Wilcox v. Lloyds TSB Bank, PLC et al

Filing 73

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS re: 62 . Signed by JUDGE ALAN C KAY on 12/23/2014. Written Order follows hearing held 12/15/2014 on Defendant Lloyds Bank PLC's Motion to Dism iss the Claims Asserted in the Second Amended Complaint (motion, doc 62 ). Minutes of hearing: doc. no. 71 . (afc)CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
LLOYDS TSB BANK, PLC, a bank
organized and existing under the)
laws of the United Kingdom, and )
)
DOES 1-15,
)
)
Defendants.
)
BRADLEY WILLCOX and FRANK
DOMINICK,

Civ. No. 13-00508 ACK-RLP

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S
MOTION TO DISMISS
PROCEDURAL BACKGROUND
On September 13, 2013, Plaintiff Bradley Willcox filed
a Complaint, on behalf of himself and a similarly situated class,
against Defendant Lloyds TSB Bank, PLC, now known as Lloyds Bank
PLC (“Lloyds”), in the Circuit Court of the First Circuit, State
of Hawaii. (Doc. No. 1 (“Notice of Removal”) Ex. A.) On October
7, 2013, Lloyds removed the case to federal court pursuant to the
Class Action Fairness Act, 28 U.S.C. § 1332.1/ (Notice of Removal

1/

Three class action suits involving similar loan products
and claims as those at issue in the instant case have been filed
against Lloyds in federal district courts in California and
Washington: (1) Dugan v. Lloyds TSB Bank, Civ. No. 3:12-cv-02549WHA (N.D. Cal.); (2) Osmena v. Lloyds TSB Bank, Civ. No. 3:12-cv(continued...)
1

at 3-7.)
On December 3, 2013, Willcox filed a First Amended
Complaint (“FAC”), adding Frank Dominick as a named plaintiff.
(Doc. No. 25.) Willcox and Dominick (collectively “Plaintiffs”)
brought two claims for relief in their FAC: Unfair and Deceptive
Trade Practices under H.R.S. §§ 480-2 and 481A-3(a)(12); and
Declaratory Relief under H.R.S. §§ 632-1 et seq. and 28 U.S.C. §§
2201 and 2202. (FAC ¶¶ 61-77.)
On December 17, 2013, Lloyds filed a Motion to Dismiss
the Claims Asserted in the FAC. (Doc. No. 26.) On June 10, 2014,
the Court issued an Order Granting Lloyds’ Motion to Dismiss.
(Doc. No. 49 (“June 10 Order”).) In the June 10 Order, the Court
found that the facility agreements’ Hong Kong choice of law
provision precluded Plaintiffs from asserting Hawaii and U.S.
statutory claims and, therefore, dismissed all claims in the FAC.
June 10 Order at 46. However, the Court granted Plaintiffs leave
to file an amended complaint. Id.
On August 14, 2014, Plaintiffs filed the operative
Second Amended Complaint (“SAC”). (Doc. No. 61.) In their SAC,
Plaintiffs bring three claims for relief under Hong Kong law:
Breach of Contract (Count I); Breach of an Implied Term Limiting

1/

(...continued)
02937-WHA (N.D. Cal.) (since consolidated with Dugan); and (3)
Washington Land Development, LLC v. Lloyds TSB Bank plc, 2:14-cv00179-JCC (W.D. Wash.). Dugan and Osmena have since been resolved
and dismissed.
2

Lloyds’ Discretion to Change the Interest Rate (Count II); and
Declaratory Relief (Count III). (Id. ¶¶ 54-78.)
On September 19, 2014, Lloyds filed the instant Motion
to Dismiss the Claims Asserted in the SAC (Doc. No. 62), along
with a Notice of Intent to Rely on Foreign Law Pursuant to
Federal Rule of Civil Procedure 44.1 (Doc. No. 63). On November
24, 2014, Plaintiffs filed an Opposition (Doc. No. 68), along
with a Notice of Intent to Rely on Foreign Law Pursuant to
Federal Rule of Civil Procedure 44.1 (Doc. No. 67). On December
1, 2014, Lloyds filed a Reply. (Doc. No. 69.)
The Court held a hearing regarding the instant motion
on December 15, 2014.
FACTUAL BACKGROUND2/
This case involves the issuance by Lloyds of dual
currency, or International Mortgage System (“IMS”), loans. Lloyds
is a wholly-owned subsidiary of Lloyds Banking Group, PLC. (SAC ¶
8.) Lloyds is organized under the laws of the United Kingdom and,
although a subsidiary, maintains branches throughout the world,
including a branch in Hong Kong, through which Lloyds issued IMS
loans to Plaintiffs. (Id.) Lloyds obtains funding from its
parent.

2/

The facts as recited in this Order are for the purpose of
disposing of the current motion and are not to be construed as
findings of fact that the parties may rely on in future
proceedings.
3

I.

The “Cost of Funds” Provision in the IMS Loans
IMS loans are mortgage loans with a currency switching

feature that allows borrowers to switch the currency of their
loans between U.S. Dollars and other currencies. This case
concerns IMS loans secured by mortgages on real property located
in Hawaii and California. (Id. ¶¶ 6-7 & 28-29.) These loans all
have an interest rate set at 1.5% above the “Cost of Funds,” with
the interest rate period fixed for successive three month
periods. The Cost of Funds is defined as “the cost (calculated to
include the costs of complying with liquidity and reserve asset
requirements) in respect of any currency expressed as a
percentage rate of funding for maintaining the Advance or
Advances in that currency as conclusively nominated by the Bank
from time to time.” (Id. ¶ 2.)
II.

