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VILLAHERMOSA, Mexico — After years of longing and a mountain of expense, Michael Theologos became a father in December, when a surrogate mother gave birth to his son in a clinic in this tropical town. Mr. Theologos wept as he cut the umbilical cord.

Then the trouble began.

The next day, officials arrived at the hospital and took the baby, Alexandros, into custody. They said Mr. Theologos, a New York City resident, had broken a new law that bars surrogate mothers here in Tabasco State from bearing children for foreigners.

Mr. Theologos, 59, did not see Alexandros again for nearly six weeks.

“You receive your dream and then someone comes over and takes away everything,” said Mr. Theologos, an American citizen who paid $55,000 to an agency for the surrogacy. Speaking by telephone from Queens, he added, “It was the end of the world for me.”

Mr. Theologos and his son are among a dozen foreign families who have been tangled up in a legal battle over how to apply new surrogacy restrictions in Tabasco, which for years was the...