JPMorgan Chase Bank v. Cook
United States District Court for the Southern District of New York
318 F. Supp. 2d 159 (2004)
- Written by Eric Miller, JD
Facts
Lodwrick Cook (defendant), an executive at Global Crossing, Ltd., borrowed $7.5 million from the private banking division (Private Bank) of JPMorgan Chase Bank (JPM) (plaintiff). The transaction was secured by a standby letter of credit issued by JPM, which guaranteed that Global Crossing’s revolving credit facility would repay Private Bank if Cook defaulted. JPM also served as the administrative agent for Global Crossing’s revolving credit facility, which was made up of various lending banks whose pro rata participation helped spread the risk. Cook defaulted. Global Crossing went into bankruptcy, triggering an automatic stay that prevented JPM from collecting from Global Crossing. The revolving credit facility, through JPM, disbursed $7.5 million to Private Bank. JPM brought suit against Cook directly, arguing that the doctrine of equitable subrogation enabled it to stand in the shoes of Private Bank to collect the $7.5 million. Cook argued that because Private Bank had been made whole on the letter of credit, an additional $7.5 million would amount to a double recovery. Cook moved to dismiss. JPM cross-moved for summary judgment.
Rule of Law
Issue
Holding and Reasoning (Lynch, J.)
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