Court Opinion

ID: 4211196
Source: CourtListenerOpinion
Date Created: 2017-10-12 15:20:17.335157+00
Date Added: 2024-06-11T14:41:11.642599
License: Public Domain

This opinion was filed for record

    IN CLERKt OFFICE
 BCCOURT,SCVE OF WASI^NQTOM
  DATE OCT I 7 Wl
         tivUyul. Oi                                             SUSAN L CARLSON
    CHIEF JUSTICE
                                                               SUPREME COURT CLERK

            IN THE SUPREME COURT OF THE STATE OF WASHINGTON

SHANGHAI COMMERCIAL BANK
LIMITED,a banking corporation organized and            No. 93823-7
existing under the Laws ofHong Kong Special
Administrative Region, the People's Republic
of China,
                       Respondent,

       V.                                              En Bane

KUNG DA CHANG and "JANE DOE"
CHANG,husband and wife, and the marital
community comprised thereof.

                       Petitioners.                    Filed     OCT 1 2 2
                                                J

       MADSEN, J.—The present iteration ofthis case concerns whether a Hong Kong

judgment is enforceable against marital community property in Washington State. At

issue is the effieacy of a choice of law contractual provision in a Hong Kong contract

along with application ofthe "most significant relationship" test for determining confliet

of law issues and, ultimately, whether Hong Kong law should be applied to reach the

eommunity assets in Washington to satisfy a valid and enforeeable foreign judgment. We

hold that under the facts ofthis case, the debtor's community property may be reached to

satisfy the Hong Kong judgment.
No. 93823-7

                                         FACTS

      The 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 oflaw provision selecting Hong Kong law as the
governing law.

       The "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 ofthe 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 added).^

'SCB's first summary judgment motion established that SCB's Hong Kong judgment against
Kung Da Chang is valid and enforeeable in Washington. See Shanghai Commercial Bank Ltd. v.
Kung Da Chang, No. 70526-1-1, at 1 (Wash. Ct. App. Aug. 25, 2014)(unpublished),
http://www.eourts.wa.gov/opinions/, review denied, 182 Wash. 2d 1006, 342 P.3d 327(2015), cert,
denied, 135 S. Ct. 2847, 192 L. Ed. 2d 877(2015).
^ The remaining documents making up the parties' agreement also all expressly choose Hong
Kong law.
No. 93823-7

         During exchange ofthe 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.

         Chang 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)."^

^ Chang moved to Washington in 1989 and married Michelle Chen in 1994, and the couple has
resided in Washington since that time.
 The record contains a declaration from a purported expert regarding Hong Kong law, stating:
       Hong Kong is a separate property jurisdiction, and there is no community
         property concept/principle. The judgment in High Court of Hong Kong HCA 806
         of2009 against KD Chang is enforceable in Hong Kong against all of KD
         Chang's assets, which I am given to understand include those assets that would be
         considered "commimity property" in Washington, but not against his wife's
         separate assets.
CP at 76-77(Decl. of Donny Chiu in Supp. of Pet'r's Second Mot. for Summ. J.). As the Court
of Appeals correctly noted,"Chang did not introduce contrary evidence and does not contest that
his and Chen's community property would be subject to the judgment if Hong Kong law
         Shanghai Commercial Bank Ltd. v. KungDa Chang, 195 Wash. App. 896, 906, 381 P.3d
212(2016). Nor does Chang offer a contrary view of Hong Kong law in his briefing to this
court.
No. 93823-7

      Following 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 eould he 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

signifieant 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 eommunity

available for colleetion ofthe Hong Kong judgment. Shanghai Commercial Bank Ltd. v.

KungDa Chang, 195 Wash. App. 896, 906-07, 381 P.3d 212(2016). Division One did not

reach the effect ofthe choice of law provision in the agreement between Chang and SCB.

Id. Chang sought review, which we granted. See Shanghai Commercial Bank Ltd. v.

KungDa Chang, 187 Wash. 2d 1017, 390 P.3d 337(2017).

 See supra note 1.
No. 93823-7

                                        ANALYSIS

       Standard of Review

       This court reviews the trial eourt's summary judgment decision de novo. Mohr v.

