Southwest Livestock v. Ramon ( 2000 )

UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-51011
Summary Calendar
Southwest Livestock and Trucking Co., Inc.,
Darrel Hargrove; Mary Jane Hargrove,
Plaintiffs-Appellants,
versus
Reginaldo Ramon,
Defendant-Appellee.
Appeal from the United States District Court for the
Western District of Texas
(SA-94-CV-1082-OG)
September 14, 2000
Before JOLLY, JONES and BENAVIDES, Circuit Judges.
PER CURIAM:1
Plaintiff-Appellants Southwest Livestock & Trucking Co,
Inc. (“Southwest Livestock”), Darrel Hargrove, and Mary Jane
Hargrove (the “Hargroves”) sued Defendant-Appellee Reginaldo Ramon
(“Ramon”) alleging that Ramon committed usury in a loan transaction
with Southwest Livestock. The district court granted summary
judgment for Ramon, and Southwest Livestock appeals. We affirm.
1
Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
BACKGROUND
The facts of this case are stated fully in this Court’s
earlier decision in this case, Southwest Livestock and Trucking Co.
v. Ramon, 169 F.3d 317 (5th Cir. 1999) (“Southwest Livestock I”).
The essential facts are as follows:
The Hargroves are United States citizens and officers of
Southwest Livestock. Southwest Livestock is a Texas corporation.
Ramon is a citizen of Mexico.
Southwest Livestock borrowed over $400,000 from Ramon
between 1991 and 1994. This loan took the form of thirty-four
successive “pagares,” or Mexican promissory notes, payable to Ramon
with interest within thirty days. Each month, Southwest Livestock
paid the accrued interest and executed a new pagare to cover the
outstanding principal. Southwest Livestock repaid $120,000 of the
principal during this period, but also borrowed additional money
from Ramon. The interest on these pagares was approximately fifty
percent. The interest rates were illegal in Texas, but legal in
Mexico.
In October of 1994, Southwest Livestock defaulted on its
loan. Ramon obtained a default judgment from a court in Mexico on
the thirty-fourth pagare. The Mexican court awarded Ramon $680,000
and accrued interest.
Southwest Livestock filed suit in the United States
District Court, alleging that Ramon violated Texas usury laws.
2
Ramon asserted that the Mexican judgment barred Southwest
Livestock’s suit under principles of res judicata and collateral
estoppel. The district court initially refused to recognize the
Mexican judgment because of the state of Texas’s policy interest in
preventing usury. This Court reversed. See Southwest Livestock I,
169 F.3d at 323 (holding that Texas’s public policy did not justify
withholding recognition of the Mexican judgment). On remand, the
district court enforced the Mexican judgment and granted summary
judgment to Ramon. Southwest Livestock appeals.
STANDARD OF REVIEW
We review the district court’s grant of summary judgment
de novo. See Ginsberg 1985 Real Estate Partnership v. Cadle Co.,
39 F.3d 528, 531 (5th Cir. 1994). Summary judgment is proper if
"the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law." Fed.
R. Civ. P. 56(c).
DISCUSSION
Southwest Livestock concedes that the Mexican judgment
bars its claim on the thirty-fourth pagare. It contends, however,
that the judgment does not bar the company’s usury claims on the
preceding thirty-three pagares. Southwest Livestock considers each
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pagare a distinct transaction, and argues that Ramon committed
thirty-three separate acts of usury unrelated to the last pagare.
This Court looks to Texas law to determine the preclusive
effects of foreign judgments. See Success Motivation Inst. Of
Japan v. Success Motivation Inst., Inc., 966 F.2d 1007, 1010 (5th
Cir. 1992) (ruling that state res judicata rules applied to a
Japanese judgment). We must therefore determine whether Texas res
judicata rules would bar Southwest Livestock’s claims on the
preceding thirty-three pagares.
Res judicata precludes relitigation of claims that have
been finally adjudicated, or that arise out of the same subject
matter and that could have been litigated in the prior action. See
Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex. 1992)
(clarifying Texas res judicata law). A court will bar a claim if
there is (1) a prior final judgment on the merits by a court of
competent jurisdiction; (2) identity of parties or those in privity
with them; and (3) a second action based on the same claims as were
raised or could have been raised in the first action. See Amstadt
v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). Southwest
Livestock challenges only the third element of this test, arguing
that its barred claim on the final pagare is distinct from its
claims on the first thirty-three pagares.
Texas uses the transactional approach to res judicata to
distinguish claims. See Barr, 837 S.W.2d at 631. This approach
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“requires an analysis of the factual matters that make up the gist
of the complaint, without regard to the action.” Id. at 630. A
final judgment on an action extinguishes the right to bring suit
“on a transaction, or series of connected transactions, out of
which the action arose.” Id. at 631 (quoting Restatement of
Judgments § 24(1)). “The determination is to be made
pragmatically, ‘giving weight to such considerations as whether the
facts are related in time, space, origin, or motivation . . . .’”
Id. (quoting Restatement of Judgments § 24(2)).
In this case, all of the pagares are part of what is
substantively a single loan transaction. The pagares are a series
of connected transactions, involving largely the same principal.
Although the interest rate of the final pagare differed slightly
from the rate on the earlier pagares,2 Southwest Livestock’s claim
to recover excessive interest payments stems from the same factual
basis. We cannot agree that Southwest Livestock could pursue its
claims on each of the pagares individually, and that litigation and
judgment on one pagare would not affect litigation on the others.
The Mexican court awarded Ramon judgment on the final
pagare. This judgment encompassed principal that was the basis of
the earlier pagares. Ramon charged Southwest Livestock an interest
rate on the final pagare that would have been usurious in Texas, as
2
The first thirty-three pagares had an unstated interest rate of
approximately 52 percent. The final pagare stated an interest rate of 48
percent.
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he had throughout the loan period. If the Mexican judgment bars
suit on the final pagare, it bars suit on all the pagares.
Because res judicata bars Southwest Livestock’s claims on
all of the pagares, we need not address the company’s argument that
Texas law controls its usury claim. There is no genuine issue of
material fact, and summary judgment was appropriate.
AFFIRMED.
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