                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-22-2005

Yuen v. Bank of China
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-4068




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Recommended Citation
"Yuen v. Bank of China" (2005). 2005 Decisions. Paper 508.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/508


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                                                                NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT


                                     No. 04-4068


                ELMER YUEN; SAFARI DEVELOPMENT CO., LTD,
                                        Appellants

                                          v.

                                  BANK OF CHINA


             APPEAL FROM THE UNITED STATES DISTRICT COURT
                      FOR THE DISTRICT OF NEW JERSEY
                               D.C. Civil 03-cv-00744
                 District Judge: The Honorable Anne E. Thompson


                      Submitted Under Third Circuit LAR 34.1(a)
                                 September 13, 2005


               Before: SLOVITER, BARRY, and SMITH, Circuit Judges


                         (Opinion Filed: September 22, 2005 )


                                      OPINION




BARRY, Circuit Judge

      Appellant Elmer Yuen, through his corporation, appellant Safari Development Co.,

Ltd. (“Safari”), was the owner of a condominium in the Trump International Hotel and
Tower, located in New York City. The condominium was subject to a mortgage held by

appellee, the Bank of China, with Safari as mortgagor and Yuen as guarantor. The

mortgage and related loan documents were executed in New York, and contain New York

choice of law provisions.

          This action arises out of two previous litigations. In April, 2001, Yuen’s former

wife, Stephanie Downs, sued Yuen in New Jersey Superior Court in connection with the

couple’s divorce. In November, 2002, the Bank of China commenced a mortgage

foreclosure action against Yuen and Safari in New York Supreme Court (“the New York

action”). Shortly thereafter, Yuen and Safari commenced this action in New Jersey

Superior Court, seeking to enjoin the Bank of China from foreclosing in the New York

action. The Bank of China removed this case to the U.S. District Court for the District of

New Jersey. The District Court stayed the case pending the disposition of the New York

action.

          On February 27, 2004, Yuen and Safari sold the condominium, and the proceeds of

the sale were used to satisfy the outstanding mortgage balance.1 As a result, the New

York court dismissed the New York action as moot.

          Yuen and Safari claim that the sale of the condominium was pursuant to an oral

settlement reached with the Bank of China, whereby the parties agreed that Yuen and




   1
  This sale occurred in connection with a settlement agreement between Yuen and
Downs.

                                               2
Safari would not be responsible for some additional $500,000 in fees and penalties. The

Bank of China denies that any such agreement had been reached, and demanded the

$500,000, which Yuen and Safari were forced to pay.2

          Yuen and Safari thereafter filed a motion in the District Court to enforce the

purported settlement with the Bank of China. While the parties continue to dispute the

existence of a settlement agreement, Yuen and Safari concede that any such agreement

was never reduced to writing. There is no dispute as to the underlying state law: all

parties agree that New York law requires settlement agreements to be in writing, while

New Jersey law recognizes oral settlement agreements. Rather, the main issue is whether

New York or New Jersey law applies.

          The District Court held that New York law applied because New York had the

greater interest in, and most significant connection to, the litigation. The District Court

noted that the mortgage agreement and settlement agreement (to the extent it existed)

were both entered into in New York, and the condominium was located in New York. In

contrast, New Jersey was connected to the case only because of the litigation filed in New

Jersey.

          On appeal, Yuen and Safari argue that the purpose of New York’s policy that



   2
    Indeed, based on the record provided, it appears that no such agreement was reached.
In a letter from Yuen to the Bank of China on the date of the sale, Yuen claimed that
“Safari is experiencing significant cash flow problems to disburse the taxes and legal fees
involved. Safari would like to sincerely propose that Bank of China forgive Safari of the
related legal fees of approximately $140,000.” App. 163.

                                                3
settlement agreements be in writing is “to relieve New York courts of the burden of

collateral litigation over [settlement] agreements.” Reply Brief, at 2. Because this action

is before the New Jersey courts, the argument goes, New York’s policy would not be

frustrated by enforcing the settlement agreement, while New Jersey’s policy would be

vindicated. This argument fails. New York’s policy is intended to protect both the courts

and the litigants from collateral litigation, and to promote finality. Although this action is

before a court in New Jersey, New York continues to have an interest in promoting its

policies, particularly where the litigation is in connection with real property located in

New York. And, we note, the procedural history of this case strongly suggests that Yuen

and Safari engaged in forum shopping, which is a significant factor to be considered in

applying choice-of-law principles. See State Farm Mutual Automobile Ins. Co. v.

Simmons’ Estate, 417 A.2d 488, 492 (N.J.1980); Business Loan Center v. Nischal, 331 F.

Supp. 2d 301, 310 (D.N.J. 2004).

       The October 13, 2004 order of the District Court will be affirmed.




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