Grantham, 172 Wash. 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 oflaw.'" Id.(alterations in original)

(quoting CR 56(c)). The court must draw all reasonable inferenees from the evidenee in

favor ofthe nonmoving party. Id. This eourt reviews the denial of a motion for

reconsideration for abuse of diseretion. Rivers v. Wash. State Conf. ofMason

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 Wash. 2d 376,

383, 88 P.3d 939 (2004). Choice of law is a question of law that the eourt 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).

       Restatement(Second) ofConflict ofLaws § 187(Am.Law Inst. 1971)

       Washington eourts "shall recognize a foreign-eountry judgment" for money

damages that is "final, eonclusive, and enforceable" where rendered, unless one or more

ofthe mandatory or discretionary grounds for nonrecognition applies. ROW

6.40A.030(1),.020(l)(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), http://www.courts.wa.gov/opinions/, review denied, 182 Wn.2d
No. 93823-7

1006, 342 P.3d 327(2015), cert denied, 135 S. Ct 2847, 192 L. Ed. 2d 877(2015). A

recognized "foreign-eountry judgment is .. . [ejnforeeable in the same manner and to the

same extent as a judgment rendered in this state." RCW 6.40A.060(2).

       The 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 ofthe parties' express choice oflaw

provision in their governing agreement. Our decision in Erwin directs that such inquiry

be undertaken and provides the appropriate analysis.

       In Erwin, we explained that in resolving disputes concerning choice of law the

court need decide(1) whether there is an actual conflict oflaws and, if so,(2) whether the

parties' agreement's choice of law provision is effective. 161 Wash. 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 Wash. 2d at

648). "If the result for a particular issue 'is different under the law ofthe two states, there

is a "real" conflict.'" Id.(quoting Seizer, 132 Wash. 2d at 648 (citing Pac. Gamble

Robinson Co. v. Lapp, 95 Wash. 2d 341, 344-45, 622 P.2d 850(1980), overruling on other

grounds as recognized by Haley v. Highland, 142 Wash. 2d 135, 12 P.3d 119 (2000))).

"'[Wjhcre 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 Wash. 2d at 648-49).
No. 93823-7

      Here, there is an actual eonfliet between Hong Kong law and Washington law on

the issue of whether Chang and his wife's community property is reachable for

satisfaction ofthe 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 eoneept/principle." CP at 76. Accordingly,"[t]he

judgment in ... HCA 806 ... against KD Chang is enforceable in Hong Kong against all

ofKD Chang's assets,. .. inelud[ing] those assets that would be considered 'community

property' in Washington." Id.

       Washington 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 "[ujnder the law of this state [(Washington)], community property is

liable for the suretyship debt of one ofthe 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 ofthe husband, irrespective of whether they were incurred

^ Similarly here, the SCB aeeount provided moneys for Clark's investment activities in Hong
Kong and for servicing Clark's investment debts at another Hong Kong bank. Chang and Chen's
community received no money (benefits) from the SCB account.
No. 93823-7

for the benefit ofthe community."'' Id. Accordingly, ifIdaho 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.

       As 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 ofthe two states, there is

a "real" conflict).

       Given 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 "[sjince 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 Wash. 2d 92, 100,

95 P.3d 313 (2004)); see also id. at 696. "Section 187 ofthe Restatement provides the

 The same is true under Hong Kong law, as attested in the noted expert declaration.

                                               8
No. 93823-7

rule for conflict of laws problems in which the parties have made an express contractual

choice of law." Id. at 694.^ Restatement section 187 provides as follows:

       "'§ 187. Law of the State Chosen by the Parties

              '(1) The law ofthe 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 issue.
              '(2) The law ofthe 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
       their agreement directed to that issue, unless either
              '(a) the chosen state has no substantial relationship to the parties or
                  the transaction and there is no other reasonable basis for the
                  parties' choice, or
               '(b) application ofthe law ofthe chosen state would be contrary to a
                  fundamental policy of a state which has a materially greater
                  interest than the chosen state in the determination ofthe particular
                  issue and which, under the rule of § 188, would be the state ofthe
                  applicable law in the absence of an effective choice oflaw by the
                  parties.
               '(3) In the absence of a contrary indication of intention, the reference
       is to the local law of the state of the chosen law.'"

Id. at 694-95 (quoting O'Brien v. Shearson Hayden Stone, Inc., 90 Wn.2d 680,685, 586

P.2d 830(1978)(qaoting Restatement § 187)).

