Opinion
No. 05-04-01511-CV
Opinion Filed January 3, 2006.
On Appeal from the 191st Judicial District Court, Dallas County, Texas, Trial Court Cause No. 04-04551-J.
Affirm.
Before Justices MORRIS, WRIGHT, and RICHTER.
MEMORANDUM OPINION
Don Navarro is the president of Don Navarro and Associates, L.C., a corporation with its principal place of business in Texas. Appellee San Remo Manufacturing, Inc., a Cayman corporation doing business in Wisconsin, filed suit against appellants in Wisconsin for breach of contract. Appellants contested the Wisconsin court's personal jurisdiction over them. After a hearing, the Wisconsin court found that there were sufficient contacts to satisfy a finding of personal jurisdiction over appellants.
The Wisconsin court then proceeded to the merits of the case and rendered judgment against appellants. San Remo filed an authenticated copy of the Wisconsin judgment, along with notice of its filing, with the district clerk of Dallas County for domestication under the Uniform Enforcement of Foreign Judgments Act. Appellants subsequently filed a Motion to Contest the Recognition of a Foreign Judgment/Motion for New Trial in the Texas court, asserting that San Remo obtained the Wisconsin judgment through fraud and that their objections to jurisdiction were not fully and fairly litigated in the Wisconsin court. According to appellants' motion, they discovered that San Remo did not have a certificate of authority to transact business in Wisconsin only after judgment was rendered. The record does not reflect that appellants contested the judgment in the Wisconsin appellate courts. After a hearing, the Texas court denied the motion. This, in effect, allowed the enforcement of the Wisconsin judgment. See Moncrief v. Harvey, 805 S.W.2d 20, 22 (Tex.App.-Dallas 1991, no writ)
On appeal, appellants challenge the trial court's denial of their motion. We affirm the trial court's order denying appellants' Motion to Contest the Recognition of a Foreign Judgment/Motion for New Trial
Standard of Review
A motion contesting enforcement of a foreign judgment operates as a motion for new trial. Mindis Metals, Inc. v. Oilfield Motor Control, Inc., 132 S.W.3d 477, 483 (Tex.App.-Houston [1st Dist.] 2004, pet. denied). Thus, we will review the denial of appellants' motion under an abuse of discretion standard. Id. at 485-86 (the trial court has broad discretion to grant a motion for new trial, and we may not disturb its ruling absent manifest abuse of discretion). The test for abuse of discretion is whether the trial court acted without reference to any guiding rules or principles, or whether under the circumstances of the case the trial court's actions were arbitrary or unreasonable. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985), cert. denied, 476 U.S. 2259 (1986).
Law: The Enforcement of a Foreign Judgment
Article IV, section 1 of the United States Constitution requires that each state give full faith and credit to the public acts, records, and judicial proceedings of every other state. U.S. Const. art. IV, § 1; Bard v. Charles R. Meyers Ins. Agency, Inc., 839 S.W.2d 791, 794 (Tex. 1992). A properly proven foreign judgment must be recognized and given effect coextensive with that to which it is entitled in the rendering state. Bard, 839 S.W.2d at 794. Texas has adopted the Uniform Enforcement of Foreign Judgments Act, which provides a procedure for enforcing a foreign judgment by merely filing an authenticated copy of it with the clerk of any court of competent jurisdiction of this state. See Tex. Civ. Prac. Rem. Code Ann. § 35.001et seq. (Vernon 1997) (the Act). Provided that the procedural requirements of the Act are followed, the clerk of the court in which the foreign judgment is filed must treat that judgment in the same manner as a judgment of that court. Tex. Civ. Prac. Rem. Code Ann. § 35.003 (b) (Vernon 1997). The filing of the foreign judgment partakes of the nature of both a plaintiff's original petition and a final judgment: the filing initiates the enforcement proceeding, but it also instantly creates a Texas judgment that is enforceable. Moncrief, 805 S.W.2d at 22. A filed foreign judgment has the same effect — and is subject to the same procedures, defenses, and proceedings for reopening, vacating, staying, enforcing, or satisfying a judgment-as a judgment of the court in which it is filed. Tex. Civ. Prac. Rem. Code Ann. § 35.003 (c) (Vernon 1997); Moncrief, 805 S.W.2d. at 22.
