Trejos Hermanos Sucesores S.A. v. Verizon Communications Inc.

Background

Trejos Hermanos, a printing business established in Costa Rica, entered into a Master Purchase Agreement with an entity that later became Verizon Information Services Costa Rica, LLC. Verizon Communications Inc. owned a 65% interest in the parent of that entity. After related contract disputes involving Costa Rica’s public electricity agency, the Costa Rican courts entered judgment for Trejos Hermanos against ICE, Verizon, and Verizon Costa Rica.

The Costa Rican judgment awarded Trejos Hermanos USD 51,355,812 in principal, along with statutory adjustments for indexation, interest, legal fees, and costs. Verizon appealed to Costa Rica’s Supreme Court of Justice. That court rejected Verizon’s arguments concerning subject-matter jurisdiction, arbitration, damages, contractual liability, evidence, and other issues. The parties agreed that Verizon had exhausted its appellate rights in Costa Rica.

Trejos Hermanos sought enforcement in New York under Article 53 of the New York Civil Practice Law and Rules, which governs recognition of foreign-country money judgments. Verizon removed the case to federal court based on diversity jurisdiction. After limited expert discovery, Trejos Hermanos renewed its motion for summary judgment. In an earlier order, the court granted in part and denied in part Trejos Hermanos’s motion to strike portions of testimony from Marvin Cespedes; that ruling concerned what testimony the court would consider for the summary-judgment motion.

Legal framework

Under Article 53, a foreign money judgment generally may be recognized if it grants or denies a sum of money and is final, conclusive, and enforceable in the country where it was issued. Once the party seeking enforcement meets those requirements, the party opposing recognition must establish a statutory ground for nonrecognition. Mandatory grounds include an inadequate judicial system or procedures, lack of personal jurisdiction, and lack of subject-matter jurisdiction. Other grounds are discretionary, including fraud, conflict with public policy, incompatibility with due process, substantial doubt about the integrity of the foreign court, or proceedings contrary to an agreement requiring arbitration.

Court’s analysis

The court found no genuine dispute that the Costa Rican judgment awarded money and was final, conclusive, and enforceable in Costa Rica. The judgment was not for taxes, a domestic-relations matter, or a fine or penalty. The court rejected Verizon’s argument that the damages were punitive, noting that the Costa Rican trial court described them as compensatory, reviewed damages evidence, and considered an independent expert’s report.

The court rejected Verizon’s subject-matter-jurisdiction challenge. Verizon had raised the issue in Costa Rica, and Costa Rica’s Supreme Court of Justice had determined that the Tribunal Contencioso had jurisdiction because the claims were related to ICE, a public entity. The court gave that determination preclusive effect because Verizon had a full and fair opportunity to litigate it.

The court also rejected Verizon’s arguments based on the arbitration clause. The Costa Rican courts had decided, under Costa Rican law, that the clause did not deprive the Tribunal Contencioso of jurisdiction. Because Verizon participated in litigating that issue and appealed the decision, the court would not reconsider the Costa Rican courts’ determination during the New York enforcement proceeding.

The court found no basis to deny enforcement on public-policy or due-process grounds. It held that the Costa Rican courts’ application of the economic interest group theory, which resulted in liability for Verizon even though Verizon argued it was not a party to the Master Purchase Agreement, was not so fundamentally offensive to New York or federal public policy that enforcement should be denied. The court likewise rejected arguments concerning corporate separateness and the calculation of duplicative, disproportionate, or punitive damages.

The court emphasized that Article 53 primarily examines procedural due process, not whether the foreign court reached the same legal result a New York court might have reached. Verizon received notice, was represented by counsel, presented evidence, had opportunities to contest the damages, and appealed to Costa Rica’s Supreme Court of Justice. The court also found that Verizon had not shown substantial doubt about the integrity of the Costa Rican courts. Alleged legal errors and a lawyer’s speculation about bias were not enough.

Finally, the court addressed the post-judgment adjustments. Trejos Hermanos’s expert calculated indexation, interest, fees, and costs using the methodology required by Costa Rican law. The court found no factual dispute requiring a trial, particularly because Verizon’s own Costa Rican-law expert acknowledged that the methodology was consistent with instructions from Costa Rica’s Supreme Court of Justice.

Disposition

Judge Jennifer L. Rochon granted Trejos Hermanos’s motion for summary judgment. The court ordered that the Costa Rican judgment for USD 51,355,812 be enforced. It directed that the statutory adjustments be calculated as of the date of the order using the Costa Rican Supreme Court’s methodology, required Trejos Hermanos to submit an updated calculation within two weeks, and stated that the Clerk would enter judgment for the final calculated amount two weeks after receiving it. Federal post-judgment interest would run from entry of judgment until payment. The opinion does not state the final adjusted dollar amount.