The Named Plaintiffs’ Loans
Plaintiff Bradley Willcox is a resident of Hawaii and

Canadian citizen who, in 2007, took out approximately $1,284,500
in four IMS loans from Lloyds, secured by four real properties
located in Honolulu, Hawaii. (SAC ¶¶ 6 & 20-21; Mot. at 6.)
Willcox took out the loans in U.S. Dollars and, shortly after the
closing of the transaction, chose to redenominate them to
Japanese Yen. (SAC ¶ 22.) After he did so, the exchange rate
began to fall, meaning the Yen grew stronger relative to the U.S.
Dollar, and the interest rate on Willcox’s loans rose. (Id. ¶
4

23.) Willcox alleges that the “dramatic increase” was a product,
in part, of Lloyds’ “arbitrary increases” in its Cost of Funds.
(Id. ¶ 24.) Willcox states that, as a result of these alleged
arbitrary increases, he has paid substantially more than he
otherwise would have over the course of the loans. (Id. ¶ 25.)
Plaintiff Frank Dominick is a legal resident of Hong
Kong3/ and a U.S. citizen. (Id. ¶ 7.) In 2007, Dominick took out
$2,700,000 in an IMS loan from Lloyds, secured by property
located in Honolulu, Hawaii, as well as a second IMS loan for
$1,762,500 secured by a property in Los Angeles, California. (Id.
¶¶ 27-29.) Dominick alleges that his loans were always
denominated in Yen. (Id. ¶ 29.) Lloyds asserts that Dominick
chose to denote his loans in Yen, and notes that the facility
agreements governing Dominick’s loans set forth the loan amounts
in U.S. Dollars. (Mot. Exs. E & F.) Regardless, as was the case
for Willcox, once the exchange rate began to drop (with the Yen
growing stronger in relation to the U.S. Dollar), Dominick’s
interest rate on his loans rose. (SAC ¶ 31.) Dominick alleges
that his quarterly interest payments had risen “dramatically” by
2012. (Id.) Specifically, Dominick alleges that his payments on
the Hawaii property loan in March 2007 were equivalent to

3/

As discussed below, Dominick asserts in his declaration
that although he is “technically” a legal resident of Hong Kong,
he resides primarily in California. See Part I.B.2.a. of this
Order infra.
5

approximately $15,800 in U.S. Dollars, but that the payments had
increased to roughly the equivalent of $28,300 by September 2012.
(Id. ¶ 32.) Dominick alleges that this increase was the result of
Lloyds’ arbitrary increases of its Cost of Funds. (Id. ¶ 33.)
According to Dominick, he has paid significantly more money over
the course of the loans than he otherwise would have as a result
of Lloyds’ increase in its Cost of Funds. (Id. ¶ 34.)
III.

Allegations Regarding the Cost of Funds
Plaintiffs allege that Lloyds arbitrarily increased the

Cost of Funds component of the variable interest rates of the IMS
loans thereby substantially increasing the IMS loans’ interest
rates. (Id. ¶ 4.) Plaintiffs further allege that Lloyds increased
its Cost of Funds during a time when standard indexes for
interest rates, such as the London Inter-Bank Offered Rate
(“LIBOR”), decreased. (Id.)
Plaintiffs assert that, from 1985 to 2008, Lloyds used
one method for calculating its Cost of Funds, but that in 2009
Lloyds added several basis points to the Cost of Funds as a
result of the imposition by its parent company of a liquidity
transfer pricing (“LTP”) charge. (Id. ¶ 5.) Plaintiffs allege
that Lloyds thus used the Cost of Funds to pass on to borrowers
“the cost of funding Lloyds’ parent’s overhead and operations as
a whole, not just the cost of funding their own IMS loans.” (Id.)

6

DISCUSSION
Lloyds moves to dismiss the SAC on forum non conveniens
grounds. Alternatively, Lloyds moves to dismiss the SAC for
failure to state a claim upon which relief can be granted.
I.

Motion to Dismiss for Forum Non Conveniens
A. Legal Standard
“The doctrine of forum non conveniens is a drastic

exercise of the court’s ‘inherent power’ because, unlike a mere
transfer of venue, it results in the dismissal of a plaintiff’s
case.” Carijano v. Occidental Petroleum Corp., 643 F.3d 1216,
1224 (9th Cir. 2011). Accordingly, the Ninth Circuit has “treated
forum non conveniens as ‘an exceptional tool to be employed
sparingly,’ and not a ‘doctrine that compels plaintiffs to choose
the optimal forum for their claim.’” Id. (quoting Dole Food Co.
v. Watts, 303 F.3d 1104, 1118 (9th Cir. 2002)). “The mere fact
that a case involves conduct . . . from overseas is not enough
for dismissal.” Id. (citing Tuazon v. R.J. Reynolds Tobacco Co.,
433 F.3d 1163, 1181-82 (9th Cir. 2006)).
“To prevail on a motion to dismiss based upon forum non
conveniens, a defendant bears the burden of demonstrating an
adequate alternative forum, and that the balance of private and
public factors favors dismissal.” Id. (citing Dole Food Co., 303
F.3d at 1118).
B. Application
7

1. Adequate Alternative Forum
“Generally, an alternative forum is available where the
defendant is amenable to service of process and the forum
provides ‘some remedy’ for the wrong at issue.” Tuazon, 433 F.3d
at 1178.
Here, it appears that Lloyds is amenable to service of
process in Hong Kong because it currently maintains a branch in
Hong Kong and conducts business there. Furthermore, it is clear
that Hong Kong courts provide Plaintiffs “some remedy” for
Lloyds’ alleged wrongful conduct given that they assert claims
and seek relief under Hong Kong law. Tuazon, 433 F.3d at 1178;
see also Borden, Inc. v. Meiji Milk Products Co., Ltd., 919 F.2d
822, 829 (2d Cir. 1990) (holding that a foreign forum was
adequate even though it did not “provide precisely the same
remedies” as a United States court). The Court also notes that
the IMS loans’ facility agreements contain a Hong Kong choice of
law provision and non-exclusive Hong Kong forum selection clause.
(See, e.g., Mot. Ex. A at 7.)4/ Moreover, in its June 10 Order,
the Court recognized that “several Hong Kong statutes and common
law remedies” offer Plaintiffs “somewhat similar protection” as

