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  • January 25, 2022

    Foreign Judgment Enforceable Against Wisconsin Couple Who Built Mexican Condo

    A judgment entered by a Mexican court against a Wisconsin couple who defaulted on a loan is enforceable in state court, the Wisconsin Supreme Court has ruled.

    Jeff M. Brown

    Drunk Driving

    Jan. 25, 2022 – A judgment entered by a Mexican court against a Wisconsin couple who defaulted on a loan is enforceable in state court, the Wisconsin Supreme Court has ruled.

    In Hennessy v. Wells Fargo Bank, N.A., 2022 WI 2, ___ Wis. 2d ___, ___ N.W.2d ___, the supreme court held that the Milwaukee County Circuit Court properly interpreted Mexican law and did not abuse its discretion in upholding the Mexican court judgment.

    A Condo in del Cabo

    Wells Fargo loaned Daniel and Jane Hennessy $7.5 million to build a condominium in San Jose del Cabo, Mexico. The Hennessys defaulted on the loan and Wells Fargo filed a foreclosure action in a Mexican district court in May 2012.

    Jeff M. Brown Jeff M. Brown is a legal writer for the State Bar of Wisconsin, Madison. He can be reached by email or by phone at (608) 250-6126.

    Wells Fargo claimed that under the loan agreements, the Hennessys owed them money. If the Hennesseys didn’t make the payments, Wells Fargo claimed, it was entitled to take the property as collateral.

    The district court issued a judgment for Wells Fargo in March 2014. In October 2014, a Mexican appellate court affirmed the district court’s decision in part and awarded a judgment in favor of Wells Fargo.

    The Hennesseys were ordered to pay Wells Fargo $7.5 million and unpaid interest, along with a delay fee, expenses, and commissions as required by the agreements. If the Hennesseys didn’t pay the loan amount and interest, the judgment required them to deliver the property to Wells Fargo.

    Circuit Court Rules For Bank

    The Hennesseys didn’t appeal the decision of the Mexican court of appeals. However, in November 2016 they filed a complaint in Milwaukee County Circuit Court.

    The Hennesseys claimed that the Wisconsin statute of limitation barred Wells Fargo from bringing a breach of contract action to redress their failure to pay the loan. Wells Fargo filed a counterclaim in May 2017, seeking to domesticate the Mexican judgment.

    Before the circuit court, the Hennesseys claimed that Mexican courts had only resolved in rem claims against them, not in personam claims. An in personam applies to a specific person, while an in rem claim applies to a specific item of property and, potentially, any person or persons linked to that property.

    Both parties provided testimony on that point from experts in Mexican law.

    In a written decision issued in October 2018, the circuit court ruled that the Mexican judgment was valid and could be enforced against the Hennesseys personally.

    In April 2019, the circuit court ruled that principles of comity required it to recognize the Mexican judgment. The Wisconsin Court of Appeals affirmed the circuit court’s decision.

    Question-of-Fact Standard

    In an opinion written by Chief Justice Annette Ziegler, the supreme court unanimously upheld the court of appeals.

    The first issue the court addressed was the Hennesseys’ argument that the court should change its standard for reviewing a foreign country’s law, from a question of fact to a question of law.

    The court declined to do so. There had been no change in the law sufficient to undo the rationale behind the question-of-fact standard of review for foreign laws, Chief Justice Ziegler wrote.

    “The justifications underlying the question-of-fact standard remain valid today. Countries use different languages, and have distinct legal systems, cultural values, and societal expectations, all of which influence legal interpretations and analysis.

    “As was true in centuries past, applying a wholly independent standard of review to a foreign country’s jurisprudence can create substantial difficulties for courts, and having a question of fact standard can relieve the pressure placed on the judicial system.”

    Even if a court had full access to the foreign law or laws at issue, language barriers and interpretation problems would make it difficult to implement a question of law standard, Ziegler explained.

    Moreover, the use of the question-of-fact standard by many courts had led to the creation of a body of settled law than had proved workable over decades, Chief Justice Ziegler wrote.

    Another factor that cut against the Hennesseys' argument was Wis. Stat. section 902.02(5). That statute, Ziegler explained, prohibits courts from taking judicial notice of a foreign country’s law, and judicial notice is linked to questions of law and de novo review.

    Interpretation of Mexican Law

    The supreme court was unwilling to reverse the circuit’s court ruling that the Mexican judgments included a resolution of in personam claims against the Hennesseys.

    “While the Hennesseys presented an expert with different views on Mexican law, the court cannot conclude that the circuit court’s decision to credit Wells Fargo and its expert ‘is against the great weight and clear preponderance of the evidence,’” Chief Justice Ziegler wrote.

    Any problems the Hennesseys had with the Mexican courts’ interpretation of Mexican law must be taken up with Mexican authorities, Chief Justice Ziegler explained.

    Principles of Comity

    The Hennesseys argued that the circuit court should not have domesticated the Mexican judgment because it didn’t specify the amount they owed Wells Fargo, and without such a specification the judgment wasn’t final.

    But the circuit court’s finding that the Mexican judgment was final was supported by the record, Chief Justice Ziegler explained.

    The Wells Fargo expert testified that the judgment was final; calculations by Wells Fargo as part of its efforts to collect interest, expenses and fees were mere procedures pursuant to a final judgment; and the judgment specified that the Hennesseys owed Wells Fargo $7.5 million and that the property was subject to forfeiture.

    Moreover, Chief Justice Ziegler wrote, the circuit court based its decision on principles of comity, under which courts as a matter of discretion give effect to judgments of other states and nations out of mutual respect.

    “This court cannot conclude that the circuit court erroneously exercised its discretion in domesticating the Mexican judgment. The circuit court accurately examined the facts, recognized the applicability of the comity doctrine, ‘use[d] a demonstrative rational process’ in applying the doctrine, and came to a reasonable conclusion.”

    Concurrence Focuses on Statute

    Justice Rebecca Dallet wrote a concurring opinion in which Justice Jill Karofsky and Justice Brian Hagedorn joined.

    The proper focus of the analysis, Justice Dallet wrote, was section Wis. Stat. 902.02(5). That subsection stands out from adjoining subsections, which authorize state courts to take judicial notice of Wisconsin county and municipal ordinances and rules; orders of state and federal agencies; and the common law and statutes of each state, territory and other U.S. jurisdiction.

    “Nowhere in Chapter 902 does the legislature provide for judicial notice of foreign countries’ laws,” Justice Dallet wrote. “This context leads to a single conclusion: Wisconsin courts cannot take judicial notice of a foreign countries’ laws; the parties must prove them as facts.”

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    WisBar Court Review, published by the State Bar of Wisconsin, includes summaries and analysis of decisions from the Wisconsin Supreme Court, the Wisconsin Court of Appeals, and the U.S. Court of Appeals for the Seventh Circuit, as well as other court developments. To contribute to this blog, contact Joe Forward.

    Disclaimer: Views presented in blog posts are those of the blog post authors, not necessarily those of the Section or the State Bar of Wisconsin. Due to the rapidly changing nature of law and our reliance on information provided by outside sources, the State Bar of Wisconsin makes no warranty or guarantee concerning the accuracy or completeness of this content.

    © 2023 State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53707-7158.

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