SHANGHAI COMMERCIAL BANK 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" CHANG, husband and wife, and the marital community comprised thereof, Petitioners.
present iteration of this case concerns whether a Hong Kong
judgment is enforceable against marital community property in
Washington State. At issue is the efficacy of a choice of law
contractual provision in a Hong Kong contract along with
application of the "most significant relationship"
test for determining conflict of law issues and, ultimately,
whether Hong Kong law should be applied to reach the
community assets in Washington to satisfy a valid and
enforceable foreign judgment. We hold that under the facts of
this case, the debtor's community property may be reached
to satisfy the Hong Kong judgment.
facts relevant to the present matter, which concerns Shanghai
Commercial Bank's (SCB's) second motion for summary
judgment in this case,  are undisputed and as follows. Kung Da
Chang entered into a credit facility arrangement with SCB
between March and April 2008 by executing five agreements.
Together, these five agreements enabled Chang and his father,
Clark Chang (Clark), to borrow large sums from SCB, and those
sums make up the underlying debt obligation at issue in this
lawsuit. These five documents define Chang and SCB's
agreement and govern their obligations. The parties'
agreement explicitly includes a choice of law provision
selecting Hong Kong law as the governing law.
"Facility Letter" that Chang signed provides that
the signor is subject to its terms and conditions, which
"form an integral part of this Facility Letter."
Clerk's Papers (CP) at 148. The "Terms and
Conditions for Bank Accounts and General Services"
contains a labeled "Governing Law and Jurisdiction"
section that provides, "The validity, construction,
interpretation, and enforcement of the Agreement
and/or the Relevant Terms and Conditions shall be governed by
the laws of HKSAR [Hong Kong Special Administrative
Region]." Id. at 172 (emphasis
exchange of the documentation that forms the parties'
agreement, SCB delivered the papers for Chang's signature
to an address in Shanghai that was actually Clark's
residence. Clark sent the documents to his son in Seattle,
Chang signed the documents and returned them to his father in
Shanghai, and Clark forwarded them to SCB in Hong Kong. There
is no indication in the record that at this time SCB knew
that it was dealing with a person residing in Seattle.
ultimately defaulted on the debt obligation, the parties
litigated the matter in Hong Kong in high court action no.
806/2009 (HCA 806), and SCB prevailed and secured a $9
million dollar judgment. Id. at 290. It is
undisputed that the HCA 806 judgment under Hong Kong law
encompasses what Washington considers Chang and his
wife's marital community, as Hong Kong law exempts solely
separate property of a spouse, not community property, from
judgments entered against one spouse (Chang).
SCB's successful (first) summary judgment motion, which
established that HCA 806 is enforceable in Washington,
SCB's filed the present (second) summary judgment motion
in this continuing enforcement action on July 2, 2015,
seeking a ruling that HCA 806 could be enforced against
Chang's community property. The trial court granted the
second summary judgment motion on August 21, 2015, ruling
that the express choice of law provision was determinative,
and that even if there were no such provision in this case,
the Hong Kong law would apply anyway because it had more
significant contacts. The trial court denied Chang's
motion for reconsideration on September 15, 2015, and Chang
appealed. Court of Appeals, Division One, affirmed, holding
that Hong Kong had the most significant relationship to
Chang's agreement with SCB and thus under
Washington's conflict of law principles, Hong Kong law
applied making property that in Washington belongs to Chang
and his wife's marital community available for collection
of the Hong Kong judgment. Shanghai Commercial Bank Ltd.
v. KungDa Chang, 195 Wn.App. 896, 906-07, 381 P.3d 212
(2016). Division One did not reach the effect of the choice
of law provision in the agreement between Chang and SCB.
Id. Chang sought review, which we granted. See
Shanghai Commercial Bank Ltd. v. Kung Da Chang, 187
Wn.2d 1017, 390 P.3d 337 (2017).
court reviews the trial court's summary judgment decision
de novo. Mohr v. Grantham, 172 Wn.2d 844, 859, 262
P.3d 490 (2011). "Summary judgment 'shall be
rendered forthwith if. . . there is no genuine issue as to
any material fact and ... the moving party is entitled to a
judgment as a matter of law.'" Id.
(alterations in original) (quoting CR 56(c)). The court must
draw all reasonable inferences from the evidence in favor of
the nonmoving party. Id. This court reviews the
denial of a motion for reconsideration for abuse of
discretion. Rivers v. Wash. State Conf. of Mason
Contractors, 145 Wn.2d 674, 685, 41 P.3d 1175 (2002).
Statutory interpretation is a question of law that the court
reviews de novo. Philippides v. Bernard, 151 Wn.2d
376, 383, 88 P.3d 939 (2004). Choice of law is a question of
law that the court reviews de novo. Erwin v. Cotter
Health Ctrs., Inc., 161 Wn.2d 676, 691, 167 P.3d 1112
(2007); Seizer v. Sessions, 132 Wn.2d 642, 650, 940
P.2d 261 (1997).
(Second) of Conflict of Laws § 187 (Am. Law Inst.
courts "shall recognize a foreign-country judgment"
for money damages that is "final, conclusive, and
enforceable" where rendered, unless one or more of the
mandatory or discretionary grounds for nonrecognition
applies. RCW 6.40A.030(1), .020(1)(b). As noted, SBC's
previous summary judgment motion established that the Hong
Kong judgment is valid and enforceable in Washington.
