Texas Court Gives Foreign Judgment Broad Res Judicata Effect
October 28, 2025
Gottwald v. Dominguez de Cano is a not a case that most readers would normally hear of. It is a Texas Court of Appeals decision giving res judicata effect to a Mexican judgment to bar a claim in state court to recover money paid in a Mexican land sale more than a decade ago. But the case raises an interesting legal question: should a U.S. court give a foreign judgment greater preclusive effect than the rendering court would give it?
Section 487 of the Restatement (Fourth) of Foreign Relations Law says no: “A foreign judgment will not be given greater preclusive effect in the United States than the judgment would be accorded in the state of origin.” But the Texas Court of Appeals said yes, holding that the Mexican judgment was entitled to res judicata effect under Texas law despite the apparent agreement of the parties’ experts that Mexican law would not give it such effect.
A Land Sale in Mexico
Juan Alvarez Gottwald is the administrator and representative of Axiom, S.A. de C.V., a Mexican corporation. In 2008, Axiom agreed to buy undeveloped property in Juarez, Mexico, from members of the Delgado family. The contracts provided that Axiom would pay an additional $2 million if the Delgados secured government permits for utilities by a certain date. Although the Delgados secured the permits, Alvarez insisted that they were untimely and inadequate and refused to pay the additional amount. The Delgados brought criminal fraud charges against Axiom in Mexican court. Alvarez was arrested and put in jail pending the preliminary investigation. To secure his release, he paid the additional amount with a check drawn on Axiom’s account.
These facts gave rise to two lawsuits. First, Axiom and Alvarez (together) sued the Delgados in Texas state court, claiming that they manipulated the Mexican court system to extort payment. Second, Axiom (alone) filed suit for illegitimate enrichment in Mexican court. That court found that the Delgados had satisfied the contract by obtaining the permits and were entitled to keep the additional amount. Axiom appealed unsuccessfully.
In 2022, the Delgados moved to dismiss the Texas action, arguing that Axiom’s corporate claims and Alvarez’s individual claims were precluded by the Mexican civil judgment. Apparently, the parties’ experts agreed that under Mexican law, the Mexican judgment against Axiom would not preclude Alvarez’s individual claims. But the trial judge applied Texas law on res judicata instead and barred Alvarez’s claims. Alvarez appealed,
The Preclusive Effect of the Mexican Judgment
Alvarez relied on Texas cases holding that the preclusive effect of sister-state judgments is determined by the law of the rendering state. But the Texas Court of Appeals distinguished sister-state judgments from foreign-country judgments on the ground that the latter are not governed by the Full Faith and Credit Clause of the U.S. Constitution. (I will return to this point below.)
Instead, the court looked to the 2005 Uniform Foreign-Country Money Judgments Recognition Act, which Texas has adopted. (The court mistakenly substituted “Currency” for “Country” in citing the Act.) Section 7(1) of that Act provides that, if a foreign-country judgment is entitled to recognition, then it is “conclusive between the parties to the same extent as the judgment of a sister state entitled to full faith and credit in this state would be conclusive.” According to Comment 2:
Subsection 7(1) … sets out the minimum effect that must be given to the foreign-country judgment once recognized. The forum court remains free to give the foreign-country judgment a greater preclusive effect in the forum state than the judgment would have in the foreign country where it was rendered. Cf. Restatement (Third) of the Foreign Relations Law of the United States, § 481 cmt c (1986).
The Texas Court of Appeals relied on this portion of the comment as well as § 481, Comment c of the Restatement (Third) of Foreign Relations Law, which says “no rule prevents a court in the United States from giving greater preclusive effect to a judgment of a foreign state than would be given in the courts of that state.”
However, the court neglected to note that the Restatement (Fourth) of Foreign Relations Law, which represents the current position of the American Law Institute (ALI), takes a different view. Section 487 of the Restatement (Fourth) says: “A foreign judgment will not be given greater preclusive effect in the United States than the judgment would be accorded in the state of origin.” The Restatement (Fourth) took this position because all the state cases that could be found did so. [Disclosure: I served as a reporter for Section 487.]
The New York Court of Appeals, for example, stated in Watts v. Swiss Bank Corp. (1970):
[T]he law of the rendering jurisdiction, insofar as it limits the effect of its own judgments, would also limit elsewhere the preclusive effect of the judgment and the definition of the parties bound. At least this is true as to recognition of judgments between States of the Union. A fortiori, the limitation should apply to extranational judgments. (Citations omitted.)
Federal courts sitting in diversity followed these state decisions, as they are bound to do. There is one federal-question case to the contrary. But the Restatement (Fourth) saw no reason for federal law to differ from state law on this point.
But what about Comment 2 to Section 7 of the Uniform Act, which says that “[t]he forum court remains free to give the foreign-country judgment a greater preclusive effect in the forum state than the judgment would have in the foreign country where it was rendered”? First, it is worth noting that Comment 2 relies for this proposition on Restatement (Third) § 481, Comment c, which is no longer the ALI’s position.
Second, it is worth looking again at the text of Section 7(1) itself, which states that a recognized foreign judgment is “conclusive between the parties to the same extent as the judgment of a sister state entitled to full faith and credit in this state would be conclusive.” As noted above, in Texas the preclusive effect of a sister state judgment is determined by the law of the rendering state. By directing that a recognized foreign judgment is conclusive to the same extent as the judgment of a sister state, the Uniform Act itself directs that preclusive effect must be judged by the law of the rendering foreign state. It should go without saying that a comment to the Uniform Act, even an official comment, cannot vary the text of the statute that the legislature adopted.
As noted above, the Texas Court of Appeals distinguished sister-state judgments from foreign judgments on the ground that the latter are not covered by the Full Faith and Credit Clause. What this ignores is that the Uniform Act itself makes foreign-country judgments equivalent to sister-state judgments. When a state like Texas determines the preclusive effect of a sister-state judgment by looking to the law of the rendering state, Section 7(1) directs that foreign-country judgments must be treated the same way.
Conclusion
The Texas Court of Appeals decision in Gottwald is an outlier. So far as I know, it is the first and only state case to have held that it is appropriate to give a foreign judgment greater preclusive effect than the rendering state would give. The opinion offers no policy justification for this position, and I can see none.
The point of recognizing and enforcing foreign judgments is to give effect to what the foreign court decided. With respect to preclusion, what the foreign court decided depends on the foreign court’s law. To give a foreign judgment greater preclusive effect than the rendering state is not give effect to what the foreign court decided but to supplement that effect in ways that neither the rendering court nor the parties to the foreign action may have anticipated.
The Texas Court of Appeals opinion rests entirely on the position of the Restatement (Third) and Comment 2 to § 7(1) of the Uniform Act. But the Restatement (Third)’s position has now been superseded by the Restatement (Fourth)’s, and the comment cannot trump the text of the Uniform Act, which plainly calls for foreign-country judgments to be treated in the same manner as sister-state judgments.