4/

For purposes of ruling on Defendant’s motion to dismiss
for forum non conveniens, the Court considers materials outside
the SAC. See Van Cauwenberghe v. Biard, 486 U.S. 517, 529 (1988)
(recognizing that “the district court is accorded substantial
flexibility in evaluating a forum non conveniens motion, and each
case turns on its facts”) (internal citation and alteration
omitted).
8

certain U.S. and Hawaii consumer protection statutes. June 10
Order at 45-46.
For these reasons, the Court concludes that Hong Kong
is an adequate alternative forum.
2. Balance of Private and Public Interest Factors
Since an adequate alternative forum exists, the Court
must balance the private and public interest factors to determine
whether to dismiss the SAC on forum non conveniens grounds.
However, before doing so, the Court must decide what level of
deference Plaintiffs’ choice of forum should be accorded. See
Carijano, 643 F.3d at 1227.
a. Level of Deference to Plaintiffs’ Chosen Forum
Where a plaintiff is a United States citizen or
resident, the plaintiff’s choice of his home forum is entitled to
substantial deference and the defendant must satisfy a heavy
burden of proof. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256
(1981); Lueck v. Sundstrand Corp., 236 F.3d 1137, 1143 (9th Cir.
2001); see also Carijano, 643 F.3d at 1227 (“When a domestic
plaintiff initiates litigation in its home forum, it is
presumptively convenient.”). While courts afford substantial
deference to a domestic plaintiff’s choice of his home forum,
that deference is “far from absolute.” Loya v. Starwood Hotel &
Resorts Worldwide, Inc., 583 F.3d 656, 665 (9th Cir. 2009). “A
district court has discretion to decide that a foreign forum is
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more convenient.” Id.
In this case, Willcox is a Canadian citizen and
permanent resident of Hawaii. (SAC ¶ 6; Willcox Decl. ¶¶ 3-5 &
10-11; Mot. at 6.) Willcox has been living in Hawaii since 2002
and currently works as a professor at the University of Hawaii
John Burns School of Medicine. (Willcox Decl. ¶¶ 3 & 8.)
As for Dominick, the parties contest his status.
Dominick alleges in the SAC that he is a legal resident of Hong
Kong and U.S. citizen. (SAC ¶ 7.) In his declaration, Dominick
asserts that he is “technically” a legal resident of Hong Kong
because he works in Hong Kong and is therefore obligated to have
a Hong Kong ID card. (Dominick Decl. ¶ 2.) However, Dominick
asserts that he has resided primarily in California since 2007
and only stays with friends or in a hotel while in Hong Kong.
(Id. ¶¶ 3-4.) Lloyds questions Dominick’s assertions and argues
that Dominick has “substantial ties” to Hong Kong. (Reply at 89.) Lloyds presents evidence that, in February 2012, Dominick
submitted a “Confirmation of Changes to Contact Details” form to
Lloyds listing Hong Kong as his “country of residence” and
providing a Hong Kong address for correspondence from Lloyds.
(Reply Ex. 2.) Lloyds also presents evidence that Dominick is a
managing partner at an investment management company located in
Hong Kong. (Id. Ex. 3.)
Having reviewed the parties’ submissions, the Court

10

concludes that Plaintiffs’ choice of forum should be afforded
substantial deference. As discussed, Willcox is a permanent
resident of Hawaii and has been living in the state since 2002,
which is five years before he took out the IMS loans. The Ninth
Circuit has held that a resident plaintiff (Willcox’s category)
is entitled to the same deference as a citizen plaintiff. Tuazon,
433 F.3d at 1177 n. 6 (citing Piper, 454 U.S. at 256 n. 23).
Regarding Dominick, he is a U.S. citizen, and the Ninth Circuit
has “clarified that a [U.S.] citizen’s decision to bring suit in
a state in which the plaintiff is not a resident is still
entitled to deference.” Neuralstem, Inc. v. ReNeuron, Ltd., 365
Fed. Appx. 770, 771 (citing Boston Telecommunications Group, Inc.
v. Wood, 588 F.3d 1201, 1207 (9th Cir. 2009)). Further, even
assuming arguendo that Dominick’s apparent status as a legal
resident of Hong Kong qualifies him as a “foreign plaintiff,” the
Ninth Circuit has explicitly rejected the argument that “when
both domestic and foreign plaintiffs are present, the strong
presumption in favor of the domestic plaintiff’s choice of forum
is [] lessened.” Carijano, 643 F.3d at 1228.
Because the Court finds that Plaintiffs’ decision to
initiate this action in Hawaii is entitled to substantial
deference, Lloyds bears a heavy burden of showing that the
balance of private and public interest factors weighs strongly in
its favor. Piper, 454 U.S. at 256; Lueck, 236 F.3d at 1143; see

11

also Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1334-35 (9th
Cir. 1984) (“. . . [U]nless the balance is strongly in favor of
the defendant, the plaintiff’s choice of forum should rarely be
disturbed.”). The Court now turns to those factors.
b. Private Interest Factors
The Court weighs the following private interest
factors:
(1) relative ease of access to sources of
proof; (2) the availability of compulsory
process for attendance of unwilling
witnesses, and cost of obtaining attendance
of willing witnesses; (3) possibility of
viewing subject premises; [and] (4) all other
factors that render trial of the case
expeditious and inexpensive.
Creative Technology, Ltd. v. Aztech System Pte., Ltd., 61 F.3d
696, 703 (9th Cir. 1995).
i. Sources of Proof
In terms of the parties, as discussed above, Willcox
has lived in Hawaii at all times relevant to this action.
Dominick is evidently a legal resident of Hong Kong, although he
asserts in his declaration that he resides primarily in
California. As for Lloyds, Plaintiffs allege that it “is a
wholly-owned subsidiary of Lloyds Banking Group plc, organized
and existing under the laws of the United Kingdom with branches
in, among other places, the United States, Tokyo, Japan, and Hong
Kong.” (SAC ¶ 8.)

12

In terms of the witnesses and documents, Lloyds asserts
that “virtually all” of the witnesses and relevant documents are
located in Hong Kong. (Mot. at 14.) Lloyds notes that the
facility and mortgage agreements indicate that the IMS loans
originated and were serviced out of Lloyds’ Hong Kong branch. See
June 10 Order at 24 n. 10. Lloyds also directs the Court’s
attention to Willcox’s Rule 26(a)(1) Initial Disclosures5/ (dated
November 29, 2013), in which Willcox identifies individuals who
are “likely to have discoverable information that [he] may use to
support his claims.” (Mot. Ex. I at 2-6.) The majority of these
individuals are employees and representatives of Lloyds,
including thirteen Hong Kong branch employees, and therefore they
presumably reside outside of Hawaii. Conversely, only a minority
of the individuals identified in Willcox’s Initial Disclosures
are located in Hawaii: Willcox himself and attorneys at Cades
Schutte LLP, the Hawaii law firm that allegedly helped draft the
IMS loan documents. (Id. at 3.) Willcox’s Initial Disclosures
further provide that Lloyds “is in possession and control of all,
or the vast majority of information relevant” to his claims. (Id.
at 8.)
Additionally, Lloyds notes that certain allegations in

