Court Opinion

ID: 3123979
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:46:30.371229+00
Date Added: 2024-06-11T10:22:08.596251
License: Public Domain

Opinion issued April 26, 2012

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-11-00636-CV
———————————
MARINA PRESLEY, Appellant
V.
N.V. MASUREEL VEREDELING, Appellee
 
 

On Appeal from the 133rd District Court
Harris
County, Texas
Trial
Court Cause No. 2006-46323
 
 

O P I N I O N
          Appellant,
Marina Presley, challenges the trial court’s judgment entered in favor of
appellee, N.V. Masureel Veredeling
(“Masureel”), in Masureel’s
suit against Presley for enforcement of a foreign judgment.   In two issues, Presley contends that the
trial court erred in recognizing a judgment entered in favor of Masureel by a court
located in Belgium.          
          We affirm.
Background
          Masureel
is a company in the business of “yarns and fabrics finishing” with production
facilities located in and around Korujtik,
Belgium.  Presley is President of Sudaglass Fiber Company, Inc. (“Sudaglass”).  On September 6, 2000, Presley, individually
and on behalf of Sudaglass, Presley’s business partner Graham Miller, and a
Masureel representative executed a joint venture agreement that provided that the
parties wished to incorporate, under the laws of Belgium, a joint venture
limited liability company for the purposes of representing and selling
“continuous filament fiber worldwide.” 
The joint venture agreement provided that it was to be “governed by, and
construed and interpreted in accordance with the laws of Belgium.”  The joint venture agreement further provided that
Any dispute between the
Parties hereto arising out or in relation with the Agreement shall be
exclusively and definitively settled in accordance with the rules of the
International Chamber of Commerce (ICC), by one arbitrator appointed in
accordance with these rules.  The place
of arbitration shall be Brussels, Belgium . . . .
 
Masureel, Presley, and Miller also
executed, on September 6, 2000, a loan agreement, which was attached as an
exhibit to the joint venture agreement. 
The loan agreement identified Masureel as the “[l]ender” and Presley and
Miller as the “[b]orrower.”  The loan agreement recited that, “[w]ithin the framework of the joint venture agreement” and
“subject to the terms and conditions of the present agreement,” Masureel would
lend to Presley and Graham $600,000 for specified purposes; the loaned amounts would
be reimbursed “on the earliest of either the moment at which” specified shares
in the joint venture were sold by Presley and Miller to Masureel “under the
terms of the [j]oint [v]enture
[a]greement, by means of set off, or December 31,
2000”; Presley and Miller were jointly and severally liable for the performance
of the obligations owed by the “[b]orrower”; and Masureel would be entitled to “immediate reimbursement” of
the loaned amounts if, among other things, the “financial situation” of
Sudaglass, Presley, or Miller was “modified to the extent that the ability of
one of them to reimburse the loan appears jeopardi[z]ed.”
 Under a section of the agreement
entitled “Law and Jurisdiction,” the loan agreement provided,
This agreement shall be
governed by and construed in accordance with Belgian law.  The courts of Kortrijk have non exclusive
jurisdiction for any dispute which may arise under or in connection with this
agreement. 
 
