Grain Traders, Inc. v. Citibank, N.A.

960 F. Supp. 784 (1997)

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Nature of the Case

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Facts

P initiated a funds transfer to effectuate the payment of $310,000 to Claudio Goidanich Kraemer. The funds transfer was to proceed as follows: (1) P's account at BCN was to be debited $310,000; (2) the $310,000 was then to be 'transferred' to Banque Du Credit Et Investissement Ltd.'s ('BCI') at D by way of a debit to BCN's D account and a corresponding credit in that amount to BCI's D account; (3) the $310,000 was in turn to be 'transferred' from BCI to Banco Extrader, S.A. by way of an unspecified transaction between BCI and Extrader; 2 and (4) the $310,000 was finally to be transferred to Kraemer by way of a credit to his account at Extrader. Everything proceeded as expected. BCN's account at D was debited $310,000, and BCI's account at Citibank was credited $310,000. At the same time, BCN sent instructions to D, directing D to instruct BCI to instruct Extrader to credit $310,000 to Kraemer. D, in turn, sent instructions to BCI on the same day, notifying BCI that D had credited its account with $310,000 and instructing BCI to instruct Extrader to credit this amount to Kraemer. During the process when BCI's account at D was credited with the $310,000, the BCI account was placed by D on 'hold for funds' status. BCI's account with D was overdrawn by more than $12 million and D prevented BCI from making any further withdrawals from the account. Kraemer apparently never received a credit to his Extrader account for the $310,000. BCI, a Bahamian bank, ceased making payments in January 1995; it was closed by supervisory authorities in the Bahamas on July 31, 1995. P sued D for (1) for a refund under U.C.C. § 4-A-402; (2) for a refund as well as reasonable expenses and attorneys' fees under U.C.C. §§ 4-A-209, 4-A-301, and 4-A-305; (3) for breach of the obligation to deal in good faith under U.C.C. § 1-203; and (4) for conversion and money had and received under common law. P and D both moved for summary judgment.