UFJ Bank Ltd. v. Ieda

123 P.3d 1232, 109 Haw. 137, 2005 Haw. LEXIS 608
CourtHawaii Supreme Court
DecidedDecember 8, 2005
Docket25549
StatusPublished
Cited by11 cases

This text of 123 P.3d 1232 (UFJ Bank Ltd. v. Ieda) is published on Counsel Stack Legal Research, covering Hawaii Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
UFJ Bank Ltd. v. Ieda, 123 P.3d 1232, 109 Haw. 137, 2005 Haw. LEXIS 608 (haw 2005).

Opinion

Opinion of the Court by MOON, C.J.

Plaintiff-appellant UFJ Bank Limited (UFJ), a Japanese bank, filed suit in the Circuit Court of the First Circuit, 1 seeking to collect a debt owed by Kabushiki Kaisha Lots Wako (KKLW), a Japanese company and a non-party to this action. UFJ sued defendants-appellees Osamu leda, who personally guaranteed KKLW’s loan, and Lots Wako, Inc. (LWI) [hereinafter, collectively, the defendants], a wholly-owned subsidiary of KKLW that was incorporated in the state of Hawaii. UFJ appeals from the December 10, 2002 final judgment entered in favor of the defendants pursuant to the August 26, 2002 order granting the defendants’ motion to dismiss and denying UFJ’s motion for partial summary judgment. UFJ also challenges the circuit court’s November 19, 2002 order granting the defendants’ motion for attorneys’ fees.

On appeal, UFJ contends that the circuit court erred in denying its motion for partial summary judgment and dismissing its verified complaint based upon (a) UFJ’s failure to join KKLW as an indispensable party under Hawaii Rules of Civil Procedure (HRCP) Rule 19(b) (2002), quoted infra, and (b) forum non conveniens grounds. UFJ also contends that, inasmuch as UFJ’s complaint was dismissed “without prejudice,” the circuit court erred in awarding attorneys’ fees to the defendants.

For the reasons discussed herein, we hold that: (1) the circuit court erred in finding that KKLW is an indispensable party; and, (2) inasmuch as the record is unclear as to whether an available alternative forum existed for UFJ to prosecute its claims against LWI, we remand this case for such determination. Accordingly, we vacate the December 10, 2002 final judgment, including the November 19, 2002 award of attorneys’ fees, and remand this case to the circuit court for further proceedings.

I. BACKGROUND

A. Factual Background

UFJ is a corporation organized under the laws of Japan, with its principal place of *139 business in Japan. On March 22, 1991, UFJ 2 entered into an “Agreement on Banking Transactions” (the Agreement) 3 in which it loaned an aggregate principal amount of approximately 769,700,000 yen to KKLW. According to the Agreement, KKLW was obligated to, inter alia: (1) repay the loan; (2) pay damages at the rate of fourteen percent per annum in the event of a default, pursuant to Article 3(2) of the Agreement; 4 and (3) provide additional security, if demanded by UFJ, pursuant to Article 4(1) of the Agreement. 5

Article 14 of the Agreement specifically provides that:
In the event that it becomes necessary to litigate in connection with any transaction governed by this Agreement, [KKLW] agree[s] that the competent court shall be the court having jurisdiction in the locale of the head office of Sanwa Bank [ (UFJ) ] or_the Branch of [UJF].

On March 19, 1991, two days prior to the execution of the Agreement, leda, a stockholder and representative director of KKLW, executed a personal guaranty for KKLW’s obligations under the Agreement (the Guaranty). Specifically, the Guaranty states in pertinent part:

The Guarantor [ (ie., leda) ] hereby undertakes to guarantee, jointly and severally with [KKLW], any and all present and future obligation incurred by [KKLW] with respect to [UFJ] ... pursuant to any transaction provided for under [the] Agreement ... and[,] in performing on said obligation, the Guarantor shall abide by all of the terms and conditions contained in said Agreement[.]

On September 29, 2000, KKLW executed a promissory note in the face amount of 769,-700,000 yen (the Note). The entire balance on the Note became due and payable to UFJ on January 30, 2001 when, by its terms, the Note matured. On September 20, 2001, KKLW allegedly made a payment of 502,-302,136 yen.

According to UFJ, KKLW and leda owed the outstanding amount of 1,527,532,274 yen, or approximately $11,892,037.94 U.S. dollars, as of April 15, 2002. UFJ also contends that, since April 15, 2002, interest has continued to accrue at a rate of 486,125 yen per day, or approximately $3,784.55 U.S. dollars per day, as provided in Article 3(2) of the Agreement. As of July 8, 2002, an additional 40,834,500 yen allegedly had accrued, and the total amount owed by KKLW and leda to UFJ on that date was 1,568,366,774 yen.

On May 23, 2002, UFJ notified KKLW, leda, and LWI that it was exercising its right of subrogation with respect to an “Inter-company Debt,” pursuant to Article 423 of the Japan Civil Code, which provides a right of subrogation, 6 and demanded payment of UFJ’s loan. According to UFJ, the Inter-company Debt was a loan extended by *140 KKLW to LWI (of which leda is president and director) in the principal amount of 1,364,109,632 yen. UFJ had obtained information regarding the inter-company loan from KKLW’s financial statements for the fiscal year ending May 31, 2000, the most recent statements available to UFJ. In their answer to the verified complaint, the defendants neither admitted nor denied the existence of the inter-company loan, stating only that “what is described in [UFJ’s verified complaint] as ‘Inter-Company Debt’ involved funds that were used to acquire the leasehold interest in an office building located at 345 Queen Street, Honolulu, Hawai'i” (the Queen Street Property). The defendants also conceded that LWI owns the single-family residence located at 1610 Ihiloa Loop, Honolulu, Hawai'i, where leda resides. The defendants did not respond to UFJ’s May 23, 2002 demand for payment.

B. Procedural Background

On May 28, 2002, UFJ filed the instant suit in the First Circuit Court against leda and LWI. UFJ’s verified complaint contained three claims for relief: (1) Count I sought recovery directly from leda for the amount of KKLW’s purported indebtedness pursuant to the Guaranty; (2) Count II alleged UFJ’s entitlement to additional security from leda as guarantor; and (3) Count III asserted a right of subrogation against LWI for the amount of the “Inter-Company Debt” and any other obligations that LWI may have to KKLW pursuant to Japanese law and its civil code. Simultaneously with its filing of the complaint, UFJ filed an ex parte motion for prejudgment writ of attachment, seeking to attach the Queen Street Property. On June 4, 2002, the circuit court granted UFJ’s motion without a hearing. The writ of attachment was issued on June 5, 2002. On June 6, 2002, the defendants filed an ex parte motion, seeking reconsideration of the circuit court’s order granting UFJ’s motion for writ of attachment. The circuit court granted the defendants’ motion for reconsideration on June 13, 2002 and ordered, among other things, that the writ of attachment against the Queen Street Property be released.

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Cite This Page — Counsel Stack

Bluebook (online)
123 P.3d 1232, 109 Haw. 137, 2005 Haw. LEXIS 608, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ufj-bank-ltd-v-ieda-haw-2005.