          On
October 30, 2000, Masureel, as lender, and Presley and Graham, as borrowers,
executed a second loan agreement, evidencing a second loan by Masureel to Presley
and Graham for an additional $51,466.32 that was to be used to “constitute” the
joint venture company.  Similar to the
first loan agreement, the second loan agreement recited that the loaned amounts
were to be reimbursed “on the earliest of either” the selling of specified
shares to Masureel “under the terms of the joint
venture agreement . . . , by means of set off, or December 31, 2000.” And Masureel would be entitled to “immediate reimbursement” of
the loaned amounts if the “financial situation” of Presley or Miller was
“modified to the extent that the ability of one of them to reimburse the loan
appears jeopardi[z]ed.”  The second loan agreement contained a “Law and
Jurisdiction” clause identical to the same clause in the first loan agreement,
which provided that the agreement was to be governed by and construed in
accordance with Belgium law and the courts of Kortrijk, Belgium had “non
exclusive jurisdiction for any dispute which may arise under or in connection with
this agreement.”  
          Masureel
funded the two loan agreements.  Although
the parties dispute the factual reasons for non-payment, Masureel was not
reimbursed for the loan amounts by December 31, 2000, which was the date by
which Masureel was entitled to reimbursement under the terms of both loan
agreements.  In 2001, Masureel filed a
lawsuit against Presley, Miller, and Sudaglass, in the
“Court of the First Instance of the District of Kortrijk (Belgium).”  In its lawsuit, Masureel sought as its damages
the amount of its loan payments for which it had not been reimbursed.  Masureel argued that
it was entitled to the repayment of its loans because the contractually-specified
date of December 31, 2000 had passed, Presley and Graham had not fulfilled
their obligations under the loan agreements, and the financial situation of
Presley and Graham had changed to the extent that their ability to reimburse
the loans had been jeopardized.[1] 
          In
the Belgium court proceedings, Presley challenged the Belgium court’s
jurisdiction by contending that the joint venture agreement and loan agreement
“constitute one whole.”  Presley asserted
that the arbitration clause in the joint venture agreement, which applied to disputes
“arising from or relating to” the joint venture agreement, controlled and
mandated that the parties’ entire dispute be submitted to arbitration.  Presley also sought a judgment dissolving the
joint venture agreement.  
          On
June 13, 2002, the Belgium court issued its judgment addressing all of the
arguments presented by the parties.  In
its judgment, the Belgium court stated,
Pursuant to section 1679 of
the Code of Civil Procedure, the judge to whom a dispute subject to arbitration
is submitted declares that he is not competent to take cognisance
of that dispute at the request of one party, unless there is no valid agreement
for arbitration with regard to that dispute or if this agreement has been
terminated.  The plea must be put forward
before any other plea or means of defence.
 
In this case, the plea was
put forward by Marina Presley, Graham Miller and Sudaglass Fiber Company Inc.
in their first pleadings of 22 November 2001 (“that the defendants, insofar as
necessary, contest the competence of the court of first instance in Kortrijk”).
 In these pleadings, no other pleas or
means of defence with regard to the merits of the
case were formulated.  Consequently, the
plea must be examined. 
 
Since both loan agreements
that are the basis of the main claim explicitly stipulate, in their articles 9,
that the courts of Kortrijk are not exclusively competent to settle any dispute
arising from or in connection with these agreements, whereas these loan
agreements were concluded within the framework of the Joint Venture agreement,
which in turn contains an ICC arbitration clause, the court is of the opinion that the parties indeed had the intention
to depart from the stipulations in the Joint Venture agreement, so that all
disputes relating to the loan agreements fall within the competence of the
ordinary courts (in this case: the courts of Kortrijk). The stipulation that
the courts of Kortrijk are “not exclusively” competent means that the plaintiff
has in any case the possibility to bring the dispute before
the courts in
Kortrijk.
 
The interpretation of
article 9 of both loan agreements by Marina Presley, Graham Miller and
Sudaglass Fiber Company Inc. cannot be accepted: it was indeed the intention of
the parties to have disputes relating to the execution of both loan agreements
settled “close to the place of residence of the loaner” (in this case: N.V. Masureel Veredeling), whereas disputes
relating to the execution of the Joint Venture agreement would be submitted to ICC
arbitration in Brussels. Nothing prevents contracting parties from making a
distinction between disputes that must “go to court” and disputes that must be
settled through arbitration.
 
Taking into account the
foregoing, the Court is competent to take cognizance of the main claim.  
 
