Justice Tonya McLaughlin
The Houston [14th] Court of Appeals has affirmed that filing motion to dismiss on res judicata grounds in a Texas lawsuit does not bar foreign judgment creditors from domesticating a New York judgment in Texas under the Uniform Enforcement of Foreign Judgments Act (UEFJA).
This dispute in Electric Red Ventures, LLC, Monzer Hourani, and Manfred Company, LC v. RDF Agent, LLC (No. 14-23-00865-CV; August 26, 2025) stemmed from a failed venture to finance a $230 million multifamily real estate project in Arizona. To fund the project, Plaintiffs executed a “Term Sheet” in July 2021, giving RDF the exclusive right to provide them loans for 60 days. However, in March 2022, RDF sent Plaintiffs a demand of almost $2.7 million in damages and out-of-pocket costs, alleging that Plaintiffs breached the Term Sheet’s exclusivity provision and failed to timely secure the equity needed to close the contract. Plaintiffs sued RDF in Harris County district court (129th), alleging fraud and seeking a declaratory judgment that they did not violate the Term Sheet (“Plaintiffs’ Suit”). Meanwhile, RDF sued Plaintiffs for breach of contract in New York (the “New York Suit”).
The New York court ruled first, granting RDF summary judgment and entering a final judgment against Plaintiffs for $3,397,093.14. However, shortly prior to that, RDF had moved for summary judgment in Plaintiffs’ Suit, seeking dismissal on res judicata grounds that the New York court’s judgment foreclosed all of Plaintiffs’ claims. When the New York court order was released, RDF entered a certified copy of it with another Harris County district court (234th) and filed a “Notice of Domestication of a Foreign Judgment” under the Uniform Enforcement of Foreign Judgments Act (UEFJA). Plaintiffs responded to the “UEFJA Suit,” asserting that RDF could not domesticate the New York judgment under the statute because it had allegedly already done so under common law. RDF denied ever having elected for common-law enforcement and moved to strike. Plaintiffs moved for an evidentiary hearing, and RDF moved to transfer the UEFJA Suit to the same court as Plaintiffs’ Suit. Without considering Plaintiffs’ motion, the 234th transferred the UEFJA Suit to the 129th. That denied Plaintiffs’ motion to strike the UEFJA Suit. Plaintiffs appealed.
In an opinion by Justice McLaughlin, the court of appeals affirmed. Plaintiffs first argued that RDF had already attempted to domesticate the New York judgment under the common law by filing a summary judgment motion to dismiss Plaintiffs’ Suit based on res judicata, and thus was barred from doing so under the UEFJA as well. The court disagreed, holding that res judicata is wholly incomparable to an action to domesticate a foreign judgment. The court explained that actions to domesticate are “affirmative claim[s] for relief” in the form of enforcing the judgment in Texas, while res judicata is an “affirmative defense.” By moving for summary judgment on res judicata grounds, RDF merely sought to dismiss Plaintiffs’ Suit. It did not request the enforcement of the New York judgment. Moreover, the motion did not make the New York judgment enforceable but merely resulted in the dismissal of Plaintiffs’ Suit. The Court concluded that the UEFJA petition was this case’s first and only domestication procedure.
The Court further denied Plaintiffs’ claim that the lower court erred in giving full faith and credit to the New York judgment. The court observed that Texas courts may only deny full faith and credit to sister state judgments if: (1) the decree is interlocutory; (2) the decree is subject to modification under the law of the rendering state; (3) the rendering court lacks jurisdiction; (4) the judgment was procured by extrinsic fraud; or (5) the period for enforcing the foreign judgment has expired. Mindis Metals, Inc. v. Oilfield Motor & Control, Inc., 132 S.W.3d 477, 484 (Tex. App.—Houston [14th Dist.] 2004, pet. denied).
Citing the doctrine of dominant jurisdiction, Plaintiffs argued that the New York court lacked jurisdiction over their case. The Court pointed out, however, that the doctrine only applies to suits pending in the same state, and the exception only pertains to a lack of personal jurisdiction, not dominant jurisdiction. The court also rejected Plaintiffs’ contention that the New York judgment offended Texas’ public policy, but their only authority for this claim concerned the enforcement of foreign laws contrary to public policy, not foreign judgments. Finally, the Court overruled Plaintiffs’ claim that the trial court erred by not setting an evidentiary hearing, finding no such request had ever been filed. Thus, the court affirmed the trial court’s decision.
TCJL Intern Shaan Rao Singh researched and prepared this article.