5/

As Lloyds points out, Willcox’s Initial Disclosures were
served before Dominick was added as a named plaintiff “and thus
may not account for any additional individuals Dominick might
assert are likely to have discoverable information.” (Mot. at 1516.)
13

the SAC relate to its parent company. (See, e.g., SAC ¶ 5.) In
particular, Plaintiffs allege that from 1985 to 2008 Lloyds used
one method for calculating the Cost of Funds, but changed that
method in 2009 to account for a LTP charge imposed by its parent.
(Id.) Witnesses and documents related to the LTP charge will
likely be located in London, where Lloyds’ parent is located.
In response to Lloyds’ arguments regarding access to
sources of proof, Plaintiffs claim that Lloyds shut down its Hong
Kong branch operations on December 1, 2014, and moved those
operations to the U.K. (Opp. at 20.) Plaintiffs submit
correspondence from Lloyds (dated June 9, 2014), informing them
that Lloyds is “proposing to close [the] Hong Kong branch” and
“relocate [] mortgage operations to the” U.K., and that they
“expect to complete this change in 2014.” (Id. Exs. 19 & 22.)
Plaintiffs claim that, as a result of this relocation, high-level
Lloyds employees and documentary evidence will move to the U.K.
(Opp. at 20.)
Through the declaration of Simon Cooper, Chief
Executive of the Hong Kong branch, Lloyds clarifies that although
the June 9 correspondence expressed an expectation that the Hong
Kong branch would close by the end of 2014, a fixed date for the
closure has not been set. (Cooper Decl. ¶ 8.) Lloyds states that
the Hong Kong branch will remain open until at least May 2015.
(Id.)

14

Further, Plaintiffs claim that key witnesses are
located in Hawaii. Plaintiffs direct the Court’s attention to
Lloyds’ Rule 26(a)(1) Initial Disclosures (dated November 29,
2013), in which Lloyds identifies a number of individuals who
reside in Hawaii and who are “likely to have discoverable
information.” (Opp. Ex. 8 at 2-11.)
Plaintiffs also assert that the majority of relevant
documents are not located in Hong Kong, but rather are in the
possession of Lloyds’ U.S. based counsel, Squire Patton Boggs
(“SPG”). (Opp. at 21.) According to Plaintiffs, SPG has
collected, reviewed and electronically processed much of this
material as part of its litigation efforts in Dugan, a similar
class action suit that was filed in the U.S. District Court for
the Northern District of California.6/ (Id.; see also footnote 1
supra.) Plaintiffs assert that SPG has informed their counsel on
several occasions “that the bulk of what is required to be
produced in this case has already been the subject of discovery
in the [Dugan] litigation.” (Melchinger Decl. ¶ 9.) Plaintiffs
also produce a letter (dated October 2, 2014) that Lloyds sent to
the plaintiff in Washington Land Development, a similar class
action suit that was filed in the U.S. District Court for the

6/

Plaintiffs submit evidence that Lloyds spent approximately
$5 million on electronic discovery in Dugan and used a team of 19
attorneys and paralegals to review the collected material. (Opp.
Ex. 2 at ¶¶ 6-10.)
15

Western District of Washington. (Opp. Ex. 9; see also footnote 1
supra.) In this letter, Lloyds offers to meet the majority of its
discovery obligations by re-producing the Dugan material. (Id.)
In sum, one of the parties resides in Hawaii (Willcox),
one resides in Hong Kong or California (Dominick), and one is
located in Hong Kong or the U.K. (Lloyds). With respect to the
witnesses and documents, Willcox’s and Lloyd’s Rule 26(a)(1)
Initial Disclosures appear to indicate that the majority of
individuals who are “likely to have discoverable information” are
located outside of Hawaii, primarily in Hong Kong or the U.K.
However, neither party addresses whether the individuals
identified in these disclosures will be called to testify or will
produce documents, let alone whether such testimony and documents
are material and important. See Tuazon, 433 F.3d at 1181 (as to
the location and availability of evidence and witnesses, “[t]he
crucial focus is not on ‘the number of witnesses or quantity of
evidence in each locale,’ but rather the ‘materiality and
importance of the anticipated evidence and witnesses’
testimony’”) (quoting Lueck, 236 F.3d at 1146). Further, Lloyds
notes that the IMS loans originated and were serviced in Hong
Kong, and that Willcox states in his Rule 26(a)(1) Initial
Disclosures that Lloyds is in possession of the vast majority of
relevant information. However, Plaintiffs submit evidence
indicating that much of this information has already been

16

collected and electronically processed as part of Lloyds’
litigation efforts in Dugan and, therefore, is in possession of
Lloyds’ U.S. based counsel.
For these reasons, and given the parties’ competing
submissions, the Court finds that this factor slightly favors
Lloyds.
ii. Availability of Compulsory Process for
Attendance of Unwilling Witnesses and
Cost of Obtaining Attendance of Willing
Witnesses
Lloyds asserts that this Court’s subpoena power
does not extend to Hong Kong residents. (Mot. at 17.) Plaintiffs
do not dispute this assertion. However, Lloyds states that
unwilling witnesses can be compelled to testify in Hawaii
proceedings through the provisions of the Hague Convention,
although Lloyds contends that this process is costly. (Id.)
As to the cost of obtaining the attendance of willing
witnesses, Willcox lives in Hawaii and Dominick appears to reside
in California at least part of the year. (See Dominick Decl. ¶ 4
(stating that his children attend California schools and that he
has held a valid California driver’s license for the last seven
years).) Further, Plaintiffs assert that several key witnesses
reside in Hawaii, including local brokers who allegedly helped
administer the IMS loans as well as several attorneys at Cades
Schutte LLP. Nevertheless, it appears that most witnesses are
likely to be employees or representatives of Lloyds and therefore
17

will have to travel from overseas, either from Hong Kong or the
U.K., to testify at a trial in Hawaii.
For the foregoing reasons, the Court concludes that
this factor weighs in favor of Lloyds.
iii. Viewing Subject Premises
Although Plaintiffs’ IMS loans are secured by five
properties located in Hawaii and one property located in
California, the Court agrees with Lloyds that “there is no need
to view or visit these properties in order to adjudicate
Plaintiffs’ claims.” (Mot. at 18.) Plaintiffs’ claims are
contractual in nature and turn on the question of whether Lloyds
breached the facility agreements by inappropriately increasing
the Cost of Funds component of the variable interest rate of the
IMS loans, as alleged in the SAC. Thus, this factor is neutral.
iv. All Other Private Factors Rendering Trial
Expeditious and Inexpensive
Finally, the Court considers all other private factors
rendering trial of this case expeditious and inexpensive.
Here, Lloyds argues in a conclusory manner that “the
courts in Hong Kong are adequately equipped to handle the
contractual claims asserted by Plaintiffs in an efficient and
expeditious manner.” (Mot. at 21.) However, Lloyds does not
specify how Hong Kong courts are able to handle Plaintiffs’
claims in an efficient and expeditious manner. Cf. Lajouj, 2008
WL 2858262, at *7 (noting that “[t]he KRS Defendants argue that
18