(Emphasis added).
After rejecting Presley’s
jurisdictional argument, the Belgium court ruled that both loan agreements had
expired by their own terms and Masureel was
contractually entitled, as of December 31, 2000, to demand reimbursement of the
loan amounts.  Thus, the court ordered
Presley to pay Masureel the amount of its loans.  The Belgium court also concluded that it did
not have jurisdiction to entertain Presley’s claim for dissolution and breach
of the joint venture agreement.[2]      
          Presley appealed the Belgium court’s
judgment to the Court of Appeals of Ghent, which issued its opinion in March
2004.  In regard to the issue of
jurisdiction, the Belgium court of appeals stated that it agreed with the
reasoning of the Belgium trial court, and it noted that “the will of the
parties in those loan agreements in relation to the competency clause can be
described as very clear and does not require explanation.”  The court of appeals further stated,
The state judge, confronted
with a counterclaim on the  merits of an agreement
between the parties that have accepted an arbitration clause in that regard,
will have to split the claims submitted to him and can only pronounce judgement on the claim in principal.  The counterclaim may only be considered by the
arbitration judge(s).  This principle is
applicable in full when the principal and counterclaim are related and
consequently closely linked to each other so that it is desirable for them to
be considered and judged together, in order to avoid solutions that may be
irreconcilable (section 30 of the Judicial Code).
 
Deviation from that principle
may only be accepted in one exceptional case, i.e. indivisibility.  The unity of the proceeding hereby impedes
that the principal and counterclaims are considered by different court instances.
 In that case the state judge may
consider the entire dispute and leave the valid arbitration agreement without
effect. 
 
However there is only a case
of indivisibility in accordance with section 31 of the Judicial Code, when the joint
execution of the separate judgements arising from the
dispute would be materially impossible.
 
In view of the
aforementioned considerations, the first judge correctly pronounced himself
without legal jurisdiction to consider the counterclaim on the basis of the
arbitration clause stipulated in art. 30 of the ‘joint-venture’-agreement
concluded between the parties of 6 September 2000.
 
It is in no way adequate for
indivisibility that the principal and counterclaim are related and that it is
in any event correct, if no arbitration clause should exist, to consider these
together.  The joint execution of the judgement of the state judge and the ruling of the arbitration
institution must remain completely impossible, even if those two decisions
should be contradictory (Martens, K ‘De arbitrageovereenkomst:
nog steeds een probleemkind van de overheidsrechter,
note in CASS, 9 November 1995, Rec. Cass., 1996, 381–382).
 
However the appellants have
not shown such indivisibility.
 
The Belgium court of appeals also stated that it “completely”
agreed with the trial court and the trial court had no jurisdiction to consider
Presley’s counterclaim for breach of the joint venture agreement.
Masureel, in the underlying Harris
County district court, filed on July 26, 2006 its Original Petition for
Enforcement of Foreign Judgment.[3]  Masureel noted that
on June 13, 2002, the Belgium trial court had entered a final judgment in its
favor against Presley.  Masureel
requested that the clerk promptly provide notice “to the party against whom
recognition is sought.”[4]  The record reflects that Presley was served
on November 16, 2006.  On December 18,
2006, Presley filed her Motion for Nonrecognition of
Foreign Judgment[5]
in which she contended that the trial court should refuse to recognize the Belgium
trial court’s judgment against her on the ground that the parties had agreed to
arbitrate all disputes and she had been denied the opportunity to present a
defense in violation of due process.  
The trial court, recognizing the
Belgium trial court’s judgment, entered a judgment stating that the foreign judgment
is “enforceable in the same manner as a judgment from Texas or any sister
state.”
Recognition of Foreign Judgment
In her first and second issues,
Presley argues that the trial court erred in recognizing the Belgium trial court’s
judgment because it “was obtained in a derogation of the parties’ agreement to
arbitrate disputes” and the Belgium trial court failed to provide Presley a
fair trial.
Under the Uniform Foreign
Money–Judgments Recognition Act (the “Act”), a judgment creditor may seek
recognition of a foreign country judgment[6] in Texas by filing a final,
authenticated copy of the foreign country judgment in the judgment debtor’s
county of residence.  Sanchez v. Palau, 317 S.W.3d 780, 785 (Tex.
App.—Houston [1st Dist.] 2010, pet. denied) (citing Tex. Civ. Prac. & Rem. Code Ann.
§§ 36.0041–42 (Vernon 2008)).   The Act applies to a foreign country judgment that
“is final and conclusive and enforceable where rendered, even though an appeal
is pending or the judgment is subject to appeal.”  Tex.
Civ. Prac. & Rem. Code Ann. § 36.002(a)(1) (Vernon 2008).   The
Act further provides that when a qualifying foreign country judgment is filed
in accord with the Act, notice of the filing is given as provided by the Act, and
a foreign country judgment is not otherwise “refused recognition” under the
Act, then the judgment is “is conclusive between the parties to the extent that
it grants or denies recovery of a sum of money” and is “enforceable in the same
manner as a judgment of a sister state that is entitled to full faith and
credit.”  See id. § 36.004 (Vernon 2008). 

