Lectrodryer v. Seoulban

91Cal.Rptr.2d 881 (2000)

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Nature of the Case

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Facts

P manufactured a molecular sieve dryer used in refining oil into gasoline for JDP, a California exporter of industrial equipment. The price of the sieve dryer was $493,000, payable by an irrevocable letter of credit. Prior to delivery, JDP sold the dryer to Dae Ahn, a South Korean oil refinery. The resale price was $601,701, for a profit to JDP of approximately $108,000. JDP was in serious financial difficulty. It wrote three checks totaling approximately $494,000 to D to obtain a letter of credit from the bank to pay P. D issued the letter of credit. Thereafter, two of JDP's checks totaling more than $492,000 bounced. After receiving payment of $500,000 from Dae Ahn, JDP paid D $492,000 with two cashier's checks. P presented its documentation of delivery to D accompanied by a draft for payment in the amount of $493,000. D did not honor the letter of credit. D allowed it to expire and claimed P did not comply with the terms of the letter of credit. JDP sent D a discrepancy waiver, a fairly routine commercial practice. D also claimed the letter of credit was not prepaid. D did not return the $493,000 to JDP. It retained those funds to reduce its exposure on JDP's credit line with the bank. JDP went into bankruptcy. P sued D. The trial court sustained D's demurrer against fraud and intentional interference with contractual relations. P got a jury verdict for $493,000. Prejudgment interest and costs were also awarded. D appealed. D contends that P's cause of action for unjust enrichment is an impermissible attempt to enforce indirectly a letter of credit by resort to equity.