       Here, subsection(1)applies. The parties could have(and did) expressly provide

in their agreement that "[t]he validity, construction, interpretation and enforcement of

^ Here, the Court of Appeals eorrectly aeknowledged that the parties' "agreement requires the
applieation of Hong Kong law." Shanghai Commercial Bank, 195 Wash. App. at 905. Yet the
Court of Appeals analysis does not mention Restatement section 187, applying instead only the
analysis contained in Restatement section 188. See id. at 903 n.22. Although in this case the
Court of Appeals analysis and the analysis applied in this decision achieve the same outcome, we
granted review in part to reiterate the analytical framework that should be followed when a
choice of law provision is elected by the parties.

                                                 9
No. 93823-7

their agreement "shall be governed by [Hong Kong law]." CP at 172(emphasis added).

The specific inclusion of enforcement in context fulfills the specificity requirement of

subsection (1), encompassing the enforcement action here and thereby making the

parties' choice of law selection effective under subsection (1).

       Further, even if the language ofthe choice of law provision were deemed to be too

general to comply with subsection (1), or the nature ofthe subsection (1)requirement

could not otherwise be met here, subsection (2)(b) would apply to the circumstance

presented in this case.® Under subsection (2)(b), the law chosen by the parties (i.e.. Hong

Kong law) will be applied unless application of Hong Kong law would be contrary to

Washington policy and under Restatement section 188(most significant relationship test)

Washington would be the state of applicable law absent an express choice oflaw

designation by the parties. As the discussion in the next section (concerning Pacific

Gamble and Potlatch) explains, the application of Hong Kong law in this circumstance

does not offend Washington policy. Further, the most significant relationship test

(applied below)favors application of Hong Kong law. Accordingly, because subsection

(2)(b) conditions foreclosing application ofthe chosen law are not met, the parties'

express choice of Hong Kong law is effective under Restatement section 187.

       Restatement section 188

       Turning to Restatement section 188, as we have noted, Washington courts have

applied the most significant relationship test to contract choice oflaw issues for half a

® Subsection (2)(a) does not apply because "the chosen state"(Hong Kong) clearly does have a
substantial relationship to the parties and the transaction.

                                                  10
No. 93823-7

century. See Mulcahy, 152 Wash. 2d at 100 (citing Baffin Land Corp. v. Monticello Motor

Inn, Inc., 70 Wn.2d 893,425 P.2d 623 (1967)). "In the absence of an effective choice of

law by the parties, the validity and effect of a contract are governed by the law ofthe
state having the most significant relationship with the contract." Pac. Gamble Robinson

Co. V. Lapp,95 Wash. 2d 341, 343,622 P.2d 850(1980). Restatement section 188 provides
a summary ofthe test to be applied:

                "(1) The rights and duties ofthe parties with respect to an issue in
         contract are determined by the local law ofthe state which, with respect to
         that issue, has the most significant relationship to the transaction and the
         parties under the principles stated in § 6.0°^
                "(2)In the absence of an effective choice of law by the parties (see §
         187), the contacts to be taken into account in applying the principles of § 6
         to determine the law applicable to an issue include:
                 "(a)the place of contracting,
                 "(b)the place of negotiation of the contract,
                 "(c)the place of performance,
                 "(d)the location ofthe subject matter ofthe contract, and
                 "(e)the domicil, residence, nationality, place of incorporation and
                 place of business ofthe parties.
                 "These contacts are to be evaluated according to their relative
         importance with respect to the particular issue.
               "(3)If the place of negotiating the contract and the place of
          performance are in the same state, the local law of this state will usually be
          applied."

10
     Restatement section 6 lists "Choice-of-Law Principles" at subsection(2) as follows:
         (a)the needs ofthe interstate and intemational systems,
         (b)the relevant policies ofthe forum,
         (c)the relevant policies of other interested states and the relative interests of those states
          in the determination of the particular issue,
         (d)the protection ofjustified expectations,
         (e)the basic policies underlying the particular field of law,
         (f) certainty, predictability and uniformity of result, and
         (g)ease in the determination and application ofthe law to be applied.
                                                   11
No. 93823-7

Id. at 346(quoting Restatement section 188). "Additionally, the expectations ofthe

parties to the eontract may significantly tip the scales in favor of one jurisdiction's laws

being applied over another's." Mulcahy, 152 Wash. 2d at 101; see also Pac. Gamble,95

Wn.2d at 346; Potlatch, 76 Wash. 2d at 810.

