De Mexico v. Epsa

AGROBIOSOL DE MEXICO, S.A. DE C.V., Plaintiff and Respondent, v. AGRICOLA EPSA, S.A. DE C.V., Defendant and Appellant.

D076551

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

March 25, 2021

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. No. 37-2017-00026745-CU-MC-CTL)

APPEAL from a judgment of the Superior Court of San Diego County, Kenneth J. Medel, Judge. Affirmed.

Scudi & Ayers, Morgan J.C. Scudi, and J. Ray Ayers for Defendant and Appellant Agricola EPSA, S.A. de C.V.

Higgs Fletcher & Mack, John Morris, and Rachel Moffitt Garrard for Plaintiff and Respondent Agrobiosol de Mexico, S.A. de C.V.

Agrobiosol de Mexico, S.A. de C.V. (Agrobiosol), a Mexican corporation, initiated this action pursuant to California's Uniform Foreign-Country Money Judgments Recognition Act (Recognition Act), Code of Civil Procedure sections 1713 to 1725,¹ to recognize a judgment issued by a court of Mexico against Agricola EPSA, S.A. de C.V. (EPSA), a Mexican corporation, that included an award of interest at the rate of 5 percent per month. After the parties stipulated to recognition of the Mexican judgment, Agrobiosol filed a motion seeking a determination of the applicable interest rate under which interest would be deemed to have accrued on the judgment under Mexican law. The trial court ruled in favor of Agrobiosol and concluded the relevant foreign interest rate was the 5 percent per month rate set forth in the Mexican judgment. EPSA then moved to set aside the stipulation on the ground it had initiated a collateral attack on the judgment in a court of Mexico that had resulted in issuance of an order temporarily suspending enforcement of the judgment in Mexico. EPSA argued this development undermined the Mexican judgment's eligibility for recognition under the Recognition Act and supported setting aside the stipulation. The trial court denied EPSA's motion, finding EPSA had failed to offer a sufficient justification for waiting to pursue the collateral attack until after entering into the stipulation and receiving an adverse ruling on the relevant foreign interest rate, and entered judgment in the amounts sought by Agrobiosol. On appeal, EPSA challenges the court's rulings on the foreign interest rate motion and motion to withdraw from the stipulation. We affirm.

BACKGROUND

In July of 2013, Agrobiosol sold agricultural goods to EPSA, a grower of produce in Mexico.² The resulting debt was evidenced by a promissory note signed by Jose Gonzalo Espinoza Pablos (Espinoza), EPSA's sole officer anddirector, indebting EPSA in the principal amount of $7,406,619 Mexican pesos³ and calling for interest to accrue at the rate of 5 percent per month (i.e., 60 percent per year) in the event of default.

In August of 2013, Espinoza was terminated by EPSA's majority shareholder, Andrew and Williamson Sales Co. (A&W), a California corporation with offices in San Diego, after A&W determined Espinoza had mismanaged EPSA's finances and purportedly had embezzled funds from EPSA. EPSA was placed into administrative liquidation proceedings in Mexico in late 2013.

A. The Mexican Judgment

In October of 2013, Agrobiosol sued EPSA in the First District Court of Culiacan, Sinaloa, Mexico for nonpayment of the promissory note. On June 27, 2014, the district court entered judgment in favor of Agrobiosol in the principal amount of $7,406,619 Mexican pesos (the Mexican judgment). The Mexican judgment included an award of pre- and post-judgment interest at the promissory note default rate of 5 percent per month, with interest to accrue from the default date of September 18, 2013, "until the date when payment is carried out for such amount." EPSA appealed the judgment to an intermediate court of appeal; the appeal was denied on August 29, 2014. EPSA then sought review from Mexico's high court, which denied review on March 31, 2016.

B. Agrobiosol's Recognition Action

On July 21, 2017, Agrobiosol filed this action against EPSA in San Diego Superior Court seeking recognition of the Mexican judgment under the Recognition Act, alleging the judgment had become final, conclusive, andenforceable following denial of review by the Mexican high court.⁴ Agrobiosol alleged EPSA's finances had been managed from A&W's San Diego offices and indicated it sought to domesticate the Mexican judgment in California so it could later pursue enforcement of the judgment against A&W.⁵ Agrobiosol attached a copy of the Mexican judgment, together with a certified English translation, to the complaint. The Mexican judgment is itself a 21-page document that includes the district court's legal analysis as well as its award of relief.