The Act sets forth the grounds for
“nonrecognition” of a foreign country judgment.   See
id. § 36.005 (Vernon 2008).  Relevant to the instant case, a foreign country
judgment is “not conclusive” if it “was rendered under a system that does not
provide impartial tribunals or procedures compatible with the requirements of
due process of law.”  See id. § 36.005(a)(1).  And a foreign country judgment “need not be
recognized” if “the proceeding in the foreign country court was contrary to an
agreement between the parties under which the dispute in question was to be
settled otherwise than by proceedings in that court.”  See id.
§ 36.005(b)(5). 
A party contesting recognition of a foreign country judgment may file
and serve a motion for nonrecognition no later than
the 30th day after the date of service of the notice of filing of judgment is
provided under the Act.  See id. § 36.0044(a) (Vernon 2008).  The party filing the motion for nonrecognition shall include with the motion all supporting
affidavits, briefs, and other documentation; the party opposing the motion must
file any response, including supporting affidavits, briefs, and other
documentation not later than the 20th day after the date of service on that
party of a copy of the motion for nonrecognition.  See id.
§ 36.0044(b), (c).  
The party seeking to avoid
recognition has the burden of proving a ground for nonrecognition
and, unless that party satisfies his burden of proof by establishing one or
more of the specific grounds for nonrecognition, the
court is required to recognize the foreign country judgment.  Courage Co. v. Chemshare Corp., 93 S.W.3d
323, 331 (Tex. App.—Houston [14th Dist.] 2002, no pet.).  By limiting the defenses available to a
judgment debtor, the Act creates standards for recognizing foreign country judgments
and prevents parties from relitigating issues that
were conclusively settled by courts of foreign countries, unless such issues
create an exception to recognition.  Beluga Chartering, B.V. v. Timber S.A., 294 S.W.3d 300, 304 (Tex.
App.—Houston [14th Dist.] 2009, no pet.); Dart v. Balaam, 953 S.W.2d 478, 480 (Tex. App.—Fort Worth
1997, no writ).  A trial court’s enforcement
of a foreign country judgment presents a question of law, and, thus, we review
de novo a trial court’s recognition of a foreign country judgment.  Sanchez,
317 S.W.3d at 785; Courage
Co., 93 S.W.3d at 331.
Presley first argues that because
the parties agreed to arbitrate any claims arising out of or relating to the
joint venture agreement, and because the joint venture agreement and the loan
agreements “constitute one agreement” and are “inextricably intertwined,”
Masureel obtained the Belgium court judgment “in violation of the parties’
agreement to arbitrate.”  See id. § 36.005(b)(5).
Initially, we note that Presley
does not dispute that the loan agreements, as well as the joint venture
agreement, specify that Belgium law is to be applied to the construction of the
agreements.  Moreover, Presley does not
cite, or discuss in any significant detail, Belgium law regarding the
interpretation of the dispute resolution, choice of law, and forum selection clauses
in the joint venture and loan agreements. 
Rather, Presley asserts that Masureel waived
any argument regarding the application of Belgium law by failing to provide
notice that it intended to raise an issue concerning the law of Belgium.   See
Tex. R. Evid.
203.  We disagree.  The record reveals that Masureel provided
notice that it was relying on the judgments issued by the Belgium trial and
appellate courts, and it furnished the trial court with complete copies of the Belgium
trial court and court of appeals’ judgments and English translations of these
judgments.   See id.  The judgments reflect that the Belgium courts
applied Belgium law in considering, and rejecting, Presley’s arguments that the
arbitration clause in the joint venture agreement should trump the choice of
law and forum selection clauses in the loan agreements.  Presley has not provided this Court with analysis
challenging the Belgium courts’ application of Belgium law.  See Autonation Direct.com, Inc. v. Thomas A. Moorehead, Inc., 278 S.W.3d 470, 472 (Tex. App.—Houston
[14th Dist.] 2009, no pet.) (stating that Texas courts will respect parties’
choice of law provision and will “apply the law the parties chose” to
substantive matters, including contract construction); see also El Pollo Loco, S.A. de C.V. v. El Pollo Loco, Inc., 344 F. Supp. 2d 986, 988 (S.D. Tex. 2004)
(citation omitted) (stating that “Texas choice of law principles give effect to
choice of law clauses if the law chosen by the parties has a reasonable
relationship with the parties and the chosen state, and the law of the chosen
state is not contrary to a fundamental policy of the state”); BDO Seidman v.
Miller, 949 S.W.2d 858, 860–61 (Tex. App.—Austin 1997, writ dism’d w.o.j.) (stating that court would apply law of forum specified in
parties’ choice of law provision to determine whether valid, enforceable arbitration
agreement existed).
Nevertheless, even if we were to
consider the merits of Presley’s arguments, which are based upon general
principles of Texas contract construction law rather than Belgium law, we would
conclude that the trial court did not err in denying Presley’s motion for nonrecognition.  In
support of her argument that the Belgium trial court’s judgment violated the
parties’ arbitration clause, Presley cites our sister court’s opinion in Courage. 
In Courage, the Fourteenth
Court of Appeals considered the proper construction of “plainly inconsistent” forum
selection and choice of law clauses that were included within two separate
agreements that were executed by the same parties seven months apart.  93 S.W.3d at 332–33.   In
analyzing the two conflicting agreements, the court noted that, under Texas