       In Pacific Gamble,this court addressed the issue of whether a creditor on an

obligation ineurred by one spouse in a foreign, noncommunity property state, where both

spouses were previously domiciled, was restricted in its recovery to the separate property

ofthe obligor spouse after the couple moved to Washington. 95 Wash. 2d at 343. In

Pacific Gamble,the husband, a Colorado resident and business owner, signed a note to

secure a loan for his Colorado business. His wife did not sign the note. Under Colorado

law, only the husband's earnings and property were subjeet to the debt. The husband
defaulted, he and his wife moved to Washington, and the creditor sued in Washington,

seeking to reeover the balance due on the note from both the husband and the marital

community. Id. at 342-43.

       Applying Restatement section 188, this court noted that Colorado had numerous

governmental interests in the note transaction. The transaetion oceurred in Colorado, the

husband was doing business in Colorado, and he and his wife were domiciled in

Colorado at the time of the exeeution of the note, which was signed in Colorado by the

husband individually and on behalf of his Colorado corporation. Both parties apparently

eontemplated that all performance was to be in Colorado. Id. at 346-47. This court

assumed that Colorado's interests included ensuring the predictability of business

                                              12
No. 93823-7

relations and to prevent the flight of debtors to other states to avoid payment of otherwise

legitimate debts. Id.

       This court acknowledged that while Washington has a general interest in

protection of marital communities from the entirely separate debts of one spouse,see

RCW 26.16.010,.020, nevertheless,"neither this court nor the legislature currently

adheres to the rule that the marital property, including the wages of a debtor spouse, are

under all circumstances to be insulated from the claims of a creditor on a separate debt."

Pac. Gamble,95 Wn.2d at 347 n.2. Moreover, Washington had no cormection with the

transaction until the husband and wife established their domicile here a few months after

the note went into default. Id. at 347. The court noted,"[T]his state has no policy

interest in maintaining within its borders a sanctuary for fleeing debtors." Id.

       As to the parties' expectations, the court held that all parties would assume that

Colorado law applied. The creditor had willingly subjected itself to Colorado law by

doing business in Colorado and contracting with a Colorado resident, and the creditor

"could justifiably assume that the Colorado law would likewise apply to [the creditor's]

business debtor." /J. at 348. The husband and wife could reasonably expect at the time

the note was executed that the transaction would be governed by Colorado law since they

had long been domiciled in Colorado, and remained there for a time after the note was

signed;"they could not justifiably believe that the obligation could be fairly avoided by

...[moving] to a state where a husband's wages would not be subject to the debt." Id.

This court held that the numerous contacts, competing policies, and justifiable

expectations ofthe parties show Colorado's interest in the contract to be far more

                                             13
No. 93823-7

significant than Washington's and accordingly applied Colorado law, thereby subjecting

all ofthe husband's wages and acquisitions available for payment ofthe debt,

"notwithstanding such property is characterized as 'community' under Washington law."

Id. at 349-50.

       The Pacific Gamble court noted that its decision was consistent with Fotlatch,

even though in Fotlatch the court concluded that Washington law should apply to the

question of whether the community was liable for the husband's suretyship obligation to

an Idaho creditor; the result reached turned on application ofthe above factors to the facts

ofthe case. Id. at 350 n.3. "Had we found [in Fotlatch] that Idaho had the most

significant relationship to the transaction, it is clear we would have applied Idaho law and

accordingly imposed liability on the Washington marital community." Id. Key to the

result in Fotlatch was the fact that the Idaho creditor knew it was dealing with

Washington residents and knew that the property covered in the chattel mortgage at issue

was located in Washington, and that it was likely that the debtors' community property

would be situated in Washington. Fotlatch, 76 Wash. 2d at 813.

       Applying the Restatement section 188 factors, Faciflc Gamble, and Fotlatch to the

facts ofthis case yields the result that Hong Kong law has the most significant

relationship to the present matter concerning enforcement ofthe Hong Kong judgment.