Shanghai Commercial Bank Ltd. v. Chang, No.
70526-1-1, at 1 (Wash.Ct.App. Aug. 25, 2014) (unpublished),
denied, 182 Wn.2d 1006, 342 P.3d 327 (2015), cert
denied, 135 S.Ct 2847, 192 L.Ed.2d 877 (2015). A
recognized "foreign-country judgment is . . .
[e]nforceable in the same manner and to the same extent as a
judgment rendered in this state." RCW 6.40A.060(2).
first appeal having resolved that the Hong Kong judgment, HCA
806, is enforceable in Washington, this court is now asked to
decide whether the judgment debtor's community property
may be reached to satisfy the Hong Kong judgment. In deciding
that issue, we must address the efficacy of the parties'
express choice of law provision in their governing agreement.
Our decision in Erwin directs that such inquiry be
undertaken and provides the appropriate analysis.
Erwin, we explained that in resolving disputes
concerning choice of law the court need decide (1) whether
there is an actual conflict of laws and, if so, (2) whether
the parties' agreement's choice of law provision is
effective. 161 Wn.2d at 692. '"When parties dispute
choice of law, there must be an actual conflict between the
laws or interests of Washington and the laws or interests of
another state before Washington courts will engage in a
conflict of laws analysis.'" Id. (quoting
Seizer, 132 Wn.2d at 648). "If the result for a
particular issue 'is different under the law of the two
states, there is a "real" conflict.'"
Id. (quoting Seizer, 132 Wn.2d at 648
(citing Pac. Gamble Robinson Co. v. Lapp, 95 Wn.2d
341, 344-45, 622 P.2d 850 (1980), overruling on other
grounds as recognized by Haley v. Highland, 142 Wn.2d
135, 12 P.3d 119 (2000))). '"[W]here laws or
interests of concerned states do not conflict, ' the
situation presents 'a false conflict' and 'the
presumptive local law is applied.'" Id.
(internal quotation marks omitted) (quoting Seizer,
132 Wn.2d at 648-49).
there is an actual conflict between Hong Kong law and
Washington law on the issue of whether Chang and his
wife's community property is reachable for satisfaction
of the HCA 806 judgment. As noted, evidence in the record
regarding Hong Kong law states in relevant part that
"Hong Kong is a separate property jurisdiction, and
there is no community property concept/principle." CP at
76. Accordingly, "[t]he judgment in . . . HCA 806 . . .
against KD Chang is enforceable in Hong Kong against all of
KD Chang's assets, . . . includ[ing] those assets that
would be considered 'community property' in
law yields a different result. Similar to this case, in
Potlatch No. 1 Federal Credit Union v. Kennedy, 76
Wn.2d 806, 459 P.2d 32 (1969), the husband (a Washington
resident) undertook a loan obligation (as cosigner) with a
lender in Idaho, a noncommunity property state. Upon default,
the foreign creditor sought relief against the husband, his
wife, and their Washington community. The trial court,
applying Washington law, ruled that the foreign creditor was
not entitled to judgment against the wife or the community.
Id. at 807-08. In the course of affirming the
judgment, this court explained that "[u]nder the law of
this state [(Washington)], community property is liable for
the suretyship debt of one of the parties only if the
community has been benefited by the obligation."
Id. at 808. "Under Idaho law, however, the
community is liable for the separate debts of the husband,
irrespective of whether they were incurred for the benefit of
the community." Id. Accordingly, if Idaho law
were applied, "[the foreign creditor] plaintiff would
have been entitled to judgment against the . . .
community." Id. But if Washington law were
applied, "there would be no recovery against the
community." Id. In the absence of a choice of
law by the parties, this court applied the "most
significant relationship" test (discussed below) and,
based on the specific facts, applied Washington law and
affirmed the trial court. Id. at 809-14.
discussed in Potlatch, this is an actual conflict.
See also Erwin, 161 Wn.2d at 692 (if the result for
a particular issue is different under the law of the two
states, there is a "real" conflict).
an actual conflict, the analysis turns to whether the
parties' contractual choice of law is effective.
Id. at 693. In Erwin, this court adopted
Restatement section 187 as "the law of
Washington when resolving conflict of laws issues in which
the parties have made an express contractual choice of law to
govern their contractual rights and duties."
Id. at 694. This court explained that "[s]ince
1967, Washington has followed the most significant
relationship test... [of] the Restatement [section
188] when resolving contractual choice-of-law problems in
which the parties did not make an express choice of
law." Id. at 693-94 (citing Mulcahy v.
Farmers Ins. Co. of Wash, 152 Wn.2d 92, 100, 95 P.3d 313
(2004)); see also id. at 696. "Section 187 of
the Restatement provides the rule for conflict of
laws problems in which the parties have made an express
contractual choice of law." Id. at
Restatement section 187 provides as follows:
"'§ 187. Law of the State Chosen by the Parties
'(1) The law of the state chosen by the parties to govern
their contractual rights and duties will be applied if the
particular issue is one which the parties could have resolved
by an explicit provision in their agreement directed to that
'(2) The law of the state chosen by the parties to govern
their contractual rights and duties will be applied, even if
the particular issue is one which the parties could not have
resolved by an explicit provision in ...