From our private database of 22,300+ case briefs...
In re Ocean Petroleum, Inc.
United States Bankruptcy Court for the Eastern District of New York
252 B.R. 25 (Bankr. E.D.N.Y. 2000)
Business Alliance Capital Corp. (BACC) (defendant) provided revolving credit and asset-based lending to Ocean Petroleum, Inc. Ocean made payments to BACC by depositing collections into a blocked account at Fleet Bank, N.A. (plaintiff). BACC’s bank, First Union, then initiated Automated Clearing House (ACH) transfers and wire transfers from the blocked account to BACC’s own accounts. To request advances from BACC, Ocean prepared certificates listing alleged collections that Ocean was supposed to deposit into the blocked account. BACC relied on Ocean’s representations about the collections and regularly advanced money to Ocean even though BACC could not verify the deposits until the following business day. On November 20, 1998, BACC initiated a $5.8 million ACH transfer from the blocked account. However, the account contained insufficient funds, and BACC’s debit request was returned as uncollected. Although the transaction was reversed in Fleet’s system, it was not reversed with the Federal Reserve because of a computer glitch. As a result, the transaction was deemed final in Fleet’s Federal Reserve account and in the ACH system. Ocean filed for bankruptcy on November 23, 1998, and BACC initiated additional transfers from the blocked account. In total, BACC received over $7.3 million from Fleet, even though the blocked account only contained $5.9 million. The remaining $1.4 million came from Fleet’s Federal Reserve account. On December 14, 1998, Fleet contacted BACC and advised that the $5.8 million ACH debit should have been returned for insufficient funds because some of Ocean’s pre-bankruptcy deposits into the blocked account had not cleared. Fleet sought the return of its $1.4 million, but BACC only returned $741,000. Fleet sued BACC to recover the remaining funds. BACC asserted that Fleet’s claims were barred because Fleet had not returned the $5.8 million ACH debit entry within two business days, as required by National Automated Clearing House Association (NACHA) rules. Fleet argued that it could still seek return of the money under New York common law. In a pretrial deposition, a BACC officer testified that he knew by November 23, 1998, that over $500,000 in deposits made by Ocean on November 20, 1998, had not cleared. Both parties moved for summary judgment.
Rule of Law
Holding and Reasoning (Eisenberg, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 517,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 517,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 22,300 briefs, keyed to 984 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.