In The News

Irving-Based Mining Co. Can’t Recover $48M Mexican Judgment

May 9, 2023
The Texas Lawbook

A Dallas appellate court has dismissed an Irving-based mining company’s effort to uphold in the United States a $48 million foreign judgment against the company’s partner in a Mexican gold mine.

A three-judge panel of the Fifth District Court of Appeals on May 2 dismissed a 2020 request from the Irving Company, DynaResource Inc., for U.S. courts to recognize its 2015 judgment by a Mexican court against Goldgroup Resources Inc. of Vancouver, British Columbia.

In effect, the appellate court’s opinion continues a series of judicial findings that the value of that 2015 judgment in America is zilch.

The opinion follows a May 2021 ruling by Dallas County District Judge Dale B. Tillery dismissing DynaResource’s motion for recognition of the Mexican judgment. The appellate court said DynaResource had no business in the first place suing Goldgroup in Dallas County, since the Canadian company has no ties to Texas and conducts no business here.

Having thus ruled, the appellate court said, it need not further address issues raised at the trial level by either party.

A 2011 contract between DynaResource and Goldgroup, the appellate court noted, requires that disputes between the partners be resolved first through mediation then through binding arbitration in Denver.

No American court has recognized, or “domesticated,” DynaResource’s Mexican judgment. Until a court in some state does so, the judgment is unenforceable in that state — and, as a practical matter, anywhere else in the United States.

It was the latest setback for DynaResource in its 11-year litigation showdown with Goldgroup. The two mining concerns, through joint interest in a Mexican subsidiary of DynaResource, control the San Jose de Gracia Project, a gold-mining enterprise potentially covering 170,081 acres in Sinaloa, Mexico.

Since an acrimonious falling-out over governance of the mining operation, the partners have been at each other’s throats, filing suit upon suit, appeal upon appeal, in Mexico, Texas and Colorado.

Goldgroup is principally represented in the Texas litigation by Jamil N. Alibhai, a shareholder with Munsch Hardt Kopf & Harr in Dallas. DynaResource’s principal lawyer is Gerrit M. Pronske, a partner in the Plano office of Spencer Fane.

Neither responded immediately to requests for comment.

DynaResource and Goldgroup became gold-mining partners in 2011, when Goldgroup purchased a half interest in the San Jose de Gracia mine for $18 million. (More precisely, Goldgroup exercised an option to buy a 50 percent equity interest in DynaResource de México, the DynaResource subsidiary that owned 100 percent of the mining operation.)

According to Mexican authorities, the San Jose de Gracia district yielded more than 1 million ounces of gold in the early 1900s — and may yet hold even more.

The relationship between Goldgroup and DynaResource quickly unraveled.

From the start, Goldgroup said, it was excluded from important management decisions about expenditures and financial oversight. In 2013, Goldgroup contended, DynaResource deliberately diluted Goldgroup’s interest in the mine to 20 percent by issuing new shares without notifying its Canadian partners.

DynaResource, in turn, accused Goldgroup of publicly exaggerating its ownership interest in the mine, leaking confidential business information, threatening DynaResource managers in Mexico, “attempting to delay, stop, or otherwise impair” development of the gold mine and otherwise acting in ways that deprived the venture of potential profits.

By and large, these accusations found their way into a Mexico City lawsuit that DynaResource filed two days before Christmas 2014 in the Tribunal Superior de Justicia del Distrito Federal. On Oct. 5, 2015, the court ruled in DynaResource’s favor and awarded the company $48 million in damages.

Goldgroup’s position, then and now, was that the tribunal had no business issuing a judgment — not for $48 million and not for 48 cents — because DynaResource had no business seeking one, under the two concerns’ agreement to submit to mediation and arbitration in Denver.

Given the years of acrimonious wrangling between the two mining partners, it’s unlikely that the Dallas appellate court’s ruling will be the final word in the matter of the $48 million judgment.

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