The party seeking to enforce a foreign judgment has the initial burden to present a judgment that appears on its face to be a final, valid, and subsisting judgment. Russo v. Dear, 105 S.W.2d 43, 46 (Tex.App.-Dallas 2003, no pet.). Thereafter, the defendant has the burden of collaterally attacking the judgment by establishing a recognized exception to the full faith and credit requirements, e.g., when a decree is interlocutory or subject to modification under the law of the rendering state, when the rendering state lacks jurisdiction, when the judgment was procured by fraud or is penal in nature, or when limitations has expired under Texas Civil Practice and Remedies Code section 16.066. Id. The presumption of the judgment's validity can only be overcome by clear and convincing evidence. Escalona v. Combs, 712 S.W.2d 822, 824 (Tex.App.-Houston [1st Dist.] 1986, no writ).
Here, by filing an authenticated copy of the Wisconsin judgment, San Remo presented a prima facie case for its enforcement in Texas. The burden then shifted to appellants to prove why it should not be given full faith and credit.
Issue One: Fraud
In their first issue, appellants contend that the Texas court erred in its denial of their motion because the foreign judgment was predicated upon San Remo's fraudulent implication that it could pursue the lawsuit in the Wisconsin court. We disagree.
The judgment of a sister state may be attacked collaterally for fraud when the defense of fraudulent procurement would be available in the state in which the judgment was rendered. Smith v. Young, 620 S.W.2d 656, 659 (Tex.Civ.App.-Dallas 1981, no writ). Wisconsin law allows a party to collaterally attack a judgment on the basis of actual or constructive fraud on the trial court. Boots v. Boots, 243 N.W.2d 225, 230 (Wis., 1976). Actual fraud arises from deception through misrepresentation or concealment of a material fact; constructive fraud arises from a rule of public policy or fiduciary duty. Id. When fraud in procuring the sister state's judgment is alleged, the averments and proof must be clear, specific, and definite, tending to establish the fraud. Rodgers v. Williamson, 482 S.W.2d 665, 668 (Tex.App.-Dallas 1972), rev'd on other grounds, 489 S.W.2d 558 (Tex. 1973). The sister state's judgment is entitled to the presumption of validity in the absence of clear and convincing proof to the contrary. Id.
Appellants claim that Wisconsin statutes prohibit a foreign corporation without a certificate of authority from transacting business in the state or from maintaining a proceeding in any court in the state. They argue that San Remo committed fraud by pleading that it did business in Wisconsin when it knew that it had not obtained a certificate of authority in compliance with Wisconsin law. According to appellants, this representation implied that San Remo had a certificate of authority, that it could therefore file suit in Wisconsin, and that the Wisconsin court could hear the case. Appellants claim that all of these implications were false, rendering the Wisconsin judgment invalid. San Remo does not dispute that it never had a certificate of authority, but it contends that it did not need one to do business or to file suit in Wisconsin.
Because appellants' claims of fraud were based on the prerequisite of the certificate of authority, the crux of appellants' first issue is whether a certificate was required before San Remo could file suit and the Wisconsin court could in turn exercise its jurisdiction in the underlying lawsuit. If the certificate was not required for San Remo to conduct its business in Wisconsin, it follows that San Remo's claim of doing business there did not necessarily imply that it had such a certificate.
Wisconsin law allows a foreign corporation to "transact business" in the state only after it obtains a certificate of authority. See Wis. Stat. Ann. § 180.1501(1). However, the definition of the term "transact business" is limited by statute. See Wis. Stat. Ann. § 180.1501(2) . For example, transacting business in interstate commerce is specifically listed as an activity that does not constitute transacting business in Wisconsin. See Wis. Stat. Ann. § 180.1501(2)(k). In such a case, the corporation would not be required to obtain a certificate. Furthermore, Wisconsin law requires a business to have a certificate of authority to maintain a proceeding in a Wisconsin court only if it is also required to have a certificate under § 180.1501. Wis. Stat. Ann. § 180.1501, § 180.1502.
