Reading & Bates Const. Co. v. Baker Energy Resources Corp.

• Decision Date: 05 February 1998
• Docket Number: No. 01-95-01526-CV,01-95-01526-CV
• Parties: READING & BATES CONSTRUCTION CO. and Reading & Bates Horizontal Drilling LTD., Appellants, v. BAKER ENERGY RESOURCES CORPORATION, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 702

976 S.W.2d 702

READING & BATES CONSTRUCTION CO. and Reading & Bates

Horizontal Drilling LTD., Appellants, v. BAKER ENERGY RESOURCES CORPORATION, Appellee.

No. 01-95-01526-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Feb. 5, 1998.

Rehearing Overruled March 30, 1998.

Chris E. Ryman, Glen A. Nordt, Houston, Leonard Rose, Kansas City, KS, for appellants.

Richard A. Schwartz, Phillip Weigand Bechter, Houston, for appellee.

Before HEDGES, BASS ^* and HUTSON-DUNN, ^** JJ.

OPINION

HEDGES, Justice.

We are asked to decide two issues. First, did the district court err when it denied recognition to and enforcement of a Canadian judgment on "public policy" and "reciprocity" grounds under the Uniform Foreign Country Money-Judgment Recognition Act (UFCMJRA)? ¹ Second, did the district court err when it refused to give full faith and credit through the Uniform Enforcement of Foreign Judgments Act (UEFJA) ² to a Louisiana judgment that recognized the same Canadian judgment? We reverse.

BACKGROUND TO THIS APPEAL

The Canadian Judgment

In 1983, appellant Reading & Bates Construction Co., ³ and appellee, Baker Energy Resources Corporation (Baker Energy), both American companies, submitted competitive bids to Gaz Inter-Cite Inc., a Quebec company, to lay a natural gas pipeline across and under the St. Lawrence River. As the low bidder, Baker Energy was awarded the contract.

After Baker Energy started the work, but before the project was completed, Reading & Bates sued Gaz and Baker Energy, alleging that the processes and techniques used by Baker Energy infringed two Canadian patents held by Reading & Bates Construction Co. or its wholly-owned Canadian subsidiary, Reading & Bates Horizontal Drilling Ltd. In March 1986, the trial court (the Federal Court of Canada, Ottawa, Ontario) declared one of the Canadian patents valid and found that Baker Energy had infringed it. On July 6, 1992, the Federal Court of Canada, Ottawa, Ontario, entered a judgment reciting that "[Baker Energy] earned profits of $2,934,205 (Canadian) in the installation of a pipeline under the St. Lawrence River" (emphasis added), and ordered Baker Energy to pay Reading & Bates $2,934,205 (Canadian) ⁴ plus interest as specified (the Canadian judgment). The Canadian judgment became final when the Supreme Court of Canada denied Baker Energy's application for leave on June 1, 1995.

The Louisiana Judgment

In November 1992, Reading & Bates filed a petition in Louisiana to make the Canadian judgment "executory." The Louisiana Civil District Court for the Parish of Orleans entered the requested judgment on December 1, 1992 (the Louisiana judgment).

The Texas Judgment

On December 11, 1992, Reading & Bates filed the Canadian judgment for recognition under the UFCMJRA ⁵ in the 334th District Court of Harris County, Texas. Baker Energy timely filed a motion for nonrecognition of the Canadian judgment. ⁶ It urged two reasons why the Canadian judgment should not be recognized: (1) the Canadian judgment awarded Reading & Bates damages that violated the public policy of the United States, ⁷ and (2) Texas courts require reciprocity with the rendering jurisdiction, which it alleged Canada did not offer. ⁸

On April 22, 1993, Reading & Bates sought to enforce the Louisiana judgment in Texas by filing it in accordance with the UEFJA. ⁹ Baker Energy filed its "Response in Opposition to Plaintiffs' Notice and Affidavit of Filing Foreign (Louisiana) Judgment and Motion for Nonrecognition and Nonenforceability of Louisiana Judgment." In that pleading, it complained that the Louisiana judgment was invalid, unconstitutional, and not entitled to full faith and credit; that Reading & Bates was improperly attempting to evade the hurdles precluding recognition of the Canadian judgment; and that Reading & Bates had breached their settlement agreement with Baker Energy by which Baker Energy had agreed to forego appellate review of the Louisiana judgment.

On January 6, 1994, the district court signed an order granting Baker Energy's motion for nonrecognition of the Louisiana judgment without specifying any reasons. On August 11 and 23, 1995, the district court signed orders granting Baker Energy's motion for nonrecognition of the Canadian judgment and denying recognition to and enforcement of the Canadian judgment (the Texas judgment). ¹⁰ The trial court explained the reasons for its ruling I believe that this lawsuit fails under the reciprocity leg of the Uniform Enforcement of Foreign Judgments Act which is a provision that was specifically put into our act by the Texas State Legislature. The reason I believe that is because based on my reading of Canadian law it appears to me that Canada will not recognize a judgment wherein the measure of damages in the American court was not recognized by it....

