Fifth Circuit affirms forum non conveniens dismissal of Texas lawsuit in favor of forum Mexico despite allegations of bribery and other unethical conduct in Mexico; all relevant acts occurred in Mexico and aspects of the matter have already been litigated in Mexico; the fact that the opposing party has already prevailed in part in Mexico proves that it is an adequate alternative forum
The following is a dispute between a Mexican banking corporation and a South Carolina company over the proceeds from the sale of textile manufacturing equipment. A Mexican textile manufacturer, Denimtex, S.A. de C.V., purchased $30 million worth of manufacturing equipment with bank loans, and began defaulting on the loans in 2000. BBVA Bancomer, S.A. (Bancomer) held a security interest in that equipment, and DTEX, LLC claims that it owned the equipment based on a foreclosure sale by the Mexican Government. This dispute has occupied Mexican and U.S. courts since 2002. In one of the Mexican actions, Bancomer claimed that the Mexican tribunal that conducted the sale of the equipment had done so in violation of Bancomer's rights.
The Mexican court dismissed that action, and subsequent appeals confirmed the result.
DTEX filed the present lawsuit in the Southern District of Texas, seeking damages for tortious interference with contract, intentional interference with prospective contractual relations, and conversion. There was jurisdiction over Bancomer in Texas because it has a foreign bank agency in Houston, Texas. The district court dismissed DTEX's lawsuit based on forum non conveniens, suggesting that the matter proceed in Mexico. This appeal ensued.
The U.S. Court of Appeals for the Fifth Circuit affirms the district court because there was no abuse of discretion. In fact, the Court fully agrees with the district court's opinion and adopts its Memorandum and Order by reference as the opinion of the Court.
The district court has broad discretion in determining forum non conveniens, and such finding may be reversed only if there is a clear abuse of discretion. The applicable standard is:
"The defendants bear the burden of proof on all elements of the forum non conveniens analysis. ..."
"The "private interest' factors include: "(I) the relative ease of access to sources of proof; (ii) availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; (iii) possibility of view of [the] premises, if view would be appropriate to the action; (iv) all other practical problems that make trial of a case easy, expeditious and inexpensive . . . enforceability of judgment [; and whether] the plaintiff [has sought to] "vex,' "harass,' or "oppress' the defendant. [...]"
"The "public interest' factors include:"
"(I) the administrative difficulties flowing from court congestion; (ii) the local interest in having localized controversies resolved at home; (iii) the interest in having a the trial of a diversity case in a forum that is familiar with the law that must govern the action; (iv) the avoidance of unnecessary problems in conflicts of law, or in application of foreign law; and (v) the unfairness of burdening citizens in an unrelated forum with jury duty."
"The defendant carries the burden of persuading the court that a lawsuit should be dismissed on forum non conveniens grounds. ... Ordinarily a strong favorable presumption is applied to the plaintiff's choice of forum. "[U]nless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed.' Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)." [Slip op. 10 11]
The district court then applied the factors to the case at bar. As for the adequacy and availability of the foreign forum, both parties presented experts on Mexican law. Even though Mexican law may limit some of the damages that DTEX is claiming for the alleged tortious conduct, it does recognize DTEX's claims. In fact, DTEX has prevailed against Bancomer in one of the Mexican cases and collected 39 million Mexican pesos.
As for the ease of access to sources of proof, DTEX's witnesses are primarily in Mexico. Most of the alleged events occurred in Mexico. The evidence includes Mexican court transcripts, Mexican police records, the impoundment of the equipment by Mexican authorities, and DTEX's attorneys' fees incurred in Mexico. Most of these documents are in Spanish and translations would be expensive and time consuming. Thus, the relative ease of access to evidence favors Mexico.
As for the availability of compulsory process for unwilling witnesses, many of DTEX's non party witnesses are Mexican, including the judicial administrator of the equipment impoundment, Mexican judges, Mexican police officers, and other Mexican court officials. The district court cannot compel the attendance by any unwilling non party witness located in Mexico. This factor favors dismissal based on forum non conveniens.
As for the cost of securing attendance of willing witnesses, since virtually all witnesses are Mexican, this factor favors dismissal.
As to other factors that facilitate the proceeding, DTEX refers to Bancomer's alleged undue influence on Mexican government officials and other unethical actions. Furthermore, DTEX claims that litigating in Spanish is a hardship. The district court notes that DTEX purchased the equipment at issue in Mexico at an auction sponsored by the Mexican Government, and has already litigated aspects of this case in Mexico.
As for the public interest factor of administrative difficulties, all of the above mentioned factors indicate that administrative difficulties would be greatly reduced in Mexico.
As for interest of the forum in resolving the controversy, all alleged torts occurred in Mexico. Clearly, Mexican courts have a greater interest that U.S. courts in deciding whether the Mexican court system has been abused after an impoundment by the Mexican Government. DTEX's only connection to Texas in this instance is this lawsuit.
As to the governing law, it is likely that Mexican law will apply to at least part of the controversy. Texas follows the "most significant relationship test" pursuant to the Restatement (Second) of Conflict of Laws Section 6 and Section 145. The relevant contacts include the place where the injury occurred, the domicile of the parties, and the place where the relationship of the parties is centered. All of these contacts favor Mexico.
Finally, as to the burden on the citizens, Texas should not be burdened with the Mexico centered lawsuit.
In sum, Mexico is an adequate and available forum, and both private and public interest factors strongly support dismissal based on forum non conveniens.
Citation: DTEX, LLC v. BBVA Bancomer, S.A., No. 07 20364 (5th Cir. November 21, 2007).
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