Pubali Bank v. City National Bank, the Aristos Group, Jack A. McGuire and Margo Svikhart, City National Bank, Pubali Bank v. The Aristos Group

This case is before us for the second time. After our remand order in Pubali Bank v. City National Bank, 676 F.2d 1326 (9th Cir.1982) (Pubali I), the district court granted summary judgment to Pubali. We affirm.

Pubali began this action in 1978 for breach pf contract, fraud, money had and received and negligent misrepresentation. Pubali had arranged for Manufacturers Hanover Bank to issue two stand-by letters of credit on behalf of its customer, Emerald, Inc. In its complaint, Pubali alleged that Aristos and its bank, City National Bank (CNB), in conjunction with actions taken by individual defendants, drew down the two letters of credit even though they knew that Emerald had met the contractual obligations which the letters guaranteed.

The dispute between Emerald and Aristos and CNB centered on the meaning of the term “freight earned per contract.” Emerald contracted with Aristos for the charter of two ships to transport jute from Bangladesh to Syria. The letters of credit issued by Manufacturers Hanover Bank specified that Emerald would pay Aristos a specific amount for “freight earned per contract” for each charter. According to the parties’ agreement, only if those amounts…