the court system in the [Republic of the Marshall Islands
(“RMI”)] is largely based upon American substantive and
procedural law” and, “[t]herefore, according to the KRS
Defendants, discovery efforts and trial can be timely and
efficient in the courts of the RMI.”).
As to Plaintiffs, they note that there is an additional
private interest factor that this Court must consider: “the
ability to enforce any judgment obtained.” (Opp. at 24 n. 7.)
However, Plaintiffs “submit [that] enforceability is not an
issue.” (Id.) Lloyds does not argue that enforcing a judgment is
a concern in this case. Accordingly, the final private interest
factor is neutral. See Boston Telecomms. Group, Inc. v. Wood, 588
F.3d 1201, 1210 (9th Cir. 2009) (“Neither party has argued that
there would be any problem enforcing a judgment in either forum,
and thus the district court properly concluded that [this factor]
was neutral.”).
c. Public Interest Factors
The Court also weighs the following public interest
factors:
(1) administrative difficulties flowing from
court congestion; (2) imposition of jury duty
on the people of a community that has no
relation to the litigation; (3) local
interest in having localized controversies
decided at home; (4) the interest in having a
diversity case tried in a forum familiar with
the law that governs the action; and (5) the
avoidance of unnecessary problems in
conflicts of law.
19

Creative Technology, 61 F.3d at 703-704.
i. Court Congestion
Lloyds has failed to indicate whether or not the courts
of Hong Kong have congested dockets. This Court’s docket is not
congested. Accordingly, this factor weighs in favor of
Plaintiffs.
ii. Jury Interest
Hong Kong jurors are unlikely to have an interest in
this case since Lloyds is closing its Hong Kong branch. In
contrast, Hawaii jurors have a strong interest in this case
because the subject properties (excluding Dominick’s California
property) are located in Hawaii, Willcox is a permanent resident
of Hawaii, a Hawaii law firm allegedly helped draft the IMS loan
documents, and Lloyds allegedly “transacts business in Hawaii”
and sells IMS loans in Hawaii. (SAC ¶ 8.) Hawaii jurors
definitely have a strong interest in adjudicating claims
involving how Willcox and other Hawaii residents are treated by
foreign lenders. Accordingly, this factor weighs strongly in
favor of Plaintiffs.7/
7/

Lloyds argues that this factor weighs in its favor
because the substantial majority of witnesses allegedly reside in
Hong Kong and Hong Kong jurors are “‘better able to assess the
credibility’ of these witnesses ‘given [their] familiarity with
the culture’ in Hong Kong.” (Mot. at 21) (quoting Lajouj, 2008 WL
2858262, at *8.) However, the Ninth Circuit has rejected a
similar argument and recognized that “[j]uries routinely address
subjects that are totally foreign to them, ranging from the
(continued...)
20

iii. Local Interest
For the same reasons as the previous factor, the Court
finds that this factor favors Plaintiffs. Unlike Hong Kong,
Hawaii has a strong interest in this case.
iv. Familiarity with Governing Law
The Court has already determined that the claims at
issue are governed by Hong Kong law. See June 10 Order at 45.
Because Hong Kong courts are better suited to apply and interpret
Hong Kong law, this factor weighs in favor of dismissal.
v. Avoidance of Conflict of Law Problems
As noted directly above, the Court has already
concluded that Plaintiffs’ claims are governed by Hong Kong law.
Thus, no conflict of law problems will likely arise in this case.
Accordingly, this factor is neutral.
d. Summary of Private and Public Interest Factors
The private interest factor relating to sources of
proof weighs slightly in favor of Lloyds. The private interest
factor relating to the availability of compulsory process for the
attendance of unwilling witnesses and cost of obtaining
attendance of willing witnesses weighs in favor of Lloyds. The
remaining private interest factors are neutral.

7/

(...continued)
foreign language of patent disputes to cases involving foreign
companies, foreign cultures and foreign languages.” Tuazon, 433
F.3d at 1181-82.
21

The public interest factors relating to court
congestion, jury interest, and local interest weigh in favor of
Plaintiffs. The public interest factor relating to familiarity
with governing law weighs in favor of Lloyds.8/ The remaining
public interest factor is neutral.
On balance, Lloyds has not met its heavy burden of
demonstrating that the substantial deference accorded to
Plaintiffs’ choice of forum should be disturbed. Piper, 454 U.S.
at 256; Lueck, 236 F.3d at 1143; see also Jensen, 743 F.2d at
1334-35 (“. . . [U]nless the balance is strongly in favor of the
defendant, the plaintiff’s choice of forum should rarely be
disturbed.”). The Court notes that while Plaintiffs’ claims are
governed by Hong Kong law, the parties can supply the relevant
Hong Kong authorities as they have done in a prior motion and in
the instant motion.9/ (See Doc. Nos. 37-38, 62 & 67.)
For these reasons, the Court DENIES Defendant’s Motion

8/

The Court notes that while this factor weighs in favor
of dismissal, it is not dispositive in a forum non conveniens
analysis. Piper, 454 U.S. at 260.
9/

The Court also notes that Lloyds has not sought dismissal
of the Dugan or Washington Land Development actions on the basis
of forum non conveniens. The Court further notes that Lloyds
earlier filed with the United States Judicial Panel on
Multidistrict Litigation a Motion for Transfer of Related Actions
to the Northern District of California for Coordinated or
Consolidated Pretrial Proceedings pursuant to 28 U.S.C. § 1407.
(Doc. No. 5.) On February 14, 2014, the Panel issued an order
denying Lloyds’ Motion for Transfer of Related Actions. (Doc. No.
29.)
22

to Dismiss for forum non conveniens.
II.

