Hennessy v. Wells Fargo Bank, N.A.

Decision Date14 January 2022
Docket NumberNo. 2019AP1206,2019AP1206
Citation2022 WI 2,400 Wis.2d 50,968 N.W.2d 684
Parties Daniel J. HENNESSY, Jr. and Jane E. Hennessy, Plaintiffs-Appellants-Petitioners, v. WELLS FARGO BANK, N.A., Defendant-Respondent.
CourtWisconsin Supreme Court

For the plaintiffs-appellants-petitioners, there were briefs filed by Daniel A. Manna, John Franke, Tamar B. Kelber, and Gass Weber Mullins LLC, Milwaukee. There was an oral argument by Daniel A. Manna.

For defendant-respondent, there was a brief filed by Nina G. Beck, Michael B. Apfeld, Daniel J. Blinka, and Godfery & Kahn, S.C., Milwaukee. There was an oral argument by Nina G. Beck.

ZIEGLER, C.J., delivered the majority opinion for a unanimous Court. DALLET, J., filed a concurring opinion, in which HAGEDORN and KAROFSKY, JJ., joined.

ANNETTE KINGSLAND ZIEGLER, C.J.

¶1 This is a review of a published decision of the court of appeals, Hennessy v. Wells Fargo Bank, N.A., 2020 WI App 64, 394 Wis. 2d 357, 950 N.W.2d 877, affirming an order of the Milwaukee County circuit court1 that domesticated a Mexican judgment in favor of Wells Fargo Bank, N.A., and against Daniel and Jane Hennessy.

¶2 The Hennessys argue that the circuit court incorrectly held that, under Mexican law, the foreign judgment was valid and personally enforceable against them. In the process, the Hennessys ask that this court alter the standard for reviewing issues of foreign law and consider such issues de novo as questions of law. In addition, the Hennessys claim that the circuit court should not have domesticated the Mexican judgment under principles of comity.

¶3 In Wisconsin, a foreign country's law must be proven before a circuit court as a question of fact. We reaffirm this principle and decline the Hennessys’ invitation to consider foreign law de novo. Upon a review of the record, the court cannot conclude that the circuit court's interpretation of Mexican law was clearly erroneous. Further, the circuit court did not erroneously exercise its discretion by choosing to recognize the Mexican judgment in Wisconsin. Thus, the court of appeals is affirmed, and Wells Fargo's judgment against the Hennessys was properly domesticated.

I. FACTUAL BACKGROUND AND PROCEDURAL POSTURE

¶4 The Hennessys took out a loan of $7.5 million owed to Wells Fargo to build a condominium in San Jose del Cabo, Mexico. As part of the transaction, the parties signed three separate agreements. They executed a construction loan agreement, a promissory note, and an addendum to the note. These documents are governed by Wisconsin law and are written in English. In addition, the parties entered into a trust agreement. The trust held the property underlying the transaction as collateral in case of the Hennessys’ default. Mexican law governs the trust agreement, which is written in Spanish.

¶5 The agreements are closely interlinked and reference each other. For instance, the loan agreement stated that the security is "granted ... under the Guaranteed Trust Agreement." The trust agreement, for its part, stated that the Hennessys must "comply with all obligations [they] assumed under the Loan Documents," and, in the case of default, the Hennessys were obligated to "immediately pay any and all amounts [they] owe[ ] under the Loan Documents."

¶6 The Hennessys defaulted under the agreements, and in May 2012, Wells Fargo initiated a foreclosure action in Mexico. Wells Fargo filed its lawsuit before the Eighth District Civil Court, a Mexican federal court located in Mexico City ("the Mexican district court"). Wells Fargo claimed it was entitled to payment for amounts owed under the transaction agreements and, if payments were not made, possession of the property as collateral. As an exhibit to the complaint, Wells Fargo attached the loan agreement, the note and its addendum, and the trust agreement.

¶7 In March 2014, the Mexican district court issued a judgment in favor of Wells Fargo ("the Mexican judgment"), and both parties appealed the decision. In October 2014, an appellate court, the Third Unitary Court of Mexico ("the Mexican appellate court"), affirmed in part the Mexican district court's decision and awarded a judgment in favor of Wells Fargo. The Mexican appellate court amended the judgment issued by the district court. It stated in relevant part:2

The plaintiff partially proved its claim, and the defendants did not prove their counterarguments; consequently, the defendants are sentenced to pay the plaintiff the principal amount of US$ 7,500,000.00 (seven million, five hundred thousand and 00/100 United States dollars, legal tender in the United States of America), in its equivalent in national currency (pesos) at the time that payment is made.
In addition, the defendants are sentenced to pay unpaid ordinary interest accrued both during and after the construction period, which may be quantified in enforcement of a judgment in accordance with what was stipulated in all of the loan documents admitted into court as evidence.
The defendant is informed that if it does not pay the foregoing amounts, it will be ordered to deliver to the plaintiff the property with which it guaranteed the promissory note in the loan agreement, so that the property can be auctioned off according to the terms of the chapter that applies to this matter. ... The defendants are sentenced to pay the claim identified in section (d) of the demand, consisting of payment of the delay fee and expenses and commissions caused, which may be quantified in enforcement of the judgment, in accordance with what was stipulated in all of the loan documents admitted into court as evidence.
... The defendants are sentenced in trial court to pay court costs.

