Case of the Day: New Hampshire Insurance Co. v. Magellan Reinsurance Co.

The case of the day is New Hampshire Insurance Co. v. Magellan Reinsurance Co. (Tex. Ct. App. 2013). NHIC filed a winding-up petition against Magellan in the courts of the Turks and Caicos Islands. The Supreme Court (the court of first instance) ruled in NHIC’s favor, but on appeal the Court of Appeal reversed, holding that NHIC was not a creditor and had no standing. The Privy Council affirmed. After the judgment, the Privy Council and the Turks and Caicos courts taxed costs in favor of Magellan. Magellan then sought recognition and enforcement of the two certificates of taxation of costs in the 17th District Court of Tarrant County, Texas. The question was whether the certificates of taxation of costs were judgments within the scope of the UFCMJRA, that is, a “judgment of a foreign country granting or denying a sum of money” except a judgment for “taxes, a fine, or other penalty,” and except for matrimonial or family cases.

The court ruled in favor of Magellan. First, it rejected NHIC’s argument that the UFCMJRA only applied to applications for recognition or enforcement by a party that had asserted an affirmative claim for relief in the foreign proceeding. The court’s decision was plainly right. The UFCMJRA permits a defendant to seek recognition of a foreign judgment for purposes, say, of establishing a res judicata defense, and nothing in the Act suggests that it should not also apply to a request for recognition and enforcement of a judgment in the defendant’s favor to the extent the judgment awards costs (as as US judgment does in such cases).

Second, the court rejected NHIC’s argument that the certificates of taxation of costs were not judgments at all. According to the court, costs are assessed “by court order and considered as part of the judgment” in both the Privy Council and the Turks and Caicos courts.

Third, the court rejected NHIC’s argument that Magellan had not properly authenticated the certificates of taxation of costs. Under Texas law, the certificates had to be authenticated in accordance with a federal statute, a Texas statute, or a treaty. There was no claim that they had been authenticated under federal law or a treaty, and Magellan did not follow the procedure in Texas law for making the certificates self-authenticating.

Fourth, Magellan attempted to authenticate the certificates with affidavits from its counsel in the Privy Counsel and Supreme Court cases. NHIC argued that the affidavits lacked jurats. But this argument doesn’t go anywhere, since both affidavits stated they were made on oath contained statements by the attesting witnesses indicating that the witnesses were authorized to administer oaths (a solicitor in the case of the Privy Council affidavit; a Commissioner for Oaths in the case of the Supreme Court of Turks and Caicos affidavit). Under Texas law, an affidavit does not need a jurat if the evidence shows that it was sworn, and in this case the court held that the two affidavits met that standard.

Last,1 the court rejected NHIC’s argument that the costs were a penalty and thus excluded from the scope of the UFCMJRA. The Turks and Caicos courts, and the Privy Counsel, award attorney’s fees as an item of costs to the prevailing party as a matter of course. But the English Rule on attorney’s fees is not penal, but rather simply reflects a different policy judgment than the American Rule that prevails here.

  1. I omit an argument about whether the affdiavits were competent to authenticate the certificates. I can only take so much!

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