law, “when a second contract deals with the same subject matter as the first
contract made by the same parties, but does not specify whether or to what extent
it is intended to operate in discharge or substitution,” the contracts are to
be “interpreted together, and to the extent that they are inconsistent, the
later one prevails.”  Id. 
Because the court found that the agreements pertained to the same subject
matter and were “inextricably interwined,” the court
concluded that the parties intended for the subsequently-executed agreement “to
supersede and to control.”  Id. at 335.  Based upon these legal principles, and after
noting that the parties had failed to submit their disputes to arbitration in
accord with the clauses in the subsequently-executed agreement, the court affirmed
the trial court’s order refusing to recognize a foreign country judgment that
had been entered by a court outside the scope of the required arbitration
proceedings.  Id. at 336. 
Courage is substantively
distinguishable.  First, as noted above, Belgium,
rather than Texas, law applies to the substance of this dispute.  Second, although the joint venture agreement
and the loan agreements refer to each other, the loan agreements plainly
provide that any disputes arising under or in connection with the loan
agreements may be submitted to the courts of Kortrijk, Belgium.  By their express terms, the loan agreements
are significantly narrower than the joint venture agreement.  The only reasonable construction to apply to
these agreements is to recognize that the parties expressly elected to allow
disputes that arose from the loan agreements to be submitted to Belgium courts
rather than arbitration.  See Seagull Energy E & P, Inc. v. Eland
Energy, Inc., 207 S.W.3d 342, 345 (Tex. 2006) (stating that we must examine
and consider entire writing in effort to harmonize and to give effect to all
provisions of contract so that none will be rendered meaningless); Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132,
133–34 (Tex. 1994) (providing that specific provisions control over more
general ones).  Moreover, the second loan
agreement, which contains a choice of law and forum selection clause that is identical
to the first loan agreement, was executed after the joint venture
agreement.  See Courage, 93 S.W.3d at 332–33 (stating
that “to the extent” contracts clauses “are inconsistent, the later one
prevails”).  Accordingly, we hold
that the trial court did not err in recognizing the Belgium court’s judgment on
the ground that it was contrary to an arbitration agreement between the
parties.  See Tex. Civ. Prac. & Rem. Code Ann. § 36.005(b)(5).
Second, Presley argues that because
the Belgium trial court refused to hear her defenses that were based upon the
joint venture agreement, the Belgium court’s judgment was “fundamentally unfair
and incompatible with due process.” 
Presley asserts that Masureel’s breach of the
joint venture agreement “excused” or “offset” her breach of the loan agreements,
and she complains that the Belgium court’s disallowance of her defenses
resulted in a judgment rendered by “a system that does not provide impartial
tribunals or procedures compatible with the requirements of due process of law.”
See id. § 36.005(a)(1).
Recognition of a foreign country
judgment under the Act “does not require that the procedures used in the courts
of a foreign country be identical to those used in the courts of the United
States.”  The Society of Lloyds v. Webb, 156
F. Supp. 2d 632, 639–40 (N.D. Tex. 2001).  Rather, the Act requires only that the foreign
procedures are “compatible with the requirements of due process of law” and do
“not offend against basic fairness.” Id. at 640 (internal quotations and citations omitted).  To establish a prima facie case that
conclusive effect should be given to a foreign country judgment, courts have
explained that a party may demonstrate that “the rendering court had
jurisdiction over the person and subject matter, that there was timely notice
and an opportunity to present a defense, that no fraud was involved, that the
proceedings were according to a civilized jurisprudence are the same for both
favored and nonfavored systems.”  Id.
(citation omitted).
The record reflects that Presley
appeared in the Belgium court proceedings, and the Belgium courts considered
and addressed Presley’s arguments that the entire matter should be submitted to
arbitration pursuant to the joint venture agreement’s arbitration clause.  The record further reflects that the Belgium
courts ruled that Presley’s counterclaim for breach of the joint venture
agreement against Masureel should be pursued in arbitration.  Although Presley disputes the Belgium court’s
determination that Masureel’s request for
reimbursement under the loan agreements and the other disputes arising from the
joint venture agreement are not “indivisible,” we conclude that the record does
not support Presley’s assertions that the Belgium courts failed to provide her
with an impartial tribunal and the procedures used by the Belgium courts were “incompatible”
with due process of law.  Presley has not
cited any authority for the proposition that a ruling like that reached by the
Belgium courts under the circumstance here, in which Presley was directed to
pursue her affirmative claims in accord with an arbitration clause, renders the
foreign country’s procedures fundamentally unfair.[7]  In sum, we hold that the trial court did not
err in recognizing the Belgium court’s judgment on the ground that it was
rendered under a system that does not provide impartial tribunals or procedures
compatible with the requirements of due process of law.  See id.
§ 36.005(a)(1).
We overrule Presley’s first and
second issues.
Conclusion
          We affirm
the judgment of the trial court. 
 
