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Derr v. Swarek

United States District Court, Fifth Circuit

December 2, 2013



LOUIS GUIROLA, Jr., Chief District Judge.

BEFORE THE COURT are cross-motions for judgment as a matter of law filed by the parties in this lawsuit. Plaintiffs seek to enforce a foreign judgment entered in their favor by a German court. The defendants resist enforcement of the judgment because they assert the principles of comity do not support enforcement. Defendants argue that the German court did not recognize the legal effect of the Swareks' voluntary dismissal with prejudice of Hermann Derr in a parallel lawsuit in Mississippi. In addition, because the Swareks' dismissal came before the German court acted on the matter, the German court should have given the dismissal res judicata effect. After consideration of the submissions and the relevant law, it is the Court's opinion that it should not grant comity to the German court judgment. Accordingly, the Swareks' Motion for Judgment on the Pleadings will be granted.


The plaintiffs in this case are citizens of Germany and the heirs of Hermann P. Derr. Hermann and his Mississippi corporation, Derr Plantation, Inc., accepted an offer in 2005 made by the defendants, the Swareks, to lease and purchase a farm owned by Derr Plantation in Mississippi. When Derr Plantation did not honor the lease/sale agreement, the Swareks filed a complaint against Hermann and Derr Plantation for specific performance and damages in the Chancery Court of Issaquena County, Mississippi.

Hermann died in 2006, and the Swareks filed a motion to substitute Hermann's estate for Hermann in his individual capacity. The Chancery Court did not rule on the motion. The motion to substitute, and a renewed motion three years later, were rendered moot when the Swareks withdrew them after dismissing their claims against Hermann with prejudice on May 10, 2010.

Meanwhile, on March 9, 2009, the Derr Heirs filed a complaint in the Regional Court in Düsseldorf, Germany against the Swareks. The Derr Heirs sought a declaration that the Swareks had no claims against them arising from or in connection with the lease/sale agreement in Mississippi. The Swareks retained an attorney in Germany to represent them. Shortly before the Swareks dismissed their claims against Hermann in the Mississippi case, the attorney representing the Derr Heirs in the German case filed an application for admission pro hac vice in the Mississippi case, which was granted by the Chancery Court.

On August 31, 2010, the Regional Court declined to grant a declaratory judgment to the Derr Heirs, holding that they did not have a legitimate interest in a declaratory judgment, and had shown no need for legal protection. The court stated that

Given the fact that a case is already pending which deals comprehensively with the questions at issue in the form of an "action for performance" ( Leistungsklage ) and which must be recognized in Germany as well, it has to be noted that a contrary action seeking a negative declaratory judgment lacks the required legitimate interest in a declaratory judgment, but in any event lacks the need for legal protection.

(Answer Ex. 134, ECF No. 6-13). The court stated that "the rights and legal position of the [Derr Heirs] are not threatened by the mere Motion to Substitute Parties' filed to the U.S. Court." ( Id. at 5).

The decision was appealed to the Higher Regional Court, which reversed the Regional Court on January 12, 2012, and held that the Derr Heirs were entitled to a declaratory judgment that the Swareks do not have any claims against them in connection with the lease/sale agreement. (Compl. Ex. B 5, ECF No. 1-3). The Higher Regional Court held that the document dismissing the Swareks' claims against Hermann "merely constitutes a unilateral statement, which is not contractually binding for the defendants." ( Id. at 6). According to German law, "the acknowledgment of the non-existence of a claim requires a contractual agreement, which the plaintiffs refuse to enter into, as is their right." ( Id. ). The court explained:

The validity of this withdrawal [of the complaint with respect to the deceased Mr. Hermann Derr in the Mississippi lawsuit] as well as the question whether it causes a procedural preclusion ("res judicata") with respect to the plaintiffs that did not become a party to the Mississippi proceeding can remain open. Even if this were the case, in the event of an action filed against them plaintiffs would be required to prove that the res judicata effect extend to them. Their interest in a declaratory judgment remains, because any ambiguity will be resolved at their expense.

( Id. at 7).

The court therefore granted a declaratory judgment, which it stated "would be recognized in most U.S. American States due to guaranteed reciprocity as set forth in § 328 para. 1 no. 5 of the German Code of Civil Procedure, " and would "also prevent the execution of a possible U.S. judgment against the plaintiffs." ( Id. ). The court went on the consider the merits of the claim against Hermann Derr, finding that under German law, it could not be shown that Hermann Derr had personal liability for the lease/sale agreement he signed in his personal capacity. ( Id. at 8, 9). The Swareks were ordered to pay the costs of the proceeding - 205, 157.30 Euros, plus interest. (Compl. Ex. D, ECF No. 1-5).

The Derr Heirs seek recognition by this Court of the German Judgment and Order for Costs on the basis of comity, and enforcement in United States dollars equivalent to ...

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