¶8 No further appeal was taken in the case, and the Mexican judgment, as amended by the Mexican appellate court, was indisputably final and binding upon the parties. In the summer of 2017, the property was transferred from the Hennessys to Wells Fargo.

¶9 In November 2016, the Hennessys filed a complaint in the Milwaukee County circuit court. They sought a declaratory judgment that Wells Fargo was barred under the applicable statute of limitations from bringing a breach of contract claim under Wisconsin law based on the Hennessys’ failure to pay their loan obligations. In May 2017, Wells Fargo filed a counterclaim seeking domestication of the Mexican judgment. In August 2017, the circuit court granted summary judgment in favor of the Hennessys for their declaratory judgment claim. The circuit court held that any breach of contract action by Wells Fargo was time barred, but stated that the order did not affect Wells Fargo's action to enforce the Mexican judgment.

¶10 To resolve Wells Fargo's remaining request for domestication, the circuit court divided the proceedings into two phases. First, the circuit court heard arguments on the effect and meaning of the Mexican judgment under Mexican law. Second, the circuit court determined whether to recognize the Mexican judgment under principles of comity.

¶11 For the first phase of the proceedings, the Hennessys claimed that the Mexican order was not a valid judgment enforceable against them personally. Specifically, they claimed that the Mexican courts had resolved only in rem claims, and no in personam money judgment against the Hennessys had been entered.3

¶12 The circuit court received briefing from the parties, including hundreds of pages of exhibits on Mexican law. On June 11, 2018, and July 17, 2018, the circuit court held hearings at which the parties presented their arguments. In addition, experts testified on the substance and meaning of Mexican law. Wells Fargo presented Alejandro Osuna-Gonzalez, an attorney who taught law classes and practiced in Mexico. He testified that the Mexican judgment was final and enforceable against the Hennessys. In addition, Mr. Osuna explained that, under the Mexican judgment, Wells Fargo could seek monetary compensation for any difference between the value of the collateral and the amounts still owed to Wells Fargo. In response, the Hennessys presented the testimony of Georgina Fabian, an attorney who practiced commercial law in Mexico. Ms. Fabian stated that under Mexican law a creditor cannot combine an in rem and an in personam action. Thus, according to the Hennessys’ expert, because Wells Fargo pursued foreclosure proceedings in Mexico, a form of in rem relief, the Mexican judgment could not extend to the Hennessys personally for any money judgment or deficiency.

¶13 On October 16, 2018, the circuit court issued a written decision holding that the Mexican judgment was valid and could be enforced against the Hennessys personally. The circuit court reasoned that the Mexican judgment mandated that the Hennessys either pay the amounts owed to Wells Fargo or surrender the property as collateral. Under Mexican law, if the Hennessys failed to pay Wells Fargo, the bank could recover any deficiency remaining after the collateral was sold, and, by seeking a deficiency, Wells Fargo was enforcing the Mexican judgment. Thus, the circuit court credited Wells Fargo's expert and rejected the Hennessys’ argument that the Mexican judgment provided only in rem relief.

¶14 After issuing its October 2018 decision, the circuit court continued to the second phase of the proceedings and considered whether to domesticate the Mexican judgment. The circuit court again accepted briefing and exhibits, and on April 11, 2019, a hearing was held. At the hearing, the circuit court concluded, under principles of comity, that Wells Fargo was entitled to recognition of the Mexican judgment.

¶15 On May 20, 2019, the circuit court entered an order "recognizing" the Mexican judgment, and on June 20, 2019, the circuit court ordered the clerk of court to enter the judgment against the Hennessys. In the June 20 order, the circuit court stated that Wells Fargo was entitled to $7.5 million, "plus unpaid ordinary interest accrued both during and after the construction...

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3 cases
  • State v. Mulhern
    • United States
    • Wisconsin Supreme Court
    • June 21, 2022
    ...court when it was not legally supported by United States Supreme Court precedent upon which the decision was based), with Hennessy v. Wells Fargo Bank, 2022 WI 2, ¶32, 400 Wis. 2d 50, 968 N.W.2d 684 ("There is no indication that the prior decisions were wrongly decided, unsound in principle......
  • State v. Lee
    • United States
    • Wisconsin Supreme Court
    • May 24, 2022
    ...N.W.2d 63 (1967). Departing from that precedent would require a "special justification," which Lee does not offer. See Hennessy v. Wells Fargo Bank, N.A., 2022 WI 2, ¶27, 400 Wis. 2d 50, 968 N.W.2d 684. Instead, he argues that the circuit court's failure to hold a timely preliminary examina......
  • Jill v. Blinken
    • United States
    • U.S. District Court — Eastern District of Missouri
    • January 30, 2023
    ...reopen the merits of the case and consider whether foreign courts accurately applied their own law.” Henessy v. Wells Fargo Bank, N.A., 968 N.W.2d 684, 697 (Wis. 2022) (citing Hilton v. Guyot, 159 U.S. 113, 202 (1895)). A foreign judgment may not be collaterally attacked upon the mere asser......

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