EPSA responded to Agrobiosol's complaint with a motion asserting a variety of legal challenges that are not relevant to this appeal. This motion was denied on May 18, 2018.

C. The Stipulation

In December of 2018, counsel for Agrobiosol and EPSA entered into a written stipulation titled "Stipulation for Entry of Foreign Judgment and to Reserve Issue of Attorney's Fee, Costs, and Foreign Interest Rate by Noticed Motion." Because the stipulation is significant to this appeal, we set it forth in its entirety. It stated as follows:

"1. WHEREAS, Plaintiff, judgment creditor, [Agrobiosol], filed its complaint in this matter on July 21, 2017, seeking recognition of its foreign judgment pursuant to California Code of Civil Procedure § 1713, et seq. "2. WHEREAS, Defendant, judgment debtor, [EPSA], in response to the complaint, filed a Demurrer, Motion to Strike and Forum Non Conveniens Motion ('Motions'), which were heard and decided on May 18, 2018.

"3. WHEREAS, following oral argument and submission of all moving and opposition papers, and evidence submitted by the parties, the court denied all relief sought by Defendant in its motions.

"4. WHEREAS, the parties agree that the foreign (Mexican) judgment may be recognized and that a California judgment may be entered at this time as to the principal amount of the Mexican judgment, the parties disagree as to the applicable interest rate on the foreign judgment prior to recognition and entry of a California judgment; and whether attorney's fees/costs incurred in connection with the Mexican action may be added to the California judgment.

"5. In an effort to proceed as efficiently as possible for the benefit of the parties and the court, the parties enter into this stipulation.

"WHEREFORE, THE PARTIES STIPULATE AS FOLLOWS:

"A. The parties agree and stipulate that Plaintiff's foreign judgment filed and served as Exhibit A to Plaintiff's complaint in this matter, may be, and is to be recognized by the Court, as follows.

"B. A California judgment recognizing said foreign judgment is to be entered in favor of Plaintiff and against Defendant, in the principal amount of $7,406,619.00 Pesos, currency of Mexico ('Judgment Amount'); plus attorney's fees/costs, if any, in the amount determined by the court at [a] January 25, 2019 hearing.

"C. The post judgment interest rate on the ensuing California judgment is to be entered at the legal California rate of 10 percent per annumfrom the date of entry of the California judgment until satisfaction of judgment.

"D. The interest rate on the foreign judgment to apply prior to recognition and entry of the California judgment is to be determined by noticed motion, which motion date has been reserved by Plaintiff for January 25, 2019, at 10:30 a.m.

"E. The foreign judgment interest and attorney's fees/costs, if any, as decided by the Court on, or as soon as the matter may be heard, [sic] January 25, 2019, is to be added to the California judgment, nunc pro tunc, as of August 1, 2018, pursuant to this stipulation.

"F. The proposed California judgment is attached and submitted herewith by the parties, as Exhibit 1."⁶

D. Agrobiosol's Foreign Interest Motion

On December 28, 2018, pursuant to the stipulation, Agrobiosol filed a motion seeking a determination of the relevant rate at which interest should be deemed to have accumulated on the Mexican judgment (the foreign interest motion). Agrobiosol asserted that the parties had stipulated the Mexican judgment could be recognized, but had disagreed over the relevant foreign interest rate. It argued the governing legal interest rate under Mexican law was the 5 percent monthly rate awarded in the Mexican judgment itself, which, when applied to the principal debt of $7,406,619 Mexican pesos from the default date of September 17, 2013 through thestipulated end date of August 1, 2018, amounted to a total interest award of $21,659,794.85 Mexican pesos.⁷

EPSA opposed Agrobiosol's foreign interest motion on a number of grounds. EPSA disputed Agrobiosol's characterization of the stipulation and maintained the parties had only agreed to recognition of the judgment principal, not the award of interest. EPSA claimed Agrobiosol had thus failed to meet its burden to prove the interest award met the requirements for recognition. EPSA also argued that the interest award was not expressed as a sum certain as required by section 1715, subdivision (a)(1), and that it was subject to a further "ancillary proceeding" such that it was not final or enforceable as required by section 1715, subdivision (a)(2). EPSA additionally maintained that Agrobiosol was not entitled to prejudgment interest on the Mexican judgment, and it asked the court to refuse to recognize or to reduce the interest award on public policy grounds.

The trial court held a hearing on Agrobiosol's foreign interest motion on January 25, 2019. On January 29, 2019, the trial court issued a minute order granting Agrobiosol's motion. Noting the parties had stipulated it could...