The case of the day is Carmona v. Carmona (In re Carmona) (Bankr. S.D. Texas. 2018)>. Maria Rosales was married to Hector Carmona. In 1991, the wife sold a parcel of land in Guanajuato, Mexico without her husband’s consent. (Mexico is a community property jurisdiction, as are Texas and several other southwestern states once ruled by Spain). In 2012, the wife sought a divorce in Webb County, Texas. In the divorce case, the husband asserted that the wife had transferred the Mexican land without his consent. The parties entered a settlement agreement that purported to resolve “all claims and controversies” in the action, but that did not mention the Mexican property specifically. The case ended with a divorce decree requiring the husband to pay the wife $1.85 million and that approved the settlement agreement.

The husband sought unsuccessfully to set aside the decree on the grounds of fraudulent inducement. He also brought actions against his wife in Mexico—I am not going to detail them, but in short, he obtained a ruling from a Mexican court holding that the wife had committed a fraud against the marital community and awarding her damages. The wife declared bankruptcy in the United States and brought a proceeding seeking a ruling that the Mexican judgment was not entitled to recognition.

The bankruptcy judge did much more than he had to do to decide the case. The simplest route was simply to say, as the judge ultimately did, that the Mexican judgment conflicted with the prior Texas judgment, which was res judicata with respect to the claim about the sale of the Mexican land. But the judge also found that the Mexican judgment conflicted with Texas public policy, because the Texas proceeding had settled the dispute and public policy forbade “fault being determined twice.” I’m not sure of the strength of this holding, as it seems simply to restate the res judicata rule and it’s not clear whether the same outcome would apply or should apply if, for some reason, the first judgment were not res judicata. The judge also rejected challenges to the impartiality of the Mexican judiciary and of the due process accorded to the wife in the particular Mexican proceedings.