IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
SHANGHAI COMMERCIAL BANK No. 70526-1-1
LIMITED, a banking corporation
organized and existing under the
Laws of Hong Kong Special
Administrative Region, the People's
Republic of China,
Respondent,
KUNG DA CHANG and JANE DOE UNPUBLISHED OPINION
CHANG, husband and wife and the
marital community comprised thereof, FILED: August 25, 2014
Appellants.
Verellen, A.C.J. — This appeal arises from the decision of the King County
Superior Court granting recognition and enforcement of a foreign judgment entered by a
Hong Kong trial court. Kung Da Chang fails to demonstrate that he was deprived of due
process by either the Hong Kong judicial system generally or the rendering court
specifically, that the judgment is repugnant to state or federal public policies, or that the
judgment was rendered under circumstances raising doubts about the integrity of the
rendering court. Chang fails to establish that the foreign judgment sought to be
enforced was affected by a security-for-costs order issued in a separate action. The
King County Superior Court correctly determined that the foreign judgment is valid and
enforceable. We affirm.
No. 70526-1-1/2
FACTS
In Shanghai Commercial Bank Limited v. Chang Kung Da. HCA 806/2009 (Action
806), Shanghai Commercial Bank (SCB) sought to collect on an unpaid revolving multi
currency loan that Chang obtained in March 2008 in order to facilitate the transfer of
investments from the Bank of East Asia (BEA) to SCB. Chang counterclaimed against
SCB, raising fraud and securities claims. Chang did not appear at trial for Action 806,
but the trial court considered evidence submitted by the parties, including pleadings and
witness statements. In June 2011, the Hong Kong trial court entered judgment against
Chang, which totaled almost USD$9 million, exclusive of interest. Chang did not
appeal.
In a parallel action before the Hong Kong trial court, Zhang Zhatzewal. also
known as Chang Chih Hwa, Clark, and Chang Kung Da v. Shanghai Commercial Bank
Limited and The Bank of East Asia. Limited. HCA 1996/2009 (Action 1996), Chang and
his father, Clark Chang, as plaintiffs, asserted fraud and securities claims against SCB
and BEA based on the Changs' multimillion dollar investment losses. The claims in
Action 1996 are substantially similar to Chang's counterclaims in Action 806.
Prior to the resolution of these separate actions, SCB and BEA applied for
security for their costs in Action 1996. The Hong Kong rules of civil procedure allow a
defendant in any action to petition the court to order a nonresident plaintiff to post
security for the possible costs of the litigation. Such a bond secures against a
nonresident plaintiff avoiding payment of a winning defendant's attorney fees and other
costs in the event that the nonresident plaintiff loses the lawsuit. The applications for
No. 70526-1-1/3
costs in Action 1996 were heard over two days.1 In determining whether to order
security against the Changs, the Hong Kong court considered a variety of factors
established by Hong Kong case law, including whether imposing security would stifle
the plaintiffs' access to the courts. In May 2011, the Hong Kong trial court ordered the
Changs to provide security for Action 1996 in the amounts of HKD$3 million2 to secure
SCB's potential costs and HKD$3.5 million to secure BEA's possible costs. Despite
being warned of the consequences, the Changs failed to post the required security. As
a result, the Hong Kong court dismissed the Changs' claims in Action 1996 in June
2011. Shortly thereafter, the court awarded judgment against the Changs on
counterclaims asserted by SCB in Action 1996. The Changs did not appeal.
In June 2012, SCB filed a petition, pursuant to Washington's Uniform Foreign-
Country Money Judgments Recognition Act (UFMJRA), chapter 6.40A RCW, in King
County Superior Court seeking recognition and enforcement of the Hong Kong
judgment rendered in Action 806. In King County Superior Court, Chang argued that
the security for costs ordered in Action 1996 rendered the Action 806 judgment
unrecognizable in Washington. Upon SCB's motion for partial summary judgment, the
trial court concluded that the Action 806 judgment was recognizable and enforceable,
granted partial summary judgment in favor of SCB, and entered final judgment against
Chang for approximately USD$11.7 million.
Chang appeals.
1 The petition for costs in Action 1996 was heard together with a petition for costs
in HCA 805/2009, a third lawsuit to which Chang was not a party.
2 This amount, HKD$3 million, equals approximately USD$387,000.
No. 70526-1-1/4
DECISION
Chang contends that the trial court improperly granted partial summary judgment
in favor of SCB. We disagree.
We review the trial court's summary judgment decision de novo.3 Summary
judgment is proper if the pleadings, affidavits, depositions, and admissions on file
demonstrate that there is no genuine issue of material fact and that the moving party is
entitled to summary judgment as a matter of law.4 All reasonable inferences from the
evidence must be drawn in favor of the nonmoving party.5
The UFMJRA provides that Washington courts "shall recognize a foreign-country
judgment" for money damages that is "final, conclusive, and enforceable" where
rendered,6 unless one or more of the mandatory or discretionary grounds for non-
recognition applies.7 Chang does not argue that the foreign judgment here was not
final, conclusive, or enforceable. Instead, he argues that four exceptions render the
judgment unrecognizable.
First, a Washington court is prohibited from recognizing a foreign judgment if it
was "rendered under a judicial system that does not provide impartial tribunals or
procedures compatible with the requirements of due process."8 Second, even where
the court may not have found the foreign judicial system to be defective as a whole,9 a
3 Lakev v. Puget Sound Energy, 176 Wn.2d 909, 922, 296 P.3d 860 (2013).
4ld\
5ld,
6RCW6.40A.020(1).
