BANK OF HAWAII SEEKS DISMISSAL OF BANK OF GUAM LAWSUIT

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By Gina Tabonares

HAGATNA, Guam (Marianas Variety, May 3) – Citing the first-to-file rule, the Bank of Hawaii asked the District Court of Guam to dismiss the complaint filed by the Bank of Guam, saying it was a duplicate lawsuit and should not be treated as a separate action.

In a reply to the alleged check-kiting scheme filed by the Bank of Guam on April 11, attorneys for Bank of Hawaii said that a prior action involving the same parties and transactions was filed in the U.S. District Court of Hawaii on March 27.

Elyze J. McDonald and Meredith Sayre, lawyers for Bank of Hawaii, said the lawsuit filed by Bank of Guam is a contravention of the first-to-file doctrine and the complaint filed in Guam should be treated as counterclaims, creating a multiplicity of actions, wasting court resources, and inviting inconsistent rulings.

To avoid inconveniences, the Bank of Hawaii attorneys also asked to transfer the venue of the Bank of Guam complaint, saying the evidence relating to the Automated Clearing House transactions, including most records and evidence pertinent to the questionable transactions, are electronically stored at Bank of Hawaii’s headquarters in Honolulu.

The Bank of Hawaii also stated that most of their witnesses reside in Hawaii and other non-party witnesses residing in the mainland will have more convenience to travel to Hawaii as opposed to Guam.

The Bank of Hawaii further argued that expert testimony regarding the Automated Clearing House system is likely to be provided by one or both parties and that qualified witnesses are likely to be traveling from the U.S. mainland.

It added that to save time and expense for both parties and witnesses and to avoid inconsistent results, the Bank of Hawaii told the District Court of Guam to dismiss the Bank of Guam lawsuit or transfer the case to Hawaii and resolve the matter based on the first action filed.

The banks’ court battle started after an alleged check-kiting scheme of Jale Management’s Information and Data Services was discovered.

Information Data Services provides payroll services to employers like the Hilton Guam Resort and Spa, and Dewitt Transactions. It also forwards taxes withheld from employees to the appropriate taxing authorities on behalf of its employer-clients.

Information Data Services reportedly debited more than US$2 million from its Bank of Guam account.

The Bank of Hawaii complaint confirmed that a former Information Data Services controller was investigated by Federal Bureau of Investigation agents and bank officials on October 12, 2006.

The Bank of Hawaii confirmed that it received a credit from the Bank of Guam in the amount of US$2,273,905 and applied the credit to offset the overdraft positions in the Information Data Services accounts at Bank of Hawaii.

The amount of US$143,067 remained after the offsets, and the amount is currently held by Bank of Hawaii in Honolulu.

The Bank of Hawaii insisted that at the outset of the Information Data Services transactions, Bank of Guam was in breach of its express warranties and must therefore bear the risk of loss on the transactions through its indemnification obligations set forth in the Automated Clearing House rules.

The locally owned Bank of Guam filed a lawsuit against the Bank of Hawaii after uncovering an alleged check-kiting scheme involving more than US$2 million in payroll of several businesses on the island.

The Bank of Guam wants Bank of Hawaii to pay for damages, and asked the District Court of Guam for a jury trial alleging that Bank of Hawaii intentionally defrauded the local bank, causing it to suffer a substantial loss.

The complaint stated that from Sept. 8, 2006 to Oct. 2, 2006, Information Data Services sent items for payment from a computer electronically to a bank using the Bank of Guam computerized cash management system to upload items to Bank of Hawaii.

A total of US$2,273,905.50 was uploaded by Information Data Services on three separate occasions.

The Bank of Guam demanded that Bank of Hawaii return the more than US$2 million but the Hawaii-chartered bank refused to do so.

Meanwhile, Information Data Services president Romy Miclatha has allegedly left the territory and has relocated to Manila, Philippines after asserting his Fifth Amendment privilege.

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