If a bank accidentally sends your company money and then asks for its cash back, don’t try to keep it.
That was the message of an opinion today by Senior Judge Gladys Kessler, who handed Qatar National Bank and its legal team from Patton Boggs a win on summary judgment at the U.S. District Court for the District of Columbia.
The case revolved around a mixup between the bank, Middle East news network Al Jazeera and Washington-based Winmar Construction. According to Kessler’s opinion, Al Jazeera hired Winmar in 2005 to renovate its D.C. office. The deal eventually went sour, but not before Al Jazeera wired $474,000 to the company as part of an initial payment.
In January 2006, after the contract was terminated, Al Jazeera asked Qatar National to confirm whether the original payment had actually been made. The bank misinterpreted the instructions, and instead wired a second $474,000 payment to Winmar. After realizing its mistake, the bank asked the construction company to return the money. Winmar said no.
Was the company just trying to keep a lucky penny? Not quite. According to Kessler’s opinion, Winmar believed that Al Jazeera still owed it $355,000 from their moribund contract. It kept that amount and sent the company back the $119,000 balance.
Qatar National, represented by Patton partner Alan Dickey, sued Winmar in July 2006 for unjust enrichment. Winmar’s legal team from Washington’s Lee & McShane argued that it was justified in keeping the money because the money was used to settle a real debt. But in today’s opinion, Judge Kessler wrote that argument would only work if Winmar had credited Al Jazeera’s account before it learned the payment was accidental. As it turns out, the company didn’t know about the second transfer until Qatar National alerted it.
Of course, there is a chance Winmar may see the money again. The construction company and Al Jazeera are still fighting it out in court.