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Phil & Kathy’s Inc. v. Safra National Bank

United States District Court for the Southern District of New York
595 F. Supp. 2d 330 (2009)


Facts

On July 2, 2003, Phil & Kathy’s, Inc. (P&K) (plaintiff) submitted a payment order to Harris Trust and Savings Bank (Harris), requesting Harris to wire $1.5 million from P&K’s account to Safra National Bank (Safra) (defendant). The order directed Safra to deposit the money into an account owned by Banco Do Brasil, but misidentified the account name, rendering payment impossible. Harris notified P&K of the issue the following day, and Banco Do Brasil recommended that the beneficiary account on the payment order be changed to Blue Vale (Blue). P&K then submitted a second order, directing payment of $1.5 million to Blue. Over the next few days, Harris sent numerous write transfers to Safra, requesting to amend the first order to substitute Blue as the beneficiary. However, Safra processed the second order and credited Blue’s account on July 7, which was the next business day due to a holiday. Based on Harris’s wire transfers requesting amendment of the first order, Safra then credited Blue’s account another $1.5 million on July 9, within five business days of the first order. P&K filed suit against Safra, seeking recovery of the $1.5 million paid on the first order, and contending that the first order was cancelled by operation of law due to the misidentified beneficiary. Safra filed a motion to dismiss, arguing that the order had been amended and that its execution was therefore proper.

Rule of Law

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Issue

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Holding and Reasoning (Sand, J.)

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  • A “yes” or “no” answer to the question framed in the issue section;
  • A summary of the majority or plurality opinion, using the CREAC method; and
  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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