Follow The Money
A Chinese seafood company delivered $650,000 of refrigerated crab's legs to a U.S. customer in Florida who claimed the products were 100% adulterated and refused to pay for any of them. The Chinese seafood company consulted with another California law firm who advised them to sue the Florida customer and that the litigation would be very expensive because it would entail laboratory testing of the products and expert witness testimony. The other law firm said it could not litigate outside California and suggested the Chinese seafood company contact an attorney in Florida. The Chinese seafood company asked The Food Lawyers® for our opinion.
We concluded that the prior law firm was focused on the wrong party. We advised the Chinese seafood company not to sue the U.S. company in Florida, but to sue Wells Fargo Bank in San Francisco for failing to pay the Chinese seafood company under the letter of credit that Wells Fargo had issued for funding the transaction. Under the terms of the letter of credit, Wells Fargo was under an absolute duty to pay the Chinese Seafood Company in full as soon as the shipment reached the U.S. port.
We wrote a letter to Wells Fargo Bank detailing the facts and demanding payment in full within 10 days. Our letter pointed out that Wells Fargo's letter of credit put it under a duty to pay the outstanding amount in full, notwithstanding the Florida customer's claim that the goods were defective. On the 7th day, Wells Fargo Bank offered our client $300,000 to settle the case. We advised the client to refuse the offer and not make a counter offer. The client followed our advice and on the 10th (and last) day, Wells Fargo wired our client the entire $650,000 it was owed. This entire process took three weeks and the client was astounded.
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