The Dallas Fifth District Court of Appeals rejected a Mexican gold mining company’s third attempt to use a Texas state court to resolve a dispute that led to a $48.3 million judgment in Mexico City against a Canadian partner.
According to the Vancouver, British Columbia-based defendant/appellee, the Fifth District was handed a textbook example of forum shopping, where the opposing party tried to avoid a contractual obligation to resolve a dispute through arbitration in Denver, Colorado, by going to federal court in Colorado, and to courts in Mexico City and Texas.
The Dallas County 134th District Court heard DynaResource de Mexico and DynaResource v. Goldgroup Resources, the most recent incarnation of a dispute that has wound its way through two nations.
The district court ruled in favor of Goldgroup, denying the DynaResource parties personal jurisdiction. DynaResource appealed to the Fifth District.
But for the complex history that Justice Bonnie Lee Goldstein had to acknowledge, her 22-page opinion might have been reduced to a few pages.
“It is antithetical to our system of justice to be able to file a suit for recognition of a judgment when the purported judgment debtor has no ties to the state in which recognition is sought, either through assets to attach or seize by enforcement or personal jurisdiction over the judgment debtor,” Goldstein said for the court.
“DynaResource provides no facts in support of filing for recognition in Texas,” Goldstein said.
A Long and Winding Road
DynaResource Mexico entered into an agreement with Goldgroup in 2006 that provided Goldgroup the exclusive right and option to earn up to a 50% equity interest based on exploration and development of gold from property in Sinaloa, Mexico.
The relationship soured in 2012 and DynaResource sued Goldgroup in Texas, despite the fact that the agreement included an arbitration clause to handle disagreements before a Denver, Colorado-based arbitrator.
DynaResource’s complaint was that Goldgroup misrepresented its ownership in the property for the purpose of unlawfully raising money for its own benefit. Losses claimed were for misrepresentation and interruption of mining operations in 2013 and 2014.
Events over the next decade are summarized as follows:
- Goldgroup by special appearance told Texas the claims were subject to arbitration and DynaResource dismissed its first Texas suit.
- March 2014: Goldgroup initiated the Denver arbitration.
- DynaResource filed for declaratory and injunctive relief in U.S. District Court, District of Colorado, arguing the business agreement had terminated and resolution should take place in a Mexican court.
- September 2015: Colorado federal court ruled the agreement was not expired and its arbitration provision was still in effect.
- October 2015: After 10 months of litigation, a Mexico City court issued a default judgment in favor of DynaResource that included money damages of $48.3 million.
- Goldgroup, which had not appeared in the Mexico litigation, appealed on grounds it was not properly served. All appeals to date have failed.
- The Denver arbitrator ruled in Goldgroup’s favor, finding DynaResource “flagrantly and in bad faith breached their obligations … by seeking to enjoin this arbitration in the Mexico City litigation.”
- May 2019: The Colorado federal court issued final judgment on the arbitration award and in April 2021 the U.S. Court of Appeals for the Tenth Circuit confirmed the award and affirmed the judgment.
- August 2020: While the Tenth Circuit decision was pending, DynaResource tried to domesticate the Mexico judgment in Dallas County. The 134th District Court ruled it had no jurisdiction because there was no service of process to Goldgroup.
- DynaResource filed its third lawsuit in Texas, this time serving Goldgroup with process, but also asserting personal jurisdiction is not required for recognizing the foreign judgment.
Attorneys for DynaResource, Gerrit Pronske and Jason Kathman of Spencer Fane, lost at the trial court. On appeal, they argued that the Mexico judgment is final, conclusive and enforceable.
“Even the trial court below made a finding in its Findings of Fact that Mexican Judgment ‘is final, conclusive, and enforceable according to the law of Mexico.’ The best evidence of the enforceability of that judgment is that the courts in Mexico have actually enforced it by seizing and ordering the foreclosure of all of appellee’s shares of stock in DynaMexico in partial satisfaction of the Mexican Judgment,” Pronske and Kathman stated in their brief.
DynaResource argued that Goldgroup’s lack of service-of-process defense was extensively argued in Mexico and rejected.
The majority of the Fifth District opinion’s analysis dealt with Goldgroup’s right to special appearance, which DynaResource fought, and the extent to which the trial court went beyond what it should have done.
Goldgroup, as the party resisting recognition of a foreign-country judgment, had a statutory burden to establish a ground for nonrecognition exists, while simultaneously avoiding the adverse consequence of subjecting itself to this state’s jurisdiction, the Fifth District said.
The trial court clearly granted Goldgroup’s special appearance, but it simultaneously ruled on motions to dismiss, for recognition and for nonrecognition.
“Once it granted Goldgroup’s special appearance, the trial court lacked jurisdiction to proceed further with the underlying recognition proceeding,” the Fifth District concluded. “We therefore conclude the trial court erred in proceeding to rule on the merits of DynaResource’s claims.”
The Fifth District rendered a judgment dismissing for lack of jurisdiction DynaResource’s foreign judgment motion and Goldgroup’s motions to dismiss and for nonrecognition.
Jamil N. Alibhai of Munsch Hardt Kopf & Harr argued briefed the case for Goldgroup.
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