Motion to Dismiss for Failure to State a Claim
A. Legal Standard
1. Rule 12(b)(6)
While Hong Kong law governs the substance of

Plaintiffs’ contractual and declaratory relief claims; Federal
Rule of Civil Procedure (“Rule”) 12(b)(6) governs this portion of
Lloyds’ Motion procedurally.
Rule 12(b)(6) authorizes the Court to dismiss a
complaint that fails “to state a claim upon which relief can be
granted.” Rule 12(b)(6) is read in conjunction with Rule 8(a),
which requires only “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P.
8(a)(2). The Court may dismiss a complaint either because it
lacks a cognizable legal theory or because it lacks sufficient
factual allegations to support a cognizable legal theory.
Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.
1988).
In resolving a Rule 12(b)(6) motion, the court must
construe the complaint in the light most favorable to the
plaintiff and accept all well-pleaded factual allegations as
true. Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 783
(9th Cir. 2012). The complaint must contain sufficient factual
matter accepted as true to “state a claim to relief that is
23

plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “The plausibility standard . . . asks for more than a
sheer possibility that a defendant has acted unlawfully. Where a
complaint pleads facts that are ‘merely consistent with’ a
defendant’s liability, it ‘stops short of the line between
possibility and plausibility of entitlement to relief.’” Iqbal,
556 U.S. at 678 (quoting Twombly, 550 U.S. at 556-57). However,
in considering a motion to dismiss, “the court is not deciding
whether a claimant will ultimately prevail but rather whether the
claimant is entitled to offer evidence to support the claims
asserted.” Tedder v. Deutsche Bank Nat. Trust Co., 863 F. Supp.
2d 1020, 1030 (D. Haw. 2012) (citing Twombly, 550 U.S. at 563 n.
8).
2. Consideration of Materials Outside the SAC
“Generally, the scope of review on a motion to dismiss
for failure to state a claim is limited to the contents of the
complaint.” Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006).
However, “[a] court may consider evidence on which the complaint
‘necessarily relies’ if: (1) the complaint refers to the
document; (2) the document is central to the plaintiff’s claim;
and (3) no party questions the authenticity of the copy attached
to the 12(b)(6) motion.” Id. The court is allowed to treat such a
document as “part of the complaint, and thus may assume that its
24

contents are true for purposes of a motion to dismiss under Rule
12(b)(6).” Id. The Ninth Circuit has extended the “incorporation
by reference” doctrine to situations in which a plaintiff does
not explicitly allege the contents of the document if “the
plaintiff’s claim depends on the contents of [the] document” and
“the parties do not dispute the authenticity of the document.”
Knievel v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
Additionally, when deciding on a Rule 12(b)(6) motion, the Court
may consider a document subject to judicial notice. U.S. v.
Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
In ruling on the Rule 12(b)(6) portion of Lloyds’
Motion, the Court considers Exhibits A to F of Lloyds’ Motion and
Exhibits 11 to 20 of Plaintiffs’ Opposition.10/ Exhibits A to F
and 11 to 20 are copies of the facility agreements and mortgage
agreements signed by Plaintiffs. These documents are referred to
extensively in the SAC, essential to Plaintiffs’ contractual and
declaratory relief claims, and neither party questions the
documents’ authenticity. (See, e.g., SAC ¶¶ 2, 21 & 29.)
The Court also considers Exhibits 1, 2, and 6 of
Plaintiffs’ Opposition, Exhibits J to O of Lloyds’ Motion, and
the exhibits attached to Plaintiffs’ Notice of Intent to Rely on

10/

The Court notes that, at the Dec. 15 hearing, the parties
agreed that the Court could consider their exhibits without
converting the instant motion to dismiss into a motion for
summary judgment.
25

Foreign Law. These exhibits are copies of decisions from two
similar class action suits filed against Lloyds in federal
district courts in Washington and California, see footnote 1
supra, and copies of foreign court decisions. See Lee v. City of
Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001) (explaining that a
court can take judicial notice of another court’s opinions);
MCA, Inc. v. U.S., 685 F.2d 1099, 1103 n. 12 (9th Cir. 1982)
(holding that a federal court may take judicial notice of foreign
law under Rule 44.1 if the parties give written notice of their
intent to raise an issue of foreign law).
Finally, the Court considers the declaration of
Professor Anselmo Reyes, a former judge on the High Court of Hong
Kong, who opines on Hong Kong law. See MCA, 685 F.2d at 1103 n.
12.
B. Application
1. Breach of Contract (Count I)
To prevail on a breach of contract claim under Hong
Kong law, a plaintiff must establish (1) that there were express
or implied contractual terms requiring the defendant to act in
some manner and (2) that the defendant has acted contrary to
those express or implied terms. Hongkong Fir Shipping Co. Ltd v.
Kawasaki Kisen Kaisha, [1962] 2 QB (QB Div. 1962) (Mot. Ex. J.)
Contractual language is interpreted by “ascertain[ing] . . . the
meaning which the document would convey to a reasonable person

26

having all the background knowledge which would reasonably have
been available to the parties in the situation in which they were
at the time of the contract.” Investors Comp. Scheme Ltd. v. West
Bromwich Bldg. Soc’y, [1998] 1 WLR 896 at 17 (Doc. No. 67 Ex.
A)11/; see also Jumbo King Ltd v. Faithful Properties Ltd, (1999)
2 HKCFAR 279, 296 (Doc. No. 67 Ex. B) (finding that
interpretation of a document includes consideration of “the
practical objects which it was intended to achieve”).
Plaintiffs’ breach of contract claim (Count I) is based
on the Cost of Funds provision in the IMS loans’ facility
agreements. That provision states:
The Bank’s Cost of Funds means the cost
(calculated to include the costs of complying
with liquidity and reserve asset
requirements) in respect of any currency
expressed as a percentage rate of funding for
maintaining the advance or advances in that
currency as conclusively nominated by the
Bank from time to time.
(See, e.g., Mot. Ex. A at 3.) Plaintiffs allege that Lloyds
breached this provision by “arbitrarily increasing its Cost of

11/

The Court notes that Investors Comp. is an English common
law case, and that both parties have previously recognized that
the body of Hong Kong law includes English common law. (Doc. No.
37-3 at 2) (expert opinion of Paul Kwan submitted in opposition
to Lloyds’ 12/17/13 motion to dismiss) (“Because of its historic
ties with England, the current legal framework of Hong Kong is
based on English common law and Hong Kong legislation.”); (Doc.
No. 38-1 at 4) (expert opinion of Professor Anselmo Reyes
submitted in support of Lloyds’ 12/17/13 motion to dismiss)
(noting that “the body of Hong Kong law” includes English common
law).)
27