7RCW6.40A.030.
8 RCW 6.40A.030(2)(a).
9 See 2005 Recognition Act § 4(c)(7), cmt. 11.
No. 70526-1-1/5
tribunal-specific due process concern grants Washington courts discretion to deny
recognition if "[t]he specific proceeding in the foreign court leading to the judgment was
not compatible with the requirements of due process of law."10 Third, a Washington
court "need not recognize a foreign-country judgment if... [t]he judgment or the cause
of action or claim for relief on which the judgment is based is repugnant to the public
policy of [Washington] or of the United States."11 Fourth, a Washington court is "not
required to recognize a foreign-country judgment if. . . [t]he judgment was rendered in
circumstances that raise a substantial doubt about the integrity of the rendering court
with respect to the judgment."12
Chang fails to establish that any of these grounds for non-recognition apply in
this case. Chang conflates Action 806 and Action 1996 and analyzes each of the
exceptions by considering the Action 1996 security-for-costs order rather than the
Action 806 judgment. Chang asserts that, in evaluating the proceedings in Action 806,
we should consider the effect of the security-for-costs order in Action 1996 because
"HCA 806 and HCA 1996 were essentially one and the same matter" and "any ruling in
one matter should be considered by the Court to be a ruling in the other matter."13 All of
Chang's arguments for non-recognition of the Action 806 judgment stem from this
premise.14 But Chang provides no authority for this proposition, and we find no reason
10RCW6.40A.030(3)(h).
11 RCW 6.40A.030(3)(c).
12 RCW 6.40A.030(3)(g).
13 Appellant's Br. at 18.
14 For example, Chang argues that Hong Kong's security-for-costs procedures
deprive plaintiffs of access to the courts and discriminate against nonresidents.
No. 70526-1-1/6
to make such an assumption in this case. Although a parallel proceeding, Action 1996
was a separate cause of action from Action 806.
Nevertheless, Chang asserts that material questions of fact remain regarding
whether the Action 1996 security-for-costs order effectively prevented him from litigating
Action 806. But even accepting Chang's factual allegations as true, he did not
demonstrate that the security-for-costs order in Action 1996 actually prevented him from
defending against SCB's claims in Action 806. Even if, as Chang alleges, he could not
appear personally for fear that he would be imprisoned or ordered to remain in Hong
Kong indefinitely, Chang does not establish that he could not continue to appear in
Action 806 through counsel or that he could not submit evidence, such as witness
affidavits, from outside of Hong Kong. Moreover, the issues Chang raises regarding the
effect of the security-for-costs order on Action 806 should have been addressed to the
Hong Kong court ordering Chang to provide security when that foreign court considered
whether such an order would stifle Chang's access to the courts. For these reasons,
Chang's arguments regarding the impact of the security-for-costs order are unavailing.
Moreover, even accepting Chang's premise that the Action 1996 security-for-
costs order impacted Action 806, Chang does not establish that the judgment in Action
806 should not be recognized under any of the four exceptions he relies upon.
As to the mandatory exception under RCW 6.40A.030(2)(a) and the discretionary
exception under RCW 6.40A.030(3)(h), Chang points to no authority holding that a
security-for-costs mechanism is incompatible with due process or other constitutional
standards. He argues that the security-for-costs mechanism implicates equal protection
and privileges and immunities concerns by restricting nonresident plaintiff's access to
No. 70526-1-1/7
the courts. But he cites no court decision that has rejected a security-for-costs
mechanism on such a theory. Chang also argues that he had no meaningful
opportunity to be heard, but the hearing on the security-for-cost matter lasted for two
days, and it appears that the limited materials he submitted were considered by the
Hong Kong court. Chang had the opportunity to present evidence to the Hong Kong
court demonstrating that he was not financially able to provide the requested security,
but he did not do so. Chang also had the opportunity to appeal the security-for-costs
order, and for that matter the judgment rendered in Action 806, but he did not appeal
either judgment. Even after his claims were dismissed in Action 1996, Chang was given
the right to be heard and to be represented in Action 806, although he chose not to
exercise those rights. There is no indication that Chang was deprived of due process.
As to the exception under RCW 6.40A.030(3)(c), the security that the Hong Kong
court ordered Chang to provide is not repugnant to Washington law, as the security-for-
costs mechanism in Hong Kong is substantially similar to the Washington procedure
under RCW 4.84.210.15 Although Chang vaguely asserts that Washington's security-
for-costs statute may be "ripe" for a constitutional challenge, he provides no analysis or
persuasive authority in support of this assertion.
As to the exception under RCW 6.40A.030(3)(g), Chang fails to establish that the
security-for-costs order raises any doubt about the integrity of the Hong Kong court. He
contends that the Hong Kong court gave undue deference to the interests of the banks.
15 See, e.g., White Coral Corp. v. Geyser Giant Clam Farms, LLC, 145 Wn. App.
862, 867-69, 189 P.3d 205 (2008) (affirming trial court's dismissal of action upon failure
of foreign plaintiff to post $125,000 security for costs for defendant's prospective
attorney fees).
No. 70526-1-1/8
But, rather than demonstrating impartiality, the Hong Kong court's passing reference to
the bank's concern with its reputation was merely part of the court's observation that
both parties were likely to incur significant attorney fees in Action 1996 because they
had a lot at stake.
Chang's arguments are not persuasive. We affirm the King County Superior
Court's determination that the Hong Kong judgment in Action 806 is recognizable and
enforceable.
WE CONCUR:
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