J., who took no part in the consideration or decision of the case.