Funds.” (SAC ¶ 59.) Plaintiffs further allege that, from 1985 to
2008, Lloyds used one method for calculating its Cost of Funds,
but that in 2009 Lloyds added several basis points to the Cost of
Funds as a result of the imposition by its parent of a LTP
charge. (Id. ¶ 5.) According to Plaintiffs, Lloyds’ inclusion of
the LTP charge breached the Cost of Funds provision because the
charge did not reflect the cost of funding the IMS loans, but
rather reflected “the cost of funding Lloyds’ parent’s overhead
and operations as a whole.” (Id.) Plaintiffs also allege that, at
the same time as Lloyds increased the Cost of Funds, standard
indexes for interest rates like LIBOR were falling. (Id. ¶ 4.)12/
Lloyds makes two basic arguments for dismissing
Plaintiffs’ breach of contract claim.
First, Lloyds argues that the increase in the Cost of
Funds component of the interest rate was not “arbitrary” because
the increase was the direct result of a LTP charge imposed on
Lloyds by its parent and liquidity costs are included within the
definition of “Cost of Funds.” (Mot. at 27-28.) However, Lloyds
does not explain the circumstances under which the LTP charge was
included as part of the Cost of Funds or how the LTP charge was

12/

In their First Cause of Action, Plaintiffs also allege
that “Lloyds breached an implied duty to act honestly and in good
faith in exercising any discretion it held to change the [IMS
loans’] interest rates.” (SAC ¶ 60.) This allegation will be
addressed below in connection with Plaintiffs’ claim for “Breach
of an Implied Term Limiting Lloyds’ Discretion to Change the
Interest Rate” (Count II).
28

computed.13/ At this motion to dismiss stage, the Court need not
decide (and lacks the information to decide) whether the LTP
charge passed on to the IMS loan borrowers “the cost of funding
Lloyds’ parent’s overhead and operations as a whole, not just the
cost of funding their own IMS loans,” as alleged by Plaintiffs.
(SAC ¶ 5.)
Second, Lloyds mischaracterizes Plaintiffs’ breach of
contract claim by implying that its success depends on whether
the Cost of Funds provision explicitly refers to LIBOR or other
market indexes. (Mot. at 29-30.) Lloyds made a similar argument
in Washington Land Development, which Judge Coughenour rejected:
Defendant devotes most of its time to this
strawman argument. But Plaintiff merely
points to the LIBOR index as supporting
evidence. This is not “forc[ing] LIBOR into
the Cost of Funds definition,” as Defendant
suggests, but merely suggesting one reason to
think that the increase did not reflect a
cost properly attributable to Lloyds Bank.
(Opp. Ex. 6 at 4.)
In sum, Plaintiffs plausibly allege that incorporating
the LTP charge breached the Cost of Funds provision by passing on
to the IMS loan borrowers the cost of funding Lloyds’ parent’s
overhead and operations as a whole; rather than an amount
allowable under Hong Kong law. Accordingly, the Court DENIES

13/

The Court notes that, at the Dec. 15 hearing, Lloyds
stated that the change in method for calculating the Cost of
Funds, and specifically the LTP charge, in 2009 was the result of
new regulatory requirements imposed after the financial crisis.
29

Defendant’s Motion to Dismiss Plaintiffs’ breach of contract
claim (Count I).
2. Breach of an Implied Term Limiting Lloyds’
Discretion to Change the Interest Rate (Count II)
In Count II, Plaintiffs claim that the facility
agreement contains “[a]n implied term requiring Lloyds to
exercise any discretion it has to change the Cost of Funds
component of the interest [rate] honestly and in good faith, and
not for an improper purpose, capriciously or arbitrarily, having
regard to the proper purpose and provision of the contract.” (SAC
¶ 69.) Plaintiffs claim that Lloyds breached this alleged implied
term “by arbitrarily passing on Lloyds’ [p]arent’s LTP charge for
purposes of greed rather than for commercially reasonable
reasons.” (Opp. at 35) (citing SAC ¶¶ 64-71.)
Under Hong Kong law, which includes English common
law,14/ courts do not read into every contract implied terms
requiring parties to act in good faith. (Reyes Decl. ¶ 9) (citing
Greenclose Ltd. v. National Westminster Bank, [2014] EWHC 1156
(Ch Div. 14 April 2014), at ¶ 150 (Mot. Ex. K) (“. . . [T]here is
no general doctrine of good faith in English contract law and
such a term is unlikely to arise by way of necessary implication
in a contract between two sophisticated commercial parties
negotiating at arms’ length”).) However, in circumstances similar

14/

See footnote 11 supra.
30

to those in the instant case, courts have read into contracts
implied terms requiring parties to exercise their discretion to
adjust rates in good faith.
For instance, in Pacific Long Distance Tel. Corp. Ltd.
v. New World Telecomm. Ltd., a contractual provision allowed a
company to “revise the Agreement and/or introduce additional
terms and conditions from time to time.” [2012] HCA 1688/2006 ¶
32 (Doc. No. 67 Ex. E). The company invoked this provision to
substantially increase rates. Id. ¶¶ 32-33. The Hong Kong court
held that, although the contractual provision contained no
explicit limit on the company’s discretion to set rates, the
company nevertheless breached “an implied term that the rights
set out in that clause should be exercised on a commercial
footing, reflecting market rates for the provision of such
services, but not for any collateral purpose.” Id. ¶ 48.
Similarly, in Nash v. Paragon Finance PLC, which
involved a variable interest rate provision, an English court
found that there was an implied term in the contract “that the
rate[] of interest would not be set dishonestly, for an improper
purpose, capriciously or arbitrarily.”15/ [2001] EWCA Civ. 1466 ¶

15/

The Court notes that Lloyds’ own expert in Hong Kong law,
Professor Anselmo Reyes, recognizes that the Paragon Finance
court “identified an implied term of good faith prohibiting the
lender from ‘set[ting] interest rates unreasonably.’” (Reyes
Decl. ¶ 11.)
31