The trial court explained that it had refused recognition of the Louisiana judgment because it regarded the request as a "back door" attempt to domesticate the Canadian judgment.

IS THE CANADIAN JUDGMENT ENTITLED TO RECOGNITION IN TEXAS?

In point of error three, Reading & Bates asserts that the district court erred in refusing to recognize the Canadian judgment.

When recognition is not contested or a contest is overruled, a foreign country judgment is conclusive between the parties to the extent that it grants recovery or denial of a sum of money. It is enforceable in the same manner as a judgment of a sister state entitled to full faith and credit. ¹¹ The UFCMJRA governs the recognition and enforcement of foreign country money judgments. Don Docksteader Motors, Ltd. v. Patal Enters., Ltd., 794 S.W.2d 760, 760 (Tex.1990).

Texas will recognize a foreign country judgment under the UFCMJRA if four conditions are met:

(1) The judgment is final and conclusive and enforceable where rendered.

(2) An authenticated copy of the judgment is filed in the office of the clerk of a court in the county of residence (or in any other court of competent jurisdiction allowed under the Texas venue laws) of the party against whom recognition is sought.

(3) Notice of the filing of the judgment is given to the party against whom recognition is sought.

(4) There are no grounds because of which the judgment should be refused recognition under TEX. CIV. PRAC. & REM.CODE ANN. § 36.005 (Vernon 1997).

TEX. CIV. PRAC. & REM.CODE ANN. §§ 36.002, 36.004, 36.0041 (Vernon 1997).

There is no dispute that conditions one through three were met. The only issue is whether the district court erred when it found grounds to deny recognition to the Canadian judgment.

The UFCMJRA specifies seven grounds under which a foreign country judgment "need not be recognized." ¹² Baker Energy asserted two of those grounds in support of its argument that the Canadian judgment should be denied recognition by the district court:

(b) A foreign country judgment need not be recognized if:

....

(3) the cause of action on which the judgment is based is repugnant to the public policy of this state;

....

(7) it is established that the foreign country in which the judgment was rendered does not recognize judgments rendered in this state that, but for the fact that they are rendered in this state, conform to the definition of "foreign country judgment."

TEX. CIV. PRAC. & REM.CODE ANN. § 36.005(b)(3), (7) (Vernon 1997). Subsection (b)(3) is referred to as the "public policy" ground, and subsection (b)(7) is referred to as the "reciprocity" ground.

The Parties' Arguments

Reading & Bates has framed this point of error as one of (1) sufficiency of the evidence ¹³ to support the orders denying recognition to the Canadian judgment, "and/or" (2) a question of law. ¹⁴

Baker Energy responds that the issue is purely one of fact: the trial court had to decide the factual question whether Canada would recognize a similar judgment from Texas. According to Baker Energy, the parties introduced evidence to the trial court in the form of conflicting affidavits from their respective experts, both Canadian law professors; the trial court disbelieved Reading & Bates' expert's opinion and believed Baker Energy's expert. Therefore, the trial court's ruling was not an abuse of discretion because it had sufficient evidence to rule as it did. Baker Energy states that because "reciprocity" is a question of fact, the trial court did not make a determination of foreign law under TEX.R. CIV. EVID. 203, but rather a factual determination that reciprocity was not present.

Rule 203

Rule 203 of the Texas Rules of Civil Evidence facilitates a trial court's determination of a particular law of a foreign country. Although it is contained within the article designated, "Judicial Notice," the rule itself does not refer to judicial notice. See Lawrenson v. Global Marine, Inc., 869 S.W.2d 519, 525 (Tex.App.--Texarkana 1993, writ denied). It sets forth the procedural mechanism for raising an issue concerning the law of a foreign country, for giving notice to the other parties, and for furnishing materials concerning the foreign law. It provides the substantive foundation on which a trial court determines foreign country law:

The court, in determining the law of a foreign nation, may consider any material or source, whether or not submitted by a party or admissible under the rules of evidence, including but not limited to affidavits, testimony, briefs, and treatises. If the court considers sources other than those submitted by a party, it shall give all parties notice and a reasonable opportunity to comment on the sources and to submit further materials for review by the court. The court, and not a jury, shall determine the laws of foreign countries. The court's determination shall be subject to review as a ruling on a question of law.

TEX.R. CIV. EVID. 203 (emphasis added). Rule 203 derives from FED.R.CIV.P. 44.1, not from the Federal Rules of Evidence. See Murl A. Larkin & Cathleen C. Herasimchuk, Texas Rules of Evidence: Rules and Commentary, Article II: ...