Lectrodryer v. Seoulbank

91Cal.Rptr.2d 881 (2000)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

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.