36 (Ct. App. 2001) (Mot. Ex. M). A more recent English case
“recognized ‘well established’ authority that ‘a power conferred
by a contract on one party to make decisions which affect them
both must be exercised honestly and in good faith for the purpose
for which it was conferred, and must not be exercised
arbitrarily, capriciously or unreasonably (in the sense of
irrationally).’” (Opp. Ex. 6 at 7) (citing Yam Seng Pte Ltd. v.
International Trade Corp. Ltd., [2013] EWHC 11 (QB) ¶ 145).
In accordance with Pacific Long, Paragon, and
Yam Seng, this Court concludes that Plaintiffs plausibly claim
that there is an implied term in the facility agreements
requiring Lloyds to exercise its discretion to adjust the Cost of
Funds component of the interest rate in good faith. Having so
concluded, the Court next turns to the question of whether Lloyds
plausibly claims that Lloyds breached this alleged implied term.
Lloyds argues that the increase in the Cost of Funds
component of the interest rate “does not qualify, as a matter of
Hong Kong law, as a breach of any implied good faith term.” (Mot.
at 32.) Lloyds relies on the above mentioned Paragon case in
support of this argument.
In Paragon, the borrowers entered into mortgage loan
agreements with Paragon Finance. Paragon, [2001] EWCA Civ. 1466
¶¶ 2-6. The loan agreements provided: “Interest shall be charged
at such rate as [Paragon Finance] shall from time to time apply

32

. . . and may accordingly be increased or decreased by [Paragon
Finance] at any time and with effect from such date or dates as
[Paragon Finance] shall determine[.]” Id. ¶ 8. As noted, the
court determined that there was an implied term in the loan
agreements “that the rates of interest would not be set
dishonestly, for an improper purpose, capriciously or
arbitrarily.” Id. ¶ 36. The court then determined that Paragon
Finance did not violate this implied term by charging interest
rates substantially above prevailing market rates because Paragon
Finance was accounting for its increased costs:
In my judgment, the mere fact that the rates
charged were made “without reference to the
prevailing rates” is not evidence from which
it can be inferred that, in fixing them,
[Paragon Finance] acted in breach of the
implied term. . . . One of the reasons for
[the high interest rate] . . . was that
[Paragon Finance] was in serious financial
difficulties because many of its borrowers
had defaulted, the money markets charged
higher rates for lending to [Paragon Finance]
because it was perceived to be a greater risk
than other mortgage lenders, and these higher
costs had been passed on to borrowers. . . .
In my view, if it was the case that the rates
were increased because [Paragon Finance] was
in financial difficulties for reasons of that
kind, that would not be a breach of the
implied term. If a lender is in financial
difficulty, for example, because it is
obliged to pay higher rates on interest to
the money market, then it is likely to have
to pass those increased costs on to its
borrowers. If in such circumstances the rate
of interest charged to a borrower is
increased, it is impossible to say that the
discretion to set the rate of interest is
being exercised for an improper purpose,
33

capriciously, [or] arbitrarily[.]
Id. ¶ 46.
Although the court concluded that Paragon Finance did
not breach the implied contractual term requiring it to exercise
its discretion to adjust the interest rate in good faith, the
court reasoned that Paragon Finance was accounting for its
increased costs of borrowing from money markets when setting the
interest rate. In this case, as noted, Lloyds fails to provide
any information regarding the circumstances under which the LTP
charge was included as part of the Cost of Funds or how the LTP
charge was computed. Thus, the Court lacks sufficient information
to determine whether Lloyds passed on to the IMS loan borrowers
an amount allowable under Hong Kong law.
In sum, Plaintiffs plausibly allege that Lloyds
breached an implied term - requiring Lloyds to exercise its
discretion to adjust the Cost of Funds in good faith - by passing
on to the IMS loan borrowers an amount not allowed under Hong
Kong law. Accordingly, the Court DENIES Defendant’s Motion to
Dismiss Plaintiffs’ claim for breach of an implied term (Count
II).
3. Declaratory Relief (Count III)
Lloyds argues that Plaintiffs’ declaratory relief claim
(Count III) is not cognizable as an independent cause of action
under Hong Kong law. (Mot. at 35.) In support, Lloyds relies on

34

the declaration of Professor Reyes. (Reyes Decl. ¶ 2.) Reyes
asserts that, under Hong Kong law, declaratory relief “is not an
independent cause of action,” but rather “is an equitable or
statutory remedy.” (Id. ¶ 13.) Reyes supplies two Hong Kong cases
that appear to assert the same. See Eton Properties and
others, [2012] HKCU 2289, at ¶ 19 (Mot. Ex. N) (finding that “a
court should hesitate long and hard before granting ‘declaratory’
relief in its true form, which is an equitable (or statutory)
remedy which serves to establish and/or to clarify the
substantive rights of a party”) (emphasis added); Charter View
Development Ltd. v. Golden Rich Enterprises Ltd., [2002] HKCU
173, at 3 (Mot. Ex. O) (“There is no doubt that declaratory
relief has for many years been embraced in common law
jurisdictions as a valuable and flexible remedy appropriate for
use in many different contexts.”) (emphasis added).
In opposing Lloyds’ argument, Plaintiffs rely on a
decision from a federal court in California applying California
law. (Opp. at 37.) As noted, this Court must apply Hong Kong law
to Plaintiffs’ claims in the SAC. Plaintiffs do not supply the
Court with any Hong Kong law regarding the cognizability of a
declaratory relief claim as an independent cause of action. The
Court therefore relies on the Reyes declaration and the two Hong
Kong cases cited by him, and concludes that under Hong Kong law
declaratory relief is permitted as a remedy, but is not

35

cognizable as an independent cause of action. If this Court
ultimately rules that Plaintiffs prevail on their contractual
claims, then such a ruling could provide any appropriate
declaratory relief or remedy.
CONCLUSION
For the foregoing reasons, the Court: (1) DENIES
Defendant’s motion to dismiss for forum non conveniens; and (2)
GRANTS IN PART AND DENIES IN PART Defendant’s motion to dismiss
for failure to state a claim upon which relief can be granted.
Regarding the second holding, the Court DENIES
Defendant’s motion to dismiss as to Plaintiffs’ claims for Breach
of Contract (Count I) and Breach of an Implied Term Limiting
Lloyds’ Discretion to Change the Interest Rate (Count II).
However, the Court GRANTS Defendant’s motion to dismiss as to
Plaintiffs’ claim for Declaratory Relief (Count III).
IT IS SO ORDERED.
DATED:

Honolulu, Hawai#i, December 23, 2014.

________________________________
Alan C. Kay
Senior United States District Judge

Willcox vs. Lloyds TSB Bank, PLC, Civ. No. 13-00508 ACK-RLP: ORDER GRANTING IN PART
AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS

36