The places of contracting, negotiation, and performance and the location ofthe subject

matter ofthe contract favor Hong Kong. Given these contacts, the justified expectations

ofthe parties and the policies of Hong Kong and Washington indicate that Hong Kong

has the most significant relationship to the issue here. The parties' reasonable

                                             14
No. 93823-7

expectations favor Hong Kong law. Less than a week before the Facility Letter and other

documents were prepared by SCB for Chang's signature, Chang was in Hong Kong with

Clark, meeting with a bank executive and investment adviser about moving millions of

dollars of investment accounts to SCB. Chang clearly knew that he was dealing with a

bank in Hong Kong and that the agreement with SCB expressly included Hong Kong

choiee-of-law provisions. Conversely, the record contains no indication that SCB knew it

was dealing with a Washington resident; the documents Chang signed were all addressed

to his father's (Clark's) residence in Shanghai and Chang returned them to Clark, not to

SCB, after signing. Clark and his advisors used the borrowed money in Hong Kong to

pay investment debt incurred there that had no connection to Washington.

       The relative interests and policies of Washington and Hong Kong also favor Hong

Kong. Like Colorado, Hong Kong has an interest in ensuring the predictability of

business relations, including the payment of debt obligations. See Pac. Gamble,95

Wn.2d at 346-47. And while Washington has an interest in generally protecting the

welfare of community property interests of its residents, it would not serve those interests

to permit debtors to hide behind or misuse community property status as a blanket

protection of assets from legitimate foreign debt collection in all circumstances.

       In sum, weighing the competing policies of Washington and Hong Kong and the

justified expectations of Chang, Chen, and SCB, and considering Chang's contacts with

Hong Kong, we conclude that Hong Kong has the most significant relationship to the

issue here. For all the reasons discussed above, we affirm the trial court's grant of

summary judgment.

                                             15
No. 93823-7

       Merger

       Finally, relying on Caine & Weiner v. Barker,42 Wn. App. 835, 837, 713 P.2d
1133 (1986), which addresses the "merger doctrine," Chang argues that the present

enforcement action should be considered without any reference to the underlying

agreement, breach, or contacts as discussed above. He contends that "[t]he underlying

claim is irrelevant to an inquiry into enforceability." Pet. for Review at 15. But Chang's

reliance on the merger doctrine is misplaced in the present context. In Caine, Division

One observed that the merger rule "applies generally to a judgment for a plaintiff in an

action to recover money." 42 Wash. App. at 837. "As a general rule, when a valid final

judgment for the payment of money is rendered, the original claim is extinguished, and a

new cause of action on the judgment is substituted for it. Thereafter, the plaintiff cannot

maintain an action on the original claim or any part thereof." Id.(citations omitted). But

Caine also acknowledged the doctrine's limitations as follows:

              The merger rule is based in part upon the need to prevent vexatious
      relitigation of matters that have already passed into judgment as between
      the parties to the litigation and their successors. However, despite the
      general rule that underlying rights and obligations are extinguished by the
      judgment, the doctrine is designed to promotejustice and should not be
       carriedfurther than that end requires.

Id.(emphasis added)(citations omitted). Here, application of the merger doctrine is not

warranted or appropriate. The present case does not involve vexatious relitigation; SCB

merely seeks enforcement of a valid judgment. Further, application ofthe doctrine as

Chang advocates would require the court to ignore the parties' express expectation

                                             16
No. 93823-7

(evidenced by the ehoiee of law provision)that Hong Kong law is to he applied

comprehensively to all aspects ofthe agreement, including enforcement. Accordingly,

because application ofthe doctrine as Chang advocates would he contrary to the rule's

parameters as noted in Caine, we decline to apply the merger doctrine here.

                                     CONCLUSION

       The trial court correctly granted SCB's second summary judgment motion because

the express choice oflaw provision contained in the agreement between SCB and Chang

is effective under Restatement section 187 and Erwin. Further, if there were no express

choice of law provision in this ease. Hong Kong law would apply in any event under

Restatement section 188's most significant relationship test. Accordingly, Hong Kong

law applies in this enforcement action, making all of Chang's assets, including

community property in Washington, available for payment ofthe debt, but Chang's

wife's separate assets are not available. We reiterate that the appropriate analytical

framework for conflict of law analysis, where there is a choice of law by the parties, is

application ofRestatement 187 as directed in Erwin. For the reasons discussed above, we

affirm the trial court's grant of summary judgment.

                                             17
No. 93823-7

WE CONCUR:

              18