The record shows that appellants failed to demonstrate to the Texas court that San Remo was required to possess a certificate under Wisconsin law. Without this evidence, there was no clear and convincing proof before the Texas court that San Remo made fraudulent implications to the Wisconsin court or concealed information regarding the certificate. See Rodgers, 482 S.W.2d at 668 . The Texas court was well within its discretion to find that appellants did not overcome the presumption of the validity of the Wisconsin court's judgment.
We overrule appellants' first issue.
Issue 2: Jurisdiction
Appellants argue that the Texas court erred in its denial of their motion because the issue of jurisdiction was not fully and fairly litigated by the Wisconsin court. We disagree.
A court in one state, when asked to give effect to the judgment of a court in another state, may inquire into the foreign court's jurisdiction to render judgment. Durfee v. Duke, 375 U.S. 106, 111 (1963). However, the scope of inquiry into a foreign court's jurisdiction is limited to whether the question of jurisdiction was fully and fairly litigated and finally decided by the court that rendered the original judgment. Id. The issue of jurisdiction is considered "fully and fairly litigated" when the one contesting jurisdiction has voluntarily appeared, presented his case, and has been fully heard. Id., citing Baldwin v. Iowa State Traveling Men's Assn., 283 U.S. 522, 525 (1931) . According to the Baldwin court, when the question of a court's jurisdiction has been fully and fairly litigated in the absence of fraud, that court's judgment should be given binding effect in another state without further litigation of the jurisdictional issue . Baldwin, 283 U.S. at 525-26.
First, appellants contend that the Wisconsin court's finding of sufficient minimum contacts to exercise personal jurisdiction over them was incorrect and that the Texas court erred in ignoring this. Here, the record demonstrates that appellants voluntarily appeared to contest the Wisconsin court's jurisdiction over them, that they presented their case, that the Wisconsin court heard appellants' challenge to jurisdiction, and that the court found that sufficient minimum contacts existed to justify its jurisdiction over appellants. There is no evidence that appellants sought any relief in the Wisconsin appellate courts from the trial court's ruling. And, appellants failed to present sufficient evidence of fraud. The Texas court heard no evidence that demonstrated that the Wisconsin court failed to fully and fairly litigate the issue of personal jurisdiction. It is well-established that if the issue of personal jurisdiction has been fully and fairly litigated in a foreign state, it cannot be raised again in a collateral attack in Texas. Russo, 105 S.W.3d at 47. Thus, the Texas court could not relitigate the issue of personal jurisdiction. See Roark v. Sweigart, 848 S.W.2d 387, 389 (Tex.App.-Amarillo 1993, no writ) (when appellant had voluntarily entered into the Pennsylvania court, unsuccessfully contested the issue of personal jurisdiction and then failed to contest the judgment in the Pennsylvania appellate process, he could not again contest the issue in the Texas courts).
Appellants also contend that the Texas court erred in ignoring evidence demonstrating that the fraudulent acts of San Remo rendered the Wisconsin court incompetent to consider the underlying suit . Again, appellants failed to present sufficient evidence that San Remo committed fraudulent acts. As a result, there was simply insufficient evidence before the Texas court to demonstrate that the Wisconsin court exercised jurisdiction over the suit when it was incompetent to do so.
Therefore, in denying appellants' motion contesting enforcement of the foreign judgment, the Texas court did not ignore evidence with respect to jurisdictional issues, as appellants claim. We overrule appellants' second issue.
Conclusion
Having overruled both of appellants' issues, we affirm the Texas trial court's denial of appellants' Motion to Contest the Recognition of a Foreign Judgment/Motion for New Trial, thereby allowing the enforcement of the Wisconsin court's judgment in Texas.