The outcome of a lawsuit filed against the HongKong Shanghai Banking Corp. by Alan H. Sadhwani Guam businessman and property developer and settlement documents of the case are under seal. A federal judge has dismissed with prejudice all complaints and counterclaims.
Judge A. Wallace Tashima of the U.S. District court ordered the case dismissed with prejudice on Nov. 29 and also ordered each party to pay their own costs and attorney fees.
Sadhwani filed suit against HSBC on Oct. 21 2003 alleging a 25-year business relationship and its resultant social relationship had been violated and irreparable damages had occurred (See Sadhwani’s sues HSBC for bad business practice ” in the Dec. 1 2003 issue of the Journal.).
The charges had hinged on actions taken by the bank and its executives concerning Sadhwani’s loans with HSBC.
Sadhwani asked the court to intervene in a forced banking relationship that ensued following the departure of HSBC from Guam.
He and Laju Sadhwani his wife formed K. Sadhwani’s Inc. a Guam corporation on Jan. 31 1978 for the purpose of acquiring properties and developing them.
Through the years Sadhwani’s engaged in the business of leasing renting properties including offices and commercial buildings and selling electronics fixtures and appliances.
Court documents filed with the U.S. District Court of Guam by Joaquin C. Arriola partner at Arriola Cowan & Arriola and Sadhwani’s attorney stated Sadhwani’s owned such Guam landmarks as the Tick Tock building in East Agana the Deloitte & Touche building on Marine Drive the Sateena mall in Dededo and — coincidentally — the HongKong and Shanghai Banking Corp. building in Tamuning.
Sadhwani stated in 1978 he met a manager of the bank at a Rotary Club of Guam meeting and because of the ensuing relationship decided to bank exclusively with HSBC.
After establishing a relationship Sadhwani negotiated to construct HSBC a building in Tamuning thereby making the bank his landlord. The relationship prospered through the years with the Sadhwani’s and the three-year term managers socializing at each other’s homes or in various restaurants court documents obtained by the Journal stated.
Sadhwani said he deposited more than $100 million during 25 years and spent “untold thousands in interest and fees” associated with various loans he had taken with the bank. He stated he would have deposited more had HSBC accepted credit-card transactions which under federal banking laws were not allowed as the bank was a foreign corporation.
Sadhwani’s “faith trust and explicit confidence” in HSBC grew such that he felt the officers and employees would be fair and honest in all their dealings with him court documents stated.
On April 29 2002 HSBC announced it would be closing its Guam office at a time when Sadhwani owed the bank $6.8 million. On Feb. 13 2003 Sadhwani met with an unnamed bank representative to discuss what arrangement could be made. On March 5 2003 HSBC said it would offer a “hairline discount” if the loan could be paid. A promissory note modification was signed extending the loan maturity date to Aug. 31 2003 court records stated.
Sadhwani met with Christopher K. Felix president and principal broker of Century 21 Realty Management Co. to ask for help to either unload properties or find tenants to lease a growing number of unoccupied office spaces he owned. Felix indicated in a letter dated April 3 2003 to Sadhwani that the market was weak. Felix told Sadhwani he had shown the properties to a number of possible buyers but that none had actually made an offer.
On July 18 2003 Sadhwani received a letter from HSBC that said it intended to sell the loan and that he had until Aug. 31 2003 to settle his obligation.
Court documents stated that Sadhwani said he pleaded with the bank not to sell the loan and offered to attempt to find $3 million — and later $3.5 million — to guarantee the loan. He said he was told the money or a guarantee would have to be produced by Aug. 8 2003.
Sadhwani stated he had arranged financing of $3.5 million with First Hawaiian Bank and informed HSBC of that fact on Aug. 5 2003. On Aug. 11 HSBC informed Sadhwani the loan had been sold to Paradise Marine Corp. for an undisclosed amount.
Two months later Sadhwani filed suit against HSBC claiming the bank had acted in bad faith by refusing to agree to a commercially reasonable settlement and in refusing to accept alternative financing he had obtained.
Over the course of the next year claims and counterclaims passed between attorneys.
Jacques A. Bronze principal attorney at the law offices of Bronze & Tang PC represented HSBC initially. Guam attorney Richard A. Pipes soon joined the case as did Roderick A. McLeod an attorney with Jones Day in San Francisco.
Mary L.M. Moran clerk of the court entered final judgment in the secret settlement on the federal court docket on Dec. 3 2004. MBJ