 
                                                                    Terry Jennings
                                                                   Justice 
 
Panel
consists of Justices Jennings, Massengale, and Huddle.

[1]           Masureel
alleged that Presley and Graham appeared not to be the owners of the shares
that they had committed to pledge.

[2]           The Belgium court’s judgment indicates
that it continued proceedings in regard to the proper determination of interest
on the judgment.  

[3]           See
Tex. Civ. Prac.
& Rem. Code Ann. 36.001–.008 (Vernon 2008).
 

[4]
          See id. § 36.042(a), (b) (providing that at time foreign country
judgment is filed, party seeking recognition of judgment “shall file with the
clerk of the court an affidavit showing the name and last known post office
address of the judgment debtor and the judgment creditor” and “[t]he clerk
shall promptly mail notice of the filing of the foreign country judgment to the
party against whom recognition is sought at the address given and shall note
the mailing in the docket”).
 

[5]           See
id. § 36.005.
 

[6]
          A “foreign country judgment” is
defined as “a judgment of a foreign country granting or denying a sum of money
other than a judgment for: (A) taxes, a fine, or other penalty; or (B) support
in a matrimonial or family matter.”  See id. § 36.001(2).  There is no dispute that the judgment entered
by the Belgium court constitutes a foreign country judgment.

[7]           Presley has not responded to or
disputed Masureel’s assertion that she has not yet
pursued her affirmative claims in arbitration.